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118365 Hermes Registration Intro

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					HANSTEEN HOLDINGS PLC

REGISTRATION DOCUMENT




                        23 June 2009
This document comprises a registration document (the “Registration Document”) relating to the
Company prepared in accordance with the Prospectus Rules of the Financial Services Authority
(the “FSMA”) made under Section 73A of the FSMA (the “Prospectus Rules”).

This Registration Document will not be updated. Under Section 85 of the FSMA, a separate securities note
and summary, together with the Registration Document, will be published and approved by the Financial
Services Authority (the “FSA”) before either (i) transferable securities in the Company are offered to the
public in the UK or (ii) a request is made for the admission of transferable securities in the Company to
trading on a regulated market situated or operating in the UK. In accordance with the Prospectus Rules, such
a separate securities note will be published to incorporate any significant change in relation to any
matters contained in this Registration Document and any new matter which is required to be contained
in this Registration Document. In addition, the Company will comply with its obligations pursuant to
Section 87G of the FSMA with regard to the publication of a supplementary prospectus following such an
offer or request, if applicable.

AIM is a market designed primarily for emerging or smaller companies to which a higher
investment risk tends to be attached than to larger or more established companies. AIM securities
are not admitted to the official list of the UK Listing Authority. A prospective investor should be
aware of the risks of investing in such companies and should make the decision to invest only after
careful consideration and, if appropriate, consultation with an independent financial adviser. Each
AIM company is required pursuant to the AIM Rules to have a nominated adviser. The London
Stock Exchange has not itself examined or approved the contents of this document.

Each of the Company and the Directors, whose names and functions appear on page 11 of this                     A1/1.1
                                                                                                               A1/1.2
document, accept responsibility for the information contained in this Registration Document. To the
best of the knowledge of the Company and the Directors (who have taken all reasonable care to ensure
that such is the case) the information contained in this Registration Document is in accordance with the
facts and contains no omission likely to affect its import.




               HANSTEEN HOLDINGS PLC
             (Incorporated and registered in England and Wales with registered number 5605371)



                                    Registration Document

                                     Nominated Adviser and Broker
                                   KBC PEEL HUNT LTD



KBC Peel Hunt Ltd, which is regulated by the FSA, is acting as Nominated Adviser and Broker
for the Company and is not acting for any other person and will not be responsible to any other
person for providing the protections afforded to clients of KBC Peel Hunt or for advising any
other person on the contents of this document.

YOUR ATTENTION IS DRAWN TO THE RISK FACTORS SET OUT ON PAGES 3 TO 9 OF
THIS DOCUMENT.
REGISTRATION DOCUMENT – INTRODUCTION



                                            CONTENTS
                                                                                                      Page
PART I        RISK FACTORS                                                                               3
              FORWARD-LOOKING STATEMENTS                                                                10
              DIRECTORS, COMPANY SECRETARY AND ADVISERS                                                 11

PART II       INFORMATION ABOUT THE GROUP                                                               12

PART III      SELECTED HISTORICAL AND FINANCIAL OPERATING DATA                                          18

PART IV       OPERATING AND FINANCIAL REVIEW                                                            25

PART V        FINANCIAL INFORMATION                                                                     35

PART VI       VALUATION REPORT                                                                         141

PART VII      ADDITIONAL INFORMATION                                                                   149

DEFINITIONS                                                                                            184

In this document, use of any gender includes the other genders and all references to time are references to
London time.




                                                    2
REGISTRATION DOCUMENT – PART I



                                                  PART I

                                           RISK FACTORS
An investment in the Company is only suitable for Shareholders who are capable of evaluating the                    A1/4.1

risks and merits of such investment and who have sufficient resources to bear any loss which might
result from such investment. If any of the following risks were to occur, the Group’s business, financial
condition, capital resources and/or future operations could be materially adversely affected. In such a
case, the trading price of the Ordinary Shares and/or net asset value of the Group could decline
significantly and Shareholders may lose all or part of their investment.

Prospective investors should immediately seek their own personal financial advice from their
independent professional adviser authorised under the FSMA, who specialises in advising on the
acquisition of shares and other securities, or other advisers such as legal advisers and accountants.

An investment in the Company principally involves a degree of risk because of the nature of the
property business. The paragraphs below set out what the Company and the Directors currently
consider to be those risks that would have a material impact on the Group but the risks referred to
below do not purport to be an exhaustive list. Additional risks and uncertainties not currently known
to the Directors, or that the Directors do not currently consider to be material, may also have an
adverse effect on the Company and/or the Group. The past performance of the Company and/or the
Group is no guarantee of future performance.

1.    RISKS RELATING TO REAL ESTATE
1.1   Property valuation is inherently subjective and uncertain
      The valuation of property and property-related assets is inherently subjective. As a result, valuations
      are subject to uncertainty. Moreover, all property valuations are made on the basis of assumptions
      which may not prove to reflect the true position. There is no assurance that the valuations of the
      properties and property-related assets will reflect actual sale prices even where any such sales occur
      shortly after the relevant valuation date.

1.2   Real estate investments are relatively illiquid
      Properties such as those in which the Group currently invests and intends to invest are relatively
      illiquid. Such illiquidity may affect the Group’s ability to vary its portfolios or dispose of or liquidate
      part of its portfolio in a timely fashion and at satisfactory prices in response to changes in economic,
      real estate market or other conditions or the exercise by tenants of their contractual rights such as
      those which enable them to vacate properties occupied by them prior to, or at, the expiry of the
      originally agreed term. This could have an adverse effect on the Group’s financial condition and
      results. The Group’s operating performance would be likely to be adversely affected by a downturn in
      the property market in terms of capital and/or rental values.

1.3   The value of any property portfolio may fluctuate as a result of factors outside the owner’s
      control
      Property investments are subject to varying degrees of risks. Rents and values are affected by
      changing demand for real estate, changes in general economic conditions, changing supply with a
      particular area of competing space and attractiveness of real estate relative to other investment
      choices. The value of any property portfolio may also fluctuate as a result of other factors outside the
      owner’s control, such as changes in regulatory requirements and applicable laws (including in relation
      to taxation and planning), political conditions, the condition of financial markets, the financial
      condition of lessees, potentially adverse tax consequences, interest and inflation rate fluctuations and
      higher accounting and internal expenses. The Group’s operating performance would be likely to be
      adversely affected by a downturn in the property market in terms of capital and/or rental values.



                                                       3
REGISTRATION DOCUMENT – PART I


      In addition, changes in gross domestic product in the economies in which the properties are located
      may also impact on employment levels, which in turn may impact the demand for premises.

1.4   The Group may incur environmental liabilities
      The Group may be liable for the costs of removal, investigation or remediation of hazardous or toxic
      substances located on or in a property owned or leased by it. The costs of any required removal,
      investigation or remediation of such substances may be substantial. The presence of such substances,
      or the failure to remediate such substances properly, may also adversely affect the Group’s ability to
      sell or lease the real estate or to borrow using the real estate as security. Laws and regulations, as these
      may be amended over time, may also impose liability for the release of certain materials into the air
      or water from a real estate investment, including asbestos, and such release can form the basis for
      liability to third persons for personal injury or other damages. Such laws often impose such liability
      without regard to whether the owner knew of, or was responsible for, the existence of these
      substances. The owner’s liability as to any property is generally not limited under such laws and could
      exceed the value of the property or the aggregate assets of the owners. Other laws and regulations can
      limit the development of, and impose liability for, the disturbance of wetlands or the habitats of
      threatened or endangered species.

1.5   The Group’s ability to generate its desired returns will depend on its ability to identify and
      acquire suitable properties and to overcome potentially significant competition in doing so
      The Group’s ability to implement its strategy and achieve its desired returns may be limited by its
      ability to identify and acquire suitable properties at satisfactory yields. In addition, the Group may
      face significant competition in identifying and acquiring suitable properties from other investors,
      including competitors who may have greater resources. Competition in the property market may lead
      to prices for properties identified by the Group as suitable being driven up through competing bids by
      potential purchasers. Accordingly, the existence and extent of such competition may have a material
      adverse effect on the Group’s ability to acquire properties at satisfactory prices and otherwise on
      satisfactory terms. Additionally, if increasing competition for properties from public or private buyers
      causes the Group’s volumes to slow or leads to a reduction in the number or quality of investment
      opportunities available to the Group or leads to a reduction in yield expectations, it is likely to have
      negative implications for the Company’s ability to generate earnings and dividends.

1.6   The Group may take on mismatched lease liabilities and obligations
      The Group may in future acquire lease liabilities and obligations in connection with portfolio
      acquisitions. The Group’s earnings may be adversely affected to the extent that the Group is not able
      to manage mismatches between its liabilities and obligations and the corresponding liabilities and
      obligations of the Group’s tenants.

1.7   The Group’s ability to generate its desired returns will also depend on its ability to lease its
      properties to appropriate tenants on appropriate terms and to dispose of properties on
      appropriate terms
      The Group’s ability to implement its strategy and achieve its desired returns may be limited by its
      ability to lease its properties to, and manage them for (together with providing related services to),
      appropriate tenants on satisfactory terms, and to dispose of them on appropriate terms. Revenue
      earned from, and the value of, properties held by the Group may be adversely affected by a number
      of factors, including:

      (A)    vacancies that lead to reduced occupancy rates which would reduce the Group’s revenue and
             its ability to recover certain operating costs such as local taxes and service charges and would
             result in it incurring additional expenses until the property is re-let, including legal and
             surveying fees and marketing costs;
      (B)    the Group’s ability to collect rent and service charge payments from tenants and other
             contractual payments under real estate outsourcing contracts, on a timely basis or at all;


                                                       4
REGISTRATION DOCUMENT – PART I


      (C)    tenants seeking the protection of insolvency laws which could result in delays in receipt of
             rental and other contractual payments, inability to collect such payments at all or the
             termination of a tenant’s lease, all of which could hinder or delay the sale of a property;
      (D)    the amount of rent and the terms on which lease renewals and new leases are agreed being less
             favourable than current leases;
      (E)    the amount of rents may not be agreed at the estimated rental value of any particular property;
             and
      (F)    a competitive rental market which may affect rental levels or occupancy levels at the Group’s
             properties.

1.8   The Group may be unable to let a property or re-let a property following the expiry of a tenancy
      The ability of the Group to attract new tenants will depend on demand for space at the relevant
      property and on the regional economy in the relevant catchment area, which can be influenced by a
      number of factors. Rental levels and the affordability of rents, the size and quality of the building, the
      amenities and facilities offered, the convenience, location and local environment of the relevant
      property, the amount of competing space available, the transport infrastructure, the other tenants
      renting adjacent and nearby properties, the age and facilities of the building in comparison with the
      alternatives and changing trends in the industrial property market are all examples of factors which
      influence tenant demand. Similarly, changes to the infrastructure, demographics, planning regulations
      and economic circumstances relating to the surrounding areas on which the relevant property depends
      for its tenant base may adversely affect the demand for such property.

      Further, there can be no assurance that the Group’s tenants will renew their leases at the end of their
      current tenancies or, if they do not, that new tenants of equivalent standing (or any new tenants) will
      be found to take up replacement leases. This is particularly the case where a property requires
      refurbishment or redevelopment following the expiry of a tenancy. Tenants with the benefit of
      contractual break rights may also exercise these to bring the lease to an end before the contractual
      termination date. During void periods, the Group will suffer a rental shortfall and incur additional
      expenses until the property is re-let. In the UK, this includes liability for empty rates, which has
      become more onerous following a change to legislation in April 2008 that significantly reduces relief
      available from business rates in relation to empty property. Even if tenant renewals or replacements
      are effected, there can be no assurance that such renewals or replacements will be on terms (including
      rental levels and rent review terms) that are as favourable to the Group as before or that new tenants
      will be as creditworthy as previous tenants.

1.9   Any property in the UK may at any time be compulsorily purchased by Government
      departments or local authorities
      Any property or part of any property in the UK may, at any time, be compulsorily acquired by a
      Government department or local authority in connection with proposed redevelopment or
      infrastructure projects. If a compulsory purchase order were made in respect of a property or part of
      a property, compensation would be payable on the basis of the value of all owners’ and tenants’
      proprietary interests in that property at the time of the related purchase as determined by reference to
      a statutory compensation code, but the compensation could be less than the Group’s assessment of the
      property’s current market value (or the relevant apportionment of such market value where only part
      of a property is subject to a compulsory purchase order). In the case of an acquisition of the whole or
      any part of that property, the relevant freehold, heritable or long leasehold estate and any lease would
      both be acquired. If the amount received from the proceeds of purchase of the relevant freehold,
      heritable or long leasehold estate were inadequate, the operations, financial position and prospects of
      the Group may be adversely affected.

      There may be a delay between the compulsory purchase of a property or part of any property and the
      payment of compensation, the length of which will largely depend upon the ability of the property
      owner and the entity acquiring the property to agree on the open market value. Should such a delay


                                                      5
REGISTRATION DOCUMENT – PART I


      occur in the case of a property or part of any property of the Group, the operations, financial position
      and prospects of the Group may be adversely affected. If only part of a property is compulsorily
      purchased, the Group’s financial position and prospects could be materially adversely affected if such
      part was of strategic importance to a Group development property or investment property.

1.10 Leases under which properties in the Group’s portfolio are held contain provisions for forfeiture
     of those leases for breach of covenant and/or non-payment of rent which could be enforced
     against the Group if it defaulted
      The leases for some of the Group’s leasehold properties contain provisions providing for forfeiture for
      breach of tenant’s obligations and/or non-payment of rent. If any breach were to trigger such a
      provision, and the relevant landlord took enforcement action, the relevant Group tenant would, in
      respect of a property situated in England or Wales, be able to apply to the court for relief from
      forfeiture. This is an equitable remedy which is given only at the discretion of the court; where relief
      is granted, it would usually be granted on terms requiring the tenant to cure the breach of obligation
      and/or pay any outstanding rent. The court is entitled to grant the relief on such terms as it deems
      appropriate.

      Forfeiture of any of the leases under which property in the Group’s portfolio is held would impact on
      the financial position, operations, results and prospects of the Group and could also have an impact
      on the reputation of the Company as a property company.

      The Group may undertake improvements (including redevelopment and/or refurbishments) of
      properties or invest in properties that require refurbishment prior to leasing the property. The risks of
      development include, but are not limited to: (i) delays in timely completion of the project, (ii) cost
      overruns and (iii) poor quality of workmanship.

2.    RISKS RELATING TO THE GROUP

2.1   The Group may be subject to increases in operating and other expenses
      The Group’s operating and other expenses could increase without a corresponding increase in
      turnover or tenant reimbursements of operating and other costs. The factors which could materially
      increase operating and other expenses are:
      (A)    increases in the rate of inflation and currency fluctuation;
      (B)    increases in payroll expenses and energy costs;
      (C)    increases in property taxes and other statutory charges;
      (D)    changes in laws, regulations or government policies (including those relating to health and
             environmental compliance safety) which increase the costs of compliance with such laws,
             regulations or policies;
      (E)    increases in insurance premiums;
      (F)    unforeseen increases in the costs of maintaining properties; and
      (G)    unforeseen capital expenditure may arise as a result of defects affecting the properties which
             need to be rectified, failure to perform by sub-contractors or increases in operating costs.

      Such increases could have a material adverse effect on the Group’s financial position and its ability to
      make distributions to its Shareholders.

2.2   The Group may suffer material losses in excess of insurance proceeds
      The Group’s properties could suffer physical damage caused by fire or other causes, resulting in losses
      (including loss of rent) which may not be fully compensated by insurance. In addition, there are
      certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes,
      terrorism or acts of war, that may be uninsurable or are not economically insurable. Inflation, changes


                                                      6
REGISTRATION DOCUMENT – PART I


      in building codes and ordinances, environmental considerations, and other factors, including terrorism
      or acts of war, also might result in insurance proceeds being insufficient to repair or replace a property
      if it is damaged or destroyed.

      Under such circumstances, the insurance proceeds may be inadequate to restore the Group’s economic
      position with respect to the affected real estate. Should an uninsured loss or a loss in excess of insured
      limits occur, the Group could lose capital invested in the affected property as well as anticipated future
      revenue from that property. In addition, the Group could be liable to repair damage caused by
      uninsured risks. The Group would also remain liable for any debt or other financial obligation related
      to that property. No assurance can be given that material losses in excess of insurance proceeds will
      not occur in the future. In addition, whilst the Group will attempt to ensure that all of the Group’s
      properties are adequately insured, changes in the cost, cover or availability of insurance could expose
      the Group to uninsured losses.

2.3   The Group may be subject to liability following the disposal of investments
      The Group may dispose of investments in certain circumstances and may be required to give
      representations and warranties about those investments and to pay damages to the extent that any such
      representations or warranties turn out to be inaccurate. The Group may become involved in disputes
      or litigation concerning such representations and warranties and may be required to make payments
      to third parties as a result of such disputes or litigation. If the Group does not have cash available to
      conduct such litigation or make such payments it may be required to borrow funds. Any such
      payments and borrowings to finance those payments could have an adverse impact on the Group’s
      ability to pay dividends.

      In addition, if the Group is unable to borrow funds to make such payments, it may be forced to sell
      investments to obtain funds. There can be no assurance that any such sales could be effected on
      satisfactory terms.

2.4   The Group relies on key executives and the loss of any of them could have a material adverse
      impact
      The Group is highly dependent on Ian Watson and Morgan Jones, the loss of the services of either of
      whom would have a material adverse impact on the Group. Although both have entered into service
      contracts with the Company, there can be no certainty that they will perform under those service
      contracts.

2.5   The Group may incur losses as a result of fluctuations in the foreign currency exchange rates
      between the pound and other foreign currencies for which it has not, or not effectively, hedged
      its risk
      The Group’s investments in Continental Europe are valued in euro. The Group reports its financial
      results in sterling and must translate the valuations of its European properties from euro to sterling.
      This exposure is hedged to a degree by matching the value of the foreign assets with borrowings in
      foreign currencies. To the extent that the Group does not hedge its exposure to foreign currency
      exchange rate fluctuations, or to the extent that such hedging is inaccurate or otherwise ineffective,
      such exposure could have an adverse effect on the Group’s business, financial condition, results of
      operations, future prospects or the price of the Ordinary Shares.

2.6   The Company’s ability to continue to pay dividends will depend on the level of profits and cash
      flows generated by the Company.
      Under UK company law, a company can only pay cash dividends to the extent that it has distributable
      reserves and cash available for this purpose. The Company’s ability to pay cash dividends in the future
      is affected by a number of factors including its ability to receive sufficient dividends from
      subsidiaries. The payment of dividends to the Company by its subsidiaries is, in turn, subject to




                                                      7
REGISTRATION DOCUMENT – PART I


      restrictions, including certain regulatory requirements and the existence of sufficient distributable
      reserves and cash in the Company’s subsidiaries.

      The ability of these subsidiaries to pay dividends and the Company’s ability to receive distributions
      from its investments in other entities is subject to applicable local laws and regulatory requirements
      and other restrictions, including, but not limited to, applicable tax laws and covenants in some of the
      Group’s credit facilities. These laws and restrictions could limit the payment of dividends and
      distributions to the Company by its subsidiaries, which could in future restrict the Company’s ability
      to fund other operations or to pay a dividend to holders of the Existing Ordinary Shares or the New
      Ordinary Shares.

2.7   The Group’s businesses are subject to various regulations. The regulatory environment in which
      the Group operates may change in each of the relevant jurisdictions.
      In each of the jurisdictions in which the Group operates it has to comply with laws, regulations and
      administrative actions and policies which relate to, among other matters, tax, REITs, planning,
      developing, building, land use, fire, health and safety, environment and employment. These
      regulations often provide broad discretion to the administering authorities. Each aspect of the
      regulatory environment in which the Group operates is subject to change, which may be retrospective,
      and changes in regulations could affect existing planning consent, costs of property ownership and the
      value of properties. Changes in regulations could have an adverse impact on the Group’s business,
      results of operations, financial condition or prospects.

2.8   The Group may be subject to certain limitations on its ability to invest directly in UK industrial
      property should it successfully establish a UK Industrial Property Fund
      The Group proposes to explore opportunities to invest in UK industrial property directly and also
      through the establishment of a UK Industrial Property Fund, managed by Hansteen (or one of its
      subsidiaries) and in which it will co-invest with third party institutional investors (a “Fund”).
      Typically any such Fund would be expected to have an exclusive right to invest in certain types of UK
      industrial property which will mean that the Group will be subject to certain limitations on its ability
      to invest directly in UK industrial property should it successfully close any Fund.

3.    RISKS RELATING TO BORROWINGS

3.1   The Group’s credit facilities may restrict its ability to engage in business activities that may be
      in its interest
      The Group’s credit facilities impose certain restrictions on the Group. These restrictions may affect,
      limit or prohibit the Group’s ability to create or permit to subsist any charges, liens or other
      encumbrances in the nature of a security interest; incur additional indebtedness by way of borrowing,
      leasing commitments, factoring of debts or granting of guarantees; make any material changes in the
      nature of its business as presently conducted; sell, transfer, lease or otherwise dispose of all or a
      substantial part of its assets; amend, vary or waive the terms of certain acquisition documents or give
      any consent or exercise any discretion thereunder; acquire any businesses; or make any coinvestments
      or investments over the longer term. If the Group were to seek to vary or waive any of these
      restrictions and the relevant lenders did not agree to such variation or amendment, the restrictions may
      over the longer term limit the Group’s ability to plan for or react to market conditions or meet capital
      needs or otherwise restrict the Group’s activities or business plans and adversely affect the Group’s
      ability to finance ongoing operations, strategic acquisitions, investments and development projects.

      However, the Group is currently conservatively geared, with total net debt to value of 51 per cent. as
      at 31 December 2008, and is therefore operating comfortably within its banking covenants.




                                                     8
REGISTRATION DOCUMENT – PART I


3.2   The Group’s businesses are subject to the effects of movements in market interest rates
      The Group is exposed to movements in interest rates which affect the amount of interest paid on
      borrowings and the return on its cash investments.

3.3   Use of borrowing could adversely impact on net asset value
      Prospective investors should be aware that, whilst the use of borrowings should enhance the net asset
      value of the Ordinary Shares where the value of the Group’s underlying assets is rising, it will have
      the opposite effect where the underlying asset value is falling.

3.4   Fluctuations in financial markets and the global economic downturn could affect the Group’s
      long term ability to refinance any of its obligations
      Continuing global economic turmoil could inhibit the Group’s ability to rollover its existing
      borrowings in the event that the Group is, in the long term, unable to comply with applicable financial
      covenants or to meet its financial obligations when they fall due. Such turmoil could also affect the
      Group’s long term ability to refinance its obligations or obtain new financing.

3.5   Enforcement of security over the Group’s assets
      Borrowings are likely to be secured over the Group’s property assets. In the event that the Group
      defaults under the terms of any borrowing agreements entered into, the lender concerned may seize
      title to such assets by enforcing their security.

      In addition, any amounts owing under borrowing agreements will rank ahead of Shareholders’
      entitlements.

4.    RISKS RELATING TO TAXATION
      The amount of taxation charged on the Group’s activities is subject to changes in tax laws and their
      practical application in the jurisdictions in which the Group operates. The amount of any gain subject
      to tax on certain investment properties is affected by changes in the rate of exchange between Sterling
      and the Euro to the date of sale of the properties.

The risk factors listed above are not presented in any order of priority and do not necessarily comprise
all those risks faced by the Group but are the ones judged as material by the Directors.




                                                     9
REGISTRATION DOCUMENT – PART I



                          FORWARD-LOOKING STATEMENTS
This document includes statements that are, or may be deemed to be, “forward-looking statements”. These
forward-looking statements can be identified by the use of forward-looking terminology, including the terms
“believes”, “estimates”, “plans”, “anticipates”, “targets”, “aims”, “continues”, “projects”, “assumes”,
“expects”, “intends”, “may”, “will”, “would” or “should”, or in each case, their negative or other variations
or comparable terminology. These forward-looking statements include all matters that are not historical facts
and speak only as at the date of this document.

They appear in a number of places throughout this document and include statements regarding the
Directors’, the Company’s and the Group’s intentions, beliefs or current expectations concerning, among
other things, the Group’s result of operations, financial condition, liquidity, prospects, growth strategies and
the industries in which the Group operates. By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances. A number of factors could cause actual
results and developments to differ materially from those expressed or implied by the forward-looking
statements, including without limitation: conditions in the markets, market position of the Group, earnings,
financial position, cash flows, return on capital, anticipated investments and capital expenditures, changing
business or other market conditions and general economic conditions. These and other factors could
adversely affect the outcome and financial effects of the plans and events described in this document.

Forward-looking statements contained in this document based on past trends or activities should not be taken
as a representation that such trends or activities will continue in the future. However, these forward-looking
statements and other statements contained in this document regarding matters that are not historical facts
involve predictions. No assurance can be given that such future results will be achieved.

The information in this document will be updated as required by the Prospectus Rules, the AIM Rules and/or
the Disclosure and Transparency Rules. In particular, under Section 85 of the FSMA, a separate securities
note and summary, together with the Registration Document, will be published and approved by the FSA
before either (i) transferable securities in the Company are offered to the public in the UK or (ii) a request
is made for the admission of transferable securities in the Company to trading on a regulated market situated
or operating in the UK. In accordance with the Prospectus Rules, such a securities note will be published to
incorporate any new significant change in relation to any matters contained in this Registration Document
and any new matter which is required to be contained in this Registration Document. In addition, the
Company will comply with is obligations pursuant to Section 87G of the FSMA with regard to the
publication of a supplementary prospectus following such an offer or request, if applicable.




                                                      10
REGISTRATION DOCUMENT – PART I



          DIRECTORS, COMPANY SECRETARY AND ADVISERS
Directors of the Company:        James Daryl Hambro (Non-Executive Chairman)
                                 Morgan Lewis Jones (Joint Chief Executive)
                                 Ian Richard Watson (Joint Chief Executive)
                                 Stephen Trevor Gee (Non-Executive Director)
                                 Richard Stephen Mully (Non-Executive Director)
                                 all of:
                                 1 Berkeley Street, London, W1J 8DJ

Registered Office:               1 Berkeley Street
                                 London
                                 W1J 8DJ

Telephone Number:                020 7016 8820

Company Secretary:               Richard Lowes, FCCA

Nominated Adviser and Broker     KBC Peel Hunt Ltd
                                 111 Old Broad Street
                                 London
                                 EC2N 1PH

Reporting Accountant             Deloitte LLP                                     A1/2.1

and Registered Auditors:         Abbots House
                                 Abbey Street
                                 Reading
                                 RG1 3BD

Legal Adviser to the             Jones Day
Company:                         21 Tudor Street
                                 London
                                 EC4Y 0DJ

Legal Adviser to                 Addleshaw Goddard LLP
KBC Peel Hunt Ltd:               150 Aldersgate Street
                                 London
                                 EC1A 4EJ

Registrars:                      Capita Registrars
                                 The Registry
                                 34 Beckenham Road
                                 Beckenham
                                 Kent
                                 BR3 4TU

Property Valuers:                King Sturge LLP
                                 30 Warwick Street
                                 London
                                 W1B 5NH




                                           11
REGISTRATION DOCUMENT – PART II



                                                 PART II

                          INFORMATION ABOUT THE GROUP

1.    INTRODUCTION AND HISTORICAL OVERVIEW
Hansteen was established in 2005 by Ian Watson and Morgan Jones to take advantage of opportunities to               A1/5.1

invest in industrial property in Continental Europe and, as stated, when value returned, in the UK. It was
admitted to trading on AIM in November 2005.
Prior to establishing Hansteen, Morgan Jones and Ian Watson founded and were joint chief executives of
Ashtenne Holdings Plc. Ashtenne specialised in opportunistically buying, vigorously managing and
profitably realising industrial property, predominately in the UK. Ashtenne’s business model evolved in the
early 1990s when the property market experienced several years of low or falling values due to the economic
recession at that time. Typically Ashtenne acquired estates which were bought with high vacancy levels and,
to varying degrees, from forced sellers. Ashtenne’s strategy was to improve and manage these estates,
integrate them into the existing portfolio, and turn them into high return investments.
The Company has calculated that from its incorporation in 1989 until its sale to Warner Estates plc in 2005,
Ashtenne achieved net returns for its shareholders equivalent to an annual rate of return in excess of 20 per
cent. per annum. At the time of the sale of Ashtenne in early 2005, Ian Watson and Morgan Jones stated their
belief that industrial property values in the UK had risen to levels at which they no longer represented a value
opportunity. In particular, industrial property yields were at, or below, the cost of borrowing and capital
values at, or above, replacement cost.
In Continental Europe however this was not the case. In many cases, industrial properties could still be
acquired at yields substantially above the cost of borrowing and capital values were well below replacement
costs. Accordingly, Morgan Jones and Ian Watson believed there was an opportunity to build a portfolio of
industrial property in Continental Europe and in November 2005 Hansteen was admitted to trading on AIM
to take advantage of this opportunity. In March 2007, the Company announced a further fundraising through
a placing of new ordinary shares, raising gross proceeds of £70 million to enable it to continue to expand its
property portfolio.

2.    PRINCIPAL ACTIVITIES OF THE GROUP
The Group’s principal activity is investment in industrial property. Hansteen’s focus is on acquiring high          A1/6.1.1

yielding industrial property assets at low capital values and where possible to improve occupancy and
income.
Since Hansteen was established the Group has painstakingly built a portfolio of around €498 million of
properties (€495 million excluding development land) in Germany, the Netherlands, Belgium and France
with an annual rent roll of €43.7 million. The portfolio has a diverse spread of tenants, low capital values and
rents, a high current yield of over 8.75 per cent. and a reversionary yield of 10 per cent. reflecting the
opportunities to add value to a number of the properties. In the last three years the Company has paid annual
dividends of 3.0p, 3.2p and 3.2p respectively which were covered from the outset by the Normalised Profit
generated by the business. Normalised Profit has grown in those years from £6.3 million in 2006, to £9.6
million in 2007, to £11.8 million in 2008.
The growth and success of Hansteen’s business since 2005 has been accomplished prudently, particularly in          A1/6.5

relation to the amount and terms of the Group’s borrowings. Overall Hansteen’s net debt to value as at
31 December 2008 was 51 per cent. Of Hansteen’s two significant bank facilities the earliest matures in mid
2011 and the other in 2013 and the Group has substantial headroom on its banking covenants. This means
that unlike many of the listed property companies and funds, Hansteen has no current balance sheet
constraints and believes it has no need to raise capital or to sell properties at a low point in the cycle for
defensive reasons. The Board believes that when stability returns to the property market, the strong
investment characteristics of the European portfolio will be reflected in the portfolio value and that in the
meantime the portfolio will continue to produce a meaningful surplus of income over total cost. The Board



                                                      12
REGISTRATION DOCUMENT – PART II


also believes that Hansteen is one of only a few British management teams to successfully create a pan-
European property business.

The Group’s operations are carried out through a focused and experienced in-house team assisted by a
number of professional property advisers and associates located in each of the countries in which it invests.
Of the 23 people currently employed by Hansteen, 11 previously worked for Ashtenne, including the
majority of the senior management team.

Recent additions to the team include Mark Ovens and James Havery, who having worked with Morgan Jones
and Ian Watson at Ashtenne, remained with Ashtenne after its sale to Warner Estate Holdings plc to run the
Ashtenne Industrial Fund. They both have extensive, current knowledge of the UK industrial property
market.

The Directors believe that Hansteen ’s existing business provides it with a solid platform, enjoying
sustainable positive income returns from which new opportunities in the UK can be exploited without the
need to incur significant additional business infrastructure costs.

The following table provides more detailed information on the Group’s property portfolio at 31 May 2009
with the valuations extracted from the independent Valuation Report set out in Part VI of this document:

                                                                  Occupancy        Annual             Current
                                         No of       Sq m               Rate         Rent                Yield    Valuation        A1/6.2

Country                              Properties     (000’s)        (per cent.)       (€m)           (per cent.)        (€m)
Netherlands                                 33        370                 88         16.5                  8.5        192.9
Germany1                                    51        454                 80         20.4                  8.9        228.7
Belgium                                     13         50                 92          3.9                  8.7         44.5
France                                        4        78                100          2.4                10.4          22.7
Other assets2                                 5          9                91          0.5                  5.4          9.2
                                     ————          ————            ————           ————              ————          ————
Total                                      106        961                 87         43.7                8.75         498.0

1
                                     ———— ———— ———— ———— ———— ————
     Floor area includes storage/archive space.
2    Non core German assets (grouped under Germany in the valuation report) and development land.


3.      STRATEGY
Hansteen was established in 2005 to focus on providing its shareholders with consistent, high, and realised
returns through acquisitions of properties over time to create a high yielding property portfolio initially in
Continental Europe. This was combined with other more opportunistic and management intensive
acquisitions which, whilst lower yielding would provide greater capital growth potential. At that time the
Directors stated their belief that the UK property cycle would turn down over the following two to three
years, and that this downturn would eventually provide significant opportunities in the UK for well
capitalised companies with experienced and opportunistic management teams. Hansteen’s initial focus was                       A1/6.1.2

therefore on acquiring industrial property in Continental Europe which at that time was demonstrating higher
yields, cheaper financing costs and greater opportunity for value improvement through asset management
than could then be achieved in the UK.

The difficult economic conditions, restricted availability of financing and sharply falling property values                   A1/9.2.3

currently being experienced in the UK market following a sustained period of rising property values and
plentiful availability of debt has created a state of considerable distress in the UK property market. The
Directors, therefore, believe industrial property acquisitions can be made at double digit initial yields. This
has led the Directors to conclude that there is an outstanding opportunity to create value for Hansteen ’s
shareholders by re-entering the UK industrial property market at this time.

This activity will be complemented by the strong balance sheet and cash flow provided by the Continental
European business. In Continental Europe, the Directors believe the high yields on industrial property and
the relative lack of distress amongst owners when coupled with low interest rates mean that the Continental
European industrial property sector will see a good recovery in the medium term. Consequently the Directors



                                                             13
REGISTRATION DOCUMENT – PART II


intend to maintain the Group’s portfolio of prudently financed Continental European properties with a view
to realising considerable value when the Continental European property market recovers.

Hansteen seeks to provide its shareholders with high, consistent and largely realised returns by successfully
buying, vigorously managing and profitably reselling industrial property. Key elements of the Group’s
strategy include:

•     Seeking properties with high yields and low capital values
      The Group intends to opportunistically buy industrial estates with high yields and low capital values
      where significant opportunities to add value can be achieved by letting vacant spaces at low rents.
      Previous experience in both the UK and Continental Europe shows that a hands-on approach to
      marketing can result in significant capital uplifts.

•     Actively managing bought properties
      Following acquisition, the Group aggressively markets un-let units to increase occupancy and the
      yield on the property. Additionally, Hansteen communicates with tenants in order to ascertain how the
      tenant-landlord relationship can be improved in order to drive further value from active management
      of acquired properties.

•     Realise value at an appropriate time
      Over the long term, once under-managed and under-occupied properties are transformed into more
      efficiently-managed and fully occupied properties, the Group would consider realising value from its
      portfolio. In the Directors’ experience, investment property funds have tended to invest in larger
      portfolios and have in certain circumstances paid a premium for a ready prepared portfolio.

•     Positive yield gap and gearing
      Currently the difference between the yield on industrial property in the UK and the cost of both short
      and medium term debt is significant leading to a large positive yield gap. This should allow Hansteen
      to leverage any acquired properties, thereby improving the returns to shareholders and the Group’s
      returns on capital.

•     Joint ventures and limited life funds
      The Directors also intend to pursue various ways of gaining further exposure to the UK industrial
      property cycle through the formation of joint ventures and limited life funds with third party investors
      or participating in workouts with banks in order to enhance returns to Hansteen. Hansteen intends to
      invest directly into such joint ventures or funds, and therefore benefit from exposure to the potential
      growth in value of the asset portfolios, whilst also receiving management and performance fees.

•     Corporate development
      Hansteen intends to apply to move to the UKLA’s Official List within the next 12 months. The
      Company has grown significantly since admission to AIM in November 2005 and the Board believes
      that the Official List will be a more appropriate platform than AIM for the continued growth of the
      Group by increasing its profile and assisting in increasing the liquidity of the Company’s shares.

4.    KEY STRENGTHS
The Directors believe that the Group is particularly well positioned to take advantage of the current            A1/6.5

opportunities in the market because:
•     Hansteen ’s senior management have proven ability in industrial property in the UK. This was
      achieved not only in times of increasing property values generally but during the sharp recession of
      the early 1990s;




                                                     14
REGISTRATION DOCUMENT – PART II


•      as a well established company, Hansteen already has the personnel and infrastructure in place to invest
       in and manage properties in the UK;
•      Hansteen has the experience, knowledge, contacts and skills to identify good acquisition
       opportunities, actively manage these properties to add value, and realise that value when appropriate;
•      Hansteen has a strong balance sheet and remains conservatively geared. The stability of the existing
       Continental European business will allow the management team to focus on acquisition opportunities;
       and
•      there are currently few competing buyers for acquisitions as a result of a shortage of available capital
       and problems within potential competitors’ existing portfolios.

5.     THE PERFORMANCE RECORD OF UK INDUSTRIAL PROPERTY
The particularly strong investment case created by the current state of distress in the property markets is also
underpinned by the fact that UK industrial property has historically been an attractive investment
proposition.                                                                                                       A1/6.2


Between 1971 and 2008 (the entire period covered by IPD) UK industrial property outperformed both retail
and office in terms of total returns (Source: IPD). Over this period UK industrial property provided an
average annual total return of 12.4 per cent. compared with 11.7 per cent. for retail, 10.1 per cent. for office
and 11.0 per cent. for all properties (Source: IPD). Additionally, for each of the periods 1970-1980,
1980-1990, 1990-2000 and 1998-2008, industrial property also outperformed retail and office in terms of
total return (Source: IPD).

Furthermore, in the economic downturns of 1974 and the early 1990’s the UK industrial property sector
proved to be defensive by materially outperforming the other property sectors (Source: IPD).

The Directors believe this is partly due to industrial property representing the lowest cost form of
commercial property for occupiers and partly due to the fact that industrial properties are the most flexible
and adaptable of all commercial properties. Typical occupants include manufacturers, storage and logistics
companies, internet and home delivery retailers, back office, call centre and disaster recovery operations as
well as companies engaged in other forms of retail and leisure activity. In the Directors’ experience, in an
economic downturn, secondary industrial property can benefit from businesses seeking to reduce their
overheads, as well as from businesses carrying increased inventory.

6.    CURRENT TRADING AND PROSPECTS
The Group has started 2009 with a robust balance sheet and solid financing. Hansteen is in a strong position
to weather any further value falls and, just as importantly, has a team to take advantage of opportunities
which arise in a depressed market. There are a significant number of industrial property portfolios and
investment companies that are currently highly leveraged and which the Directors believe could provide
some significant opportunities to develop Hansteen’s business.

Hansteen’s focus for 2009 therefore will be on maintaining the occupancy and high income surplus from the
existing portfolio, prudently managing its finances and seeking ways of taking advantage of the current
downturn in the property cycle.

Since 31 December 2008, the Group has completed two further property acquisitions in Germany and
concluded two property sales (one in Germany, one in the Netherlands). In the first quarter of 2009,
Hansteen’s net occupancy has continued to improve and Hansteen’s income collection has remained robust.
The Directors however, are expecting conditions for Hansteen’s occupiers to be tough for the rest of the year.
The slow decline in property values is likely to continue in Continental Europe in 2009. However, the
Directors believe these falls will be limited due to the high yield and low capital values of its portfolio.

7.    THE BOARD
The Board comprises of the following individuals:



                                                      15
REGISTRATION DOCUMENT – PART II


•     James Daryl Hambro, aged 60 (Non-Executive Chairman)
      Mr. Hambro spent 15 years working at Hambros Bank, mostly in corporate finance and international
      debt markets and, from 1982 to 1985, as executive director responsible for international operations.
      In 1986 he became a founder shareholder of J.O. Hambro & Co and in 1988 a founder and joint
      managing director of J.O. Hambro Magan, the corporate finance boutique. Mr. Hambro is chairman
      of J.O. Hambro Capital Management Limited and a director of Primary Health Properties PLC and
      Singer & Friedlander AIM II VCT. He was non-executive chairman of Ashtenne from 1997 until 16
      May 2005.

•     Morgan Lewis Jones, aged 51 (Joint Chief Executive)
      Mr. Jones is a chartered accountant who qualified with Touche Ross & Co in 1984 prior to becoming
      a management consultant in that firm’s consultancy division. He joined Arlington Securities plc in
      1986 as a development executive, and in 1989 left to set up Ashtenne’s business with Ian Watson. Mr.
      Jones was joint chief executive of Ashtenne from 1989 until its successful sale.

•     Ian Richard Watson, aged 49 (Joint Chief Executive)
      Mr. Watson qualified as a solicitor with Gouldens in 1984. In 1986 he became a development
      executive at Arlington Securities plc and left in 1989 to set up Ashtenne’s business with Morgan Jones.
      He was joint chief executive of Ashtenne from 1989 until its successful sale.

•     Stephen Trevor Gee, aged 65 (Non-Executive Director)
      A chartered accountant, Mr. Gee worked for several years in the financial sector. He was co-founder
      and a director of My Kinda Town Plc, the restaurant and bar group, from 1977 to 1997. He was
      subsequently a co-founder and is chairman of Carluccio’s Plc, the Italian restaurant and food shop
      group. He was a non-executive director of Ashtenne from 1990 until 2005.

•     Richard Stephen Mully, aged 47 (Non-Executive Director)
      Mr. Mully is managing partner of Grove International Partners (UK) Limited, an international real
      estate private equity firm currently managing about $5 billion of funds. Prior to co-founding Grove in
      2004, Mr. Mully was managing partner of Soros Real Estate Partners LLC from 1999. He had
      previously spent 17 years in various senior investment banking roles. Mr. Mully currently also serves
      as a non-executive director of Spazio Investments N.V., admitted to AIM, and Alstria Office REIT-
      AG, listed on the prime standard market of the Frankfurt Stock Exchange.

8.    PORTFOLIO VALUATION
The Valuation Report set out in Part VI of this document contains an independent valuation of the Group’s         CESR 130(vi)

property portfolio as of 31 May 2009. As at this date, the Group’s property portfolio was valued at €495m
(excluding development land). This represents a 2.75 per cent. decline relative to the portfolio value as at 31
December 2008 of €509m (excluding development land). Since 31 December 2008 the Group has sold two
properties for a total of €6.4m and bought two properties for a total of €7.7m. Occupancy within the Group’s
properties has increased slightly since 31 December 2008. The Directors therefore believe that the main
reason for the decline in the value of the Group’s portfolio since 31 December 2008 is the fall in capital
values within the European industrial property market in general. However, the Directors believe that further
falls in the value of the Group’s portfolio will be limited due to the high yield and low capital values.
As at 23 June 2009, there has been no material change in the valuation of the property portfolio of the Group
since 31 May 2009.

9.    CORPORATE GOVERNANCE
As the Ordinary Shares are traded on AIM, the Company is not obliged to comply with UK corporate
governance rules and regulations contained in The Combined Code on Corporate Governance (the
“Combined Code”). Nonetheless, the Board does have regard to the provisions of the Combined Code and
seeks to comply with it so far as the Board considers practicable (taking into account the size, structure and



                                                      16
REGISTRATION DOCUMENT – PART II


resources of the Company). Please see paragraph 9.2 of Part VII of this document for further information on
the Company’s corporate governance policies.

10.   ADDITIONAL INFORMATION
Your attention is drawn to the additional information on the Group set out in Parts III to VII of this document
and to the Property Valuation Report set out in Part VI of this document.




                                                      17
REGISTRATION DOCUMENT – PART III



                                                    PART III

      SELECTED HISTORICAL AND FINANCIAL OPERATING DATA                                                         A1/3.1
                                                                                                               A1/3.2

The data for the financial years ended 31 December 2008, 31 December 2007 and 31 December 2006 set out
below have been extracted without material adjustment from, and should be read together with, the Group’s
audited consolidated financial statements for the financial years ended 31 December 2008, 31 December
2007 and 31 December 2006, which are set out in full at Part V of this document, and the information
contained in the “Operating and Financial Review” set out at Part IV of this document.

Consolidated income statement
                                                                                                 Period from
                                                                                                  27 October
                                                                  Year ended      Year ended         2005 to
                                                                31 December     31 December     31 December
                                                                        2008            2007            2006
                                                       Note            £’000           £’000           £’000
Continuing operations
Revenue                                                     1     34,884          18,400          16,012
Cost of sales                                                     (8,174)         (1,751)         (8,395)
                                                                —————           —————           —————
Gross profit                                                      26,710          16,649           7,617
Administrative expenses                                           (3,934)         (4,159)         (2,847)
                                                                —————           —————           —————
Operating profit before losses and gains on
investment properties and before gain on sale
of subsidiary                                                        22,776          12,490           4,770
(Losses)/gains on investment properties                     2        (41,655)        19,614          14,789
Gain on sale of subsidiary                                            161              –               –
                                                                —————           —————           —————
Operating (loss)/profit                                           (18,718)        32,104          19,559
(Losses)/gains on forward currency contracts                         (45,006)        (11,014)         1,304
Finance income                                                      2,111          1,649           1,996
Finance costs                                                     (13,050)        (4,549)           (490)
Change in fair value of interest rate derivatives                  (4,579)           238              13
Foreign exchange gains/(losses)                                    18,299          1,946            (260)
                                                                —————           —————           —————
(Loss)/profit before tax                                          (60,943)        20,374          22,122
Tax                                                         3       1,388         (6,799)         (6,792)
                                                                —————           —————           —————
(Loss)/profit for the year/period                                 (59,555)        13,575          15,330
                                                                —————           —————           —————
Attributable to:
Equity holders of the parent                                      (59,571)        13,472          15,330
Minority interests                                                     16            103               –
                                                                —————           —————           —————
(Loss)/profit for the year/period                                 (59,555)        13,575          15,330
                                                                —————           —————           —————
Earnings per share
Basic                                                              (33.4)p         8.1p            13.3p
                                                                —————           —————           —————
Diluted                                                            (33.4)p         8.1p            13.3p
                                                                —————           —————           —————




                                                       18
REGISTRATION DOCUMENT – PART III


Consolidated balance sheet
                                                          31 December   31 December   31 December
                                                                 2008          2007          2006
                                                 Note           £’000         £’000         £’000
Non-current assets
Goodwill                                                      2,241         2,252             –
Property, plant and equipment                                    32            31            28
Investment property                                   4     492,357       391,242       139,593
Investment property held for sale                     5           –        15,417             –
Deferred tax asset                                                –         2,885             –
Derivative financial instruments                                273           379         1,434
                                                          —————         —————         —————
                                                            494,903       412,206       141,055
                                                          —————         —————         —————
Current assets
Trading properties                                            2,750         5,260         5,151
Trade and other receivables                                   5,831         3,781         2,485
Cash and cash equivalents                                    80,240        19,562        14,395
Derivative financial instruments                             13,747             –             –
                                                          —————         —————         —————
                                                            102,568        28,603        22,031
                                                          —————         —————         —————
Total assets                                                597,471       440,809       163,086
                                                          —————         —————         —————
Current liabilities
Trade and other payables                                     (9,919)       (6,916)      (3,333)
Current tax liabilities                                      (4,907)       (2,563)      (1,675)
Borrowings                                                     (926)       (2,579)           –
Obligations under finance leases                               (372)         (279)           –
Derivative financial instruments                            (68,407)            –            –
                                                          —————         —————         —————
                                                            (84,531)      (12,337)      (5,008)
                                                          —————         —————         —————
Non-current liabilities
Borrowings                                                 (280,318)     (166,957)      (15,689)
Obligations under finance leases                             (4,071)       (3,218)            –
Derivative financial instruments                             (4,509)       (9,710)            –
Deferred tax liabilities                                    (10,678)      (17,194)       (4,517)
                                                          —————         —————         —————
                                                           (299,576)     (197,079)      (20,206)
                                                          —————         —————         —————
Total liabilities                                          (384,107)     (209,416)      (25,214)
                                                          —————         —————         —————
Net assets                                                  213,364       231,393       137,872
                                                          —————         —————         —————
Equity
Share capital                                                17,843        17,843        12,500
Share premium account                                       114,312       174,312       111,133
Translation reserve                                          60,483        13,287        (1,142)
Retained earnings                                            19,907        25,772        15,381
                                                          —————         —————         —————
Equity attributable to equity holders of the parent         212,545       231,214       137,872
Minority interest                                               819           179             –
                                                          —————         —————         —————
Total equity                                                213,364       231,393       137,872
                                                          —————         —————         —————




                                                 19
REGISTRATION DOCUMENT – PART III


Statement of changes in equity                      Share       Share Translation   Retained
                                                   capital   premium     reserves   earnings     Total
                                                    £’000       £’000      £’000       £’000    £’000
Exchange differences arising on translation of
overseas operations                                  –    – (1,581)      – (1,581)
Tax on items taken directly to equity               –    –     439       –    439
                                                 ———— ———— ———— ———— ————
Net loss recognised directly in equity               –    – (1,142)      – (1,142)
Profit for the period                                –    –      –  15,330 15,330
                                                 ———— ———— ———— ———— ————
Total recognised income and expense
for the period                                         –       –  (1,142) 15,330  14,188
Ordinary shares issued at a premium               12,500 112,500       –       – 125,000
Cost of issue of shares at a premium                   –  (1,367)      –       –  (1,367)
Share-based payments                                   –       –       –      51      51
Equity shareholders’ funds at 27 October 2005          –       –       –       –       –
                                                 ———— ———— ———— ———— ————
Equity shareholders’ funds at
31 December 2006                                  12,500 111,133 (1,142) 15,381 137,872
                                                 ———— ———— ———— ———— ————
Exchange differences arising on translation
of overseas operations                               –    – 16,143       – 16,143
Tax on items taken directly to equity               –    –  (1,714)      – (1,714)
                                                 ———— ———— ———— ———— ————
Net gain recognised directly in equity               –    – 14,429       – 14,429
Profit for the year                                  –    –      –  13,472 13,472
                                                 ———— ———— ———— ———— ————
Total recognised income and expense
for the year                                           –       –  14,429  13,472   27,901
Ordinary shares issued at a premium                5,343  64,657       –       –   70,000
Cost of issue of shares at a premium                   –  (1,478)      –       –   (1,478)
Share-based payments                                   –       –       –     669      669
Dividends paid                                         –       –       –  (3,750)  (3,750)
Equity shareholders’ funds at 1 January 2007      12,500 111,133  (1,142) 15,381  137,872
                                                 ———— ———— ———— ———— ————
Equity shareholders’ funds at
31 December 2007                                  17,843 174,312 13,287 25,772 231,214
                                                 ———— ———— ———— ———— ————
Exchange differences arising on translation
of overseas operations                                  –          –      45,710          –    45,710
Tax credit on items taken directly to equity            –          –       1,275          –     1,275
Translation differences recognised on sale
of subsidiary                                        –    –    211       –      211
                                                 ———— ———— ———— ———— ————
Net gain recognised directly in equity               –    – 47,196       –   47,196
Loss for the year                                    –    –      – (59,571) (59,571)
                                                 ———— ———— ———— ———— ————
Total recognised income and expense
for the year                                           –       –  47,196 (59,571) (12,375)
Reduction of share premium account                     – (60,000)      –  60,000        –
Costs of reduction of share premium account            –       –       –     (22)     (22)
Share-based payments                                   –       –       –    (562)    (562)
Dividends paid                                         –       –       –  (5,710)  (5,710)
Equity shareholders’ funds at 1 January 2008      17,843 174,312  13,287  25,772  231,214
                                                 ———— ———— ———— ———— ————
Equity shareholders’ funds at
31 December 2008                                  17,843 114,312 60,483 19,907 212,545
                                                 ———— ———— ———— ———— ————



                                                   20
REGISTRATION DOCUMENT – PART III


Cash flow statement
                                                                                            Period from
                                                                                             27 October
                                                               Year ended     Year ended        2005 to
                                                             31 December    31 December    31 December
                                                                     2008           2007           2006
                                                  Note              £’000          £’000          £’000
Group
Net cash inflow from operating activities              6       17,925          8,475          292
                                                             —————          —————          —————
Investing activities
Interest received                                                2,111          1,649          1,996
Additions to property, plant and equipment                         (25)           (19)           (39)
Additions to investment properties                             (30,461)      (193,367)      (126,823)
Proceeds on sale of investment properties                       22,659            460            118
Acquisition of subsidiaries                                          –        (12,339)             –
Disposal of subsidiaries                                           531              –              –
                                                             —————          —————          —————
Net cash used in investing activities                           (5,185)      (203,616)      (124,748)
                                                             —————          —————          —————
Financing activities
Dividend paid                                                   (5,710)        (3,750)             –
Proceeds from issue of shares at a premium net of expenses           –         68,522        123,633
Costs of reduction of share premium account                        (22)             –              –
Repayments of obligations under finance leases                    (138)           (30)             –
New bank loans raised (net of expenses)                        165,839        132,800         15,335
Bank loans repaid                                             (114,566)             –              –
(Reduction)/increase in bank overdrafts                         (2,041)         1,826              –
Additions to derivative financial instruments                     (464)           (71)          (117)
Capital contribution from minority shareholders                    493             69              –
Dividend paid to minority shareholders                             (14)             –              –
                                                             —————          —————          —————
Net cash from financing activities                              43,377        199,366        138,851
                                                             —————          —————          —————
Net increase in cash and cash equivalents                       56,117          4,225         14,395
Cash and cash equivalents at beginning of year/period          19,562         14,395              –
Effect of foreign exchange rates                                4,561            942              –
                                                             —————          —————          —————
Cash and cash equivalents at end of year/period                80,240         19,562         14,395
                                                             —————          —————          —————




                                                  21
REGISTRATION DOCUMENT – PART III


NOTES TO THE FINANCIAL STATEMENTS

1.      Revenue
                                                                                            Period from
                                                                                             27 October
                                                               Year ended     Year ended        2005 to
                                                             31 December    31 December    31 December
                                                                     2008           2007           2006
                                                                    £’000          £’000          £’000
Property rental income                                         34,884         18,400          7,760
Proceeds from disposal of trading properties                        –              –          8,252
                                                             —————          —————          —————
                                                               34,884         18,400         16,012
                                                             —————          —————          —————
Interest receivable on bank deposits                            2,074          1,599          1,977
Other interest receivable                                          37             50             19
                                                             —————          —————          —————
                                                                2,111          1,649          1,996
                                                             —————          —————          —————
Total                                                          36,995         20,049         18,008
                                                             —————          —————          —————

2.      (Losses)/gains on investment properties
                                                                                            Period from
                                                                                             27 October
                                                               Year ended     Year ended        2005 to
                                                             31 December    31 December    31 December
                                                                     2008           2007           2006
                                                                    £’000          £’000          £’000
(Decrease)/increase in fair value of investment properties     (41,989)       19,595         14,759
Profit on disposal of investment properties                        334            19             30
                                                             —————          —————          —————
                                                               (41,655)       19,614         14,789
                                                             —————          —————          —————

3.      Tax
                                                                                            Period from
                                                                                             27 October
                                                               Year ended     Year ended        2005 to
                                                             31 December    31 December    31 December
                                                                     2008           2007           2006
                                                                    £’000          £’000          £’000
UK current tax
On net income of the current period                             6,444          1,024          1,665
Charge in respect of prior periods                              1,629              –              –
                                                             —————          —————          —————
                                                                8,073          1,024          1,665
                                                             —————          —————          —————
Foreign current tax
On net income of the current period                             1,368          1,242            566
Credit in respect of prior periods                             (2,300)             –              –
                                                             —————          —————          —————
                                                                 (932)         1,242            566
                                                             —————          —————          —————
Total current tax                                               7,141          2,266          2,231
Deferred tax                                                   (8,529)         4,533          4,561
                                                             —————          —————          —————
Total tax (credit)/charge                                      (1,388)         6,799          6,792
                                                             —————          —————          —————




                                                     22
REGISTRATION DOCUMENT – PART III


4.    Investment property
                                                     31 December   31 December   31 December
                                                            2008          2007          2006
                                                           £’000         £’000         £’000
At 1 January                                           391,242       139,593             –
Additions – property purchases                          29,758       196,705       126,137
           – capital expenditure                           562           689           244
Acquisition of subsidiaries                                  –        36,847             –
Revaluations included in income statement              (41,956)       19,595        14,759
Disposal of subsidiary                                  (2,668)            –             –
Disposals                                               (4,979)         (440)          (88)
Transfer to investment property held for sale                –       (15,417)            –
Exchange adjustment                                    120,398        13,670        (1,459)
                                                     —————         —————         —————
At 31 December                                         492,357       391,242       139,593
                                                     —————         —————         —————

5.    Investment property held for resale
                                                     31 December   31 December   31 December
                                                            2008          2007          2006
                                                           £’000         £’000         £’000
At 1 January                                            15,417            –          –
Additions – capital expenditure                            141            –          –
Transfer from investment property                            –       15,417           –
Revaluations included in income statement                  (33)           –           –
Disposals                                              (17,345)           –          –
Exchange adjustment                                      1,820            –          –
                                                     —————         —————         —————
At 31 December                                               –       15,417          –
                                                     —————         —————         —————




                                                23
REGISTRATION DOCUMENT – PART III


6.    Net cash flow from operating activities
                                                                                     Period from
                                                                                      27 October
                                                       Year ended      Year ended        2005 to
                                                     31 December     31 December    31 December
                                                             2008            2007           2006
                                                            £’000           £’000          £’000
(Loss)/profit for the year/period                         (59,555)        13,575         15,330
Adjustments for:
Share-based employee remuneration                        (562)             669             51
Depreciation of property, plant and equipment              24               16             10
Impairment of trading properties                        2,802                –              –
Losses/(gains) on investment properties                41,655          (19,614)       (14,789)
Gain on sale of subsidiary                               (161)               –              –
Losses on forward currency contracts                   45,006           11,014         (1,304)
Net finance income/(costs)                              6,678            1,720         (1,259)
Tax                                                    (1,388)           6,799          6,792
                                                     —————           —————          —————
Operating cash inflows before movements in
working capital                                           34,499          14,179          4,831
Increase in trading properties                           (292)           (109)        (5,151)
Increase in receivables                                  (305)         (1,107)        (2,255)
Increase in payables                                      764           2,908          3,334
                                                     —————           —————          —————
Cash generated by operations                           34,666          15,871            759
Income taxes paid                                       (4,339)        (3,559)         (330)
Interest paid                                          (12,402)        (3,837)         (137)
                                                     —————           —————          —————
Net cash inflow from operating activities               17,925          8,475           292
                                                     —————           —————          —————




                                                24
REGISTRATION DOCUMENT – PART IV



                                                 PART IV

                       OPERATING AND FINANCIAL REVIEW                                                               A1/9.1



The following operating and financial review should be read in conjunction with (i) the Section entitled
“selected historical financial and operating data” and (ii) the Group’s audited financial statements,
including the notes to those financial statements, included in this document. Certain statements in this
Section are “forward-looking” statements and should be read in conjunction with the disclaimer “Forward-
looking information” on page 10 of this document.

1.     Overview
In its AIM admission document, Hansteen stated that its business strategy was to provide investors with
consistent, high and realised returns. It was envisaged that this would be achieved through acquisition of
properties over time to create a high yielding property portfolio in Continental Europe. This was combined
with other more opportunistic and management intensive acquisitions which, while lower yielding would
provide greater capital growth potential.

The strategy for Hansteen was derived from Ian Watson and Morgan Jones’ previous experience in the UK
industrial property market, which had performed well but by 2005 was characterised by unrealistically high
prices leading to their decision to exit the UK, via the sale of Ashtenne Holdings Plc.

Since inception, the Group has built up a substantial portfolio of assets in Germany, the Netherlands,
Belgium and France in line with its stated strategy.

As at 31 December 2008, Hansteen had a portfolio comprising 942,000 square metres of property with a
value of €512 million (including development land) producing an annual rent roll of €42.9 million,
representing an initial yield of 8.4 per cent. (reversionary yield of 9.5 per cent.) and including 134,000 square
metres of lettable vacant space, 117 acres of development land and a small residential portfolio.

Whilst the Continental European industrial property market has been affected by the global credit crisis,
Hansteen has, nonetheless, produced positive results since inception, showing Normalised Profit growth and
an increase in EPRA NAV per share from 99p at inception to 128p at 31 December 2008. As a result the
Company paid its first dividend in May 2007 and has continued to pay a dividend each year thereafter.

2.     Key factors affecting results of operations
Set out below is a description of material factors that the Directors believe have had, and may continue to         A1/9.2.1

have, a material impact on the results of the Company’s operations.

2.1    The investment market for industrial property in each European market
       Changes in the general economic environment exposes the Group to a number of external factors
       including variation in the value of its property investments, loss of rental income and increased vacant
       property costs due to the failure of tenants to renew or extend leases, as well as the increased potential
       for tenants to become bankrupt. The Board believes these risks are reduced due to its policy of
       assembling a portfolio with a wide spread of different tenancies in terms of actual tenants, industry
       type and geographical location, as well as undertaking thorough due diligence on acquisitions.

       One of the initial attractions to Hansteen of the industrial property investment market in Continental
       Europe was that it was a relatively new market with few specialist operators.

       Compared to the UK a higher proportion of industrial property in Continental Europe has been owner
       occupied with a few investments held by local private investors. In addition, rent levels in Continental
       Europe tend to be lower than those in the UK and are at levels which make speculative development
       uneconomical. As a result, the broad spectrum of industrial investments tend to be local, high yielding
       and with low capital values.



                                                       25
REGISTRATION DOCUMENT – PART IV


      In the last three years there has been more activity through sale and lease backs and purchases by three
      UK, or Australian-backed, businesses resulting in a marginal yield compression. As the credit crisis
      has unfolded, these three specialist competitors have withdrawn and yields have returned to their more
      traditional levels.

      Whilst in the short term yields may continue to increase, the Directors believe that the industrial sector
      is now more widely accepted and that given the large yield gap over the cost of money the medium
      term outlook for the industrial property market remains very positive.

2.2   The occupier demand for industrial property
      The occupier demand for industrial property generally will depend on the Continental European
      economies. Whilst the outlook for the global economy remains uncertain there are aspects of the
      warehouse market which are likely to mitigate the effects of any downturn. Low rents and capital
      values means that the supply of property has been constrained, offering occupiers fewer alternatives.

      The Directors believe that the factors which led to industrial property being resilient in the UK during
      previous downturns are also likely to be factors in Continental Europe. Industrial space is cheap and
      flexible attracting businesses focussed on cost saving in hard times. Often the warehouse is
      fundamental to a business in a way that offices or shops may not be.

      Despite the current difficulties, Hansteen has seen net occupancy improvement in the three financial
      periods to 31 December 2008.

2.3   Management ability to identify good acquisition opportunities and asset manage the properties to
      add value
      Hansteen has identified, at an early stage, that better value in Continental Europe could be achieved
      by buying individual assets from local owners compared to making large portfolio purchases. Since
      inception, the portfolio has been created through 68 individual acquisitions and has been improved
      through reducing vacancy and opportunistic sales.

2.4   Optimum and appropriate financing of the business
      Given the properties’ high yields compared to interest costs, a level of gearing can enhance returns to
      investors. The ability to access debt is therefore important. However, should the level of gearing be
      too high and the value of the property falls there is the danger of breaching bank covenants and/or
      loan defaults, and thus ultimately jeopardising the entire business.

      The Group has been able to obtain bank gearing which enhances its returns and the level of gearing
      has been prudent at around 50 per cent. net debt to value.

2.5   Currency fluctuations
      By investing in property in Continental Europe, the Group is exposed to foreign currency exchange
      rate risk. In response to this risk the Group’s borrowings are in Euro-denominated loan facilities and,
      therefore, to the extent that investments are financed by debt, a self-hedging mechanism is in place.
      In relation to the equity element of the Group’s investments, the Board monitors the level of exposure
      on a regular basis and considers the level and timing of when to take out the appropriate hedging
      instruments to cover this exposure.

3.    Analysis of results of operations
The following table summarises the Group’s consolidated results for the three financial years ended
31 December 2006, 2007 and 2008.




                                                      26
REGISTRATION DOCUMENT – PART IV


Income Statement Data
                                                                                                                  Period from
                                                                                                                   27 October
                                                                          Year ended           Year ended             2005 to
                                                                        31 December          31 December         31 December
                                                                                2008                 2007                2006
                                                                               £’000                £’000               £’000
Revenue                                                                      34,884               18,400              16,012
Cost of sales                                                                (8,174)              (1,751)             (8,395)
                                                                            ————                 ————                ————
Gross profit                                                                 26,710               16,649               7,617
Administrative expenses                                                      (3,934)              (4,159)             (2,847)
                                                                            ————                 ————                ————
Operating profit before losses and gains on
  investment properties and before gain on
  sale of subsidiary                                                          22,776               12,490              4,770
(Losses)/gains on investment properties                                      (41,655)              19,614             14,789
Gain on sale of subsidiary                                                       161                     –                 –
                                                                            ————                 ————                ————
Operating (loss)/profit                                                      (18,718)              32,104             19,559
(Losses)/gains on forward currency contracts                                 (45,006)             (11,014)             1,304
Finance income                                                                 2,111                1,649              1,996
Finance costs                                                                (13,050)              (4,549)              (490)
Change in fair value of interest rate derivatives                             (4,579)                 238                 13
Foreign exchange gains/(losses)                                               18,299                1,946               (260)
                                                                            ————                 ————                ————
(Loss)/profit before tax                                                     (60,943)              20,374             22,122
Tax                                                                            1,388               (6,799)            (6,792)
                                                                            ————                 ————                ————
(Loss)/profit for the year/period                                            (59,555)              13,575             15,330
                                                                            ————                 ————                ————
Dividend paid per share (p)                                                       3.2                  3.0                 0
                                                                            ————                 ————                ————
Net assets per share (p)                                                         119                  130                110
Diluted EPRA net assets per share (p)*                                           128                  138                114
                                                                            ————                 ————                ————
*   Diluted EPRA net assets per share takes into consideration the dilution through any share options and adding back deferred tax
    on the valuation of investment properties.

In addition to the IFRS measures, the Group has presented a normalised profit measure as a supplementary
measure of its performance. Normalised Profit is stated before gains and losses on investment properties,
gain on sale of subsidiary, gains and losses on forward currency contracts and foreign exchange and changes
in fair value of interest rate derivatives, as follows:

                                                                                                                  Period from
                                                                                                                   27 October
                                                                          Year ended           Year ended             2005 to
                                                                        31 December          31 December         31 December
                                                                                2008                 2007                2006
                                                                               £’000                £’000               £’000
Revenue                                                                       34,884              18,400              16,012
Cost of sales                                                                 (8,174)             (1,751)             (8,395)
Administrative expenses                                                       (3,934)             (4,159)             (2,847)
Finance income                                                                 2,111               1,649               1,996
Finance costs                                                                (13,050)             (4,549)               (490)
                                                                            ————                 ————                ————
Normalised Profit                                                             11,837               9,590               6,276
                                                                            ————                 ————                ————




                                                               27
REGISTRATION DOCUMENT – PART IV


3.1   Revenue
      The Company’s revenue principally relates to property rental income. Revenue increased from £16.0
      million in 2006 to £34.9 million in 2008. This increase was primarily attributable to property
      acquisitions added to the portfolio over the three year period and the increase in rent from improved
      occupancy through lettings, as well as annual indexation of rents.                                         A1/9.2.2


      The portfolio growth is demonstrated by the table below showing the number of square metres of
      property owned and its value at 31 December 2006, 2007 and 2008:

                                                                      2008             2007             2006
      Property owned (sqm)                                     942,367        875,511         365,544
                                                             ————            ————           ————
      Property value (£m)                                        495.1          411.9           145.6
                                                             ————            ————           ————
      The Company’s property portfolio is diverse and high yielding. At 31 December 2008 it comprised
      106 blocks of property spread over the Netherlands, Germany, Belgium and France. 14 per cent. of
      the portfolio comprises vacant but lettable space which the Directors believe will provide the
      opportunity to continue the income growth.

      The Company’s property operations are located in Belgium, France, Germany, the Netherlands and
      the United Kingdom. The following table provides an analysis of the Company’s revenue by
      geographical market:

                                                                                                 Period from
                                                                                                  27 October
                                                               Year ended       Year ended           2005 to
                                                             31 December      31 December       31 December
                                                                     2008             2007              2006
                                                                    £’000            £’000             £’000
      Belgium                                                       3,495             946                  0
      France                                                        1,863           1,145               429
      Germany                                                      16,212           7,960             2,077
      the Netherlands                                              13,314           8,349            13,149
      United Kingdom                                                    –                –              357
                                                                 ————           ————             ————
                                                                   34,884          18,400            16,012
                                                                 ————           ————             ————
      In each of the Continental European markets that Hansteen operates, its business activity has steadily
      increased following the commencement of business in 2005. This reflects the steady investment of the
      Company’s capital and debt resources. In 2006, Hansteen traded in some properties in the UK but has
      elected to stay out of that market until market conditions improve.

3.2   Gross profit
      Gross profit increased from £7.6 million in 2006 to £26.7 million in 2008. The growth in gross profit
      reflects the steady increase in size of the property portfolio and the rental returns generated by those
      properties.

3.3   Administrative expenses
      Administrative expenses were £2.8 million, £4.2 million and £3.9 million for the years ended
      31 December 2006, 2007 and 2008, respectively.

      The increase reflects the growth in staffing needed to manage the increasing portfolio size. The
      decrease in 2008 reflects a share based payments credit in relation to the Directors’ long term
      incentive plan. Since inception, the Hansteen team has grown from two to 23, most recently including
      the lead managers of the Ashtenne Industrial Fund.




                                                     28
REGISTRATION DOCUMENT – PART IV


3.4   (Losses)/gains on investment properties
      Losses/gains on investment properties have fluctuated from a £14.8 million profit in 2006, to a £19.6
      million profit in 2007 and a £41.6 million loss in 2008.

      In the first two financial years the Group’s acquisitions were largely made off-market at good prices
      when values were increasing. In 2008, the property market generally experienced value reductions
      and these were reflected within its portfolio.

3.5   (Losses)/gains on forward currency contracts
      Losses/gains on forward currency contracts have fluctuated from a £1.3 million profit in 2006, to a
      £11.0 million loss in 2007 and a £45.0 million loss in 2008.

      Gains and losses on the forward currency contracts result from the change in value of the Euro against
      Sterling. Hansteen’s properties are purchased and valued in Euros and therefore currency movements
      are reflected in the Sterling values in the balance sheet. In 2006, 2007 and 2008 Hansteen entered into
      forward currency contracts to hedge against the currency risk. Fair value changes in the forward
      currency contract are shown in the consolidated income statement. The loss is generated as a result of
      the strengthening of the Euro and the weakening of Sterling.

      In December 2008, owing to the rapid devaluation of Sterling the currency hedging contract that the
      Company entered into in 2006 started to present an unacceptable potential cash drain on the business.
      Hansteen acted swiftly to effectively close the contract at a one-off cash cost of €57.6 million, which
      is due to be settled in July 2009. The Board will, however, continue to monitor the appropriate
      hedging policy.

3.6   Finance cost (net)
      Net finance cost increased from £1.5 million income in 2006 to £10.9 million cost in 2008. The
      growing cost reflects the increase in borrowing undertaken to finance a growing property portfolio.

3.7   Change in fair value of interest rate derivatives
      Fair value of interest rate derivatives have fluctuated from a small gain in 2006, to a £0.2 million gain
      in 2007 and a £4.6 million loss in 2008. The interest rate derivatives are a combination of swaps and
      caps. Broadly, an increase in the EURIBOR rates means the Group’s hedging instruments increase in
      value whereas a reduction in rates leads to a fall in their value. The movements noted above reflect
      the changes in the EURIBOR rates over the relevant period.

3.8   Foreign exchange gains/(losses)
      Foreign exchange gains/losses have fluctuated from a £0.3 million loss in 2006, to a £1.9 million gain
      in 2007 and a £18.3 million gain in 2008. These gains and losses have been realised on inter-company
      loans and are subject to movements in the amounts of the loans and currency rates.

3.9   Loss/profit before tax
      Loss/profit before tax has fluctuated from a £22.1 million profit in 2006, to a £20.4 million profit in
      2007 and a £60.9 million loss in 2008.

      As set out below, Normalised Profit, which excludes fair valuations, has increased steadily. However,
      the IFRS accounting requirements are to include fair valuation adjustments as detailed above. This has
      produced the large fluctuations in the Group’s profit/loss before tax.

3.10 Taxation
      Taxation has fluctuated from a £6.8 million charge in 2006 and a £6.8 million charge in 2007 to a
      £1.4 million credit in 2008. The charges in the first two years reflected the profitability of the business
      as well as the property value and currency gains. The credit in 2008 was smaller than expected mainly



                                                      29
REGISTRATION DOCUMENT – PART IV


       due to additional deferred tax provided on gains on investment properties caused by movements in
       exchange rates.

3.11 Net assets per share
       Net asset value per share has fluctuated from 114p in 2006, to 138p in 2007 and 128p in 2008. Net
       asset values per share initially rose with retained profit and increased property values. The reduction
       in 2008 reflected a fall in the valuation of the property portfolio.

3.12 Normalised Profit
       Normalised Profit increased from £6.3 million in 2006 to £11.8 million in 2008.

       Normalised Profit is a traditional method of measuring the business profitability. As the portfolio has
       grown the income generated from the properties has increased faster than the costs. High property
       yields, vigorous management and lowering interest costs have resulted in the growth of the business
       increasing the profitability.

4.     Balance sheet analysis
The following table summarises the Group’s balance sheet as at 31 December 2006, 2007 and 2008.

Balance Sheet Data                                                    2008             2007              2006
                                                                     £’000            £’000             £’000
Goodwill                                                            2,241            2,252                –
Investment property                                               492,357          406,659          139,593
Trading properties                                                  2,750            5,260            5,151
Cash and cash equivalents                                          80,240           19,562           14,395
Derivative financial assets and liabilities (net)                 (58,896)          (9,331)           1,434
Borrowings                                                       (281,244)        (169,536)         (15,689)
Other assets and liabilities (net)                                (24,084)         (23,473)          (7,012)
                                                                 ————             ————             ————
Net assets                                                        213,364          231,393          137,872
                                                                 ————             ————             ————
Net assets per share (p)                                              119              130              110
Diluted EPRA net assets per share (p)*                                128              138              114
                                                                 ————             ————             ————

4.1    Goodwill
       Goodwill was £nil in 2006, £2.3 million in 2007 and £2.2 million in 2008.

       The goodwill arose on the acquisition on 31 August 2007 of a portfolio of Belgian subsidiary
       companies. Hansteen tests goodwill annually for impairment or more frequently if there are
       indications that goodwill might be impaired.

4.2    Investment and trading properties
       Investment and trading properties were £144.7 million in 2006, £411.9 million in 2007 and
       £495.1 million in 2008.

       Growth in the property portfolio reflects the acquisition programme undertaken by Hansteen since its
       inception. The movement also reflects revaluations provided by the independent valuer. In the first
       two years revaluations were upward whereas in 2008 the values saw a 10 per cent. decline.

4.3    Cash and cash equivalents
       Cash and cash equivalents were £14.4 million in 2006, £19.6 million in 2007 and £80.2 million in
       2008. Included in cash and cash equivalents at 31 December 2008 is an amount of £47.9 million held
       on interest-bearing deposit at Merrill Lynch International Bank Limited as collateral security for
       forward currency contracts due to mature on 27 July 2009.




                                                     30
REGISTRATION DOCUMENT – PART IV


      The level of cash and cash equivalents reflects the deployment of the Company’s capital, the use of
      borrowings and cash generated from operations. Cash movements are discussed in more detail below
      in section 5.

4.4   Derivative financial assets and liabilities (net)
      Net derivative financial assets and liabilities was a £1.4 million asset in 2006, a £9.3 million liability
      in 2007 and a £58.9 million liability in 2008.

      The liability in 2008 resulted from the fair valuation and closure of the forward currency contract.
      Details of the movement are set out in section 3 above and in risk analysis below.

4.5   Borrowings
      Borrowings were £15.7 million in 2006, £169.5 million in 2007 and £281.2 million in 2008.

      The borrowings have increased to finance the growth in the business. Further details regarding our
      borrowing facilities and borrowing policy are set in section 5 below.

4.6   Other assets and liabilities (net)
      Net other assets and liabilities were £7.0 million in 2006, £23.5 million in 2007 and £24.1 million in
      2008.

      Other assets and liabilities comprise operating debtors and creditors along with deferred taxation.

5.    Capital resources and liquidity

5.1   Overview
      Hansteen finances its operations through a combination of Shareholders’ equity, retained profits and          A1/10.1

      borrowings. In relation to equity Hansteen has undertaken two share issues to date:                           A1/10.2
                                                                                                                    A1/10.3
      (A)    initial equity raising on 29 November 2005 raised £123.6 million net; and
      (B)    secondary raising on 23 March 2007 raised £68.5 million net.

      Profits have been partially distributed as dividends (see paragraph 6 below) and the balance re-
      invested into the expansion of Hansteen.

      Prudent borrowings have been employed by the Group as the portfolio has expanded. Net loan to
      value was 1 per cent. in 2006, 36 per cent. in 2007 and 51 per cent. in 2008.

      At 31 December 2008 there were bank borrowings and finance lease obligations of £285.7 million
      (2007: £173.0 million, 2006: £15.7 million) which, along with the retained cash, resulted in net
      gearing for the Company of 96.7 per cent. or a loan to value of approximately 41.5 per cent. However,
      part of the cash balances are restricted and a true net gearing position would be 119.2 per cent. gearing
      (2007: 66.4 per cent.; 2006: 0.9 per cent.) or loan to value of 51.2 per cent. (2007: 36.3 per cent.; 2006:
      1 per cent.). Hansteen’s property portfolio and business model is strongly cash generative. As at 31
      December 2008 the properties generated an annual income of approximately 8.4 per cent. on carrying
      value, whereas Hansteen’s debt, which is approximately half the amount of the properties, has an
      average cost of 4.7 per cent. per annum.

5.2   Borrowing facilities
      Total borrowings amounted to £15.7 million in 2006, £169.5 million in 2007 and £281.2 million in              A1/10.1

      2008. All borrowings are denominated in Euros.                                                                A1/10.2
                                                                                                                    A1/10.3
      Hansteen’s borrowings fall into three broad categories:

      (A)    in the Netherlands, the Group has a new loan facility announced in June 2008 of €130 million,
             which was fully drawn at 31 December 2008. The loan is for a five year term ending in 2013


                                                      31
REGISTRATION DOCUMENT – PART IV


            and does not have a loan to value covenant. The interest cover covenant is 1.55 and at 31
            December 2008 the cover was over 2.5;
      (B)   Hansteen has a revolving bank facility with HBOS for €200 million of which €141 million was
            drawn as at 31 December 2008. This loan is a corporate facility secured on properties in
            Germany and France. This has a loan to value covenant of 70 per cent. and at 31 December
            2008 was secured on properties sufficient to give a 59 per cent. loan to value. Further properties
            are in the course of being secured which would reduce the loan to value to 55 per cent. and, if
            required, spare cash resources could be utilised, further reducing the loan to value to 50 per
            cent.; and
      (C)   the remaining debt finance is on an individual property basis in Belgium and consists of
            substantially long-term mortgage facilities without interest or loan to value covenants.

5.3   Financial covenants
      The Board has analysed the loan facilities in the light of the difficult economic environment and          A1/10.4

      falling property values. Due to the high yielding nature of the portfolio and the low interest rate
      environment along with the interest hedging instruments described further below there is a very
      significant safety margin in relation to the income covenants required by the Group’s banking
      facilities. The issue of loan to value is relevant only in relation to the HBOS loan. Hansteen will seek
      to maintain headroom with this facility through individual property sales and debt reduction.
      However, even without such sales, values would need to fall by over 20 per cent. before approaching
      the loan to value default level. The loan to value position may tighten over the next 12 months, but the
      Directors believe there is sufficient headroom to meet projections.

5.4   Treasury policy
      Hansteen’s funding policy, where borrowing is used, is to utilise prudent interest rate hedging which
      includes an element of short-term fixed interest rates and interest caps. At 31 December 2008 the
      average gross cost of borrowing for Hansteen was 4.7 per cent. and £716,000 financing costs were
      amortised in the period. The Group has four interest rate caps covering total borrowings of €150
      million. The interest rate caps are set at 4 per cent, 4.5 per cent, 4.95 per cent. and 5 per cent. The
      interest rate caps originally cost £0.6 million and were revalued in the 31 December 2008 balance
      sheet at £0.3 million.
      In addition, the Group’s hedging includes €100 million of interest rate swaps. At 31 December 2008
      there was €25 million swapped at 4.16 per cent, €25 million swapped at 4.29 per cent. and €50 million
      swapped at 4.46 per cent.

5.5   Cash flows
                                                                                                 Period from     A1/10.2

                                                                                                  27 October     A1/10.4

                                                               Year ended       Year ended           2005 to
                                                             31 December      31 December       31 December
                                                                     2008             2007              2006
                                                                    £’000            £’000             £’000
      Net cash inflow from operating activities                   17,925             8,475              292
      Net cash used in investing activities                       (5,185)         (203,687)        (124,865)
      Net cash from financing activities                          43,377           199,437          138,968
                                                                 ————             ————             ————
      Net increase in cash and cash equivalents                   56,117             4,225           14,395
      Cash and cash equivalents at beginning of year/period       19,562            14,395                –
      Effect of foreign exchange rates                             4,561               942                –
                                                                 ————             ————             ————
      Cash and cash equivalents at end of year/period             80,240            19,562           14,395
                                                                 ————             ————             ————




                                                     32
REGISTRATION DOCUMENT – PART IV


      Included in cash and cash equivalents at 31 December 2008 is an amount of £47.9 million held on
      interest-bearing deposit as collateral security for forward currency contracts due to mature on 27 July
      2009.

      Net cash inflow from operating activities represented a net inflow of £0.3 million, £8.5 million and
      £17.9 million in 2006, 2007 and 2008 respectively. These changes reflect the growth in the business,
      in particular the rental income generated from the growing portfolio.

      Net cash used in investing activities represented a net outflow of £124.9 million, £203.7 million and
      £5.2 million in 2006, 2007 and 2008 respectively. These changes reflect the Group’s programme of
      property acquisitions which were at their most active in the first two years.

      Net cash from financing activities were substantial in the first two financial years of operation
      reflecting two equity fund raisings by the Company, matched with borrowings to fund a growth in the
      business. In 2008 the net cash from financing activities reduced from £199.4 million to £43.4 million
      as there was no new equity raised and gearing only modestly increased.

6.    Dividends and dividend policy
Below is an overview of the dividends paid by Hansteen:

                                                                       2009             2008             2007
Dividend paid per share (p)                                            3.2              3.2            3.0
                                                               ————              ————          ————
The Company’s policy is to pay a prudent and progressive dividend. The properties the Group invests in are
generally high yielding and borrowing costs are currently low due to the low interest rates.

7.    Qualitative disclosure about market risk
The principal categories of market risk the Group is exposed to are foreign currency risk, interest rate risk,
credit risk and liquidity risk.

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates
and interest rates. Hansteen enters into a variety of derivative financial instruments to manage its exposure
to interest rate and foreign currency risk, including:

(A)   interest rate swaps and caps to mitigate the risk of rising interest rates; and

(B)   forward foreign exchange contracts to hedge the exchange rate risk arising on translation of the
      Group’s investment in foreign operations which have the Euro as their functional currency.

7.1   Foreign currency risk
      The Group’s exposure to foreign currency arises from the fact that there are foreign operations which
      transact business denominated in Euros, with the translation of the local trading performance and local
      net assets to Sterling for each financial period and at each balance sheet date, giving rise to an
      exposure to fluctuations in the Euro:Sterling exchange rate.

      In the past the Board has used forward currency contracts to limit exposure to the fluctuations arising
      from equity investments and will continue to monitor the position and consider appropriate hedging
      in the future. By managing the exposure the impact of translating overseas profits and assets has been
      minimal so these are not specifically hedged.

7.2   Interest rate risk
      The Group is exposed to interest rate risk as entities in Hansteen borrow funds at floating interest
      rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating
      rate borrowings, by the use of interest rate swap contracts and interest rate cap contracts.




                                                      33
REGISTRATION DOCUMENT – PART IV


7.3   Credit risk
      Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
      a financial loss to the Group.

      The Group’s principal credit risk is attributable primarily to its trade receivables which consist
      principally of rents due from tenants. Potential customers are evaluated for creditworthiness and
      where necessary collateral is secured. There is no concentration of credit risk within the portfolio to
      either geographical business segment or company as Hansteen has a well spread diverse customer
      base with no one customer accounting for more than three per cent. of the gross rent roll.

      Cash deposits are held at banks with high credit ratings assigned by international credit rating
      agencies.

7.4   Liquidity risk
      Ultimate responsibility for liquidity risk management rests with the Board of Directors, which
      monitors the Group’s short, medium and long-term funding and liquidity management requirements
      on a regular basis. Hansteen manages liquidity risk by maintaining adequate reserves, banking
      facilities and reserve borrowing facilities.

8.    Current trading, trends and prospects
      The Group has started 2009 with a robust balance sheet and solid financing. Hansteen is in a strong           A1/12.1

      position to weather any further value falls and, just as importantly, has a team to take advantage of
      opportunities which arise in a depressed market. There are a significant number of industrial property
      portfolios and investment companies that are currently highly leveraged and which the Directors               A1/12.2

      believe could provide some significant opportunities to develop Hansteen’s business.

      Hansteen’s focus for 2009, therefore, will be on maintaining the occupancy and high income surplus
      from the existing portfolio, prudently managing its finances and seeking ways of taking advantage of
      the current downturn in the property cycle.

      Since 31 December 2008, the Group has completed two further property acquisitions in Germany and
      concluded two property sales (one in Germany, one in the Netherlands). In the first quarter of 2009,
      Hansteen’s net occupancy has again improved and Hansteen’s income collection has remained robust.
      The Directors however, are expecting conditions for Hansteen’s occupiers to be tough for the rest of
      the year. The slow decline in property values is likely to continue in Continental Europe in 2009.
      However, the Directors believe these falls will be limited due to the high yield and low capital values
      of its portfolio.




                                                      34
REGISTRATION DOCUMENT – PART V



                                                 PART V

                                FINANCIAL INFORMATION
                                                                                                             A1/20.1
In relation to this Part V of the Registration Document, the financial information has been reproduced
                                                                                                             A1/20.5.1
without adjustment from the audited financial statements of Hansteen for the financial years ended
                                                                                                             A1/20.3
31 December 2006, 31 December 2007 and 31 December 2008, as originally published. Also reproduced
without adjustment is the independent auditors’ reports in relation to the audited financial statements of
Hansteen for the financial years ended 31 December 2006, 31 December 2007 and 31 December 2008, as
originally published. Both the financial information and the independent auditors’ reports have been
reproduced verbatim and, as such, page numbers and other references may no longer be valid.

(A)   YEAR ENDED 31 DECEMBER 2006

Income statement
for the period from 27 October 2005 to 31 December 2006

                                                                                             Period from
                                                                                              27 October
                                                                                                 2005 to
                                                                                            31 December
                                                                                                    2006
                                                                                    Note           £’000
Group
Revenue                                                                                 4          16,012
Cost of sales                                                                                      (8,395)
                                                                                                ––––––––
Gross profit                                                                                        7,617
Administrative expenses                                                                            (2,847)
                                                                                                ––––––––
Operating profit before gains on investment properties                                              4,770
Gains on investment properties                                                          8          14,789
                                                                                                ––––––––
Operating profit                                                                       6           19,559
Gains on forward currency contract                                                     9            1,304
Finance income                                                                        10            1,996
Finance costs                                                                         10             (490)
Change in fair value of interest rate swaps                                           10               13
Foreign exchange losses                                                               10             (260)
                                                                                                ––––––––
Profit before tax                                                                                  22,122
Tax                                                                                   11           (6,792)
                                                                                                ––––––––
Profit for the period                                                                              15,330
                                                                                                ––––––––
Earnings per share
Basic                                                                                 12            13.3p
                                                                                                ––––––––
Diluted                                                                               12            13.3p
                                                                                                ––––––––
All results derive from continuing operations.




                                                   35
REGISTRATION DOCUMENT – PART V


Balance sheet
31 December 2006

                                                                                Group     Company
                                                                                 2006        2006
                                                                 Note           £’000       £’000
Non-current assets
Property, plant and equipment                                      13              28             –
Investment property                                                14         139,593             –
Investment in subsidiary undertakings                              15               –      111,285
Derivative financial instruments                                   16           1,434         1,434
                                                                            ––––––––      ––––––––
                                                                              141,055       112,719
                                                                            ––––––––      ––––––––
Current assets
Trading properties                                                 17           5,151             –
Trade and other receivables                                        18           2,485         6,418
Cash and cash equivalents                                          19          14,395        10,938
                                                                            ––––––––      ––––––––
                                                                               22,031        17,356
                                                                            ––––––––      ––––––––
Total assets                                                                  163,086       130,075
                                                                            ––––––––      ––––––––
Current liabilities
Trade and other payables                                           20          (3,333)         (920)
Current tax liabilities                                                        (1,675)       (1,653)
                                                                            ––––––––      ––––––––
                                                                               (5,008)       (2,573)
                                                                            ––––––––      ––––––––
Non-current liabilities
Bank loans                                                         21         (15,689)            –
Deferred tax liabilities                                           22          (4,517)            –
                                                                            ––––––––      ––––––––
                                                                              (20,206)            –
                                                                            ––––––––      ––––––––
Total liabilities                                                             (25,214)       (2,573)
                                                                            ––––––––      ––––––––
Net assets                                                                    137,872       127,502
                                                                            ––––––––      ––––––––
Equity
Share capital                                                      23           12,500       12,500
Share premium account                                                          111,133     111,133
Translation reserves                                                            (1,142)           –
Retained earnings                                                               15,381        3,869
                                                                             ––––––––     ––––––––
Total equity                                                                   137,872      127,502
                                                                             ––––––––     ––––––––
These financial statements were approved by the Board of Directors on 16 March 2007.

Signed on behalf of the Board of Directors


IR Watson                               ML Jones
Director                                Director




                                                   36
REGISTRATION DOCUMENT – PART V


Statement of changes in equity
for the period from 27 October 2005 to 31 December 2006
                                                  Share        Share   Translation     Retained
                                                 capital    premium       reserves     earnings         Total
                                                  £’000        £’000        £’000         £’000        £’000
Group
Exchange differences arising on translation
  of overseas operations                              –           –        (1,581)           –        (1,581)
Tax on items taken directly to equity                 –           –            439           –            439
                                               –––––––     –––––––      –––––––      –––––––       –––––––
Net loss recognised directly in equity                –           –        (1,142)           –        (1,142)
Profit for the period                                 –           –              –      15,330        15,330
                                               –––––––     –––––––      –––––––      –––––––       –––––––
Total recognised income and expense
  for the period                                      –            –       (1,142)      15,330         14,188
Ordinary shares issued at a premium              12,500     112,500              –           –       125,000
Cost of issue of shares at a premium                  –      (1,367)             –           –        (1,367)
Share based payments                                  –            –             –          51             51
Equity shareholders funds at 27 October 2005          –            –             –           –              –
                                               –––––––     –––––––      –––––––      –––––––       –––––––
Equity shareholders funds
  at 31 December 2006                            12,500     111,133        (1,142)      15,381       137,872
                                               –––––––     –––––––      –––––––      –––––––       –––––––
Company
Profit for the period                                 –           –             –        3,818         3,818
                                               –––––––     –––––––      –––––––      –––––––       –––––––
Total recognised income and expense
  for the period                                      –            –            –        3,818          3,818
Ordinary shares issued at a premium              12,500     112,500             –            –       125,000
Cost of issue of shares at a premium                  –      (1,367)            –            –        (1,367)
Share based payments                                  –            –            –           51             51
Equity shareholders funds at 27 October 2005          –            –            –            –              –
                                               –––––––     –––––––      –––––––      –––––––       –––––––
Equity shareholders funds
  at 31 December 2006                            12,500     111,133             –        3,869       127,502
                                              –––––––     –––––––        –––––––       –––––––      –––––––
As permitted by section 230 of the Companies Act 1985, the profit and loss account of the parent company
is not presented as part of these accounts. The parent company’s profit for the financial period amounted to
£3,818,000.




                                                      37
REGISTRATION DOCUMENT – PART V


Cash flow statement
for the period from 27 October 2005 to 31 December 2006

                                                                  Period from
                                                                   27 October
                                                                      2005 to
                                                                 31 December
                                                                         2006
                                                          Note          £’000
Group
Net cash inflow from operating activities                  25            292
                                                                    ––––––––
Investing activities
Interest received                                                       1,996
Additions to property, plant and equipment                                (39)
Additions to investment properties                                   (126,823)
Proceeds on sale of investment properties                                 118
Additions to derivative financial instruments                            (117)
                                                                    ––––––––
Net cash used in investing activities                                (124,865)
                                                                    ––––––––
Financing activities
Proceeds from issue of shares at a premium                            125,000
Costs of issue of shares at a premium                                  (1,367)
New bank loans raised (net of expenses)                                15,335
                                                                    ––––––––
Net cash from financing activities                                    138,968
                                                                    ––––––––
Net increase in cash and cash equivalents                              14,395
Cash and cash equivalents at beginning of period                            –
                                                                    ––––––––
Cash and cash equivalents at end of period                             14,395
                                                                    ––––––––
Company
Net cash outflow from operating activities                 25          (6,306)
                                                                    ––––––––
Investing activities
Interest received                                                       4,640
Dividends received from subsidiaries                                      373
Investments in subsidiaries                                          (111,285)
Additions to derivative financial instruments                            (117)
                                                                    ––––––––
Net cash used in investing activities                                (106,389)
                                                                    ––––––––
Financing activities
Proceeds from issue of shares at a premium                            125,000
Costs of issue of shares at a premium                                  (1,367)
                                                                    ––––––––
Net cash from financing activities                                    123,633
                                                                    ––––––––
Net increase in cash and cash equivalents                              10,938
Cash and cash equivalents at beginning of period                            –
                                                                    ––––––––
Cash and cash equivalents at end of period                             10,938
                                                                    ––––––––




                                                   38
REGISTRATION DOCUMENT – PART V


Notes to the financial statements

for the period from 27 October 2005 to 31 December 2006

1.    General information
Hansteen Holdings PLC was incorporated in the United Kingdom under the Companies Act 1985 on
27 October 2005. The address of the registered office is, 1 Berkeley Street, London W1J 8DJ.

The Company was listed on AIM on 29 November 2005 and these financial statements cover the period from
its date of incorporation on 27 October 2005 to 31 December 2006. As these are the Company’s maiden
results there are no comparative figures.

The Group’s principal activities are those of a property group investing mainly in industrial properties in
Continental Europe.

These financial statements are presented in pounds sterling because that is the currency of the primary
economic environment in which the Company operates. Foreign operations are included in accordance with
the policies set out in note 2.

At the date of authorisation of these financial statements, the following Standards and Interpretations which
have not been applied in these financial statements were in issue but have not yet come into effect:

IFRS 7       Financial instruments: Disclosures; and the related amendment to IAS 1 on capital disclosures
IFRS 8       Operating Segments
IFRIC 4      Determining whether an arrangement contains a lease
IFRIC 7      Applying the Restatement Approach under IAS 29
             Financial Reporting in Hyperinflationary Economies
IFRIC 8      Scope of IFRS 2
IFRIC 9      Reassessment of Embedded Derivatives
IFRIC 10     Interim Financial Reporting and Impairment
IFRIC 11     IFRS 2 – Group and Treasury Share Transactions
IFRIC 12     Service Concession Arrangements

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have
no material impact on the financial statements of the Group, except for additional disclosures on capital and
financial instruments when the relevant standards come into effect for periods commencing on or after
1 January 2007. The additional disclosures under IFRS 7 include stating the carrying amount of financial
assets and liabilities under each of the classifications in IAS 39 ‘Financial Instruments: Recognition and
Measurement’; an analysis of the age for financial assets that are either past due or impaired; a reconciliation
of changes in carrying amounts during a period where impairment is recorded through an allowance account
as opposed to a direct reduction to the carrying amount of the financial asset; and additional requirements
on providing sensitivity analysis on market risks and how changes in these risks would have impacted profit
or loss and equity in the period.

2.    Significant accounting policies

Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards
(‘IFRSs’). The financial statements have also been prepared in accordance with IFRSs adopted by the
European Union and therefore the Group financial statements comply with Article 4 of the EU IAS
Regulation.

The financial statements have been prepared on the historical cost basis, except for the revaluation of
investment properties and certain financial instruments. The principal accounting policies are set out below.




                                                      39
REGISTRATION DOCUMENT – PART V


Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December. Control is achieved where the
Company has the power to govern the financial and operating policies of an investee entity so as to obtain
benefits from its activities.

The results of subsidiaries which commenced trading or which were acquired during the period are included
in the consolidated income statement from the date on which trading commenced or the date from which
they were acquired, as appropriate.

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

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Property, plant and equipment
This comprises computer and office equipment. Computers and office equipment are stated at cost less
accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the
cost or valuation of computers and office equipment, over their estimated useful lives, using the straight-line
method, on the following bases:

Computers                  3 years
Office equipment           3 years

Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation are treated as
acquired when the Group assumes the significant risks and rewards of ownership. Acquisitions of investment
properties including related transaction costs and subsequent additions of a capital nature are initially
recognised in the accounts at cost. At each reporting date the investment properties are re-valued to their fair
values based on a professional valuation at the balance sheet date. Gains or losses arising from changes in
the fair value of investment property are included in the income statement for the period in which they arise.

Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost less, where appropriate, provisions for impairment.

Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases. Where a property is
held under a head lease it is initially recognised as an asset as the sum of the premium paid on acquisition
and the present value of minimum ground rent payments. The corresponding rent liability to the head
leaseholder is included in the balance sheet as a finance lease obligation. Where only the buildings element
of a property lease is classified as a finance lease, the ground rent payments for the land element are shown
within operating leases.

Trading Properties
Trading properties are included in the balance sheet at the lower of cost and net realisable value and are
treated as acquired when the Group assumes the significant risks and rewards of ownership. Cost includes
development costs specifically attributable to properties in the course of development. Net realisable value
represents the estimated selling price less further costs expected to be incurred to completion and disposal.

Financial Instruments
Trade receivables and payables. Trade receivables and payables are stated at their nominal value. Trade
receivables are reduced by appropriate allowances for estimated irrecoverable amounts.



                                                      40
REGISTRATION DOCUMENT – PART V


Financial obligations
Debt instruments are stated at their net proceeds on issue. Finance charges including premiums payable on
settlement or redemption and direct issue costs are spread over the period to redemption using the effective
interest method.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of
changes in value.

Derivative financial instruments
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates
and interest rates. The Group uses foreign exchange forward contracts and interest rate swap contracts to
hedge these exposures. The Group does not use derivative financial instruments for speculative purposes.

The use of financial derivatives is governed by the Group’s policies approved by the board of directors.

The Group does not hedge account its current forward currency contracts and interest rate swaps and states
them at fair value with changes in fair value included in the income statement.

Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business, net of discounts, VAT and other
sales related taxes.

Rental income is recognised on an accruals basis. Where a lease incentive is granted, which does not enhance
the value of the property, or a rent free period is granted, the effective cost is amortised on a straight-line
basis over the period from the date of lease commencement to the earliest termination date.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.

Revenue from the sale of trading and investment properties is recognised when the significant risks and
returns have been transferred to the buyer. This is generally on unconditional exchange of contracts. The
profit on disposal of trading and investment properties is determined as the difference between the sales
proceeds and the carrying amount of the asset at the commencement of the accounting period plus additions
in the period.

Foreign currencies
The individual financial statements of each group company are presented in the currency of the primary
economic environment in which it operates (its functional currency). For the purpose of the consolidated
financial statements, the results and financial position of each group company are expressed in pounds
sterling, which is the functional currency of the Company, and the presentation currency for the consolidated
financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates
of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are translated 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 arising on the settlement of monetary items, and on the retranslation of monetary
items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-
monetary items carried at fair value are included in profit or loss for the period, except for differences arising


                                                       41
REGISTRATION DOCUMENT – PART V


on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in
equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly
in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s
foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense
items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of transactions are used. Exchange
differences arising, if any, are classified as equity and transferred to the Company’s translation reserve. Such
translation differences are recognised as income or as expenses in the period in which the operation is
disposed of.

Operating leases
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the
relevant lease.

Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on 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, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary differences can
be utilised. Deferred tax is measured on a non-discounted basis.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled
or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
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 Company intends to settle its current tax assets and liabilities on a net basis.

Share-based payments
The fair value of equity-settled share-based payments to employees is determined at the date of grant and is
expensed on a straight-line basis over the vesting period based on the Company’s estimate of options that
will eventually vest. Fair value is measured by use of a binomial model. The expected life used in the model
has been adjusted based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.

3.     Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance
sheet 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.

Valuation of Long Term Incentive Plan (‘LTIP’). In assessing whether any liability should be accrued under
the LTIP the Company is required to estimate the growth of the net assets of the Group over the period of
the LTIP. This estimate involves making a variety of assumptions concerning inter-alia rents and related
costs, yields, administrative costs, interest rates, exchange rates and the rate and level of property
acquisitions.


                                                       42
REGISTRATION DOCUMENT – PART V


4.    Revenue
An analysis of the Group’s revenue is as follows:
                                                                                                  Period from
                                                                                                   27 October
                                                                                                      2005 to
                                                                                                 31 December
                                                                                                         2006
                                                                                                        £’000
Property rental income                                                                                  7,760
Sales of trading properties                                                                             8,252
                                                                                                    ––––––––
                                                                                                       16,012
                                                                                                    ––––––––
Interest receivable on bank deposits                                                                    1,977
Other interest receivable                                                                                  19
                                                                                                    ––––––––
                                                                                                        1,996
                                                                                                    ––––––––
Total revenue in the period                                                                            18,008
                                                                                                    ––––––––
5.    Business and geographical segments
Business segments
The Group’s primary reporting segments are the classification of its properties based on whether they are
held for investment or trading. The secondary reporting segments are the classification of its properties based
on geographic location.
The Company’s business is to invest in its subsidiaries and therefore it operates in a single segment.

(a)   Totals by business segment
      Period from 27 October 2005 to 31 December 2006
                                                                   Trading        Investment
                                                                 properties        properties             Total
                                                                     £’000             £’000             £’000
      Group
      Property rental income                                              2            7,758         7,760
      Sales of trading properties                                     8,252                –         8,252
                                                                  ––––––––         ––––––––      ––––––––
      Revenue                                                         8,254            7,758        16,012
      Direct property operating expenses                                (58)            (757)         (815)
      Cost of sales of trading properties                            (7,580)               –        (7,580)
      Administrative expenses                                          (139)          (2,120)       (2,259)
                                                                  ––––––––         ––––––––      ––––––––
      Operating profit before gains on investment properties            477            4,881         5,358
      Gains on investment properties                                      –           14,789        14,789
                                                                  ––––––––         ––––––––      ––––––––
      Segment result                                                    477           19,670        20,147
                                                                  ––––––––         ––––––––      ––––––––
      Unallocated corporate expenses                                                                  (588)
                                                                                                 ––––––––
      Operating profit                                                                              19,559
      Gains on forward currency contract                                                             1,304
      Net finance income                                                                             1,259
                                                                                                 ––––––––
      Profit before tax                                                                             22,122
      Tax                                                                                           (6,792)
                                                                                                 ––––––––
      Profit for the period                                                                         15,330
                                                                                                 ––––––––
      Direct property operating expenses relating to investment properties that did not generate any rental
      income were £10,000.


                                                      43
REGISTRATION DOCUMENT – PART V


      Balance sheet
                                                              Trading       Investment
                                                            properties       properties           Total
                                                                 2006             2006            2006
                                                                £’000            £’000           £’000
      Group
      Property assets                                            5,151         139,593         144,744
      Other assets                                                   –           5,849           5,849
                                                             ––––––––        ––––––––        ––––––––
      Segment assets                                             5,151         145,442         150,593
                                                             ––––––––        ––––––––        ––––––––
      Unallocated corporate assets                                                              12,493
                                                                                             ––––––––
      Consolidated total assets                                                               163,086
                                                                                             ––––––––
      Segment liabilities                                         (28)          (2,317)         (2,345)
                                                             ––––––––        ––––––––        ––––––––
      Unallocated corporate liabilities                                                        (22,869)
                                                                                             ––––––––
      Consolidated total liabilities                                                           (25,214)
                                                                                             ––––––––
      Additions to properties                                    5,151         126,380         131,531
                                                             ––––––––        ––––––––        ––––––––
(b)   Totals by geographic segment
      The Group’s property operations are located in France, Germany, the Netherlands and the United
      Kingdom. The following table provides an analysis of the Group’s revenue by geographical market:

                                                                                           Period from
                                                                                            27 October
                                                                                               2005 to
                                                                                          31 December
                                                                                                  2006
                                                                                                 £’000
      Group
      France                                                                                       429
      Germany                                                                                    2,077
      Netherlands                                                                               13,149
      United Kingdom                                                                               357
                                                                                             ––––––––
                                                                                                16,012
                                                                                             ––––––––
      The following is an analysis of the carrying amount of segment assets and additions to properties
      analysed by the geographical area in which the assets are located:

                                                                                           Additions to
                                                                                             properties
                                                                              Carrying     period from
                                                                             amount of      27 October
                                                                               segment         2005 to
                                                                                 assets   31 December
                                                                                  2006            2006
                                                                                 £’000           £’000
      Group
      France                                                                    14,905          13,058
      Germany                                                                   55,506          47,816
      Netherlands                                                               75,031          65,506
      United Kingdom                                                             5,151           5,151
                                                                             ––––––––        ––––––––
                                                                               150,593         131,531
                                                                             ––––––––        ––––––––


                                                  44
REGISTRATION DOCUMENT – PART V


6.     Profit for the period
Profit for the period has been arrived at after (charging)/crediting:

                                                                                                Period from
                                                                                                 27 October
                                                                                                    2005 to
                                                                                               31 December
                                                                                                       2006
                                                                                                      £’000
Net foreign exchange losses included in administrative expenses                                         (73)
Net foreign exchange losses included in net finance income                                             (260)
Depreciation of property, plant and equipment                                                           (10)
Increase in fair value of investment properties                                                      14,759
Staff costs (see note 7)                                                                              1,476
                                                                                                  ––––––––
The analysis of auditors’ remuneration is as follows:

                                                                                                Period from
                                                                                                 27 October
                                                                                                    2005 to
                                                                                               31 December
                                                                                                       2006
                                                                                                      £’000
Fees payable to the Company’s auditors for the audit of the Company’s annual accounts                    40
Fees payable to the Company’s auditors and their associates for other services to the Group:
– The audit of the Company’s subsidiaries pursuant to legislation                                         81
                                                                                                  ––––––––
Total audit fees                                                                                        121
                                                                                                  ––––––––
– Tax services                                                                                            26
– Other services                                                                                          86
                                                                                                  ––––––––
Total non-audit fees                                                                                    112
                                                                                                  ––––––––
Fees payable to Deloitte & Touche LLP and their associates for non-audit services to the Company are not
required to be disclosed because the consolidated financial statements are required to disclose such fees on
a consolidated basis.

Fees paid to Deloitte & Touche LLP for other services comprise principally accounting, VAT and transfer
pricing advice.

7.     Staff Costs
The average monthly number of employees (including executive directors) was:

                                                                                                Period from
                                                                                                 27 October
                                                                                                    2005 to
                                                                                               31 December
                                                                                                      2006
                                                                                                        No.
Administration                                                                                            6




                                                      45
REGISTRATION DOCUMENT – PART V


Their aggregate remuneration was:

                                                                                     Period from
                                                                                      27 October
                                                                                         2005 to
                                                                                    31 December
                                                                                            2006
                                                                                           £’000
Wages and salaries                                                                          1,181
Share based payments                                                                           51
Social security costs                                                                         160
Other pension costs                                                                            84
                                                                                        ––––––––
                                                                                            1,476
                                                                                        ––––––––
The amounts shown against pension costs comprise amounts payable by the Group to personal pension
schemes of the employees.

8.    Gains on investment properties
                                                                                     Period from
                                                                                      27 October
                                                                                         2005 to
                                                                                    31 December
                                                                                            2006
                                                                                           £’000
Increase in fair value of investment properties                                            14,759
Profit on disposal of investment properties                                                    30
                                                                                        ––––––––
                                                                                           14,789
                                                                                        ––––––––

9.    Gains on forward currency contract
                                                                                     Period from
                                                                                      27 October
                                                                                         2005 to
                                                                                    31 December
                                                                                            2006
                                                                                           £’000
Increase in fair value of forward currency contract                                        1,304




                                                  46
REGISTRATION DOCUMENT – PART V


10.    Net finance income
                                                                                                    Period from
                                                                                                     27 October
                                                                                                        2005 to
                                                                                                   31 December
                                                                                                           2006
                                                                                                          £’000
Interest receivable on bank deposits                                                                         1,977
Other interest receivable                                                                                        19
                                                                                                          ––––––––
Finance income                                                                                                1,996
                                                                                                          ––––––––
Interest payable on bank loans and overdrafts                                                                  (490)
                                                                                                          ––––––––
Finance costs                                                                                                  (490)
                                                                                                          ––––––––
Net interest received                                                                                         1,506
Increase in fair value of interest rate swaps                                                                    13
Foreign exchange losses on retranslation of inter-company loan balances                                        (260)
                                                                                                          ––––––––
Net finance income                                                                                            1,259
                                                                                                          ––––––––

11.    Tax
                                                                                                    Period from
                                                                                                     27 October
                                                                                                        2005 to
                                                                                                   31 December
                                                                                                           2006
                                                                                                          £’000
UK Current tax                                                                                                1,665
Foreign current tax                                                                                             566
Total current tax                                                                                             2,231
Deferred tax (see note 22)                                                                                    4,561
                                                                                                          ––––––––
Total tax charge                                                                                              6,792
                                                                                                          ––––––––
UK Corporation tax is calculated at 30 per cent. of the estimated assessable profit for the period.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The tax charge for the year can be reconciled to the profit per the income statement as follows:

                                                                                                    Period from
                                                                                                     27 October
                                                                                                        2005 to
                                                                                                   31 December
                                                                                                           2006
                                                                                                          £’000
Profit before tax                                                                                            22,122
                                                                                                          ––––––––
Tax at the UK corporation tax rate of 30 per cent.                                                            6,637
Tax effect of:
Expenses that are not deductible in determining taxable profit                                                  116
Short-term timing differences                                                                                     5
Marginal relief                                                                                                  (8)
Effect of different tax rates of overseas subsidiaries                                                           42
                                                                                                          ––––––––
                                                                                                              6,792
                                                                                                          ––––––––



                                                       47
REGISTRATION DOCUMENT – PART V


In addition to the amount charged to the income statement, tax relating to the unrealised exchange losses on
translation of overseas operations has been credited directly to translation reserves (see statement of changes
in equity).

12.   Earnings per share and net asset value per share
The calculations for earnings per share, based on the weighted average number of shares, are shown in the
table below.

The European Public Real Estate Association (‘EPRA’) has issued recommended bases for the calculation
of certain per share information and these are included in the following tables:

                                                                                                  Period from
                                                                                                   27 October
                                                                                                       2005 to
                                                                                    Weighted     31 December
                                                                                     average             2006
                                                                                   number of         Earnings
                                                                  Earnings            shares         per share
                                                                     £’000             000’s                 p
Basic EPS                                                            15,330          115,223             13.3
Dilutive share options                                                    –               43                –
                                                                  ––––––––         ––––––––         ––––––––
Diluted EPS                                                          15,330          115,266             13.3
                                                                  ––––––––         ––––––––         ––––––––
Adjustments:
Revaluation gains on investment properties                         (14,759)
Profit on the sale of investment properties                             (30)
Tax on the sale of investment properties                                  9
Change in fair value of financial instruments                        (1,317)
Tax on the change in fair value of financial instruments                395
Deferred tax                                                          4,529
                                                                 ––––––––
Diluted EPRA EPS                                                      4,157                              3.6
                                                                 ––––––––                           ––––––––
The calculations for net asset value per share are shown in the table below:

                                                                                              31 December
                                                                    Equity                            2006
                                                              shareholder’s          Number Net asset value
                                                                     funds          of shares    per share
                                                                     £’000              000’s             p
Basic NAV                                                           137,872          125,000            110.3
Unexercised share options                                               428              400              n/a
                                                                  ––––––––         ––––––––         ––––––––
Diluted NAV                                                         138,300          125,400            110.3
                                                                  ––––––––         ––––––––         ––––––––
Adjustments:
Fair value of trading properties                                        849
Deferred tax                                                          4,529
                                                                  ––––––––
Diluted EPRA NAV                                                    143,678                             114.6
                                                                  ––––––––                          ––––––––




                                                      48
REGISTRATION DOCUMENT – PART V


13.   Property, plant and equipment
                                                                  Office      Computer
                                                              equipment       equipment             Total
                                                                  £’000           £’000            £’000
Cost:
At 27 October 2005                                                   –                –               –
Additions                                                            1               37              38
                                                              ––––––––         ––––––––        ––––––––
At 31 December 2006                                                  1               37              38
                                                              ––––––––         ––––––––        ––––––––
Accumulated depreciation:
At 27 October 2005                                                   –                –               –
Charge for the period                                                –               10              10
                                                              ––––––––         ––––––––        ––––––––
At 31 December 2006                                                  –               10              10
                                                              ––––––––         ––––––––        ––––––––
Net book value:
At 31 December 2006                                                  1               27              28
                                                              ––––––––         ––––––––        ––––––––
At 27 October 2005                                                   –                –               –
                                                              ––––––––         ––––––––        ––––––––

14.   Investment property
                                                                                                   £’000
Balance at 27 October 2005                                                                              –
Additions – property purchases                                                                   126,137
          – capital expenditure                                                                       244
Disposals                                                                                             (88)
Revaluations included in income statement                                                          14,759
Exchange adjustment                                                                                (1,459)
                                                                                                ––––––––
At 31 December 2006                                                                               139,593
                                                                                                ––––––––
All investment properties are stated at market value as at 31 December 2006 and have been valued by
independent professionally qualified external valuers, King Sturge LLP. The valuations have been prepared
in accordance with the Appraisal and Valuation Manual published by The Royal Institute of Chartered
Surveyors and with IVA1 of the International Valuation Standards.

The Group has pledged certain of its investment properties to secure a bank loan facility granted to the
Group.

15.   Investment in subsidiary undertakings
                                                              Shares in         Loans to
                                                             subsidiary       subsidiary
                                                           undertakings     undertakings            Total
                                                                  £’000            £’000           £’000
Company cost and net book value:
Balance at 27 October 2005                                            –                –               –
Additions                                                        45,910           65,375         111,285
                                                              ––––––––         ––––––––        ––––––––
At 31 December 2006                                              45,910           65,375         111,285
                                                              ––––––––         ––––––––        ––––––––




                                                   49
REGISTRATION DOCUMENT – PART V


Details of the Company’s subsidiaries at 31 December 2006 are as follows:

                                                                             Proportion of     Proportion of
                                                                                ownership      voting power
                                                       Place of                   interest              held
                                                       incorporation                    %                 %
Hansteen   Developments Limited                        England and Wales               100              100
Hansteen   Europe Limited                              England and Wales               100              100
Hansteen   Land Limited                                England and Wales               100              100
Hansteen   Limited                                     England and Wales               100              100
Hansteen   France SAS                                  France                          100              100
Hansteen   Germany Limited                             England and Wales               100              100
Hansteen   Germany Residential Limited                 England and Wales               100              100
Hansteen   Netherlands B.V.                            The Netherlands                 100              100

Each of the undertakings listed above is engaged in property development, investment and management.

16.   Derivative financial instruments
                                                                 Forward
                                                                 currency           Interest
                                                                 contract          rate cap            Total
                                                                    £’000             £’000           £’000
Group and Company
Fair value at 27 October 2005                                           –               –                  –
Additions at cost                                                      33              84                117
Revaluations included in income statement                           1,304              13             1,317
                                                                ––––––––         ––––––––          ––––––––
Fair value at 31 December 2006                                      1,337              97              1,434
                                                                ––––––––         ––––––––          ––––––––
Currency derivatives
The Group utilises currency derivatives to hedge significant future transactions and cash flows.

On 26 August 2006 the Company entered into a forward currency contract to sell Euros 155,159,000 for
£110,000,000 on 27 July 2009. The fair value of the Company’s forward currency contract is based on
market values of equivalent instruments at the balance sheet date.

Interest rate cap
The Group uses interest rate derivatives to manage its exposure to interest rate movements on its bank
borrowings.

On 6 November 2006 the Company entered into a Euros 25,000,000 interest rate cap at 4 per cent. with a
start date of 26 January 2007 and a maturity date of 26 October 2009. The fair value of the Company’s
interest rate cap is based on market values of equivalent instruments at the balance sheet date.

17.   Trading properties
                                                                                                       2006
                                                                                                      £’000
Land and related costs                                                                                5,151

The trading properties were valued at 31 December 2006 at open market value at £6,000,000.




                                                    50
REGISTRATION DOCUMENT – PART V


18.   Trade and other receivables
                                                                                       Group          Company
                                                                                        2006             2006
                                                                                       £’000            £’000
Trade receivables                                                                         356                –
Amounts due from subsidiary undertakings                                                    –           5,700
Other receivables                                                                       1,754                –
Prepayments and accrued income                                                            375              718
                                                                                    ––––––––         ––––––––
                                                                                        2,485            6,418
                                                                                    ––––––––         ––––––––
The carrying amount of trade and other receivables approximate their fair value.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance
sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an
identified loss event which, based on previous experience is evidence of a reduction in the recoverability of
the cash flows. The Group has no significant concentration of credit risk, with exposure spread over a large
number of counterparties and customers.

19.   Cash and cash equivalents
                                                                                       Group          Company
                                                                                        2006             2006
                                                                                       £’000            £’000
Cash and cash equivalents                                                              14,395           10,938

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original
maturity of three months or less. The carrying value of these assets approximates to their fair value.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings
assigned by international credit- rating agencies

20.   Trade and other payables
                                                                                       Group          Company
                                                                                        2006             2006
                                                                                       £’000            £’000
Trade payables                                                                        597                  18
Amounts due to subsidiary undertakings                                                  –                 745
Other payables                                                                        710                   –
Accruals and deferred income                                                        2,026                 157
                                                                                ––––––––             ––––––––
                                                                                    3,333                 920
                                                                                ––––––––             ––––––––
The carrying amount of trade and other payables approximates to their fair value.

21.   Bank loans
                                                                                                          2006
                                                                                                         £’000
Secured
Bank loan                                                                                             16,845
Unamortised borrowing costs                                                                           (1,156)
                                                                                                   ––––––––
Bank loan                                                                                             15,689
                                                                                                   ––––––––
The bank loan represents Euros 25,000,000 drawn down under a five year Euros 230,000,000 revolving bank
loan facility entered into on 25 July 2006 by Hansteen Holdings PLC and certain of its subsidiary
undertakings. The loan is secured on the shares of the borrowing subsidiaries and their investment properties



                                                      51
REGISTRATION DOCUMENT – PART V


and is guaranteed by Hansteen Holdings PLC and the borrowing subsidiaries. Interest on the amounts drawn
under the loan facility is charged at Euribor plus 0.8 per cent.
The Directors estimate that the book value of the Groups bank loans approximates to their fair value.

                                                                                                          2006
                                                                                                         £’000
Maturity
The bank loan is repayable as follows:
In the third to fifth years inclusive                                                                    16,845
                                                                                                      ––––––––
Undrawn committed facilities
Expiring after more than two years                                                                    138,131
                                                                                                    ––––––––
                                                                                                 Floating rate
                                                                                                  borrowings
                                                                                                         2006
                                                                                            %           £’000
Interest rate and currency profile
Euros                                                                                     4.35          16,845

The bank loan drawn down at 31 December 2006 under the Euro 230,000,000 revolving bank loan facility
was arranged at floating rates until 26 January 2007.

An interest rate cap has been entered into in respect of the entire amount drawn under the loan facility at
31 December 2006 to cap the Euribor rate at 4 per cent. for the period from 27 January 2007 to 26 October
2009 (see note 16).

22.   Deferred tax liabilities
The following are the major deferred tax liabilities and assets recognised by the Group and movements
thereon during the reporting period.

                                                                             UK tax on
                                                                               retained
                         Revaluation of Accelerated        Short-term       earnings in
                            investment           tax            timing        overseas          Tax
                             properties depreciation       differences     subsidiaries      losses       Total
                                 £’000        £’000              £’000            £’000      £’000       £’000
At 27 October 2005                     –               –               –               –            –         –
Charge to income                   4,179            350               64             343         (375)   4,561
Exchange differences                 (43)             (4)              –               –            3       (44)
                                 ––––––          ––––––         ––––––           ––––––      –––––– ––––––
At 31 December 2006                4,136            346               64              43         (372)   4,517
                                 ––––––          ––––––         ––––––           ––––––      –––––– ––––––
At the balance sheet date the Group has unused tax losses available for offset against future profits. These
losses arose principally due to the non-recurring start-up costs of overseas operations. The start-up costs are
non-recurring and it is expected that the tax losses will be utilised in the foreseeable future.

At the balance sheet date, the amount of temporary differences associated with undistributed earnings of
subsidiaries for which deferred tax liabilities have been fully provided is £372,000.




                                                      52
REGISTRATION DOCUMENT – PART V


23.    Share capital
                                                                                                         2006
                                                                                                        £’000
Authorised
200,000,000 ordinary shares of 10p each                                                              20,000
                                                                                                   ––––––––
Issued and fully paid
125,000,002 ordinary shares of 10p each                                                              12,500
                                                                                                   ––––––––
The share capital comprises one class of ordinary shares carrying no right to fixed income.

Movements in issued share capital
                                                                                        2006             2006
                                                                   Date               Number            £’000
Issued on incorporation 2 shares of £1 each                        27/10/2005               2               –
Sub-division of £1 shares to 10p shares                            14/11/2005              18               –
Shares issued for cash                                             14/11/2005         499,980              50
Shares issued in consideration for shares
   in Hansteen Limited                                             22/11/2005               2          –
Shares issued for cash                                             27/11/2005     124,500,000     12,450
                                                                                  –––––––––– ––––––––––
                                                                                  125,000,002     12,500
                                                                                  –––––––––– ––––––––––

24.    Acquisition of subsidiary
On 22 November 2005, as part of a reorganisation of the Hansteen Holdings PLC group, the Company issued
two ordinary shares of £1 each credited as fully paid in exchange for the entire issued ordinary share capital
of Hansteen Limited comprising two ordinary shares of £1 each.

25.    Notes to the cash flow statement
                                                                                     Group         Company
                                                                                Period from      Period from
                                                                                 27 October       27 October
                                                                                    2005 to          2005 to
                                                                               31 December      31 December
                                                                                       2006             2006
                                                                                      £’000            £’000
Profit for the period                                                                15,330            3,818
Tax                                                                                   6,792            1,643
                                                                                  ––––––––         ––––––––
Profit before tax                                                                    22,122            5,461
Dividends from subsidiaries                                                               –             (373)
Net finance income                                                                   (1,259)          (4,563)
Gains on forward currency contract                                                   (1,304)          (1,304)
                                                                                  ––––––––         ––––––––




                                                     53
REGISTRATION DOCUMENT – PART V


                                                                                  Group         Company
                                                                             Period from      Period from
                                                                              27 October       27 October
                                                                                 2005 to          2005 to
                                                                            31 December      31 December
                                                                                    2006             2006
                                                                                   £’000            £’000
Operating profit/(loss)                                                            19,559             (779)
Adjustments for:
Gains on investment properties                                                    (14,789)               –
Share-based employee remuneration                                                      51               51
Depreciation of property, plant and equipment                                          10                –
                                                                                ––––––––         ––––––––
Operating cash flows before movements in working capital                            4,831             (728)
Increase in trading properties                                                     (5,151)               –
Increase in receivables                                                            (2,255)          (6,419)
Increase in payables                                                                3,334              931
                                                                                ––––––––         ––––––––
Cash generated by/(used in) operations                                                759           (6,216)
Income taxes paid                                                                    (330)               –
Interest paid                                                                        (137)             (90)
                                                                                ––––––––         ––––––––
Net cash inflow/(outflow) from operating activities                                   292           (6,306)
                                                                                ––––––––         ––––––––

26.    Operating lease arrangements
The Group as lessee

                                                                                              Period from
                                                                                               27 October
                                                                                                  2005 to
                                                                                             31 December
                                                                                                     2006
                                                                                                    £’000
Minimum lease payments under operating leases recognised
 as an expense in the year:                                                                            181

As at the balance sheet date the Group had outstanding commitments for future minimum lease payments
under non-cancellable operating leases, which fall due as follows:

                                                                                                      2006
                                                                                                     £’000
Within one year                                                                                        229
In the second to fifth years inclusive                                                                 259
After five years                                                                                     1,136
                                                                                                  –––––––
                                                                                                     1,624
                                                                                                  –––––––
Operating lease payments represent rentals payable by the Group under ground rent leases for certain of its
investment properties and rentals payable in respect of its head office property under a licence agreement
with an unexpired term of 12 months as at the balance sheet date.




                                                    54
REGISTRATION DOCUMENT – PART V


The Group as lessor
The Group leases all of its investment properties under operating leases. As at the balance sheet date the
Group had contracted with tenants for the following future aggregate minimum rentals receivable under non-
cancellable operating leases:
                                                                                                        2006
                                                                                                       £’000
Within one year                                                                                      10,103
In the second to fifth years inclusive                                                               21,771
After five years                                                                                      8,688
                                                                                                  ––––––––
                                                                                                     40,562
                                                                                                  ––––––––

27.    Share based payments
Equity-settled share option scheme
The 2005 Share Option Scheme is open to certain senior employees of the Group. In the case of options
granted within three months of admission of shares to trading on AIM, options are exercisable at the price
at which shares were placed in connection with the float, being £1 per share. All options granted after this
date are exercisable at a price equal to the average quoted market price of the ordinary shares of Hansteen
Holdings PLC on the date of grant. The options have a three year vesting period that is not subject to
performance conditions. If the options remain unexercised after a period of ten years from the date of grant,
the options expire. Options are normally forfeited if the employee leaves the Group before the options vest.
In accordance with IFRS 2 ‘Share-based Payment’ the fair value of equity-settled share- based payments to
employees is determined at the date of grant and is expensed on a straight-line basis over the vesting period
based on the Group’s estimate of options that will eventually vest. Fair value is calculated using a Binomial
pricing model.
Details of the share options outstanding during the period are as follows:
                                                                                                  Weighted
                                                                                                    average
                                                                                Number of     exercise price
                                                                              share options           pence
Outstanding at 27 October 2005                                                          –                 –
Granted during the period                                                         400,000            107.1
                                                                                 ––––––––         ––––––––
Outstanding at 31 December 2006                                                   400,000            107.1
                                                                                 ––––––––         ––––––––
Exercisable at 31 December 2006                                                         –                 –
                                                                                 ––––––––         ––––––––
                                                                                                      Years
Weighted average remaining contractual life                                                             9.04

The options outstanding under the scheme are exercisable at exercise prices ranging from 100.0p to 128.5p
in years from 2009 up to 2016. During the period options were granted on 3 January 2006 and 6 March 2006.
The aggregate of the fair values of the options granted on those dates is £160,000 determined according to
the Binomial model.
The inputs into the Binomial model are as follows:
                                                                                                       2006
Weighted average share price                                                                         124.0p
Weighted average exercise price                                                                        107.1
Expected volatility                                                                                     25%
Expected life                                                                                      3–8 years
Risk free rate                                                                                        4.16%
Expected dividend yield                                                                                  3%




                                                     55
REGISTRATION DOCUMENT – PART V


The expected volatility was determined by calculating the historical volatility of the Company’s share price
over the period from the date the Company floated on AIM on 29 November 2005 and the dates the options
were granted and also by comparison with the volatilities of similar companies over the same period. The
expected life used in the model has been adjusted, based on management’s best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.

The Group recognised total expenses of £51,000 related to equity-settled share-based payment transactions
in the period from 27 October 2005 to 31 December 2006.

28.   Events after the balance sheet date
On 28 February 2007 the Company announced its intention to raise additional equity of £70,000,000, before
expenses, by way of a placing of 53,435,115 fully paid new ordinary shares of 10p each for a cash
consideration of 131p per share. The placing of the new ordinary shares is conditional, inter-alia, upon the
passing of a special resolution at an Extraordinary General Meeting of the Company on 23 March 2007 and
the admission of the new ordinary shares to trading on AIM.

The new ordinary shares, when issued, will rank pari passu with the existing ordinary shares, including the
right to receive all dividends and other distributions, save in respect of the dividend of 3 pence per existing
ordinary share payable to shareholders on 1 May 2007.

29.   Related party transactions
Remuneration of key management personnel
The aggregate remuneration of the directors, who are the key management personnel of the Group, is set out
below, as required by IAS 24 ‘Related Party Disclosures’. Further information about the remuneration of
individual directors is provided in the audited part of the Remuneration Report on page 38.

                                                                                                  Period from
                                                                                                   27 October
                                                                                                      2005 to
                                                                                                 31 December
                                                                                                         2006
                                                                                                        £’000
Short-term employee benefits                                                                            1,001
Post-employment benefits                                                                                   69
                                                                                                    ––––––––
                                                                                                        1,070
                                                                                                    ––––––––




                                                      56
REGISTRATION DOCUMENT – PART V


Independent Auditors’ Report
Independent Auditors’ Report to the Members of Hansteen Holdings PLC

We have audited the group and parent company financial statements (the ‘financial statements’) of Hansteen
Holdings PLC for the period ended 31 December 2006 which comprise the Group Income Statement, the
Group and Company Balance Sheets, the Group and Company Cash Flow Statements, the Group and
Company Statements of Changes in Equity, the Statement of Accounting Policies and the related notes 1 to
29. These financial statements have been prepared under the accounting policies set out therein. We have also
audited the information in the Directors’ Remuneration Report that is described as having been audited.

This report is made solely to the company’s members, as a body, in accordance with section 235 of the
Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to
be audited in accordance with relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the
financial statements and the part of the Directors’ Remuneration Report to be audited have been properly
prepared in accordance with the Companies Act 1985 and, as regards the group financial statements,
Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the
Directors’ Report is consistent with the financial statements.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we
have not received all the information and explanations we require for our audit, or if information specified
by law regarding directors’ remuneration and other transactions is not disclosed.

Although not required to do so, the directors have voluntarily chosen to make a corporate governance
statement detailing the extent of their compliance with the July 2003 FRC Combined Code. We review
whether the Corporate Governance Statement reflects the Company’s compliance with the nine provisions
of the 2003 Combined Code specified for our review by the Listing Rules of the Financial Services
Authority, and we report if it does not. We are not required to consider whether the board’s statements on
internal control cover all risks and controls, or form an opinion on the effectiveness of the group’s corporate
governance procedures or its risk and control procedures.

We read the other information contained in the Annual Report and consider whether it is consistent with the
audited financial statements. The other information comprises only the Directors’ Report, the unaudited part
of the Directors’ Remuneration Report, the Chairman’s Statement and the Corporate Governance Statement.
We consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not extend to any further information
outside the Annual Report.

Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by
the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements and the part of the Directors’ Remuneration Report to be
audited. It also includes an assessment of the significant estimates and judgments made by the directors in



                                                      57
REGISTRATION DOCUMENT – PART V


the preparation of the financial statements, and of whether the accounting policies are appropriate to the
group’s and company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial statements and the part of the Directors’ Remuneration Report to be audited are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the financial statements and the part of
the Directors’ Remuneration Report to be audited.

Opinion
In our opinion:

•     the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the
      European Union, of the state of the Group’s affairs as at 31 December 2006 and of its profit for the
      period then ended;

•     the parent Company financial statements give a true and fair view, in accordance with IFRSs as
      adopted by the European Union as applied in accordance with the provisions of the Companies Act
      1985, of the state of the parent Company’s affairs as at 31 December 2006;

•     the financial statements and the part of the Directors’ Remuneration Report to be audited have been
      properly prepared in accordance with the Companies Act 1985 and, as regards the Group financial
      statements, Article 4 of the IAS Regulation; and

•     the information given in the Directors’ Report is consistent with the financial statements.


Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
16 March 2007




                                                     58
REGISTRATION DOCUMENT – PART V


(B)   YEAR ENDED 31 DECEMBER 2007

Income statement
for the year ended 31 December 2007
                                                                                 Period from
                                                                                  27 October
                                                                  Year ended         2005 to
                                                                31 December     31 December
                                                                        2007            2006
                                                         Note          £’000           £’000
Group
Revenue                                                    5          18,400          16,012
Cost of sales                                                         (1,751)         (8,395)
                                                                   ––––––––        ––––––––
Gross profit                                                          16,649           7,617
Administrative expenses                                               (4,159)         (2,847)
                                                                   ––––––––        ––––––––
Operating profit before gains on investment properties                12,490           4,770
Gains on investment properties                             9          19,614         14,789
                                                                   ––––––––        ––––––––
Operating profit                                           7          32,104          19,559
(Losses)/gains on forward currency contract               10         (11,014)          1,304
Finance income                                            11           1,649           1,996
Finance costs                                             11          (4,549)           (490)
Change in fair value of interest rate swaps               11             238              13
Foreign exchange gains/(losses)                           11           1,946            (260)
                                                                   ––––––––        ––––––––
Profit before tax                                                     20,374          22,122
Tax                                                       12          (6,799)         (6,792)
                                                                   ––––––––        ––––––––
Profit for the period                                                 13,575          15,330
                                                                   ––––––––        ––––––––
Attributable to:
Equity holders of the parent                                         13,472          15,330
Minority interests                                                       103               –
                                                                   ––––––––        ––––––––
Profit for the period                                                 13,575          15,330
                                                                   ––––––––        ––––––––
Earnings per share
Basic                                                     13            8.1p           13.3p
                                                                   ––––––––        ––––––––
Diluted                                                   13            8.1p           13.3p
                                                                   ––––––––        ––––––––
All results derive from continuing operations.




                                                 59
REGISTRATION DOCUMENT – PART V


Balance sheet
31 December 2007
                                                          Group     Company         Group     Company
                                                           2007        2007          2006        2006
                                               Note       £’000       £’000         £’000       £’000
Non-current assets
Goodwill                                         14        2,252            –            –            –
Property, plant and equipment                    15           31            –           28            –
Investment property                              16      391,242            –     139,593             –
Investment property held for sale                16       15,417            –            –            –
Investment in subsidiary undertakings            17            –     177,752             –     111,285
Deferred tax asset                               25        2,885        2,885            –            –
Derivative financial instruments                 18          379          379        1,434        1,434
                                                       ––––––––     ––––––––     ––––––––     ––––––––
                                                         412,206      181,016      141,055      112,719
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Current assets
Trading properties                               19        5,260            –        5,151            –
Trade and other receivables                      20        3,781        6,954        2,485        6,418
Cash and cash equivalents                        21       19,562       13,581       14,395       10,938
                                                       ––––––––     ––––––––     ––––––––     ––––––––
                                                          28,603       20,535       22,031       17,356
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Total assets                                             440,809      201,551      163,086      130,075
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Current liabilities
Trade and other payables                         22       (6,916)      (1,162)      (3,333)        (920)
Current tax liabilities                                   (2,563)        (142)      (1,675)      (1,653)
Borrowings                                       23       (2,579)           –            –            –
Obligations under finance leases                 24         (279)           –            –            –
                                                       ––––––––     ––––––––     ––––––––     ––––––––
                                                         (12,337)      (1,304)      (5,008)      (2,573)
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Non-current liabilities
Borrowings                                       23     (166,957)           –      (15,689)           –
Obligations under finance leases                 24       (3,218)           –            –            –
Derivative financial instruments                 18       (9,710)      (9,710)           –            –
Deferred tax liabilities                         25      (17,194)           –       (4,517)           –
                                                       ––––––––     ––––––––     ––––––––     ––––––––
                                                        (197,079)      (9,710)     (20,206)           –
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Total liabilities                                       (209,416)     (11,014)     (25,214)      (2,573)
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Net assets                                               231,393      190,537      137,872      127,502
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Equity
Share capital                                    26       17,843       17,843       12,500       12,500
Share premium account                                    174,312      174,312      111,133      111,133
Translation reserve                                       13,287            –       (1,142)           –
Retained earnings                                         25,772       (1,618)      15,381        3,869
                                                       ––––––––     ––––––––     ––––––––     ––––––––
Equity attributable to equity holders
  of the parent                                          231,214      190,537       137,872     127,502
Minority interest                                            179             –            –           –
                                                       –––––––– –––––––– ––––––––             ––––––––
Total equity                                             231,393      190,537       137,872     127,502
                                                       –––––––– –––––––– ––––––––             ––––––––
These financial statements were approved by the Board of Directors on 7 April 2008.
Signed on behalf of the Board of Directors

M L JONES           I R WATSON
Director            Director



                                                  60
REGISTRATION DOCUMENT – PART V


Statement of changes in equity
for the year ended 31 December 2007
                                              Share        Share    Translation    Retained
                                             capital    premium        reserves    earnings        Total
                                              £’000        £’000         £’000        £’000       £’000
Group
Exchange differences arising on
  translation of overseas operations             –            –          16,143       –   16,143
Tax on items taken directly to equity            –            –          (1,714)      –    (1,714)
                                          ––––––––     ––––––––       –––––––– –––––––– ––––––––
Net gain recognised directly in equity           –            –          14,429       –    14,429
Profit for the year                              –            –               –  13,472   13,472
                                          ––––––––     ––––––––       –––––––– –––––––– ––––––––
Total recognised income and expense
  for the year                                    –            –         14,429      13,472      27,901
Ordinary shares issued at a premium           5,343       64,657              –           –      70,000
Cost of issue of shares at a premium              –       (1,478)             –           –      (1,478)
Share based payments                              –            –              –         669         669
Dividends paid                                    –            –              –      (3,750)     (3,750)
Equity shareholders funds at
  31 December 2006                           12,500      111,133         (1,142)  15,381  137,872
                                          ––––––––     ––––––––       –––––––– –––––––– ––––––––
Equity shareholders funds at
  31 December 2007                           17,843      174,312         13,287      25,772  231,214
                                          ––––––––     ––––––––       ––––––––    –––––––– ––––––––
Company
Loss for the year                                 –            –              –       (2,406)    (2,406)
Total recognised income and expense
  for the year                                    –            –              –       (2,406)    (2,406)
Ordinary shares issued at a premium           5,343       64,657              –            –     70,000
Cost of issue of shares at a premium              –       (1,478)             –            –     (1,478)
Share based payments                              –            –              –          669        669
Dividends paid                                    –            –              –       (3,750)    (3,750)
Equity shareholders funds at
  31 December 2006                           12,500      111,133             –        3,869  127,502
                                          ––––––––     ––––––––       ––––––––    –––––––– ––––––––
Equity shareholders funds at
  31 December 2007                             17,843    174,312                –      (1,618) 190,537
                                            –––––––– ––––––––          –––––––– –––––––– ––––––––
As permitted by section 230 of the Companies Act 1985, the profit and loss account of the parent company
is not presented as part of these accounts. The parent company’s loss for the financial year amounted to
£2,406,000 (Period from 27 October 2005 to 31 December 2006: profit £3,818,000).




                                                  61
REGISTRATION DOCUMENT – PART V


Cash flow statement
for the year ended 31 December 2007
                                                                                Period from
                                                                                 27 October
                                                                 Year ended         2005 to
                                                               31 December     31 December
                                                                       2007            2006
                                                        Note          £’000           £’000
Group
Net cash inflow from operating activities                28           8,475            292
                                                                  ––––––––        ––––––––
Investing activities
Interest received                                                     1,649           1,996
Additions to property, plant and equipment                              (19)            (39)
Additions to investment properties                                 (193,367)       (126,823)
Proceeds on sale of investment properties                               460             118
Additions to derivative financial instruments                           (71)           (117)
Acquisition of subsidiaries                              27         (12,339)              –
                                                                  ––––––––        ––––––––
Net cash used in investing activities                              (203,687)       (124,865)
                                                                  ––––––––
                                                                  ––––––––        ––––––––
                                                                                  ––––––––
Financing activities
Dividend paid                                                        (3,750)              –
Proceeds from issue of shares at a premium                           70,000        125,000
Costs of issue of shares at a premium                                (1,478)         (1,367)
Repayments of obligations under finance leases                          (30)              –
New bank loans raised (net of expenses)                            132,800           15,335
Increase in bank overdrafts                                           1,826               –
Capital contribution from minority shareholders                          69               –
                                                                  ––––––––        ––––––––
Net cash from financing activities                                  199,437         138,968
                                                                  ––––––––
                                                                  ––––––––        ––––––––
                                                                                  ––––––––
Net increase in cash and cash equivalents                             4,225          14,395
Cash and cash equivalents at beginning of period                     14,395               –
Effect of foreign exchange rates                                        942               –
                                                                  ––––––––        ––––––––
Cash and cash equivalents at end of period                           19,562          14,395
                                                                  ––––––––
                                                                  ––––––––        ––––––––
                                                                                  ––––––––
Company
Net cash outflow from operating activities               28          (3,504)         (6,306)
                                                                  ––––––––        ––––––––
Investing activities
Interest received                                                     4,950           4,640
Dividends received from subsidiaries                                  2,100             373
Investments in subsidiaries                                         (66,467)       (111,285)
Additions to derivative financial instruments                           (71)           (117)
                                                                  ––––––––        ––––––––
Net cash used in investing activities                               (59,488)       (106,389)
                                                                  ––––––––
                                                                  ––––––––        ––––––––
                                                                                  ––––––––
Financing activities
Dividend paid                                                        (3,750)              –
Proceeds from issue of shares at a premium                           70,000        125,000
Costs of issue of shares at a premium                                (1,478)         (1,367)
                                                                  ––––––––        ––––––––
Net cash from financing activities                                   64,772         123,633
                                                                  ––––––––
                                                                  ––––––––        ––––––––
                                                                                  ––––––––
Net increase in cash and cash equivalents                             1,780          10,938
Cash and cash equivalents at beginning of period                     10,938               –
Effect of foreign exchange rates                                        863               –
                                                                  ––––––––        ––––––––
Cash and cash equivalents at end of period                           13,581          10,938
                                                                  ––––––––
                                                                  ––––––––        ––––––––
                                                                                  ––––––––




                                                   62
REGISTRATION DOCUMENT – PART V


Notes to the financial statements
for the year ended 31 December 2007

1.    General information
Hansteen Holdings PLC was incorporated in the United Kingdom under the Companies Act 1985 on
27 October 2005. The address of the registered office is 1 Berkeley Street, London W1J 8DJ. The
comparative figures in these financial statements therefore cover the period from its date of incorporation on
27 October 2005 to 31 December 2006.

The Company was listed on AIM on 29 November 2005.

The Group’s principal activities are those of a property group investing mainly in industrial properties in
Continental Europe.

These financial statements are presented in pounds sterling because that is the currency of the primary
economic environment in which the Company operates. Foreign operations are included in accordance with
the policies set out in note 3.

2.    Adoption of new and revised standards
Standards, amendments and interpretations that became effective in 2007 and were adopted by the Group:

IFRS 7, Financial Instruments: Disclosures and the associated revisions to IAS 1: Presentation of Financial
Statements and IAS 32: Financial Instruments: Presentation and Disclosure.

The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand the disclosures provided
in these financial statements regarding the Group’s financial instruments and management of capital.

Standards, amendments and interpretations that became effective in 2007 but have no effect on the Group’s
operations:

IFRIC 7      Applying the restatement approach under IAS 29, Financial reporting in hyperinflationary
             economies.
IFRIC 8      Scope of IFRS 2
IFRIC 9      Reassessment of embedded derivatives
IFRIC 10     Interim financial reporting and impairment

Standards, amendments and interpretations to existing standards that are not yet effective and have not been
adopted early by the Group:

IFRS 8                     Operating segments
IFRS 3 (Amendment)         Business Combinations
IAS 1 (Amendment)          Presentation of financial statements
IAS 23 (Amendment)         Borrowing costs
IAS 27 (Amendment)         Consolidated and separate financial statements

Published interpretations to existing standards that are not yet effective and not relevant to the Group’s
operations:

IFRIC 11     Group and treasury share transactions
IFRIC 12     Service concession arrangements
IFRIC 13     Customer loyalty programmes
IFRIC 14     The limit on a defined benefit asset, minimum funding requirements and their interaction

The Directors anticipate that the adoption of the standards and interpretations in future periods will have no
material impact on the financial statements of the Group except for additional segment disclosures when
IFRS 8 comes into effect for periods commencing on or after 1 January 2009.




                                                     63
REGISTRATION DOCUMENT – PART V


3.     Significant accounting policies

Basis of preparation
The financial statements have also been prepared in accordance with International Financial Reporting
Standards (‘IFRSs’) adopted by the European Union and therefore the Group financial statements comply
with Article 4 of the EU IAS Regulation.

The financial statements have been prepared on the historical cost basis, except for the revaluation of
investment properties and certain financial instruments.

The preparation of financial statements in conformity with generally accepted accounting principles requires
the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management’s best knowledge of the amount, event or actions, actual
results ultimately may differ from those estimates. The principal accounting policies are set out below.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December. Control is achieved where the
Company has the power to govern the financial and operating policies of an investee entity so as to obtain
benefits from its activities.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s
equity therein. Minority interests consist of the amount of those interests at the date of the original business
combination (see below) and the minority’s share of changes in equity since the date of the combination.
Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated
against the interests of the Group except to the extent that the minority has a binding obligation and is able
to make an additional investment to cover the losses.

The results of subsidiaries which commenced trading or which were acquired during the period are included
in the consolidated income statement from the date on which trading commenced or the date from which
they were acquired, as appropriate.

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

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is
measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs
directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the
acquisition date except for non-current assets (or disposal groups) that are classified as held for sale in
accordance with IFRS 5 Non Current Assets Held for Sale and Discontinued Operations, which are
recognised and measured at fair value less costs to sell.

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest
in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity
at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured
at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for
impairment annually. Any impairment is recognised immediately in profit or loss and is not subsequently
reversed.



                                                        64
REGISTRATION DOCUMENT – PART V


For the purpose of impairment testing, goodwill is allocated to the relevant cash-generating units of the
Group 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 the carrying amount
of the unit, 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.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is
included in the determination of profit or loss on disposal.

Non-current assets held for sale
Non-current assets (and disposal groups) classified as held for sale, except investment properties, are
measured at the lower of carrying amount and fair value less costs to sell.

Investment properties classified as held for sale are carried at fair value in accordance with IAS 40
‘Investment Properties’.

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be
recovered through a sale transaction rather than through continuing use. This condition is regarded as met
only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its
present condition. Management must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.

Property, plant and equipment
This comprises computer and office equipment. Computers and office equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of computers and office equipment, over their
estimated useful lives, using the straight-line method, on the following bases:

Computers                  3 years
Office equipment           3 years

Investment properties
Investment properties, which comprises freehold and leasehold property held to earn rentals and/or for
capital appreciation, are treated as acquired when the Group assumes the significant risks and rewards of
ownership. Acquisitions of investment properties including related transaction costs and subsequent
additions of a capital nature are initially recognised in the accounts at cost. At each reporting date the
investment properties are re-valued to their fair values based on a professional valuation at the balance sheet
date. Gains or losses arising from changes in the fair value of investment property are included in the income
statement for the period in which they arise.

Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost less provisions for impairment.

Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases. Where a property is
held under a head lease it is initially recognised as an asset as the sum of the premium paid on acquisition
and the present value of minimum ground rent payments. The corresponding rent liability to the head
leaseholder is included in the balance sheet as a finance lease obligation. Where only the buildings element
of a property lease is classified as a finance lease, the ground rent payments for the land element are shown
within operating leases.



                                                      65
REGISTRATION DOCUMENT – PART V


Trading properties
Trading properties are included in the balance sheet at the lower of cost and net realisable value and are
treated as acquired when the Group assumes the significant risks and rewards of ownership. Cost includes
development costs specifically attributable to properties in the course of development. Net realisable value
represents the estimated selling price less further costs expected to be incurred to completion and disposal.

Financial instruments
Trade receivables. Trade receivables are not interest bearing and are stated at their nominal value. Trade
receivables are reduced by appropriate allowances for estimated irrecoverable amounts. Such allowances are
raised based on an assessment of debtor ageing, past experiences and known tenant circumstances.

Trade payables. Trade payables are not interest bearing and are stated at their nominal value until settled.

Financial obligation including bank overdrafts. Debt instruments are stated at their net proceeds on issue.
Finance charges including premiums payable on settlement or redemption and direct issue costs are spread
over the period to redemption using the effective interest method. Finance charges and issue costs are added
to the carrying value of the financial instrument to the extent that they are not settled in the period in which
they arise.

Cash and cash equivalents. Cash and cash equivalents comprise cash in hand and demand deposits and
other short-term highly liquid investments that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.

Derivative financial instruments. The Group’s activities expose it primarily to the financial risks of
changes in foreign currency exchange rates and interest rates. The Group uses foreign exchange forward
contracts and interest rate swap contracts to hedge these exposures. The Group does not use derivative
financial instruments for speculative purposes.

The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors.

The Group does not hedge account its current forward currency contracts and interest rate swaps and states
them at fair value with changes in fair value included in the income statement.

Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business, net of discounts, VAT and other
sales related taxes.

Rental income is recognised on an accruals basis. Where a lease incentive is granted, which does not enhance
the value of the property, or a rent free period is granted, the effective cost is amortised on a straight-line
basis over the period from the date of lease commencement to the earliest termination date.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.

Revenue from the sale of trading and investment properties is recognised when the significant risks and
returns have been transferred to the buyer. This is generally on unconditional exchange of contracts. The
profit on disposal of trading and investment properties is determined as the difference between the sales
proceeds and the carrying amount of the asset at the commencement of the accounting period plus additions
in the period.

Foreign currencies
The individual financial statements of each group company are presented in the currency of the primary
economic environment in which it operates (its functional currency). For the purpose of the consolidated
financial statements, the results and financial position of each group company are expressed in pounds
sterling, which is the functional currency of the Company, and the presentation currency for the consolidated
financial statements.


                                                      66
REGISTRATION DOCUMENT – PART V


In preparing the financial statements of the individual companies, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates
of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are translated 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 arising on the settlement of monetary items, and on the retranslation of monetary
items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-
monetary items carried at fair value are included in profit or loss for the period except for differences arising
on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in
equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly
in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s
foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense
items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of transactions are used. Exchange
differences arising, if any, are classified as equity and transferred to the Company’s translation reserve. Such
translation differences are recognised as income or as expenses in the period in which the operation is
disposed of.

Operating leases
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the
relevant lease.

Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on 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, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary differences can
be utilised. Deferred tax is measured on a non-discounted basis.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled
or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
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 Company intends to settle its current tax assets and liabilities on a net basis.

Share-based payments
The fair value of equity-settled share-based payments to employees is determined at the date of grant and is
expensed on a straight-line basis over the vesting period based on the Company’s estimate of options that
will eventually vest. Fair value is measured by use of a binomial model for the Employee Share Option




                                                       67
REGISTRATION DOCUMENT – PART V


Scheme. The expected life used in the model has been adjusted based on management’s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural considerations.

The fair value of the shares to be awarded under the Long-Term Incentive Plan is determined at the
measurement date by reference to the current share price at that date less the discounted value of estimated
future dividends.

4.     Key sources of estimation and judgement
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date used in preparing these accounts are:

Property valuations
In determining the fair value of investment properties under IAS 40 at open market value, there is a degree
of uncertainty and judgement involved. The Group uses external professional valuers to determine the
relevant amounts.

Financial instruments
Certain derivative financial instruments are carried at fair value in accordance with IAS 39. These valuations
are performed by third party external professionals.

Impairment of goodwill. Determining whether goodwill is impaired requires an estimation of the value in
use of the cash- generating units to which the goodwill has been allocated. The value in use calculation
requires the entity to estimate the future cash flows expected to arise from the cash-generating units and a
suitable discount rate in order to calculate the present value.

Valuation of Long-Term Incentive Plan (‘LTIP’)
In assessing whether any share awards are to be granted under the LTIP the Company is required to estimate
the growth of the net assets of the Group over the period of the LTIP and the fair value of a share at the grant
date and the balance sheet date. These estimates involve making a variety of assumptions concerning inter-
alia rents and related costs, yields, administrative costs, interest rates, exchange rates, dividend rates and the
rate and level of property acquisitions.

5.     Revenue
An analysis of the Group’s revenue is as follows:
                                                                                                    Period from
                                                                                                     27 October
                                                                                   Year ended           2005 to
                                                                                 31 December       31 December
                                                                                         2007              2006
                                                                                        £’000             £’000
Property rental income                                                                  18,400             7,760
Proceeds from disposal of trading properties                                                 –             8,252
                                                                                     ––––––––          ––––––––
                                                                                        18,400            16,012
                                                                                     ––––––––          ––––––––
Interest receivable on bank deposits                                                     1,599             1,977
Other interest receivable                                                                   50                19
                                                                                     ––––––––          ––––––––
                                                                                         1,649             1,996
                                                                                     ––––––––          ––––––––
Total revenue in the period                                                             20,049            18,008
                                                                                     ––––––––          ––––––––




                                                       68
REGISTRATION DOCUMENT – PART V


6.    Business and geographical segments

Business segments
The Group’s primary reporting segments are the classification of its properties based on whether they are
held for investment or trading. The secondary reporting segments are the classification of its properties based
on geographic location.

The Company’s business is to invest in its subsidiaries and therefore it operates in a single segment.

(a)   Totals by business segment
                                                                                       Period from 27 October 2005
                                              Year ended 31 December 2007                  to 31 December 2006
                                              Trading Investment                      Trading     Investment
                                            properties   properties     Total       properties     properties      Total
                                                £’000        £’000     £’000            £’000          £’000      £’000
      Group
      Property rental income                       –        18,400  18,400                  2         7,758    7,760
      Sales of trading properties                  –             –        –             8,252             –    8,252
                                            ––––––––     –––––––– ––––––––          ––––––––      –––––––– ––––––––
      Revenue                                      –        18,400   18,400             8,254         7,758   16,012
      Direct property operating expenses         (62)       (1,696)  (1,758)              (58)         (757)    (815)
      Cost of sales of trading properties          7             –        7            (7,580)            –   (7,580)
      Administrative expenses                    (59)       (2,954)  (3,013)             (139)       (2,120)  (2,259)
                                            ––––––––     –––––––– ––––––––          ––––––––      –––––––– ––––––––
      Operating profit/(loss) before
        gains on investment properties          (114)       13,750   13,636              477          4,881        5,358
      Gains on investment properties               –        19,614   19,614                –        14,789       14,789
                                            ––––––––     –––––––– ––––––––          ––––––––      ––––––––     ––––––––
      Segment result                            (114)       33,364    33,250             477         19,670       20,147
                                            ––––––––
                                            ––––––––     ––––––––
                                                         ––––––––                   ––––––––
                                                                                    ––––––––      ––––––––
                                                                                                  ––––––––
      Unallocated corporate expenses                                  (1,146)                                      (588)
                                                                   ––––––––                                    ––––––––
      Operating profit                                                32,104                                     19,559
      (Losses)/gains on forward currency
        contract                                                         (11,014)                                  1,304
      Net finance (costs)/income                                            (716)                                  1,259
                                                                       ––––––––                                ––––––––
      Profit before tax                                                   20,374                                  22,122
      Tax                                                                 (6,799)                                 (6,792)
                                                                       ––––––––                                ––––––––
      Profit for the period                                               13,575                                 15,330
                                                                       ––––––––
                                                                       ––––––––                                ––––––––
                                                                                                               ––––––––
      Direct property operating expenses relating to investment properties that did not generate any rental
      income were £35,200 (Period from 27 October 2005 to 31 December 2006: £10,000).

      Balance sheet
                                              Trading    Investment                   Trading    Investment
                                            properties    properties       Total    properties    properties       Total
                                                £’000         £’000       £’000         £’000         £’000       £’000
      Group
      Goodwill                                      –        2,252      2,252               –             –          –
      Property assets                           5,260      406,659 411,919              5,151       139,593    144,744
      Other assets                                  2        9,487      9,489               –         5,849      5,849
                                            ––––––––     –––––––– ––––––––          ––––––––      ––––––––   ––––––––
      Segment assets                            5,262      418,398 423,660              5,151       145,442    150,593
                                            ––––––––
                                            ––––––––     ––––––––
                                                         ––––––––                   ––––––––
                                                                                    ––––––––      ––––––––
                                                                                                  ––––––––   ––––––––
                                                                                                             ––––––––
      Unallocated corporate assets                                     17,149                                   12,493
                                                                    ––––––––                                 ––––––––
      Consolidated total assets                                       440,809                                 163,086
                                                                    ––––––––
                                                                    ––––––––                                 ––––––––
                                                                                                             ––––––––
      Segment liabilities                        (11)       (9,105)    (9,116)           (28)        (2,317)    (2,345)
                                            ––––––––
                                            ––––––––     ––––––––
                                                         ––––––––                   ––––––––
                                                                                    ––––––––      –––––––– ––––––––
                                                                                                  –––––––– ––––––––
      Unallocated corporate liabilities                              (200,300)                                 (22,869)
                                                                    ––––––––                                 ––––––––
      Consolidated total liabilities                                 (209,416)                                 (25,214)
                                                                    ––––––––
                                                                    ––––––––                                 ––––––––
                                                                                                             ––––––––
      Additions to properties                    109       218,880 218,989              5,151       126,380    131,531
                                            ––––––––
                                            ––––––––     –––––––– ––––––––
                                                         –––––––– ––––––––          ––––––––
                                                                                    ––––––––      –––––––– ––––––––
                                                                                                  –––––––– ––––––––




                                                         69
REGISTRATION DOCUMENT – PART V


(b)    Totals by geographic segment
       The Group’s property operations are located in Belgium, France, Germany, the Netherlands and the
       United Kingdom. The following table provides an analysis of the Group’s revenue by geographical
       market:

                                                                                                Period from
                                                                                                 27 October
                                                                                 Year ended         2005 to
                                                                               31 December     31 December
                                                                                       2007            2006
                                                                                      £’000           £’000
       Group
       Belgium                                                                      946                    –
       France                                                                     1,145                 429
       Germany                                                                    7,960               2,077
       Netherlands                                                                8,349              13,149
       United Kingdom                                                                 –                 357
                                                                              ––––––––            ––––––––
                                                                                 18,400              16,012
                                                                              ––––––––            ––––––––
       The following is an analysis of the carrying amount of segment assets and additions to     properties
       analysed by the geographical area in which the assets are located:

                                                                                                Additions to
                                                                                                  properties
                                                  Carrying                        Carrying      Period from
                                                 amount of                       amount of       27 October
                                                   segment      Additions to       segment          2005 to
                                                     assets      properties          assets    31 December
                                                      2007             2007           2006             2006
                                                     £’000            £’000          £’000            £’000
       Group
       Belgium                                      44,093           36,880               –               –
       France                                       21,144            3,757          14,905          13,058
       Germany                                     192,777          106,965          55,506          47,816
       Netherlands                                 160,384           71,278          75,031          65,506
       United Kingdom                                5,262              109           5,151           5,151
                                                 ––––––––         ––––––––        ––––––––        ––––––––
                                                   423,660          218,989         150,593         131,531
                                                 ––––––––         ––––––––        ––––––––        ––––––––

7.     Profit for the period
Profit for the period has been arrived at after (charging)/crediting:

                                                                                                Period from
                                                                                                 27 October
                                                                                 Year ended         2005 to
                                                                               31 December     31 December
                                                                                       2007            2006
                                                                                      £’000           £’000
Net foreign exchange gains/(losses) included in administrative expenses                 146             (73)
Net foreign exchange gains/(losses) included in net finance income                    1,946            (260)
Depreciation of property, plant and equipment                                           (16)            (10)
Increase in fair value of investment properties                                      19,595          14,759
Staff costs (see note 8)                                                              2,447           1,476
                                                                                  ––––––––        ––––––––




                                                      70
REGISTRATION DOCUMENT – PART V


The analysis of auditors’ remuneration is as follows:
                                                                                               Period from
                                                                                                27 October
                                                                               Year ended          2005 to
                                                                             31 December      31 December
                                                                                     2007             2006
                                                                                    £’000            £’000
Fees payable to the Company’s auditors and their associates for the
  audit of the Company’s and Group annual accounts                                      69               40
Fees payable to the Company’s auditors and their associates for other
  services to the Group:
– The audit of the Company’s subsidiaries pursuant to local statutory
  requirements                                                                          116               81
                                                                                 ––––––––         ––––––––
Total audit fees                                                                        185             121
                                                                                 ––––––––         ––––––––
– Tax services                                                                          212               26
– Other services                                                                         24               86
                                                                                 ––––––––         ––––––––
Total non-audit fees                                                                    236             112
                                                                                 ––––––––         ––––––––
Fees payable to Deloitte & Touche LLP and their associates for non-audit services to the Company are not
required to be disclosed because the consolidated financial statements are required to disclose such fees on
a consolidated basis.
Tax services fees paid to Deloitte & Touche LLP and their associates comprise fees for UK and overseas
income tax, VAT and property tax advisory services.
In addition to the fees disclosed above fees amounting to £78,000 were paid to associates of Deloitte &
Touche LLP for due diligence services relating to corporate acquisitions.

8.    Staff costs
The average monthly number of employees (including executive directors) was:
                                                                                               Period from
                                                                                                27 October
                                                                               Year ended          2005 to
                                                                             31 December      31 December
                                                                                     2007            2006
                                                                                    £’000               No
Administration                                                                          9               6
                                                                                 ––––––––        ––––––––
Their aggregate remuneration was:
                                                                                               Period from
                                                                                                27 October
                                                                               Year ended          2005 to
                                                                             31 December      31 December
                                                                                     2007             2006
                                                                                    £’000            £’000
Wages and salaries                                                                   1,422          1,181
Share-based payments                                                                   669              51
Social security costs                                                                  264             160
Other pension costs                                                                     92              84
                                                                                 ––––––––        ––––––––
                                                                                     2,447           1,476
                                                                                 ––––––––        ––––––––



                                                    71
REGISTRATION DOCUMENT – PART V


The amounts shown against pension costs comprise amounts payable by the Group to personal pension
schemes of the employees.

9.     Gains on investment properties
                                                                                      Period from
                                                                                       27 October
                                                                       Year ended         2005 to
                                                                     31 December     31 December
                                                                             2007            2006
                                                                            £’000           £’000
Increase in fair value of investment properties                            19,595          14,759
Profit on disposal of investment properties                                    19              30
                                                                        ––––––––        ––––––––
                                                                           19,614          14,789
                                                                        ––––––––        ––––––––

10.    (Losses)/gains on forward currency contract
                                                                                      Period from
                                                                                       27 October
                                                                       Year ended         2005 to
                                                                     31 December     31 December
                                                                             2007            2006
                                                                            £’000           £’000
(Decrease)/increase in fair value of forward currency contract            (11,014)          1,304
                                                                        ––––––––        ––––––––

11.    Net finance (costs)/income
                                                                                      Period from
                                                                                       27 October
                                                                       Year ended         2005 to
                                                                     31 December     31 December
                                                                             2007            2006
                                                                            £’000           £’000
Interest receivable on bank deposits                                        1,599          1,977
Other interest receivable                                                      50              19
                                                                        ––––––––        ––––––––
Finance income                                                              1,649          1,996
                                                                        ––––––––        ––––––––
Interest payable on bank loans and overdrafts                              (4,502)           (490)
Interest payable on obligations under finance leases                          (47)              –
                                                                        ––––––––        ––––––––
Finance costs                                                              (4,549)           (490)
                                                                        ––––––––        ––––––––
Net interest (paid)/received                                               (2,900)          1,506
Increase in fair value of interest rate swaps                                 238              13
Foreign exchange gains/(losses)                                             1,946            (260)
                                                                        ––––––––        ––––––––
Net finance (costs)/income                                                   (716)          1,259
                                                                        ––––––––        ––––––––




                                                       72
REGISTRATION DOCUMENT – PART V


12.    Tax
                                                                                                    Period from
                                                                                                     27 October
                                                                                    Year ended          2005 to
                                                                                  31 December      31 December
                                                                                          2007             2006
                                                                                         £’000            £’000
UK current tax                                                                 1,024         1,665
Foreign current tax                                                            1,242           566
                                                                           ––––––––      ––––––––
Total current tax                                                              2,266         2,231
Deferred tax (see note 25)                                                     4,533         4,561
                                                                           ––––––––      ––––––––
Total tax charge                                                               6,799         6,792
                                                                           ––––––––      ––––––––
UK Corporation tax is calculated at 30 per cent. (Period from 27 October 2005 to 31 December 2006:
30 per cent.) of the estimated assessable profit for the period.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The tax charge for the year can be reconciled to the profit per the income statement as follows:

                                                                                                    Period from
                                                                                                     27 October
                                                                                    Year ended          2005 to
                                                                                  31 December      31 December
                                                                                          2007             2006
                                                                                         £’000            £’000
Profit before tax                                                                       20,374               22,122
                                                                                     ––––––––             ––––––––
Tax at the UK corporation tax rate of 30 per cent.                                       6,112                6,637
Tax effect of:
Expenses that are not deductible in determining taxable profit                               68                116
Short-term timing differences                                                                 1                  5
Marginal relief                                                                               –                 (8)
Effect of different tax rates of overseas subsidiaries                                      576                 42
Effect on deferred tax balances due to the change in UK tax rate from
  30 per cent. to 28 per cent. effective from 6 April 2008                              335                 –
Prior year tax credit                                                                  (293)                –
                                                                                 ––––––––          ––––––––
                                                                                      6,799            6,792
                                                                                 ––––––––          ––––––––
In addition to the amount charged to the income statement in the year to 31 December 2007, tax amounting
to £1,714,000 (Period from 27 October 2005 to 31 December 2006: £439,000) relating to the unrealised
exchange losses on translation of overseas operations has been credited directly to translation reserves (see
statement of changes in equity).




                                                       73
REGISTRATION DOCUMENT – PART V


13.      Earnings per share and net asset value per share

The calculations for earnings per share, based on the weighted average number of shares, are shown in the
table below.

The European Public Real Estate Association (‘EPRA’) has issued recommended bases for the calculation
of certain per share information and these are included in the following tables:
                                                                                                                             Period from
                                                                                                                              27 October
                                                                                  Year ended                                     2005 to
                                                                                31 December                                 31 December
                                                               Weighted                 2007                     Weighted          2006
                                                                average             Earnings                      average       Earnings
                                                              number of                  per                    number of             per
                                              Earnings           shares                share        Earnings       shares          share
                                                 £’000            £’000                    p           £’000        £’000               p
Basic EPS                                      13,472            166,430                  8.1         15,330      115,223           13.3
Dilutive share options                               –                67                    –              –           43              –
                                             ––––––––          ––––––––             ––––––––       ––––––––     ––––––––       ––––––––
Diluted EPS                                     13,472           166,497                  8.1         15,330      115,266           13.3
                                             ––––––––
                                             ––––––––          ––––––––
                                                               ––––––––             ––––––––
                                                                                    ––––––––       ––––––––
                                                                                                   ––––––––     ––––––––
                                                                                                                ––––––––       ––––––––
                                                                                                                               ––––––––
Adjustments:
Revaluation gains on investment properties      (19,595)                                             (14,759)
Profit on the sale of investment properties         (19)                                                 (30)
Tax on the sale of investment properties              6                                                    9
Change in fair value of financial instruments    10,776                                               (1,317)
Current tax on the change in fair value of
  financial instruments                            (395)                                                 395
Deferred tax                                      4,814                                                4,529
                                              ––––––––                              ––––––––       ––––––––                    ––––––––
Diluted EPRA EPS                                  9,059                                   5.4          4,157                         3.6
                                              ––––––––
                                              ––––––––                              ––––––––
                                                                                    ––––––––       ––––––––
                                                                                                   ––––––––                    ––––––––
                                                                                                                               ––––––––
The calculations for net asset value per share are shown in the table below:
                                                                            31 December                                     31 December
                                                                                    2007                                            2006
                                           Equity                               Net asset             Equity                    Net asset
                                     shareholder’s       Number of             value per        shareholder’s   Number of      value per
                                            funds           shares                 share               funds       shares          share
                                            £’000            £’000                     p               £’000        £’000              p
Basic NAV                                  231,214           178,435               129.6             137,872      125,000          110.3
Unexercised share options                      428               400                 n/a                 428          400            n/a
                                         ––––––––          ––––––––            ––––––––            ––––––––     ––––––––       ––––––––
Diluted NAV                                231,642           178,835               129.5             138,300      125,400          110.3
                                         ––––––––
                                         ––––––––          ––––––––
                                                           ––––––––            ––––––––
                                                                               ––––––––            ––––––––
                                                                                                   ––––––––     ––––––––
                                                                                                                ––––––––       ––––––––
                                                                                                                               ––––––––
Adjustments:
Goodwill                                    (2,252)                                                        –
Fair value of trading properties               740                                                       849
Deferred tax                                17,272                                                     4,529
                                         ––––––––                              ––––––––            ––––––––                    ––––––––
Diluted EPRA NAV                           247,402                                 138.3             143,678                       114.6
                                         ––––––––
                                         ––––––––                              ––––––––
                                                                               ––––––––            ––––––––
                                                                                                   ––––––––                    ––––––––
                                                                                                                               ––––––––

14.      Goodwill
                                                                                                                                  Total
                                                                                                                                 £’000
Cost and carrying amount:
At 1 January 2007                                                                                       –
Recognised on acquisition of subsidiary undertakings                                               2,252
                                                                                                ––––––––
At 31 December 2007                                                                                 2,252
                                                                                                ––––––––
The goodwill arose on the acquisition, on 31 August 2007, of a portfolio of Belgian subsidiary companies
which is considered to be the relevant cash-generating unit (see note 17 for details of the subsidiaries
acquired).

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill
might be impaired. At 31 December 2007 the Group considers that there is no indication of impairment of
the goodwill and consequently no impairment review has been performed.



                                                                       74
REGISTRATION DOCUMENT – PART V


15.   Property, plant and equipment
                                                         Office   Computer
                                                     equipment    equipment       Total
                                                         £’000        £’000      £’000
Cost:
At 31 December 2006                                         1           37          38
Additions                                                   –           19          19
                                                     ––––––––     ––––––––    ––––––––
At 31 December 2007                                         1           56          57
                                                     ––––––––     ––––––––    ––––––––
Accumulated depreciation:
At 31 December 2006                                         –           10          10
Charge for the period                                       –           16          16
                                                     ––––––––     ––––––––    ––––––––
At 31 December 2007                                         –           26          26
                                                     ––––––––     ––––––––    ––––––––
Net book value:
At 31 December 2007                                         1           30          31
                                                     ––––––––     ––––––––    ––––––––
At 31 December 2006                                         1           27          28
                                                     ––––––––     ––––––––    ––––––––
Prior year
Cost:
At 27 October 2005                                          –            –           –
Additions                                                   1           37          38
                                                     ––––––––     ––––––––    ––––––––
At 31 December 2006                                         1           37          38
                                                     ––––––––     ––––––––    ––––––––
Accumulated depreciation:
At 27 October 2005                                          –            –           –
Charge for the period                                       –           10          10
                                                     ––––––––     ––––––––    ––––––––
At 31 December 2006                                         –           10          10
                                                     ––––––––     ––––––––    ––––––––
Net book value:
At 31 December 2006                                         1           27          28
                                                     ––––––––     ––––––––    ––––––––
At 27 October 2005                                          –            –           –
                                                     ––––––––     ––––––––    ––––––––
16.   Investment property
                                                                                 £’000
At 31 December 2006                                                            139,593
Additions – property purchases                                                 196,705
           – capital expenditure                                                    689
Acquisition of subsidiaries                                                      36,847
Disposals                                                                          (440)
Transfer to investment property held for sale                                   (15,417)
Revaluations included in income statement                                        19,595
Exchange adjustment                                                              13,670
                                                                              ––––––––
At 31 December 2007                                                            391,242
                                                                              ––––––––
Balance at 27 October 2005                                                            –
Additions – property purchases                                                 126,137
          – capital expenditure                                                     244
Disposals                                                                           (88)
Revaluations included in income statement                                        14,759
Exchange adjustment                                                              (1,459)
                                                                              ––––––––
At 31 December 2006                                                            139,593
                                                                              ––––––––




                                                75
REGISTRATION DOCUMENT – PART V


                                                                                                       £’000
Investment property held for sale
At 31 December 2006                                                                                     –
Transfer from investment property                                                                  15,417
                                                                                                ––––––––
At 31 December 2007                                                                                15,417
                                                                                                ––––––––
All investment properties are stated at market value as at 31 December 2007 and have been valued by
independent professionally qualified external valuers, King Sturge LLP. The valuations have been prepared
in accordance with the Appraisal and Valuation Standards published by The Royal Institute of Chartered
Surveyors and with IVA1 of the International Valuation Standards.

The Group has pledged certain of its investment properties to secure bank loan facilities and a finance lease
granted to the Group.

17.      Investment in subsidiary undertakings
                                                                Shares in         Loans to
                                                               subsidiary       subsidiary
                                                             undertakings     undertakings              Total
                                                                    £’000            £’000             £’000
Company
Cost and net book value:
Balance at 31 December 2006                                       45,910          65,375      111,285
Additions/(repayments)                                            78,731         (12,264)       66,467
                                                              ––––––––         ––––––––      ––––––––
At 31 December 2007                                              124,641          53,111       177,752
                                                              ––––––––         ––––––––      ––––––––
Details of all of the Company’s subsidiaries at 31 December 2007 are as follows:
                                                                            Proportion of Proportion of
                                                                               ownership voting power
                                                        Place of                 interest          held
                                                        incorporation                  %             %
Hansteen Belgium Limited                                Great Britain                100           100
Hansteen Developments Limited                           Great Britain                100           100
Hansteen Europe Limited                                 Great Britain                100           100
Hansteen Land Limited                                   Great Britain                100           100
Hansteen Limited                                        Great Britain                100           100
Hansteen France SAS                                     France                       100           100
Hansteen Germany Limited                                Great Britain                100           100
Hansteen Germany (2) Limited                            Great Britain                100           100
Hansteen Germany (3) Limited                            Great Britain                100           100
Hansteen Germany Residential Limited                    Great Britain                100           100
Hansteen Netherlands B.V.                               The Netherlands              100           100
Hansteen Ormix B.V.*                                    The Netherlands               50           100
Arman B01 BVBA*                                         Belgium                      100           100
Erangra NV*                                             Belgium                      100           100
Hert BVBA*                                              Belgium                      100           100
I.P.I Nossegem NV*                                      Belgium                      100           100
Jezusstraat 22 NV*                                      Belgium                      100           100
Small Island Management NV    *                         Belgium                      100           100
Tycoons Immo BVBA*                                      Belgium                      100           100
Vignée Invest NV*                                       Belgium                      100           100
Waterloo Investments NV*                                Belgium                      100           100
Each of the undertakings listed above is engaged in property development, investment and management.
*     Acquired 31 August 2007, see note 27.



                                                     76
REGISTRATION DOCUMENT – PART V


18.   Derivative financial instruments
                                                Forward            Interest        Interest
                                                currency               rate            rate
                                                contract              caps          swaps              Total
                                                   £’000             £’000           £’000            £’000
Group and Company
Financial assets and liabilities held for
  trading
Fair value at 31 December 2006                     1,337              97                –              1,434
Additions at cost                                     27              44                –                 71
Revaluations included in income statement        (11,074)             94              144            (10,836)
                                               ––––––––         ––––––––         ––––––––          ––––––––
Fair value at 31 December 2007                    (9,710)            235              144             (9,331)
                                               ––––––––         ––––––––         ––––––––          ––––––––
Currency derivatives
The Group utilises currency derivatives to hedge significant future transactions and cash flows.

On 25 July 2006 the Company entered into a forward currency contract to sell Euros 155,159,000 for
£110,000,000 on 27 July 2009. On 30 March 2007 the Company entered into a forward currency contract to
sell Euros 71,214,926 for £50,000,000 on 27 July 2009. On 8 November 2007 the Company entered into a
forward currency contract to sell Euros 56,316,215 for £40,000,000 on 27 July 2009. The fair value of the
Company’s forward currency contracts is based on market values of equivalent instruments at the balance
sheet date.

Interest rate caps
The Group uses interest rate derivatives to manage its exposure to interest rate movements on its bank
borrowings.

On 6 November 2006 the Company entered into a Euros 25,000,000 interest rate cap at 4 per cent. with a
start date of 26 January 2007 and a maturity date of 26 October 2009. On 8 November 2007 the Company
entered into a Euros 25,000,000 interest rate cap at 5 per cent. with a start date of 26 February 2008 and a
maturity date of 28 February 2011. The fair value of the Company’s interest rate caps is based on market
values of equivalent instruments at the balance sheet date.

Interest rate swaps
The Group uses interest rate swaps to manage its exposure to interest rate movements on its bank
borrowings.

On 3 March 2007 the Company entered into a Euros 25,000,000 interest rate swap at 4.165 per cent. with a
start date of 26 April 2007 and a maturity date of 26 April 2010. On 8 November 2007 the Company entered
into a Euros 25,000,000 interest rate swap at 4.29 per cent. with a start date of 26 February 2008 and a
maturity date of 28 February 2011. The fair value of the Company’s interest rate swaps is based on market
values of equivalent instruments at the balance sheet date.

19.   Trading properties
                                                                                      2007             2006
                                                                                     £’000            £’000
Land and related costs                                                               5,260           5,151
                                                                                  ––––––––       ––––––––
The trading properties were valued at fair market value by the Directors at 31 December 2007 at £6,000,000.




                                                    77
REGISTRATION DOCUMENT – PART V


20.   Trade and other receivables
                                                    Group          Company             Group          Company
                                                     2007             2007              2006             2006
                                                    £’000            £’000             £’000            £’000
Trade receivables                                 1,749                 –              356                   –
Amounts due from subsidiary undertakings              –           6,227                  –              5,700
Other receivables                                   484                 –            1,754                   –
Prepayments and accrued income                    1,548              727               375                 718
                                              ––––––––        ––––––––           ––––––––            ––––––––
                                                  3,781           6,954              2,485               6,418
                                              ––––––––        ––––––––           ––––––––            ––––––––
The carrying amount of trade and other receivables approximate their fair value.

The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance
sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an
identified loss event which, based on previous experience is evidence of a reduction in the recoverability of
the cash flows. The Group has no significant concentration of credit risk, with exposure spread over a large
number of counterparties and customers. There are no customers who represent more than 5 per cent. of the
total balance of trade receivables and there are no debtors over six months.

21.   Cash and cash equivalents
                                                    Group          Company             Group          Company
                                                     2007             2007              2006             2006
                                                    £’000            £’000             £’000            £’000
Cash and cash equivalents                         19,562            13,581          14,395             10,938
                                               ––––––––          ––––––––       ––––––––            ––––––––
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original
maturity of three months or less. The carrying value of these assets approximates to their fair value.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies.

22.   Trade and other payables
                                                    Group          Company             Group          Company
                                                     2007             2007              2006             2006
                                                    £’000            £’000             £’000            £’000
Trade payables                                       1,388              13               597             18
Amounts due to subsidiary undertakings                   –             849                 –            745
Other payables                                         929               –               710               –
Accruals and deferred income                         4,599             300             2,026            157
                                                ––––––––         ––––––––         ––––––––        ––––––––
                                                     6,916           1,162             3,333            920
                                                ––––––––         ––––––––         ––––––––        ––––––––
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing
costs. The average credit period taken for trade purchases by the Company is three days. For most suppliers
no interest is charged on the trade payables for the first 30 days from the date of the invoice. Thereafter,
interest charged on the outstanding balances at various interest rates. The Group has financial risk
management policies in place to ensure that all payables are paid within the credit timeframe. The Directors
consider that the carrying amount of trade and other payables approximates to their fair value.




                                                      78
REGISTRATION DOCUMENT – PART V


23.   Borrowings
                                                                                       2007             2006
                                                                                      £’000            £’000
Secured at amortised cost
Bank overdrafts                                                                      1,825                –
Bank loans                                                                         169,088           16,845
Unamortised borrowing costs                                                         (1,377)          (1,156)
                                                                                 ––––––––         ––––––––
                                                                                   169,536           15,689
                                                                                 ––––––––         ––––––––
Total borrowings
Amount due for settlement within 12 months                                            2,579                 –
Amount due for settlement after 12 months                                          166,957             15,689
                                                                                 ––––––––           ––––––––
Bank loans                                                                         169,536             15,689
                                                                                 ––––––––           ––––––––
The principal borrowing represents Euros 149,000,000 drawn down under a five year Euros 230,000,000
revolving bank loan facility entered into on 25 July 2006 by Hansteen Holdings PLC and certain of its
subsidiary undertakings. The loan is secured on the shares of the borrowing subsidiaries and their investment
properties and is guaranteed by Hansteen Holdings PLC and the borrowing subsidiaries. Interest on the
amounts drawn under the loan facility is charged at Euribor plus 0.8 per cent.

Hansteen Ormix BV, a Dutch subsidiary has a number of bank loans secured on its properties in the
Netherlands with an expiry date of 31 December 2009 charged at Euribor plus 0.9 per cent. The aggregate
amount outstanding at 31 December 2007 in respect of these bank loans was £42,881,000 (2006: £nil).

The Belgian subsidiaries have a number of facilities secured on all of the Belgian properties with expiry
dates ranging from 31 December 31 2009 to 31 March 2026 charged at Euribor plus 0.75 per cent. to
1.5 per cent. The aggregate amount outstanding at 31 December 2007 in respect of these bank loans was
£16,800,000 (2006: £nil).

The Directors estimate that the book value of the Groups’ bank loans approximates to their fair value.

                                                                                       2007             2006
                                                                                      £’000            £’000
Maturity
The bank loans are repayable as follows:
Within one year or on demand                                                           753                –
Between one and two years                                                           45,152                –
In the third to fifth years inclusive                                              114,079          16,845
Over five years                                                                      9,104                –
                                                                                 ––––––––         ––––––––
                                                                                   169,088           16,845
                                                                                 ––––––––         ––––––––
Undrawn committed facilities
Expiring after more than two years                                                  59,475         138,131
                                                                                 ––––––––         ––––––––
                                                                                   Floating rate borrowings
                                                                      2007                             2006
                                                          %          £’000               %            £’000
Interest rate and currency profile
Euros                                                5.31         169,088              4.35           16,845

A number of interest rate caps and swaps have been entered into in respect of the amounts drawn under the
loan facility at 31 December 2007 to hedge Euro borrowings at an average rate of 4.39 per cent.
(see note 18).




                                                     79
REGISTRATION DOCUMENT – PART V


24.    Obligations under finance leases
                                                         Minimum lease                          Present value of
                                                            payments                             lease payments
                                                       2007          2006                     2007            2006
                                                          £             £                         £              £
Amounts payable under finance leases:
Within one year                                        279                 –                    126                –
In the second to fifth years inclusive               1,131                 –                    553
After five years                                     3,877                 –                  2,818                –
                                                 ––––––––           ––––––––              ––––––––         ––––––––
                                                     5,287                 –                  3,497                –
Less: future finance charges                        (1,790)                –                     n/a             n/a
                                                 ––––––––           ––––––––              ––––––––         ––––––––
Present value of lease obligations                   3,497                 –                 3,497                 –
                                                 ––––––––           ––––––––              ––––––––         ––––––––
Less: amount due for settlement within
  12 months (shown under current liabilities)                                       (279)                 –
                                                                               ––––––––          ––––––––
Amount due for settlement after 12 months                                          3,218                  –
                                                                               ––––––––          ––––––––
The lease is held in I.P.I. Nossegem NV, a Belgian subsidiary and is denominated in Euros. The lease term
outstanding at 31 December 2007 is 16 years. For the year ended 31 December 2007, the interest rate implicit
in the lease was 5.228 per cent. Interest rates are fixed every five years and interest rate and capital
repayments adjusted to reflect this.

The fair value of the Group’s lease obligations approximates their carrying amount.

The Group’s obligations under the finance lease are secured by the lessors’ rights over the leased assets.

25.    Deferred tax
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax
balances (after offset) for financial reporting purposes:

                                                     Group          Company                  Group         Company
                                                      2007             2007                   2006            2006
                                                     £’000            £’000                  £’000           £’000
Deferred tax assets                                   2,885           2,885              –                –
Deferred tax liabilities                           (17,194)               –         (4,517)               –
                                                ––––––––          ––––––––       ––––––––        ––––––––
                                                   (14,309)           2,885         (4,517)               –
                                                ––––––––          ––––––––       ––––––––        ––––––––
The following are the major deferred tax liabilities and assets recognised and movements thereon during the
reporting period.
                                                                             UK tax on
                                                                               retained
                             Revaluation      Accelerated    Short-term        earnings
                            of investment             tax         timing    in overseas              Tax
                                properties   depreciation    differences   subsidiaries           losses        Total
                                    £’000          £’000           £’000          £’000           £’000        £’000
Group
At 31 December 2006                  4,136           346             64            343             (372)       4,517
Acquired (see note 27)               4,185             –            459              –             (486)       4,158
Charge/(credit) to income            6,696           777         (2,904)           (23)             (13)       4,533
Exchange differences                 1,048            85             44              –              (76)       1,101
                               ––––––––      ––––––––        ––––––––      ––––––––          ––––––––      ––––––––
At 31 December 2007               16,065         1,208           (2,337)        320               (947)       14,309
                               ––––––––      ––––––––        ––––––––      ––––––––          ––––––––      ––––––––




                                                       80
REGISTRATION DOCUMENT – PART V


                                                                             UK tax on
                                                                               retained
                              Revaluation      Accelerated   Short-term        earnings
                             of investment             tax        timing    in overseas             Tax
                                 properties   depreciation   differences   subsidiaries          losses          Total
                                     £’000          £’000          £’000          £’000          £’000          £’000
Company
At 31 December 2006                      –              –             –              –                –              –
Charge/(credit) to income                –              –        (2,885)             –                –         (2,885)
                              ––––––––        ––––––––      –––––––– –––––––– –––––––– ––––––––
At 31 December 2007                     –              –         (2,885)            –             –         (2,885)
                              ––––––––        ––––––––      –––––––– –––––––– –––––––– ––––––––
At the balance sheet date the Group has unused tax losses amounting to £2,796,000 (2006: £1,206,000)
available for offset against future profits. These losses arose principally due to the non-recurring start up
costs of overseas operations. It is expected that the tax losses will be utilised in the foreseeable future and a
deferred tax asset has been recognised in respect of these losses.

At the balance sheet date, the amount of temporary differences associated with undistributed earnings of
subsidiaries for which deferred tax liabilities have been fully provided is £320,000 (2006: £343,000).

26.    Share capital
                                                                                              2007              2006
                                                                                             £’000             £’000
Authorised
250,000,000 (2006: 200,000,000) ordinary shares of 10p each                                 250,000            20,000
                                                                                          ––––––––          ––––––––
Issued and fully paid
178,435,117 (2006: 125,000,002) ordinary shares of 10p each                          17,843                    12,500
                                                                                  ––––––––                  ––––––––
The share capital comprises one class of ordinary shares carrying no right to fixed income.

Movements in issued share capital
                                                                                             2007               2006
                                                                                           Number              £’000
Balance at 1 January 2007                                                           125,000,002               12,500
Shares issued for cash on 23 March 2007                                              53,435,115                5,343
                                                                                    ––––––––––            ––––––––––
Balance at 31 December 2007                                                         178,435,117               17,843
                                                                                    ––––––––––            ––––––––––

27.    Acquisition of subsidiaries
On 31 August 2007 the Group acquired 100 per cent. of the issued share capital of a portfolio of nine
companies incorporated and registered in Belgium (see note 17) for cash consideration of £11,880,000. Each
of these companies is engaged in property investment and management in Belgium. This transaction has
been accounted for by the purchase method of accounting.




                                                        81
REGISTRATION DOCUMENT – PART V


                                                                                         Book             Fair
                                                                                        value            value
                                                                                        £’000            £’000
Net assets acquired:
Investment properties                                                                  24,534           36,847
Trade and other receivables                                                               311              311
Cash and cash equivalents                                                                  70               70
Trade and other payables                                                                 (724)            (724)
Current tax liabilities                                                                  (419)            (419)
Bank loans                                                                            (18,568)         (18,568)
Obligations under finance leases                                                       (3,202)          (3,202)
Deferred tax liabilities                                                                 (458)          (4,158)
                                                                                    ––––––––         ––––––––
                                                                                        1,544           10,157
                                                                                    ––––––––         ––––––––
Goodwill                                                                                                 2,252
                                                                                                     ––––––––
Total consideration                                                                                     12,409
                                                                                                     ––––––––
Satisfied by:
Cash                                                                                                   11,880
Directly attributable costs                                                                                529
                                                                                                     ––––––––
                                                                                                        12,409
                                                                                                     ––––––––
Net cash outflow arising on acquisition
Cash consideration                                                                                12,409
Cash and cash equivalents acquired                                                                   (70)
                                                                                               ––––––––
                                                                                                  12,339
                                                                                               ––––––––
The difference between book value and fair value at acquisition relates to the revaluation of investment
properties by independent valuers in accordance with the requirements of IAS 40 and the related deferred
tax.

The goodwill arising on the acquisition of the subsidiaries is attributable to a sharing of the inherent capital
gains tax potential burden with the vendor.

The subsidiaries contributed £946,000 revenue and £302,000 to the Group’s profit before tax for the period
between the date of acquisition and the balance sheet date.

If the acquisition of the subsidiaries had been completed on the first day of the financial year, Group revenues
for the period would have been £20,607,000. The accounts of the subsidiaries acquired were prepared
according to Belgian GAAP and no fair valuations of the investment properties were carried out on 1 January
2007. For this reason it is not practical to determine what the Group profit attributable to equity holders of
the parent on an IFRS basis would have been if the acquisition of the subsidiaries had been completed on the
first day of the financial year.




                                                      82
REGISTRATION DOCUMENT – PART V


28.    Notes to the cash flow statement
                                                                                   Group        Company
                                                                              Period from     Period from
                                                                               27 October      27 October
                                                                                  2005 to         2005 to
                                                   Group        Company      31 December     31 December
                                                    2007           2007              2006            2006
                                                   £’000          £’000             £’000           £’000
Profit/(loss) for the period                      13,575           (2,406)         15,330            3,818
Adjustments for:
Share-based employee remuneration                     669            669               51               51
Depreciation of property, plant and equipment          16              –               10                –
Gains on investment properties                    (19,614)             –          (14,789)               –
Losses/(gains) on forward currency contracts       11,014         11,014           (1,304)          (1,304)
Dividends from subsidiaries                             –         (2,100)               –             (373)
Net finance costs/(income)                          1,720         (5,983)          (1,259)          (4,563)
Tax                                                 6,799         (1,944)           6,792            1,643
                                                ––––––––       ––––––––         ––––––––         ––––––––
Operating cash flows before movements
  in working capital                               14,179           (750)           4,831             (728)
Increase in trading properties                       (109)             –           (5,151)               –
Increase in receivables                            (1,107)          (535)          (2,255)          (6,419)
Increase in payables                                2,908            241            3,334              931
                                                ––––––––       ––––––––         ––––––––         ––––––––
Cash generated by/(used in) operations             15,870         (1,044)             759           (6,216)
Income taxes paid                                  (3,559)        (2,453)            (330)               –
Interest paid                                      (3,837)            (7)            (137)             (90)
                                                ––––––––       ––––––––         ––––––––         ––––––––
Net cash inflow/(outflow) from operating
  activities                                        8,475         (3,504)            292            (6,306)
                                                ––––––––       ––––––––         ––––––––         ––––––––

29.    Operating lease arrangements
The Group as lessee
                                                                                              Period from
                                                                                               27 October
                                                                                                  2005 to
                                                                                             31 December
                                                                                     2007            2006
                                                                                    £’000           £’000
Minimum lease payments under operating leases recognised as
 an expense in the year:                                                          260           181
                                                                             ––––––––      ––––––––
As at the balance sheet date the Group had outstanding commitments for future minimum lease payments
under non- cancellable operating leases, which fall due as follows:
                                                                                     2007             2006
                                                                                    £’000            £’000
Within one year                                                                        410             229
In the second to fifth years inclusive                                                 403             259
After five years                                                                     3,354           1,136
                                                                                 ––––––––        ––––––––
                                                                                     4,167           1,624
                                                                                 ––––––––        ––––––––
Operating lease payments represent rentals payable by the Group under ground rent leases for certain of its
investment properties and rentals payable in respect of its head office property under a licence agreement
with an unexpired term of 12 months as at the balance sheet date.



                                                    83
REGISTRATION DOCUMENT – PART V


The Group as lessor
The Group leases all of its investment properties under operating leases. As at the balance sheet date the
Group had contracted with tenants for the following future aggregate minimum rentals receivable under non-
cancellable operating leases:

                                                                                        2007             2006
                                                                                       £’000            £’000
Within one year                                                                        26,093        10,103
In the second to fifth years inclusive                                                 64,601        21,771
After five years                                                                       30,115          8,688
                                                                                    ––––––––       ––––––––
                                                                                      120,809         40,562
                                                                                    ––––––––       ––––––––

30.    Share-based payments
During the year ended 31 December 2007, the Group had two share-based payment arrangements with
employees. Both of the Group’s share-based payment schemes are equity settled, either by award of options
to acquire ordinary shares (Employee Share Option Scheme) or award of ordinary shares (Long-Term
Incentive Plan).

The total share-based payment charge relating to Hansteen Holdings PLC shares for the year was made up
as follows:
                                                                                                 Period from
                                                                                                  27 October
                                                                                 Year ended          2005 to
                                                                               31 December      31 December
                                                                                       2007             2006
                                                                                      £’000            £’000
Employee share option scheme                                             (a)              54             51
Long-term incentive plan                                                 (b)             615              –
                                                                                    ––––––––       ––––––––
                                                                                         669             51
                                                                                    ––––––––       ––––––––
(a)    Equity-settled share option scheme
       The 2005 Share Option Scheme is open to certain senior employees of the Group. In the case of
       options granted within three months of admission of shares to trading on AIM, options are exercisable
       at the price at which shares were placed in connection with the float, being £1 per share. All options
       granted after this date are exercisable at a price equal to the average quoted market price of the
       ordinary shares of Hansteen Holdings PLC on the date of grant. The options have a three year vesting
       period that is not subject to performance conditions. If the options remain unexercised after a period
       of ten years from the date of grant, the options expire. Options are normally forfeited if the employee
       leaves the Group before the options vest. In accordance with IFRS 2 ‘Share-based Payment’ the fair
       value of equity-settled share-based payments to employees is determined at the date of grant and is
       expensed on a straight-line basis over the vesting period based on the Group’s estimate of options that
       will eventually vest. Fair value is calculated using a Binomial pricing model.

       Details of the share options outstanding during the period are as follows:

                                                                                                    Weighted
                                                                                                     average
                                                                                     Number          exercise
                                                                                     of share           price
                                                                                      options          pence
       Outstanding at 31 December 2006 and 31 December 2007                          400,000          107.1
                                                                                    ––––––––       ––––––––




                                                     84
REGISTRATION DOCUMENT – PART V


                                                                                                         Years
      Weighted average remaining contractual life                                                   8.03
                                                                                              ––––––––
      The options outstanding under the scheme are exercisable at exercise prices ranging from 100.0p to
      128.5p in years from 2009 up to 2016. During the period no options were granted. (Period from
      27 October 2005 to 31 December 2006: 400,000 at a weighted average exercise price of 107.1p per
      share) The aggregate of the fair values of the outstanding options granted dates is £160,000
      determined according to the Binomial model.

      The inputs into the Binomial model are as follows:

                                                                                        2007             2006
      Weighted average share price                                                     124.0p           124.0p
      Weighted average exercise price                                                  107.1p           107.1p
      Expected volatility                                                                 25%              25%
      Expected life                                                                  3-8 years        3-8 years
      Risk free rate                                                                    4.16%            4.16%
      Expected dividend yield                                                              3%               3%
                                                                                    ––––––––         ––––––––
      The expected volatility was determined by calculating the historical volatility of the Company’s share
      price over the period from the date the Company floated on AIM on 29 November 2005 and the dates
      the options were granted and also by comparison with the volatilities of similar companies over the
      same period. The expected life used in the model has been adjusted, based on management’s best
      estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

(b)   Equity-settled long-term incentive scheme (LITP)
      Details of the Group’s LTIP scheme are described in the remuneration report.

      On 25 May 2007 the LTIP was amended following approval by the shareholders at the Company’s
      Annual General Meeting, so that any payment payable is satisfied in full by the issue of ordinary
      shares of the Company to any relevant executive director, rather than in cash.

      The assumptions used in the calculations for the current years are set out in the table below. There are
      no comparatives because in the period to 31 December 2006 the LTIP scheme was a cash-settled
      scheme rather than an equity settled scheme.

                                                                                                  Period from
                                                                                                   27 October
                                                                                 Year ended           2005 to
                                                                               31 December       31 December
                                                                                       2007              2006
                                                                                      £’000             £’000
      Date of grant                                                        22/11/2005            n/a
      Number of instruments                                                 1,344,610            n/a
      Share price at the date of grant                                         100.0p            n/a
      Share price at the date of measurement                                   98.50p            n/a
      Contractual life                                                         4 years           n/a
      Risk free interest rate                                                      5%            n/a
      Expected outcome of meeting performance criteria (at date of grant)       100%             n/a
                                                                            ––––––––     ––––––––
      Vesting is dependent on the Company’s NAV growth per share exceeding a compound growth rate of
      10 per cent. per annum in the four years ending on 31 December 2009.

      A progressive dividend growth policy is assumed in all fair value calculations.




                                                     85
REGISTRATION DOCUMENT – PART V


31.   Events after the balance sheet date
On 19 March 2008 the High Court of Justice, Chancery Division, Companies Court approved the reduction
of the Company’s Share Premium Account by a sum of £60,000,000. The reduction in the Share Premium
Account will result in an increase in the Company’s distributable reserves.

On 7 April 2008 the Board declared that an interim dividend of 3.2 pence per ordinary share will be paid on
16 May 2008 to shareholders on the register at the close of business on 18 April 2008.

32.   Related party transactions

(a)   Group

      Trading transactions
      During the year, group subsidiaries entered into trading transactions with related parties who are not
      members of the Group:

                                                                                         Amounts owed
                                               Purchase of services                     to related parties
                                                            Period from
                                                            27 October
                                             Year ended         2005 to
                                           31 December 31 December
                                                   2007            2006               2007             2006
                                                  £’000           £’000              £’000            £’000
      Ormix BV                                   640                  –                –               –
                                           ––––––––         ––––––––          ––––––––         ––––––––
      Ormix B.V., a company incorporated in the Netherlands, owns 50 per cent. of the issued ordinary
      shares of Hansteen Ormix B.V. The remaining 50 per cent. of the issued ordinary shares of Hansteen
      Ormix B.V. are owned by Hansteen Netherlands B.V. which is a wholly-owned subsidiary
      undertaking of Hansteen Holdings PLC. Ormix B.V. is therefore considered to be a related party of
      the Group.

      Purchases of services from Ormix B.V. were made at prices comparable with those paid by the Group
      for similar services from unrelated parties. At 31 December 2007 the amounts outstanding in respect
      of these trading transactions was £nil (2006: £nil).

      Other amounts due to related parties:

                                                                                      2007             2006
                                                                                     £’000            £’000
      Amount due to Ormix BV                                                        368               –
                                                                               ––––––––       ––––––––
      The amount due to Ormix B.V. represents a capital contribution from Ormix B.V. to Hansteen Ormix
      B.V. which was in the process of being formally documented as such at 31 December 2007. On 1 April
      2008 the formal documentation was completed and the amount due to Ormix was converted to capital.
      The amount due to Ormix B.V was unsecured and did not bear interest.

      Remuneration of key management personnel
      The aggregate remuneration of the Directors, who are the key management personnel of the Group,
      is set out below, as required by IAS 24 ‘Related Party Disclosures’. Further information about the
      remuneration of individual directors is provided in the audited part of the Remuneration Report on
      pages 61 to 62.




                                                    86
REGISTRATION DOCUMENT – PART V


                                                                                               Period from
                                                                                                27 October
                                                                               Year ended          2005 to
                                                                             31 December      31 December
                                                                                     2007             2006
                                                                                    £’000            £’000
      Short-term employee benefits                                                       983           1,001
      Post-employment benefits                                                            66              69
                                                                                  ––––––––        ––––––––
                                                                                       1,049           1,070
                                                                                  ––––––––        ––––––––
      In addition to the above remuneration the Executive Directors are entitled to share-based payments
      awards linked to Company performance over the four-year period to 31 December 2009. Current
      projections, using assumptions based on current interest rates, current exchange rates and current
      property yields indicate that the liability to the Executive Directors under the scheme for the period
      up to 31 December 2007 is estimated to be £61 5,000 (2006: £nil).

(b)   Company

      Transactions with subsidiaries
      The Company enters into loans with its subsidiaries to provide long-term funding for their investment
      activities. Interest is charged on these loans at Libor plus 0.8 per cent.

      The Company provides interest-free loans to its development subsidiary, Hansteen Land Limited to
      finance its operations.

      The Company is charged management fees by its management subsidiary, Hansteen Limited which
      undertakes day-to day management of the Hansteen Group on behalf of the Company. Management
      fees charged by Hansteen Limited to other subsidiaries of the Hansteen Group are recovered by the
      Company on behalf of Hansteen Limited.

      A summary of the transactions with the subsidiaries is as follows:

                                                                                               Period from
                                                                                                27 October
                                                                               Year ended          2005 to
                                                                             31 December      31 December
                                                                                     2007             2006
                                                                                    £’000            £’000
      Interest-bearing loans made to subsidiaries                                        –           65,375
      Interest-bearing loans repaid by subsidiaries                                 12,264                –
      Interest-free loans made to subsidiaries                                         249            5,279
      Loan fee disbursements recharged to subsidiaries                                 487              226
      Interest income received in respect of interest-bearing loans                  3,749            2,730
      Dividend income received                                                       2,100              373
      Management fees charged to the Company                                           498              457
      Management fees charged to the Company and
         recharged to subsidiaries                                                  2,384           1,918
                                                                                ––––––––         ––––––––




                                                    87
REGISTRATION DOCUMENT – PART V


       The balances outstanding at the year end from transactions with subsidiaries are as follows:

                                                                                                    Period from
                                                                                                     27 October
                                                                                   Year ended           2005 to
                                                                                 31 December       31 December
                                                                                         2007              2006
                                                                                        £’000             £’000
       Interest-bearing loans due from subsidiaries                                     53,111           65,375
       Amounts due from subsidiaries included in trade and other receivables             6,227             5,700
       Amounts due to subsidiaries included in trade and other receivables                (849)             (745)
                                                                                     ––––––––          ––––––––
                                                                                        58,489            70,330
                                                                                     ––––––––          ––––––––
       Remuneration of key management personnel
       The aggregate remuneration of the Directors and key management personnel of the Company are
       considered to be the same as for the Group.

33.    Financial instruments

Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns
while maximising the return to stakeholders through the optimisation of the debt and equity balance. The
capital structure of the Group consists of debt, which includes the borrowings disclosed in note 23, cash and
cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves
and retained earnings as disclosed in the balance sheet.

Gearing ratio
The Group’s management reviews the capital structure on a semi-annual basis in conjunction with the Board.
As part of this review, management considers the cost of capital and the risks associated with each class of
capital and debt.

The gearing ratio at the year end is as follows:

                                                                                           2007             2006
                                                                                          £’000            £’000
Debt                                                                           169,536                    15,689
Cash and cash equivalents                                                      (19,562)                  (14,395)
                                                                             ––––––––                  ––––––––
Net debt                                                                       149,974                     1,294
                                                                             ––––––––                  ––––––––
Equity                                                                         231,214                   137,872
                                                                             ––––––––                  ––––––––
Net debt to equity ratio                                                        64.9%                       0.9%
                                                                             ––––––––                  ––––––––
Carrying value of investment and trading properties                            411,919                   144,744
                                                                             ––––––––                  ––––––––
Net debt to value ratio                                                         36.4%                       0.9%
                                                                             ––––––––                  ––––––––
Debt is defined as long- and short-term borrowings, as detailed in note 23. The Group is not           subject to
externally imposed capital requirements.

Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.




                                                       88
REGISTRATION DOCUMENT – PART V


Categories of financial instruments
                                            Group                      Company                      Group                  Company
                                2007         2007        2007             2007         2006          2006        2006         2006
                             Carrying         Fair    Carrying             Fair     Carrying          Fair    Carrying         Fair
                                Value       Value        Value            Value        Value        Value        Value        Value
                               £’000        £’000       £’000            £’000        £’000         £’000       £’000        £’000
Financial assets
Designated as held for
   trading
Forward currency contracts          –           –            –                –         1,337        1,337       1,337        1,337
Interest rate caps                235         235          235              235            97           97           97           97
Interest rate swaps               144         144          144              144             –            –            –            –
                             ––––––––    ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
                                  379         379          379              379         1,434        1,434        1,434        1,434
                             ––––––––
                             ––––––––    ––––––––
                                         ––––––––     ––––––––
                                                      ––––––––         ––––––––
                                                                       ––––––––     ––––––––
                                                                                    ––––––––     ––––––––
                                                                                                 ––––––––     ––––––––
                                                                                                              ––––––––     ––––––––
                                                                                                                           ––––––––
Other financial assets
Trade and other
  receivables                    3,781       3,781        6,954            6,954        2,485        2,485        6,418        6,418
Cash and cash deposits          19,562      19,562       13,581           13,581       14,395       14,395       10,938       10,938
                             ––––––––    ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
                                23,343      23,343       20,535           20,535       16,880       16,880       17,356       17,356
                             ––––––––    ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
Total                           23,722      23,722       20,914           20,914       18,314       18,314       18,790       18,790
                             ––––––––
                             ––––––––    ––––––––
                                         ––––––––     ––––––––
                                                      ––––––––         ––––––––
                                                                       ––––––––     ––––––––
                                                                                    ––––––––     ––––––––
                                                                                                 ––––––––     ––––––––
                                                                                                              ––––––––     ––––––––
                                                                                                                           ––––––––
Financial liabilities
Designated as held for
  trading
Forward currency contracts     (9,710)      (9,710)      (9,710)          (9,710)          –            –            –            –
                            ––––––––     ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
At amortised cost
Secured bank loans           (167,711)    (167,711)          –                –       (15,689)     (15,689)          –            –
Bank overdrafts                (1,825)      (1,825)          –                –             –            –           –            –
                            ––––––––     ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
                             (169,536)    (169,536)          –                –       (15,689)     (15,689)          –            –
                            ––––––––     ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
Other financial liabilities
Trade and other payables       (6,916)      (6,916)      (1,162)          (1,162)      (3,333)      (3,333)        (920)        (920)
Finance lease payables         (3,497)      (3,497)           –                –            –            –            –            –
Tax payables                   (2,563)      (2,563)        (142)            (142)      (1,675)      (1,675)      (1,653)      (1,653)
                            ––––––––     ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
                              (12,976)     (12,976)      (1,304)          (1,304)      (5,008)      (5,008)      (2,573)      (2,573)
                            ––––––––     ––––––––     ––––––––         ––––––––     ––––––––     ––––––––     ––––––––     ––––––––
Total                        (192,222)    (192,222)     (11,014)         (11,014)     (20,697)     (20,697)      (2,573)      (2,573)
                            ––––––––
                            ––––––––     ––––––––
                                         ––––––––     ––––––––
                                                      ––––––––         ––––––––
                                                                       ––––––––     ––––––––
                                                                                    ––––––––     ––––––––
                                                                                                 ––––––––     ––––––––
                                                                                                              ––––––––     ––––––––
                                                                                                                           ––––––––

Fair value of financial instruments
The fair values of derivative financial assets and financial liabilities are determined by independent experts
in accordance with generally accepted pricing models.

Financial risk management objectives
The Group monitors and manages the financial risks relating to the operations of the Group through internal
risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk
(including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge
these risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the
Board of Directors. Compliance with policies and exposure limits is reviewed by the Board and management
on a continuous basis. The Group does not enter into or trade financial instruments, including derivative
financial instruments, for speculative purposes.

The Group’s management reports quarterly to the Board and Audit committee, an independent body that
monitors risks and policies implemented to mitigate risk exposures.




                                                                  89
REGISTRATION DOCUMENT – PART V


Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates
and interest rates. The Group enters into a variety of derivative financial instruments to manage its exposure
to interest rate and foreign currency risk, including:

•     interest rate swaps and caps to mitigate the risk of rising interest rates; and

•     forward foreign exchange contracts to hedge the exchange rate risk arising on translation of the
      Group’s investment in foreign operations which have the Euro as their functional currency.

Foreign currency risk management
The Group’s exposure to foreign currency exposure arises from the fact that there are foreign operations
which transact business denominated in Euros, with the translation of the local trading performance and local
net asset to Sterling for each financial period and at each balance sheet date giving rise to an exposure at the
Group to fluctuations in the Euro: Sterling exchange rate. The Group’s approach to managing this exposure
is to fund investments in Euro denominated operations with debt that is covered by forward currency
contracts to limit the overall exposure of the Group. By managing the exposure the impact of translating
overseas profits and assets has been minimal so these are not specifically hedged.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities
at the reporting date are as follows:

                                                    Group          Company              Group         Company
                                                     2007             2007               2006            2006
                                                    £’000            £’000              £’000           £’000
Gross currency assets                               18,937           13,037            10,498            7,090
Gross currency liabilities                        (170,913)               –           (16,845)               –
                                                 ––––––––         ––––––––          ––––––––         ––––––––
Net exposure                                      (151,976)         13,037             (6,347)          7,090
                                                 ––––––––         ––––––––          ––––––––         ––––––––
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of Belgium, France, Germany and the Netherlands (Euro
currency).

At 31 December 2007 the net assets of the Group were £231,214,000 (2006: £137,872,000) of which
£225,411,000 were denominated in Euros (2006: £128,874,000). At 31 December 2007 the Group had fixed
forward contracts to sell Euros 282,690,000 for £200,000,000 (2006: Euros 155,159,000 for £110,000,000)
and therefore the net assets exposure to currency fluctuations was £25,411,000 (2006: 18,874,000).

The effect of a 5 per cent. increase in the value of the Euro compared to Sterling would increase the net assets
of the Group at 31 December 2007 by £1,337,000 (2006: £993,000). The effect of a 5 per cent. decrease in
the value of the Euro compared to Sterling would decrease the net assets of the Group at 31 December 2007
by £1,210,000 (2006: 898,000).

Forward foreign exchange contracts
In the current year, the Group has entered into various forward currency contracts. These are entered into to
hedge the net investment in foreign operations but have not been designated as hedges. These contracts are
fair valued through the income statement.




                                                      90
REGISTRATION DOCUMENT – PART V


The following table details the forward foreign currency contracts outstanding as at the year end:
                                       Average                  Currency                  Contract                      Fair
                                      exchange                   contract                   value                     value
                                          rates       2007          2006           2007      2006         2007         2006
                              2007        2006    EUR 000’s    EUR 000’s          £’000     £’000        £’000        £’000
Group and Company
Sell Euros buy Sterling      1.4105      1.4105     155,159          155,159          –          –      (5,121)        1,337
Sell Euros buy Sterling      1.4243           –      71,215                –          –          –      (2,799)            –
Sell Euros buy Sterling      1.4079           –      56,316                –          –          –      (1,790)            –
                          ––––––––    ––––––––    ––––––––         ––––––––    ––––––––   ––––––––   ––––––––      ––––––––
Total                        1.4135      1.4105     282,690          155,159          –          –      (9,710)        1,337
                          ––––––––
                          ––––––––    ––––––––
                                      ––––––––    ––––––––
                                                  ––––––––         ––––––––
                                                                   ––––––––    ––––––––
                                                                               ––––––––   ––––––––
                                                                                          ––––––––   ––––––––
                                                                                                     ––––––––      ––––––––
                                                                                                                   ––––––––
As at 31 December 2007, the aggregate amount of unrealised losses under forward foreign exchange
contracts recognised in the income statement is £11,014,000 (2006: unrealised gains of £1,304,000). The
impact of the translation of the foreign operations which has been deferred in equity for which the contracts
are designed to minimise the exposure are £16,143,000 gain (2006: £1,581,000 loss).

Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. The
risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings,
by the use of interest rate swap contracts and interest rate cap contracts. See note 18 for details of the interest
rate derivatives.

The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk management section of this note.

The sensitivity analyses below have been determined based on the exposure to interest rates for both
derivatives and non- derivative instruments during the year.

                                                             Increase/(decrease) in profit before tax
                                                                                          Group         Company
                                                                                    Period from       Period from
                                                                                    27 October        27 October
                                                    Year ended     Year ended           2005 to           2005 to
                                                  31 December 31 December 31 December 31 December
                                                          2007            2007              2006             2006
                                                         £’000           £’000             £’000            £’000
Increase interest rate by 1 per cent.               (3)             612                           424                  443
Decrease interest rate by 1 per cent.             246              (367)                         (399)                (418)
                                            ––––––––         ––––––––                        ––––––––             ––––––––
There would have been no effect on amounts recognised directly in equity.

Interest rate swap and cap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating
rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to
mitigate the risk of changing interest rates on the fair value of issued fixed rate debt held and the cash flow
exposures on the issued variable rate debt held. The average interest rate is based on the outstanding balances
at the end of the financial period.

The interest rate swaps settle on a quarterly basis. The floating rate on the interest rate swaps is three months
EURIBOR. The Group settles the difference between the fixed and floating interest rate on a net basis.

Under interest rate caps the Group pays a premium to limit its exposure to floating interest rates to a fixed
upper limit determined at the time the interest rate cap contract is entered into.

The interest rate caps settle on a quarterly basis. The floating rate on the interest rate caps is three months
EURIBOR. If the floating rate exceeds the capped rate the Group receives the difference between the fixed
and capped interest rate on a net basis.



                                                              91
REGISTRATION DOCUMENT – PART V


The Group does not hedge account for its interest rate swaps or interest rate caps and states them at fair value
with changes in fair value included in the income statement.

The following tables detail the notional principal amounts and remaining terms of interest rate swap and cap
contracts outstanding as at the reporting date:

Economic hedges to the cash flows
                                         Average contract        Notional principal
                                         fixed interest rate          amount                        Fair value
                                        2007             2006      2007           2006       2007             2006
                                           %                %   EUR’000       EUR’000       £’000            £’000
Group and Company
Interest rate swaps – outstanding
   receive floating pay fixed
   contracts
In more than two years but less
   than five                              4.2            –         50,000           –         144               –
                                    ––––––––      ––––––––      ––––––––     ––––––––    ––––––––        ––––––––
Interest rate caps – outstanding
   receive floating
   pay fixed contracts
In more than one year but less
   than two                               4.0              –      25,000            –         184                –
In more than two years but less
   than five                              5.0           4.0        25,000       25,000         51              97
                                    ––––––––      ––––––––      ––––––––     ––––––––    ––––––––        ––––––––
                                                                   50,000       25,000        235              97
                                    ––––––––
                                    ––––––––      ––––––––
                                                  ––––––––      ––––––––
                                                                ––––––––     ––––––––
                                                                             ––––––––    ––––––––
                                                                                         ––––––––        ––––––––
                                                                                                         ––––––––

Credit risk management
The Group’s maximum exposure to credit risk is £23,343,000 (2006: £16,880,000) comprising trade and
other receivables and cash and cash deposits. The Group’s principal credit risk is attributable primarily to its
trade receivables £1,749,000 (2006: £356,000) which consist principally of rents due from tenants. The
balance is low relative to both the current and net assets of the Group and the Company.

Potential customers are evaluated for creditworthiness and where necessary collateral is secured. There is no
concentration of credit risk within the portfolio to either geographical business segment or company as the
Group has a well spread diverse customer base with no one customer accounting for more than 3 per cent.
of the gross rent roll.

Other receivables consist principally of property purchase deposits held in client accounts at solicitors and
VAT receivables. These items do not give rise to significant credit risk.

Cash deposits are held at banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which monitors the
Group’s short, medium and long-term funding and liquidity management requirements on a regular basis.
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities. As at 31 December 2007 the Group had additional undrawn committed borrowing
facilities of £59,475,000 (2006: £138,131,000) at its disposal to further reduce liquidity risk.




                                                           92
REGISTRATION DOCUMENT – PART V


Liquidity and interest risk tables
The following table details the Group’s remaining contractual maturity for its non-derivative financial
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest dates on which the Group can be required to pay. The table includes both interest and principal
cash flows.

                                                                                                            2007 Maturity
                                Weighted
                                 average
                                 effective     Less than         One to           Two to      More than
                             interest rate      one year       two years       five years     five years           Total
                                        %         £’000           £’000            £’000          £’000           £’000
Group
Non-interest bearing                    –         9,479                   –              –              –          9,479
Variable rate debt
  instruments                       5.43         52,703            8,843         124,980          12,716         199,242
Finance lease liability             5.23            279              283             848           3,877           5,287
                               ––––––––       ––––––––         ––––––––        ––––––––        ––––––––        ––––––––
                                                 62,461            9,126         125,828          16,593         214,008
                               ––––––––       ––––––––         ––––––––        ––––––––        ––––––––        ––––––––
Company
Non-interest bearing                  –           1,304               –               –               –            1,304
                               ––––––––       ––––––––         ––––––––        ––––––––        ––––––––        ––––––––
                                                                                                            2006 Maturity
                                Weighted
                                 average
                                 effective     Less than         One to           Two to      More than
                             interest rate      one year       two years       five years     five years           Total
                                        %         £’000           £’000            £’000          £’000           £’000
Group
Non-interest bearing                    –         5,008                   –              –              –          5,008
Variable rate debt
  instruments                       4.35            733             733           19,043              –           20,509
                               ––––––––       ––––––––         ––––––––        ––––––––        ––––––––        ––––––––
                                                  5,741             733           19,043              –           25,517
                               ––––––––       ––––––––         ––––––––        ––––––––        ––––––––        ––––––––
Company
Non-interest bearing                    –         2,573            –             –            –        2,573
                               –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
The following table details the Group’s expected maturity for its non-derivative financial assets. The tables
have been drawn up based on the undiscounted contractual maturities of the financial assets including
interest that will earned on those assets except here based on the earliest dates on which the Group can be
required to pay. The table includes both interest and principal cash flows.

                                                                                                        2007 Maturity
                                             Less than          One to           Two to More than
                                              one year        two years       five years five years                Total
                                                £’000            £’000            £’000      £’000                £’000
Group
Non-interest bearing                             3,781               –               –              –              3,781
Variable interest rate instruments              19,562               –               –              –             19,562
                                             ––––––––         ––––––––        ––––––––       ––––––––          ––––––––
                                                23,343               –               –              –             23,343
                                             ––––––––         ––––––––        ––––––––       ––––––––          ––––––––




                                                         93
REGISTRATION DOCUMENT – PART V


                                                                                                  2007 Maturity
                                           Less than           One to        Two to More than
                                            one year         two years    five years five years           Total
                                              £’000             £’000         £’000      £’000           £’000
Company
Non-interest bearing                           6,954                –            –          –             6,954
Variable interest rate instruments            13,581                –            –          –            13,581
                                           ––––––––          ––––––––     ––––––––   ––––––––         ––––––––
                                              20,535                –            –          –            20,535
                                           ––––––––          ––––––––     ––––––––   ––––––––         ––––––––
                                                                                                  2006 Maturity
                                           Less than           One to        Two to More than
                                            one year         two years    five years five years           Total
                                              £’000             £’000         £’000      £’000           £’000
Group
Non-interest bearing                           2,485                –            –          –            2,485
Variable interest rate instruments            14,395                –            –          –           14,395
                                           ––––––––          ––––––––     ––––––––   ––––––––        ––––––––
                                              16,880                –            –          –          16,880
                                           ––––––––          ––––––––     ––––––––   ––––––––        ––––––––
Company
Non-interest bearing                            6,418              –            –             –          6,418
Variable interest rate instruments            10,938               –            –             –         10,938
                                           –––––––– –––––––– –––––––– ––––––––                       ––––––––
                                              17,356               –            –             –         17,356
                                           –––––––– –––––––– –––––––– ––––––––                       ––––––––
The following table details the Group’s liquidity analysis for its derivative financial instruments. The table
has been drawn up based on the undiscounted net cash inflows/(outflows) on the derivative instrument that
settle on a net basis and the undiscounted gross inflows and (outflows) on those derivatives that require gross
settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined
by reference to the interest and foreign currency rates as at the reporting date.

                                                                                                  2007 Maturity
                                           Less than           One to        Two to More than
                                            one year         two years    five years five years           Total
                                              £’000             £’000         £’000      £’000           £’000
Group and Company
Net settled:
Interest rate swaps                              166              166          115           –             447
Interest rate caps                               125              103            –                         208
Gross settled:
Foreign exchange forward
   contracts – outflows                             –        (207,570)           –           –        (207,570)
Foreign exchange forward
   contracts – inflows                            –            200,000           –          –         200,000
                                           ––––––––          ––––––––     ––––––––   ––––––––        ––––––––
                                                291             (7,301)        115          –           (6,915)
                                           ––––––––          ––––––––     ––––––––   ––––––––        ––––––––




                                                        94
REGISTRATION DOCUMENT – PART V


                                                                                      2006 Maturity
                                 Less than          One to       Two to More than
                                  one year        two years   five years five years           Total
                                    £’000            £’000        £’000      £’000           £’000
Group and Company
Gross settled:
Foreign exchange forward
  contracts – outflows                  –                –    (104,548)          –        (104,548)
Foreign exchange forward
  contracts – inflows                   –                –      110,000          –        110,000
                                 ––––––––         ––––––––    ––––––––    ––––––––       ––––––––
                                        –                –        5,452          –           5,452
                                 ––––––––         ––––––––    ––––––––    ––––––––       ––––––––




                                             95
REGISTRATION DOCUMENT – PART V



                                 Independent Auditors’ Report

Independent auditors’ report to the members of Hansteen Holdings PLC
We have audited the group and parent company financial statements (the “financial statements”) of Hansteen
Holdings PLC for the year ended 31 December 2007 which comprise the Group Income Statement, the
Group and Parent Company Balance Sheets, the Group and Parent Company Cash Flow Statements, the
Group and Parent Company Statements of Changes in Equity and the related notes 1 to 33. These financial
statements have been prepared under the accounting policies set out therein. We have also audited the
information in the Directors’ Remuneration Report that is described as having been audited.

This report is made solely to the company’s members, as a body, in accordance with section 235 of the
Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to
be audited in accordance with relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the
financial statements and the part of the Directors’ Remuneration Report to be audited have been properly
prepared in accordance with the Companies Act 1985 and, as regards the group financial statements,
Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the
Directors’ Report is consistent with the financial statements. The information given in the Directors’ Report
includes that specific information presented in the Chairman’s Statement and Joint Chief Executive’s Review
that is cross referred from the Business Review section of the Directors’ Report.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we
have not received all the information and explanations we require for our audit, or if information specified
by law regarding directors’ remuneration and other transactions is not disclosed.

Although not required to do so, the directors have voluntarily chosen to make a corporate governance
statement detailing their compliance with the 2006 Combined Code. We review whether the Corporate
Governance Statement reflects the company’s compliance with the nine provisions of the 2006 Combined
Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it
does not. We are not required to consider whether the board’s statements on internal control cover all risks
and controls, or form an opinion on the effectiveness of the group’s corporate governance procedures or its
risk and control procedures.

We read the other information contained in the Annual Report as described in the contents section and
consider whether it is consistent with the audited financial statements. We consider the implications for our
report if we become aware of any apparent misstatements or material inconsistencies with the financial
statements. Our responsibilities do not extend to any further information outside the Annual Report.

Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by
the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements and the part of the Directors’ Remuneration Report to be
audited. It also includes an assessment of the significant estimates and judgments made by the directors in


                                                     96
REGISTRATION DOCUMENT – PART V


the preparation of the financial statements, and of whether the accounting policies are appropriate to the
group’s and company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial statements and the part of the Directors’ Remuneration Report to be audited are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the financial statements and the part of
the Directors’ Remuneration Report to be audited.

Opinion
In our opinion:

•     the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the
      European Union, of the state of the group’s affairs as at 31 December 2007 and of its profit for the
      year then ended;

•     the parent company financial statements give a true and fair view, in accordance with IFRSs as
      adopted by the European Union as applied in accordance with the provisions of the Companies Act
      1985, of the state of the parent company’s affairs as at 31 December 2007;

•     the financial statements and the part of the Directors’ Remuneration Report to be audited have been
      properly prepared in accordance with the Companies Act 1985 and, as regards the group financial
      statements, Article 4 of the IAS Regulation; and

•     the information given in the Directors’ Report is consistent with the financial statements.


Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
7 April 2008




                                                     97
REGISTRATION DOCUMENT – PART V


(C)    YEAR ENDED 31 DECEMBER 2008

Consolidated income statement
for the year ended 31 December 2008

                                                                    2008         2007
                                                         Note      £’000        £’000
Group
Revenue                                                    5       34,884       18,400
Cost of sales                                                      (8,174)      (1,751)
                                                                ––––––––     ––––––––
Gross profit                                                       26,710       16,649
Administrative expenses                                            (3,934)      (4,159)
                                                                ––––––––     ––––––––
Operating profit before losses and gains on investment
  properties and before gain on sale of subsidiary                 22,776       12,490
(Losses)/gains on investment properties                    9      (41,655)      19,614
Gain on sale of subsidiary                                28          161            –
                                                                ––––––––     ––––––––
Operating (loss)/profit                                           (18,718)      32,104
Losses on forward currency contracts                      10      (45,006)     (11,014)
Finance income                                            11        2,111        1,649
Finance costs                                             11      (13,050)      (4,549)
Change in fair value of interest rate derivatives         11       (4,579)         238
Foreign exchange gains                                    11       18,299        1,946
                                                                ––––––––     ––––––––
(Loss)/profit before tax                                          (60,943)      20,374
Tax                                                       12        1,388       (6,799)
                                                                ––––––––     ––––––––
(Loss)/profit for the year                                 7      (59,555)      13,575
                                                                ––––––––     ––––––––
Attributable to:
Equity holders of the parent                                      (59,571)     13,472
Minority interests                                                     16         103
                                                                ––––––––     ––––––––
(Loss)/profit for the year                                        (59,555)     13,575
                                                                ––––––––     ––––––––
Earnings per share
Basic                                                     14       (33.4p)       8.1p
                                                                ––––––––     ––––––––
Diluted                                                   14       (33.4p)       8.1p
                                                                ––––––––     ––––––––
All results derive from continuing operations.




                                                    98
REGISTRATION DOCUMENT – PART V


Balance sheets
31 December 2008

                                              Group     Company         Group     Company
                                               2008        2008          2007        2007
                                    Note      £’000       £’000         £’000       £’000
Non-current assets
Goodwill                             15       2,241             –       2,252             –
Property, plant and equipment        16          32             –          31             –
Investment property                  17     492,357             –     391,242             –
Investment property held for sale    17           –             –      15,417             –
Investment in subsidiary
  undertakings                       18            –      124,655            –      177,752
Deferred tax asset                   26            –       15,762        2,885        2,885
Derivative financial instruments     19          273           96          379          379
                                           ––––––––     ––––––––     ––––––––     ––––––––
                                             494,903      140,513      412,206      181,016
                                           ––––––––     ––––––––     ––––––––     ––––––––
Current assets
Trading properties                   20        2,750            –        5,260            –
Trade and other receivables          21        5,831       60,954        3,781        6,954
Cash and cash equivalents            22       80,240       55,617       19,562       13,581
Derivative financial instruments     19       13,747       13,747            –            –
                                           ––––––––     ––––––––     ––––––––     ––––––––
                                             102,568      130,318       28,603       20,535
                                           ––––––––     ––––––––     ––––––––     ––––––––
Total assets                                 597,471      270,831      440,809      201,551
                                           ––––––––     ––––––––     ––––––––     ––––––––
Current liabilities
Trade and other payables             23       (9,919)     (35,544)      (6,916)      (1,162)
Current tax liabilities                       (4,907)      (2,861)      (2,563)        (142)
Borrowings                           24         (926)           –       (2,579)           –
Obligations under finance leases     25         (372)           –         (279)           –
Derivative financial instruments     19      (68,407)     (68,407)           –            –
                                           ––––––––     ––––––––     ––––––––     ––––––––
                                             (84,531)    (106,812)     (12,337)      (1,304)
                                           ––––––––     ––––––––     ––––––––     ––––––––
Non-current liabilities
Borrowings                           24     (280,318)           –     (166,957)           –
Obligations under finance leases     25       (4,071)           –       (3,218)           –
Derivative financial instruments     19       (4,509)      (1,391)      (9,710)      (9,710)
Deferred tax liabilities             26      (10,678)           –      (17,194)           –
                                           ––––––––     ––––––––     ––––––––     ––––––––
                                            (299,576)      (1,391)    (197,079)      (9,710)
                                           ––––––––     ––––––––     ––––––––     ––––––––
Total liabilities                           (384,107)    (108,203)    (209,416)     (11,014)
                                           ––––––––     ––––––––     ––––––––     ––––––––
Net assets                                   213,364      162,628      231,393      190,537
                                           ––––––––     ––––––––     ––––––––     ––––––––




                                               99
REGISTRATION DOCUMENT – PART V


                                                 Group        Company            Group     Company
                                                  2008           2008             2007        2007
                                  Note           £’000          £’000            £’000       £’000
Equity
Share capital                        27         17,843           17,843          17,843       17,843
Share premium account                          114,312          114,312         174,312      174,312
Translation reserve                             60,483                –          13,287            –
Retained earnings                               19,907           30,473          25,772       (1,618)
                                             ––––––––         ––––––––        ––––––––     ––––––––
Equity attributable to equity
  holders of the parent                         212,545         162,628          231,214     190,537
Minority interest                                   819               –              179           –
                                              ––––––––        ––––––––         ––––––––    ––––––––
Total equity                                    213,364         162,628          231,393     190,537
                                              ––––––––        ––––––––         ––––––––    ––––––––
These financial statements were approved by the Board of Directors on 1 April 2009.

Signed on behalf of the Board of Directors




I R Watson                M L Jones
Director                  Director




                                                  100
REGISTRATION DOCUMENT – PART V


Statement of changes in equity
for the year ended 31 December 2008
                                               Share         Share    Translation    Retained
                                              capital     premium        reserves    earnings        Total
                                                2008          2008          2008         2008        2008
                                     Note      £’000         £’000         £’000        £’000       £’000
Group
Exchange differences arising on
  translation of overseas
  operations                                       –             –        45,710            –      45,710
Tax credit on items taken
  directly to equity                               –             –         1,275            –        1,275
Translation differences recognised
  on sale of subsidiary                            –            –           211            –          211
                                            ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Net gain recognised
  directly in equity                               –            –         47,196            –       47,196
Loss for the year                                  –            –              –      (59,571)     (59,571)
                                            ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Total recognised income
  and expense for the year                         –             –        47,196      (59,571)     (12,375)
Reduction of share
  premium account                                  –       (60,000)            –      60,000             –
Costs of reduction of
  share premium account                            –             –             –          (22)         (22)
Share-based payments                               –             –             –         (562)        (562)
Dividends paid                        13           –             –             –       (5,710)      (5,710)
Equity shareholders’ funds
  at 1 January 2008                            17,843      174,312        13,287       25,772      231,214
                                            ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Equity shareholders’ funds
  at 31 December 2008                          17,843      114,312        60,483       19,907      212,545
                                            ––––––––
                                            ––––––––     ––––––––
                                                         ––––––––      ––––––––
                                                                       ––––––––     ––––––––
                                                                                    ––––––––     ––––––––
                                                                                                 ––––––––
Company
Loss for the year                                  –            –             –       (21,615)     (21,615)
                                            ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Total recognised income and
  expense for the year                             –             –             –      (21,615)     (21,615)
Reduction of share
  premium account                                  –       (60,000)            –      60,000             –
Costs of reduction of share
  premium account                                  –             –             –          (22)         (22)
Share-based payments                               –             –             –         (562)        (562)
Dividends paid                        13           –             –             –       (5,710)      (5,710)
Equity shareholders’ funds
  at 1 January 2008                           17,843      174,312             –        (1,618)    190,537
                                            ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Equity shareholders’ funds
  at 31 December 2008                          17,843      114,312            –        30,473      162,628
                                            ––––––––
                                            ––––––––     ––––––––
                                                         ––––––––      ––––––––
                                                                       ––––––––     ––––––––
                                                                                    ––––––––     ––––––––
                                                                                                 ––––––––




                                                   101
REGISTRATION DOCUMENT – PART V


                                               Share        Share    Translation    Retained
                                              capital    premium        reserves    earnings        Total
                                                2007         2007          2007         2007        2007
                                   Note        £’000        £’000         £’000        £’000       £’000
Group
Exchange differences arising
  on translation of overseas
  operations                                       –            –        16,143            –      16,143
Tax on items taken directly
  to equity                                       –            –         (1,714)          –        (1,714)
                                           ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Net gain recognised directly
  in equity                                       –            –         14,429            –       14,429
Profit for the year                               –            –              –       13,472       13,472
                                           ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Total recognised income and
  expense for the year                             –            –        14,429      13,472       27,901
Ordinary shares issued at
  a premium                                    5,343       64,657             –            –      70,000
Cost of issue of shares at
  a premium                                        –       (1,478)            –            –       (1,478)
Share-based payments                               –            –             –          669          669
Dividends paid                      13             –            –             –       (3,750)      (3,750)
Equity shareholders’ funds
  at 1 January 2007                           12,500      111,133        (1,142)      15,381      137,872
                                           ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Equity shareholders’ funds
  at 31 December 2007                         17,843      174,312        13,287       25,772      231,214
                                           ––––––––
                                           ––––––––     ––––––––
                                                        ––––––––      ––––––––
                                                                      ––––––––     ––––––––
                                                                                   ––––––––     ––––––––
                                                                                                ––––––––
Company
Loss for the year                                 –            –             –        (2,406)      (2,406)
                                           ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Total recognised income and
  expense for the year                             –            –             –       (2,406)      (2,406)
Ordinary shares issued at
  a premium                                    5,343       64,657             –            –      70,000
Cost of issue of shares at
  a premium                                        –       (1,478)            –            –       (1,478)
Share-based payments                               –            –             –          669          669
Dividends paid                      13             –            –             –       (3,750)      (3,750)
Equity shareholders’ funds at
  1 January 2007                              12,500      111,133            –         3,869      127,502
                                           ––––––––     ––––––––      ––––––––     ––––––––     ––––––––
Equity shareholders’ funds at
  31 December 2007                            17,843      174,312            –        (1,618)     190,537
                                           ––––––––
                                           ––––––––     ––––––––
                                                        ––––––––      ––––––––
                                                                      ––––––––     ––––––––
                                                                                   ––––––––     ––––––––
                                                                                                ––––––––
As permitted by section 230 of the Companies Act 1985, the profit and loss account of the parent company
is not presented as part of these accounts. The parent company’s loss for the financial year amounted to
£21,615,000 (2007: £2,406,000).




                                                  102
REGISTRATION DOCUMENT – PART V


Cash flow statement
for the year ended 31 December 2008
                                                                        2008         2007
                                                             Note      £’000        £’000
Group
Net cash inflow from operating activities                     29      17,925         8,475
Investing activities
Interest received                                                       2,111        1,649
Additions to property, plant and equipment                                (25)         (19)
Additions to investment properties                                    (30,461)    (193,367)
Proceeds on sale of investment properties                              22,659          460
Acquisition of subsidiaries                                                 –      (12,339)
Disposal of subsidiaries                                      28          531            –
                                                                    ––––––––     ––––––––
Net cash used in investing activities                                  (5,185)    (203,616)
                                                                    ––––––––     ––––––––
Financing activities
Dividend paid                                                          (5,710)      (3,750)
Proceeds from issue of shares at a premium net of expenses                  –       68,522
Costs of reduction of share premium account                               (22)           –
Repayments of obligations under finance leases                           (138)         (30)
New bank loans raised (net of expenses)                               165,839     132,800
Bank loans repaid                                                    (114,566)           –
(Reduction)/increase in bank overdrafts                                (2,041)       1,826
Additions to derivative financial instruments                            (464)         (71)
Capital contribution from minority shareholders                           493           69
Dividend paid to minority shareholders                                    (14)           –
                                                                    ––––––––     ––––––––
Net cash from financing activities                                     43,377      199,366
                                                                    ––––––––     ––––––––
Net increase in cash and cash equivalents                              56,117        4,225
Cash and cash equivalents at beginning of year                         19,562       14,395
Effect of foreign exchange rates                                        4,561          942
                                                                    ––––––––     ––––––––
Cash and cash equivalents at end of year                               80,240       19,562
                                                                    ––––––––     ––––––––
Company
Net cash outflow from operating activities                    29      (14,503)      (3,504)
                                                                    ––––––––     ––––––––
Investing activities
Interest received                                                       5,146        4,950
Dividends received from subsidiaries                                        –        2,100
Investments in subsidiaries                                               (14)     (66,467)
Loans repaid by subsidiaries                                          53,111             –
                                                                    ––––––––     ––––––––
Net cash from/(used in) investing activities                           58,243      (59,417)
                                                                    ––––––––     ––––––––
Financing activities
Dividend paid                                                          (5,710)      (3,750)
Proceeds from issue of shares at a premium net of expenses                  –      68,522
Costs of reduction of share premium account                               (22)           –
Additions to derivative financial instruments                            (103)         (71)
                                                                    ––––––––     ––––––––
Net cash (used in)/from financing activities                           (5,835)     64,701
                                                                    ––––––––     ––––––––
Net increase in cash and cash equivalents                              37,905        1,780
Cash and cash equivalents at beginning of year                         13,581       10,938
Effect of foreign exchange rates                                        4,131          863
                                                                    ––––––––     ––––––––
Cash and cash equivalents at end of year                               55,617       13,581
                                                                    ––––––––     ––––––––




                                                  103
REGISTRATION DOCUMENT – PART V


Notes to the financial statements
for the year ended 31 December 2008

1.    General information
Hansteen Holdings PLC was incorporated in the United Kingdom under the Companies Act 1985 on
27 October 2005. The address of the registered office is 1 Berkeley Street, London W1J 8DJ.

The Company was listed on AIM on 29 November 2005.

The Group’s principal activities are those of a property group investing mainly in industrial properties in
Continental Europe.

These financial statements are presented in Pounds Sterling because that is the currency of the primary
economic environment in which the Company operates. Foreign operations are included in accordance with
the policies set out in note 3.

2.    Adoption of new and revised standards
Standards, amendments and interpretations that became effective in 2008 but have no effect on the
Group’s operations:

IFRIC 11                   IFRS 2 Group and Treasury Share Transactions
IFRIC 12                   Service concession arrangements
IFRIC 13                   Customer loyalty programmes
IFRIC 14                   IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements
                           and their Interaction

Standards, amendments and interpretations to existing standards that are not yet effective and have not
been adopted early by the Group:

IFRS 1 (amended)           Cost of an Investment in a Subsidiary, Jointly-Controlled Entity or Associate
IFRS 2 (amended)           Share-based Payment – Vesting Conditions and Cancellations
IFRS 3 (revised 2008)      Business Combinations
IFRS 8                     Operating Segments
IAS 1 (revised 2007)       Presentation of Financial Statements
IAS 23 (revised 2007)      Borrowing Costs
IAS 27 (revised 2008)      Consolidated and Separate Financial Statements
IAS 32 (amended)           Financial instruments: Presentation
IAS 39 (amended)/
IFRS7 (amended)            Reclassification of Financial Instruments/Reclassification of Financial Assets:
                           Effective Date and Transition.
IAS 39 (amended)           Financial Instruments: Recognition and Measurement – Eligible Hedged Items
IFRIC 15                   Agreements for the Construction of Real Estate
IFRIC 16                   Hedges of a Net Investment in a Foreign Operation
IFRIC 17                   Distributions of Non-cash assets to Owners
IFRIC 18                   Transfer of Assets from Customers

The Directors anticipate that the adoption of the standards and interpretations in future periods will have no
material impact on the financial statements of the Group except for potential additional segment disclosures
when IFRS 8 comes into effect for periods commencing on or after 1 January 2009.

3.    Significant accounting policies
Basis of accounting
The financial statements have been prepared on a going concern basis and in accordance with International
Financial Reporting Standards (‘IFRSs’) adopted by the European Union and therefore the Group financial
statements comply with Article 4 of the EU IAS Regulation.


                                                     104
REGISTRATION DOCUMENT – PART V


The financial statements have been prepared on the historical cost basis, except for the revaluation of
investment properties and certain financial instruments.

The preparation of financial statements in conformity with generally accepted accounting principles requires
the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management’s best knowledge of the amount, event or actions, actual
results ultimately may differ from those estimates. The principal accounting policies are set out below.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December. Control is achieved where the
Company has the power to govern the financial and operating policies of an investee entity so as to obtain
benefits from its activities.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s
equity therein. Minority interests consist of the amount of those interests at the date of the original business
combination (see below) and the minority’s share of changes in equity since the date of the combination.
Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated
against the interests of the Group except to the extent that the minority has a binding obligation and is able
to make an additional investment to cover the losses.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income
statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

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

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is
measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs
directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the
acquisition date except for non-current assets (or disposal groups) that are classified as held for sale in
accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are
recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of
the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair
value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in profit or loss.

Non-current assets held for sale
Non-current assets (and disposal groups) classified as held for sale, except investment properties, are
measured at the lower of carrying amount and fair value less costs to sell.

Investment properties classified as held for sale are carried at fair value in accordance with IAS 40
‘Investment Properties’.

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be
recovered through a sale transaction rather than through continuing use. This condition is regarded as met
only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its



                                                       105
REGISTRATION DOCUMENT – PART V


present condition. Management must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest
in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly-controlled entity
at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured
at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for
impairment annually. Any impairment is recognised immediately in profit or loss and is not subsequently
reversed.

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 the carrying amount of the
unit, 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.

On disposal of a subsidiary, associate or jointly-controlled entity, the attributable amount of goodwill is
included in the determination of profit or loss on disposal.

Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business, net of discounts, VAT and other
sales-related taxes.
Rental income is recognised on an accruals basis. Where a lease incentive is granted, which does not enhance
the value of the property, or a rent-free period is granted, the effective cost is amortised on a straight-line
basis over the period from the date of lease commencement to the earliest termination date.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.
Revenue from the sale of trading and investment properties is recognised when the significant risks and
returns have been transferred to the buyer. This is generally on unconditional exchange of contracts. The
profit on disposal of trading and investment properties is determined as the difference between the sales
proceeds and the carrying amount of the asset at the commencement of the accounting period plus additions
in the period.

Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases. Where a property is
held under a head lease it is initially recognised as an asset as the sum of the premium paid on acquisition
and the present value of minimum ground rent payments. The corresponding rent liability to the head
leaseholder is included in the balance sheet as a finance lease obligation. Where only the buildings element
of a property lease is classified as a finance lease, the ground rent payments for the land element are shown
within operating leases. Rentals payable under operating leases are charged to the income statement on a
straight-line basis over the term of the relevant lease.

Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary
economic environment in which it operates (its functional currency). For the purpose of the consolidated
financial statements, the results and financial position of each group company are expressed in pounds
sterling, which is the functional currency of the Company, and the presentation currency for the consolidated
financial statements.



                                                       106
REGISTRATION DOCUMENT – PART V


In preparing the financial statements of the individual companies, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates
of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are translated 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 arising on the settlement of monetary items, and on the retranslation of monetary
items, are included in profit or loss for the period in which they arise. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are included in profit or loss for the period in which
they arise except for differences arising on the retranslation of non-monetary items in respect of which gains
and losses are recognised directly in equity. For such non-monetary items, any exchange component of that
gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense
items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of transactions are used. Exchange
differences arising, if any, are classified as equity and transferred to the Group’s foreign currency translation
reserve. Such translation differences are recognised as income or as expenses in the period in which the
operation is disposed of.

Share-based payments
The fair value of equity-settled share-based payments to employees is determined at the date of grant and is
expensed on a straight-line basis over the vesting period based on the Company’s estimate of options that
will eventually vest. Fair value is measured by use of a binomial model for the Employee Share Option
Scheme. The expected life used in the model has been adjusted based on management’s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural considerations.

The fair value of the shares to be awarded under the Long-Term Incentive Plan is determined at the
measurement date by reference to the current share price at that date less the discounted value of estimated
future dividends.

Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on 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, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary differences can
be utilised. Deferred tax is measured on a non-discounted basis.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled
or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.




                                                       107
REGISTRATION DOCUMENT – PART V


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.

Property, plant and equipment
This comprises computer and office equipment. Computers and office equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of computers and office equipment, over their
estimated useful lives, using the straight-line method, on the following bases:
Computers                   three years
Office equipment            three years

Investment properties
Investment properties, which comprises freehold and leasehold property held to earn rentals and/or for
capital appreciation, are treated as acquired when the Group assumes the significant risks and rewards of
ownership. Acquisitions of investment properties including related transaction costs and subsequent
additions of a capital nature are initially recognised in the accounts at cost. At each reporting date the
investment properties are re-valued to their fair values based on a professional valuation at the balance sheet
date. Gains or losses arising from changes in the fair value of investment property are included in profit or
loss for the period in which they arise.

Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost less provisions for impairment.

Trading properties
Trading properties are included in the balance sheet at the lower of cost and net realisable value and are
treated as acquired when the Group assumes the significant risks and rewards of ownership. Cost includes
development costs specifically attributable to properties in the course of development. Net realisable value
represents the estimated selling price less further costs expected to be incurred to completion and disposal.

Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group
becomes a party to the contractual provisions of the instrument.

Financial Assets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of an
investment is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, plus transaction costs, except
for those financial assets classified as at fair value through profit or loss, which are initially measured at fair
value.

Financial assets are classified into the following specified categories: financial assets ‘at fair value through
profit or loss’ (FVTPL), ‘held-tomaturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans
and receivables’. The classification depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.

Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees on points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for
debt instruments other than those financial assets designated as at FVTPL.


                                                       108
REGISTRATION DOCUMENT – PART V


Financial assets at FVTPL
Financial assets are classified as at FVTPL where 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 in the near future; or
•      it is a part of an identified portfolio of 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 Group 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; or
•      Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit
       or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned
       on the financial asset.

Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as loans and receivables. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the recognition of interest would be
immaterial.

Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been impacted. Objective evidence of impairment could include:

•      significant financial difficulty of the issuer or counterparty; or

•      default or delinquency in interest or principal payments; or

•      it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a collective basis. Objective evidence of
impairment for a portfolio of receivables could include the Group’s past experience of collecting payments,
an increase in the number of delayed payments in the portfolio past the normal average credit period, as well
as observable changes in national or local economic conditions that correlate with default on receivables.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an
allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the allowance account.
Changes in the carrying amount of the allowance account are recognised in profit or loss.



                                                       109
REGISTRATION DOCUMENT – PART V


If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortised cost would have been had the impairment not
been recognised.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of
changes in value.

De-recognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset
to another entity. 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.

Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into.

Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.

Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially at their fair values and are subsequently
measured at the higher of:

•      the amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions,
       Contingent Liabilities and Contingent Assets; and

•      the amount initially recognised less, where appropriate, cumulative amortisation recognised in
       accordance with the revenue recognition policies set out above.

Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.

Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is
designated as at FVTPL. A financial liability is classified as held for trading if:

•      it has been incurred principally for the purpose of disposal in the near future; or

•      it is a part of an identified portfolio of 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.




                                                        110
REGISTRATION DOCUMENT – PART V


A financial liability other than a financial liability 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 liability 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 Group 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 liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or
loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method,
with interest expense recognised on an effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash payments through
the expected life of the financial liability, or, where appropriate, a shorter period.

De-recognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or they expire.

Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign exchange rate risk, including foreign exchange forward contracts and interest rate swaps and foreign
currency options.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is
recognised in profit or loss immediately.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the
instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current liabilities.

4.     Critical accounting judgements and key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date used in preparing these accounts are:

Property valuations
In determining the fair value of investment properties under IAS 40 at open market value, there is a degree
of uncertainty and judgement involved. The Group uses external professional valuers who provide
independent valuations of the investment properties.

Financial instruments
Certain derivative financial instruments are carried at fair value in accordance with IAS 39. These valuations
are performed by third-party external professionals.


                                                       111
REGISTRATION DOCUMENT – PART V


Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating
units to which the goodwill has been allocated. The value in use calculation requires the entity to estimate
the future cash flows expected to arise from the cash-generating units and a suitable discount rate in order to
calculate the present value.

Valuation of Long-Term Incentive Plan (‘LTIP’)
In assessing whether any share awards are to be granted under the LTIP the Company is required to estimate
the growth of the net assets of the Group over the period of the LTIP and the fair value of a share at the grant
date and the balance sheet date. These estimates involve making a variety of assumptions concerning inter
alia rents and related costs, yields, administrative costs, interest rates, exchange rates, dividend rates and the
rate and level of property acquisitions.

5.      Revenue
An analysis of the Group’s revenue is as follows:

                                                                                             2008             2007
                                                                                            £’000            £’000
Property rental income                                                                      34,884          18,400
                                                                                         ––––––––         ––––––––
Interest receivable on bank deposits                                                         2,074            1,599
Other interest receivable                                                                       37               50
                                                                                         ––––––––         ––––––––
                                                                                             2,111            1,649
                                                                                         ––––––––         ––––––––
Total                                                                                       36,995           20,049
                                                                                         ––––––––         ––––––––

6.      Business and geographical segments
Business segments
The Group’s primary reporting segments are the classification of its properties based on whether they are
held for investment or trading. The secondary reporting segments are the classification of its properties based
on geographic location.

The Company’s business is to invest in its subsidiaries and therefore it operates in a single segment.

(a)     Totals by business segment
                                      Trading    Investment                   Trading       Investment
                                    properties    properties       Total    properties       properties        Total
                                         2008          2008        2008          2007             2007         2007
                                        £’000         £’000       £’000         £’000            £’000        £’000
        Group
        Property rental income             –        34,884        34,884           –            18,400        18,400
                                    ––––––––     ––––––––      ––––––––     ––––––––         ––––––––      ––––––––
        Revenue                            –        34,884        34,884           –            18,400        18,400
        Direct property operating
          expenses                        (65)       (5,307)      (5,372)         (62)          (1,696)       (1,758)
        Impairment of trading
          properties                   (2,802)            –       (2,802)           –                –             –
        Cost of sales of trading
          properties                       –             –             –           7                 –             7
        Administrative expenses          (52)       (3,750)       (3,802)        (59)           (2,954)       (3,013)
                                    ––––––––     ––––––––      ––––––––     ––––––––         ––––––––      ––––––––




                                                         112
REGISTRATION DOCUMENT – PART V


                                    Trading    Investment                   Trading    Investment
                                  properties    properties       Total    properties    properties       Total
                                       2008          2008        2008          2007          2007        2007
                                      £’000         £’000       £’000         £’000         £’000       £’000
     Operating (loss)/profit
       before (losses)/gains on
       investment properties
       and sale of subsidiary        (2,919)      25,827       22,908          (114)      13,750       13,636
     (Losses)/gains on
       investment properties              –       (41,655)     (41,655)           –       19,614       19,614
     Gain on disposal of
       subsidiary                         –          161           161           –            –             –
                                  ––––––––     ––––––––      ––––––––     ––––––––     ––––––––      ––––––––
     Segment result                  (2,919)     (15,667)      (18,586)       (114)      33,364        33,250
                                  ––––––––
                                  ––––––––     ––––––––
                                               ––––––––      ––––––––
                                                             ––––––––     ––––––––
                                                                          ––––––––     ––––––––
                                                                                       ––––––––      ––––––––
                                                                                                     ––––––––
     Unallocated corporate
       expenses                                                   (132)                                 (1,146)
                                                             ––––––––                                ––––––––
     Operating (loss)/profit                                   (18,718)                                 32,104
     Losses on forward currency
       contract                                                (45,006)                                (11,014)
     Net finance income/(costs)                                  2,781                                    (716)
                                                             ––––––––                                ––––––––
     (Loss)/profit before tax                                  (60,943)                                 20,374
     Tax                                                         1,388                                  (6,799)
                                                             ––––––––                                ––––––––
     (Loss)/profit for the year                                (59,555)                                 13,575
                                                             ––––––––
                                                             ––––––––                                ––––––––
                                                                                                     ––––––––
     Direct property operating expenses relating to investment properties that did not generate any rental
     income were £nil (2007: £35,200).

     Balance sheet
                                    Trading    Investment                   Trading    Investment
                                  properties    properties       Total    properties    properties       Total
                                       2008          2008        2008          2007          2007        2007
                                      £’000         £’000       £’000         £’000         £’000       £’000
     Group
     Goodwill                             –        2,241         2,241            –        2,252         2,252
     Property assets                  2,750      492,357       495,107        5,260      406,659       411,919
     Other assets                        58       30,124        30,182            2        9,487         9,489
                                  ––––––––     ––––––––      ––––––––     ––––––––     ––––––––      ––––––––
     Segment assets                   2,808      524,722       527,530        5,262      418,398       423,660
                                  ––––––––
                                  ––––––––     ––––––––
                                               ––––––––      ––––––––
                                                             ––––––––     ––––––––
                                                                          ––––––––     ––––––––
                                                                                       ––––––––      ––––––––
                                                                                                     ––––––––
     Unallocated corporate
       assets                                                   69,941                                  17,149
                                                             ––––––––                                ––––––––
     Consolidated total assets                                597,471                                 440,809
                                  ––––––––
                                  ––––––––     ––––––––
                                               ––––––––      ––––––––
                                                             ––––––––     ––––––––
                                                                          ––––––––     ––––––––
                                                                                       ––––––––      ––––––––
                                                                                                     ––––––––
     Segment liabilities              (164)      (16,530)      (16,694)        (11)       (9,105)       (9,116)
                                  ––––––––
                                  ––––––––     ––––––––
                                               ––––––––      ––––––––
                                                             ––––––––     ––––––––
                                                                          ––––––––     ––––––––
                                                                                       ––––––––      ––––––––
                                                                                                     ––––––––
     Unallocated corporate
       liabilities                                            (367,413)                               (200,300)
                                                             ––––––––                                ––––––––
     Consolidated total
       liabilities                                            (384,107)                               (209,416)
                                  ––––––––
                                  ––––––––     ––––––––
                                               ––––––––      ––––––––
                                                             ––––––––     ––––––––
                                                                          ––––––––     ––––––––
                                                                                       ––––––––      ––––––––
                                                                                                     ––––––––
     Additions to properties           292        30,461        30,753         109       218,880       218,989
                                  ––––––––
                                  ––––––––     ––––––––
                                               ––––––––      ––––––––
                                                             ––––––––     ––––––––
                                                                          ––––––––     ––––––––
                                                                                       ––––––––      ––––––––
                                                                                                     ––––––––




                                                       113
REGISTRATION DOCUMENT – PART V


(b)    Totals by geographic segment
       The Group’s property operations are located in Belgium, France, Germany, the Netherlands and the
       United Kingdom. The following table provides an analysis of the Group’s revenue by geographical
       market:

                                                                                    2008             2007
                                                                                   £’000            £’000
       Group
       Belgium                                                                    3,495               946
       France                                                                     1,863             1,145
       Germany                                                                   16,212             7,960
       Netherlands                                                               13,314             8,349
                                                                               –––––––           –––––––
                                                                                 34,884            18,400
                                                                               –––––––           –––––––
       The following is an analysis of the carrying amount of segment assets and additions to   properties
       analysed by the geographical area in which the assets are located:

                                                  Carrying                      Carrying
                                                 amount of                     amount of
                                                   segment      Additions to     segment    Additions to
                                                     assets      properties        assets    properties
                                                      2008             2008         2007           2007
                                                     £’000            £’000        £’000          £’000
       Group
       Belgium                                      51,146               26       44,093           36,880
       France                                       24,599                –       21,144            3,757
       Germany                                     248,914           18,217      192,777          106,965
       Netherlands                                 200,063           12,218      160,384           71,278
       United Kingdom                                2,808              292        5,262              109
                                                 ––––––––         ––––––––     ––––––––         ––––––––
                                                   527,530           30,753      423,660          218,989
                                                 ––––––––         ––––––––     ––––––––         ––––––––

7.     (Loss)/profit for the year
(Loss)/profit for the year has been arrived at after (charging)/crediting:

                                                                                    2008             2007
                                                                                   £’000            £’000
Net foreign exchange gains included in administrative expenses                       523              146
Net foreign exchange gains included in net finance income                         18,299            1,946
Depreciation of property, plant and equipment                                        (24)             (16)
Profit on sale of investment properties                                              334               19
(Decrease)/increase in fair value of investment properties                       (41,989)          19,595
Impairment of trading properties                                                  (2,802)               –
Profit on sale of subsidiary                                                         161                –
Auditors’ remuneration                                                               350              421
Staff costs (see note 8)                                                          (1,644)          (2,447)
                                                                                –––––––          –––––––




                                                      114
REGISTRATION DOCUMENT – PART V


The analysis of auditors’ remuneration is as follows:
                                                                                       2008             2007
                                                                                      £’000            £’000
Fees payable to the Company’s auditors and their associates for the audit
  of the Company’s and Group annual accounts                                             88               69
Fees payable to the Company’s auditors and their associates for other
  services to the Group:
– The audit of the Company’s subsidiaries pursuant to local statutory
  requirements                                                                          142              116
                                                                                 ––––––––          ––––––––
Total audit fees                                                                        230              185
                                                                                 ––––––––          ––––––––
– Tax services                                                                          119              212
– Other services                                                                           1              24
                                                                                 ––––––––          ––––––––
Total non-audit fees                                                                    120              236
                                                                                 ––––––––          ––––––––
Fees payable to Deloitte LLP and their associates for non-audit services to the Company are not required to
be disclosed separately because the consolidated financial statements are required to disclose such fees on a
consolidated basis.

Tax services fees paid to Deloitte LLP and their associates comprise fees for UK and overseas income tax,
VAT and property tax advisory services.

In addition to the fees disclosed above fees amounting to £15,000 (2007: £78,000) were paid to associates
of Deloitte LLP for due diligence services relating to corporate acquisitions.

8.    Staff costs
The average monthly number of employees (including executive directors) was:

                                                                                     2008             2007
                                                                                       No               No
Administration                                                                         15                9
                                                                                 ––––––––         ––––––––
Their aggregate remuneration was:
                                                                                       2008             2007
                                                                                      £’000            £’000
Wages and salaries                                                          1,919           1,422
Share-based payments                                                         (562)            669
Social security costs                                                         160             264
Other pension costs                                                           127              92
                                                                        ––––––––        ––––––––
                                                                            1,644           2,447
                                                                        ––––––––        ––––––––
The amounts shown against pension costs comprise amounts payable by the Group to personal pension
schemes of the employees.

9.    (Losses)/gains on investment properties
                                                                                       2008             2007
                                                                                      £’000            £’000
(Decrease)/increase in fair value of investment properties                         (41,989)          19,595
Profit on disposal of investment properties                                            334               19
                                                                                 ––––––––         ––––––––
                                                                                   (41,655)         19,614
                                                                                 ––––––––         ––––––––




                                                    115
REGISTRATION DOCUMENT – PART V


10.    Losses on forward currency contracts
                                                                                           2008               2007
                                                                                          £’000              £’000
Decrease in fair value of forward currency contracts                                   (45,006)             (11,014)
                                                                                     ––––––––             ––––––––

11.    Net finance income/(costs)
                                                                                           2008               2007
                                                                                          £’000              £’000
Interest receivable on bank deposits                                                     2,074                1,599
Other interest receivable                                                                   37                   50
                                                                                     ––––––––             ––––––––
Finance income                                                                           2,111                1,649
                                                                                     ––––––––             ––––––––
Interest payable on bank loans and overdrafts                                          (12,866)              (4,502)
Interest payable on obligations under finance leases                                      (184)                 (47)
                                                                                     ––––––––             ––––––––
Finance costs                                                                          (13,050)              (4,549)
                                                                                     ––––––––             ––––––––
Net interest paid                                                                      (10,939)              (2,900)
(Decrease)/increase in fair value of interest rate swaps                                (4,579)                 238
Foreign exchange gains                                                                  18,299                1,946
                                                                                     ––––––––             ––––––––
Net finance income/(costs)                                                               2,781                 (716)
                                                                                     ––––––––             ––––––––

12.    Tax
                                                                                           2008               2007
                                                                                          £’000              £’000
UK current tax
On net income of the current year                                                       6,444                1,024
Charge in respect of prior years                                                         1,629                    –
                                                                                     ––––––––             ––––––––
                                                                                         8,073                1,024
                                                                                     ––––––––             ––––––––
Foreign current tax
On net income of the current year                                                      1,368           1,242
Credit in respect of prior years                                                      (2,300)                –
                                                                                   ––––––––        ––––––––
                                                                                        (932)          1,242
                                                                                   ––––––––        ––––––––
Total current tax                                                                      7,141           2,266
Deferred tax (see note 26)                                                            (8,529)          4,533
                                                                                   ––––––––        ––––––––
Total tax (credit)/charge                                                             (1,388)          6,799
                                                                                   ––––––––        ––––––––
UK Corporation tax is calculated at 28.5 per cent. (2007: 30 per cent.) of the estimated assessable profit for
the period.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.




                                                       116
REGISTRATION DOCUMENT – PART V


The tax (credit)/charge for the year can be reconciled to the (loss)/profit per the income statement as follows:

                                                                                            2008           2007
                                                                                           £’000          £’000
(Loss)/profit before tax                                                                 (60,943)        20,374
Tax at the UK corporation tax rate of 28.5 per cent. (2007: 30 per cent.)                (17,369)         6,112
Tax effect of:
Gain on investment properties caused by movement in exchange rates                        14,812               –
Reduction in liabilities due to strengthening of euro exchange rate                       (2,221)              –
Deferred tax assets not recognised                                                         2,111               –
Effect of different tax rates in overseas subsidiaries                                       458             576
Indexation relief                                                                           (393)              –
Expenses that are not deductible in determining taxable profit                               268              68
Effect on deferred tax balances due to the change in UK tax rate
  from 30 per cent. to 28 per cent. effective from 1 April 2008                        320              335
Short-term timing differences                                                           72                 1
Prior year tax charge/(credit)                                                         554             (293)
                                                                                 ––––––––         ––––––––
                                                                                    (1,388)           6,799
                                                                                 ––––––––         ––––––––
In addition to the amount credited to the income statement in the year to 31 December 2008, tax amounting
to £1,275,000 relating to realised exchange gains on loans to overseas operations has been credited directly
to translation reserves (2007: £1,714,000 tax charge on unrealised exchange gains).

13.    Dividends
                                                                                            2008           2007
                                                                                           £’000          £’000
Group and Company
Amounts recognised as distributions to equity holders in the period:
Interim dividend for the year ended 31 December 2008 of 3.2p
   (2007: 3p) per share                                                                    5,710          3,750
                                                                                        ––––––––       ––––––––

14.    Earnings per share and net asset value per share
The calculations for earnings per share, based on the weighted average number of shares, are shown in the
table below.

The European Public Real Estate Association (‘EPRA’) has issued recommended bases for the calculation
of certain per share information and these are included in the following tables:
                                               Weighted                                     Weighted
                                                average                                      average
                                              number of      Earnings                      number of    Earnings
                                 Earnings        shares      per share      Earnings          shares    per share
                                     2008          2008          2008           2007            2007        2007
                                    £’000          000s         pence          £’000            000s       pence
Basic EPS                          (59,571)      178,435         (33.4)        13,472        166,430          8.1
Dilutive share options                   –             –             –              –             67            –
                                 ––––––––      ––––––––      ––––––––       ––––––––       ––––––––     ––––––––
Diluted EPS                        (59,571)      178,435         (33.4)        13,472        166,497          8.1
                                 ––––––––
                                 ––––––––      ––––––––
                                               ––––––––      ––––––––
                                                             ––––––––       ––––––––
                                                                            ––––––––       ––––––––
                                                                                           ––––––––     ––––––––
                                                                                                        ––––––––




                                                      117
REGISTRATION DOCUMENT – PART V


                                                     Weighted                                Weighted
                                                      average                                 average
                                                    number of    Earnings                   number of   Earnings
                                        Earnings       shares    per share     Earnings        shares   per share
                                            2008         2008        2008          2007          2007       2007
                                           £’000         000s       pence         £’000          000s      pence
Adjustments:
Revaluation losses/(gains) on
  investment properties                   41,989                                (19,595)
Profit on the sale of investment
  properties                                (334)                                    (19)
Profit on the sale of subsidiary
  undertaking                               (161)                                      –
Tax on the sale of investment
  properties                                 456                                       6
Change in fair value of financial
  instruments                             49,585                                 10,776
Deferred tax on the above items          (10,200)                                 4,419
                                       ––––––––                  ––––––––     ––––––––                  ––––––––
Diluted EPRA EPS                          21,764                      12.2        9,059                       5.4
                                       ––––––––
                                       ––––––––                  ––––––––
                                                                 ––––––––     ––––––––
                                                                              ––––––––                  ––––––––
                                                                                                        ––––––––
The calculations for net asset value (‘NAV’) per share are shown in the table below:
                                          Equity                 Net asset       Equity                 Net asset
                                    shareholders’   Number of        value shareholders’    Number of       value
                                            funds      shares    per share         funds       shares   per share
                                             2008       2008         2008           2007        2007        2007
                                           £’000         000s       pence         £’000          000s      pence
Basic NAV                                212,545      178,435        119.1      231,214       178,435       129.6
Unexercised share options                      –            –          n/a          428           400         n/a
                                       ––––––––     ––––––––     ––––––––     ––––––––      ––––––––    ––––––––
Diluted NAV                              212,545      178,435        119.1      231,642       178,835       129.5
                                       ––––––––
                                       ––––––––     ––––––––
                                                    ––––––––     ––––––––
                                                                 ––––––––     ––––––––
                                                                              ––––––––      ––––––––
                                                                                            ––––––––    ––––––––
                                                                                                        ––––––––
Adjustments:
Goodwill                                  (2,241)                                 (2,252)
Fair value of trading
  properties                                   –                                    740
Fair value of interest rate
  derivatives                              4,180                                   (379)
Deferred tax                              13,193                                 17,378
                                       ––––––––                  ––––––––     ––––––––                  ––––––––
Diluted EPRA NAV                         227,677                     127.6      247,129                     138.2
                                       ––––––––
                                       ––––––––                  ––––––––
                                                                 ––––––––     ––––––––
                                                                              ––––––––                  ––––––––
                                                                                                        ––––––––

15.     Goodwill
                                                                                             2008          2007
                                                                                            £’000         £’000
Group
Cost and carrying amount:
At 1 January                                                                         2,252                –
Recognised on acquisition of subsidiary undertakings                                     –           2,252
Recognised on disposal of a subsidiary undertaking                                     (11)               –
                                                                                ––––––––         ––––––––
At 31 December                                                                       2,241           2,252
                                                                                ––––––––         ––––––––
The goodwill recognised on acquisition of subsidiary undertakings relates to the acquisition, on 31 August
2007, of a portfolio of Belgian subsidiary companies which is considered to be the relevant cash-generating
unit. The goodwill recognised on the disposal of a subsidiary undertaking relates to the disposal, on
31 October 2008, of Erangra NV, one of the Belgian subsidiary companies originally acquired on 31 August
2007.

The Group tests goodwill annually for impairment or more frequently if there are any indications that
goodwill might be impaired.




                                                           118
REGISTRATION DOCUMENT – PART V


The recoverable amounts with regard to the Belgian subsidiary companies are determined on the basis of fair
value less costs to sell by reference to the fair valuation of the underlying properties. The assumptions in
relation to determining the fair value of the Belgian portfolio are:

•     Fair value of the investment properties in the portfolio – the fair value of these properties are
      determined under RICS and in accordance with IVA1 of the International Valuation Standards on a bi-
      annual basis; and

•     The discount to be applied in the sale transaction in respect of deferred tax liabilities carried in the
      individual entities – it is normal business practice in Belgium to execute property transactions by sale
      of a company. On disposal of a property company, a sales price discount is normally negotiated
      because of the inherent capital gains tax in these companies. The discount varies widely and is open
      to negotiation. Following the recent disposal of a Belgian subsidiary, whereby no sales price discount
      was necessary and the full valuation price was realised, the Group have assumed that no sales price
      discount will be necessary for the disposal of the remainder of the portfolio.

A sensitivity analysis indicates that a 12 per cent. discount on the underlying deferred tax balances included
in the Belgian subsidiary companies as at 31 December 2008 would remove all available headroom.

16.   Property, plant and equipment
                                                                     Office       Computer
                                                                 equipment        equipment              Total
                                                                     £’000            £’000             £’000
Group
2008
Cost:
At 1 January 2008                                                       1               56               57
Additions                                                               1               24               25
                                                                 ––––––––         ––––––––         ––––––––
At 31 December 2008                                                     2               80               82
                                                                 ––––––––         ––––––––         ––––––––
Accumulated depreciation:
At 1 January 2008                                                       –               26               26
Charge for the period                                                   1               23               24
                                                                 ––––––––         ––––––––         ––––––––
At 31 December 2008                                                     1               49               50
                                                                 ––––––––         ––––––––         ––––––––
Net book value:
At 31 December 2008                                                     1               31               32
                                                                 ––––––––         ––––––––         ––––––––
At 31 December 2007                                                     1               30               31
                                                                 ––––––––         ––––––––         ––––––––
2007
Cost:
At 1 January 2007                                                       1               37               38
Additions                                                               –               19               19
                                                                 ––––––––         ––––––––         ––––––––
At 31 December 2007                                                     1               56               57
                                                                 ––––––––         ––––––––         ––––––––
Accumulated depreciation:
At 1 January 2007                                                       –               10               10
Charge for the period                                                   –               16               16
                                                                 ––––––––         ––––––––         ––––––––
At 31 December 2007                                                     –               26               26
                                                                 ––––––––         ––––––––         ––––––––
Net book value:
At 31 December 2007                                                     1               30               31
                                                                 ––––––––         ––––––––         ––––––––
At 31 December 2006                                                     1               27               28
                                                                 ––––––––         ––––––––         ––––––––




                                                     119
REGISTRATION DOCUMENT – PART V


17.   Investment property
                                                                                       2008             2007
                                                                                      £’000            £’000
Group
At 1 January                                                                       391,242          139,593
Additions – property purchases                                                      29,758         196,705
           – capital expenditure                                                       562              689
Acquisition of subsidiaries                                                              –           36,847
Revaluations included in income statement                                          (41,956)          19,595
Disposal of subsidiary                                                              (2,668)               –
Disposals                                                                           (4,979)            (440)
Transfer to investment property held for sale                                            –          (15,417)
Exchange adjustment                                                               120,398            13,670
                                                                                 ––––––––         ––––––––
At 31 December                                                                     492,357         391,242
                                                                                 ––––––––         ––––––––
                                                                                      2008             2007
                                                                                     £’000            £’000
Group
Investment property held for sale
At 1 January                                                                       15,417               –
Additions – capital expenditure                                                       141               –
Transfer from investment property                                                       –          15,417
Revaluations included in income statement                                             (33)              –
Disposals                                                                         (17,345)              –
Exchange adjustment                                                                 1,820               –
                                                                               ––––––––         ––––––––
At 31 December                                                                          –          15,417
                                                                               ––––––––         ––––––––
All investment properties are stated at market value as at 31 December 2008 and have been valued by
independent professionally qualified external valuers, King Sturge LLP. The valuations have been prepared
in accordance with the Valuation Standards (6th Edition) published by The Royal Institute of Chartered
Surveyors and with IVA1 of the International Valuation Standards.

The Group has pledged certain of its investment properties to secure bank loan facilities and a finance lease
granted to the Group.

18.   Investment in subsidiary undertakings
                                                                Shares in         Loans to
                                                               subsidiary       subsidiary
                                                             undertakings     undertakings              Total
                                                                    £’000            £’000             £’000
Company
Cost and net book value:
Balance at 1 January 2008                                        124,641            53,111         177,752
Additions/(repayments)                                                 14          (53,111)         (53,097)
                                                                ––––––––         ––––––––         ––––––––
At 31 December 2008                                               124,655                –         124,655
                                                                ––––––––         ––––––––         ––––––––




                                                    120
REGISTRATION DOCUMENT – PART V


Details of all of the Company’s subsidiaries at 31 December 2008 are as follows:

                                                                                 Proportion of   Proportion of
                                                             Place of               ownership    voting power
                                                             incorporation            interest            held
                                                                                            %               %
Hansteen Belgium Limited                                     Great Britain                100             100
Hansteen Developments Limited                                Great Britain                100             100
Hansteen Europe Limited                                      Great Britain                100             100
Hansteen Land Limited                                        Great Britain                100             100
Hansteen Limited                                             Great Britain                100             100
Hansteen France SAS                                          France                       100             100
Hansteen Germany Limited                                     Great Britain                100             100
Hansteen Germany (2) Limited                                 Great Britain                100             100
Hansteen Germany (3) Limited                                 Great Britain                100             100
Hansteen Germany Residential Limited                         Great Britain                100             100
Hansteen Germany B.V.                                        The Netherlands              100             100
Hansteen Netherlands B.V.                                    The Netherlands              100             100
Hansteen Ormix B.V.                                          The Netherlands               50             100
Arman B01 BVBA                                               Belgium                      100             100
Hert BVBA                                                    Belgium                      100             100
I.P.I Nossegem NV                                            Belgium                      100             100
Jezusstraat 22 NV                                            Belgium                      100             100
Small Island Management NV                                   Belgium                      100             100
Tycoons Immo BVBA                                            Belgium                      100             100
Vignée Invest NV                                             Belgium                      100             100
Waterloo Investments NV                                      Belgium                      100             100
Each of the undertakings listed above is engaged in property development, investment and management.

19.   Derivative financial instruments
Derivative financial instruments are included in the balance sheet as follows:

                                                   Group         Company               Group        Company
                                                    2008            2008                2007           2007
                                                   £’000           £’000               £’000          £’000
Financial assets and liabilities held
  for trading
Non-current assets                                   273               96                 379             379
Current assets                                    13,747           13,747                   –               –
Current liabilities                              (68,407)         (68,407)                  –               –
Non-current Liabilities                           (4,509)          (1,391)             (9,710)         (9,710)
                                               ––––––––         ––––––––            ––––––––        ––––––––
                                                 (58,896)         (55,955)              9,331          (9,331)
                                               ––––––––         ––––––––            ––––––––        ––––––––




                                                    121
REGISTRATION DOCUMENT – PART V


The movements on derivative financial instruments are as follows:

                                                Forward
                                                currency     Interest rate    Interest rate
                                                contract             caps           swaps             Total
                                                   £’000            £’000            £’000           £’000
Group
Financial assets and liabilities held
  for trading
Fair value at 1 January 2008                      (9,710)             235               144         (9,331)
Additions at cost                                      –              464                 –            464
Revaluations included in
  income statement                              (45,006)           (396)              (4,183)      (49,585)
Exchange difference                                   –              26                 (470)         (444)
                                              ––––––––         ––––––––            ––––––––      ––––––––
Fair value at 31 December 2008                  (54,716)            329               (4,509)      (58,896)
                                              ––––––––         ––––––––            ––––––––      ––––––––
Company
Financial assets and liabilities held
  for trading
Fair value at 1 January 2008                      (9,710)             235               144         (9,331)
Additions at cost                                      –              103                 –            103
Revaluations included in
  income statement                              (45,006)           (186)              (1,535)      (46,727)
                                              ––––––––         ––––––––            ––––––––      ––––––––
Fair value at 31 December 2008                  (54,716)            152               (1,391)      (55,955)
                                              ––––––––         ––––––––            ––––––––      ––––––––

20.   Trading properties
                                                                                       2008           2007
                                                                                      £’000          £’000
Group
Land and related costs                                                                2,750     5,260
                                                                                    –––––––  –––––––
At 31 December 2008 an impairment of £2,802,000 (2007: £nil) has been charged to the income statement
to write the carrying value of the trading properties down to net realisable value.

21.   Trade and other receivables
                                                  Group         Company               Group      Company
                                                   2008            2008                2007         2007
                                                  £’000           £’000               £’000        £’000
Trade receivables                                  2,226                 –           1,749                –
Amounts owed by subsidiary undertakings                 –          60,352                 –           6,227
Other receivables                                  1,258                 8             484                –
Prepayments and accrued income                     2,347               594           1,548              727
                                               ––––––––         ––––––––        ––––––––          ––––––––
                                                   5,831           60,954            3,781            6,954
                                               ––––––––         ––––––––        ––––––––          ––––––––
Group trade receivables are shown after deducting a provision for bad and doubtful debts of £688,000 (2007:
£276,000). The movement in the provision during the year was recognised entirely in income.

The carrying amount of trade and other receivables approximate their fair value.




                                                   122
REGISTRATION DOCUMENT – PART V


22.   Cash and cash equivalents
                                                    Group         Company              Group         Company
                                                     2008            2008               2007            2007
                                                    £’000           £’000              £’000           £’000
Cash and cash equivalents                         80,240            55,617          19,562             13,581
                                               ––––––––          ––––––––       ––––––––            ––––––––
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original
maturity of three months or less. The carrying value of these assets approximates to their fair value.

Included in cash and cash equivalents held by the Company is an amount of £47,874,000 held on
interest-bearing deposit at Merrill Lynch International Bank Limited as collateral security for forward
currency contracts due to mature on 27 July 2009.

23.   Trade and other payables
                                                    Group         Company              Group         Company
                                                     2008            2008               2007            2007
                                                    £’000           £’000              £’000           £’000
Trade payables                                       1,882                24            1,388               13
Amounts owed to subsidiary undertakings                  –           35,335                 –              849
Other payables                                       1,440                 –              929                –
Accruals                                             3,145               185            2,742              300
Deferred income                                      3,452                 –            1,857                –
                                                 ––––––––         ––––––––          ––––––––         ––––––––
                                                     9,919           35,544             6,916            1,162
                                                 ––––––––         ––––––––          ––––––––         ––––––––
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing
costs. The average credit period taken for trade purchases by the Company is 23 days (2007: three days). For
most suppliers no interest is charged on the trade payables for the first 30 days from the date of the invoice.
Thereafter, interest is charged on the outstanding balances at various interest rates. The Directors consider
that the carrying amount of trade and other payables approximates to their fair value.

24.   Borrowings
                                                                                        2008              2007
                                                                                       £’000             £’000
Group
Secured at amortised cost
Bank overdrafts                                                                            –            1,825
Bank loans                                                                           283,329          169,088
Unamortised borrowing costs                                                           (2,085)          (1,377)
                                                                                   ––––––––         ––––––––
                                                                                     281,244          169,536
                                                                                   ––––––––         ––––––––
Total borrowings
Amount due for settlement within 12 months                                                926           2,579
Amount due for settlement after 12 months                                            280,318         166,957
                                                                                  ––––––––         ––––––––
Bank loans                                                                           281,244         169,536
                                                                                  ––––––––         ––––––––
On 25 July 2006 Hansteen Holdings PLC and certain of its subsidiary undertakings entered into a five year
Euros 230,000,000 revolving bank loan facility with an expiry date of 25 July 2011. On 29 May 2008
following the re-financing of the Dutch portfolio of investment properties this facility was reduced to Euros
200,000,000. The loan is secured on the shares of the borrowing subsidiaries and their investment properties
and is guaranteed by Hansteen Holdings PLC and the borrowing subsidiaries. Interest on the amounts drawn
under the loan facility is charged at EURIBOR plus 0.8 per cent. The Group has drawn down Euros
141,000,000 under this facility at 31 December 2008 (2007: Euros 149,000,000).




                                                     123
REGISTRATION DOCUMENT – PART V


On 25 May 2008 Hansteen Netherlands B.V. and Hansteen Ormix B.V., both Dutch subsidiaries, entered into
a five year Euros 130,000,000 bank loan facility with an expiry date of 1 June 2013. The Euros 130,000,000
drawn down under the facility was used to repay existing borrowings of the Dutch subsidiaries. The loan is
secured on the properties of Hansteen Netherlands B.V. and Hansteen Ormix B.V. The net sales proceeds
arising from sales of investment properties are required to be used to reduce the bank loan unless re-invested
in investment properties. Interest on the amounts drawn under the loan facility is charged at EURIBOR plus
1.55 per cent. At 31 December 2008 the Group has drawn down Euros 130,000,000 under this facility (2007:
Euros nil).

The Belgian subsidiaries have a number of facilities secured on the Belgian investment properties with
expiry dates ranging from 1 January 2010 to 31 March 2026 and interest charged at EURIBOR plus
0.75 per cent. to 1.5 per cent. The aggregate amount outstanding at 31 December 2008 in respect of these
bank loans is Euros 22,019,000 (2007: Euros 22,881,000).

Security for secured borrowings at 31 December 2008 is provided by charges on property with an aggregate
carrying value of £462,000,000 (2007: £318,213,000).

The Directors estimate that the book value of the Group’s bank loans approximates to their fair value.

                                                                                       2008              2007
                                                                                      £’000             £’000
Group
Maturity
The bank loans are repayable as follows:
Within one year or on demand                                                            926              753
Between one and two years                                                             2,958           45,152
In the third to fifth years inclusive                                               267,952         114,079
Over five years                                                                      11,493            9,104
                                                                                  ––––––––         ––––––––
                                                                                    283,329          169,088
                                                                                  ––––––––         ––––––––
Undrawn committed facilities
Expiring after more than two years                                                   57,049           59,475
                                                                                  ––––––––         ––––––––
                                                                                                Floating rate
                                                                                                 borrowings
                                                     2008             2008             2007             2007
                                                       %             £’000               %             £’000
Interest rate and currency profile
Euros                                              4.71          283,329             5.31        169,088
                                              ––––––––        ––––––––          ––––––––       ––––––––
A number of interest rate caps and swaps have been entered into in respect of the amounts drawn under the
loan facilities at 31 December 2008 to hedge Euro borrowings at an average rate of 4.53 per cent. (2007:
4.39 per cent.) (see note 19).




                                                     124
REGISTRATION DOCUMENT – PART V


25.      Obligations under finance leases
                                                                             Minimum lease                                   Present value of
                                                                                payments                                     lease payments
                                                                           2008          2007                              2008            2007
                                                                              £             £                                 £               £
Group
Amounts payable under finance leases:
Within one year                                                             372                    279                     168                       126
In the second to fifth years inclusive                                    1,490                  1,131                     739                       553
After five years                                                          4,734                  3,877                  3,536                     2,818
                                                                      ––––––––               ––––––––                ––––––––                  ––––––––
                                                                          6,596                  5,287                   4,443                     3,497
Less: future finance charges                                             (2,153)                (1,790)                     n/a                       n/a
                                                                      ––––––––               ––––––––                ––––––––                  ––––––––
Present value of lease obligations                                        4,443                  3,497                  4,443                     3,497
                                                                      ––––––––               ––––––––                ––––––––                  ––––––––
Less: amount due for settlement within
  12 months (shown under current liabilities)                                            (372)             (279)
                                                                                   ––––––––           ––––––––
Amount due for settlement after 12 months                                               4,071             3,218
                                                                                   ––––––––           ––––––––
The lease is held in I.P.I. Nossegem NV, a Belgian subsidiary and is denominated in Euros. The lease term
outstanding at 31 December 2008 is 15 years (2007: 16 years). For the year ended 31 December 2008, the
interest rate implicit in the lease was 5.045 per cent. (2007: 5.228 per cent.). Interest rates are fixed every
five years and interest rate and capital repayments adjusted to reflect this.
The fair value of the Group’s lease obligations approximates their carrying amount.
The Group’s obligations under the finance lease are secured by the lessors’ rights over the leased assets.

26.      Deferred tax
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax
balances (after offset) for financial reporting purposes:
                                                                         Group                Company                    Group                 Company
                                                                          2008                   2008                     2007                    2007
                                                                         £’000                  £’000                    £’000                   £’000
Deferred tax assets                                       –          15,762          2,885           2,885
Deferred tax liabilities                           (10,678)               –        (17,194)               –
                                                ––––––––          ––––––––       ––––––––        ––––––––
                                                   (10,678)          15,762        (14,309)          2,885
                                                ––––––––          ––––––––       ––––––––        ––––––––
The following are the major deferred tax liabilities and assets recognised and movements thereon during the
reporting period.
                                                                                         Currency       UK tax on
                            Revaluation Depreciation     Exchange       Indexation       contracts        retained
                                      of           of     gains on              on             and     earnings in               Short-term
                             investment   investment    investment      investment    interest rate      overseas                     timing
                              properties   properties    properties      properties    derivatives    subsidiaries     Losses    differences          Total
                                  £’000        £’000         £’000           £’000           £’000           £’000      £’000          £’000         £’000
Group
At 1 January 2008              (16,065)       (1,208)           –               –          2,658             (320)        947         (321)         (14,309)
Disposed (see note 28)             321            31            –               –              –                –         (22)         327              657
Credit/(charge) to income       11,230        (1,265)     (14,601)          1,299         13,545           (1,176)         (5)        (490)           8,529
Exchange differences            (2,815)         (600)      (2,595)            231             83                –         276         (143)          (5,555)
                             ––––––––      ––––––––     ––––––––         ––––––––       ––––––––        ––––––––     ––––––––     ––––––––        ––––––––
At 31 December 2008             (7,329)       (3,042)     (17,196)          1,530         16,286           (1,496)      1,196         (627)         (10,678)
                             ––––––––
                             ––––––––      ––––––––
                                           ––––––––     ––––––––
                                                        ––––––––         ––––––––
                                                                         ––––––––       ––––––––
                                                                                        ––––––––        ––––––––
                                                                                                        ––––––––     ––––––––
                                                                                                                     ––––––––     ––––––––
                                                                                                                                  ––––––––        ––––––––
                                                                                                                                                  ––––––––
Company
At 1 January 2008                   –             –            –                –           2,658              –            –          227            2,885
Credit/(charge) to income           –             –            –                –          13,074              –            –         (197)          12,877
                             ––––––––      ––––––––     ––––––––         ––––––––       ––––––––        ––––––––     ––––––––     ––––––––        ––––––––
At 31 December 2008                 –             –            –                –          15,732              –            –           30          15,762
                             ––––––––
                             ––––––––      ––––––––
                                           ––––––––     ––––––––
                                                        ––––––––         ––––––––
                                                                         ––––––––       ––––––––
                                                                                        ––––––––        ––––––––
                                                                                                        ––––––––     ––––––––
                                                                                                                     ––––––––     ––––––––
                                                                                                                                  ––––––––        ––––––––
                                                                                                                                                  ––––––––




                                                                          125
REGISTRATION DOCUMENT – PART V


At 31 December 2008 the Group has unutilised tax losses amounting to £11,709,000 (2007: £2,796,000)
available for offset against future profits. A deferred tax asset has been recognised in respect of £3,528,000
(2007: £2,796,000) of such losses. No deferred tax asset has been recognised in respect of the remaining
£8,181,000 (2007: £nil) due to the unpredictability of future profit streams. Included in unrecognised tax
losses are losses of £7,383,000 (2007: £nil) that will expire in 2017. Other losses may be carried forward
indefinitely.

At 31 December 2008 full provision of £1,196,000 (2007: £320,000) has been made for temporary
differences associated with undistributed earnings of overseas subsidiaries.

27.   Share capital
                                                                                       2008              2007
                                                                                      £’000             £’000
Authorised
250,000,000 (2007: 250,000,000) ordinary shares of 10p each                          25,000           25,000

Issued and fully paid
178,435,117 (2007: 178,435,117) ordinary shares of 10p each                          17,843           17,843
                                                                                  ––––––––         ––––––––
The share capital comprises one class of ordinary shares carrying no right to fixed income.

28.   Disposal of subsidiary
On 31 October 2008 the Group disposed of 100 per cent. of the issued share capital of Erangra NV, a
company incorporated and registered in Belgium for cash consideration of £1,333,000 net of disposal
expenses. The company was originally acquired on 31 August 2007 and engaged in property investment and
management in Belgium. The net assets of Erangra NV at the date of disposal and at 31 December 2007 were
as follows:
                                                                                 31 October     31 December
                                                                                       2008            2007
                                                                                      £’000           £’000
Investment properties                                                                 2,668            2,739
Trade and other receivables                                                              27               56
Cash and cash equivalents                                                               802              776
Trade and other payables                                                                (81)            (119)
Bank loans                                                                           (1,387)          (1,395)
Deferred tax liabilities                                                               (657)            (679)
Attributable goodwill                                                                    11               11
Translation differences on net assets                                                  (211)            (113)
                                                                                  ––––––––         ––––––––
                                                                                      1,172            1,276
                                                                                  ––––––––         ––––––––
Gain on disposal                                                                        161
                                                                                  ––––––––
Total consideration                                                                   1,333
                                                                                  ––––––––
Satisfied by:
Cash                                                                                  1,400
Less disposal expenses                                                                  (67)
                                                                                  ––––––––
                                                                                      1,333
                                                                                  ––––––––
Net cash inflow arising on disposal:
Cash consideration net of disposal expenses                                          1,333
Cash and cash equivalents disposed of                                                 (802)
                                                                                  ––––––––
                                                                                       531
                                                                                  ––––––––




                                                     126
REGISTRATION DOCUMENT – PART V


Erangra NV contributed £168,000 revenue and a loss after tax of £105,000 to the Group’s revenue and profit
after tax in the period from 1 January 2008 to 31 October 2008 (Period from 31 August 2007 to 31 December
2007: revenue of £67,000 and a loss after tax of £76,000).

29.    Notes to the cash flow statement
                                                   Group        Company            Group         Company
                                                    2008           2008             2007            2007
                                                   £’000          £’000            £’000           £’000
(Loss)/profit for the year                        (59,555)       (21,615)          13,575           (2,406)
Adjustments for:
Share-based employee remuneration                    (562)          (562)             669              669
Depreciation of property, plant and equipment          24              –               16                –
Impairment of trading properties                    2,802              –                –                –
Losses/(gains) on investment properties            41,655              –          (19,614)               –
Gain on sale of subsidiary                           (161)             –                –                –
Losses on forward currency contracts               45,006        45,006            11,014          11,014
Dividends from subsidiaries                             –              –                –           (2,100)
Net finance income/(costs)                          6,678         (8,476)           1,720           (5,983)
Tax                                                (1,388)        (9,784)           6,799           (1,944)
                                                ––––––––       ––––––––         ––––––––         ––––––––
Operating cash inflows/(outflows) before
  movements in working capital                     34,499          4,569           14,179             (750)
Increase in trading properties                       (292)             –             (109)               –
Increase in receivables                              (305)       (46,105)          (1,107)            (535)
Increase in payables                                  764         28,688            2,908              241
                                                ––––––––       ––––––––         ––––––––         ––––––––
Cash generated by/(used in) operations             34,666        (12,848)         15,871            (1,044)
Income taxes paid                                  (4,339)          (374)          (3,559)          (2,453)
Interest paid                                     (12,402)        (1,281)          (3,837)              (7)
                                                ––––––––       ––––––––         ––––––––         ––––––––
Net cash inflow/(outflow) from
  operating activities                             17,925        (14,503)          8,475            (3,504)
                                                ––––––––       ––––––––         ––––––––         ––––––––

30.    Operating lease arrangements

The Group as lessee
                                                                                     2008             2007
                                                                                    £’000            £’000
Minimum lease payments under operating leases recognised as an
 expense in the year:                                                                 524              260
As at the balance sheet date the Group had outstanding commitments for future minimum lease payments
under non-cancellable operating leases, which fall due as follows:

                                                                                     2008             2007
                                                                                    £’000            £’000
Within one year                                                                        614             410
In the second to fifth years inclusive                                               1,131             403
After five years                                                                    16,002           3,354
                                                                                 ––––––––        ––––––––
                                                                                    17,747           4,167
                                                                                 ––––––––        ––––––––
Operating lease payments represent rentals payable by the Group under ground rent leases for certain of its
investment properties and rentals payable in respect of its head office property under a licence agreement
with an unexpired term of 12 months as at the balance sheet date.




                                                    127
REGISTRATION DOCUMENT – PART V


The Group as lessor
The Group leases all of its investment properties under operating leases. As at the balance sheet date the
Group had contracted with tenants for the following future aggregate minimum rentals receivable under
non-cancellable operating leases:

                                                                                       2008              2007
                                                                                      £’000             £’000
Within one year                                                                      36,401           26,093
In the second to fifth years inclusive                                               80,298           64,601
After five years                                                                     39,219           30,115
                                                                                  ––––––––         ––––––––
                                                                                    155,918          120,809
                                                                                  ––––––––         ––––––––

31.    Share-based payments
During the year ended 31 December 2008, the Group had two share-based payment arrangements with
employees. Both of the Group’s share-based payment schemes are equity settled, either by award of options
to acquire ordinary shares (Employee Share Option Scheme) or award of ordinary shares (Long-Term
Incentive Plan).

The total share-based payment charge relating to Hansteen Holdings PLC shares for the year was made up
as follows:

                                                                                       2008              2007
                                                                                      £’000             £’000
Employee share option scheme                                             (a)            53               54
Long-term incentive plan                                                 (b)          (615)             615
                                                                                  ––––––––         ––––––––
                                                                                      (562)             669
                                                                                  ––––––––         ––––––––
(a)    Equity-settled share option scheme
       The 2005 Share Option Scheme is open to certain senior employees of the Group. In the case of
       options granted within three months of admission of shares to trading on AIM, options are exercisable
       at the price at which shares were placed in connection with the float, being £1 per share. All options
       granted after this date are exercisable at a price equal to the average quoted market price of the
       ordinary shares of Hansteen Holdings PLC on the date of grant. The options have a three year vesting
       period that is not subject to performance conditions. If the options remain unexercised after a period
       of 10 years from the date of grant, the options expire. Options are normally forfeited if the employee
       leaves the Group before the options vest. In accordance with IFRS 2 ‘Share-based Payment’ the fair
       value of equity-settled share-based payments to employees is determined at the date of grant and is
       expensed on a straight-line basis over the vesting period based on the Group’s estimate of options that
       will eventually vest. Fair value is calculated using a Binomial pricing model.

       Details of the share options outstanding during the year are as follows:

                                                                                                    Weighted
                                                                                                     average
                                                                                                     exercise
                                                                                 Number of              price
                                                                               share options           pence
       Outstanding at 31 December 2007 and 31 December 2008                        400,000            107.1
                                                                                  ––––––––         ––––––––
                                                                                                       Years
       Weighted average remaining contractual life                                                   7.03
                                                                                               ––––––––
       The options outstanding under the scheme are exercisable at exercise prices ranging from 100.0p to
       128.5p in years from 2009 up to 2016. No options were granted during the current or preceding


                                                     128
REGISTRATION DOCUMENT – PART V


      financial year. The aggregate of the fair values of the outstanding options at the dates granted is
      £160,000 determined according to the Binomial model.

      The inputs into the Binomial model are as follows:

                                                                                        2008             2007
      Weighted average share price                                                     124.0p           124.0p
      Weighted average exercise price                                                  107.1p           107.1p
      Expected volatility                                                                 25%              25%
      Expected life                                                                  3-8 years        3-8 years
      Risk free rate                                                                    4.16%            4.16%
      Expected dividend yield                                                              3%               3%
                                                                                    ––––––––         ––––––––
      The expected volatility was determined by calculating the historical volatility of the Company’s share
      price over the period from the date the Company floated on AIM on 29 November 2005 and the dates
      the options were granted and also by comparison with the volatilities of similar companies over the
      same period. The expected life used in the model has been adjusted, based on management’s best
      estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

(b)   Equity-settled long-term incentive scheme (LTIP)
      Details of the Group’s LTIP scheme are described in the remuneration report.

      The assumptions used in the calculations for the current years are set out in the table below.

                                                                                        2008             2007
                                                                                       £’000            £’000
      Date of grant                                                        22/11/2005    22/11/2005
      Number of instruments                                                         nil   1,344,610
      Share price at the date of grant                                         100.0p        100.0p
      Share price at the date of measurement                                    70.5p        98.50p
      Contractual life                                                         4 years       4 years
      Risk-free interest rate                                                      4%            5%
      Expected outcome of meeting performance criteria (at date of grant)       100%          100%
                                                                            ––––––––      ––––––––
      Vesting is dependent on the Company’s NAV growth per share exceeding a compound growth rate of
      10 per cent. per annum in the four years ending on 31 December 2009.

      A progressive dividend growth policy is assumed in all fair value calculations.

      Current projections, using assumptions based on current interest rates, current exchange rates and
      current property yields indicate that the liability to the Executive Directors under the scheme for the
      period up to 31 December 2008 is estimated to be £nil (2007: £615,000).

32.   Events after the balance sheet date
On 1 April 2009 the Board declared that an interim dividend of 3.2 pence per ordinary share will be paid on
15 May 2009 to shareholders on the register at the close of business on 17 April 2009.




                                                     129
REGISTRATION DOCUMENT – PART V


33.   Related party transactions

(a)   Group

      Trading transactions
      During the year, group subsidiaries entered into trading transactions with related parties who are not
      members of the Group:

                                                       Purchase of                      Amounts owed
                                                        services                       to related parties
                                                   2008            2007              2008             2007
                                                      £               £                  £                £
      Ormix B.V.                                   60              640                 –               –
                                           ––––––––         ––––––––          ––––––––         ––––––––
      Ormix B.V., a company incorporated in the Netherlands, owns 50 per cent. of the issued ordinary
      shares of Hansteen Ormix B.V. The remaining 50 per cent. of the issued ordinary shares of Hansteen
      Ormix B.V. are owned by Hansteen Netherlands B.V. which is a wholly-owned subsidiary
      undertaking of Hansteen Holdings PLC. Ormix B.V. is therefore considered to be a related party of
      the Group.

      Purchases of services from Ormix B.V. were made at prices comparable with those paid by the Group
      for similar services from unrelated parties. At 31 December 2008 the amounts outstanding in respect
      of these trading transactions was £nil (2007: £nil).

      Other amounts due to related parties
                                                                                      2008             2007
                                                                                     £’000            £’000
      Amount due to Ormix B.V.                                                       –            368
                                                                             ––––––––      ––––––––
      The amount due to Ormix B.V. at 31 December 2007 represented a capital contribution from
      Ormix B.V. to Hansteen Ormix B.V. which was in the process of being formally documented as such
      at 31 December 2007. On 1 April 2008 the formal documentation was completed and the amount due
      to Ormix was converted to capital. The amount due to Ormix B.V was unsecured and did not bear
      interest.

      Remuneration of key management personnel
      The aggregate remuneration of the Directors, who are the key management personnel of the Group,
      is set out below, as required by IAS 24 ‘Related Party Disclosures’. Further information about the
      remuneration of individual directors is provided in the audited part of the Remuneration Report on
      page 61.

                                                                                      2008             2007
                                                                                     £’000            £’000
      Short-term employee benefits                                                    928              983
      Post-employment benefits                                                         78               66
                                                                                ––––––––         ––––––––
                                                                                    1,006            1,049
                                                                                ––––––––         ––––––––
(b)   Company

      Transactions with subsidiaries
      The Company enters into loans with its subsidiaries to provide long-term funding for their investment
      activities. Interest is charged on these loans at LIBOR plus 0.8 per cent. or EURIBOR plus
      0.8 per cent.




                                                   130
REGISTRATION DOCUMENT – PART V


      The Company provides interest-free loans to its development subsidiary, Hansteen Land Limited to
      finance its operations.

      The Company is charged management fees by its management subsidiary, Hansteen Limited which
      undertakes day-to-day management of the Hansteen Group on behalf of the Company. Management
      fees charged by Hansteen Limited to other subsidiaries of the Hansteen Group are recovered by the
      Company on behalf of Hansteen Limited.

      Surplus funds in subsidiary companies are loaned to the Company at EURIBOR plus 0.8 per cent.
      A summary of the transactions with the subsidiaries is as follows:

                                                                                        2008              2007
                                                                                       £’000             £’000
      Interest-bearing loans made to subsidiaries                                  27,465                –
      Interest-bearing loans repaid by subsidiaries                               (25,979)         12,264
      Interest bearing loans made by subsidiaries                                 (34,880)               –
      Interest-free loans made to subsidiaries                                        318              249
      Loan fee disbursements recharged to subsidiaries                                374              487
      Interest income received in respect of interest-bearing loans                 3,580            3,749
      Interest paid in respect of interest-bearing loans                           (1,240)               –
      Dividend income received                                                           –           2,100
      Management fees charged to the Company                                          549              498
      Management fees charged to the Company and recharged to subsidiaries          3,646           2,384
                                                                               ––––––––          ––––––––
      The balances outstanding at the year end from transactions with subsidiaries are as follows:

                                                                                        2008              2007
                                                                                       £’000             £’000
      Amounts due from subsidiaries included in investment in subsidiaries                 –          53,111
      Amounts due from subsidiaries included in trade and other receivables           60,352            6,227
      Amounts due to subsidiaries included in trade and other payables               (35,335)            (849)
                                                                                   ––––––––         ––––––––
                                                                                      25,017           58,489
                                                                                   ––––––––         ––––––––
      Remuneration of key management personnel
      The aggregate remuneration of the Directors and key management personnel of the Company are
      considered to be the same as for the Group.

34.   Financial instruments
Financial instruments comprise both financial assets and financial liabilities. The carrying value of these
financial assets and liabilities approximate their fair value.

Financial assets in the Group comprise interest rate swaps and forward foreign exchange contracts which
are categorised as derivatives designated as fair value through the income statement. Financial assets also
include trade and other receivables and cash and cash equivalents which are classified as other financial
assets.

Financial liabilities in the Group comprise interest rate swaps and forward foreign exchange contracts
which are categorised as derivatives designated as fair value through the income statement. Financial
liabilities also include bank loans and overdrafts, which are categorised as debt at amortised cost, and trade
and other payables, finance lease payables and current tax liabilities, which are classified as other financial
liabilities.

Fair value of financial instruments
The fair values of derivative financial assets and financial liabilities are determined by independent experts
in accordance with generally accepted pricing models.


                                                     131
REGISTRATION DOCUMENT – PART V


Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns
while maximising the return to stakeholders through the optimisation of the debt and equity balance. The
capital structure of the Group consists of debt, which includes the borrowings, the obligations under finance
leases, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued
capital, reserves and retained earnings, all as disclosed in the balance sheet.

The Group is not subject to externally imposed capital requirements.

Categories of financial instruments
                                                 Group                  Company                      Group                   Company
                                 Carrying          Fair    Carrying         Fair     Carrying          Fair    Carrying          Fair
                                    value         value       value        value        value         value       value         value
                                    2008          2008        2008         2008         2007          2007        2007          2007
                                   £’000         £’000       £’000        £’000        £’000         £’000       £’000         £’000
Financial assets
Designated as held for trading
Forward currency contracts          13,691       13,691      13,691       13,691            –            –            –             –
Interest rate caps                     329          329          152          152         235          235          235           235
Interest rate swaps                      –            –            –            –         144          144          144           144
                                 ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––      ––––––––
                                    14,020       14,020       13,843       13,843         379          379          379           379
                                 ––––––––
                                 ––––––––     ––––––––
                                              ––––––––     ––––––––
                                                           ––––––––     ––––––––
                                                                        ––––––––     ––––––––
                                                                                     ––––––––     ––––––––
                                                                                                  ––––––––     ––––––––
                                                                                                               ––––––––      ––––––––
                                                                                                                             ––––––––
Other financial assets
Trade and other receivables          5,831        5,831       60,954       60,954        3,781        3,781        6,954         6,954
Cash and cash deposits              80,240       80,240       55,617       55,617       19,562       19,562       13,581        13,581
                                 ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––      ––––––––
                                    86,071       86,071      116,571      116,571       23,343      23,343       20,535        20,535
                                 ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––      ––––––––
Total                              100,091      100,091      130,414      130,414       23,722       23,722       20,914        20,914
                                 ––––––––
                                 ––––––––     ––––––––
                                              ––––––––     ––––––––
                                                           ––––––––     ––––––––
                                                                        ––––––––     ––––––––
                                                                                     ––––––––     ––––––––
                                                                                                  ––––––––     ––––––––
                                                                                                               ––––––––      ––––––––
                                                                                                                             ––––––––
Financial liabilities
Designated as held for trading
Forward currency contracts         (68,407)     (68,407)     (68,407)     (68,407)      (9,710)      (9,710)      (9,710)       (9,710)
Interest rate swaps                 (4,509)      (4,509)      (1,391)      (1,391)           –            –            –             –
                                 ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––      ––––––––
                                   (72,916)     (72,916)     (68,798)     (68,798)      (9,710)      (9,710)      (9,710)       (9,710)
                                 ––––––––
                                 ––––––––     ––––––––
                                              ––––––––     ––––––––
                                                           ––––––––     ––––––––
                                                                        ––––––––     ––––––––
                                                                                     ––––––––     ––––––––
                                                                                                  ––––––––     ––––––––
                                                                                                               ––––––––      ––––––––
                                                                                                                             ––––––––
At amortised cost
Secured bank loans                (281,244)    (281,244)          –            –      (167,711)    (167,711)          –             –
Bank overdrafts                          –            –           –            –        (1,825)      (1,825)          –             –
                                 ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––      ––––––––
                                  (281,244)    (281,244)          –            –      (169,536)    (169,536)          –             –
                                 ––––––––
                                 ––––––––     ––––––––
                                              ––––––––     ––––––––
                                                           ––––––––     ––––––––
                                                                        ––––––––     ––––––––
                                                                                     ––––––––     ––––––––
                                                                                                  ––––––––     ––––––––
                                                                                                               ––––––––      ––––––––
                                                                                                                             ––––––––
Other financial liabilities
Trade and other payables            (9,919)      (9,919)     (35,544)     (35,544)      (6,916)      (6,916)      (1,162)       (1,162)
Finance lease payables              (4,443)      (4,443)           –            –       (3,497)      (3,497)           –             –
Tax payables                        (4,907)      (4,907)      (2,861)      (2,861)      (2,563)      (2,563)        (142)         (142)
                                 ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––      ––––––––
                                   (19,269)     (19,269)     (38,405)     (38,405)     (12,976)     (12,976)      (1,304)       (1,304)
                                 ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––     ––––––––      ––––––––
Total                             (373,429)    (373,429)    (107,203)    (107,203)    (192,222)    (192,222)     (11,014)      (11,014)
                                 ––––––––
                                 ––––––––     ––––––––
                                              ––––––––     ––––––––
                                                           ––––––––     ––––––––
                                                                        ––––––––     ––––––––
                                                                                     ––––––––     ––––––––
                                                                                                  ––––––––     ––––––––
                                                                                                               ––––––––      ––––––––
                                                                                                                             ––––––––

Gearing ratio
The Group’s management reviews the capital structure on a semi-annual basis in conjunction with the Board.
As part of this review, management considers the cost of capital and the risks associated with each class of
capital and debt.

The gearing ratio at the year end is as follows:

                                                                                                        2008                   2007
                                                                                                       £’000                  £’000
Debt                                                                                                285,687                 173,033
Cash and cash equivalents excluding deposits given as
  collateral for known liabilities                                                  (32,367)        (19,562)
Net debt                                                                           253,320          153,471
Equity                                                                             212,545          231,214
Net debt to equity ratio                                                            119.2%           66.4%
Carrying value of investment and trading properties                                495,107          411,919
Net debt to value ratio                                                              51.2%           37.3%
                                                                                 ––––––––         ––––––––
Debt is defined as borrowings and obligations under finance leases, as detailed in notes 24 and 25.




                                                            132
REGISTRATION DOCUMENT – PART V


Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

Financial risk management objectives
The Group monitors and manages the financial risks relating to the operations of the Group through internal
risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk
(including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge
these risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the
Board of Directors. Compliance with policies and exposure limits is reviewed by the Board and management
on a continuous basis. The Group does not enter into or trade in financial instruments, including derivative
financial instruments, for speculative purposes.

The Group’s management reports quarterly to the Board and Audit Committee, an independent body that
monitors risks and policies implemented to mitigate risk exposures.

Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates
and interest rates. The Group enters into a variety of derivative financial instruments to manage its exposure
to interest rate and foreign currency risk, including:

•      interest rate swaps and caps to mitigate the risk of rising interest rates; and

•      forward foreign exchange contracts to hedge the exchange rate risk arising on translation of the
       Group’s investment in foreign operations which have the Euro as their functional currency.

Foreign currency risk management
The Group’s exposure to foreign currency exposure arises from the fact that there are foreign operations
which transact business denominated in Euros, with the translation of the local trading performance and local
net asset to Sterling for each financial period and at each balance sheet date giving rise to an exposure to
fluctuations in the Euro: Sterling exchange rate. The Group’s approach to managing this exposure is to fund
investments in Euro-denominated operations with debt that is covered by forward currency contracts to limit
the overall exposure of the Group. By managing the exposure the impact of translating overseas profits and
assets has been minimal so these are not specifically hedged.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities
at the reporting date are as follows:

                                                     Group          Company              Group         Company
                                                      2008             2008               2007            2007
                                                     £’000            £’000              £’000           £’000
Gross currency assets                                78,776           54,872            18,937            13,037
Gross currency liabilities                         (286,847)               –          (170,913)                –
                                                  ––––––––         ––––––––          ––––––––          ––––––––
Net exposure                                       (208,071)         54,872           (151,976)          13,037
                                                  ––––––––         ––––––––          ––––––––          ––––––––




                                                       133
REGISTRATION DOCUMENT – PART V


Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of Belgium, France, Germany and the Netherlands (Euro
currency).

At 31 December 2008 the net assets of the Group were £212,545,000 (2007: £231,214,000) of which
£209,900,000 were denominated in Euros (2007: £225,411,000). At 31 December 2008 the Group had no
fixed forward contracts in place to sell Euros for Sterling (2007: Contracts to sell Euros 282,690,000 for
£200,000,000) and therefore the net assets exposure to currency fluctuations was £209,900,000 (2007:
£25,411,000).

The effect of a 10 per cent. increase in the value of the Euro compared to Sterling would increase the net
assets of the Group as at 31 December 2008 by £19,082,000 (2007: effect of a 5 per cent. change –
£1,337,000). The effect of a 10 per cent. decrease in the value of the Euro compared to Sterling would
decrease the net assets of the Group as at 31 December 2008 by £23,322,000 (2007: effect of a 5 per cent.
change – £1,210,000).

Forward foreign exchange contracts
The Group has entered into various forward currency contracts. These were entered into to hedge the net
investment in foreign operations but have not been designated as hedges. The changes in the fair values of
these contracts are recognised in the income statement. In January 2009 the Company exercised its right such
that all payments under the forward foreign currency contracts listed below will be set off, resulting in a
single net payment due in July 2009.

The following table details the forward foreign currency contracts outstanding as at the year end:
                                    Average
                              exchange rates       Currency contract           Contract value               Fair value
                                                   2008        2007         2008        2007       2008          2007
                           2008        2007    EUR 000s EUR 000s           £’000       £’000      £’000         £’000
Group and Company
Sell Euros buy Sterling   1.4105     1.4105     (155,159)    (155,159)    110,000    110,000     (37,319)      (5,121)
Sell Euros buy Sterling   1.4243     1.4243      (71,215)     (71,215)     50,000     50,000     (17,617)      (2,799)
Sell Euros buy Sterling   1.4079     1.4079      (56,316)     (56,316)     40,000     40,000     (13,471)      (1,790)
Sell Sterling buy Euros   1.1258          –      123,832            –    (110,000)         –       7,542            –
Sell Sterling buy Euros   1.1258          –       56,287            –     (50,000)         –       3,428            –
Sell Sterling buy Euros   1.1252          –       45,007            –     (40,000)         –       2,721            –
                                                –––––––      –––––––     –––––––     –––––––    –––––––      –––––––
Total                                            (57,564)    (282,690)          –    200,000     (54,716)      (9,710)
                                                –––––––
                                                –––––––      –––––––
                                                             –––––––     –––––––
                                                                         –––––––     –––––––
                                                                                     –––––––    –––––––
                                                                                                –––––––      –––––––
                                                                                                             –––––––
In the year to 31 December 2008, the aggregate amount of unrealised losses under forward foreign exchange
contracts recognised in the income statement is £45,006,000 (2007: unrealised losses of £11,014,000). The
impact in the year to 31 December 2008 of the translation of the foreign operations which has been deferred
in equity for which the contracts are designed to minimise the exposure are £45,710,000 gain (2007:
£16,143,000 gain).

Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. The
risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings,
by the use of interest rate swap contracts and interest rate cap contracts.

The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk management section of this note.

Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both
derivatives and non-derivative instruments during the year.




                                                            134
REGISTRATION DOCUMENT – PART V


                                                                Increase/(decrease) in profit before tax
                                                     Group           Company             Group         Company
                                                      2008               2008             2007            2007
                                                     £’000              £’000            £’000           £’000
Increase interest rate by 1 per cent.                  (204)              1,608             (3)              612
Decrease interest rate by 1 per cent.                 2,132                (125)           246              (367)

There would have been no effect on amounts recognised directly in equity.

Interest rate swap and cap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating
rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to
mitigate the risk of changing interest rates on the fair value of issued fixed rate debt held and the cash flow
exposures on the issued variable rate debt held.

The following tables detail the notional principal amounts and remaining terms of interest rate swap and cap
contracts outstanding as at the reporting date:

Economic hedges to the cash flows
                                       Average contract                  Notional
                                      fixed interest rate        principal amount                      Fair value
                                     2008           2007       2008          2007            2008           2007
                                         %             %    EUR ‘000 EUR ‘000               £’000          £’000
Group and Company
Interest rate swaps –
   outstanding receive floating
   pay fixed contracts:
In more than one year
   but less than two                    4.2            –        25,000             –          (518)            –
In more than two years
   but less than five                   4.7          4.2         75,000        50,000      (3,991)          144
                                                               –––––––       –––––––     –––––––        –––––––
                                                                100,000        50,000      (4,509)          144
                                                               –––––––       –––––––     –––––––        –––––––
Interest rate caps –
   outstanding receive floating
   pay fixed contracts:
In less than one year                   4.0            –        25,000             –              56           –
In more than one year
   but less than two                     –           4.0              –        25,000              –         184
In more than two years
   but less than five                   4.6          5.0    125,000        25,000           273              51
                                                           –––––––       –––––––       –––––––          –––––––
                                                            150,000        50,000           329             235
                                                           –––––––       –––––––       –––––––          –––––––
The average interest rate is based on the outstanding balances at the end of the financial period.

The interest rate swaps settle on a quarterly basis. The floating rate on the interest rate swaps is three months
EURIBOR. The Group settles the difference between the fixed and floating interest rate on a net basis.

Under interest rate caps the Group pays a premium to limit its exposure to floating interest rates to a fixed
upper limit determined at the time the interest rate cap contract is entered into.

The interest rate caps settle on a quarterly basis. The floating rate on the interest rate caps is three months
EURIBOR. If the floating rate exceeds the capped rate the Group receives the difference between the fixed
and capped interest rate on a net basis.




                                                      135
REGISTRATION DOCUMENT – PART V


The Group does not hedge account for its interest rate swaps or interest rate caps and states them at fair value
with changes in fair value included in the income statement.

Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a
financial loss to the Group.

The Group’s maximum exposure to credit risk is £86,071,000 (2007: £23,343,000) comprising trade and
other receivables and cash and cash deposits. The Group’s principal credit risk is attributable primarily to its
trade receivables of £2,226,000 (2007: £1,749,000) which consist principally of rents due from tenants. The
balance is low relative to both the current and net assets of the Group and the Company.

Potential customers are evaluated for creditworthiness and where necessary collateral is secured. There is no
concentration of credit risk within the portfolio to either geographical business segment or company as the
Group has a well spread diverse customer base with no one customer accounting for more than 3 per cent.
of the gross rent roll.

Other receivables consist principally of property purchase deposits held in client accounts at solicitors and
VAT receivables. These items do not give rise to significant credit risk.

Cash deposits are held at banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which monitors the
Group’s short, medium and long-term funding and liquidity management requirements on a regular basis.
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities. As at 31 December 2008 the Group had additional undrawn committed borrowing
facilities of £57,049,000 (2007: £59,475,000) at its disposal to further reduce liquidity risk.

Liquidity and interest risk tables
The following table details the Group’s remaining contractual maturity for its non-derivative financial
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest dates on which the Group can be required to pay. The table includes both interest and principal
cash flows.

                                                                                                 2008 Maturity
                                Weighted
                                 average
                                 effective    Less than       One to         Two to    More than
                             interest rate     one year     two years     five years   five years         Total
                                        %        £’000         £’000          £’000        £’000         £’000
Group
Non-interest bearing                    –       14,826              –             –             –       14,826
Variable rate debt
  instruments                       4.82        14,374        16,239       288,790        15,118       334,521
Finance lease liability             5.05           372           372         1,118         4,734         6,596
                                –––––––       –––––––       –––––––       –––––––       –––––––       –––––––
                                                29,572        16,611       289,908        19,852       355,943
                                –––––––       –––––––       –––––––       –––––––       –––––––       –––––––
Company
Non-interest bearing                    –         3,641             –             –             –         3,641
Variable rate debt
  instruments                       3.43        34,880                                                  34,880
                                –––––––       –––––––       –––––––       –––––––       –––––––       –––––––
                                                38,521            –             –             –         38,521
                                –––––––       –––––––       –––––––       –––––––       –––––––       –––––––




                                                      136
REGISTRATION DOCUMENT – PART V


                                                                                                2007 Maturity
                                Weighted
                                 average
                                 effective   Less than       One to         Two to    More than
                             interest rate    one year     two years     five years   five years          Total
                                        %       £’000         £’000          £’000        £’000          £’000
Group
Non-interest bearing                    –        9,479              –            –             –         9,479
Variable rate debt
  instruments                       5.43        52,703         8,843       124,980        12,716       199,242
Finance lease liability             5.23           279           283           848         3,877         5,287
                                –––––––       –––––––       –––––––       –––––––       –––––––       –––––––
                                                62,461         9,126       125,828        16,593       214,008
                                –––––––       –––––––       –––––––       –––––––       –––––––       –––––––
Company
Non-interest bearing                     –        1,304           –              –             –        1,304
                                 –––––––       –––––––      –––––––     –––––––        –––––––      –––––––
The following table details the Group’s expected maturity for its non-derivative financial assets. The tables
have been drawn up based on the undiscounted contractual maturities of the financial assets including
interest that will be earned on those assets except where the Group anticipates that the cash flow will occur
in a different period.

                                                                                               2008 Maturity
                                             Less than       One to         Two to    More than
                                              one year     two years     five years   five years       Total
                                                £’000         £’000          £’000        £’000       £’000
Group
Non-interest bearing                             5,831            –             –             –          5,831
Variable interest rate instruments              80,240            –             –             –         80,240
                                              –––––––       –––––––       –––––––       –––––––       –––––––
                                                86,071            –             –             –         86,071
                                              –––––––       –––––––       –––––––       –––––––       –––––––
Company
Non-interest bearing                             6,357            –             –              –       6,357
Variable interest rate instruments             110,214            –             –              –     110,214
                                              –––––––       –––––––       –––––––      –––––––      –––––––
                                               116,571            –             –              –     116,571
                                              –––––––       –––––––       –––––––      –––––––      –––––––
                                                                                               2007 Maturity
                                             Less than       One to         Two to    More than
                                              one year     two years     five years   five years        Total
                                                £’000         £’000          £’000        £’000        £’000
Group
Non-interest bearing                             3,781            –             –             –          3,781
Variable interest rate instruments              19,562            –             –             –         19,562
                                              –––––––       –––––––       –––––––       –––––––       –––––––
                                                23,343            –             –             –         23,343
                                              –––––––       –––––––       –––––––       –––––––       –––––––
Company
Non-interest bearing                              6,954              –            –             –        6,954
Variable interest rate instruments               13,581              –            –             –       13,581
                                              –––––––       –––––––        –––––––      –––––––       –––––––
                                                 20,535              –            –             –       20,535
                                              –––––––       –––––––        –––––––      –––––––       –––––––
The following table details the Group’s liquidity analysis for its derivative financial instruments. The table
has been drawn up based on the undiscounted net cash inflows/(outflows) on the derivative instrument that
settle on a net basis and the undiscounted gross inflows and (outflows) on those derivatives that require gross
settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined
by reference to the interest and foreign currency rates as at the reporting date.


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                                                                                           2008 Maturity
                                           Less than      One to        Two to    More than
                                            one year    two years    five years   five years       Total
                                              £’000        £’000         £’000        £’000       £’000
Group
Net settled:
Interest rate swaps                           (1,374)      (1,173)      (1,851)           –       (4,398)
Gross settled:
Foreign exchange forward
   contracts – outflows                    (473,342)            –            –            –     (473,342)
Foreign exchange forward
   contracts – inflows                       417,682            –            –           –       417,682
                                            –––––––      –––––––      –––––––      –––––––      –––––––
                                             (57,034)      (1,173)      (1,851)          –       (60,058)
                                            –––––––      –––––––      –––––––      –––––––      –––––––
Company
Net settled:
Interest rate swaps                             (631)        (430)         (55)           –       (1,116)
Gross settled:
Foreign exchange forward
   contracts – outflows                    (473,342)            –            –            –     (473,342)
Foreign exchange forward
   contracts – inflows                         417,682            –            –            –     417,682
                                              –––––––      –––––––      –––––––      –––––––     –––––––
                                               (56,291)        (430)         (55)           –     (56,776)
                                              –––––––      –––––––      –––––––      –––––––     –––––––
In January 2009 the Company exercised its right such that all payments due to and from the Company shown
above as gross settled cash outflows and inflows under foreign exchange forward contracts will be set off,
resulting in a single net payment due in July 2009.

                                                                                           2007 Maturity
                                           Less than      One to        Two to    More than
                                            one year    two years    five years   five years       Total
                                              £’000        £’000         £’000        £’000       £’000
Group and Company
Net settled:
Interest rate swaps                             166           166          115            –          447
Interest rate caps                              125           103            –            –          228
Gross settled:
Foreign exchange forward
   contracts – outflows                            –     (207,570)           –            –     (207,570)
Foreign exchange forward
   contracts – inflows                            –       200,000           –            –      200,000
                                            –––––––      –––––––      –––––––      –––––––      –––––––
                                                291        (7,301)        115            –        (6,895)
                                            –––––––      –––––––      –––––––      –––––––      –––––––




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                                 Independent Auditors’ Report

Independent auditors’ report to the members of Hansteen Holdings PLC
We have audited the Group and Parent Company financial statements (the ‘financial statements’) of
Hansteen Holdings PLC for the year ended 31 December 2008 which comprise the Consolidated Income
Statement, the Group and Parent Company Balance Sheets, the Group and Parent Company Statements of
Changes in Equity, the Group and Parent Company Cash Flow Statements, and the related notes 1 to 34.
These financial statements have been prepared under the accounting policies set out therein. We have also
audited the information in the Directors’ Remuneration Report that is described as having been audited.

This report is made solely to the Company’s members, as a body, in accordance with section 235 of the
Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to
be audited in accordance with relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the
financial statements and the part of the Directors’ Remuneration Report to be audited have been properly
prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the
information given in the Directors’ Report is consistent with the financial statements. The information given
in the Directors’ Report includes that specific information presented in the Chairman’s Statement and Joint
Chief Executive’s Review that is cross referred from the Business Review section of the Directors’ Report.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we
have not received all the information and explanations we require for our audit, or if information specified
by law regarding directors’ remuneration and other transactions is not disclosed.

Although not required to do so, the directors have voluntarily chosen to make a corporate governance
statement detailing the extent of their compliance with the July 2006 Combined Code. We review whether
the Corporate Governance Statement reflects the company’s compliance with the nine provisions of the 2006
Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we
report if it does not. We are not required to consider whether the Board’s statements on internal control cover
all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance
procedures or its risk and control procedures.

We read the other information contained in the Annual Report as described in the contents section and
consider whether it is consistent with the audited financial statements. We consider the implications for our
report if we become aware of any apparent misstatements or material inconsistencies with the financial
statements. Our responsibilities do not extend to any further information outside the Annual Report.

Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by
the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements and the part of the Directors’ Remuneration Report to be
audited. It also includes an assessment of the significant estimates and judgements made by the directors in



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REGISTRATION DOCUMENT – PART V


the preparation of the financial statements, and of whether the accounting policies are appropriate to the
Group’s and Company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial statements and the part of the Directors’ Remuneration Report to be audited are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the financial statements and the part of
the Directors’ Remuneration Report to be audited.

Opinion
In our opinion:

•     the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the
      European Union, of the state of the Group’s affairs as at 31 December 2008 and of its loss for the year
      then ended;

•     the Parent Company financial statements give a true and fair view, in accordance with IFRSs as
      adopted by the European Union as applied in accordance with the provisions of the Companies Act
      1985, of the state of the Parent Company’s affairs as at 31 December 2008;

•     the financial statements and the part of the Directors’ Remuneration Report to be audited have been
      properly prepared in accordance with the Companies Act 1985; and

•     the information given in the Directors’ Report is consistent with the financial statements.




Deloitte LLP
Chartered Accountants and Registered Auditors
Reading, United Kingdom
1 April 2009




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REGISTRATION DOCUMENT – PART VI



                                               PART VI

                                     VALUATION REPORT
                                                                                 King Sturge LLP
                                                                                 30 Warwick Street
                                                                                 London W1B 5NH

                                                                                 T +44 (0)20 7493 4933
                                                                                 F +44 (0)20 7087 5555
                                                                                 www.kingsturge.com

                                                                                               23 June 2009

Hansteen Holdings PLC (“Hansteen” or “the Company”)
1 Berkeley Street
London W1J 8DJ

KBC Peel Hunt Ltd
111 Old Broad Street
London EC2N 1PH

Dear Sirs

            VALUATION OF PART OF HANSTEEN HOLDINGS EUROPEAN PORTFOLIO
                                  AS AT 31 MAY 2009

1.    INTRODUCTION
In accordance with instructions received from Hansteen Holdings PLC, which were confirmed in our letter
of engagement dated 31 May 2009, we have inspected the properties (the “Properties” and each a
“Property”) owned by Hansteen and its subsidiaries (the “Group”), in order to advise you of our opinion
of the Market Value (as defined below) of 100 per cent. of the freehold and leasehold interests in each of
those Properties held by the Group, subject to and with the benefit of the various occupational leases to
which the Properties may be subject, as at 31 May 2009 (the “Valuation”).

The Properties comprise part of the property assets of Hansteen, as listed in the Schedule of Properties set
out in Part VII of the Company’s Registration Document.

2.    INSPECTIONS
The majority of the properties have been inspected internally and externally over the past 12 months.           CESR 130(ii)



3.    COMPLIANCE WITH RICS VALUATION STANDARDS
We confirm that the valuations have been made by us in accordance with the RICS Valuation Standards, 6th
Edition (the “Red Book”) issued by the Royal Institution of Chartered Surveyors (“RICS”) as well as in
accordance with the relevant provisions of the Prospectus Rule 5.6.5G of the Prospectus Rules issued by the
United Kingdom Listing Authority (the “UKLA”) and paragraphs 128 to 130 of CESR’s recommendations
for the consistent implementation of the European Commission’s Regulation on Prospectuses no 809/2004.

4.    STATUS OF VALUER
We confirm that we have undertaken the Valuation acting as an External Valuer (as defined in the Red Book)      CESR 130(i)

for the purposes of valuing the Properties pursuant to the terms of the engagement letter with Hansteen dated
24 January 2007.




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REGISTRATION DOCUMENT – PART VI


5.    PURPOSE OF THE VALUATION
We confirm that these valuations are each prepared for a Regulated Purpose as defined in the Red Book. We
understand that our valuation report and the Appendices to it (together the “Valuation Report”) is required
for the inclusion in an approved prospectus (the “Prospectus”) which is to be published in connection with
an offering of new ordinary shares by Hansteen Holdings Plc pursuant to a placing and open offer, as a result
of which the new ordinary shares will be admitted to trading on AIM, a market operated by London Stock
Exchange (the “Placing and Open Offer”).

The effective date of the Valuation is 31 May 2009 (the “Valuation Date”).
                                                                                                                  CESR 130(iv)
In accordance with UKPS 5.4 we have made certain disclosures in connection with this valuation instruction
and our relationship with the Group. These are included in item 6 below.

6.    DISCLOSURES

6.1   Signatory
      The principal signatory of this report has continuously been the signatory of valuations for the same
      addressee and valuation purpose as this report since 2005. King Sturge has continuously been carrying
      out valuation instructions for the addressee of this report since 2005.

6.2   King Sturge’s relationship with client
      King Sturge (“KS”) has carried out Valuation, Agency and Professional services on behalf of the
      addressee for at least 4 years.

      KS, and its predecessor firms, has had a long association with the Group over several decades and has
      dealt with investment purchases and sales, property management, lettings, rent reviews, rating,
      strategic advice and other general property matters.

      In any event the Group has confirmed it is happy for us to act on its behalf.

6.3   Fee income from the Group
      In KS’s financial year to 30 April 2008, the proportion of total fees payable by the Group to the total
      fee income of KS was less than 5 per cent. It is not anticipated that this situation will vary in the
      financial year to 30 April 2009.

      We do not consider that any conflict of interest arises for us in preparing this Valuation Report and the
      Group has confirmed to us that it also considers this to be the case.

      We confirm that we do not have any material interest in the Group or any of the Properties.

7.    REPORT FORMAT
The portfolio has been divided into 4 primarily country sectors, identifying the individual assets.

8.    BASIS OF VALUATION
Our opinion of the Market Value of each of the Properties has been primarily derived using comparable
recent market transactions on arm’s length terms.

9.    MARKET VALUE
The value of each of the Properties has been prepared in accordance with the Valuation Standards published
by the RICS. These are compliant with the Standards published by the International Valuation Standards
Committee. The Properties have been valued to Market Value as defined by the International Valuation
Standards Committee. Under these provisions, the term “Market Value” means “The estimated amount for
which a property should exchange on the date of valuation between a willing buyer and a willing seller in an



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REGISTRATION DOCUMENT – PART VI


arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently
and without compulsion”.

10.    TAXATION AND COSTS
We have not made any adjustments in our valuations to reflect any liability to taxation that may arise on
rental income from Properties (if any), notional sale prices or any gains that may be realised on disposals,
nor for any costs associated with disposals incurred by the Group. No allowance has been made to reflect
any liability to repay any government or other grants, taxation allowance or lottery funding that may arise
on disposals.

We have made deductions from our valuations to reflect purchasers’ acquisition costs.

11.    VAT
The capital valuations and rentals of the Properties included in this Valuation Report are net of value added
tax at the prevailing rate.

12.    ASSUMPTIONS AND SOURCES OF INFORMATION
An Assumption is stated in the Glossary to the Red Book to be a “supposition taken to be true”
(“Assumption”). Assumptions are facts, conditions or situations affecting the subject of, or approach to, a
valuation that, by agreement, need not be verified by a valuer as part of the valuation process. In undertaking
our valuations, we have made a number of Assumptions and have relied on certain sources of information.

The Group has confirmed and we confirm that our Assumptions are correct so far as the Group and we,
respectively, are aware. In the event that any of these Assumptions prove to be incorrect then our valuations
should be reviewed. The principal Assumptions we have made for the purposes of our valuations are referred
to below.

13.    TITLE
At the time of acquisition we will have been provided with legal due diligence reports which refer to the title
deeds or leases of the Properties. We have taken these into account in the preparation of our valuation
however we have not received or reviewed any new confirming due diligence since purchase. Where
otherwise informed in the legal due diligence reports we have made an Assumption that the Group is
possessed of good and marketable freehold or leasehold title in each case and that the Properties are free
from rights of way or easements, restrictive covenants, burdens, disputes or onerous or unusual outgoings.
We have, where supplied, examined sample title documents and other relevant information. We have also
assumed that the Properties are free from mortgages, charges or other encumbrances.

Legal issues, and in particular the interpretation of matters relating to title and leases, may have a significant
bearing on the value of an interest in Property. No responsibility or liability will be accepted for the true
interpretation of the legal position of our client or other parties. Where we express an opinion upon legal
issues affecting the Valuation, then such opinion should be subject to verification by the client with a suitable
qualified lawyer. In these circumstances, we accept no responsibility or liability for the true interpretation of
the legal position of the client or other parties in respect of the Valuation as it relates to any Property.

14.    CONDITION OF STRUCTURE AND SERVICES, DELETERIOUS MATERIALS, PLANT
       AND MACHINERY AND GOODWILL
In undertaking our valuations, due regard has been paid to the apparent state of repair and condition of each
of the Properties, but condition surveys have not been undertaken, nor have woodwork or other parts of the
structures which are covered, unexposed or inaccessible, been inspected. Therefore, we are unable to confirm
that the Properties are structurally sound or free from any defects. We have made an Assumption that the
Properties are free from any rot, infestation, adverse toxic chemical treatments, and structural or design
defects other than as may be mentioned in our Valuation Report.




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REGISTRATION DOCUMENT – PART VI


We have not arranged for investigations to be made to determine whether high alumina cement concrete
(HAC), calcium chloride additive or any other deleterious materials have been used in the construction or
any alterations, and therefore we cannot confirm that the Properties are free from risk in this regard. We are
aware of the presence of HAC in certain isolated locations within certain Properties and understand that the
presence of HAC in those Properties has not had a detrimental effect. For the purposes of our valuations as
they relate to these Properties, we have made an Assumption that any such investigation would not reveal the
presence of such materials in any adverse condition.

We have not carried out an asbestos inspection and have not acted as an asbestos inspector in completing the
inspection of Properties for the purposes of our Valuation that may fall within relevant legislation regarding
Asbestos. We have assumed that the properties are free from asbestos.

No mining, geological or other investigations have been undertaken to certify that the sites are free from any
defect as to foundations. We have made an Assumption that the load bearing qualities of the sites of the
Properties are sufficient to support the buildings constructed (or to be constructed) thereon. We have also
made an Assumption that there are no services on, or crossing the sites in a position which would inhibit
development or make it unduly expensive, and that there are no abnormal ground conditions, nor
archaeological remains present, which might adversely affect the present or future occupation, development
or value of any of the Properties.

No tests have been carried out as to electrical, electronic, heating, plant and machinery, equipment or any
other services nor have the drains been tested. However, we have made an Assumption that all services,
including gas, water, electricity and sewerage, are provided and are functioning satisfactorily.

No allowance has been made in our valuations for any items of plant or machinery not forming part of the
service installations of the buildings on the Properties. We have specifically excluded all items of plant,
machinery and equipment installed wholly or primarily in connection with the occupants’ businesses. We
have also excluded furniture and furnishings, fixtures, fittings, vehicles, stock and loose tools.

Further, no account has been taken in our valuations of any business goodwill that may arise from the present
occupation of any of the Properties.

For those Properties in the course of development, we have assumed that the completed buildings will also
satisfy the various matters discussed above.

15.   ENVIRONMENTAL MATTERS

Electromagnetic Fields
There is high voltage electrical supply equipment close to some of the Properties. The possible effects of
electromagnetic fields have been the subject of media coverage. The National Radiological Protection Board
(NRPB), an independent body with responsibility for advising on electromagnetic fields, has advised that,
following studies in 2000 and 2001, there may be a risk in specified circumstances, to the health of certain
categories of people. Public perception may, therefore, affect marketability and future value of the
Properties.

Other Environmental Matters
We have been instructed not to make any investigations in relation to the presence or potential presence of
contamination in land or buildings, and to make an Assumption that if investigations were made to an
appropriate extent then nothing would be discovered sufficient to affect value. We have not carried out any
investigation into past uses, either of the Properties or any adjacent land to establish whether there is any
potential for contamination from such uses or sites, and have therefore made an Assumption that none exists.

In practice, purchasers in the property market do require knowledge about contamination. A prudent
purchaser of these Properties would be likely to require appropriate investigations to be made to assess any
risk before completing a transaction. Should it be established that contamination does exist, this might
reduce the values now reported.


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REGISTRATION DOCUMENT – PART VI


Flooding
If any of the Properties lie within or close to a flood plain, or have a history of flooding, we have made the
Assumption that building insurance is in place regarding flooding and available to be renewed to the current
or any subsequent owners of the Properties, without payment of an excessive premium or excess.

16.   AREAS
The Group have provided us with the floor areas of the Properties that are relevant to our Valuation. As
instructed, we have relied on these areas and have not checked them on site.

17.   STATUTORY REQUIREMENTS AND PLANNING
Enquiries have not been made of the relevant planning authorities in whose areas the Properties lie as to the
possibility of highway proposals, comprehensive development schemes and other ancillary planning matters
that could affect property values.

We have made an Assumption that the buildings have been constructed in full compliance with valid town
planning and building regulations approvals, that where necessary they have the benefit of current Fire Risk
Assessments compliant with the requirements of the relevant legislation. Similarly, we have also made an
Assumption that the Properties are not subject to any outstanding statutory notices as to their construction,
use or occupation. Unless our enquiries have revealed the contrary, we have made a further Assumption that
the existing uses of the Properties are duly authorised or established and that no adverse planning conditions
or restrictions apply.

We have made an Assumption that the Properties comply with all relevant statutory requirements.

We would draw your attention to the fact that employees of town planning departments now always give
information on the basis that it should not be relied upon and that formal searches should be made if more
certain information is required. We assume that, if you should need to rely upon the information given about
town planning matters, your solicitors would be instructed to institute such formal searches.

In instances where we have valued the Property with the benefit of a recently granted planning consent, we
have made an assumption that it will not be challenged under Judicial Review.

18.   LEASING
Where we have been provided with leases and related documents, these have been reviewed and reflected in
our valuations. Where this information has not been provided, we have relied upon the management
information that has been provided to us by the Group and made an Assumption that this is complete and
accurate.

We have not undertaken investigations into the financial strength of the occupiers of any Property. Unless we
have become aware by general knowledge, or we have been specifically advised to the contrary we have
made an Assumption that the occupiers of any Property are financially in a position to meet their obligations.
Unless otherwise advised we have also made an Assumption that there are no material arrears of rent or
service charges, breaches of covenants, current or anticipated tenant disputes.

However, our valuations reflect the type of tenants actually in occupation or responsible for meeting lease
commitments, or likely to be in occupation, and the market’s general perception of their creditworthiness.

We have also made an Assumption that wherever rent reviews or lease renewals are pending or impending, with
anticipated reversionary increases, all notices have been served validly within the appropriate time limits.

19.   INFORMATION
We have made an Assumption that any information the Group and its professional advisers have supplied to
us in respect of the Properties is both full and correct.




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REGISTRATION DOCUMENT – PART VI


It follows that we have made an Assumption that details of all matters likely to affect value within their
collective knowledge such as prospective lettings, rent reviews, outstanding requirements under legislation
and planning decisions have been made available to us and that the information is up to date.
For the purposes of Prospectus Rule 5.5.3(R)(2)(f), we are responsible for this Valuation Report and we will
accept responsibility for the information contained in this Valuation Report and confirm that to the best of
our knowledge (having taken all reasonable care to ensure that such is the case), the information contained
in this Valuation Report is in accordance with the facts and contains no omissions likely to affect its import.
This Report complies with Prospectus Rule 5.6.5G of the Prospectus Rules and paragraphs 128 to 130 of
CESR’s recommendations for the consistent implementation of the European Commission’s Regulation on
Prospectuses no 809/2004.

20.   PROPERTIES IN THE COURSE OF DEVELOPMENT OR REQUIRING
      REFURBISHMENT
We have relied upon information relating to construction and associated costs in respect of both the work
completed and the work necessary for completion, together with a completion date, as advised by the Group
and its professional advisers. Our valuations have been based on an Assumption that all works of
construction have been satisfactorily carried out in accordance with the building contract and specifications,
current European Standards and any relevant codes of practice. We have also made an Assumption that a duty
of care and all appropriate warranties will be available from the professional team and contractors, which
will be assignable to third parties.

21.   PORTFOLIOS
We have, as instructed, valued the Properties on the assumption that the portfolio will continue to remain in
the existing ownership. As a result we have made no reduction or addition to the valuations to reflect the
possible effect of flooding the market were the portfolio, or a substantial number of Properties within it, to
be placed on the market at the same time.
We have been instructed to provide the market value of 100 per cent. of the property interest in any of the
Properties notwithstanding in some cases the Group may only own a lesser percentage.

22.   MARKET CONDITIONS
The values stated in this report represent our objective opinion of Market Value in accordance with the
definition set out above as of the date of valuation. Amongst other things, this assumes that the properties
had been properly marketed and that exchange of contracts took place on this date.
Going forward, we would draw your attention to the fact that the current volatility in the global financial
system has created a significant degree of turbulence in commercial real estate markets across the world.
Furthermore, the lack of liquidity in the capital markets means that it may be very difficult to achieve a sale
of property assets in the short-term. We would therefore recommend that the situation and the valuations are
kept under regular review, and that specific marketing advice is obtained should you wish to effect a disposal.

23.   VALUATIONS
Having regard to the foregoing we are of the opinion that the aggregate of the Market Values as at 31 May
2009 of the freehold and long leasehold interests in the Properties described in the Appendices, subject to
the Assumptions, and comments in this Valuation Report and in the Appendices was as follows:
€495,168,000 (Four Hundred and Ninety Five Million, One Hundred and Sixty Eight Thousand Euros)                   CESR 130(v)

exclusive of VAT, as shown in the Schedule of Capital Values set out below.
                                                                                     **Short
                                                 Freehold       *Leasehold         leasehold             Total
                                                        €                €                 €                 €
                                              478,598,000       13,809,000         2,761,000      495,168,000
                                                ————              ————             ————             ————
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REGISTRATION DOCUMENT – PART VI


*     more than 50 years unexpired
**    less than 50 years

There are no negative values to report.

24.      CONFIDENTIALITY AND DISCLOSURE AND PUBLICATION
The contents of this Valuation Report may be used only for the specific purpose to which they refer. Before
this Valuation Report, or any part thereof, is reproduced or referred to, in any document, circular or
statement, and before its contents, or any part thereof, are disclosed orally or otherwise to a third party, the
valuer’s written approval as to the form and context of such publication or disclosure must first be obtained,
but may not be unreasonably withheld or delayed where it relates to the Rights Issue. For the avoidance of
doubt such approval is required whether or not King Sturge is referred to by name and whether or not the
contents of our Valuation Report are combined with others.

Yours faithfully                                                      Yours faithfully

CHRISTOPHER LAVERY MRICS                                             RICHARD BATTEN FRICS
Partner                                                              Joint Senior Partner
King Sturge LLP                                                      King Sturge LLP

T      020 7087 5736 (Direct)                                         T      020 7087 5757 (Direct)
F      020 7087 5751 (Direct)                                         F      020 7087 5766 (Direct)
M      07816 99 8813 (Mobile)                                         M      07802 665752 (Mobile)
christopher.lavery@kingsturge.com                                     richard.batten@kingsturge.com




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                                                 Appendix 1

                                  Valuation according to country
                                                                        Gross         Estimated
                                                    Vacancy        annual rent     gross annual             Market
Country                                                 rate        receivable      rental value             value
Netherlands                                        12.29%          16,548,492        16,670,340       192,910,000
Germany                                            17.31%          20,914,536        25,908,522       235,043,000
Belgium                                             7.56%           3,876,925         3,482,784        44,481,000
France                                              0.00%           2,368,308         2,655,868        22,734,000
                                                  ————              ————              ————              ————
Total                                              13.29%          43,708,261        49,673,514       495,168,000
                                                  ————               ————              ————
Hansteen’s portfolio comprises 106 properties spread across 4 Western European countries. The majority of
                                                                                                         ————
the portfolio was constructed in the 1960-1980’s with a number of newer more modern warehouses
constructed in the 1990’s-00’s. 85.3 per cent. of these properties are industrial buildings, 6.1 per cent. are
offices, 4.4 per cent. are mixed commercial, 2.8 per cent. are retail and 1.4 per cent. are residential and
leisure. The portfolio has a total leasable area of 961,248 m2, with a vacancy rate of 13.3 per cent.

Hansteen owns 56 properties, of which 5 non-core assets, in Germany spread over 10 German states. There
are 4 main clusters: Western Belgium/Dutch border, Neidersachsen around Hannover, South West and South
Frankfurt and East close to the Czech border. 76.9 per cent. of these properties are industrial buildings, 9.8
per cent. are offices, 4.7 per cent. are mixed commercial, 5.9 per cent. are retail and 2.7 per cent. are
residential and leisure. The total leasable area is 463,106 m2 (48.2 per cent. of the total portfolio floor area),
with a vacancy rate of 17.31 per cent. Hansteen has 451 tenants across its German portfolio.

Hansteen owns 33 properties in the Netherlands. The portfolio is fairly spread out across the country along
the main motorway routes. 96.9 per cent. of these properties are industrial buildings and 3.1 per cent. are
mixed commercial. The total leasable area is 370,168 m2 (38.5 per cent. of the total portfolio floor area), with
a vacancy rate of 12.29 per cent. Hansteen has 67 tenants across its Dutch portfolio.

Hansteen owns 13 properties in Belgium. The portfolio is concentrated in the main urban agglomerations
around Antwerp and Brussels. 53.4 per cent. of these properties are industrial buildings, 27.7 per cent. are
offices and 18.9 per cent. are mixed commercial. The total leasable area is 49,973 m2 (5.23 per cent. of the
total portfolio floor area), with a vacancy rate of 7.56 per cent. Hansteen has 37 tenants across its Belgian
portfolio.

Hansteen owns 4 properties in France. The portfolio is unevenly spread with one property on the Western
Atlantic coast, 2 towards the border with Switzerland and one in the south near the Cote d’Azur. 100 per
cent. of these properties are industrial buildings. The total leasable area is 78,001 m2 (8.2 per cent. of the total
portfolio floor area), with no vacant space. Hansteen has 5 tenants across its French portfolio.




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REGISTRATION DOCUMENT – PART VII



                                             PART VII

                             ADDITIONAL INFORMATION

1.    RESPONSIBILITY STATEMENT                                                                                A1/1.1
                                                                                                              A1/1.2
1.1   The Company, whose registered office appears in paragraph 2.3 below, and the Directors, whose
      names and functions appear on page 11 of this document, accept responsibility for the information
      contained in this document. To the best of the knowledge of the Company and Directors (each of
      whom has taken all reasonable care to ensure that such is the case) the information contained in this
      document is in accordance with the facts and contains no omission likely to affect the import of such
      information.

2.    THE COMPANY                                                                                             A1/5.1.1
                                                                                                              A1/5.1.2
2.1   The Company was incorporated under the 1985 Act on 27 October 2005 as a public company limited
                                                                                                              A1/5.1.3
      by shares with the name of Hansteen Holdings PLC and registered in England and Wales with number
                                                                                                              A1/5.1.4
      5605371. The Company is domiciled in England and Wales.

2.2   The principal legislation under which the Company operates is the 1985 and 2006 Acts and the
      regulations made thereunder.

2.3   The Company’s registered office, which is also its head office, is at 1 Berkeley Street, London
      W1J 8DJ and its telephone number is +44 (0)20 7016 8820.

2.4   The accounting reference date of the Company is 31 December.

2.5   As background, the following are the recent important events in the development of the Company’s
      business:

      (A)   November 2005                                                                                     A1/5.1.5

            The Company was admitted to trading on AIM and raised approximately £123.1 million of
            cash net of expenses through a placing of 124,500,000 Ordinary Shares at a price of 100 pence
            per share.

      (B)   December 2005
            In four separate transactions the Group acquired €73.35 million of industrial/distribution
            property in the Netherlands and Germany.

      (C)   May 2006
            The Group acquired a number of mainly industrial/warehouse investments in Germany, the
            Netherlands and Scotland, totalling some €43 million.

      (D)   June 2006
            The Group acquired a significant portfolio of residential properties in Wiesbaden, Germany and
            a warehouse property in Bordeaux, France. The two purchases amounted to €31 million.

      (E)   July 2006
            The Group acquired a further three investments in Germany and the Netherlands for
            €24 million.




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REGISTRATION DOCUMENT – PART VII


     (F)   July 2006
           The Company and certain of its Subsidiaries entered into a five year €230,000,000 revolving
           bank loan facility. The loan is secured on the shares of the borrowing Subsidiaries and their
           investment properties and is guaranteed by the Company and the borrowing Subsidiaries.

     (G)   February 2007
           The Group acquired a further seven investment properties in the Netherlands, Germany and
           France for a total of €44.5 million.

     (H)   March 2007
           The Company raised approximately £68.5 million of cash net of expenses through a placing of
           an additional 53,435,115 Ordinary Shares at a price of 131p per share.

     (I)   March 2007
           The Group acquired two logistics properties in Houten in the Netherlands for €17.3 million
           (£11.74 million) and a portfolio of 13 properties in Neckarsulm, Germany for €16 million
           (£10.86 million) The acquisition of the Netherlands portfolio was undertaken in joint venture
           with Ormix B.V.

     (J)   May 2007
           The Group acquired a further €24.6 million of real estate in Germany and the Netherlands.

     (K)   July 2007
           The Group acquired four properties in the Netherlands for €13.5 million, two portfolios in
           Germany totalling 12 properties for €23 million and an office building, also in Germany, for
           €10 million.

     (L)   September 2007
           The Group announced its first acquisition in Belgium for €54.3 million together with two
           further purchases in the Netherlands for €33.2 million and four further purchases in Germany
           totalling €26.6 million.

     (M)   November 2007
           The Group acquired nine properties for, in aggregate, a total consideration of €53 million.

     (N)   January 2008
           The Group acquired four properties in Germany, one in the Netherlands and one in France. The
           properties in Germany were acquired for a total consideration of €22 million and in the
           Netherlands and France, €1.6 million and €5.43 million, respectively.

     (O)   June 2008
           The Group arranged a new €130 million five year facility with FGHbank N.V. secured on its
           Dutch property portfolio.

     (P)   November 2008
           The Group announced the sale of three properties at or above book valuation for a total
           consideration of €7.50 million and the purchase of three properties for a total cost of
           €18.20 million.




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REGISTRATION DOCUMENT – PART VII


      (Q)      December 2008
               The Company effectively closed its currency hedging contracts, which it had entered into in
               2006 and 2007, at a one-off cash cost of €57.6 million, which is due to be settled in 2009.

3.    ORGANISATION STRUCTURE                                                                                                  A1/7.1
                                                                                                                              A1/7.2
3.1   The Company is the holding company of the Group.
                                                                                                                              A1/25.1
3.2   The significant subsidiaries of the Company and other undertakings (all of which the Company holds,
      directly or indirectly, a proportion of the capital) likely to have a significant effect on the assessment
      of its own assets and liabilities, financial position or profits and losses are set out below. Save as
      described below, all Subsidiaries are 100 per cent. owned by the Company and are engaged in
      property development, investment and management.

      Name                                                                                   Country of Incorporation
      Hansteen Limited                                                                               England and Wales
      Hansteen Belgium Limited                                                                       England and Wales
      Hansteen Developments Limited                                                                  England and Wales
      Hansteen Europe Limited                                                                        England and Wales
      Hansteen Land Limited                                                                          England and Wales
      Hansteen France SAS                                                                                       France
      Hansteen Germany Limited                                                                       England and Wales
      Hansteen Germany (2) Limited                                                                   England and Wales
      Hansteen Germany (3) Limited                                                                   England and Wales
      Hansteen Germany Residential Limited                                                           England and Wales
      Hansteen Germany B.V.                                                                             the Netherlands
      Hansteen Netherlands B.V.                                                                         the Netherlands
      Hansteen Ormix B.V. *                                                                             the Netherlands
      Arman BO1 BVBA†                                                                                          Belgium
      Hert BVBA†                                                                                               Belgium
      I.P.I. Nossegem NV†                                                                                      Belgium
      Jezusstraat 22 NV†                                                                                       Belgium
      Small Island Management NV†                                                                              Belgium
      Tycoons Immo BVBA†                                                                                       Belgium
      Vignée Invest NV†                                                                                        Belgium
      Waterloo Investments NV†                                                                                 Belgium
      *     50 per cent. owned by Hansteen Netherlands B.V. (which is a wholly-owned subsidiary undertaking of the Company)
            and 50 per cent. owned by Ormix B.V. (a third party).
      †     100 per cent. owned by Hansteen Belgium Limited.

3.3   As at the date of this document, the Group had no current asset investments in progress, nor any                        A1/5.2.1

      principal future investments on which firm commitments had been made.                                                   A1/5.2.2
                                                                                                                              A1/5.2.3

4.    SHARE CAPITAL                                                                                                           A1/21.1.1
                                                                                                                              A1/21.1.7
4.1   The Company was incorporated on 27 October 2005 with authorised share capital of £50,000 divided
      into 50,000 ordinary shares of £1 and two shares were issued, credited as fully paid. These shares were
      subsequently transferred to Ian Watson and Morgan Jones.

4.2   On 14 November 2005 each of the 50,000 authorised ordinary shares of £1 were subdivided into 10
      ordinary shares of 10p each. On the same date each of the two issued ordinary shares of £1 were
      subdivided into 10 ordinary shares of 10p, resulting in the issued share capital being 20 ordinary
      shares.

4.3   On 14 November 2005 the Company issued 499,980 ordinary shares at a subscription price of £1 per
      ordinary share resulting in the issued share capital being 500,000 ordinary shares.



                                                           151
REGISTRATION DOCUMENT – PART VII


4.4   On 22 November 2005 the Company’s authorised share capital was increased to 200,000,000 ordinary
      shares. On the same date two ordinary shares were issued as consideration for the transfer of two
      ordinary shares of £1 each representing the entire issued share capital of Hansteen Limited.

4.5   On 29 November 2005 the company issued 124,500,000 ordinary shares at a subscription price of £1
      per ordinary share resulting in the issued share capital being 125,000,002 ordinary shares.

4.6   On 23 March 2007, the Company issued 53,435,115 fully paid new ordinary shares of 10p each for
      cash consideration of 131p per share. This resulted in an increase in the issued share capital from
      125,000,002 ordinary shares to 178,435,117 ordinary shares.

4.7   On 25 May 2007, the Company’s authorised share capital was increased to 250,000,000 ordinary
      shares by the creation of 50,000,000 ordinary shares of 10p each.

4.8   On 19 March 2008, the High Court of Justice, Chancery Division, Companies Court, approved the
      reduction of the Company’s Share Premium Account by a sum of £60,000,000.

4.9   The authorised and issued share capital of the Company as at the date of this document is as follows:

                                                                         Number of Shares              Value
                                                                             of 10p each                   £
      Authorised Ordinary Shares                                               250,000,000       25,000,000
      Existing Ordinary Shares (issued and fully paid)                         178,435,117       17,843,000

4.10 By ordinary and special resolutions to be proposed by the Company on 9 July 2009 it is proposed that:
      (A)    the authorised share capital of the Company be increased from £25,000,000 to £60,000,000 by
             the creation of 350,000,000 new ordinary shares of ten pence each ranking pari passu for all
             purposes with the existing ordinary shares of ten pence each in the capital of the Company;
      (B)    the Directors be generally and unconditionally authorised, in substitution for all existing
             authorities in such regard, to allot relevant securities (as defined in the 1985 Act):
             (i)    up to an aggregate nominal amount of £26,776,845.10 (equivalent to 267,768,451
                    ordinary shares of 10p each in the capital of the Company) in connection with the
                    Placing and Open Offer; and
             (ii)   up to an aggregate nominal amount of £14,873,452.30 (equivalent to 148,734,523
                    ordinary shares of 10p each in the capital of the Company),
             which authorities shall expire at the conclusion of the next annual general meeting of the
             Company after the passing of such resolution (unless previously revoked or varied by the
             Company in general meeting), save that the Company may before such expiry make an offer or
             agreement which would or might require relevant securities to be allotted after such expiry and
             the Board may allot relevant securities in pursuance of such an offer or agreement as if the
             authority conferred had not expired.

      (C)    the Directors be empowered, pursuant to Section 95 of the 1985 Act, to allot equity securities
             (within the meaning of Section 94 of the 1985 Act) for cash pursuant to the authority conferred
             by the resolution above as if Sub-Section (1) of Section 89 of the 1985 Act did not apply to any
             such allotment, provided that this power be limited to the allotment of equity securities:

             (i)    up to an aggregate nominal value of £26,776,845.10 for the purpose of giving effect to
                    the Placing and Open Offer; and

             (ii)   otherwise than in connection with the Placing and Open Offer, up to an aggregate
                    nominal amount of £2,231,017.90 (equivalent to 22,310,179 ordinary shares of 10p each
                    in the capital of the Company), which authorities shall expire at the conclusion of the
                    next annual general meeting of the Company after the passing of this resolution, save
                    that the Company may before such expiry make an offer or agreement which would or


                                                    152
REGISTRATION DOCUMENT – PART VII


                     might require equity securities to be allotted after such expiry and the Board may allot
                     equity securities in pursuance of such an offer or agreement as if the power conferred
                     had not expired.

4.11 The Company has not issued shares that do not represent capital in the Company.                                 A1/21.1.2


4.12 As at the date of this document, the Company has no outstanding convertible securities, exchangeable            A1/21.1.4

     securities or securities with warrants.

4.13 As at the date of this document, 1,250,000 options over Ordinary Shares are outstanding exercisable             A1/17.2

     at exercise prices ranging from 71.0p to 128.5p in years from 2009 up to 2019.                                  A1/21.1.6



5.    MEMORANDUM OF ASSOCIATION
The Memorandum of Association provides that the principal object of the Company is to carry on the                   A1/21.2.1

business of a general commercial company. The objects of the Company are set out in full in clause four of
the Memorandum of Association.

6.    ARTICLES OF ASSOCIATION
The Articles of Association of the Company contain provisions to the following effect:

6.1   Share rights
      Subject to the authority of the Company in general meeting required by the 1985 Act, the Directors
      have unconditional authority to allot, grant options over, offer, or otherwise deal with or dispose of
      any shares of the Company to such persons, at such times and generally on such terms and conditions            A1/21.2.3

      as the directors may determine.

6.2   Voting
      Subject to any rights or restrictions attaching to any shares and to the Statutes:

      (A)      on a show of hands every member who (being an individual) is present in person or by duly
               appointed proxy or (being a corporation) is present by duly authorised representative or by duly
               appointed proxy shall have one vote; and,

      (B)      on a poll every member who (being an individual) is present in person or by duly appointed
               proxy or (being a corporation) is present by duly authorised representative or by duly appointed
               proxy shall have one vote for every share of which he is the holder.

      Unless the Board decides otherwise, no member shall be entitled to be present or vote at any meeting
      either personally or by proxy if any calls or other monies due in respect of any share upon which any
      call or other monies due and payable have not been paid.

6.3   Dividends and distributions
      Dividends may be declared by ordinary resolution but shall not exceed the amount recommended by
      the Board.

      Subject to the articles and share rights, dividends shall be declared and paid according to the amounts
      paid up (otherwise than in advance of calls) on the nominal value of the shares on which the dividend
      is paid.

      Dividends shall be apportioned and paid proportionately to the amounts paid up on the nominal value
      of the shares during any portion or portions of the period in respect of which the dividend is paid, but
      if any share is issued on terms that it shall rank for dividend as from a particular date, it shall rank for
      dividend accordingly.




                                                      153
REGISTRATION DOCUMENT – PART VII


      The Board may deduct from any dividend or other amounts payable to any person in respect of a share
      all such sums as may be due from him to the Company on account of calls or otherwise in relation to
      any shares.

      The Board may, with the prior authority of an ordinary resolution and subject to such terms and
      conditions as the Board may determine, offer any holders of ordinary shares the right to elect to
      receive ordinary shares, credited as fully paid, instead of cash in respect of the whole (or some part,
      to be determined by the Board) of any dividend specified by the ordinary resolution.

6.4   Unclaimed dividends
      All unclaimed dividends or other monies payable by the Company in respect of a share may be
      invested or otherwise made use of by the Board for the benefit of the Company until claimed. The
      payment of any unclaimed dividend or other amount payable by the Company in respect of a share
      into a separate account shall not constitute the Company a trustee in respect of it. Any dividend
      unclaimed after a period of twelve years from the date the dividend became due for payment shall be
      forfeited and shall revert to the Company.

6.5   Untraced shareholders
      The Company may sell at the best price reasonably obtainable any share of a member, or any share to
      which a person is entitled by transmission, if:

      (A)    during the period of twelve years prior to the date of the publication of the advertisements
             referred to below,

             (1)    no cheque, warrant or money order in respect of such share sent by or on behalf of the
                    Company to the member or to the person entitled by transmission has been cashed;

             (2)    no cash dividend payable on the shares has been satisfied by the transfer of funds to a
                    bank account of the member (or person entitled by transmission); and,

             (3)    the Company has received no communication (whether in writing or otherwise) in
                    respect of such share from such member or person, provided that during such twelve
                    year period the Company has paid at least three cash dividends (whether interim or final)
                    in respect of shares of the class in question and no such dividend has been claimed by
                    the person entitled to such share;

      (B)    on or after the expiry of such twelve year period the Company has given notice of its intention
             to sell such share by advertisements in a national newspaper published in the country in which
             the Company’s registered office is located and in a newspaper circulating in the area in which
             the last known address of the member is located; and,

      (C)    during a further period of three months following the date of publication of such
             advertisements and prior to the sale the Company has not received any communication in
             respect of such share from the member or person entitled by transmission.

6.6   Variation of rights                                                                                           A1/21.2.4

      Subject to the terms of issue of or rights attached to any shares, the rights or privileges attached to any
      class of shares shall be deemed not to be varied or abrogated by:

      (A)    the creation or issue of any new shares ranking pari passu in all respects (save as to the date
             from which such new shares shall rank for dividend) with or subsequent to those already
             issued;

      (B)    the reduction of the capital paid up on such shares or by the purchase or redemption by the
             Company of any of its own shares in accordance with the Statutes and the articles; or

      (C)    the Board or the operator of CREST resolving that a class of shares is to become or is to cease
             to be, a participating security for the purposes of CREST.


                                                     154
REGISTRATION DOCUMENT – PART VII


6.7   Alteration of capital
      The Company may by ordinary resolution:
      (A)   increase its share capital by a sum to be divided into shares of amounts prescribed by the
            resolution;

      (B)   consolidate and divide all or any of its share capital into shares of a larger amount than its
            existing shares;

      (C)   subject to the Statutes, sub-divide all or any of its shares into shares of a smaller amount,
            subject nevertheless to the provisions of the Statutes, and so that the resolution whereby any
            share is sub divided may determine that, as between the holders of the shares resulting from
            such sub division, one or more of the shares may have any such preferred or other special rights
            over, or may have such deferred rights or be subject to any such restrictions as compared with,
            the others as the Company has power to attach to unissued or new shares;

      (D)   cancel shares which, at the date of the passing of the resolution, have not been taken or agreed
            to be taken by a person and diminish the amount of its share capital by the amount of the shares
            so cancelled,

      and may by the resolution decide that one or more of the shares resulting from any such division or
      sub-division may have any preference or other advantage as compared with the others or may be made
      subject to any restriction as compared with the others.

      Subject to the Statutes and to any rights attached to any shares, the Company may by special
      resolution reduce its share capital or any capital redemption reserve, share premium account or other
      undistributable reserve in any way.

6.8   Transfer of shares
      Subject to the Articles, the Board may, in its absolute discretion, refuse to register the transfer of a
      certificated share or the renunciation of a renounceable letter of allotment unless it is:

      (A)   in respect of a share which is fully paid;

      (B)   in respect of a share on which the Company has no lien;

      (C)   in respect of only one class of shares;

      (D)   in favour of a single transferee or renouncee or not more than four joint transferees or
            renouncees;

      (E)   duly stamped (if required); and,

      (F)   delivered for registration to the registered office of the Company or such other place as the
            Board may decide, accompanied by the certificate for the shares to which it relates and any
            other evidence as the Board may reasonably require to prove the title,

      provided that the Board shall not refuse to register any transfer or renunciation of any certificated
      shares admitted to trading on AIM (or any other investment exchange to which the shares are admitted
      to trading) on the ground that they are partly paid in circumstances where such refusal would prevent
      dealings in such shares from taking place on an open and proper basis.

6.9   Directors                                                                                                  A1/21.2.2

      Unless and until otherwise determined by the Company by ordinary resolution, the number of
      Directors (other than alternate Directors) shall be not less than two in number. The Company may
      from time to time by ordinary resolution fix a maximum number of directors and from time to time
      vary that maximum number.




                                                      155
REGISTRATION DOCUMENT – PART VII


     The Company shall pay to the Directors (but not alternate Directors) for their services as Directors
     such aggregate amount of fees as the Board decides (not exceeding £750,000 per annum or such larger
     amount as the Company may by ordinary resolution decide). A fee payable to a Director shall be
     distinct from any salary or remuneration payable to him under a service agreement or other amount
     payable to him and accrues from day to day. A Director may also be paid all travelling, hotel and other
     expenses properly incurred by him in connection with the discharge of his duties as a Director.

     Subject to the provisions of the Statutes, no Director or intending Director shall be disqualified by his
     office from contracting with the Company either as vendor, purchaser or otherwise, nor shall any such
     contract or any transaction or arrangement entered into on behalf of the Company in which any
     Director is in any way directly or indirectly interested be liable to be avoided, nor shall any Director
     so interested be liable to account to the Company for any profit realised by any such contract or
     arrangement by reason of such Director holding that office, or of the fiduciary relationship thereby
     established, provided that the nature of this interest has been declared by him pursuant to a meeting
     of the Board (or section 177 of the 2006 Act, by written or general notice).

     Save as provided below, a Director shall not vote in respect of any contract or arrangement or any
     other proposal whatsoever in which he has any material interest otherwise than by virtue of his
     interests in shares or debentures or other securities of or otherwise in or through the Company. A
     Director shall not be counted in the quorum of a meeting in relation to any resolution on which he is
     debarred from voting.

     A Director shall (in the absence of a material interest other than those indicated below) be entitled to
     vote (and be counted in the quorum) in respect of any resolution concerning any of the following
     matters, namely:

     (1)    the giving of any security or indemnity to him in respect of money lent or obligations incurred
            by him at the request of or for the benefit of the Company or any of its subsidiary undertakings;

     (2)    the giving of any security or indemnity to a third party in respect of a debt or obligation of the
            Company or any of its subsidiaries for which he himself has assumed responsibility in whole
            or in part under a guarantee or indemnity or by the giving of security;

     (3)    any proposal concerning an offer of shares or debentures or other securities of or by the
            Company or any of its subsidiary undertakings for subscription or purchase in which offer he
            is or is to be interested as a participant in the underwriting or sub underwriting thereof;

     (4)    any proposal concerning any other company in which he is interested, directly or indirectly and
            whether as an officer or shareholder or otherwise howsoever, provided that he is not interested
            (as that term is used in section 820 of the 2006 Act) in one per cent. or more of any class of the
            equity share capital of such company (or of any third company through which his interest is
            derived) or of the voting rights available to members of the relevant company (any such interest
            being deemed for the purpose of this Article to be a material interest in all the circumstances);

     (5)    any proposal concerning the adoption, modification or operation of a superannuation fund or
            retirement, death or disability benefits scheme under which he may benefit and which has been
            approved by or is subject to and conditional upon approval by the Board of Inland Revenue for
            taxation purposes;

     (6)    any proposal relating to any arrangement for the benefit of employees under which he benefits
            or may benefit in a similar manner as the employees and which does not accord to him as a
            Director any privilege or advantage not generally accorded to the employees to whom the
            arrangement relates; or

     (7)    subject to the Statutes, any proposal concerning the purchase and/or maintenance of any
            insurance policy under which a Director may benefit.




                                                    156
REGISTRATION DOCUMENT – PART VII


      If any question shall arise at any meeting as to the materiality of a Director’s interest or as to the
      entitlement of any Director to vote and such question is not resolved by his voluntarily agreeing to
      abstain from voting, such question shall (unless the Director in question is the Chairman in which case
      a deputy chairman shall be appointed) be referred to the Chairman of the meeting.

      For the purposes of these provisions, an interest of any person who is for any purpose of the 2006 Act
      connected with a Director shall be taken to be the interest of that Director, and, in relation to an
      alternate Director, an interest of his appointor shall be treated as an interest of the alternate Director
      without prejudice to any interest which the alternate Director has otherwise.

      Any Director may continue to be or become a director of, any other company in which the Company
      may be interested, and no such Director shall be accountable for any remuneration, salary,
      commission, participation in profits, pension, superannuation or other benefits received by him as a
      director of, or holder of any other office or place of profit under, or member of, any such other
      company. The Board may exercise the voting power conferred by the shares in any company held or
      owned by the Company in such manner in all respects as it may think fit (including the exercise
      thereof in favour of any resolution appointing the Directors or any of them directors of such company,
      or voting or providing for the payment of remuneration to the directors of such company).

6.10 Borrowing powers
      The Board may exercise all the powers of the Company to borrow money and to mortgage or charge
      all or part of the undertaking, property and assets (present or future) and uncalled capital of the
      Company and, subject to section 80 of the 1985 Act and section 551 of the 2006 Act, to create and
      issue debentures and other securities, whether outright or as collateral security for a debt, liability or
      obligation of the Company or of any third party.

      The Board shall restrict the borrowings of the Company and shall exercise all voting and other rights
      or powers of control exercisable by the Company in relation to its subsidiary undertakings so as to
      ensure (as regards subsidiary undertakings, to the extent possible by such exercise) that the aggregate
      principal amount outstanding in respect of Monies Borrowed by Group Undertakings does not at any
      time, without the previous sanction of an ordinary resolution, exceed a sum equal to five times the
      Adjusted Capital and Reserves (as defined below) or £500,000,000 (whichever is the higher).

6.11 Disclosure of interests in shares                                                                              A1/21.2.7

      Under Section 793 of the 2006 Act, the Company may give notice to any person whom the Company
      knows, or has reasonable cause to believe, to be interested in the Company’s shares, or to have been
      interested at any time during the three years immediately preceding the notice date (“Section 793
      Notice”).

      The notice may require such a person to provide particulars of his present and past interest (as defined
      in the 2006 Act) in the Company.

      Where a Section 793 Notice is given by the Company to a member, or another person appearing to be
      interested in shares held by such member, and the member or other person has failed in relation to any
      shares (“Default Shares”) to give the Company the information required within the time period
      specified in the notice, then provided that fourteen (14) clear days have elapsed since service of the
      Section 793 Notice, the Board may at any time at its absolute discretion by notice to such member
      direct that:

      (A)    the member is not entitled to be present or to vote (either in person or by proxy) at a general
             meeting or at a separate meeting of the holders of a class of shares or on a poll, or to exercise
             other rights conferred by membership in relation to the meeting or poll; and

      (B)    in respect of the Default Shares that represent, at the date of the Direction Notice, 0.25 per cent.
             or more in nominal value of the issued shares of their class:




                                                     157
REGISTRATION DOCUMENT – PART VII


            (1)    any dividend (or any part of a dividend) or any monies which would otherwise be
                   payable in respect of the Default Shares (except on a winding up of the Company) may
                   be withheld by the Company, which shall have no obligation to pay interest on such
                   dividend;

            (2)    the member shall not be entitled to elect to receive shares instead of a dividend; and

            (3)    the Board may, in its absolute discretion, refuse to register the transfer of any Default
                   Shares unless:

                   (a)    the transfer is an Exempt Transfer (as defined in the Articles); or

                   (b)    the member is not himself in default in supplying the information required and
                          proves to the satisfaction of the Board that no person in default of supplying the
                          information required is interested in any of the shares which are the subject of the
                          transfer.

      (C)   The sanctions under paragraph (B) directly above shall cease to apply seven days after the
            earlier of:

            (1)    receipt by the Company of notice of an Exempt Transfer, but only in relation to the
                   shares transferred; and

            (2)    receipt by the Company, in a form satisfactory to the Board, of all the information
                   required by the Section 793 Notice.

6.12 General Meetings
      The Company shall in each year hold a general meeting as its annual general meeting in addition to         A1/21.2.5

      any other meetings in that year. The annual general meeting shall be held in each period of six months
      beginning with the day following the Company’s accounting reference date and subject thereto to such
      time and place as the Board shall determine. The Directors may call other general meetings whenever
      they think fit. The Directors must also convene a meeting upon the valid request of Shareholders
      holding not less than ten per cent. of the Company’s paid-up capital carrying voting rights at general
      meetings of Shareholders. If the Directors fail to give notice of such meeting to Shareholders when
      required to do so, the Shareholders that requested the general meeting, or any of them representing
      more than one half of the total voting rights of all Shareholders that requested the meeting, may
      themselves convene a meeting.

      A general meeting that is an annual general meeting shall be convened by not less than twenty-one
      clear days’ notice. All general meetings other than annual general meetings shall be convened by not
      less than fourteen clear days’ notice. Notice of a general meeting must be given in hard copy form, in
      electronic form, or by means of a website and must be sent to every member (other than those who
      are not entitled to receive notice), every director and to the Company’s auditors. The notice calling a
      general meeting must specify the place, day and time of the meeting and in the case of special business
      the general nature of such business. A notice calling an annual general meeting must state that the
      meeting is an annual general meeting.

7.    DIRECTORS
                                                                                                                 A1/14.1
7.1   Directors of the Company
      The directors of the Company are:
      (A)   James Daryl Hambro, aged 60 (Non-Executive Chairman)
            Mr. Hambro spent 15 years working at Hambros Bank, mostly in corporate finance and
            international debt markets and, from 1982 to 1985, as executive director responsible for
            international operations. In 1986 he became a founder shareholder of J.O. Hambro & Co and
            in 1988 a founder and joint managing director of J.O. Hambro Magan, the corporate finance


                                                    158
REGISTRATION DOCUMENT – PART VII


            boutique. Mr. Hambro is chairman of J.O. Hambro Capital Management Limited and a director
            of Primary Health Properties PLC and Singer & Friedlander AIM II VCT. He was non-
            executive chairman of Ashtenne from 1997 until 16 May 2005.

      (B)   Morgan Lewis Jones, aged 51 (Joint Chief Executive)
            Mr. Jones is a chartered accountant who qualified with Touche Ross & Co in 1984 prior to
            becoming a management consultant in that firm’s consultancy division. He joined Arlington
            Securities plc in 1986 as a development executive, and in 1989 left to set up Ashtenne’s
            business with Ian Watson. Mr. Jones was joint chief executive of Ashtenne from 1989 until its
            successful sale.

      (C)   Ian Richard Watson, aged 49 (Joint Chief Executive)
            Mr. Watson qualified as a solicitor with Gouldens in 1984. In 1986 he became a development
            executive at Arlington Securities plc and left in 1989 to set up Ashtenne’s business with Morgan
            Jones. He was joint chief executive of Ashtenne from 1989 until its successful sale.

      (D)   Stephen Trevor Gee, aged 65 (Non-Executive Director)
            A chartered accountant, Mr. Gee worked for several years in the financial sector. He was co-
            founder and a director of My Kinda Town Plc, the restaurant and bar group, from 1977 to 1997.
            He was subsequently a co-founder and is chairman of Carluccio’s Plc, the Italian restaurant and
            food shop group. He was a non-executive director of Ashtenne from 1990 until 2005.

      (E)   Richard Stephen Mully, aged 47 (Non-Executive Director)
            Mr. Mully is managing partner of Grove International Partners (UK) Limited, an international
            real estate private equity firm currently managing about $5 billion of funds. Prior to co-
            founding Grove in 2004, Mr. Mully was managing partner of Soros Real Estate Partners LLC
            from 1999. He had previously spent 17 years in various senior investment banking roles. Mr.
            Mully currently also serves as a non-executive director of Spazio Investments N.V., admitted
            to AIM, and Alstria Office REIT-AG, listed on the prime standard market of the Frankfurt
            Stock Exchange.

            The business address of each of the Directors in respect of the Company is 1 Berkeley Street,
            London W1J 8DJ.

7.2   Interests in the share capital of the Company
      (A)   As at 22 June 2009 (the latest practicable business day prior to the date of this document),
            insofar as known to the Company, the interests of the Directors, their immediate families and
            those of any connected person (within the meaning of the provisions of the Disclosure and
            Transparency Rules), the existence of which is known to, or could with reasonable diligence be
            ascertained by, that Director whether or not held through another party, in the share capital of
            the Company were as follows:

                                                                                 Current Holdings              A1/17.2

            Director                                                          Number of Percentage of
                                                                         Ordinary Shares issued capital
            James Daryl Hambro                                                    200,000             0.11
            Morgan Lewis Jones                                                  3,128,201             1.75
            Ian Richard Watson                                                  3,128,201             1.75
            Stephen Trevor Gee                                                    200,000             0.11
            Richard Stephen Mully                                                 275,000             0.15
                                                                               –––––––––            ––––––
                                                                                6,931,402              3.88
                                                                               –––––––––            ––––––
                                                   159
REGISTRATION DOCUMENT – PART VII


      (B)   In respect of any Director, there are no conflicts of interest between any duties they may have            A1/14.2

            to the Company and their private interest and/or other duties they may have.

7.3   Interests in transactions
      No Director has or has had any interest in any transaction which is or was unusual in its nature or
      conditions or is or was significant to the business of the Group and which was effected by the
      Company in the current or immediately preceding financial year of the Company or which was
      effected in an earlier financial year and remains in any respect outstanding or unperformed.

7.4   Directorships and partnerships                                                                                   A1/14.1

      The following are directorships and partnerships of which any of the Directors are currently directors
      or partners or have been directors or partners at any time in the five years prior to the date of this
      document:

      Director                    Current Directorships                         Former Directorships
      James Daryl Hambro          AGH (2006) Limited;                           Ashtenne Holdings Plc (subsequently
                                  Barratt & Cooke Limited;                      renamed Ashtenne Holdings Limited)
                                  CCH Advisers Limited;                         Blue Hut Developments Limited;
                                  Ceres Investments Limited;                    Circle General Partner Limited ;
                                  Circle Property Management Limited;           Circle Investment Advisers Limited;
                                  Enterprise Capital Trust PLC;                 Circle Nominee No. 1 Limited;
                                  Franco’s Limited;                             Circle Nominee No. 2 Limited;
                                  Further Signed Limited;                       Circle Supermart Limited;
                                  Hansteen Holdings PLC;                        Edoli Limited;
                                  Henniker Mews Residents’ Association          Healthcare Facilities Management
                                  Limited;                                      Limited;
                                  J.O. Hambro Capital Limited;                  ISEC Securities Limited;
                                  J.O. Hambro Capital Management Group          J.O. Hambro Capital Management
                                  Limited;                                      (America) Limited;
                                  J.O. Hambro Capital Management Limited;       JOHCM Retail Limited;
                                  J.O. Hambro Capital Management Unit           Ladbroke Developments Limited;
                                  Trust Managers Limited;                       Peabody Enterprises Limited;
                                  J.O. Hambro Unit Trust Managers Limited;      Peabody Land Limited;
                                  Kimberly Farms Limited;                       Peabody Pension Trust Limited;
                                  Merchant Properties Nominees Limited;         Primary Health Investment Properties
                                  Merchant Properties Two General Partner       (No. 3) B.V.;
                                  Limited;                                      Primary Health Investment Properties
                                  Merchant Properties Two Nominee 1             B.V.; and
                                  Limited;                                      Singer and Friedlander AIM 2
                                  Merchant Properties Two Nominee 2             Limited.
                                  Limited;
                                  Merchant Property General Partner Limited;
                                  PHIP CH Limited;
                                  PHIP CHH Limited;
                                  PHIP (Hetherington Road) Limited;
                                  PHIP (Hoddesdon) Limited;
                                  PHIP (Milton Keynes) Limited;
                                  PHIP (RHL) Limited;
                                  PHIP (Sheerness) Limited;
                                  PHIP (SSG Norwich) Limited;
                                  Primary Health Investment Properties (No.2)
                                  Limited;
                                  Primary Health Investment Properties (No.3)
                                  Limited;
                                  Primary Health Investment Properties
                                  Limited;
                                  Primary Health Properties PLC;
                                  Singer & Friedlander AIM VCT 3 PLC ;
                                  SPCD (Northwich) Limited;
                                  SPCD (Shavington) Limited;




                                                      160
REGISTRATION DOCUMENT – PART VII


     Director                Current Directorships                 Former Directorships
     James Daryl Hambro      Wichford Carlisle Limited;
     (continued)             Wichford (Coventry Road) Limited;
                             Wichford Property General Partner
                             Limited;
                             Wichford Property Management
                             Limited;
                             Wilton (St. James’s) Limited; and
                             Wiltons Holdings Limited.


     Morgan Lewis Jones      Donewith No. 40 Limited;              Ascot Estates Limited;
                             Enterprise Property Group Limited;    Ascot Properties Limited;
                             Hansteen Belgium Limited;             Ashtenne (AIF) Limited;
                             Hansteen Developments Limited;        Ashtenne (Severnside) Limited;
                             Hansteen Europe Limited;              Ashtenne Asset Management Limited;
                             Hansteen (General Partner) Limited;   Ashtenne Caledonia Limited;
                             Hansteen Germany (2) Limited;         Ashtenne Crawley Limited;
                             Hansteen Germany (3) Limited;         Ashtenne Europe Limited;
                             Hansteen Germany Limited;             Ashtenne Germany Limited;
                             Hansteen Germany Residential          Ashtenne Holdings Plc (subsequently
                             Limited;                              renamed Ashtenne Holdings Limited);
                             Hansteen Holdings PLC;                Ashtenne Humberside No. 1 Limited;
                             Hansteen Land Limited;                Ashtenne Humberside No. 3 Limited;
                             Hansteen Limited;                     Ashtenne Industrial (General Partner)
                             Hansteen (Jersey) Limited; and        Limited;
                             St. Christopher’s Hospice.            Ashtenne Industrial Fund Nominee
                                                                   No. 1 Limited;
                                                                   Ashtenne Industrial Fund Nominee
                                                                   No. 2 Limited;
                                                                   Ashtenne Investments (Scotland)
                                                                   Limited;
                                                                   Ashtenne Investments Limited;
                                                                   Ashtenne Land Limited;
                                                                   Ashtenne Paisley Limited;
                                                                   Ashtenne Sweden Limited;
                                                                   Ashtenne Trade Park Investments
                                                                   Limited;
                                                                   Ashtenne Trade Parks Limited;
                                                                   Ashtenne Woking Limited;
                                                                   Ashtenne Woking Nominee No. 1
                                                                   Limited;
                                                                   Ashtenne Woking Nominee No. 2
                                                                   Limited;
                                                                   Balmcrest Estate Services Limited;
                                                                   Balmcrest Estates Limited;
                                                                   Birkby (Pension Trustee) Limited;
                                                                   Birkby Leeds (No. 1) Limited;
                                                                   Birkby Limited;
                                                                   Birkby Services Limited;
                                                                   Boston and Fosdyke Pilot Boat
                                                                   Services Limited;
                                                                   Bridge House (Bewdley) Limited;
                                                                   Castle Vale Enterprise Park Limited;
                                                                   Citib@se Plc;
                                                                   Donewith Limited;
                                                                   Donewith No. 1 Limited;
                                                                   Donewith No. 2 Limited;
                                                                   Donewith No. 3 Limited;
                                                                   Donewith No. 4 Limited;
                                                                   Donewith No. 5 Limited;
                                                                   Donewith No. 6 Limited;
                                                                   Donewith No. 7 Limited;
                                                                   Donewith No. 8 Limited;
                                                                   Donewith No. 9 Limited;
                                                                   Donewith No. 10 Limited;
                                                                   Donewith No. 11 Limited;
                                                                   Donewith No. 12 Limited;
                                                                   Donewith No. 13 Limited;




                                                 161
REGISTRATION DOCUMENT – PART VII


     Director                Current Directorships   Former Directorships
     Morgan Lewis Jones                              Donewith No. 14 Limited;
     (continued)                                     Donewith No. 15 Limited;
                                                     Donewith No. 16 Limited;
                                                     Donewith No. 17 Limited;
                                                     Donewith No. 18 Limited;
                                                     Donewith No. 19 Limited;
                                                     Donewith No. 20 Limited;
                                                     Donewith No. 21 Limited;
                                                     Donewith No. 22 Limited;
                                                     Donewith No. 23 Limited;
                                                     Donewith No. 24 Limited;
                                                     Donewith No. 25 Limited;
                                                     Donewith No. 26 Limited;
                                                     Donewith No. 27 Limited;
                                                     Donewith No. 28 Limited;
                                                     Donewith No. 29 Limited;
                                                     Donewith No. 30 Limited;
                                                     Donewith No. 31 Limited;
                                                     Donewith No. 32 Limited;
                                                     Donewith No. 33 Limited;
                                                     Donewith No. 34 Limited;
                                                     Donewith No. 35 Limited;
                                                     Donewith No. 36 Limited;
                                                     Donewith No. 37 Limited;
                                                     Donewith No. 38 Limited;
                                                     Donewith No. 39 Limited;
                                                     Donewith No. 41 Limited;
                                                     Donewith No. 42 Limited;
                                                     Donewith No. 43 Limited;
                                                     Donewith No. 44 Limited;
                                                     Donewith No. 45 Limited;
                                                     Donewith No. 46 Limited;
                                                     Donewith No. 47 Limited;
                                                     Donewith No. 48 Limited;
                                                     Donewith No. 49 Limited;
                                                     Donewith No. 50 Limited;
                                                     Donewith No. 51 Limited;
                                                     Donewith No. 52 Limited;
                                                     Donewith No. 53 Limited;
                                                     Donewith No. 54 Limited;
                                                     Elmdraft Limited;
                                                     Enterprise Heritage Limited;
                                                     Finlan Property Developments
                                                     Limited;
                                                     Globe TMC Limited;
                                                     Imex Spaces Limited;
                                                     Melton Management Limited;
                                                     North West Limited;
                                                     NWL Group Holdings Limited;
                                                     Port of Boston (1992) Limited;
                                                     Port of Boston (Holdings) Limited;
                                                     Port of Boston Limited;
                                                     Suter Estates Limited;
                                                     t3 Partnership Limited;
                                                     Westmarch Estates Limited;
                                                     Wyebrook Developments Limited; and
                                                     Zipmodes Limited.




                                              162
REGISTRATION DOCUMENT – PART VII


     Director                Current Directorships                 Former Directorships
     Ian Richard Watson      Donewith No. 40 Limited;              Ascot Estates Limited;
                             Hansteen Belgium Limited;             Ascot Properties Limited;
                             Hansteen Development Limited;         Ashtenne (AIF) Limited;
                             Hansteen Europe Limited;              Ashtenne (Severnside) Limited;
                             Hansteen (General Partner) Limited;   Ashtenne Asset Management Limited;
                             Hansteen Germany Limited;             Ashtenne Caledonia Limited;
                             Hansteen Germany (2) Limited;         Ashtenne Crawley Limited;
                             Hansteen Germany (3) Limited;         Ashtenne Europe Limited;
                             Hansteen Germany Residential          Ashtenne Germany Limited;
                             Limited;                              Ashtenne Holdings Plc (subsequently
                             Hansteen Land Limited;                renamed Ashtenne Holdings Limited);
                             Hansteen Limited;                     Ashtenne Humberside No. 1 Limited;
                             Hansteen Holdings PLC; and            Ashtenne Humberside No. 3 Limited;
                             Hansteen (Jersey) Limited.            Ashtenne Industrial (General Partner)
                                                                   Limited;
                                                                   Ashtenne Industrial Fund Nominee
                                                                   No. 1 Limited;
                                                                   Ashtenne Industrial Fund Nominee
                                                                   No. 2 Limited;
                                                                   Ashtenne Investments (Scotland)
                                                                   Limited;
                                                                   Ashtenne Investments Limited;
                                                                   Ashtenne Land Limited;
                                                                   Ashtenne Paisley Limited;
                                                                   Ashtenne Sweden Limited;
                                                                   Ashtenne Trade Park Investments
                                                                   Limited;
                                                                   Ashtenne Trade Parks Limited;
                                                                   Ashtenne Woking Limited;
                                                                   Ashtenne Woking Nominee No. 1
                                                                   Limited;
                                                                   Ashtenne Woking Nominee No. 2
                                                                   Limited;
                                                                   Balmcrest Estate Services Limited;
                                                                   Balmcrest Estates Limited;
                                                                   Birkby (Pension Trustee) Limited;
                                                                   Birkby Leeds (No. 1) Limited;
                                                                   Birkby Limited;
                                                                   Birkby Services Limited;
                                                                   Boston and Fosdyke Pilot Boat
                                                                   Services Limited;
                                                                   Bridge House (Bewdley) Limited;
                                                                   Castle Vale Enterprise Park Limited;
                                                                   Donewith Limited;
                                                                   Donewith No. 1 Limited;
                                                                   Donewith No. 2 Limited;
                                                                   Donewith No. 3 Limited;
                                                                   Donewith No. 4 Limited;
                                                                   Donewith No. 5 Limited;
                                                                   Donewith No. 6 Limited;
                                                                   Donewith No. 7 Limited;
                                                                   Donewith No. 8 Limited;
                                                                   Donewith No. 9 Limited;
                                                                   Donewith No. 10 Limited;
                                                                   Donewith No. 11 Limited;
                                                                   Donewith No. 12 Limited;
                                                                   Donewith No. 13 Limited;
                                                                   Donewith No. 14 Limited;
                                                                   Donewith No. 15 Limited;
                                                                   Donewith No. 16 Limited;
                                                                   Donewith No. 17 Limited;
                                                                   Donewith No. 18 Limited;
                                                                   Donewith No. 19 Limited;
                                                                   Donewith No. 20 Limited;
                                                                   Donewith No. 21 Limited;
                                                                   Donewith No. 22 Limited;




                                                 163
REGISTRATION DOCUMENT – PART VII


     Director                Current Directorships   Former Directorships
     Ian Richard Watson                              Donewith No. 23 Limited;
     (continued)                                     Donewith No. 24 Limited;
                                                     Donewith No. 25 Limited;
                                                     Donewith No. 26 Limited;
                                                     Donewith No. 27 Limited;
                                                     Donewith No. 28 Limited;
                                                     Donewith No. 29 Limited;
                                                     Donewith No. 30 Limited;
                                                     Donewith No. 31 Limited;
                                                     Donewith No. 32 Limited;
                                                     Donewith No. 33 Limited;
                                                     Donewith No. 34 Limited;
                                                     Donewith No. 35 Limited;
                                                     Donewith No. 36 Limited;
                                                     Donewith No. 37 Limited;
                                                     Donewith No. 38 Limited;
                                                     Donewith No. 39 Limited;
                                                     Donewith No. 41 Limited;
                                                     Donewith No. 42 Limited;
                                                     Donewith No. 43 Limited;
                                                     Donewith No. 44 Limited;
                                                     Donewith No. 45 Limited;
                                                     Donewith No. 46 Limited;
                                                     Donewith No. 47 Limited;
                                                     Donewith No. 48 Limited;
                                                     Donewith No. 49 Limited;
                                                     Donewith No. 50 Limited;
                                                     Donewith No. 51 Limited;
                                                     Donewith No. 52 Limited;
                                                     Donewith No. 53 Limited;
                                                     Donewith No. 54 Limited;
                                                     Enterprise Heritage Limited;
                                                     Enterprise Property Group Limited;
                                                     Finlan Property Developments
                                                     Limited;
                                                     Globe TMC Limited;
                                                     Imex Spaces Limited;
                                                     Melton Management Limited;
                                                     North West Limited;
                                                     NWL Group Holdings Limited;
                                                     Port of Boston (1992) Limited;
                                                     Port of Boston (Holdings) Limited;
                                                     Port of Boston Limited;
                                                     Suter Estates Limited;
                                                     t3 Partnership Limited;
                                                     Westmarch Estates Limited;
                                                     Wyebrook Developments Limited; and
                                                     Zipmodes Limited.




                                              164
REGISTRATION DOCUMENT – PART VII


      Director                   Current Directorships                      Former Directorships
      Stephen Trevor Gee         Busaba Eathai Limited;                     Amerin Limited;
                                 Busaba Eathai Acquisitions Limited;        Ashtenne Holdings Plc, (subsequently
                                 Busaba Eathai Holdings Limited;            renamed Ashtenne Holdings Limited);
                                 Carluccio’s PLC;                           Busaba Eathai (Store Street) Limited;
                                 Foxhedge Limited;                          4B Finance Limited;
                                 Gaucho Holdings Limited;                   English County Inns Plc;
                                 Hansteen Holdings PLC;                     Gaucho Group Limited;
                                 The Real Food Pub Company Limited;         Termcontrol Property Management
                                 and                                        Limited; and
                                 Wallace Clifton Limited                    Webnet Media Limited.

      Richard Stephen Mully      Alstria Office REIT A.G.;                  Dolce International Limited;
                                 Apellas Holdings B.V.;                     Douglasshire International Holdings
                                 Event Hospitality Group B.V.;              B.V.;
                                 Grove International Partners LLP;          First Serviced Office B.V.;
                                 Hansteen Holdings PLC;                     Grove International Partners (UK)
                                 Hellenic Land Holdings B.V.;               Limited;
                                 Karta Realty Limited;                      Hypo Real Estate Holdings A.G.;
                                 Nowe Ogrody 2 Sp z.o.o.;                   Mapeley Estates Limited;
                                 Nowe Ogrody 3 Sp z.o.o.;                   Mapeley Steps Contractor Limited;
                                 Nowe Ogrody 4 Sp z.o.o.;                   Med Group Leisure Investments B.V.;
                                 Nowe Ogrody Sp z.o.o.;                     Natixis Capital Partners Limited;
                                 Polish Investment Real Estate Holding      Olivers Wharf (Management) Limited;
                                 B.V.;                                      Soros Private Equity Partners Limited;
                                 Polish Real Estate Holding II B.V.;        and
                                 SI Real Estate Holding B.V.;               Soros Real Estate Partners Limited.
                                 Spazio Industriale II B.V.;
                                 Spazio Investments N.V.;
                                 SREI DI Properties, Inc.; and
                                 Starr Street Limited.

7.5   Mr. Hambro was a director of Versatile Group Limited. On 28 August 1998 receivers were appointed.              A1/14.1

      The total creditor shortfall was approximately £700,000.

7.6   None of the Directors have, in the five years immediately preceding the date of this document:

      (A)    received any convictions in relation to fraudulent offences;

      (B)    been declared bankrupt or been the subject of an individual voluntary arrangement or been
             associated with any bankruptcy, receivership or liquidation in his capacity as a director or
             senior manager of another company;

      (C)    been a partner or senior manager in a partnership which has been subject to a compulsory
             liquidation, administration or a partnership voluntary arrangement; or

      (D)    been subject to any official public incrimination and/or sanction by statutory or regulatory
             authorities (including designated professional bodies) or been disqualified by a court from
             acting as a director or member of the administrative, management or supervisory bodies of a
             company or entity or from acting in the management or conduct of the affairs of any company
             or entity.

7.7   Other than as described above at paragraph 7.5, none of the Directors:

      (A)    has unspent convictions for any indictable offences or has been declared bankrupt or has made
             any individual voluntary arrangement with his creditors;

      (B)    has been a partner in a partnership at the time of or within the 12 months preceding any
             compulsory liquidation, administration or voluntary arrangement of that partnership;

      (C)    has been a director of a company which, while he was a director or within 12 months of his
             ceasing to be a director, had a receiver appointed, entered into any compulsory liquidation,
             entered into any creditors voluntary liquidation, entered into administration, entered into any
             voluntary arrangement or made any composition or arrangement with its creditors generally or
             with any class of its creditors;


                                                     165
REGISTRATION DOCUMENT – PART VII


      (D)      has had any asset which has been subject to a receivership or has been a partner in a partnership
               at the time or within the 12 months preceding an asset of the partnership being subject to a
               receivership; or

      (E)      has been publicly criticised by any statutory or regulatory authority (including any recognised
               professional body) or has been disqualified by a court from acting as a director or, in the
               management or conduct of the affairs of any company.

8.    DIRECTORS’ REMUNERATION AND BENEFITS                                                                                             A1/15.1

8.1   In the financial year ended 31 December 2008, the Directors were entitled to the remunerations and
      benefits as set out below (further details of which can be found at paragraph 9.1 below):

                                                                  Performance
                                         Basic            Car           related      Benefits in
                                        salary      allowance            bonus            kind1              Fees            2008
                                        £’000           £’000            £’000           £’000              £’000           £’000
      Morgan Jones                     245             25               122              10                –              402
      Ian Richard Watson               245             25              122               14                –             406
      James Dargh Hambro                 –              –                 –               –               60               60
      Stephen Trevor Gee2                –              –                 –               –               30               30
      Richard Stephen Mully              –              –                 –               –               30               30
                                    ————            ————             ————             ————            ————             ————
      Total                            490             50               244              24              120              928

      1
                                    ———— ———— ———— ———— ———— ————
            Benefits in kind represent the deemed monetary value of the use of company cars, health care and life insurance provided
            by the Group.
      2.    The fees of Mr. S T Gee were paid to Wallace Clifton Limited.

8.2   The Group made contributions of £39,200 to the self administered pension fund of Mr. Watson and                                  A1/15.2

      contributions of £39,200 to the self administered pension fund of Mr. Jones (equivalent to 16 per cent.
      of their basic salaries).

9.    BOARD PRACTICES

9.1   The Board                                                                                                                        A1/16
                                                                                                                                       A1/16.1
      The Board consists of three independent Non-Executive Directors, including the Chairman and two
                                                                                                                                       A1.16.2
      Executive Directors and meets approximately eight times a year. The roles and responsibilities of the
      Chairman, Executive Directors and Non-Executive Directors are clearly defined.

      The Board is satisfied that the Non-Executive Directors, each of whom is independent from
      management and has no commercial or other connection with the Company, are able to exercise
      independent judgement.

      The Company has only a small Board and has established no formal nominations committee. All
      appointments to the Board of both executive and non-executive Directors is a matter for the Board as
      a whole.

      The Board is responsible to shareholders of the Company for the strategy and future development of
      the Group and the efficient management of its resources. As a result, the Board has a schedule of
      matters reserved for its decision, which includes approval of annual budgets, acquisition and
      divestment policy, approval of major capital projects, the raising of finance and management policies.

      The Board is supplied, in a timely fashion, with the information it needs to enable it to discharge its
      duties. The Board is also kept informed of changes in relevant legislation and changing commercial
      risks, and each Director has access to independent professional advice and the advice and services of
      the company secretary. The company secretary is charged by the Board with ensuring that Board
      procedures are followed.


                                                               166
REGISTRATION DOCUMENT – PART VII


     All Directors are required to submit themselves for re-election by rotation at least every three years.

     (A)   James Daryl Hambro
           Mr. Hambro entered into a letter of engagement with the Company dated 23 November 2005
           under which he was entitled to a fee of £50,000 per annum payable quarterly in arrears. The
           fee was increased on 1 January 2008 to £60,000 per annum payable quarterly in arrears.
           Mr. Hambro’s engagement is terminable on three months’ notice. Early termination will not
           give rise to any right to compensation save for termination in the circumstances where an offer
           for the entire issued share capital of the Company becomes wholly unconditional (unless where
           requested to continue in office by the Board) and, in such circumstance, he will be entitled to
           a payment of a quarter of the annual fee. In the event, however, that an offer is wholly
           unconditional from the outset, the appointment will terminate at the end of that offer period. In
           addition, if Mr. Hambro resigns voluntarily but solely because of him having a reasonable
           objection to, or reasonable disagreement with, a Board decision on a material matter of policy
           or a material commercial matter affecting the Company or the Group, he will be entitled to a
           severance payment equivalent to the lesser of a quarter of the annual fee referred to in
           paragraph 2.1 or, if less, the total amount of fees that would have been paid to him had he
           continued in office until the date of expiry of his appointment.

     (B)   Morgan Lewis Jones and Ian Richard Watson
           On 22 November 2005, the Company entered into service contracts with Mr. Jones and
           Mr. Watson. Each service contract continues until terminated by not less than twelve months’
           written notice. Mr. Watson and Mr. Jones are each entitled to a basic salary of £245,000 per
           annum plus the use of a car and they are each entitled to a pension contribution of 16 per cent.
           of basic salary and to participate in any permanent health insurance scheme, private medical
           health scheme and life assurance scheme (providing cover of up to £1 million) operated from
           time to time by the Company for the benefit of senior executives.

           Both Mr. Watson and Mr. Jones are entitled to an annual performance related bonus scheme
           providing for a maximum payment of 100 per cent. of basic salary to be based on criteria set
           annually by the Remuneration Committee. They are also each entitled to an additional bonus
           payment linked to Group performance as follows: a sum equal to 12.5 per cent. of the Excess
           Growth multiplied by the number of Ordinary Shares in issue at the end of the relevant period
           will be payable at the end of the four year period commencing on 1 January 2006 and ending
           on 31 December 2009. “Excess Growth” will be the growth in the Net Asset Value (“NAV”)
           per share (including dividends and other returns to shareholders) of the Company which
           exceeds a compounded growth rate of 10 per cent. per annum from a base NAV per share equal
           to the Placing Price. Therefore, in the four year period ending on 31 December 2009 no
           additional bonus will be payable until NAV per share (including dividends and other returns to
           shareholders) is equal to 146p. Any amount payable under the Long-Term Incentive Plan is to
           be satisfied in full by the issue of ordinary shares of the Company to any relevant Executive
           Director. The price per share to be used when determining the number of shares which an
           Executive Director is entitled to pursuant to the Long-Term Incentive Plan shall be the average
           mid-market quotation for such shares on AIM for the first 20 dealing days immediately
           following the end of the relevant period (being the period ending on 31 December 2009 and
           thereafter each subsequent three-year period commencing on 1 January 2010).

           From 1 January 2010, the additional bonus arrangement will apply for each subsequent three
           year period on the same terms but with the base NAV per share, from which Excess Growth is
           measured, being set at the NAV per share level at the end of the immediately preceding period.
           In the event of a takeover, winding up or the termination of Mr. Jones’s or Mr. Watson’s
           employment (as the case may be) in circumstances in which he is a “Good Leaver” (as defined
           below), the assessment period for determining the bonus will be shortened so as to end on the
           date of such event and a calculation will be made as at that date. In the event of a takeover, the



                                                   167
REGISTRATION DOCUMENT – PART VII


            calculation will be based on the higher of the offer price and the actual NAV per share at that
            date. Mr. Jones and/or Mr. Watson will be a “Good Leaver” if his employment terminates by
            reason of (i) death, ill health, injury, disability, physical or mental incapacity; (ii) redundancy
            within the meaning of the Employment Rights Act 1996; (iii) retirement on his normal
            retirement date or any earlier date with the agreement in writing of the Company; (iv) dismissal
            by the Company in breach of the terms of his service contract; (v) dismissal by the Company
            which is subsequently determined by an employment tribunal of competent jurisdiction to have
            been unfair within the meaning of the Employment Rights Act 1996; or (vi) if the
            Remuneration Committee of the Board shall in its absolute discretion consider that he should
            be so regarded.

      (C)   Stephen Trevor Gee
            Mr. Gee entered into a letter of engagement with the Company dated 23 November 2005 under
            which he was entitled to a fee of £25,000 per annum payable quarterly in arrears. The fee was
            increased on 1 January 2008 to £30,000 per annum payabale quarterly in arrears. This
            engagement is terminable on three months’ notice. Early termination will not give rise to any
            right to compensation save for termination in the circumstances where an offer for the entire
            issued share capital of the Company becomes wholly unconditional (unless where requested to
            continue in office by the Board) and, in such circumstance, he will be entitled to a payment of
            a quarter of the annual fee. In the event, however, that an offer is wholly unconditional from
            the outset, the appointment will terminate at the end of that offer period. In addition, if Mr. Gee
            resigns voluntarily but solely because of him having a reasonable objection to, or reasonable
            disagreement with, a Board decision on a material matter of policy or a material commercial
            matter affecting the Company or the Group, he will be entitled to a severance payment
            equivalent to the lesser of a quarter of the annual fee referred to in paragraph 2.1 or, if less, the
            total amount of fees that would have been paid to him had he continued in office until the date
            of expiry of his appointment.

      (D)   Richard Stephen Mully
            Mr. Mully entered into a letter of engagement with the Company dated 12 June 2006 under
            which he was entitled to a fee of £25,000 per annum payable quarterly in arrear. The fee was
            increased on 1 January 2008 to £30,000 per annum payable quarterly in arrears. This
            engagement is terminable on three months’ notice. Early termination will not give rise to any
            right to compensation save for termination in the circumstances where an offer for the entire
            issued share capital of the Company becomes wholly unconditional (unless where requested to
            continue in office by the Board) and, in such circumstance, he will be entitled to a payment of
            a quarter of the annual fee. In the event, however, that an offer is wholly unconditional from
            the outset, the appointment will terminate at the end of that offer period. In addition, if Mr.
            Mully resigns voluntarily but solely because of him having a reasonable objection to, or
            reasonable disagreement with, a Board decision on a material matter of policy or a material
            commercial matter affecting the Company or the Group, he will be entitled to a severance
            payment equivalent to the lesser of a quarter of the annual fee referred to in paragraph 2.1 or,
            if less, the total amount of fees that would have been paid to him had he continued in office
            until the date of expiry of his appointment.

9.2   Corporate Governance and Internal Control                                                                     A/16.4

      As the Ordinary Shares are traded on AIM, the Company is not obliged to comply with UK corporate
      governance rules and regulations contained in The Combined Code on Corporate Governance (the
      “Combined Code”). Nonetheless, the Board does have regard to the provisions of the Combined
      Code and seeks to comply with it so far as the Board considers practicable (taking into account the
      size, structure and resources of the Company). In particular, due to the small number of Directors, the
      Board does not consider it appropriate to establish a nomination committee to make recommendations
      to the Board on new board appointments and, as each of the Non-Executive Directors is independent,



                                                     168
REGISTRATION DOCUMENT – PART VII


      the Board does not consider it necessary to nominate a senior independent director. Similarly due to
      the small number of Directors the Board does not consider it necessary to implement a formal process
      of evaluating the effectiveness of the Board, its committees and its Directors. Except for these matters,
      the Company complies with the Code Provisions (as defined in the Combined Code) set out in Section
      1 of the Combined Code.

      In accordance with the Turnbull guidance, the Board oversees an ongoing process for identifying,
      evaluating and managing the most significant risks faced by the Group.

      As part of their year-end procedures, the Directors review the effectiveness of the system of internal
      control for the period under review, the key element of which is a risk management process whereby
      key risks to achieving the Company’s objectives and strategy, as well as related controls and monitoring
      procedures in respect of those controls, are identified in a risk register. At each Audit Committee
      meeting, the risk register is reviewed and updated where appropriate and reports received from the
      executive on control procedures, and any areas for improvement are agreed for subsequent action.

      These procedures have been implemented during the financial year, and the financial statements were
      approved up to the date of this document. The risk management procedures and systems of internal
      control are designed to manage rather than eliminate the risk of failure to achieve the Group’s
      objectives.

9.3   Audit Committee                                                                                             A1/16.3

      The audit committee comprises Stephen Trevor Gee (Chairman), James Daryl Hambro and Richard
      Stephen Mully. Senior representatives of the external auditors, the Executive Directors and senior
      management may be invited to attend the meetings. The committee reviews the Group’s external audit
      arrangements including the independence and objectivity of the auditors and the level of non-audit
      services, internal controls and the merits of establishing an internal audit function.

      Given the size of the Group and the close involvement of the Joint Chief Executives, the Committee
      do not believe that an internal audit function is merited at this time. The Board, however, will review
      the situation on an ongoing basis.

      The Committee also reviews the interim and full year financial statements prior to their submission to
      the Board, the application of the Group’s accounting policies and any changes to financial reporting
      requirements.

9.4   Remuneration Committee                                                                                      A1/16.3

      The remuneration committee comprises James Daryl Hambro (Chairman), Stephen Trevor Gee and
      Richard Stephen Mully. It is responsible for making recommendations to the Board on all aspects of
      remuneration policy for Executive Directors.

9.5   Communication
      The Company recognises the importance of communication with its shareholders. The full report and
      accounts are sent to all shareholders and, upon request, to other parties who have an interest in the
      Group’s performance.

      All shareholders have the opportunity to put questions at the Company’s annual general meeting.

10.   EMPLOYEES
10.1 Set out below are the average number of employees employed by the Group for the period covered by the        A1/17.1

     financial information contained in this document. The total number of staff increased between 2006 and
     2008 from six employees to fifteen employees. As at 22 June 2009, being the last practicable date prior
     to the publication of this document, the total number of employees employed by the Company was 23.




                                                     169
REGISTRATION DOCUMENT – PART VII


10.2 Annual average employee numbers (including executive directors) were as follows:

                                                                                                  Period from
                                                         Year ended           Year ended     27 October 2005
                                                       31 December          31 December       to 31 December
                                                               2008                 2007                2006
      Total Staff                                                15                    9                    6
                                                           ––––––––            ––––––––             ––––––––
11.   SHARE OPTION SCHEME FOR EMPLOYEES                                                                           A1/17.3

11.1 The 2005 Share Option Scheme (the “Scheme”) was adopted by the Board on 15 November 2005 and is
     divided into two sections. Section A of the Scheme is designed for approval by HM Revenue & Customs
     (the “Revenue”) under the Income Tax (Earnings and Pensions) Act 2003 and has been adopted subject
     to Revenue approval. Section B of the Scheme is not designed for Revenue approval and is to be used to
     grant options to employees in excess of the individual limits permitted under Revenue approved schemes
     or to employees who cannot benefit from such schemes. The Scheme will be administered by the
     Remuneration Committee of the Board and its principal terms are summarised below.

      (A)    Section A – Revenue approved section of Scheme

             (1)    Eligibility
                    At the discretion of the Board, all employees of participating companies in the Group
                    (provided that if they are directors, they are required to work not less than 25 hours per
                    week excluding meal breaks) who are more than two years from their normal retirement
                    date are eligible to participate.

             (2)    Grant of options
                    Options may be granted (or invitations to apply for options may be issued) within
                    42 days of the approval of Section A of the Scheme by the Revenue and, thereafter,
                    options may only be granted within 42 days after the announcement by the Company of
                    its annual or interim results or the date on which listing particulars or a prospectus or a
                    document containing equivalent information in relation to shares in the Company is
                    published. Options may also be granted at any other time when the circumstances are
                    considered by the Board to be exceptional. No options may be granted later than ten
                    years after the adoption of the Scheme by the Company.

             (3)    Exercise price
                    The price per share payable upon the exercise of an option may not be less than its
                    market value at the time of grant (or its nominal value, if higher).

             (4)    Scheme limits on share issues
                    The total number of shares (including treasury shares) issued and issuable under options
                    granted under the Scheme over any ten year period, together with shares issued and
                    issuable under any other employees’ share schemes of the Company, may not exceed ten
                    per cent. of the issued Ordinary Share capital of the Company.

             (5)    Individual limits
                    Grants of options must be limited to £30,000 worth of Ordinary Shares per employee,
                    under all Revenue approved employees’ share schemes other than approved savings
                    related schemes, calculated by reference to the market value of the Company’s shares at
                    the time the options are granted.




                                                     170
REGISTRATION DOCUMENT – PART VII


           (6)   Exercise of options
                 An option will normally be exercisable no more than ten years following its grant. The
                 exercise of an option may be made wholly or partly conditional upon the performance
                 of any one or more participating companies and/or the optionholder as determined by
                 the Board. Performance conditions may be amended provided that the Board reasonably
                 considers that amended conditions would be a fairer measure of performance and would
                 be no more difficult to satisfy than the original conditions. The Board may design
                 different performance conditions for subsequent option grants.

                 Options will normally lapse on cessation of employment. Options will, however,
                 become exercisable immediately (irrespective of the period for which the option has
                 been held or whether any performance condition has been satisfied) on the death of an
                 optionholder or cessation of employment by reason of injury, disability, redundancy,
                 retirement or on the optionholder ceasing to be an eligible employee by reason of the
                 sale of his employing company or the business in which he is employed. Options will
                 also become exercisable in the event of a takeover, amalgamation, reconstruction or
                 winding up of the Company. The Board also has discretion to permit the exercise of an
                 option where the optionholder ceases to be an eligible employee for any other reason.

           (7)   Rights attaching to shares
                 Ordinary Shares allotted under the Scheme will rank pari passu with the ordinary shares
                 of the Company already in issue (save as regards any rights attaching to such shares by
                 reference to a record date which precedes the date of exercise of the option). Options are
                 not transferable and benefits under the Scheme will not be pensionable.

           (8)   Adjustment of options
                 In the event of any variation in the Company’s share capital, the Board may, with the
                 consent of the Company’s auditors, make such adjustments as it considers appropriate
                 to the total number of shares subject to options and the price payable on exercise of
                 options. Any such adjustments must receive the prior approval of the Revenue.

           (9)   Amendments to Scheme
                 The Board may at any time alter or add to the Scheme in any respect provided that the
                 prior approval of the Company in general meeting is obtained for amendments to the
                 advantage of optionholders to the provisions relating to eligibility, the overall limit on
                 the issue of new shares and transfer of treasury shares, the maximum entitlement for any
                 optionholder and the basis of determining that entitlement (save for minor amendments
                 to benefit the administration of the Scheme, to take account of changes in legislation or
                 to obtain or maintain favourable tax or regulatory treatment for optionholders or for the
                 Company or its subsidiaries). Once the Scheme has been approved by the Revenue, no
                 alteration for which prior Revenue approval is required will take effect until so
                 approved.

     (B)   Section B – Unapproved section of Scheme
           The terms of Section B of the Scheme are broadly similar to the terms of Section A of the
           Scheme, as summarised in paragraph 8(a) above save that in addition the following provisions
           apply:

           (1)   Eligibility and grant
                 Options may, at the discretion of the Board, be granted (or invitations to apply for
                 options may be issued) within three months of the adoption of the Scheme to any
                 employees of participating companies in the Group.




                                                 171
REGISTRATION DOCUMENT – PART VII


             (2)      Individual limits
                      There are no prescribed limits on the number of shares over which options may be
                      granted for any individual.

             (3)      Exercise price
             (4)      In the case of options granted within three months of admission of shares to trading on
                      AIM, options are exercisable at the price at which shares were placed in connection with
                      the float, being £1 per share. All options granted after this date are exercisable at a price
                      equal to the average quoted market price of the ordinary shares of the Company on the
                      date of grant.

             (5)      Adjustments and amendments
                      Revenue approval is not required to the adjustment of options or to amendments to
                      Section B of the Scheme.

12.   MAJOR SHAREHOLDERS
12.1 The Company has been notified of the following interests that represent 3 per cent. or more of the               A1/18.1

     issued ordinary share capital of the Company as at 22 June 2009 (being the latest practicable date
     prior to publication of this document):

                                                                                No. of ordinary        Percentage
                                                                                    shares held         (per cent.)
      Artemis Investment Management Limited                                         15,396,094                8.63
      Standard Life Investments Limited                                             15,294,817                8.57
      Lansdowne Partners Limited                                                    14,011,200                7.85
      Jupiter Asset Management Limited                                              13,263,217                7.43
      Threadneedle Investments                                                      11,719,354                6.57
      Lloyds TSB Group plc                                                          11,313,797                6.34
      Taube Hodson Stonex Partners LLP†                                             10,369,550                5.81
      Thames River Capital LLP                                                       6,707,799                3.76
      Third Avenue Management LLC                                                    5,355,571                3.00
                                                                                  –––––––––––              ––––––
                                                                                   103,431,399               57.96

      †     On behalf of client funds that it manages or controls.
                                                                                  –––––––––––              ––––––
12.2 None of the Company’s major holders of Ordinary Shares listed in paragraph 12.1 above have voting                A1/18.2

     rights different from other holders of Ordinary Shares.

12.3 The Directors are not aware of any persons at the date of this document who directly or indirectly               A1/18.3

     control the Company.

12.4 As far as the Company is aware, as at 22 June 2009 (being the last practicable date prior to the                 A1/18.4

     publication of this document) there are no arrangements the operation of which may at a later date
     result in a change of control of the Company.

12.5 The Company’s articles of association contain provisions restricting (subject to certain exceptions) the
     participation of directors in considering and approval of matters in which they are otherwise interested
     as described in paragraph 6 of this Part VII.

13.   LEGAL AND ARBITRATION PROCEEDINGS
No member of the Group is, or has been during the 12 months preceding the date of this document, involved             A1/20.8

in any governmental, legal or arbitration proceedings which may have, or have had in the recent past a
significant effect on the Group’s financial position or profitability, nor, so far as the Company is aware, are
any such proceedings pending or threatened.


                                                              172
REGISTRATION DOCUMENT – PART VII


14.   MATERIAL CONTRACTS
14.1 The following contracts are all the material contracts (not being contracts entered into in the ordinary      A1/22

     course of business) which have been entered into within the two years prior to the date of this
     document by members of the Group and the contracts (not being contracts entered into in the ordinary
     course of business) entered into at any time by members of the Group which contain provisions under
     which any member of the Group has an obligation or entitlement which is or may be material to the
     Group as at the date of this document:

      (A)    Placing Agreement
             Under the Placing Agreement between the Company and KBC Peel Hunt dated the same date
             as this document:

             (i)     KBC Peel Hunt has agreed to use its reasonable endeavours, as agent for the Company,
                     to procure subscribers under the Placing for all the Open Offer Shares and the Firm
                     Placed Shares;

             (ii)    KBC Peel Hunt has agreed to subscribe at the Issue Price for all New Ordinary Shares
                     that are not taken up under the Open Offer or otherwise subscribed under the Placing;

             (iii)   the Company has given certain warranties to KBC Peel Hunt as to the accuracy of the
                     information in this document and certain other matters concerning the Group and the
                     Company and has given an indemnity to KBC Peel Hunt and its affiliates in respect of
                     certain liabilities and claims that may arise or be made against them in connection with
                     the Placing and Open Offer (such warranties and indemnity being of a customary nature
                     for this type of an agreement);

             (iv)    the Company has agreed to pay to KBC Peel Hunt an underwriting commission equal to
                     two and three-quarters per cent. (2.75 per cent.) of the aggregate value at the Issue Price
                     of the New Ordinary Shares;

             (v)     KBC Peel Hunt’s underwriting obligations are conditional on (i) the passing of the
                     Resolutions at the General Meeting, (ii) Admission occurring by 9.00 am on 10 July
                     2009, and (iii) the fulfilment (or, in some cases, waiver by KBC Peel Hunt) of certain
                     procedural and other customary conditions; and

             (vi)    KBC Peel Hunt has the right to terminate its underwriting obligations in the event of any
                     breach by the Company of its obligations or warranties under the Placing Agreement
                     which KBC Peel Hunt considers to be material and in certain force majeure
                     circumstances. Were KBC Peel Hunt to exercise such right, no shares would be issued
                     under the Placing or Open Offer.

      (B)    Subscription and transfer agreement (the “Subscription Agreement”) and option
             agreement
             In connection with the Placing and Open Offer, the Company, KBC Peel Hunt and Newco
             entered into two agreements on 23 June 2009, in relation to the subscription and transfer of
             ordinary shares and redeemable preference shares in Newco. Under the terms of these
             agreements:

             (i)     each of the Company and KBC Peel Hunt has agreed to subscribe for ordinary shares in
                     Newco and to enter into put and call options in respect of the ordinary shares in Newco
                     subscribed for by KBC Peel Hunt;

             (ii)    KBC Peel Hunt will apply the monies that it receives, as principal, from Qualifying
                     Shareholders and placees taking up New Ordinary Shares under the Placing and Open
                     Offer, to subscribe for redeemable preference shares in Newco to an aggregate value
                     equal to the gross proceeds of the Placing and Open Offer; and


                                                      173
REGISTRATION DOCUMENT – PART VII


           (iii)   the Company will allot and issue the New Ordinary Shares to those persons entitled to
                   them in consideration of KBC Peel Hunt transferring its holdings of redeemable
                   preference shares and ordinary shares in Newco to the Company.

           Accordingly, instead of receiving cash as consideration for the issue of the New Ordinary
           Shares, at the conclusion of the Placing and Open Offer, the Company will own the entire
           issued share capital and entire redeemable preference share capital of Newco whose only assets
           will be its cash reserves, which will represent an amount equivalent to the gross proceeds of
           the Placing and Open Offer.

           Qualifying Shareholders and placees are not party to these arrangements and so will not acquire
           any direct right against KBC Peel Hunt pursuant to these arrangements. Under the Subscription
           Agreement, the Company has given certain warranties to KBC Peel Hunt in relation to the
           activities of Newco, the Company and the share capital of Newco. The Company has also
           provided an indemnity to KBC Peel Hunt regarding any losses, liabilities or expenses that it
           may incur in the performance of this agreement.

     (C)   Irrevocable Undertakings
           Pursuant to deeds of irrevocable undertaking dated 22 June 2009 all the Directors, with the
           exception of Stephen Gee, have irrevocably committed to apply for Open Offer Shares pursuant
           to their Open Offer Entitlements.

           Morgan Jones and Ian Watson have irrevocably committed to apply for 1,071,799 Open Offer
           Shares each. James Hambro and Richard Mully have irrevocably committed to apply for
           75,000 and 100,000 Open Offer Shares, respectively.

     (D)   HBOS Facility
           Master agreement (the “Master Agreement”) dated 25 July 2006 between, amongst others, (1)
           Hansteen Holdings PLC as parent (the “Parent”), (2) Hansteen Netherlands B.V., Hansteen
           France SAS and Hansteen Germany Limited as original borrowers (the “Original BOS
           Borrowers”), (3) Bank of Scotland Plc (formerly The Governor and Company of the Bank of
           Scotland) (“BoS”) as lead arranger, agent and security agent and (4) the Parent and Original
           BOS Borrowers as original guarantors (the “Original BOS Guarantors”).

           Pursuant to and in accordance with the terms of the Master Agreement, BoS has made the
           following revolving credit facilities (“RCF”) up to an aggregate maximum amount of
           €200,000,000 available to the Original BOS Borrowers:

           (1)     RCF Agreement dated 25 July 2006 between, amongst others, (1) Hansteen Netherlands
                   B.V. as borrower and (2) BoS as original lender;

           (2)     RCF Agreement dated 25 July 2006 between, amongst others, (1) Hansteen France SAS
                   as borrower and (2) BoS as original lender;

           (3)     RCF Agreement dated 25 July 2006 between, amongst others, (1) Hansteen Germany
                   Limited as borrower and (2) BoS as original lender;

           (4)     RCF Agreement dated 13 June 2007 between, amongst others, (1) Hansteen Germany
                   (2) Limited as borrower and (2) BoS as original lender; and

           (5)     RCF Agreement dated 9 May 2008 between, amongst others, (1) Hansteen Germany (3)
                   Limited as borrower and (2) BoS as original lender, together, the “Local Facilities” and
                   each a “Local Facility”).

           The principal terms applicable to each Local Facility are:




                                                  174
REGISTRATION DOCUMENT – PART VII


            (1)    Purpose: financing investment by the relevant borrower in properties in that borrower’s
                   jurisdiction of incorporation (each a “BoS Property”), certain capital expenditure and
                   where applicable, refinancing existing indebtedness;

            (2)    Termination Date: each Local Facility is due for repayment on the later of (i) the fifth
                   anniversary of the relevant utilisation and (ii) 25 July 2011;

            (3)    Repayment: subject to mandatory repayment upon occurrence of a change of control or
                   disposal of a BoS Property, bullet repayment on the Termination Date;

            (4)    Rate of interest: rate of interest calculated on the aggregate of (i) the applicable Margin
                   (between 0.80 per cent. and 0.90 per cent. depending on security cover ratio), (ii)
                   EURIBOR and (iii) Mandatory Costs; and

            (5)    Security: (i) land charges over each BoS Property, (ii) assignment of rental receivables
                   in respect of each BoS Property; (iii) global assignment of all rights and claims under
                   agreements related to each BoS Property, (iv) assignment of all rights to inter-company
                   receivables, (v) share security over each Original BoS Borrower, Hansteen Germany (2)
                   Limited and Hansteen Germany (3) Limited and (v) assignment of rights under any
                   hedging arrangements.

            Pursuant to the terms of the Master Agreement, each Local Facility contains representations,
            warranties, covenants, (including financial covenants) and undertakings of the relevant
            borrower.

      (E)   FGH Facility
            €130,000,000 term loan facility agreement (the “FGH Facility Agreement”) originally dated
            20 May 2008 between, amongst others, (1) Hansteen Netherlands B.V. and Hansteen Ormix
            B.V. as borrowers (the “FGH Borrowers”) and (2) FGH Bank N.V. as original lender. The
            Facility Agreement contains financial covenants and on-going obligations on the FGH
            Borrowers and the principal terms of the Facility Agreement include:

            (1)    Purpose: finance investment by the FGH Borrowers in a selection of properties in the
                   Netherlands (each a “FGH Property”);

            (2)    Term: 5 years;

            (3)    Repayment: subject to mandatory repayment upon occurrence of a change of control or
                   disposal of an FGH Property, bullet repayment on 1 June 2013;

            (4)    Rate of interest: FHG Borrower’s could have elected either .(i) floating rate of interest
                   calculated on the one or three month EURIBOR rate plus 1.55 per cent. points (with
                   hedging for 75 per cent. of the loan amount); or (ii) fixed rate of interest rate calculated
                   on the interbank prices for 5 years raised with 1.25 per cent. points; and

            (5)    Security: (i) first fixed mortgage of €130,000,000 over each FGH Property, (ii) second
                   banker’s mortgages of €45,000,000 over each FGH Property; and (iii) pledge over any
                   hedging arrangements.

15.   PROPERTY PLANT AND EQUIPMENT OF THE GROUP
15.1 The following are investment properties owned or leased by the Group:                                        A1/8.1


      Premises                                                                    Tenure
      53 & 87                                                                     Freehold
      rue du Dehez
      33290 Blanquefort
      France



                                                    175
REGISTRATION DOCUMENT – PART VII


     Premises                                   Tenure
     2, 6, 10 rue de Bourgogne                  Freehold
     6900 Saint Priest
     France
     42 Route de Saint Symphonien               Freehold
     6900 Saint Priest
     France
     Avenue Oliver Perroy                       Freehold
     13790 Rousset
     France
     Hinterer Flossanger 3                      Freehold
     96450 Coburg
     Germany
     Heinrich-Herz-Strasse 1 & 3                Freehold
     63303 Dreieich
     Germany
     Emil-Kemmer-Strasse 15                     Freehold
     96103 Hallstadt
     Germany
     Boellinger Hoefe/Pfaffenstrasse 31         Freehold
     70178 Heilbronn
     Germany
     Kohmhammerstrasse 31                       Freehold
     70771 Leinfelden-Echterdeingen
     Germany
     Industriestrasse                           Freehold
     76470 Oetingheim
     Germany
     Offingerstrasse 13                         Freehold
     71686 Remseck
     Germany
     (Remseck I)
     Neckarau 11                                Freehold
     71686 Remseck
     Germany
     (Remseck II)
     Henschelstrasse 16                         Freehold
     63110 Rodgau-Nieder Roden
     Germany
     Am Forst 13/15                             Freehold
     72637 Weiden in der Oberpfalz
     Germany
     Eisenbahnstrasse 84                        Freehold
     78573 Wurmlingen
     Germany
     Benzstrasse 2a                             Freehold
     63741 Aschaffenburg
     Germany
     Ostheimer Weg 3                            Freehold
     64832 Babenhausen
     Germany



                                          176
REGISTRATION DOCUMENT – PART VII


     Premises                                               Tenure
     Schuetzenhoehe 24-26                                   Freehold
     01099 Dresden
     Germany
     Engler Portfolio                                       Freehold
     Hoffnungstrasse 2
     45217 Essen
     Germany
     Engler Portfolio                                       Freehold
     Eurovia Park
     Middelicherstrasse 305
     Isoldenstrasse 23a & 25 and Reginaweg 10
     45896 Gelsenkirchen
     Germany
     Engler Portfolio                                       Freehold
     Polsumerstrasse 190/192
     45896 Gelsenkirchen
     Germany
     Willy-Brandt-Strasse 7/Leipziger Strasse 10            Freehold
     63450 Hanau
     Germany
     Engler Portfolio                                       Freehold
     Scheuchtermannstrasse 12
     44628 Herne
     Germany
     Lohmuehlbach 10/12a/13/16 and Rudolf Dieselstrasse 1   Freehold
     85356 Freising
     Germany
     Ankerstrasse 3a,b,c,d,e,f                              Freehold
     06108 Halle
     Germany
     Moselstrasse 27                                        Freehold
     63452 Hanau
     Germany
     Am Holzweg 24                                          Freehold
     65830 Kriftel
     Germany
     Bahnhofstrasse 96                                      Freehold
     98724 Lauscha
     Germany
     Breitwiesenstrasse 8                                   Freehold
     71229 Leonberg
     Germany
     Lichdi Portfolio                                       Freehold
     Markstrasse 49
     30890 Barsinghausen
     Germany
     Lichdi Portfolio                                       Freehold
     Planitzwiese 18a
     09130 Chemnitz
     Germany




                                                   177
REGISTRATION DOCUMENT – PART VII


     Premises                             Tenure
     Lichdi Portfolio                     Freehold
     Am Schwabeplan
     06466 Gatersleben
     Germany
     Lichdi Portfolio                     Leasehold
     Berlinerstrasse 4
     30966 Hemmingen
     Germany
     Lichdi Portfolio                     Freehold
     Fabrikstrasse 1
     39393 Hötensleben
     Germany
     Lichdi Portfolio                     Freehold
     Fröebeistrasse 9
     95030 Hof
     Germany
     Lichdi Portfolio                     Freehold
     Preussenstrasse 86-88
     44532 Luenen
     Germany
     Lichdi Portfolio                     Freehold
     Walsauserstrasse 122-126
     41061 Mönchengladbach
     Germany
     Lichdi Portfolio                     Freehold
     Donnersbergstrasse 34
     67806 Rockenhausen
     Germany
     Lichdi Portfolio                     Freehold
     Rathausstrasse 35
     66333 Völklingen
     Germany
     Lichdi Portfolio                     Leasehold
     Sudetenstrasse 2
     29654 Walsrode
     Germany
     Lichdi Portfolio                     Freehold
     Max-Eyth-Strasse 3
     73249 Wernau
     Germany
     Hasslauerstrasse 1                   Freehold
     04741 Rosswein
     Germany
     Tower 99                             Freehold
     Am Wallgraben 99
     70565 Stuttgart
     Germany
     Friedrich-Schaefer Strasse 2         Freehold
     64133 Weiterstadt
     Germany




                                    178
REGISTRATION DOCUMENT – PART VII


     Premises                            Tenure
     Halkestrasse 3-5, & 7               Freehold
     47877 Willich
     Germany
     Stockumer Strasse 28                Freehold
     Buildings A4, A7, C3, C4
     Parking and Antennas
     58453 Witten
     Germany
     Ludwigsstrasse 54b-d & 56           Leasehold
     67059 Ludwigshafen
     Germany
     Hueftelaecker/Ebenaecker 1          Freehold
     71573 Allmersbach im Tal
     Germany
     Max-Planck-Strasse 1                Freehold
     77656 Offenburg
     Germany
     An der Talle 89                     Freehold
     33102 Paderborn
     Germany
     Acterbroek 11, 15                   Leasehold
     Ovenberg 15, 17, 29
     Milsbeek
     The Netherlands
     Apolloweg 2                         Freehold
     Leeuwarden
     The Netherlands
     Argonweg 13                         Freehold
     Amersfoort
     The Netherlands
     Bruchterweg 88, 7772 BJ             Freehold
     Hardenberg
     The Netherlands
     Daalmeestraat 4, 6 & 16             Freehold
     Hoofddorp
     The Netherlands
     Edisonstraat 2                      Freehold
     Dedemsvaart
     The Netherlands
     Expediteursweg 2                    Freehold
     Venlo
     The Netherlands
     Galvanistraat 18                    Freehold
     Ede
     The Netherlands
     Gildenweg 11                        Freehold
     Emmeloord
     The Netherlands
     Hamburgweg 8                        Freehold
     7418 Deventer
     The Netherlands


                                   179
REGISTRATION DOCUMENT – PART VII


     Premises                            Tenure
     Hogelandsweg 19 & 21                Freehold
     Nijmegen
     The Netherlands
     Horsterweg 26                       Leasehold
     Maastricht
     The Netherlands
     Industrieweg 14-20 2404             Freehold
     Alphen aan den Rijn
     The Netherlands
     Kellensedwarsweg 2-6                Freehold
     Tiel
     The Netherlands
     Kellenseweg 16                      Freehold
     Tiel
     The Netherlands
     Klokkenbergweg 35A-35B              Leasehold
     1101 Amsterdam
     The Netherlands
     Koelenhofstraat                     Freehold
     Tiel
     The Netherlands
     Kwinkweerd 62                       Freehold
     Lochem
     The Netherlands
     Lelyweg 1                           Leasehold
     Almelo
     The Netherlands
     Lissenweld 49                       Freehold
     Raamsdonksveer
     The Netherlands
     Lorentzstraat 6                     Freehold
     7107 Winterswijk
     The Netherlands
     Neonweg 2-10                        Freehold
     3812 Amersfoort
     The Netherlands
     Ondernemersweg 3-17                 Freehold
     Emmeloord
     The Netherlands
     Plakhorstweg 46                     Freehold
     Doetinchen
     The Netherlands
     Rondweg 17                          Freehold
     Wezep
     The Netherlands
     Spekhofstraat 10-10A                Freehold
     Kerkrade
     The Netherlands




                                   180
REGISTRATION DOCUMENT – PART VII


     Premises                                Tenure
     Zalmweg 32-36                           Freehold
     Raamsdonksveer
     The Netherlands
     Zijilweg 1                              Freehold
     Waalwijk
     The Netherlands
     Avenue Einstein 2A                      Leasehold
     1348 Louvain-la-Neuve
     Belgium
     Chaussée de Waterloo 10                 Freehold
     5002 Namur
     Belgium
     Excelsiorlaan 16                        Freehold
     1930 Zaventem
     Belgium
     Hanswijkdries 80                        Freehold
     2800 Mechelen
     Belgium
     Industriepark 36                        Freehold
     2220 Heist-op-den-Berg
     Belgium
     Leuvensesteenweg 643                    Freehold
     1930 Nossengem
     Belgium
     Lossing 18                              Freehold
     2260 Westerlo
     Belgium
     Neerveld 9                              Freehold
     2550 Kontich
     Belgium
     Poverstraat 29                          Freehold
     1730 Asse
     Belgium
     Rotterdamstraat 1                       Freehold
     1080 Brussels
     Belgium
     Rue de la Petite lle 3                  Freehold
     1070 Anderfecht
     Belgium
     Rue des Phlox 28                        Freehold
     5100 Nannine
     Belgium
     Schranshoevebaan 18                     Freehold
     2160 Wommelgem
     Belgium
     Otto-Richter-Strasse 1-6b/40-46         Freehold
     39116 Magdeburg
     Germany




                                       181
REGISTRATION DOCUMENT – PART VII
                             VIII


      Premises                                                                    Tenure
      Friedensstrasse 10                                                          Freehold
      39116 Magdeburg
      Germany
      Halberstaedter Strasse 180                                                  Freehold
      39116 Magdeburg
      Germany
      Marktstrasse 34                                                             Freehold
      74172 Neckarsulm
      Germany
      Aletta Jacobswweg 1-3 &                                                     Freehold
      Marga Klompeweg 2
      5032 Tilburg
      The Netherlands
      Versterkerstraat 12                                                         Freehold
      1322 Almere
      The Netherlands
      De Kronkels 18                                                              Freehold
      2752 Bunschoten
      The Netherlands
      Loodsboot 19                                                                Leasehold
      3991 Houten
      The Netherlands
      Distributieweg 3                                                            Freehold
      7041 ‘s Heerenberg
      The Netherlands
      Stepvelden 14                                                               Freehold
      Roosendaal
      The Netherlands
15.2 The Company is not aware of any material environmental issues affecting the utilisation of its fixed        A1/8.2

     assets.

16.   DIVIDEND POLICY
The Company intends, so long as it is prudent, to continue to pay a dividend to shareholders. Dividends per      A1/20.7

ordinary share paid to date are summarised in the table below:                                                   A1/20.7.1


                                                                      2009             2008             2007
Dividend paid per share (p)                                             3.2              3.2              3.0

17.   SIGNIFICANT CHANGE
There has been no significant or material change in the financial or trading position of the Group since         A1/20.9

31 December 2008.

18.   RELATED PARTY TRANSACTIONS
Other than as disclosed in the Group's audited consolidated financial statements for the financial years ended   A1/19

31 December 2008 (note 33 on page 130), 31 December 2007 (note 32 on page 86) and 31 December 2006
(note 29 on page 56), which are set out in full at Part V of this document, there are no related party
transactions between the Company or members of the Group that were entered into during the financial years
ended 31 December 2008, 31 December 2007 and 31 December 2006 and during the period between 1
January 2009 and 22 June 2009 (the latest practicable date prior to the publication of this document).




                                                     182
REGISTRATION DOCUMENT – PART VII
                             VIII


19.    GENERAL
19.1 The Group is not dependent on patents or licences, industrial, commercial or financial contracts or        A1/6.4

     new manufacturing processes which are material to the Group’s business or profitability, save as
     disclosed in this document.

19.2 KBC Peel Hunt, of 111 Old Broad Street, London EC2N 1PH, is the Company’s nominated adviser,
     broker and underwriter. KBC Peel Hunt is regulated in the UK by the Financial Services Authority.

19.3 Deloitte LLP (formerly Deloitte & Touche LLP) of Abbots House, Abbey Street, Reading RG1 3BD               A1/2.1

     is a member of the Institute of Chartered Accountants of England and Wales and has audited the             A1/20.4.1

     annual accounts of the Company for the three financial years ended 31 December 2008, 31 December           A1/20.4.2

     2007 and 31 December 2006. These reports were unqualified and did not contain a statement under
     section 498(2) or (3) of the 2006 Act. No auditor has resigned or been removed or failed to be
     re-appointed for the period covered by the financial information set out in Part V of this document.
     The financial information set out in Part V of this document does not constitute full statutory accounts
     as referred to in Section 434 of the 2006 Act.

19.4 Where information has been sourced from a third party, the source of this information has been             A1/23.2

     identified, accurately reproduced and, as far as the Company is aware and is able to ascertain from
     information published by that third party, no facts have been omitted which would render the
     reproduced information inaccurate or misleading.

20.    VALUATION REPORT
The Valuation Report included in Part VI of this document is made as at 31 May 2009 (being the last             A1/23.1

practicable date prior to the publication of this document).

21.    CONSENTS
21.1 KBC has given and not withdrawn its written consent to the issue of this document with the inclusion       A1/23.1

     of its name in this document and references to its name in the form and context in which they appear.

21.2 King Sturge has given and not withdrawn its written consent to the inclusion in this document of its
     name and its Valuation Report and references to it in the form and context in which they appear and
     has authorised the contents of these parts of this document which comprise its report for the purposes
     of Rule 5.5.3R(2)(f) of the Prospectus Rules.

22.    DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents may be inspected at the offices of Jones Day, 21 Tudor Street, London         A1/24

EC4Y 0DJ during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted)
from the date of publication of this document until 22 June 2010:

(A)    the memorandum and articles of association of the Company;

(B)    the audited consolidated accounts of the Group for the three financial years ended 31 December 2006,
       31 December 2007 and 31 December 2008;

(C)    the Valuation Report; and,

(D)    this document.

Date

23 June 2009




                                                    183
                             VIII
REGISTRATION DOCUMENT – PART VII



                                          DEFINITIONS
The following definitions apply throughout this document, unless the context otherwise requires:

“1985 Act”                                 the Companies Act 1985 (as amended);

“2006 Act”                                 the Companies Act 2006 (as amended);

“AIM”                                      the AIM market, regulated by the London Stock Exchange;

“AIM Rules”                                the rules for AIM companies as published by the London Stock
                                           Exchange;

“Ashtenne”                                 Ashtenne Holdings PLC (subsequently renamed Ashtenne
                                           Holdings Limited);

“Board”                                    the board of directors of the Company;

“Continental Europe”                       Europe, other than the UK;

“CREST”                                    the system for trading shares in uncertificated form;

“Deloitte”                                 Deloitte LLP;

“Directors”                                the directors of the Company, whose names are set out in
                                           paragraph 7.1 of Part VII of this document;

“Disclosure and Transparency Rules”        the rules relating to the disclosure of information made in
                                           accordance with section 73A(3) of the FSMA;

“Executive Directors”                      Morgan Lewis Jones and Ian Richard Watson;

“Existing Ordinary Shares”                 the 178,435,117 existing issued Ordinary Shares;

“Firm Placed Shares”                       the 89,333,334 New Ordinary Shares which KBC Peel Hunt has
                                           made arrangements to place with certain institutional investors
                                           pursuant to the Placing;

“Firm Placing”                             the conditional agreement by KBC Peel Hunt to procure placees
                                           for the Firm Placed Shares under the Placing Agreement;

“FSA”                                      the Financial Services Authority;

“FSMA”                                     the Financial Services and Markets Act 2000, as amended;

“Group”                                    the Company and its subsidiary undertakings;

“Hansteen” or the “Company”                Hansteen Holdings PLC;

“IPD”                                      Investment Property Databank;

“Issue Price”                              75p per New Ordinary Share;

“Jones Day”                                Jones Day solicitors;

“KBC Peel Hunt”                            KBC Peel Hunt Ltd;

“King Sturge”                              King Sturge LLP, an independent property valuation expert;

“London Stock Exchange”                    London Stock Exchange plc;

“New Ordinary Shares”                      the 267,768,451 new Ordinary Shares proposed to be issued
                                           pursuant to the Placing and Open Offer;



                                                   184
REGISTRATION DOCUMENT – PART VII


“Newco”                                 Hansteen (Jersey) Limited

“Non-Executive Directors”               James Daryl Hambro, Stephen Trevor Gee and Richard Stephen
                                        Mully;

“Normalised Profit”                     a measure of profit used by the Group measuring income
                                        exceeding costs, excluding gains and losses on investment
                                        property, currency hedging instruments and interest rate hedging
                                        instruments;

“Official List”                         the Official List of the UK Listing Authority;

“Open Offer Shares”                     the 178,435,117 New Ordinary Shares to be offered to
                                        Qualifying Shareholders under the terms of the Open Offer;

“Open Offer”                            the conditional invitation to Qualifying Shareholders to
                                        subscribe for the Open Offer Shares;

“Ordinary Shares”                       ordinary shares in the capital of the Company which have a
                                        nominal value of 10p each;

“Overseas Shareholders”                 holders of the Existing Ordinary Shares with registered
                                        addresses outside the United Kingdom or who are citizens of,
                                        incorporate in, registered in or otherwise resident in, countries
                                        outside the United Kingdom;

“Placees”                               the persons with whom the Placing (subject to the entitlements
                                        of Qualifying Shareholders under the Open Offer) has been
                                        made;

“Placing”                               the conditional placing of the Open Offer Shares and the placing
                                        of the Firm Placed Shares by KBC Peel Hunt on the terms of the
                                        Placing Agreement;

“Placing Agreement”                     the conditional agreement dated 23 June 2009 between the
                                        Company and KBC Peel Hunt relating to the Placing and Open
                                        Offer and described in paragraph 14.1 of Part VII of this
                                        document;

“Prospectus Rules”                      the prospectus rules brought into effect on 1 July 2005 and made
                                        by the Financial Services Authority pursuant to FSMA;

“Qualifying non-CREST Shareholders” Qualifying Shareholders holding Ordinary Shares in certificated
                                    form;

“Qualifying Shareholders”               subject to any restrictions imposed on Overseas Shareholders,
                                        holders of Ordinary Shares whose names appear on the register
                                        of members of the Company on the Record Date;

“Record Date”                           the close of business on 19 June 2009;

“Registrars”                            Capita Registrars;

“Registration Document”                 this registration document dated 23 June 2009 prepared in
                                        accordance with the Prospectus Rules relating to the Company;

“Scheme”                                2005 Share Option Scheme;

“Shareholders”                          holders of Ordinary Shares;

“Statutes”                              the 1985 Act or the 2006 Act, as the context so requires;



                                                185
REGISTRATION DOCUMENT – PART VII


“Subsidiaries”                     those subsidiaries of the Company, that will be significant in
                                   terms of the Company’s assets and liabilities, financial position
                                   and profits and losses, further details of which are set out in
                                   paragraph 3.2 of Part VII of this document;

“UK Listing Authority”             the FSA acting in its capacity as the competent authority for the
                                   purposes of Part VII of FSMA; and

“Valuation Report”                 the valuation report prepared by King Sturge dated 23 June
                                   2009.




                                           186
sterling 118365

				
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