Final Results

Hansteen Holdings PLC

("Hansteen" or "the Group" or "the Company")

Full Year Results

Hansteen Holdings PLC (LSE: HSTN), the investor in continental European and UK real estate, announces its final results for the twelve months ended 31 December 2010.

Financial Highlights

Operational Highlights

James Hambro, Hansteen Chairman commented: "Hansteen's focus is on growth in income, earnings and dividends. We also expect the portfolio will show capital growth as the property market continues to recover.

"We have started 2011 in a positive position. The balance sheet is strong, the portfolio has significant opportunities to add value and we have the team in place to capitalise on those opportunities. Our markets are stable, and in the case of Germany, much improved and there are also initial signs of a continuation of this trend and possible upward turn in occupier demand in other countries as well.

"Undoubtedly, for the next couple of years at least, access to capital and management expertise will be the key to exploiting the opportunities which will arise. Hansteen is well placed in both these respects."

For more information:

Notes to Editors

Hansteen Holdings PLC (LSE: HSTN) is a European industrial REIT that invests in properties with high yields, low financing costs and opportunity for value improvement across the Netherlands, Germany, Belgium, France and the UK.

In 2010 Hansteen increased its portfolio to 183 assets with a value of around £745 million through the acquisition of a German industrial property portfolio from HBI for approx. €330 million and the acquisition of the 1.2 million sq ft multi-sector Kilmartin portfolio of UK properties for £80.37 million.

In August 2009 Hansteen launched Hansteen UK Industrial Property Unit Trust (HPUT), a vehicle with up to £180 million to invest in UK industrial property with a value of £15 million or less, or portfolios under £30 million. As well as managing HPUT through Hansteen Limited, a wholly owned subsidiary of the Company, Hansteen is also the largest investor with a 33% stake.

Founded by Morgan Jones and Ian Watson the Company listed on AIM in November 2005 raising £125 million. In 2009 it raised a further £200.8 million by way of a Placing and Open Offer and moved to the Official List, converting to a REIT shortly thereafter.

CHAIRMAN'S STATEMENT

In 2009, the Board expected the downturn in the property markets would give rise to some attractive acquisition opportunities. We decided to create a war chest by raising additional equity and debt facilities to take advantage of the market malaise, and the resulting purchases made during 2010 have shown that this policy was justified. 2010 was a year of significant growth and development in every aspect of the business; the property portfolio has approximately doubled and the financial results, the organisation and the prospects have all made a step change improvement.

Results

Profit before tax for the year to 31 December 2010 improved significantly to £33.2 million from a £21.3 million loss in 2009. Normalised profit, which excludes revaluations and certain one-off items increased to £24.0 million compared to £15.4 million in 2009, an increase of 56%.

Net Asset Value

Net Asset Value ("NAV") per share calculated on a diluted EPRA basis as at 31 December 2010 was 86p per share compared to 80p per share at 30 June 2010 (unaudited) and 84p per share at 31 December 2009. The 2010 NAV per share was achieved after deducting an additional dividend, as we introduced two payments per year, (in total 4.6p per share was paid during the year), and after adverse currency movements of 1.8p per share. After adjusting for these items the total underlying growth in the year is 8.4p per share or 10%.

Dividend

In past years, Hansteen has paid a single dividend. As noted above, in 2010 the Board decided to divide the dividend into two payments. The first dividend relating to the financial year 2010 of 1.4p per share, including a PID of 0.56p, was paid on 25 November 2010. A second dividend of 2.1p per share, including a PID of 1.24p, will be paid on 26 May 2011 to shareholders on the register at close of business on 3 May 2011. The total dividend of 3.5p per share is a 9% increase on 2009 notwithstanding the increase in the capital base. The Board remains committed to a prudently progressive dividend policy reflecting the strong and growing cash flow generated by the business.

Property Portfolio

During 2010, the Group made a number of excellent purchases all at prices which reflected the distress in the sector and which we believe will produce strong returns in the coming years. The Group invested approximately £460 million in ten transactions of which £289 million was in Germany and £171 million in the UK, including £84 million invested by the HPUT. Over the same period the Group sold £47 million of properties at an average premium of 20% to the book value.

The Group started the year with 153,000 sq m of vacant property representing 16% of the portfolio, purchased an additional 346,000 sq m of vacant property during the year and finished the year with 480,000 sq m of vacant property representing net occupancy improvement in the year of 19,000 sq m or 1% of the portfolio. The improvement was more significant in the second half as in the first half occupancy fell by 67,800 sq m but improved by 87,000 sq m in the second half.

As at 31 December 2010 the Group's wholly owned property portfolio comprised 1.8 million sq m (2009: 0.9 million sq m) with a value of £745 million (2009: £421 million) and a rent roll of £59.6 million (2009: £36.0 million) giving a yield of 8.0% (2009: 8.6%). There is a further £3.9 million of rent which is contracted but not yet passing either due to rent free periods, stepped rents or delayed lease starts. All of this rent will start to be paid over the next twelve months.

This high yielding portfolio produces a robust income surplus from over 1,700 tenants with significant room for growth through letting vacant accommodation, re-gearing leases, realising the value of undeveloped land and profitable sales. The occupancy level is 78% against 84% in 2009 due to the policy of buying more highly vacant properties in 2010. The benefit of this approach is that if the Group's vacant accommodation was let at current market rents, it would add approximately £15 million to the annualised rent roll. The Board believes that in normal economic conditions it would be reasonable to expect the vacancy level to decrease materially from December 2010 levels.

Hansteen Property Unit Trust (HPUT)

In early 2010, Hansteen believed that UK industrial property was likely to see a pricing correction later in the year which would provide some exciting opportunities. As a result Hansteen advised the HPUT not to invest the fund at prevailing prices at the start of the year and by the end of June only 20% of the HPUT's £90 million of capital had been deployed. However, in the second half of 2010 institutional buying activity abated, vindicating the approach Hansteen had advocated and allowing the HPUT to acquire £84 million of industrial properties including two substantial estates which were acquired at less than half the price paid by the previous owners.

Finance and Hedging

Net debt as at 31 December 2010 was £394 million (2009: £55 million) representing a net debt to value ratio of 53% (2009: 13%). Gross borrowings of £264 million are fixed at an average rate of 2.6% and £150 million are capped at an average rate of 5.3%. This means that Hansteen has an average borrowing rate at 31 December 2010 of 3.3% (2009: 4.3%) which the Board believes to be amongst the lowest average borrowing costs in the listed property sector. Borrowings are in the same currency as the assets against which they are secured. All borrowings are substantially within their banking covenants and none of Hansteen's main banking facilities require renewal before June 2013.

Approximately 63% of Hansteen's net assets are Euro denominated with the result that the Sterling value of its net assets varies with the movement in the exchange rate. The Board reviews the most appropriate policy for managing this exposure on an ongoing basis. In July last year the Company entered into a €200 million three-year hedge to provide downside protection should the Euro fall significantly against Sterling (i.e. move beyond €1.42 to the £) whilst at the same time ensuring that the Group will fully benefit if the Euro appreciates in value.

The Board's policy is to manage both its Euro revenues and cash balances to ensure that it always has adequate Sterling resources to meet projected dividends for the next twelve months.

Board changes

As a result of the growth of our business and our move to the Official List, we decided to expand the Board. As announced on 18 October 2010, I am delighted that we have been able to recruit Richard Cotton and Humphrey Price as Non-Executive Directors and that Richard Lowes has been promoted to Group Finance Director.

Organisation

Having moved up to the Official List and converted to a REIT in October 2009, Hansteen continued to expand its team and infrastructure. During 2010 we moved into permanent London headquarters and opened small offices in Leeds, Cardiff, Frankfurt, Berlin and Amsterdam in addition to the existing office in Glasgow. The executive team had grown from 19 people at 1 October 2009 to 42 people at 31 December 2010.

Current trading and prospects

The Group's focus is on growth in income, earnings and dividends. The Board also expects the portfolio will show capital growth as the property market continues to recover. Currently this recovery is more evident in Germany, where export led growth in the economy has been reflected in the occupancy rates in our portfolio.

The Group has started 2011 in a positive position. The balance sheet is strong, the portfolio has significant opportunities to add value and we have a team in place to capitalise on those opportunities. The markets in which we operate are stable and, in the case of Germany, much improved. There are also initial signs in 2011 of a continuation of this trend and possible upward turn in occupier demand in other countries as well.

In March of this year, Hansteen became a member of the FTSE 250 and also of the EPRA index. Both are significant milestones in the business's growth.

Throughout Europe there are substantial pools of properties and property owners that are facing significant challenges. Many of these are the sectors in which Hansteen specialises: high yielding, management intensive properties with vacancies. Increasingly, it is becoming clear that the management of these properties is deteriorating as the owners lose any economic interest in the equity and bank finance is underwater or fast approaching the redemption date with little prospect of being renewed.

The driver behind four out of five of the Group's major purchases during 2010 was a bank seeking to resolve an impaired loan. This enabled the Group to buy properties which fitted its acquisition criteria in terms of yields, vacancy, rent levels and capital values. To date the acquisitions in 2010 have achieved excellent returns on the capital invested with a genuine prospect of this continuing over the project lifetime.

The appetite of banks to lend on secondary property is currently very limited. Such finance is available only at very modest loan-to-value ratios and with substantial margins and then only if management can demonstrate a strong, proven track record. Undoubtedly, for the next couple of years at least, access to capital and management expertise will be the key to exploiting the opportunities which will arise. The Board believes that Hansteen is well placed in both these respects.

James Hambro

Chairman

22 March 2011

JOINT CHIEF EXECUTIVES' REVIEW

2010 was an active and successful year for Hansteen. Last year, in a market with a perceived shortage of opportunities, the Group managed to identify and execute five significant acquisitions at beneficial prices with opportunities to add value. Four of these opportunities were driven by a bank seeking to resolve an impaired loan. The Group had been tracking the larger two of these acquisitions for many months prior to agreeing terms and the Directors believe that, in tandem with our reputation for swift and straight-forward performance, it was the fact that we had capital available that enabled us to finally crystallise these situations. We are of the view that there will continue to be similar excellent opportunities in 2011/12.

The first major purchase in the year was that of the HBI Portfolio in Germany. The portfolio was acquired in April 2010 and, despite very challenging management issues, we have achieved annualised income returns in excess of 10% per annum and total returns in excess of 20% per annum on our capital invested.

The next two major purchases were the Kilmartin portfolios acquired from distressed sellers. Again, the portfolios had enormous management challenges and little existing rental income. Nevertheless there is a slender income surplus and total annualised returns, including sales and revaluation, are running at in excess of 15%

During the year there were also two further significant acquisitions undertaken in the year for the Hansteen UK Industrial Property Unit Trust (HPUT). These were at the Treforest Industrial Estate in Cardiff and Saltley Business Park in Birmingham. The purchases were completed at the end of December and to date the performance of these properties has been very encouraging.

Market Background

The occupational market during the first half of 2010 was very tough across our areas of activity as occupiers came to terms with the very harsh economic environment. During the second half of the year, however, we saw a significant improvement in occupier confidence in Germany, the country in which we have 66% of our wholly owned portfolio, our largest exposure to any single country. This confidence has started to translate into increased occupancy and as 2011 begins, we believe that the markets in the Netherlands and the UK have now also begun to stabilise and for well priced properties, there are growing enquires for new space.

Alongside this economic picture, however, is continuing distress in the secondary property market. Many banks still have outstanding loans to properties in our sector which are either greater than the underlying property value or significantly above the level the banks wish them to be at. In addition, there is often little prospect of the current owners solving the problem.

At the same time, new bank lending for secondary property is extremely limited and if it is available, it is only to financially stable businesses with good reputations and at significantly lower levels and higher costs compared with loans currently held. Banks will therefore be significant sellers for the foreseeable future and competition to buy should be limited.

We believe we have a good relationship with a number of banks, as illustrated by the transactions in 2010, which will help us to make further acquisitions in 2011 and 2012.

Property Portfolio

During 2010, the property portfolio has approximately doubled in size and significantly the year marked our return to investing in the UK. We set out below a table summarising the portfolio at 31 December 2010 followed by a country by country review of performance in the year.

UK Review 2010

We opened 2010 owning no industrial properties in the UK either on the balance sheet or in the HPUT. A year ago we were predicting that opportunities would emerge in the UK as banks took control of properties from borrowers. Our challenge centred on when to deploy our equity and to ensure that we purchased opportunities which were priced correctly and offered both an immediate high income return with medium to long-term capital growth prospects.

We closed 2010 having transacted £217 million of deals in the UK. This represented £171 million of acquisitions and £47 million of sales spread across the Hansteen balance sheet and the HPUT.

The defining deals completed on balance sheet were two acquisitions of assets from the Kilmartin Group which was in receivership. The two deals cost a total of £96.5 million and comprised 74 small properties spread throughout the UK. In both deals exchange of contracts was achieved within 15 working days of agreeing heads of terms and completion followed within a few weeks excepting those properties which required landlords' consents. By the end of the year, 25 of these properties had been sold for a consideration of £42.6 million which was at or above acquisition cost. This left a built portfolio of £40.0 million yielding 8.0% with 40.6% vacant by floor area, six development land sites totalling 234 hectares held at £11.7 million and 17 newly developed apartments held at £1.6 million.

The HPUT, of which Hansteen is the largest investor (33%) and asset manager, drew down the second tranche of equity on 14 January 2010 and purchased its first property in April. At the end of the year it had invested £84 million of its £90 million equity base; £52 million of which was allocated in the last two weeks of December on two large acquisitions. These two cornerstone assets provide the HPUT with a solid income yield as well as a wide range of exit options.

The first acquisition in December was Saltley Business Park, a 47 acre industrial site, two miles east of Birmingham city centre, from Receivers for £23 million excluding costs. The estate currently produces rent of £2.4 million per annum with 8 vacant units, equating to 30% of vacancy by floor area giving a net initial yield of 9.62% with excellent prospects for growth.

The second December acquisition was the Treforest Industrial Estate in Cardiff which was purchased from SEGRO. The property is regarded as the best industrial location in South Wales comprising of 124 units across 55 hectares and currently produces rental income of £2.8 million per annum. The purchase price reflects a net initial yield of 9.94% with around 25% vacant.

Our detailed approach to stock selection and pricing together with opportunistic sales meant that the HPUT closed 2010 with a NAV per unit of £1.005 (£1 par) and in a position to make distributions in the second quarter of 2011.

The HPUT is in the process of introducing gearing as the equity has been materially invested; ultimately it is expected to invest £180m of combined equity and debt.

During the 2011/12 business planning process the investment period for the HPUT was extended from August 2011 to February 2012 to allow it time to take advantage of the opportunities it believes will materialise over the coming year.

Having successfully performed on price and to timescale with banks on all of our acquisitions, we believe that further opportunities will present themselves through 2011/12.

Germany

The HBI Portfolio

As at 31 December 2010, properties owned in the Germany HBI portfolio amounted to €341.9 million, with a passing rent roll of €29.5 million and a contracted rent of €30.9 million; the difference accounted for by rent free periods and delayed lease starts.

With a positive economic outlook for Germany, demand for "value for money" industrial accommodation increased notably during the second half of 2010. This upswing in demand and take up conversion resulted in the vacancy rate for the portfolio reducing from 24% on acquisition to 21% by the year end.

Prior to Hansteen's ownership, the portfolio suffered from a lack of management and a shortage of capital available to rejuvenate vacant property and initiate marketing campaigns. Hansteen's strategy has been to stabilise passing rent levels by addressing the operational requirements of the existing tenants and promoting the vacant areas on the 34 estates to new tenants and to facilitate this we have opened offices in Berlin and Frankfurt and employed dynamic, locally based asset managers to work with our tenants and external consultants.

Decisive steps were taken to address historic problem tenants, which were amassing rental arrears, impeding operational efficiency and absorbing management time. This process resulted in an initial dip in the annualised rent roll but as they have been replaced by solvent growing occupiers the rent roll has stabilised and is now growing.

Key lettings and renewals achieved in the first nine months included the lease renewal of Alcan Singen GmbH at Gottmadingen for seven years at €1.5 million per annum.

There were no sales completed in the period, although there are initial indications of an increase in indigenous investor interest for secondary multi-let industrial product, a trend we expect to grow throughout 2011.

The Remaining Portfolio

During 2010 the remaining portfolio in Germany also benefitted from the general improvement of the German economy. As at the year end, contracted rents increased to €21.6 million per annum from €19.9 million at the start of the year and vacancy decreased from 80,000 sq m to 77,000 sq m, over the same period.

The relatively small net improvement in the vacancy rate over 12 months is a result of the fact that we witnessed a large increase of vacant space in the first half to 112,000 sq m, which we were able to replace with a number of significant lettings in the second half of 2010. This uptake in demand was seen across all areas of the portfolio, not just limited to prime locations.

One of the lettings concluded in the period was a new 5 year lease at Willich to 'Toyo Tyres' at a rent of €6/sq m resulting in full occupation of the office space in a building which we had purchased completely vacant in 2008.

In Ludwigshafen, the main retail unit of approximately 1,200 sq m has been let to 'Istikbal', the Turkish furniture retail chain, leading to a major improvement to the marketability of the remaining vacant spaces. Furthermore, the opening of the adjacent ECE Shopping Centre has strengthened the location and desirability of our property.

Continuing with the success reported last year, the value of our Hanau property has further improved and a 7,000 sq m letting to the Financial Authorities for 30 months commencing in July 2011 was concluded. The letting provides the opportunity to fully refurbish poor quality office space into a modern specification, and to achieve a market rent. Furthermore, we commenced construction of a 600 space multi-storey car park at a cost of €3.9m. This investment will generate a rental income of approximately €440,000 pa, when let, which will assist in unlocking the potential of the remaining 25,000 sq m vacancy at this city centre property where car parking is at a premium.

We sold two very small, and disproportionately troublesome, vacant properties in Völklingen and Hötensleben at a small loss. In addition, we notarised the sale of approximately 51,000 sq m development land in Offenburg for a total price of approximately €4.3 million to a regional furniture retailer, subject to receiving planning consent, which we anticipate will be received in early 2012.

Netherlands, Belgium and France

In 2010 the annualised rent roll in the Netherlands fell from €14.5 million to €12.3 million. Two thirds of this reduction is attributable to one bankruptcy at Tilburg and one lease termination at Amersfoort. These events also account for the majority of the increase in the vacancy from 62,000 sq m to 99,000 sq m.

There are, however, signs of an improvement in the market demand in the Netherlands. The increase in vacancies either occurred or the tenants had given notice in the first half of 2010 and no further deterioration was experienced in the second half. In early 2011 there have been tentative but encouraging signs of an upturn in occupier activity and freehold enquiries are being successfully pursued.

In 2010 there was significant regearing of leases undertaken at Waalwijk, Dedemsvaart and Bunschoten where new 10 year leases were agreed and new leases of over 25,000 sq m at buildings in Tiel and Tilburg were achieved albeit on shorter terms.

In December 2010 we set up an office based in Amsterdam and employed a local, full time asset manager to assist with all aspects of the operation and marketing of the portfolio across the Benelux countries.

2010 proved to be a stable year for the portfolio in Belgium with only a small increase in vacancy due to lease terminations resulting in a marginally reduced rent. There were no sales or acquisitions during the period.

Our holding in France comprises only four industrial properties of which two became vacant during the year. Marketing has commenced and there has been some encouraging interest from freehold purchasers.

Outlook

We now have a strong management team in all our key regions in Europe. Due to our opportunistic buying and intensive management approach, we are confident of a continuing strong income return from the portfolio. Through letting the vacant properties and utilising our spare investment capacity, there will also be opportunities for improving capital returns. In our view, Hansteen is well placed to prosper in the difficult economic environment. We are looking forward to another active year in 2011 and growing the business further with good value acquisitions.

Ian Watson and Morgan Jones

Joint Chief Executives

22 March 2011

FINANCE REVIEW

Net Asset Value

At 31 December 2010 shareholders' funds were £380 million (2009: £380 million). There are currently 453.6 million shares in issue and therefore the basic net asset value amounts to 84p per share (2009: 84p). On a diluted EPRA NAV basis this amounts to 86p per share (2009: 84p).

Gearing

The net debt to value at 31 December 2010 was 53% compared with 13% at 31 December 2009. The increase in the level of debt was in part due to the €260 million stapled debt relating to the purchase of the former HBI portfolio in April 2010 and the redrawing of €116 million on the Lloyds Bank facility. As well as the €11 million available under our existing facilities, the Group has available cash resources of approximately £30 million to invest in new opportunities.

The Group has increased its investment in the HPUT from £15 million at 31 December 2009 to £30 million at 31 December 2010. The HPUT acquired properties to the value of £84 million during the year and has capacity to gear up its equity and invest a further £96 million in new purchases in the UK.

At 31 December 2010 the Group's existing bank loan facilities had €11 million available to draw down with no restrictions on the use of those funds. An analysis of those facilities by provider is set out as follows:

In Germany and France we have a Lloyds Bank facility of €150 million. At 31 December 2010 €139 million had been drawn; this loan is available until October 2014 and has a loan to value covenant of 75% and income cover covenant of 175%.

There is also a further facility in Germany provided by UniCredit secured on the former HBI portfolio. The five year loan does not have any loan to value covenants for the first year, 95% in years two and three, 85% in year four and 75% in year five. The interest covenant is set at 132% in year one, 144% in year two and 155% thereafter. The margin on the loan is 110 basis points.

The Group's properties in the Netherlands are financed by a loan from FGH Bank expiring in June 2013. There is no loan to value covenant on this loan and the interest cover covenant is 155%.

In Belgium there are a series of mortgages for a total of €19 million, the majority of which are available for more than five years.

The covenants on all of the Group's loans currently have significant headroom.

At 31 December 2010 of the Group's £458 million borrowings, 58% was fixed at an average rate of 2.6% with a further 33% capped at an average of 5.3%. The weighted average debt maturity at 31 December 2010 was 3.8 years and the weighted average maturity of the hedging was 3.7 years.

Currency

Hansteen reports its results in Sterling although, at present, the majority of its investments are denominated in Euros. The Group's investments in Europe are partly matched with Euro borrowings and to that extent there is a natural currency hedge. In order to mitigate the risk of a substantial fall in Sterling values due to devaluation of the Euro against Sterling, Hansteen entered into a currency option in July 2010 to hedge the equity invested in Europe. The €200 million Euro put / Sterling call gives the Group the right to buy Sterling at a level of €1.42 to the £ in three years' time with Goldman Sachs and Natixis acting as counterparties. The net effect of the option is that it provides a form of downside protection should there be a decline in the Euro beyond €1.42 to the £. In this event a substantial majority of the Group's net assets will be protected from the effect of further falls. The Board will continue to review the Sterling/ Euro balance of Net Assets and consider appropriate hedging strategies from time to time.

SUMMARY

Hansteen begins 2011 with a strong balance sheet and secure financing at relatively low interest rates, the majority of which is fixed or capped at rates significantly below the running yield on our property portfolio.

Richard Lowes

Finance Director

22 March 2011

PRINCIPAL RISKS AND UNCERTAINTIES

Risk management is an important part of the Group's system of internal controls. Senior management staff and the Board regularly consider the significant risks, which it believes are facing the Group, identify appropriate controls and if necessary instigate action to improve those controls. There will always be some risk when undertaking property investments but the control process is aimed at mitigating and minimising these risks where possible. The key risks identified by the Board, the steps taken to mitigate them and additional commentary is as follows:

RESPONSIBILITY STATEMENT OF THE DIRECTORS ON THE ANNUAL REPORT

The responsibility statement has been prepared in connection with the Company's full Annual Report for the year ended 31 December 2010. Certain parts of the Annual Report are not included in this announcement, as described in note 3.

Responsibility statement

We confirm that to the best of our knowledge:

By order of the Board

22 March 2011

Consolidated income statement

for the year ended 31 December 2010

All results derive from continuing operations.

Consolidated statement of comprehensive income

for the year ended 31 December 2010

Consolidated Balance sheet

31 December 2010

Approved by the Board of Directors and authorised for issue on 22 March 2011.

Consolidated statement of changes in equity

for the year ended 31 December 2010

The merger reserve created in 2009 comprised the share premium on shares issued under the arrangement for the Placing and Open Offer in July 2009. No share premium was recorded in the Company's financial statements through the operation of the Merger Relief provisions of the Companies Act 1985. The subsequent redemption of these shares gave rise to distributable profits of £174,049,000, which were transferred to retained earnings. Costs of £6,140,000 in relation to this share issue were written off against existing share premium as permitted by the Companies Act 1985.

Consolidated cash flow statement

for the year ended 31 December 2010

Notes to the financial statements

for the year ended 31 December 2010

1. General information

Hansteen Holdings PLC is a company which was incorporated in the United Kingdom and registered in England and Wales on 27 October 2005. The Company is required to comply with the provisions of the Companies Act 2006. The address of the registered office is 6th Floor, Clarendon House, 12 Clifford Street, London W1S 2LL.

The Company was listed on AIM on 29 November 2005 and subsequently moved from AIM to the Official List on 6 October 2009.

The Group's principal activities are those of a property group investing mainly in industrial properties in Continental Europe and the United Kingdom. Further information on the Group is available on the Group's website www.hansteen.co.uk.

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 and were adopted, where applicable, in 2010 and have an effect on the Group's operations:

IFRS 3 (2008) Business Combinations, IAS 27 (2008) Consolidated and Separate Financial Statements, IAS 28 (2008) Investments in Associates

These standards have introduced a number of changes in the accounting for business combinations when acquiring a subsidiary or an associate. IFRS 3 (2008) has also introduced additional disclosure requirements for acquisitions. See note 3 for more details.

Standards, amendments and interpretations that became effective and were adopted, where applicable, in 2010 but have no effect on the Group's operations: 

IFRS 2 (amended)

Clarifies that vesting conditions consist solely of service and performance conditions and how to treat failure to meet non-vesting conditions.

IAS 23 (revised) Borrowing Costs

Eliminates option to expense borrowing costs for qualifying assets.

IAS 32 (amended) Financial Instruments: Presentation - Classification of Rights Issue

Results in some financial instruments that currently meet the definition of a financial liability being classified as equity as they represent a residual interest.

IAS 39 (amended) Financial Instruments: Recognition and Measurement - Eligible Hedged Items

Clarifies two hedge accounting issues: inflation in a financial hedged item and a one-sided risk in a hedged item.

IFRIC 17 Distributions of Non-cash Assets to Owners

The Interpretation provides guidance on when an entity should recognise a non-cash dividend payable, how to measure the dividend payable and how to account for any difference between the carrying amount of the assets distributed and the carrying amount of the dividend payable when the payable in settled.

IFRIC 18 Transfers of Assets from Customers

Clarifies requirements for agreements in which an entity receives from a customer an item of Property, Plant and Equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water).

Improvements to IFRSs 2009 (April 2009)

Miscellaneous amendments to twelve IFRSs.

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

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.

3. Significant accounting policies

Basis of accounting. The financial information contained in this preliminary announcement (the financial information) has been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 December 2010. Whilst the financial information has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards and International Financial Reporting Interpretation Committee (IFRIC) interpretations adopted for use by the European Union (IFRS), this announcement does not itself contain sufficient information to comply with IFRS.

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

The accounting policies applied, as set out below, are consistent with those adopted and disclosed in the Group's financial statements for the year ended 31 December 2010.

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.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination (see below) and the non-controlling interest's share of changes in equity since the date of the combination. Losses applicable to the non-controlling interest in excess of the non-controlling interest in the subsidiary's equity are allocated against the interests of the Group except to the extent that the non-controlling 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.

For business combinations completed prior to 1 January 2010, the following accounting policy was applied:

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 Business Combinations 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 arerecognised 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'sidentifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess isrecognised immediately in profit or loss. Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than 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.

3. Significant accounting policies continued

Business combinations continued

For business combinations completed after 1 January 2010, the following policy has been applied:

The acquisition of subsidiaries is accounted for using the acquisition method. The consideration for each 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. Acquisition-related costs are recognised in profit or loss as incurred. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 (2008) are recognised at their fair value at the acquisition date except:

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets and liabilities arerecognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.

Non-controlling interests in the acquiree are measured at the non-controlling shareholder's proportionate share of the acquiree'sidentifiable net assets.

Goodwill arising in a business combination is recognised as an asset and initially measured at cost, being the excess of the sum of the consideration transferred and the amount of any non-controlling interest in the acquiree over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilitiesrecognised. If the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the sum of the consideration transferred and the amount of any non-controlling interest in the acquiree, the excess isrecognised immediately in profit or loss as a bargain purchase gain. Capitalised goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than 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.

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.

3. Significant accounting policies continued

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.

Property management fees are recognised in the period to which they relate.

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.

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.

3. Significant accounting policies continued

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. On 6 October 2009, the Group elected to join the UK REIT regime. As a REIT, the Group is exempt from UK corporation tax on profits and gains of its property rental business, provided it meets certain conditions. Overseas property rental income, gains and non-qualifying profits and gains of the Group (the residual business) continue to be subject to taxation. 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.

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.

Operating profit. Operating profit is stated after the share of results of associates and profit on sale of subsidiaries, but before changes in fair value of forward currency contracts and currency options, finance income, finance costs, changes in fair value of interest rate derivatives and foreign exchange movements.

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:

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 revalued 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.

Investments in associates. An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment.

3. Significant accounting policies continued

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-to-maturity' 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.

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:

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.

AFS financial assets. Non-derivative financial assets that are not classified as loans and receivables or held-to-maturity investments, are not held for trading and are not designated as FVTPL on initial recognition are classified as AFS. AFS financial assets are measured at fair value with fair value gains or losses recognised in other comprehensive income. On sale or impairment of the asset, the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss as a reclassification adjustment. Impairment losses on AFS financial assets are recognised in profit or loss. Dividends on an AFS equity instrument are recognised in profit or loss when the entity's right to receive payment is established.

3. Significant accounting policies continued

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:

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.

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.

Where an AFS financial asset is considered to be impaired, cumulative gains previously recognised in other comprehensive income are reclassified to profit and loss in the period. In the case of AFS equity instruments, if, in a subsequent period the amount of 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 not reversed through profit and loss. Any increase in fair value subsequent to an impairment loss is recognised directly in equity.

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:

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

3. Significant accounting policies continued

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:

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 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 to the net carrying amount on initial recognition.

De-recognition of financial liabilities. The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. Where an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

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 options and interest rate swaps and caps.

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. Revenue and cost of sales

An analysis of the Group's revenue and cost of sales is as follows:

Total revenue per IAS 18 of £68,427,000 (2009: £39,934,000) includes £600,000 (2009: £1,049,000) interest income.

5. Normalised profit before tax

Normalised profit is an adjusted measure intended to show the underlying earnings of the Group before fair value movements and other non-recurring or otherwise exceptional items. A reconciliation of the normalised profit before tax reconciled to the profit/(loss) before tax prepared in accordance with IFRS rules is set out below.

6. Operating segments

Segment revenues and results

Information reported to the Group's Joint Chief Executives for the purposes of resource allocation and assessment of segment performance is focused on the Group's level of investment in property assets and the related net rental income according to geographic location. The Group's reportable segments under IFRS 8 are therefore determined by geographic location.

The following is an analysis of the Group's revenue and results by reportable segment:

* Administrative expenses and net finance costs are substantially managed as central costs and are therefore not allocated to segments.

6. Operating segments continued

Segment assets

7. Gains/(losses) on investment properties

8. (Losses)/gains on foreign currency derivatives

9. Net finance costs

10. Tax

UK Corporation tax is calculated at 28% (2009: 28%) of the estimated assessable profit for the year.

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

10. Tax continued

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

The Group elected to be treated as a UK REIT with effect from 6 October 2009, following admission to the Official List. The UK REIT rules exempt the profits of the Group's property rental business from UK corporation tax. Gains on UK properties are also exempt from tax, provided they are not held for trading. The Group is otherwise subject to UK corporation tax. To remain a UK REIT there are a number of conditions to be met in respect of the principal company of the Group, the Group's qualifying activity and its balance of business which are set out in the UK REIT legislation in the Finance Act 2006. 

11. Dividends

As a REIT, the Company is required to pay Property Income Distributions ('PIDs') equal to at least 90% of the Group's exempted net income, after deduction of withholding tax at the basic rate (currently 20%). £4,082,000 of the cash dividends paid during the year ended 31 December 2010 is attributable to PIDs (2009: £nil), of which £2,540,000 is in respect of the year ended 31 December 2010 and £1,542,000 in respect of the year ended 31 December 2009.

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.

The calculations for net asset value ('NAV') per share are shown in the table below:

13. Investment property

All investment properties are stated at market value as at 31 December 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.

14. Investment in associates

Details of all of the Group's interests in associates at 31 December 2010 are as follows:

Hansteen UK Industrial Property Unit Trust is involved in property management. The interest in Hansteen UK Industrial Property Unit Trust is held indirectly via Hansteen LP Limited. The interest in Hansteen UK Industrial Property Unit Trust is stated at cost adjusted for movement in the Group's share of net assets post acquisition.

15. Other investments

On 14 April 2010, the Company disposed of its entire investment in Kenmore European Industrial Fund ("KEIF"), realising a profit of £1,184,000. The remaining investment consists of 10,377,389 shares held in Warner Estate Holding PLC.

16. Derivative financial instruments

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

The movements on derivative financial instruments are as follows:

17. Trading properties

The carrying amount approximates their fair value.

18. Trade and other receivables

Group trade receivables are shown after deducting a provision for bad and doubtful debts of £4,510,000 (2009: £1,040,000). The increase in the provision from the prior year can be attributed to the provision acquired as part of the HBI acquisition and the movement in the provision for Group companies existing at the previous year end.

The carrying value of trade and other receivables approximates their fair value.

19. Cash and cash equivalents

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.

20. Trade and other payables

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 five days (2009: eight 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.

21. Borrowings

On 25 July 2006 Hansteen Holdings PLC and certain of its subsidiary undertakings entered into a five year €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 €200,000,000. On 30 October 2009, the facility was extended and reduced to €150,000,000. The revised facility has an expiry date of 30 October 2014 and has a loan to value covenant of 75% and an income cover covenant of 175%. 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 original loan facility was charged at EURIBOR plus 0.8%. Following renegotiation of the facility, interest on amounts drawn down from 30 October 2009 is charged at EURIBOR plus 1.75%. Interest of 1.0% (previously 0.3%) is charged on undrawn amounts. The Group has drawn down €139,000,000 under this facility at 31 December 2010 (2009: €23,000,000).

On 25 May 2008 Hansteen Netherlands B.V. and Hansteen Ormix B.V., both Dutch subsidiaries, entered into a five year €130,000,000 bank loan facility with an expiry date of 1 June 2013. The €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%. There is no loan to value covenant on this loan and the interest cover covenant is 155%. At 31 December 2010 the Group has drawn down €117,000,000 under this facility (2009: €128,565,000) and no further amounts can be drawn.

On 8 April 2010, as part of the acquisition of the HBI portfolio, the Group became party to a €300,000,000 loan facility. Immediately after acquisition, the Group repaid €40,000,000, reducing the facility to €260,000,000. The facility has an expiry date of 20 February 2015. 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 1.10%. The Group has drawn down €260,000,000 under this facility at 31 December 2010 (2009: €nil). The 5 year loan does not have any loan to value covenants for the first year, 95% in years two and three, 85% in year four and 75% in year five. The interest covenant is set at 132% in year one, 144% in year two and 155% thereafter.

The Belgian subsidiaries have a number of facilities secured on the Belgian investment properties with expiry dates ranging from 1 April 2011 to 31 March 2026 and interest charged at EURIBOR plus 0.75% to 2.25%. The aggregate amount outstanding at 31 December 2010 in respect of these bank loans is €18,907,000 (2009: €20,064,000).

Security for secured borrowings at 31 December 2010 is provided by charges on property with an aggregate carrying value of £670,000,000 (2009: £389,000,000)

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

21. Borrowings continued

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 2010 to hedge Euro borrowings at an average rate of 3.60% (2009: 4.59%) (see note 16).

22. Obligations under finance leases