2015 - Alpha Real Trust Limited · Annual report and financial statements For the year ended 31...

Annual report and financial statementsFor the year ended 31 March 2015 2015

Alp

ha Real Trust Lim

itedFo

r the year ended

31 March 2015

Annual rep

ort and

financial statements

1 Highlights

2 Trust summary and objective

3 Chairman’s statement

6 Investment review

24 Directors

25 Directors’ and corporate governance report

29 Directors’ statement pursuant to the Disclosure and Transparency Rules

30 Independent auditors’ report

31 Consolidated statement of comprehensive income

32 Consolidated balance sheet

33 Consolidated cash flow statement

34 Consolidated statement of changes in equity

35 Notes to the financial statements

59 Directors and Company information

60 Shareholder information

60 Financial calendar

Contents

www.alpharealtrustlimited.com

Alpha Real Trust Limited : Annual report 2015 1

• NAVpershare113.2p:31 March2015(107.0p:31 March2014)

• Adjustedearningspershareof7.5pfortheyearended31 March2015(40%upfromprioryear5.3p)

• Continuedearningsgrowth:incomefromcoreandnon-coreinvestments,bothequityandhighyielddebtcontinuetoaddtotheGroup’searningsposition

• Declarationofanincreaseddividendof0.6ppershare,expectedtobepaidon17July2015

• Saleofnon-coreinvestments:saleofthefinalassetsinBCPreleased£2.7millionforreinvestmentinopportunitiesacrosstheasset-backedspectrumthatofferhighrisk-adjustedtotalreturns

• GalaxiaarbitrationawardedintheGroup’sfavour:awardfortheoriginalamountinvested,pluspenaltyinterestandcosts.AwardsubjecttoSection34challengeinIndianCourtsbyLogix

• AUREloanrefinance:aspartofawiderrefinancingofAURE’sloanfacilities,inwhichtheCompanywasrepaid£2.3million,ARTprovidedanewmezzanineloanfacilityof£10.3 millionforatwoyeartermexpiringNovember2016.Theloanearnsacouponof9%plusentry,exitandextensionfees.Theloanwasrepaidduringthequarterto£9.6million

• Europiploanrefinance:ARTextendeditsloantoEuropipfor2years.Thenewloanearnsacouponof9%perannumplusentry,exitand,whereapplicable,earlyprepaymentfees;the loanwasrepaidduringthequarterto£1.3million

• Europipcapitalrecycling:£3.5millionofcapitalreturnedtoARTforreinvestmentasaresultofstrategicassetsalesandrenegotiatedbankfinanceterms

• H2O:asaresultofassetmanagementinitiatives,includinganimprovedtenantmixandphysicalupgradesundertakenbyART,theMadridshoppingcentreattractedrecordvisitor numbers

• H2O:17newleasecontractssignedin2014,with5newcontractsalreadysignedin2015

• 93%oftheGroup’sinvestmentportfolioisinincomeproducinginvestmentsintheUKand Europe

0.6p Declaration of an increased dividend of 0.6p per share

40% 40% increase in adjusted earnings per share to 7.5p

113.2p NAV per share 113.2p

93% 93% of the Group’s investment portfolio is in income producing investments in the UK and Europe

Highlights

Alpha Real Trust Limited targets investment

opportunities across the asset-backed

spectrum, including real estate operating

companies, securities, services and

other related businesses that offer

high risk-adjusted total returns.

Alpha Real Trust Limited : Annual report 20152

Trust summary and objective

Strategy

AlphaRealTrustLimited(“theCompany”or“ART”)targetsinvestmentopportunitiesacrosstheasset-backedspectrum,includingrealestateoperatingcompanies,securities,servicesandotherrelatedbusinessesthatofferhighrisk-adjustedtotalreturns.

ARTcurrentlyfocusesonhigh-yieldingpropertydebtandequityinvestmentsinWesternEuropethatbenefitfromunderlyingstrongcashflows.Thecurrentportfoliomix,excludingsundryassets/ liabilities,isasfollows:

Highyieldingdebt 28.4%

Highyieldingequityinpropertyinvestments 26.4%

Groundrentinvestments 19.7%

Otherinvestments 9.0%

Cash 16.5%

Management

TheCompany’sInvestmentManagerisAlphaRealCapitalLLP(“ARC”)whoseteamofinvestmentandassetmanagementprofessionalsfocusesonthepotentialtoenhanceearningsandaddvaluetotheunderlyingassets,andontheriskprofileofeachinvestmentwithinthecapitalstructuretobestdeliverhighrisk-adjustedreturns.

ControloftheCompanyrestswiththenon-executiveGuernseybasedBoardofDirectors.

Dividends

ThecurrentintentionoftheDirectorsistopayadividend quarterly.

Listing

TheCompany’ssharesaretradedontheSpecialistFundMarket(“SFM”)oftheLondonStockExchange(“LSE”),withthetickercodeARTL:LSE.

Financialhighlights

Year ended 31 March 2015

6 months ended 30 September 2014


Net asset value (£’000) 79,935 76,473 75,693

Net asset value per share 113.2p 108.3p 107.0p

Earnings per share (adjusted - basic and diluted)* 7.5p 3.0p 5.3p

Earnings per share (basic and diluted) 10.2p 3.3p 2.2p

Dividend per share (paid during the period) 2.1p 1.1p 2.6p

* Theadjustedearningspershareincludesadjustmentsfortheeffectofthefairvaluerevaluationofinvestmentpropertiesandindirectpropertyinvestmentsandthefairvaluemovementsonfinancialassets.Fullanalysisisprovidedinnote9tothefinancialstatements.

Hig

h yi

eldi

ng equity in

pro

perty

in

vestments

Cash investm

ents

Ground rent

Other

High yielding

debt

IMPT equity1.0%

Europip loan1.6%

AURE loans12.2%

IMPT loan14.6%

FIAF19.7%

Cash16.5%

Galaxia6.1%

HLP 2.5%

Cambourne2.0%

H2O19.3%

Europipproperty

4.1%

Other 0.4%

26.4%

9.0%

28.4%

16.5%16.5%

Group’s assets allocation by sector and investment (by percentage of Group’s NAV)


IampleasedtopresenttheCompany’sannualreportfortheyearended31March2015.

IthasbeenaveryactiveperiodforARTacrossallofitsinvestmentsectorswithactiveassetmanagement,newinvestmentandcapitalrecyclingallplayinganimportantrolein ayearofconsolidationandgrowth.

ThebackdropofanimprovingeconomicenvironmenthasassistedtheCompanyinachievingsuccessfuldisposalsofnon-coreassets.ARTisinastrongpositionwiththecashresourcesatyearendtocontinuetoprudentlyinvest.Theflexibilityprovidedbyourstrategyoffocusingonhigh-yieldingpropertydebtandequityinvestmentsinWesternEuropethatbenefitfromunderlyingstrongcashflowsorscopeforhighrisk-adjustedtotalreturnshasmeantthatARTiswellplacedtoadapttoopportunitiesandtakeadvantageofnewinvestments.Wecontinuetoremaindisciplinedaboutnewinvestmentsandassetselection.Whilstselective,wealsoremaincreativeandarealerttoopportunitiesthatrequirecomplexinvestmentstructures.Thisapproachhasserveduswellinthepastandprovidesanadvantageinselectedmarketsinwhichinvestmentactivityandassetpricingcouldbeperceivedtoberunningslightlyaheadofcurrentlydemonstrableoccupationalmarketfundamentals,makingdirectassetpurchaseslessattractive.

TheCompany’searningscontinuetoincreaseasaconsequenceofART’sinvestmentpolicyoftargetinginvestmentsandallocationofcapitaltoincomefocusedinvestmentsorinvestmentswhichwillgeneratestrongandgrowingcashflows.TheCompanyhasmaintaineditspolicyof

payingquarterlydividendsduringtheperiodandIampleasedtoannouncethat,supportedbyimprovingearnings,theCompanydeclaresanincreasedquarterlydividendof0.6ppershare,relatingtothequarterended31March2015,whichisexpectedtobepaidon17July2015.

Equity investments

ART’sdirectandindirectlyheldequityinvestmentsinrealestatecontinuetoperformstrongly.ThisisevidentbothintheUKandinothermarketsacrossEurope.InSpain,theH2OshoppingcentreinvestmentinMadridattractedarecordnumberofannualvisitorsin2014andalsorecordedincreasinglypositivelike-for-liketenantsalesgrowth.ThisreflectstheassetmanagementimprovementsimplementedundertheCompany’sownershipwhichincludeanimprovedcommercialmix,upgradedpublicareas,anewlakesideleisureareaanduniquemarketingevents.TherearesignsthateconomicgrowthinSpainisalsobuilding,whichbodeswellfortheasset’sfutureperformance.

Duringtheyear,underlyingassetvalueincreaseshavebeenreportedwithintheCompany’sIndustrialMultiPropertyTrustplc(“IMPT”)andActiveUKRealEstateFund(“AURE”)investmentsintheUK.Inadditiontoinvestorsentimentimprovingasriskpremiumsreduceandpricingimproves,increasedleasingactivityalsopointstoanimprovementintheunderlyingoccupiermarket.TheCompany’sinvestmentinFreeholdInvestmentAuthorisedFund(“FIAF”),whosestablecashflowsprovidesupporttotheCompany’searningsandportfoliobalance,performedstronglydeliveringatotalreturnof8.6%duringtheyear.

David Jeffreys

Chairman

Chairman’s statement


Debt investments

ARTrefinancedorextendedthetermsofitshighyieldingdebtinvestmentsinEuropipandAUREduringtheperiod.Ingeneral,thebroadeningofthedebtmarketsupplyhasmeantthatART’sdebtinvestmentsareinsomecasesnowyieldingreturnsinexcessofthemarket.

Underlyingassetvalueshavebenefitedfromanimprovementinthewiderinvestmentmarketresultinginenhancedcreditqualityasloantovalueratioshaveeitherimprovedoraremorefirmlysupportedasaresultofbothgreaterliquidityanddebtavailability.Theincreasedrealestateinvestorsentimentandliquidityinthemarkethasfacilitatedsalesofnon-coreassetsfromtheEuropipportfolio,whichhaveenabledART’sinvestmentloantoberepaidfrom£4.3millioninDecember2014to£1.3millioninMarch2015.

Capital recycling

Recyclingofcapitalfrommatureandnon-coreinvestmentshascontinued,providingtheopportunityfornewinvestmentthatoffersscopeforhigherrisk-adjustedreturns.Tothisend,theremaininginvestmentinBusinessCentrePropertiesLimited(“BCP”)wassubstantiallyredeemed.BCPwasacquiredinlate2012aspartofthelargerPropertyInvestmentPortfolioPlcportfolioandwasoneoftheassetswithintheportfoliodeemedtobenon-core.Asuccessfulmanagedsell-downoftheassetswithinBCPhasnowbeencompleted.

TherehavebeenfurtherstrategicassetsalesintheCompany’sEuropipinvestmentinNorwaywhereproceedsfromthesaleofnon-coreassetswillallowfurtheramortisationofART’shighyieldingloantoEuropipinadditiontoamortisationofEuropip’sseniorbankloanfacility.

Arbitration process in India

Duringtheyear,theInternationalChamberofCommerce(“ICC”)ArbitrationdeclaredanawardinfavouroftheCompanywithrespecttoitsGalaxiainvestment,ajointventurewiththeLogixGroup(“Logix”)locatedinan11.2acreSpecialEconomicZone,inNOIDA,theNationalCapitalRegion,India.TheArbitralTribunalbyamajoritydecreedthatLogixanditsprincipalshadbreachedtheTermsoftheShareholdersAgreementandhasawardedtheCompany:

● ReturnofitsentirecapitalinvestedofINR450Million(equivalentto£4.9millionatyearendexchangerateof£1:INR92.756)alongwithinterestat18%perannumfrom31January2011to20January2015.

● AllcostsincurredtowardstheArbitration.

Thetotalawardamountsto£9.2millionbasedonyearendexchangerates.Additionally,afurther15%perannuminterestonallsumswasawardedtotheCompanyfrom20January2015untiltheactualdateofpaymentbyLogixoftheaward.TheArbitralTribunalhasalsoruledthattheCompanyhasno

obligationorliabilitytofundtheoutstandingNOIDAleaserentundertheShareholdersAgreement.

Followingthedeterminationofthearbitrationnotedabove,theawardtotheCompanyrepresentsapotentialrealisationofapproximately£9.2million.TheDirectorscontinuetoholdtheindirectinvestmentatINR450million(£4.9million)inthefinancialstatementsduetouncertaintyovertimingandfinal value.

Aspreviouslyannounced,theCompanyhasbeennotifiedthatLogixhasfiledapetitionunderSection34oftheIndianArbitrationandConciliationAct,1996beforetheDelhiHighCourtchallengingtheaward.ThematterhasbeenadjournedforahearingplannedforJuly2015.ThismatterwillcontinuetoberobustlypursuedbytheCompanytoseekfullrecoveryofthesumsawarded.

Continued growth

TheCompanyiscontinuouslyevaluatingnewinvestmentopportunities.ART’sinvestmentpolicytotargetbothassetbackedinvestmentsandinvestmentinhighyielddebtmarketswillallowittocontinuetocapitaliseonnewinvestmentopportunitiesandoptimisereturns.TheCompany’sliquidreservesandabilitytotransactquicklymakeitwellplacedtosecuresuitableopportunities.

ARTiscommittedtoitsdisciplinedstrategyandinvestmentprincipleswhichfocusonopportunitiesthatcandeliverhighrisk-adjustedtotalreturns,whileseekingtomanageriskthroughacombinationofoperationalcontrols,diversificationandpreferredcapitalpositions.FortheCompany’sinvestmentsthatsitoutsidethecoreportfolioofequityinvestmentsandpreferredloanfacilities,amanagedexitisanticipatedoveraphasedperiodinordertorecyclecapitalintonewinvestmentopportunities.

TheCompanyisactivelyseekingtoincreasetheyieldandunderlyingcapitalvalueofitsportfoliobyenhancedperformancefromexistinginvestments,assetmanagementinitiativesandbyadditionalinvestment,fundedfromitscashandliquidholdings,strongcashflowandcapitalrecycling.

AdetailedsummaryoftheCompany’sinvestmentsiscontainedwithintheinvestmentreviewsectionofthisannualreport.

Chairman’s statement (continued)

The Company’s earnings continue to increase as a consequence of ART’s investment policy of targeting investments and allocation of capital to income focused investments or investments which will generate strong and growing cashflows.


Results and dividends

Dividends

Adjustedearningsfortheyearshowaprofitafterinterestandtaxof£5.3millionandadjustedearningspersharefortheyearof7.5pence(seenote9ofthefinancialstatements).Thiscompareswithadjustedearningspershareof5.3penceforthepreviousyearended31March2014.TheincreaseismainlytheresultoftheincrementalincomereceivedfromtheCompany’sinvestmentsinIMPTandFIAFtogetherwithanimprovedperformanceatH2OandlowercostsincurredfortheGalaxiainvestmentarbitrationproceedings.

Inlinewithitsaimtopaydividendsquarterly,theBoardannouncesadividendof0.6pencepersharewhichisexpectedtobepaidon17July2015(Exdividenddate2July2015andrecorddate3July2015).

Thedividendspaidanddeclaredforthetwelvemonthsto31March2015total2.175pencepershare,representingadividendyieldof4.0%perannumonaveragesharepriceovertheperiodand1.9%oncurrentnetassetvalue.

Thenetassetvaluepershareat31March2015is113.2pence(31March2014:107.0pencepershare)(seenote10ofthefinancialstatements).

Financing

SomeofART’sunderlyinginvestmentsarepartfundedthroughnon-recourseloanfacilitieswithexternaldebtproviders.

FortheH2Oshoppingcentre,bankborrowingsnowstandat€71.7million(£52.5million),which,followingrepayments,representsareductionof€3.3millionfromtheinitial€75.0millionborrowed.Thebankfacilitiesdonothaveanyloantovaluecovenantsandthereissufficientheadroominrelationtotheinterestcoverratiocovenants.Therecontinuestobeasubstantialsurplusofrentalincomeinexcessoffinancecharges.

Furtherdetailsofindividualassetfinancingcanbefoundundertheindividualinvestmentreviewsectionslaterinthisreport.

Foreign currency

TheBoardmonitorsforeignexchangeexposuresandconsidershedgingwhereappropriate.Allforeigncurrencybalanceshavebeentranslatedattheperiod-endratesof£1:€1.367,£1:NOK11.853and£1:INR92.756.

Share buyback

On13August2014,theCompanypublishedacirculargivingnoticeofitsAnnualGeneralMeetingon5September2014.Theproposedresolutions,includingthoseinrelationtotheTakeoverPanelWaiverandtheSharePurchaseAuthoritywereapprovedbyshareholders.ThisallowstheCompanytoacquireupto24.99%oftheVotingShareCapitalduringtheperiodexpiringontheearlierof(i)theconclusionoftheAnnualGeneralMeetingoftheCompanyin2016,and(ii)4March2016.

Summary

ARThashadapositiveyearwithearningscontinuingtogrow.ValueaddingassetmanagementandimprovedleasinghavecontributedtothevalueincreasesrecordedintheCompany’sdirectlyandindirectlyheldinvestments.

TheCompanyhassuccessfullyreneweditsdebtinvestmentsinEuropipNorwayandinAURE,maintainingbroadlythesamelevelofreturnswithimprovingcreditquality.

Takingadvantageoftheimprovingeconomicbackdropandincreasedinvestmentmarketactivityandpricing,theCompanyhassoldanumberofitsnon-coreinvestments.SalesofassetsfromEuropip’sNorwegianportfolioandoftheremainingassetsintheBCPinvestmenthasallowedcapitaltoberecycledallowingforreinvestmentintohighyieldingopportunitiesinlinewithART’sstrategy.

AsART’scurrentinvestmentportfolioisbeingimproved,wecontinuetoseeknewopportunitiesfocusedaroundthetwinstrategyofinvestingindebtinvestmentswherecapitalcanbenefitfromapreferredriskpositionandassetinvestmentsandco-investmentswithsubstantialcashflowsorscopeforhighrisk-adjustedreturns.TheCompanyisactivelysourcingandanalysingnewinvestmentopportunitiesandhastheagilityandfinancialreservestocapitaliseonthosethatmeetitsinvestmentcriteria.OurimprovingearningsandenhancedcashreservespositiontheCompanystronglyforcontinuedprogressintheyearahead.

David Jeffreys Chairman 18June2015

Chairman’s statement (continued)


Investment review

Portfoliosummary

Investment Investment value

Income return p.a.

Investment location

Property type / underlying security

Investment notes

% of portfolio 1

High yielding debt (28.4%)

Active UK Real Estate Fund plc (“AURE”)Mezzanineloan £9.8m2 9.0%3 UK High-yielddiversifiedportfolio Preferredcapitalstructure 12.2%

Industrial Multi Property Trust plc (“IMPT”)Subordinateddebt £11.8m2 15.0%3 UK High-yielddiversifiedportfolio Unsecuredsubordinateddebt 14.6%

Europip plcMezzanineloan £1.3m2 9.0%3 Norway Logistics,officeandretail Securedmezzanineloan 1.6%

High yielding equity in property investments (26.4%)

H2O shopping centreDirectproperty £15.6m

(€21.3m)13.5%4 Spain High-yield,dominantMadrid

shoppingcentreDebtfacilitywithnoLTVcovenantanda1.1xICRcovenant

19.3%

Europip plcIndirectproperty £3.3m

(€4.5m)7.6%4 Norway Agearedpropertyinvestment

vehicleinvestedinlogistics,officeandretailproperties

Recentlyextendedseniorandmezzanineloanposition

4.1%

Cambourne Business ParkIndirectproperty £1.6m 12.5%4 UK High-yieldbusinesspark

locatedinCambridgeBankfacilityat50%LTV(currentinterestcoverof2.4timescovenantlevel)

2.0%

Industrial Multi Property Trust plcEquity £0.8m n/a UK High-yielddiversifiedportfolio 19%ofordinarysharesinfund

withmediumtermdebt1.0%

Ground rent investments (19.7%)

Freehold Income Authorised FundGroundrentfund £15.9m 3.9%5 UK Highlydefensiveincome;

freeholdgroundrentsNogearing;monthlyliquidity 19.7%

Other investments (9.0%)

Galaxia Indirectproperty £4.9m

(INR 450m)n/a India SpecialEconomicZone

developmentsitelocatedinNOIDA,Delhi,NCR

Legalprocessunderwaytorecoverinvestmentbyenforcingarbitrationaward

6.1%

Healthcare & Leisure Property LimitedIndirectproperty £2.0m 8.8%6 UK Leisurepropertyfund Noexternalgearing 2.5%

Other £0.3m n/a Varied Varied Varied 0.4%

Cash (16.5%)

Cash (Companyonly) £13.3m 0.1-1% UK Currentor‘oncall’accounts 16.5%

1 PercentageshareshownbasedonNAVexcludingparentcompany’ssundryassets/ liabilities

2 Includingaccruedinterestatthebalancesheetdate

3 Annualcoupon4 Over12monthsto31 March20155 12monthsincomereturn;posttax

6 Returnontheaverageinvestmentduringtheownershipperiod


Highyieldingdebt

Market overview

Overthepastyear,therehasbeenamarkedchangeinintheavailabilityofdebtfinance.Althoughstillnotatthelevelsreachedin2007,ageneralsentimentthattherealestatemarketshavenormalisedhasleadtohigherloantovalueratiosaccompaniedbylowerfinancingmargins.

Thereisaconsensusviewthatthenextmoveforbaseinterestrateswillinevitablybeupwards,althoughtheforecastedtimingofsuchamoveisregularlypostponed.Whilstmovingoffhistoricinterestratelowsisalmostinevitable,theinitialincreaseislikelytobegreaterinsymbolismthaninquantum.Fromthecurrentlowbase,evenamoderateincreaseinbaserateswillstillleaveinterestratesatcomparativehistoriclows.Thisoutlook,combinedwithrecentreductionsinlendingmargins,ishelpingtosupportapositiveoutlookforassetsgenerallyandrealestateinparticular.ThistrendispositivenewsforART’sequityinvestmentswhosevaluesandliquidityarefurtherenhanced,andfortheCompany’sdebtinvestmentswhichhaveincreasinglyprotectedexitpositionsuponrefinancing.

Whilstthereisincreasedcompetitionwithinthelendingmarket,itremainslesscompetitiveforsmallertransactionsinnon-primesectorswhereastrongknowledgeoftheunderlyingassetsisrequired.TheacquisitionandrefinancingneedsofmanyrealestateinvestmentvehiclesthroughoutEuroperemainhighandopportunitiesforlenderswithrealestatedebtexpertisecontinuetoremainattractivealthoughthisremainsacompetitiveenvironment.

TheincreasedliquidityindebtmarketsandnumberofnewlendersenteringthemarkethelpsunderwriteexitassumptionsforART’scurrentdebtandmezzanineinvestmentswhilstalsocontributingtoimprovingassumptionsforreturnsonnetassetvalueswhichwillbenefitthevaluationsoftheCompany’sequityinvestmentportfolio.AsevidencedbytherefinanceandextensionoftheEuropipandAUREloanfacilitiesduringtheyear,ARTremainswellpositionedtotakeadvantageoffurtherdebtinvestmentopportunitiesastheyareidentified.

Investment review (continued)

Brad Bauman

Joint fund managerGordon Smith

Joint fund manager

The Company continues to source new investment opportunities with strong cash-flows and/or managed risk profiles that are accretive to its earnings position.

Sector Irish Stock Exchange listed

Underlying assets UK offices, industrial and retail property

Description AURE is an Irish Stock Exchange listed UK property fund with gross property assets of £47.9 million (as at 31 March 2015).

AURE has a regionally diversified portfolio of UK office, industrial and retail properties.


Active UK Real Estate Fund plc AURE



Active UK Real Estate Fund plc (“AURE”)

Investment Investment type Investment value Income return Property type / underlying security

Investment notes

AlphaUKRealEstateFundplc Mezzanineloan £9.8m* 9.0%p.a.** High-yielddiversifiedUKportfolio

Preferredcapitalstructure

* Includingaccruedinterestatthebalancesheetdate**Annualcoupon

DuringNovember2014,AURErefinanceditsborrowingsaddingasecondtranchetoitsbankdebtandreducingtheoverallcostofthedebt.

AspartofalargerrefinancingofAURE’sloanfacilities,inwhich£2.3millionwasrepaidtoART,ARTprovidedanewmezzanineloanfacilityof£10.3millionforatwoyeartermexpiringNovember2016.Sincefunding,theloanprincipalhasbeenrepaidto£9.6million.

Theloanearnsacouponof9%perannumplusupfrontandexitfeesinadditiontoanextensionfeeiftheloanisnotrepaidwithinthefirstyear.

BaseduponthevalueoftheunderlyingAUREportfolioof£47.9millionasat31March2015andthebalanceofthebankdebtof£22.1millionasat31March2015,theseniorlender’sloantovalueratiois46.1%.ART’sloanpositionsitsbetween46.1%and66.1%loantovalue.

Demand from occupiers across the Company’s investment markets is showing signs of improvement. This is evident across the Company’s portfolio with a high volume of new leases signed in the AURE and IMPT portfolios in the UK and also at H2O in Spain.

Sector LSE listed

Underlying assets UK offices and industrial property

Description IMPT is a London Stock Exchange listed UK property fund with gross property assets of £80.8 million (as at 31 March 2015).

IMPT has a regionally diversified portfolio of UK light industrial and office property.


Industrial Multi Property Trust plc IMPT


Industrial Multi Property Trust plc (“IMPT”)


Investment notes

IndustrialMultiPropertyTrustplc Subordinateddebt

£11.8m* 15.0%p.a.** High-yielddiversifiedUK portfolio

Unsecuredsubordinated debt

* Includingaccruedinterestatthebalancesheetdate** Annualcoupon

Furthertoitsequityinvestment(describedbelow)ARThasprovidedaloantoIMPT.

AspartoftherefinancingofIMPTinDecember2013,ARTprovidedanewsubordinateddebtfacilityof£11.5million(£11.8millionincludingaccruedinterest).Theloanhasafive-yearterm,expiringinDecember2018,andearnsacouponof15%perannum.

BasedonthevalueoftheIMPTportfolioof£80.8million(31March2015valuation),andthebalanceofthebankandmezzaninefinanceof£53.2millionasat31March2015,thisreflectsaloantovalueratioof65.8%.ART’ssubordinatedloansitsbetween65.8%and80.1%loantovalue.

European Property Investment Portfolio plc (“Europip”)


Investment notes

Europiploan Mezzanineloan £1.3m* 9.0%p.a.** Officeandlogistics Securedmezzanineloan

* Includingaccruedinterestatthebalancesheetdate**Annualcoupon

Furthertotheequityinvestment(describedbelow)ARThasprovidedmezzaninefinancetoEuropip.ARThasachargeoverEuropip’sportfolioofcommercialassetsrankingaftertheseniorlender’schargeovertheNorwayportfolioandMosaicinvestments.Inaddition,ARThastherighttotakeachargeoverasingleunencumberedpropertywithintheNorwayportfolio,whichisoutsidetheseniorlender’ssecuritypoolofassets.

DuringNovember2014ARTextendedthetermofthecurrentloanfacilitytoEuropipamountingto£4.3millionuntil27November2016.Inadditiontoanupfrontfeepaidatthetimeofsigning,thenewloanearnsacouponof9%perannumplusanexitfeeof1%;additionally,a2%feewillapplyshouldthefacilitynotberepaidwithin12months.

FollowingthesaleoftheRoykenveienproperty,£2.1millionoftheARTloanwaspartiallyrepaidduringJanuary2015.Afurther£0.9millionwaspaiddowninDecember2014following

thereleaseofacashreserveheldbytheseniorlender.ThesetworepaymentshavereducedtheARTloanbalanceto£1.3million(NOK15.4million)includingaccruedinterest,asat31March2015.

Thevalueoftheportfoliooffiveassetswas£24.4million(NOK 289million)basedonthe31December2014valuation,andthebalanceofthebankdebtwas£14.4million(NOK171.2million).Asat31March2015,includingthepropertywhichisoutsidetheseniorlender’ssecuritypoolofassets,ART’sloanpositionsitsbetween59.2%and64.5%loantovalue.

Postbalancesheet,followingthesaleoftheHvamsvingenproperty,£0.8oftheARTloanwasrepaid,reducingtheARTloanbalanceto£0.5million(NOK5.9million).


Sector Business parks

Underlying assets Office

Tenants Regus, Citrix Systems, Netcracker Technology

Area 9,767 square metres

Description The asset consists of three Grade A specification modern office buildings located in the town of Cambourne.

Phase 1000 is situated at the front of the business park. It is an institutional quality asset with Open B1 Business user planning.


Cambourne Business Park Cambridge


Highyieldingequityinpropertyinvestments

Commercial property market overview

TheUKandEuropeaneconomiesinwhichARToperateshavecontinuedtoprogresstowardseconomicstabilisationandgrowthdespitehesitantmacro-economicindicatorsfromtheEurozoneandheadwindsfrompoliticaluncertainties.Investorsentimentremainsoptimisticandthereappearstobeanincreasinglyconfidentviewthattherecoverywillcontinue.Astheyearhasprogressed,therehasnotonlybeenanincreasedlevelofmarkettransactionvolumesandpricingforrealestateandassetbackedinvestmentsbutalsoabroadeningofinvestmentsearchesforbothassettypesandgeography,indicatingamoreoptimisticmarketoutlook.

Thenarrowinvestorfocusonprimeassetsthatprevailedinrecentyearsisincreasinglygivingwaytoanobjectiveanalysisofstrengthsandweaknessofbroadercommercialpropertyandassetbackedinvestments.Anacceptanceofastabilisationofassetvaluesinmostmarkets,thelowinterestrateenvironmentandthegreateravailabilityofdebtfundinghasledtoinvestorsbroadeningtheirinvestmentcriteriatoseekhigheryieldingassetsintandemwithahigherappetiteforriskwiththeconfidencethattotalreturnsinthesemarketsarelikelytooutstripreturnsfromlowyieldingprimeassets,particularlyonarisk-adjustedbasis.ThisbodeswellforART’sportfolio.ThereboundinassetvaluesinSpainhascontinuedandthisisevidentattheCompany’sH2OshoppingcentreinMadridwherevalueinEurohasincreasedby6%duringthe year.

DemandfromoccupiersacrosstheCompany’sinvestmentmarketsisshowingsignsofimprovement.ThisisevidentacrosstheCompany’sportfoliowithahighvolumeofnewleasessignedintheAUREandIMPTportfoliosintheUKandalsoatH2OinSpain.Whilstoccupierdemandandleasingactivityhasincreased,rentalgrowthremainssubdued.Increasedleasingactivityishoweverlayingthefoundationforimprovingrentalgrowthprospects.Fornowhowever,withtheexceptionofprimeassetsinprimelocations,itappears“weightofmoney”,availabilityofdebtfinanceandarelativescarcityofqualityavailableinvestmentstockandnotrentalgrowthisdrivinginvestmenttransactionvalues.

ARTcontinuestoremainfocusedoninvestmentsthatofferpotentialtodeliverhighrisk-adjustedreturnsviavalueenhancementthroughactiveassetmanagement,improvementofnetrentalincome,selectivedeploymentofcapitalexpenditureandtheabilitytoundertakestrategicsaleswhentheachievablepriceisaccretivetoreturns.


ART remains well placed to find value for its investors and to capitalise on new investment opportunities across asset backed investment and debt markets in the UK and Europe.

Sector Retail

Asset Shopping centre

Tenants include Nike, Zara, Mango, Cortefiel, H&M, C&A and Massimo Dutti

Area 51,825 square metres

Description The property is located in the Rivas-Vaciamadrid district of Madrid.

H2O has a primary catchment area of 166,000 people but the location, due to the concentration of complementary retail, has a total catchment of 2.2 million people.

The weighted average lease length as at 30 April 2015 is 10.3 years to expiry and 1.9 years to next break.

Centre occupancy 90.1% as at 30 April 2015.


H2O Madrid-Spain

Top ten tenants (30 April 2015)

13%

12%11%

8%

8%

8%

6%

6%4%

24%

n InditexGroup

n Yelmo

n C&A

n CortefielGroup

n GrupoVIPS

n Mercadona

n SferaSportown

n H&M

n Ozone

n MuerdeLaPasta



H2O Shopping Centre, Madrid


Investment notes

H2O Directproperty £15.6m(€21.3m)

13.5%p.a.* High-yield,dominantshoppingcentre

DebtfacilitywithnoLTVcovenantanda1.1xICRcovenant

* Over12monthsto31March2015.

H2OwasopenedinJune2007andbuilttoahighstandardprovidingshopping,restaurantsandleisurearoundacentralthemeoflandscapedgardensandanartificiallake.H2Ohasagrosslettableareaof51,825squaremetrescomprising118 retailunits.Inadditiontoamultiplexcinema,supermarket(let toleadingSpanishsupermarketoperatorMercadona)andrestaurantsithasalargefashionretailerbase,includingsomeofthestrongestinternationalfashionbrands,suchasNike,Zara,Mango,Cortefiel,H&M,C&AandMassimoDutti.

TheH2OshoppingcentrewasacquiredinApril2010andtodateARThascommitted€5.3millionincapitalimprovements.

Assetmanagementhighlightsareasfollows:

● Centreoccupancy:90.1%byrentalvalue(82.2%byarea)asat30April2015.

● Footfall:thevisitornumbersatH2Oreachedrecordlevelsin2014withfootfallcontinuingtobeassistedbythepresenceofthenewbrandsandanimprovedcommercialmix;thispositivetrendhascontinuedinto2015.

● Salesgrowth:tenantsalesperformanceisimprovingandthepositivegrowthregisteredin2014hascontinuedinto2015;thisreflectsthegreatervisitornumbersatthecentreandtheimprovingeconomicenvironmentinSpain.

● Leaselength:weightedaverageleaselengthof1.9yearstonextbreakand10.3yearstoexpiry(asat30April2015).

● Leasing:2014wasahighlysuccessfulyearfornewleasingwith17newleasessigned(including4currenttenantexpansions/relocations).Thepositivemomentumhascontinuedinto2015with5newleasessigned,3ofwhicharetoupgradecurrenttenants.

● Lakesideexperience:thenewlakeside“funboulevard”andcafeandbarskiosksthatwerecreatedunderART’sownershiphavebeenenlargedandnowserveasasocialdestinationforthelocalpopulation;thisofferwasreinforcedwiththelettingtotwoleadingrestaurantbrandsin2014.

● Costcontrol:anactivecostmanagementexercisecontinuestobeimplementedtoreducethecentre’soperatingcostsandimprovethequalityandefficiencyofservices,in2014thebuildingmanagementsystemandanumberoflargesuppliercontractswererenegotiated.

● Marketing:innovativeeventscontinuetobecarriedouttoattractnewvisitors,buildcustomerloyaltyandincreasedwelltime;anextendedkid’ssummercamphasbeenheldduringrecentmonthsandtheexclusiveLegothemedplayareacontinuestoperformstrongly.

The visitor numbers at H2O reached record levels in 2014 with footfall continuing to be assisted by the presence of the new brands and an improved commercial mix; this positive trend has continued into 2015.



Industrial Multi Property Trust plc (“IMPT”)


Investment notes

IndustrialMultiPropertyTrustplc Equity £0.8m n/a High-yielddiversifiedUK portfolio

19%ofordinarycapital

ARThas19%ofIMPT’sordinarysharecapital,representing£0.8millioninequityvaluebasedonIMPT’sshareprice,asat31March2015.

IMPT,listedontheSFM,isaUKpropertyfundwitharegionallydiversifiedUKportfolioofover50multi-letlightindustrialandofficepropertiesvaluedat£80.8million(at31March2015).

ThefollowinghighlightswereincludedinIMPT’stradingstatementforthequarterended31March2015(published May 2015):

● Adjustednetassetvalueperordinaryshare-227penceasat31March2015(220penceat31December2014),an increaseof7pence(+3.1%).

● Adjustedearningsperordinaryshare-lossof3.6penceforthethreemonthsto31March2015(lossof19.4penceforthetwelvemonthsto31December2014).

● Portfoliovaluationincreased-thegroup’spropertyportfoliowasvaluedat£80.8millionasat31March2015(£79.9millionasat31December2014),anincreaseof£0.9million(+1.1%).

● Occupancyimproved-theoccupancylevelbyestimatedrentalvaluestoodat87.3%asat31March2015,comparedwith86.5%asat31December2014,anincreaseof0.8%.

● Newlettingsachieved-22newlettingsand13leaserenewalsachievedduringthequarterended31March2015(representing7.6%oftheestimatedrentalvalueofthetotalportfolio,basedonthefinalachievableannualrentincludingsteppedrent).

ARCistheinvestmentmanagerofIMPT.ARCispursuingvalueenhancementopportunitiesintheIMPTportfolioassetstoincreasenetincomeandimprovetheprofileofthisincomethroughleaseextensions,renewalsandreducingunrecoverablevoidcosts.

The Company continues to implement its active management policy and this has seen encouraging results in both directly and indirectly held investments.



Cambourne Business Park, Phase 1000, Cambridge


Investment notes

CambourneBusinessPark Indirectproperty £1.6m 12.5%p.a.* High-yieldbusinesspark Bankfacilityat50%LTV(currentinterestcoverof2.4timescovenantlevel)

*Over12monthsto31March2015.

TheCompanyhasinvested£1.2millioninajointventurethatownsPhase1000ofCambourneBusinessPark.ThepropertyconsistsofthreeGradeAspecificationmodernofficebuildingsconstructedin1999andlocatedinthetownofCambourne,approximately8mileswestofCambridgecitycentre.Thepropertycomprises9,767squaremetresoflettablearea,isself-containedandhas475carparkingspaces.Phase1000issituatedatthefrontofthebusinessparkwithgoodaccessandvisibility.

Phase1000isahighqualityasset,fullylettoNetcrackerTechnologyEMEALtd,CitrixSystemsandRegus.ThepropertyhasopenB1Businessuserplanningpermissionandhaspotentialvalue-addopportunities.

Phase1000waspurchasedinajointventurepartnershipwithamajoroverseasinvestorfor£23.0millionincludingacquisitioncosts.Bankfinanceof£10.8millionwasobtained.ART’sequitycontributionof£1.2million,whichrepresents10%ofthetotalequitycommitment,wasinvestedintoanewlyformedjointventureentity,asubsidiaryofwhichholdstheproperty.Thepropertywasacquiredforan8.5%netinitialyieldandiscurrentlydeliveringanannualisedincomereturnof12.9%asat30September2014.

ARCistheinvestmentmanagertothejointventureowningtheCambournepropertyandcontinuestopursueopportunitiestoaddvaluetotheinvestment.

The Company remains active in both its target investment sectors of high yield debt and equity in assets with high risk-adjusted returns typically when there is scope to add value through active asset management and/or the restructuring or recapitalisation of property investment vehicles.

Sector A 47% stake in an Isle of Man domiciled open ended investment company which invests in a geared property investment vehicle invested in Norway and a minority stake in a Central European commercial property fund called Mosaic Property CEE Limited.

Underlying assets The investment predominately comprises industrial and office properties in Norway, with a minority stake in a fund invested in commercial property in Central Europe.

Description The Norwegian portfolio is concentrated around Oslo.

Mosaic indirectly invests in a portfolio of commercial assets in Poland.


European Property Investment Portfolio plc Europip


European Property Investment Portfolio plc (“Europip”)


Investment notes

EuropipNorway Indirectproperty £3.3m(€4.5m)

7.6%p.a.* AgearedpropertyinvestmentvehicleinvestedinofficesandlogisticspropertiesinNorway

Recentlyrefinancedseniorandmezzanineloanposition

EuropipMosaic Indirectproperty £0.3m(€0.4m)

n/a MinorityinvestmentinacentralEuropeancommercialpropertyfund

Propertyheldviainvestmentvehicles,varyingdebtlevels

* Over12monthsto31March2015

AspartofthePropertyInvestmentPortfoliotransaction,ARTacquireda47%stakeinEuropip(sharesarenon-voting),anIsleofMandomiciledopenendedinvestmentcompany.EuropipinvestsinadirectlyownedcommercialpropertyportfolioinNorwayandholdsaminorityinterestinMosaicPropertyCEELimited(“Mosaic”),aCentralEuropeanfocusedcommercialpropertyfund.

TheNorwegianportfolioofdirectlyownedcommercialpropertiesisconcentratedaroundOslo.Thevalueofthefiveassetportfolioasat31March2015isNOK289million(£24.4million),basedonthe31December2014valuation,withapassingrentallevelofNOK27.6million(£2.3million).TheNorwegianportfolio’soccupancyratewas98%byrentalvalueandtheweightedaverageleaselengthwas3.5yearsasat31March2015.

InJanuary2015atwoyearextensionofthebankfacilityandareductionofthemarginto1.95%wasnegotiatedwiththeEuropiplendingbank.Therevisedloanmaturitydateis15January2020.Thefacilityistobeamortisedat3%oftheloanbalanceperannumfromcashflows,soreducingpro-rataintheeventofpropertysales.£17.7million(NOK210million)ofthisfacilityhasbeenfixedforfiveyearsataNIBORrateof2.49%perannum.Asat31March2015,thedebtbalancewas£14.4million(NOK171.2million);reflectingaLTVof59.2%.

AsubsidiaryofARC,AlphaRealPropertyInvestmentAdvisersLLP(“ARPIA”)istheinvestmentmanagerfortheNorwayportfolioandMalling&Co.isresponsibleforthedaytodaypropertymanagement.


Sector Freehold ground rents (UK)

Underlying assets Freehold residential ground rents

Description FIAF is an open-ended investment company that provides secure and stable investment returns from acquiring freehold residential ground rents, which offer an attractive income stream, capital growth prospects and attractive risk-adjusted returns.

FIAF owns over 64,000 freeholds in the UK with a gross annual rent income of over £8.1 million.


Freehold Income Authorised Fund FIAF


GroundrentinvestmentsTheCompanyholdsaninvestmentinafundwhichholdsadiversifiedportfolioofUKresidentialpropertyfreeholdgroundrentswithaviewtoachievingsteadyandpredictablereturns,aconsistentincomestreamandprospectsforgrowth.

Agroundrentisthepaymentmadebythelesseeofapropertytothefreeholderofthatproperty.Itrepresentstheunderlyingfreeholdinterestinapropertywhichissubjecttoaleaseforaperiodoftimeusuallybetween99and999years.

Freehold Income Authorised Fund (“FIAF”)


Investment notes

FreeholdIncomeAuthorisedFund Equityingroundrentfund

£15.9m 3.9%p.a.* Highlydefensiveincome;freeholdgroundrents

Nogearing;monthlyliquidity

* 12monthsincomereturn;posttax.

TheCompanyhasinvestedatotalof£15.9millionasat31March2015inFIAF,anopen-endedfundthatinvestsinUKfreeholdgroundrentswithanetassetvalueof£230.6millionasat31March2015.

ThefollowinghighlightswerereportedintheFIAFfactsheetasat31March2015(publishedinApril2015):

● FIAFcontinuesitsunbroken22yeartrackrecordofpositiveinflationbeatingreturns,generatingatotalreturnfortheyearended31March2015of9.64%(basedonGrossAAccumulationshareclass)*ofwhich2.20%wasdistributedasincomeattheendofNovember2014,with2.72%expectedtobedistributedattheendofMay2015i.e.anincomedistributionfortheyearof4.92%.

● 81%ofitsfreeholdshaveaformofinflationprotectionthroughperiodicupliftslinkedtoRetailPriceIndex,propertyvaluesorfixeduplifts.

● Nodebthadbeendrawnandcashreservesare£38.7millionasat31March2015.

● Asof13October2014a5%dilutionlevyappliestoallnewsubscriptionsintoFIAF.

*Note:ARTholdsadifferentclassofshares.ARTtotalreturnonitsinvestmentis8.6%fortheperiod.

ARCistheAuthorisedCorporateDirectorandARPIA,asubsidiaryofARC,istheinvestmentmanagerofFIAF.



Cash


Investment notes

Cashbalance Cash £13.3m 0.1%-1%p.a. Cashdeposits/current accounts

Heldbetweenbankswitharangeofdepositmaturities

Asat31 March2015,theCompanyhadcashbalancesof£13.3 million.

Otherinvestments

Galaxia, National Capital Region, NOIDA


Investment notes

Galaxia Indirectproperty £4.9m(INR450m)

n/a SpecialEconomicZonedevelopmentsite

Assetheldforsale

ARTinvestedINR450million(£4.9million)intheGalaxiaproject,adevelopmentsiteextendingto11.2acreswhichenjoysSEZstatuswiththepotentialtodevelop1.2millionsquarefeet.GalaxiaislocatedinNOIDA,anestablished,wellplannedsuburbofDelhithatcontinuestobenefitfromnewinfrastructureprojectsandisoneoftheprincipalofficemicro-marketsinIndia.TheCompanyhasa50%shareholdingintheSPVwhichcontrolstheGalaxiasite.Therearenobankborrowingsontheasset.

On2February2011,ARTrecommencedarbitrationproceedingsagainstitsdevelopmentpartnerLogixGroupinordertoprotectitsGalaxiainvestment.

DuringJanuary2015,theArbitralTribunal,byamajority,decreedthatLogixanditsprincipalshadbreachedthetermsoftheshareholdersagreementandhasawardedtheCompany:

● ReturnofitsentirecapitalinvestedofINR450Million(equivalentto£4.9 millionusinganexchangerateof92.756asat31March2015)alongwithinterestat18%perannumfrom31January2011to20January2015.

● Allcostsincurredtowardsthearbitration.

● Afurther15%interestperannumonallsumswasawardedtotheCompanyfrom20January2015untiltheactualdateofpaymentbyLogixoftheaward.

TheArbitralTribunalhasalsoruledthattheCompanyhasnoobligationorliabilitytofundtheoutstandingNOIDAleaserentundertheShareholdersAgreement.

TheCompanywillactivelyseekfullrecoveryofthesumsawarded.TothisendtheCompanyhasbeenawardedbythecourtsofIndiaachargeovertheprivateresidenceoftheprincipalsofLogix:ShaktiNath,MeenaNathandVikramNath.

InApril2015,theCompanyhasbeennotifiedthatLogixhasfiledapetitionunderSection34oftheIndianArbitrationandConciliationAct,1996beforetheDelhiHighCourtchallengingtheAwardmadeinfavouroftheCompanybytheInternationalCourtofArbitrationinJanuary2015.

Followingthedeterminationofthearbitrationnotedabove,theawardtotheCompanyrepresentsapotentialrealisationofapproximately£9.2million.ARTcontinuestoholdtheindirectinvestmentatINR450million(£4.9million)inthefinancialstatementsduetouncertaintyovertimingandfinalvalue.




Healthcare & Leisure Property Limited (“HLP”)


Investment notes

Healthcare&LeisurePropertyLimited

Indirectproperty £2.0m 8.8%p.a.* Leisurepropertyfund Noexternalgearing

*Returnovertheaverageinvestmentduringtheownershipperiod.

HLPhasinvestedincompaniesoperatinginthehotel,carehome,housebuildingandleisuresectorsthroughouttheUK.HLP’sinvestmentsarepredominantlyun-geared.

HLPismanagedbyAlbionVenturesLLP,aspecialistUKventurecapitalmanager.NonewinvestmentsarebeingmadebyHLP.

Asat31March2015,ARThad£2.0millioninvestedinHLP.HLPsubsequentlyholdsminoritystakesintheunderlyinginvestments.

Postbalancesheet,ARTreceived£0.5millionasredemptionfromHLP,whichreducedART’sinvestmentinHLPto£1.5million.

ARTcontinuestoreceiveincomefromitsinvestmentwhileHLP’sunderlyingassetsaresold.HLPhasdeliveredareturnof8.8%overtheaverageinvestmentduringART’sownershipperiod,andARTwillcontinuetobenefitfromitsshareofnetproceedsfromthesalesoftheunderlyingassetsastheyareprogressed.

SummaryRealestateinvestmentmarketsinwhichtheCompanyoperateshavebecomemorestableoverthepastyear.AlthoughdegreesofvariancestillexistbetweenART’sinvestmentmarkets,therehasbeenamarkedimprovementinrealestateinvestmentvolumesandvaluesinlinewithamorepositiveinvestorsentiment.InvestmentactivityhascontinuedtowidenbeyondprimeassetsandmarketstobroadergeographicmarketsandassettypeswhichbodeswellforthevalueoftheCompany’sportfolio.

TheCompanyhashadanactiveyearacrossitshighyieldingdebtandhighyieldingequityinvestmentportfolio.Twoofthehighyieldingdebtinvestmentshavebeenrefinanced,anddespiteadditionalcompetition,loantermshavebeenbroadlymaintained.

AssetmanagementoftheunderlyingrealestateequityinvestmentshasyieldedsuccessesacrosstheUK,NorwayandSpain,withrecordvisitornumbersrecordedintheH2OshoppingcentreinMadrid.OccupierdemandisincreasingwithleasingactivityacrosstheCompany’sportfolio,withpositiveresultsrecordedatIMPTandH2O.Improvingoccupierdemandisgenerallyaprecursortorentalgrowthalthoughthisisnotyetprevalentoutsidetheprimemarketsandassets.

ARTbenefitsfromthedepthofexperience,strengthandsizeoftheInvestmentManager’sbusinesswithvariousfundsundermanagementanddebtstructuring,investmentandassetmanagementprofessionalsbasedthroughoutEurope.

The Companycontinuestosourcenewinvestmentopportunitieswithstrongcash-flowsand/ormanagedriskprofilesthatareaccretivetoitsearningsposition.

TheCompanyremainsactiveinbothitstargetinvestmentsectorsofhighyielddebtandequityinassetswithhighrisk-adjustedreturnstypicallywhenthereisscopetoaddvaluethroughactiveassetmanagementand/ortherestructuringorrecapitalisationofpropertyinvestmentvehicles.

ARTremainswellplacedtofindvalueforitsinvestorsandtocapitaliseonnewinvestmentopportunitiesacrossassetbackedinvestmentanddebtmarketsintheUKandEurope.

Brad Bauman and Gordon Smith For and on behalf of the Investment Manager 18June2015


David Jeffreys

Chairman

Aged 55

DavidJeffreysqualifiedasaCharteredAccountantwithDeloitteHaskinsandSellsin1985.Heworksasanindependentnon-executivedirectortoanumberofGuernseybasedinvestmentfundcompaniesandmanagersandisaGuernseyresident.

From2007until2009DavidwastheManagingDirectorofEQTFundsManagementLimited,theGuernseymanagementofficeoftheEQTgroupofprivateequityfunds.HewaspreviouslytheManagingDirectorofAbacusFundManagers(Guernsey)Limitedbetween1993and2004,athirdpartyadministrationserviceprovidertoprimarilycorporateandfundclients.

InadditiontotheCompany,Davidisadirectorofthefollowinglistedcompanies:AlphaPyreneesTrustLimitedandTetragonFinancialGroupLimited.

Serena Tremlett

Director

Aged 50

Serenahasover25years’experienceinfinancialservices,specialisinginclosed-endedpropertyandprivateequityfundsandfundadministrationoverthelast18years.

Sheisanon-executivedirectoronthelistedcompanyboardofAlphaPyreneesTrustLimited,inadditiontovariousunlistedpropertyandprivatefundsandgeneralpartners.Serenawaspreviouslycompanysecretary(andadirector)ofAssuraGroup,atthattimeaFTSE250companylistedontheLondonStockExchange,investinginprimaryhealthcarepropertyandranAssura’sGuernseyheadoffice.

PriortoworkingforAssura,SerenawasheadofGuernseypropertyfundsatMourantInternationalFinanceAdministration(nowStateStreet)fortwoyearsandworkedforGuernseyInternationalFundManagers(nowNorthernTrust)forsevenyearswhereshesatonanumberoflistedandunlistedfundboards.Since2008,Serenahasbeenco-founderandmanagingdirectorofMorganSharpeAdministration,aspecialistclosed-endedfundadministrator.

Phillip Rose

Director

Aged 55

PhillipRoseisaFellowoftheSecuritiesInstituteandholdsaMasterofLawdegree.Hehasover30years’experienceintherealestate,fundsmanagementandbankingindustriesinEurope,theUSAandAustralasia.HehasbeentheHeadofRealEstateforABNAMROBank,ChiefOperatingOfficerofEuropeanshoppingcentreinvestoranddeveloperTrizecHahnEurope,ManagingDirectorofretailandcommercialpropertydeveloperandinvestorLendLeaseGlobalInvestmentandExecutiveManageroflistedfundGeneralPropertyTrust.

PhillipiscurrentlyCEOofAlphaRealCapitalLLPandisamemberoftheManagementCommitteeforHermesPropertyUnitTrustanditsAuditCommittee.

Jeff Chowdhry

Director

Aged 55

JeffChowdhryiscurrentlyHeadofEmergingMarketEquitiesatF&CAssetManagementplc,withoverallresponsibilityforinvestmentsinglobalemergingmarkets.Previously,hewasadirectorofSunF&CAssetManagement(India)LimitedandalsomanagedtheIndianInvestmentCompanySICAV,anopenendedinvestmentfundregisteredinLuxembourg.Priortothis,JeffmanagedtheIndiaFundInc,aclosedendedinvestmentfundlistedinNewYorkthatseekslong-termcapitalappreciationthroughinvestingprimarilyinIndianequities.

Roddy Sage

Director

Aged 62

RoddySageiscurrentlyChiefExecutiveOfficeroftheAFPgroupofcompanies,providingcorporateandtaxationadvisoryservicesinAsia.Priortothat,hespent20yearswithKPMGHongKong,10yearsofwhichwereasSeniorTaxPartnerforHongKongandChina.HehasheldChairmanshipswithinKPMGandoutsideasChairmanoftheHongKongGeneralChamberofCommerce’sTaxationCommitteeandisanon-executivedirectorofTaiPingCarpetsInternationalandGuocoGroupLimited.

Directors


TheDirectorspresenttheirreportandfinancialstatementsoftheAlphaRealTrustLimitedgroup(“theGroup”)fortheyearended31March2015.

Principal activities and status

Duringtheyear,theCompany,anauthorisedclosed-endedGuernseyregisteredinvestmentcompany,carriedonbusinessasapropertyinvestmentanddevelopmentcompany,investingincommercialproperty.

TheCompany’ssharesaretradedontheSpecialistFundMarketoftheLondonStockExchange.

Business review, results and dividend

AreviewofthebusinessduringtheyeariscontainedintheChairman’sStatementonpages3to5.

Theresultsfortheyearto31March2015aresetoutinthefinancialstatements.

On13February2015,theCompanydeclaredadividendof0.525ppershare,whichwaspaidtoshareholderson20March2015.ThecurrentintentionoftheCompanyistopayadividendquarterly.Furtherdetailsondividendsaregiveninnote8ofthefinancialstatements.

Corporate governance

AsaGuernseyregisteredcompanytradedonSFM,theCompanyisnotrequiredtocomplywithTheUKCorporateGovernanceCode(“UKCode”).However,asacompanyauthorisedbytheGuernseyFinancialServicesCommission(“GFSC”),itisrequiredtofollowtheprinciplesandguidancesetoutintheFinanceSectorCodeofCorporateGovernanceissuedbytheGFSCandeffectivefrom1January2012(“GuernseyCode”).CompliancewiththeGuernseyCodeandgeneralprinciplesofgoodcorporategovernancearereviewedbytheBoardatleastannuallyand,atthedateofsigningthesefinancialstatements,theBoardissatisfiedthattheCompanyisfullycompliantwiththeGuernseyCode.TheGuernseyCodeisavailableforconsultationontheGFSCwebsite:www.gfsc.gg.

The Board

BiographiesoftheDirectorsaresetoutonpage15.AlloftheDirectorswereappointedon15May2006.

TheDirectors’interestsinthesharesoftheCompanyasat31March2015aresetoutbelowandtherehavebeennochangesinsuchinterestsuptothecurrentdate:

Number of ordinary shares 31 March 2015

Number of ordinary shares 31 March 2014

DavidJeffreys 10,000 10,000

PhillipRose 139,695 139,695

SerenaTremlett 15,000 15,000

JeffChowdhry 40,000 40,000

RoddySage - -

Non-executivedirectorsarenotappointedforspecifiedterms;appointmentsofBoardmemberscanbeterminatedatanytimewithoutpenaltyandtheCompany’sArticlesofAssociation(“Articles”)requireeachDirectortoretireandsubmithimself/herselftore-electionbytheshareholdersateverythirdyear.Inaddition,theBoardbelievesthatcontinuityandexperienceaddstoitsstrength.

TheAnnualGeneralMeetingoftheCompanywilltakeplaceon12August2015.Atthismeeting,SerenaTremlettandDavid Jeffreyswillretireandsubmitthemselvesforre-election.TheremainderoftheBoardrecommendtheirre-appointmentandconfirmtheirindependence.

IndividualDirectorsmayseekindependentlegaladviceinrelationtotheirdutiesonbehalfoftheCompany.

Directors’ and corporate governance report


Directors’ and corporate governance report (continued)

Operations of the Board

TheBoardhasdeterminedthatitsroleistoconsideranddeterminethefollowingprincipalmatterswhichitconsidersareofstrategicimportancetotheCompany:

1) ReviewtheoverallobjectivesfortheCompanyandsettheCompany’sstrategyforfulfillingthoseobjectiveswithinanappropriateriskframework

2) Consideranyshiftsinstrategythatitconsidersmaybeappropriateinlightofmarketconditions

3) ReviewthecapitalstructureoftheCompanyincludingconsiderationofanyappropriateuseofgearingbothfortheCompanyandinanyjointventuresinwhichtheCompanymayinvestfromtimetotime

4) AppointtheInvestmentManager,Administratorandotherappropriatelyskilledserviceprovidersandmonitortheireffectivenessthroughregularreportsandmeetings

5) ReviewkeyelementsoftheCompany’sperformanceincludingNetAssetValueandpaymentofdividends.

AtBoardmeetings,theBoardensuresthatallthestrategicmattersareconsideredandresolvedbytheBoard.CertainissuesassociatedwithimplementingtheCompany’sstrategyaredelegatedeithertotheInvestmentManagerortheAdministrator.SuchdelegationisoverminorincidentalmattersandtheBoardcontinuallymonitorstheservicesprovidedbytheseindependentagents.TheBoardconsidersthereareimplementationmattersthataresignificantenoughtobeofstrategicimportanceandshouldbereservedsolelyfortheBoard(e.g.allacquisitions,alldisposals,significantcapitalexpenditure,leasinganddecisionsaffectingtheCompany’sfinancialgearing).

TheBoardmeetsatleastquarterlyandasrequiredfromtimetotimetoconsiderspecificissuesreservedfordecisionbytheBoardincludingallpotentialacquisitionsandinvestments.

AttheBoard’squarterlymeetingsitconsiderspaperscirculatedinadvanceincludingreportsprovidedbytheInvestmentManagerandtheAdministrator.TheInvestmentManager’sreportcommentson:

● ThepropertymarketsoftheUK,EuropeandIndiaincludingrecommendationsforanychangesinstrategythattheInvestmentManagerconsidersmaybeappropriate

● PerformanceoftheGroup’sportfolioandkeyassetmanagementinitiatives

● Transactionalactivityundertakenoverthepreviousquarterandbeingcontemplatedforthefuture

● TheGroup’sfinancialpositionincludingrelationshipswithbankersandlenders.

ThesereportsenabletheBoardtoassessthesuccesswithwhichtheGroup’spropertystrategyandotherassociatedmattersarebeingimplementedandalsoconsideranyrelevantrisksandtoconsiderhowtheyshouldbeproperlymanaged.

TheBoardalsoconsidersreportsprovidedfromtimetotimebyitsvariousserviceprovidersreviewingtheirinternalcontrols.

Inbetweenitsregularquarterlymeetings,theBoardhasalsometonanumberofoccasionsduringtheyeartoapprovespecifictransactionsandforothermatters.

Board and Directors’ appraisals

TheBoardcarriesoutanannualreviewofitscompositionandperformance(includingtheperformanceofindividualDirectors)andthatofitsstandingcommittees.SuchappraisalincludesreviewingtheperformanceandcompositionoftheBoard(andwhetherithasanappropriatemixofknowledge,skillsandexperience),therelationshipsbetweentheBoardandtheInvestmentManagerandAdministrator,theprocessesinplaceandtheinformationprovidedtotheBoardandcommunicationbetweenBoardmembers.

Board Meeting attendance

ThetablebelowshowstheattendanceatBoardmeetingsduringtheyearto31March2015:

Director No of meetings attended

DavidJeffreys 13

PhillipRose 4

SerenaTremlett 11

JeffChowdhry 8

RoddySage 9

No. of meetings during the year 13

Directors’ and officers’ insurance

AnappropriatelevelofDirectors’andofficers’insuranceismaintainedwherebyDirectorsareindemnifiedagainstliabilitiestothirdpartiestotheextentpermittedbyGuernseycompanylaw.

Board Committees

TheBoardhasestablishedthreestandingcommittees,allofwhichoperateunderdetailedtermsofreference,copiesofwhichareavailableonrequestfromtheCompanySecretary.



Audit Committee

TheAuditCommitteeconsistsofDavidJeffreys(Chairman),RoddySageandSerenaTremlett.TheBoardissatisfiedthatDavidJeffreyscontinuestohavetherequisiterecentandrelevantfinancialexperiencetofulfilhisroleasChairmanoftheAuditCommittee.

Role of the Committee

TheroleoftheAuditCommittee,whichmeetsatleasttwiceayear,includes:

● Theengagement,reviewoftheworkcarriedoutbyandtheperformanceoftheGroup’sexternalauditors

● Tomonitorandreviewtheindependence,objectivityandeffectivenessoftheexternalauditors

● Todevelopandapplyapolicyfortheengagementoftheexternalauditfirmstoprovidenon-auditservices

● ToassisttheBoardindischargingitsdutytoensurethatfinancialstatementscomplywithalllegalrequirements

● ToreviewtheGroup’sfinancialreportingandinternalcontrolpoliciesandtoensurethattheproceduresfortheidentification,assessmentandreportingofrisksareadequate

● Toreviewregularlytheneedforaninternalauditfunction

● TomonitortheintegrityoftheGroup’sfinancialstatements,includingitsannualandhalf-yearreportsandannouncementsrelatingtoitsfinancialperformance,reviewingthesignificantfinancialreportingissuesandjudgementswhichtheycontain

● Toreviewtheconsistencyofaccountingpoliciesandpractices

● ToreviewandchallengewherenecessarythefinancialresultsoftheGroupbeforesubmissiontotheBoard.

TheAuditCommitteemakesrecommendationstotheBoardwhicharewithinitstermsofreferenceandconsidersanyothermattersastheBoardmayfromtimetotimerefertoit.

MembersoftheAuditCommitteemayalso,fromtimetotime,meetwiththeGroup’sindependentpropertyvaluertodiscussthescopeandconclusionsoftheirwork.

Committee meeting attendance

Director No of meetings attended

DavidJeffreys 4

RoddySage 3

SerenaTremlett 3

No. of meetings during the year 4

Policy for non audit services

TheCommitteehasadoptedapolicyfortheprovisionofnon-auditservicesbytheCompany’sexternalauditor,BDOLimited,andreviewsandapprovesallmaterialnon-auditrelatedservicesinaccordancewiththeneedtoensuretheindependenceandobjectivityoftheexternalauditors.Noservices,otherthanaudit-relatedones,werecarriedoutbyBDOLimitedduringtheyear.

Internal audit

TheBoardreliesuponthesystemsandproceduresemployedbytheInvestmentManagerandtheAdministratorwhichareregularlyreviewedandareconsideredtobesufficienttoprovideitwiththerequireddegreeofcomfort.Therefore,theBoardcontinuestobelievethatthereisnoneedforaninternalauditfunction,althoughtheAuditCommitteeconsidersthisannually,reportingitsfindingstotheBoard.

Nomination Committee and attendance

TheNominationCommitteeconsistsofRoddySage(Chairman),PhillipRoseandSerenaTremlett.

TheCommittee’sprincipaltaskistoreviewthestructure,sizeandcompositionoftheBoardinrelationtoitssizeandpositioninthemarketandtomakerecommendationstofillBoardvacanciesastheyariseanditmeetsatleastannually.ItmetonceduringtheyearandallCommitteememberswerepresent.

Remuneration Committee and attendance

TheRemunerationCommitteeconsistsofSerenaTremlett(Chairman),JeffChowdhryandDavidJeffreys.

TheBoardhasapprovedformaltermsofreferencefortheCommitteeandacopyoftheseisavailableonrequestfromtheCompanySecretary.

AstheCompanycomprisesonlynon-executivedirectors,theCommittee’smainroleistodeterminetheirremunerationwithinthecapsetoutintheCompany’sArticles.ItmetonceduringtheyearandallCommitteememberswerepresent.

Remuneration report

TheaggregatefeespayabletotheDirectorsarelimitedto£200,000perannumundertheCompany’sArticlesandtheannualfeespayabletoeachDirectorhavenotmateriallychangedsincetheCompany’sshareswerelistedin2006.ThefeespayabletotheDirectorsareexpectedtoreflecttheirexpertise,responsibilitiesandtimespentonthebusinessoftheGroup,takingintoaccountmarketequivalents,theactivities,thesizeoftheGroupandmarketconditions.Undertheirrespectiveappointmentletters,eachDirectorisentitledtoanannualfeetogetherwithaprovisionforreimbursementforanyreasonableoutofpocketexpenses.



DuringtheyeartheDirectorsreceivedthefollowingemolumentsintheformoffeesfromGroupcompanies:


£


£

DavidJeffreys 31,500 31,500


SerenaTremlett 34,500 32,583

JeffChowdhry 22,000 22,000

RoddySage 22,000 22,000

Total 132,000 130,083

Internal control and risk management

TheBoardunderstandsitsresponsibilityforensuringthattherearesufficient,appropriateandeffectivesystems,procedures,policiesandprocessesforinternalcontroloffinancial,operational,complianceandriskmanagementmattersinplaceinordertomanagetheriskswhichareaninherentpartofbusiness.SuchrisksaremanagedratherthaneliminatedinordertopermittheCompanytomeetitsfinancialandotherobjectives.

TheBoardreviewstheinternalproceduresofbothitsInvestmentManageranditsAdministratoruponwhichitisreliant.TheInvestmentManagerhasascheduleofmatterswhichhavebeendelegatedtoitbytheBoardanduponwhichitreportstotheBoardonaquarterlybasis.Thesemattersincludequarterlymanagementaccountsandreportingbothagainstkeyfinancialperformanceindicatorsanditspeergroup.Further,acompliancereportisproducedbytheAdministratorfortheBoardonaquarterlybasis.

TheCompanymaintainsariskmanagementframeworkwhichconsidersthenon-financialaswellasfinancialrisksandthisisreviewedbytheAuditCommitteepriortosubmissiontotheBoard.

Investment management agreement

TheCompanyhasanagreementwiththeInvestmentManager.ThissetsouttheInvestmentManager’skeyresponsibilities,whichincludeproposingapropertyinvestmentstrategytotheBoard,identifyingpropertyinvestmentstorecommendforacquisitionandarrangingappropriatelendingfacilities.TheInvestmentManagerisalsoresponsibletotheBoardforallissuesrelatingtopropertyassetmanagement.

Substantial shareholding

Shareholderswithholdingsofmorethan3percentofthevotingrightsoftheCompanyasat20May2015wereasfollows:

Name of investor No. of voting rights % held

AlphaGlobalPropertySecuritiesFundPte.Ltd 22,550,000 32.01

BillienLimited 14,154,593 20.10

ArmstrongInvestments 4,000,000 5.68

IPGLLimited 3,010,100 4.27

MitonAssetManagement 2,780,000 3.95

CharlesStanley 2,741,966 3.89

AmiyaCapital 2,600,000 3.69

Shareholder relations

TheBoardplaceshighimportanceonitsrelationshipwithitsshareholders,withmembersoftheInvestmentManager’sInvestmentCommitteemakingthemselvesavailableformeetingswithkeyshareholdersandsectoranalysts.ReportingofthesemeetingsandmarketcommentaryisreceivedbytheBoardonaquarterlybasistoensurethatshareholdercommunicationfulfilstheneedsofbeinguseful,timelyandeffective.OneormoremembersoftheBoardandtheInvestmentManagerwillbeavailableattheAnnualGeneralMeetingtoansweranyquestionsthatshareholdersattendingmaywishtoraise.

Directors’ Responsibilities’ Statement

CompanylawrequirestheDirectorstopreparefinancialstatementsforeachfinancialyear,whichgiveatrueandfairviewofthestateofaffairsoftheGroupattheendoftheyearandoftheprofitorlossoftheGroupforthatyear.

Inpreparingthosefinancialstatements,theDirectorsarerequiredto:

(1) selectsuitableaccountingpoliciesandthenapplythemconsistently;

(2) makejudgementsandestimatesthatarereasonableandprudent;

(3) statewhetherapplicableaccountingstandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and

(4) preparethefinancialstatementsonthegoingconcernbasisunlessitisappropriatetoassumethattheCompanyandGroupwillnotcontinueinbusiness.

SofaraseachoftheDirectorsisaware,thereisnorelevantinformationofwhichtheCompany’sauditorisunaware,andtheyhavetakenallthestepstheyoughttohavetakenasDirectorstomakethemselvesawareofanyrelevantinformationandtoestablishthattheCompany’sauditorisawareofthatinformation.


TheDirectorsareresponsibleforkeepingproperaccountingrecordswhichdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandoftheGroupandtoenablethemtoensurethatthefinancialstatementscomplywiththeCompanies(Guernsey)Law,2008.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandGroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

TheDirectorsconfirmthattheyhavecompliedwiththeaboverequirementsinpreparingthefinancialstatements.

Going concern

Aftermakingenquiries,andbearinginmindthenatureoftheGroup’sbusinessandassets,theDirectorsconsiderthattheCompanyandGrouphaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Forthisreason,theycontinuetoadoptthegoingconcernbasisinpreparingthefinancialstatements.

Annual General Meeting

TheAGMoftheCompanywillbeheldinGuernseyat9.00amon12August2015atOldBankChambers,LaGrandeRue,StMartin’s,Guernsey.ThemeetingwillbeheldtoreceivetheAnnualReportandFinancialStatements,re-electDirectorsandproposethereappointmentoftheauditorandthattheDirectorsbeauthorisedtodeterminetheauditor’sremuneration.

Independent Auditor

BDOLimitedhasexpresseditswillingnesstocontinueinofficeasauditor.

David Jeffreys

DirectorSerena Tremlett Director

ByorderoftheBoard,

18June2015

Directors’ statement pursuant to the Disclosure and Transparency RulesEachoftheDirectors,whosenamesandfunctionsarelistedintheDirectors’andcorporategovernancereportconfirmthat,tothebestofeachperson’sknowledgeandbelief:

● Thefinancialstatements,preparedinaccordancewithIFRSsasadoptedbytheEU,giveatrueandfairviewoftheassets,liabilities,financialpositionandprofitoftheGroup,and

● TheChairman’sstatementandtheinvestmentreviewincludeafairreviewofthedevelopmentandperformanceofthebusinessandthepositionoftheGroupandnote23tothefinancialstatementsprovidesadescriptionoftheprincipalrisksanduncertaintiesthattheGroupfaces.

David Jeffreys

DirectorSerena Tremlett Director

ByorderoftheBoard,

18June2015

Directors’ and corporate governance report (continued)Directors’ and corporate governance report (continued)


To the Members of Alpha Real Trust Limited

WehaveauditedtheconsolidatedfinancialstatementsofAlphaRealTrustLimitedfortheyearended31March2015whichcomprisetheConsolidatedStatementofComprehensiveIncome,theConsolidatedBalanceSheet,theConsolidatedCashFlowStatement,theConsolidatedStatementofChangesinEquityandtherelatednotes1to25.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnion.

ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithSection262oftheCompanies(Guernsey)Law,2008.OurauditworkisundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Respective responsibilities of the directors and auditor

AsexplainedmorefullyintheDirectors’ResponsibilitiesStatementwithintheDirectors’Report,thedirectorsareresponsibleforthepreparationoftheconsolidatedfinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.

OurresponsibilityistoauditandexpressanopinionontheconsolidatedfinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeFinancialReportingCouncil’s(FRC’s)EthicalStandardsforAuditors.

Scope of the audit of the financial statements

Anauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:whethertheaccountingpoliciesareappropriatetotheGroup’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;thereasonablenessofsignificantaccountingestimatesmadebythedirectors;andtheoverallpresentationofthefinancialstatements.Inaddition,wereadallthefinancialandnonfinancialinformationintheDirectors’Reporttoidentifymaterialinconsistencieswiththeauditedfinancialstatementsandtoidentifyanyinformationthatisapparentlymateriallyincorrectbasedon,ormateriallyinconsistentwith,theknowledgeacquiredbyusinthecourseofperformingtheaudit.Ifwebecomeawareofanyapparentmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.

Opinion on the financial statements

Inouropinionthefinancialstatements:

● giveatrueandfairviewofthestateoftheGroup’saffairsasat31March2015andoftheGroup’sprofitfortheyearthenended;

● havebeenproperlypreparedinaccordancewithIFRSsasadoptedbytheEuropeanUnion;and

● havebeenproperlypreparedinaccordancewiththerequirementsoftheCompanies(Guernsey)Law,2008.

Matters on which we are required to report by exception

WehavenothingtoreportinrespectofthefollowingmatterswheretheCompanies(Guernsey)Law,2008requiresustoreporttoyouif,inouropinion:

● properaccountingrecordshavenotbeenkeptbytheCompany;or

● thefinancialstatementsarenotinagreementwiththeaccountingrecords;or

● wehavefailedtoobtainalltheinformationandexplanations,which,tothebestofourknowledgeandbelief,arenecessaryforthepurposesofouraudit.

Richard Michael Searle FCA For and on behalf of BDO LimitedCharteredAccountantsandRecognisedAuditorPlaceduPré,RueduPré,StPeterPort,Guernsey18June2015

Independent auditors’ report


For the year ended 31 March 2015 For the year ended 31 March 2014

Notes

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Income

Revenue 3 8,178 - 8,178 8,243 - 8,243

Changeintherevaluationofinvestmentproperty 13 - 2,721 2,721 - (658) (658)

Netgains/(losses)onfinancialassetsandliabilitiesheldatfairvaluethroughprofitorloss

23 1,407 (1,131) 276 1,253 (1,539) (286)

Total income 9,585 1,590 11,175 9,496 (2,197) 7,299

Expenses

Propertyoperatingexpenses 3 (3,615) - (3,615) (3,940) - (3,940)

InvestmentManager’sfee (1,581) - (1,581) (1,707) - (1,707)

Otheradministrationcosts 4 (823) - (823) (1,244) - (1,244)

Total operating expenses (6,019) - (6,019) (6,891) - (6,891)

Operating profit /(loss) 3,566 1,590 5,156 2,605 (2,197) 408

Shareofprofitofjointventure 131 342 473 135 15 150

Financeincome 5 3,496 - 3,496 3,116 4 3,120

Financecosts 6 (1,899) (2) (1,901) (2,098) - (2,098)

Profit /(loss) before taxation 5,294 1,930 7,224 3,758 (2,178) 1,580

Taxation 7 (10) - (10) (10) - (10)

Profit /(loss) for the year 5,284 1,930 7,214 3,748 (2,178) 1,570

Other comprehensive expense for the year

Itemsthatmaybeclassifiedtoprofitandlossinsubsequentperiods

Exchangedifferencesarisingontranslationofforeign operations

- (1,338) (1,338) - (1,176) (1,176)

Other comprehensive expense for the year - (1,338) (1,338) - (1,176) (1,176)

Total comprehensive income/(expense) for the year 5,284 592 5,876 3,748 (3,354) 394

Earnings per share (basic & diluted) 9 10.2p 2.2p

Adjusted earnings per share (basic & diluted) 9 7.5p 5.3p

ThetotalcolumnofthisstatementrepresentstheGroup’sstatementofcomprehensiveincome,preparedinaccordancewithIFRS.TherevenueandcapitalcolumnsaresuppliedassupplementaryinformationpermittedunderIFRS(seepages36and37).Allitemsintheabovestatementderivefromcontinuingoperations.

Theaccompanyingnotesonpages35to58formanintegralpartofthefinancialstatements.

Consolidated statement of comprehensive income


Notes

31 March 2015

£’000

31 March 2014

£’000

Non-current assets

Investmentproperty 13 65,544 69,942

Indirectpropertyinvestmentheldatfairvalue 14 4,851 4,525

Investmentsheldatfairvalue 15 6,566 11,275

Investmentinjointventure 12 1,563 1,214

Derivativesheldatfairvaluethroughprofitorloss 23 11 63

Tradeandotherreceivables 16 22,443 11,500

100,978 98,519

Current assets

Investmentsheldatfairvalue 15 15,868 13,145

Derivativesheldatfairvaluethroughprofitorloss 23 388 159

Tradeandotherreceivables 16 2,303 19,135

Cashandcashequivalents 14,817 5,444

33,376 37,883

Total assets 134,354 136,402

Current liabilities

Tradeandotherpayables 17 (2,347) (1,374)

Bankborrowings 18 (515) (595)

(2,862) (1,969)

Total assets less current liabilities 131,492 134,433

Non-current liabilities

Bankborrowings 18 (51,557) (58,740)

Total liabilities (54,419) (60,709)

Net assets 79,935 75,693

Equity

Sharecapital 19 - -

Specialreserve 20 80,277 80,296

Translationreserve 20 (3,423) (2,085)

Capitalreserve 20 (8,560) (10,358)

Revenuereserve 20 11,641 7,840

Total equity 79,935 75,693

Net asset value per ordinary share 10 113.2p 107.0p

ThefinancialstatementswereapprovedbytheBoardofDirectorsandauthorisedforissueon18June2015.TheyweresignedonitsbehalfbyDavidJeffreysandSerenaTremlett.


Consolidated balance sheet

David Jeffreys

Director

Serena Tremlett Director


For the year ended 31 March 2015

£’000


£’000

Operating activities

Profitfortheyearaftertaxation 7,214 1,570

Adjustments for:

Changeinrevaluationofinvestmentproperty (2,721) 658

Net(gains)/lossesonfinancialassetsandliabilitiesheldatfairvaluethroughprofitorloss (276) 286

Taxation 10 10

Shareofprofitofjointventure (473) (150)

Financeincome (3,496) (3,120)

Financecost 1,901 2,098

Operating cash flows before movements in working capital 2,159 1,352

Movements in working capital:

(Increase)/decreaseintradeandotherreceivables (1,574) 286

Decrease/(increase)intradeandotherpayables 969 (1,650)

Cash from/(used in) operations 1,554 (12)

Interestreceived 58 91

Interestpaid (1,763) (1,938)

Taxationpaid (6) (118)

Cash flows used in operating activities (157) (1,977)

Investing activities

Acquisitionofinvestments (2,000) -

Redemptionofinvestments 2,595 2,500

Redemptiononpreferenceshares’investment 350 100

Capitalexpenditureoninvestmentproperty (602) (417)

Loangrantedtorelatedparties - (8,880)

Loanrepaymentsfromrelatedparties 7,266 4,347

Loaninterestreceived 2,747 736

CULSinterestreceived 352 240

Dividendincomefromjointventure 124 139

Dividendincomefromotherinvestments 711 779

Cash flows from/(used in) investing activities 11,543 (456)

Financing activities

Bankloanrepayments (426) (916)

Sharebuyback - (1,659)

Sharebuybackcosts - (4)

Shareissuecosts (19) (29)

Currencyoptionsettlement - 142

Foreignexchangeforwardsettlement 322 -

Foreignexchangeforwardcollateralreceived/(paid) 62 (362)

SpecialdividendpaidtoAshareholders (132) -

Dividendspaid (1,483) (1,876)

Cash flows used in financing activities (1,676) (4,704)

Net increase/(decrease) in cash and cash equivalents 9,710 (7,137)

Cash and cash equivalents at beginning of year 5,444 12,602

Exchangetranslationmovement (337) (21)

Cash and cash equivalents at end of year 14,817 5,444


Consolidated cash flow statement



Special reserve

£’000

Translation reserve

£’000

Capital reserve

£’000

Revenue reserve

£’000

Total equity

£’000

At 1 April 2013 81,381 (909) (8,180) 5,968 78,260

Total comprehensive income/(expense) for the year

Profit /(loss)fortheyear - - (2,178) 3,748 1,570

Othercomprehensiveexpensefortheyear - (1,176) - - (1,176)

Total comprehensive (expense)/income for the year - (1,176) (2,178) 3,748 394

Transactions with owners

Dividends - - - (1,876) (1,876)

Shareissuecosts (29) - - - (29)

Sharebuyback (1,053) - - - (1,053)

Sharebuybackcosts (3) - - - (3)

Total transactions with owners (1,085) - - (1,876) (2,961)

At 31 March 2014 80,296 (2,085) (10,358) 7,840 75,693

Notes19,20


Special reserve

£’000

Translation reserve

£’000

Capital reserve

£’000

Revenue reserve

£’000

Total equity

£’000

At 1 April 2014 80,296 (2,085) (10,358) 7,840 75,693

Total comprehensive income/(expense) for the year

Profitfortheyear - - 1,930 5,284 7,214

Othercomprehensiveexpensefortheyear - (1,338) - - (1,338)

Total comprehensive (expense)/income for the year - (1,338) 1,930 5,284 5,876

Transactions with owners

Dividends - - (132) (1,483) (1,615)

Shareissuecosts (19) - - - (19)

Sharebuyback - - - - -

Sharebuybackcosts - - - - -

Total transactions with owners (19) - (132) (1,483) (1,634)

At 31 March 2015 80,277 (3,423) (8,560) 11,641 79,935

Notes19,20


Consolidated statement of changes in equity


1. General informationTheCompanyisalimitedliability,closed-endedinvestmentcompanyincorporatedinGuernsey.Theaddressoftheregisteredofficeisgivenonpage59.ThenatureoftheGroup’soperationsanditsprincipalactivitiesaresetoutintheChairman’sStatementonpages3to5.Thefinancialstatementswereapprovedandauthorisedforissueon18June2015andsignedbyDavidJeffreysandSerenaTremlettonbehalfoftheBoard.

2(a). Significant accounting policiesAsummaryoftheprincipalaccountingpoliciesissetoutbelow.Thepolicieshavebeenconsistentlyappliedforallperiodspresentedunlessotherwisestated.

ThepreparationoffinancialstatementsinconformitywithIFRS,asadoptedbytheEU,requirestheuseofcertaincriticalaccountingestimates.Italsorequiresmanagementtoexerciseitsjudgementintheprocessofapplyingtheaccountingpolicies.Theareasinvolvingahighdegreeofjudgementorcomplexity,orareaswheretheassumptionsandestimatesaresignificanttothefinancialstatementsaredisclosedinthisnote.

Basis of preparation

ThesefinancialstatementshavebeenpreparedinaccordancewithIFRS,whichcomprisestandardsandinterpretationsapprovedbytheInternationalAccountingStandardsBoard(“IASB”),andInternationalAccountingStandardsandStandardsInterpretationsCommittee’sinterpretationsapprovedbytheInternationalAccountingStandardsCommittee(“IASC”)thatremainineffect,andtotheextentthattheyhavebeenadoptedbytheEuropeanUnion.

Duringtheyear,theDirectorshavereconsideredthelayoutoftheconsolidatedstatementofcomprehensiveincome.Accordingly,theorderthatcertainitemsappearhasbeenchangedandtwoitemshavebeenreclassified.Thecomparativeshavebeenamendedonaconsistentbasiswhichhasrequiredthetransferof£1,412,000ofgainsoninvestmentsheldatfairvalueandonthesettlementoftheforeignexchangeforwardcontractfromfinanceincometonetgainsonfinancialassetsandliabilitiesheldatfairvaluethroughprofitorlossandthetransferof£1,698,000oflossesoninvestmentsheldatfairvalueandoncurrencyoptionsandinterestratecapcontractstonetlossesonfinancialassetsandliabilitiesheldatfairvaluethroughprofitorloss.ThishashadnoimpactonthereportedprofitbeforetaxoronnetassetssoathirdconsolidatedstatementoffinancialpositionhasnotbeenpresentedaswouldordinarilyberequiredbyIAS1:10(f).

a) Adoption of new and revised StandardsAnumberofnewandrevisedstandardsandinterpretationsissuedbytheIASBandtheInternationalFinancialReportingInterpretationsCommitteebecameeffectiveforthecurrentyear.Thesewere:

Revised and amended Standards

IAS32: FinancialInstruments:Presentation-Amendmentstoapplicationguidanceontheoffsettingoffinancialassetsandfinancialliabilities-foraccountingperiodscommencingonorafter1January2014

IAS36: ImpairmentofAssets-AmendmentsforRecoverableAmountDisclosuresforNon-FinancialAssets-foraccountingperiodscommencingonorafter1January2014

IAS39: FinancialInstruments:RecognitionandMeasurement-AmendmentsforNovationofDerivativesandContinuationandHedgeAccounting–effectivewhenIFRS9isapplied*.

Interpretations

Nointerpretations,relevantfortheGroup,wereissuedorrevisedduringtheyear.

TheadoptionofthesestandardsandinterpretationshasnotledtoanychangesintheGroup’saccountingpolicies.

b) Standards and Interpretations in issue and not yet effectiveAtthedateofauthorisationofthesefinancialstatements,thefollowingstandardsandinterpretations,whichhavenotbeenappliedinthesefinancialstatements,wereinissuebutnotyeteffective:

IFRS9: FinancialInstruments–foraccountingperiodscommencingonorafter1January2018*

IFRS15:RevenuefromContractswithCustomers-foraccountingperiodscommencingonorafter1January2017*

Revised and amended Standards

IFRS7: FinancialInstruments:Disclosures-AmendmentsrequiringdisclosuresabouttheinitialapplicationofIFRS9-foraccountingperiodscommencingonorafter1January2018*

IFRS10: ConsolidatedFinancialStatements-amendedforsaleorcontributionofassetsbetweenaninvestoranditsassociateorjointventure-foraccountingperiodscommencingonorafter1January2016*

IFRS11: JointArrangements-amendedbyaccountingforacquisitionsofinterestinjointoperations-foraccountingperiodscommencingonorafter1January2016*

IAS27: SeparateFinancialStatements-amendedbyequitymethodinseparatefinancialstatements-foraccountingperiodscommencingonorafter1January2016*

IAS28: InvestmentsinAssociatesandJointVentures-amendedforsaleorcontributionofassetsbetweenaninvestoranditsassociateorjointventure-foraccountingperiodscommencingonorafter1January2016*

*StilltobeendorsedbytheEU

Notes to the financial statementsFor the year ended 31 March 2015


Notes to the financial statements (continued)For the year ended 31 March 2015

Interpretations

Nointerpretations,relevantfortheGroup,arecurrentlyinissue.

InDecember2013,theIASBissuedfurtherimprovementstoIFRS,whichhavebecomeeffectiveforaccountingperiodscommencingonorafter1July2014.Thesecoveramendmentstoninestandards.

InSeptember2014,theIASBissuedfurtherimprovementstoIFRS,whichwillbecomeeffectiveforaccountingperiodscommencingonorafter1January2016(stilltoreceiveendorsementbytheEU).Thesecoveramendmentstofivestandards.

TheDirectorsanticipatethat,withtheexceptionofIFRS9,theadoptionofthesestandardsandinterpretationsinfutureperiodswillnothaveamaterialimpactonthefinancialstatementsoftheGroup.

IFRS9usesasingleapproachtodeterminewhetherafinancialassetismeasuredatamortisedcostoratfairvalue,replacingthemanydifferentrulesinIAS39.TheapproachinIFRS9isbasedonhowanentitymanagesitsfinancialinstruments(itsbusinessmodel)andthecontractualcashflowcharacteristicsofthefinancialassets(paymentsthataresolelypaymentsofprincipalandinterest).Therecognitionandde-recognitionrequirementsforfinancialassetsandfinancialliabilitiesareunchangedfromthosesetoutinIAS39.

TheclassificationandmeasurementrequirementsoffinancialliabilitiesarebroadlysimilartoIAS39althoughtherequirementsrelatingtofinancialliabilitiesmeasuredatfairvaluehavebeenamendedsothatchangesinfairvaluerelatedtoanentity’sowncreditriskaregenerallyrecogniseddirectlyinothercomprehensiveincome.IFRS9requiresoneimpairmentmethodwhichwouldreplacethevariousdifferentmethodsindicatedbyIAS39thatarisefromthedifferentcategories’classification.AtthetimeofadoptionofthenewstandarditisexpectedonlythattheGroup’sfinancialassetswillberequiredtobeclassifiedinaccordancewiththenewstandardandnochangesinmeasurementwillberequired.

Theprincipalaccountingpoliciesadoptedaresetoutbelow.

Basis of consolidation

a) SubsidiariesTheconsolidatedfinancialstatementsincorporatethefinancialstatementsoftheCompanyandthesubsidiaryundertakingscontrolledbytheCompany,madeupto31Marcheachyear.ControlisachievedwheretheCompanyhaspowerovertheinvestee,exposureorrights,tovariablereturnsfromitsinvolvementwiththeinvesteeandtheabilitytouseitspowertoaffecttheamountoftheinvestor’sreturns.

Theresultsofsubsidiaryundertakingsacquiredordisposedofduringtheyearareincludedintheconsolidatedstatementofcomprehensiveincomefromtheeffectivedateofacquisitionsoruptotheeffectivedateofdisposalasappropriate.

Whennecessary,adjustmentsaremadetothefinancialstatementsofsubsidiaryundertakingstobringtheaccountingpoliciesusedintolinewiththoseusedbytheGroup.

Allintra-grouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.

b) Joint venturesTheGroupappliesIFRS11toitsjointarrangement.UnderIFRS11investmentsinjointarrangementsareclassifiedaseitherjointoperationsorjointventuresdependingonthecontractualrightsandobligationseachinvestor.TheGrouphasassessedthenatureofitsjointarrangementsanddeterminedthemtobejointventures.Jointventuresareaccountedforusingtheequitymethod

Undertheequitymethodofaccounting,interestsinjointventuresareinitiallyrecognisedatcostandadjustedthereaftertorecognisetheGroup’sshareofthepost-acquisitionprofitsorlossesandmovementsinothercomprehensiveincome.WhentheGroup’sshareoflossesinajointventureequalsorexceedsitsinterestsinthejointventures(whichincludesanylong-termintereststhat,insubstance,formpartoftheGroup’snetinvestmentinthejointventures),theGroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfofthejointventures.

UnrealisedgainsontransactionsbetweentheGroupanditsjointventuresareeliminatedtotheextentoftheGroup’sinterestinthejointventures.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.

Presentation of statement of comprehensive incomeInordertobetterreflecttheactivitiesofaninvestmentcompanyandinaccordancewithguidanceissuedbytheAssociationofInvestmentCompanies(“AIC”),supplementaryinformation,whichanalysesthestatementofcomprehensiveincomebetweenitemsofarevenueandcapitalnature,hasbeenpresentedalongsidethestatementofcomprehensiveincome(seenote20).

Revenue recognitionRentalincomeandservicechargeincomefrominvestmentpropertyleasedoutunderanoperatingleasearerecognisedinthestatementofcomprehensiveincomeonastraightlinebasisoverthetermofthelease.Leaseincentivesgrantedarerecognisedasanintegralpartofthenetconsiderationfortheuseofthepropertyandarethereforealsorecognisedonthesamestraightlinebasis.Rentalrevenuesareaccountedforonanaccrualsbasis.Therefore,deferredrevenuegenerallyrepresentsadvancepaymentsfromtenants.RevenueisrecognisedwhenitisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheGroupandtheamountofrevenuecanbemeasuredreliably.Uponearlyterminationofaleasebythelessee,thereceiptofasurrenderpremium,netofdilapidationsandnon-recoverableoutgoingsrelatingtotheleaseconcerned,isimmediatelyrecognisedasrevenue.

Interestincomeisaccruedonatimebasis,byreferencetotheprincipaloutstandingandtheeffectiveinterestrateapplicable.

Otherincomeisrecognisedwhenreceived.

2(a). Significant accounting policies (continued)



Leasing Leasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.

Foreign currencies

a) Functional and presentation currencyItemsincludedinthefinancialstatementsofeachoftheGroupentitiesaremeasuredinthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(the“functionalcurrency”).TheconsolidatedfinancialstatementsarepresentedinSterling,whichistheCompany’sfunctionalandpresentationcurrency.

b) Transactions and balancesTransactionsincurrenciesotherthanthefunctionalcurrencyarerecordedattheratesofexchangeprevailingonthedatesofthetransactions.Ateachbalancesheetdate,monetaryassetsandliabilitiesthataredenominatedinforeigncurrenciesareretranslatedattheratesprevailingonthebalancesheetdate.Gainsandlossesarisingonretranslationareincludedinnetprofitorlossfortheyear,exceptforexchangedifferencesarisingonnon-monetaryassetsandliabilitieswherethechangesinfairvaluearerecogniseddirectlyinothercomprehensiveincome/(expense).

c) Group companiesTheresultsandfinancialpositionofalltheGroupentitiesthathaveafunctionalcurrencywhichdiffersfromthepresentationcurrencyaretranslatedintothepresentationalcurrencyasfollows:

(i) assetsandliabilitiesforeachbalancesheetpresentedaretranslatedattheclosingrateatthedateofthebalancesheet

(ii) incomeandexpensesforeachstatementofcomprehensiveincomearetranslatedattheaverageexchangerateprevailingintheperiod,and

(iii) allresultingexchangedifferencesarerecognisedasaseparatecomponentofequity.

Onconsolidation,theexchangedifferencesarisingfromthetranslationofthenetinvestmentinforeignentitiesaretakentoequity.Whenaforeignoperationissold,suchexchangedifferencesarerecognisedinthestatementofcomprehensiveincomeaspartofthegainorlossonsale.

ForEurobasedbalancestheyearendexchangerateusedis£1:€1.367(2014:£1:€1.210)andtheaverageratefortheyearusedis£1:€1.274(2014:£1:€1.186).Theyear-endexchangerateusedforIndianrupee(INR)balancesis£1:INR92.756(2014:£1:INR99.418)andtheaverageratefortheyearusedis£1:INR98.408(2014:£1:INR95.890).

ExpensesAllexpensesareaccountedforonanaccrualsbasisandincludefeesandotherexpensespaidtotheAdministrators,theInvestmentManagerandtheDirectors.Inrespectoftheanalysisbetweenrevenueandcapitalitems,presentedwithinthestatementofcomprehensiveincome,allexpenseshavebeenpresentedasrevenueitemsexceptexpenseswhichareincidentaltotheacquisitionofaninvestmentpropertywhichareincludedwithinthecostofthatinvestmentproperty.

Borrowing costsBorrowingcostsdirectlyattributabletotheacquisitionorconstructionofpropertyareaddedtothecostsofthoseassetsuntilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduse.Thecapitalisationrateisarrivedatbyreferencetotheactualratepayableonborrowingacquiredforatargetedproperty,ortotheaverageratewithregardtoanacquisitionfinancedoutofgeneralborrowings.Allotherborrowingcostsarerecognisedinthestatementofcomprehensiveincomeintheperiodinwhichtheyareincurred.

TaxationTheCompanyisexemptfromGuernseytaxationonincomederivedoutsideofGuernseyandbankinterestearnedinGuernsey.Afixedannualfeeof£600waspayabletotheStatesofGuernseyinrespectofthisexemptionfortheyear.NochargetoGuernseytaxationarisesoncapitalgains.TheGroupisliabletoforeigntaxarisingonactivitiesintheoverseassubsidiaries.TheGrouphassubsidiaryoperationsinCyprusandIndia.TheGroupalsoholdsinvestmentsinSpain,ownedthroughinvestmententitiesinLuxembourgandtheNetherlands,andintheUnitedKingdom,ownedthroughaninvestmententityincorporatedinJersey.TheGroupisthereforeliabletotaxationintheseoverseasjurisdictions.

Thetaxexpenserepresentsthesumofthetaxcurrentlypayableanddeferredtax.

Thetaxcurrentlypayableisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromnetprofitasreportedinthestatementofcomprehensiveincomebecauseitexcludesitemsofincomeandexpensethataretaxableordeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedatthebalancesheetdate.




Deferredtaxisthetaxexpectedtobepayableorrecoverableondifferencesbetweenthecarryingamountofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbasesusedinthecomputationoftaxableprofit,andisaccountedforusingthebalancesheetliabilitymethod.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichdeductibletimingdifferencescanbe utilised.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.Deferredtaxiscalculatedatthetaxratesthatareexpectedtoapplyintheyearwhentheliabilityissettledortheassetrealised.Deferredtaxischargedorcreditedinthestatementofcomprehensiveincome,exceptwhenitrelatestoitemschargedorcrediteddirectlytoequity,inwhichcasethedeferredtaxisalsodealtwithinequity.

DividendsDividendsarerecognisedasaliabilityintheGroup’sfinancialstatementsintheperiodinwhichtheybecomeobligationsoftheGroup.

Fair value measurementTheGroupmeasurescertainfinancialinstrumentssuchasderivatives,andnon-financialassetssuchasinvestmentproperty,atfairvalueattheendofeachreportingperiod,usingrecognisedvaluationtechniquesandfollowingtheprinciplesofIFRS13.Inaddition,fairvaluesoffinancialinstrumentsmeasuredatamortisedcostaredisclosedinthefinancialstatements.

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Thefairvaluemeasurementisbasedonthepresumptionthatthetransactiontoselltheassetortransfertheliabilitytakesplaceeither:

● intheprincipalmarketfortheassetorliability

or

● intheabsenceofaprincipalmarket,inthemostadvantageousmarketfortheassetorliability.

TheGroupmustbeabletoaccesstheprincipalorthemostadvantageousmarketatthemeasurementdate.Thefairvalueofanassetoraliabilityismeasuredusingtheassumptionsthatmarketparticipantswouldusewhenpricingtheassetorliability,assumingthatmarketparticipantsactintheireconomicbestinterest.

Afairvaluemeasurementofanon-financialassettakesintoaccountamarketparticipant’sabilitytogenerateeconomicbenefitsbyusingtheassetinitshighestandbestuseorbysellingittoanothermarketparticipantthatwouldusetheassetinitshighestandbestuse.

TheGroupusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataareavailabletomeasurefairvalue,maximisingtheuseofrelevantobservableinputsandminimisingtheuseofunobservableinputssignificanttothefairvaluemeasurementasawhole:

● Level1—Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsorliabilities.

● Level2—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisdirectlyorindirectly observable.

● Level3—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisunobservable.

Forassetsandliabilitiesthatarerecognisedinthefinancialstatementsonarecurringbasis,theGroupdetermineswhethertransfershaveoccurredbetweenlevelsinthehierarchybyre-assessingcategorisation(basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.

Investment propertyInvestmentproperty,whichispropertyheldtoearnrentalsand/orforcapitalappreciation,isinitiallyrecognisedatcostbeingthefairvalueofconsiderationgivenincludingrelatedtransactioncosts.Afterinitialrecognitionatcost,investmentpropertyiscarriedattheirfairvaluesbasedonhalfyearlyprofessionalvaluationsmadebyindependentvaluers.ThevaluationsareinaccordancewithstandardscomplyingwiththeRoyalInstitutionofCharteredSurveyorsAppraisalandValuationmanualandtheInternationalValuationStandardsCommittee.

Gainsorlossesarisingfromchangesinfairvalueofinvestmentpropertyareincludedinthestatementofcomprehensiveincomeintheperiodinwhichtheyarise.PropertiesaretreatedasacquiredwhentheGroupassumesthesignificantrisksandreturnsofownershipandasdisposedofwhenthesearetransferredtothebuyer.

Allcostsdirectlyassociatedwiththepurchaseandconstructionofapropertyandallsubsequentexpendituresqualifyingasacquisitioncostsarecapitalised.




Segmental reportingOperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecision-maker.Thechiefoperatingdecision-maker,whichisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments,hasbeenidentifiedastheBoardofDirectorsoftheCompany.

TheinvestingpolicymeanstheGroupmayinvestinrealestateopportunitiesunconstrainedbygeography,butwithaparticularfocusontheUK,EuropeandAsia.Atpresent,formanagementpurposes,theGroupisorganisedintoonemainoperatingsegmentbeingEurope.

AlloftheGroup’srevenueisfromentitiesthatareincorporatedinEurope.

WiththeexceptionoftheGalaxiainvestment(note14),alloftheGroup’snon-currentassetsarelocatedinEurope.

Financial instrumentsFinancialassetsandfinancialliabilitiesarerecognisedontheGroup’sbalancesheetwhentheGroupbecomesapartytothecontractualprovisionsoftheinstrument.TheGroupshalloffsetfinancialassetsandfinancialliabilitiesiftheGrouphasalegallyenforceablerighttosetofftherecognisedamountsandinterestsandintendstosettleonanetbasis.

(a) Financial assetsTheGroup’sfinancialassetsfallintothecategoriesdiscussedbelow,withtheallocationdependingtoanextentonthepurposeforwhichtheassetwasacquired.AlthoughtheGroupusesderivativefinancialinstrumentsineconomichedgesofcurrencyandinterestraterisk,itdoesnothedgeaccountforthesetransactions.TheGrouphasnotclassifiedanyofitsfinancialassetsasheldtomaturityorasavailableforsale.

Unlessotherwiseindicated,thecarryingamountsoftheGroup’sfinancialassetsareareasonableapproximationoftheirfairvalues.

(a)(i) Investments held at fair value through profit or lossInvestmentsareclassifiedas“fairvaluethroughprofitorloss”andareinitiallyrecognisedatcost,beingthefairvalueoftheconsiderationgiven.

FinancialassetsdesignatedatfairvaluethroughprofitorlossatinceptionarethosethataremanagedandtheirperformanceevaluatedonafairvaluebasisinaccordancewiththeGroup’sinvestmentstrategy.TheGroup’spolicyisfortheInvestmentManagerandtheBoardofDirectorstoevaluatetheinformationaboutthesefinancialassetsonafairvaluebasistogetherwithotherrelatedfinancialinformation.

Recognition

Purchasesandsalesofinvestmentsarerecognisedonthetransactiondate,thedateonwhichtheGroupcommitstopurchaseorselltheinvestment.

Measurement

Financialassetsatfairvaluethroughprofitorlossareinitiallyrecognisedatfairvaluewithtransactioncostsbeingexpensedinthestatementofcomprehensiveincome.Subsequenttoinitialrecognition,allfinancialassetsatfairvaluethroughprofitorlossaremeasuredatfairvalue.Gainsandlossesarisingfromchangesinthefairvalueofthe‘financialassetsatfairvaluethroughprofitorloss’categoryarepresentedinthestatementofcomprehensiveincomeintheperiodinwhichtheyarise.

(a)(ii) Loans and receivablesTheseassetsarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Theymainlyrelatetointerestbearingloansgrantedtothirdpartiesbutalsoarisethroughrentalleaseswithtenants(e.g.tradereceivablesandcashandcashequivalents)andincorporateothertypesofcontractualmonetaryassets.Theyareinitiallyrecognisedatfairvalueplustransactioncoststhataredirectlyattributabletotheacquisitionorissueandsubsequentlycarriedatamortisedcostusingtheeffectiveinterestratemethod,lessprovisionforimpairment.

Theeffectofdiscountingonthesefinancialinstrumentsisnotconsideredtobematerial.

Impairmentprovisionsarerecognisedwhenthereisobjectiveevidence(suchassignificantfinancialdifficultiesonthepartofthecounterpartyordefaultorsignificantdelayinpayment)thattheGroupwillbeunabletocollectalloftheamountsdueunderthetermsofthereceivable,theamountofsuchaprovisionbeingthedifferencebetweenthenetcarryingamountandthepresentvalueofthefutureexpectedcashflowsassociatedwiththeimpairedreceivable.Fortradereceivables,suchimpairmentsdirectlyreducethecarryingamountoftheimpairedassetandarerecognisedagainsttherelevantincomecategoryinthestatementofcomprehensiveincome.

Cashandcashequivalentsarecarriedatcostandconsistofcashinhandandshorttermdepositsinbankswithanoriginalmaturityofthreemonthsorless.

(a)(iii) Derivatives at fair value through profit or lossThiscategorycomprisesonly‘inthemoney’financialderivatives.Theyarecarriedinthebalancesheetatfairvaluewithchangesinfairvaluerecognisedinthestatementofcomprehensiveincome.

ThefairvalueoftheGroup’sderivativesisbasedonvaluationsasdescribedinnote24.




(a)(iv) Derecognition of financial assetsAfinancialasset(inwholeorinpart)isderecognisedeither:

● whentheGrouphastransferredsubstantiallyalltherisksandrewardsofownership,or

● whenithasneithertransferrednorretainedsubstantiallyalltherisksandrewardsandwhenitnolongerhascontrolovertheassetoraportionoftheasset,or

● whenthecontractualrighttoreceivecashflowhasexpired.

(b) Financial liabilities TheGroupclassifiesitsfinancialliabilitiesintooneoftwocategories,dependingonthepurposeforwhichtheliabilitywasissuedanditscharacteristics.AlthoughtheGroupusesderivativefinancialinstrumentsineconomichedgesofcurrencyandinterestraterisk,itdoesnothedgeaccountforthesetransactions.

Unlessotherwiseindicated,thecarryingamountsoftheGroup’sfinancialliabilitiesareareasonableapproximationoftheirfairvalues.

(b)(i) Derivatives at fair value through profit or lossThiscategorycomprisesonly‘out-of-the-money’financialderivatives.Theyarecarriedinthebalancesheetatfairvaluewithchangesinfairvaluerecognisedinthestatementofcomprehensiveincome.Otherthanderivativefinancialinstruments,theGroupdoesnothaveanyliabilitiesheldfortradingnorhasitdesignatedanyotherfinancialliabilitiesasbeingatfairvaluethroughprofitorloss.

ThefairvalueoftheGroup’sderivativesisbasedonthevaluationsasdescribedinnote24.

(b)(ii) Financial liabilities measured at amortised costOtherfinancialliabilitiesincludethefollowingitems:

● Tradepayablesandothershort-termmonetaryliabilities,whichareinitiallyrecognisedatfairvalueandsubsequentlycarriedatamortisedcostusingtheeffectiveinterestmethod

● Bankborrowingsareinitiallyrecognisedatfairvaluenetofattributabletransactioncostsincurred.Suchinterestbearingliabilitiesaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.

(b)(iii) Derecognition of financial liabilitiesAfinancialliability(inwholeorinpart)isderecognisedwhentheCompanyorGrouphasextinguisheditscontractualobligations,itexpiresoriscancelled.Anygainorlossonderecognitionistakentothestatementofcomprehensiveincome.

(c) Share capitalFinancialinstrumentsissuedbytheGrouparetreatedasequityonlytotheextentthattheydonotmeetthedefinitionofafinancialliability.TheCompany’sordinarysharesandclassAsharesareclassifiedasequityinstruments.Forthepurposesofthedisclosuresgiveninnote23theGroupconsidersallitssharecapital,sharepremiumandallotherreservesasequity.TheCompanyisnotsubjecttoanyexternallyimposedcapitalrequirements.

(d) Effective interest rate methodTheeffectiveinterestratemethodisamethodofcalculatingtheamortisedcostofafinancialassetorliabilityandofallocatinginterestincomeorexpenseovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashreceiptsorpayments(includingallfeesonpointspaidorreceivedthatformanintegralpartoftheeffectiveinterestrate,transactioncostsandotherpremiumsordiscounts)throughtheexpectedlifeofthefinancialassetorliability,or,whereappropriate,ashorterperiod.

2(b). Significant accounting estimates and judgementsTheGroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,seldomequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.

Estimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.

(a) Investment propertyTheGroupusesthevaluationcarriedoutbyitsindependentvaluersasthefairvalueofitsinvestmentproperty.Thevaluationisbaseduponassumptionsincludingfuturerentalincome,anticipatedmaintenancecosts,futuredevelopmentcostsandtheappropriatediscountrate.Thevaluersalsomakereferencetomarketevidenceoftransactionpricesforsimilarproperties.Refertonote13forfurtherdetails.




(b) Estimate of fair value of indirect property investment - Galaxia ThepropertyinterestinGalaxiaisclassifiedasanindirectpropertyinvestmentheldatfairvaluethroughprofitorlossandhasbeenincludedwithinthefinancialstatementsbasedonthecurrentestimateofrealisablevaluetotheGroup.InJanuary2015,theInternationalChamberofCommerce(‘ICC’)ArbitrationconcludeditsarbitrationproceedingsanddeclaredinfavouroftheGroup’sclaimsagainstLogixGroup,whichwasfoundtohavebreachedtheTermsoftheShareholdersAgreementwiththeGroup.TheICCawardedtheGroupthereturnofitsentirecapitalinvestedofINR450Million,withinterestat18%perannumfrom31January2011to20January2015,andtherefundofallcostsincurredtowardstheArbitration.Thetotalawardamountsto£9.2 million(the“Award”)basedonyearendexchangerates.Additionally,afurther15%perannuminterestonallsumswasawardedtotheGroupfrom20January2015untiltheactualdateofpaymentbyLogixoftheAward.InApril2015,theGroupwasnotifiedthatLogixhasfiledapetition,underSection34oftheIndianArbitrationandConciliationAct1996,beforetheDelhiHighCourtchallengingtheAward.Thematterhasbeenadjournedforahearingon15July2015.TheDirectors,takingintoconsiderationlegaladvicereceivedfollowingLogix’schallengeoftheAward,consideritprudenttocontinuetovaluetheindirectinvestmentatINR450millionduetouncertaintyovertimingandfinalvalueoftheAward.

(c) Fair value of derivative contracts

(c)(i) Interest rate capTheGroupestimatesthefairvalueofitsderivativeinterestratecapcontractsbasedonvaluationtechniquesemployedbythecontractualcounterparties.Thesetechniquesaresignificantlyaffectedbytheassumptionsused,includingdiscountratesandfuturecashflows.Furtherdetailsaregiveninnote23.

(c)(ii) Fair value of foreign exchange forward contractTheGroupestimatesthefairvalueofitsforeignexchangeforwardcontractbyreferencetothedifferencebetweenthecontractedrateasperthecontractwiththecontractualcounterpartyandtherelevantforwardexchangerateatthebalancesheetdate.Furtherdetailsaregiveninnote23.

(d) Income and deferred taxationTheGroupissubjecttoincomeandcapitalgainstaxesinnumerousjurisdictions.Significantjudgementisrequiredindeterminingthetotalprovisionforincomeanddeferredtaxes.Therearemanytransactionsandcalculationsforwhichtheultimatetaxdeterminationandtimingofpaymentisuncertainduringtheordinarycourseofbusiness.TheGrouprecognisesliabilitiesforanticipatedtaxissuesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecordedsuchdifferenceswillimpacttheincomeanddeferredtaxprovisionsintheperiodinwhichthedeterminationis made.

3. Revenue


£’000


£’000

Rentalincome 5,981 6,084

Servicechargeincome 2,182 2,138

Otherincome 15 21

Total 8,178 8,243

At31March2015,theGrouprecognisednonrecoverablepropertyoperatingexpenditureasfollows:


£’000


£’000

Servicechargeincome 2,182 2,138

Propertyoperatingexpenditure (3,615) (3,940)

Non recoverable property operating expenditure (1,433) (1,802)

TheGrouprecognisesrevenuefromitsinvestmentinoneproperty:theH2OShoppingCentreinMadrid,Spain.

TheH2OShoppingCentre,acquiredon31March2010viaajointventure,isleasedonstandardinstitutionalSpanishretailoperatingleaseswithaminimumguaranteedmonthlyrentandthepossibilityforthelandlordtoearnadditionalincomeifthetenants’turnoverexceedscertainpre-setlevelsonmostleases.Theleasesaretypicallyforaminimumguaranteedtermof5yearsfromtheopeningofthecentreinmid-2007with5yearrenewaloptionsthereafter,e.g.5+5+5,andgenerallya10to15yearterm.

2(b). Significant accounting estimates and judgements (continued)



At31March2015,theGrouphadcontractedwithtenantsattheH2OShoppingCentreforthefollowingfutureminimumleasepayments:


£’000


£’000

Withinoneyear 5,025 5,158

Inthesecondtofifthyearsinclusive 8,966 9,050

Afterfiveyears 2,343 2,797

Total 16,334 17,005

4. Other administration costs


£’000


£’000

Auditors’remunerationforauditservices 83 98

Accountingandadministrativefees 293 333

Non-executivedirectors’fees 132 130

Otherprofessionalfees 315 683

Total 823 1,244

TheGrouphasnoemployees.

5. Finance income


£’000


£’000

Bankinterestreceivable 58 91

Interestreceivableonconvertibleloanstock 516 1,011

Interestreceivableonloanstorelatedparties 2,922 2,014

Foreignexchangegain - 4

Total 3,496 3,120

6. Finance costs


£’000


£’000

Interestonbankborrowings 1,899 2,098

Foreignexchangeloss 2 -

Total 1,901 2,098

Theabovefinancecostsariseonfinancialliabilitiesmeasuredatamortisedcostusingtheeffectiveinterestratemethod.Nootherlosseshavebeenrecognisedinrespectoffinancialliabilitiesatamortisedcostotherthanthosedisclosedabove.

3. Revenue (continued)



7. Taxation

(a) Parent CompanyTheParentCompanyisexemptfromGuernseytaxationonincomederivedoutsideofGuernseyandbankinterestearnedinGuernsey.Afixedannualfeeof£600waspayabletotheStatesofGuernseyinrespectofthisexemptionfortheyear.NochargetoGuernseytaxationarisesoncapitalgains.TheGroupisliabletoforeigntaxarisingonactivitiesinitsoverseassubsidiaries.TheCompanyhasinvestments,subsidiariesandjointventureoperationsinLuxembourg,UnitedKingdom,theNetherlands,Spain,Cyprus,JerseyandIndia.

InDecember2013,theCompany’ssubsidiaryinSpain,AlphaTigerSpain1,SLU(‘ATS1’),whichownstheH2Oproperty,enteredintoanewSpanishtaxregime:SociedadesAnónimasCotizadasdeInversiónenelMercadoInmobiliario(“SOCIMI”).Underthisregime,thereisnoCorporateIncomeTaxalthoughATS1issubjecttodistributionrulesonincomeandgains.

(b) GroupTheGroup’staxexpensefortheyearcomprises:


£’000


£’000

Deferredtax - -

Currenttax 10 10

Tax Expense 10 10

Thechargefortheyearcanbereconciledtotheprofit/(loss)pertheconsolidatedstatementofcomprehensiveincomeasfollows:


£’000


£’000

Tax expense reconciliation

Profitfortheyear 7,224 1,580

Less:incomenottaxable (8,057) (7,156)

Add:expenditurenotdeductible 4,021 4,782

Un-provideddeferredtaxasset (3,149) 837

Total 39 43


£’000


£’000

Analysed as arising from

Indiaentity - -

Cyprusentities 39 43

Luxembourgentities - -

UKinvestment - -

Total 39 43

Taxatdomesticratesapplicabletoprofitsinthecountriesconcernedisasfollows:


£’000


£’000

Indiataxationat22.66% - -

Cypriottaxationat12.50% 5 5

Luxembourgentitiesatanaveragerateof29.22%* 5 5

UKtaxationat20% - -

Total 10 10

* ThetaxationincurredinLuxembourgmainlyrelatestotheminimumcorporatetaxchargeof€3,210perentity.



(c) Deferred taxationThefollowingisthedeferredtaxrecognisedbytheGroupandmovementsthereon:

Revaluation of Investment Property

£’000

Accelerated tax depreciation

£’000

Tax Losses

£’000

Other temporary differences

£’000

Total

£’000

At 31 March 2013 (712) 578 (411) 545 -

Releasetoincome 712 (578) 376 (510) -

At 31 March 2014 - - (35) 35 -

Releasetoincome - 3 (237) 234 -

At 31 March 2015 - 3 (272) 269 -

Certaindeferredtaxassetsandliabilitieshavebeenoffset.Thefollowingistheanalysisofthedeferredtaxbalances(afteroffset)forfinancialreportingpurposesavailableforoffsetagainstfutureprofits.

2015

£’000

2014

£’000

Deferredtaxliabilities 272 35

Deferredtaxassets (272) (35)

Total - -

AtthebalancesheetdatetheGrouphasunusedtaxlossesof£1.7million(2014:£1.5million).Duetotheunpredictabilityoffuturetaxableprofits,theDirectorsbelieveitisnotprudenttorecogniseadeferredtaxassetfortheunusedtaxlosses.

UnusedtaxlossesinLuxembourg,SpainandtheUnitedKingdomcanbecarriedforwardindefinitely.UnusedtaxlossesinTheNetherlandscanbecarriedforwardfor9years.UnusedtaxlossesinCypruscanbecarriedforwardfor5years.

8. Dividends

Dividend reference period Shares

’000

Dividend

pershare

Paid

£

Date

Quarterended31March2014 70,614 0.525p 370,723 1August2014

Quarterended30June2014 70,614 0.525p 370,723 26September2014

Quarterended30September2014 70,614 0.525p 370,723 19December2014

Quarterended31December2014 70,614 0.525p 370,723 20March2015

Total 1,482,892

Inaddition,duringtheyearended31March2014,ACEdisposedofitspropertyportfolio,which,followingtheliquidationofACE,generatedapproximately£0.1 millionforARTAshareholders:thisamountwasthereforepaidtoARTAshareholdersasaspecialdividendon15August2014.

TheCompanywillpayadividendforthequarterended31March2015on17July2015.InaccordancewithIAS10,thisdividendhasnotbeenincludedinthesefinancialstatementsasthedividendwasdeclaredandpaidaftertheyearend.ThecurrentintentionoftheCompanyistopayadividendquarterly.

7. Taxation (continued)



9. Earnings per shareThecalculationofthebasicanddilutedearningspershareisbasedonthefollowingdata:

1 April 2014 to 31 March 2015

1 April 2014 to 30 September 2014

1 April 2013 to 31 March 2014

Earningsperstatementofcomprehensiveincome(£’000) 7,214 2,362 1,570

Basic and diluted earnings pence per share 10.2p 3.3p 2.2p

Earningsperincomestatement(£’000) 7,214 2,362 1,570

Netchangeintherevaluationofinvestmentproperty (2,721) (683) 658

Movementinfairvalueofinvestmentinordinaryshares 409 409 (944)

Movementinfairvalueofinvestmentsinredeemablepreferenceshares 1,225 272 2,438

Movementinfairvalueofinterestratecap(marktomarket) 48 52 94

Movementinfairvalueofcurrencyswaps(marktomarket) - - 110

Movementinfairvalueoftheforeignexchangeforward(marktomarket) (551) (247) (159)

Movementinfairvalueofthejointventure’sinterestrateswap(marktomarket) (7) (4) (15)

Netchangeintherevaluationofthejointventure’sinvestmentproperty (335) (20) -

Foreignexchangeloss/(gain) 2 (3) (4)

Adjusted earnings 5,284 2,138 3,748

Adjusted earnings per share 7.5p 3.0p 5.3p

Weighted average number of ordinary shares (000’s) 70,614 70,614 71,110

TheadjustedearningsarepresentedtoprovidewhattheBoardbelievesisamoreappropriateassessmentoftheoperationalincomeaccruingtotheGroup’sactivities.Hence,theCompanyadjustsbasicearningsforincomeandcostswhicharenotofarecurrentnatureorwhichmaybemoreofacapitalnature.

10. Net asset value per share

31 March 2015 30 September 2014 31 March 2014

Netassetvalue(£’000) 79,935 76,473 75,693

Net asset value per ordinary share 113.2p* 108.3p* 107.0p*

Total number of shares (000’s) 70,614 70,614 70,614

*Thenetassetvalueperordinarysharefortheyearended31March2014hasbeencalculatedbydeductingfromthenetassetvaluetheproceedsrealisedfromACE’sportfoliodisposal(£0.1m),whichwereduetoART’sAshareholders,whowereformerlyshareholdersinPIP.ThenetassetvalueperAsharesasat31March2014was107.9p.Followingdistributionofthe£0.1mproceedstoART’sAshareholderson15August2014,thenetassetvaluepershareasat30September2014andasat31March2015isthesameforallART’sshareholders.

11. Investment in subsidiary undertakingsAlistofthesignificantinvestmentsinsubsidiariesasat31March2015,includingthename,countryofincorporationandtheproportionofownershipinterestisgivenbelow.

Name of subsidiary undertaking Class of share % of class held with voting rights

Country of incorporation

Principal activity

AlphaTigerCyprusHoldingsLimited Ordinary 100 Cyprus HoldingCompany

AlphaTigerCyprusInvestmentsNo.1Limited Ordinary 100 Cyprus HoldingCompany



Luxco114SARL Ordinary 100 Luxembourg Financecompany

Luxco111SARL Ordinary 100 Luxembourg HoldingCompany

KMSHoldingBV Ordinary 100 Netherlands HoldingCompany

AlphaTigerSpain1,SLU Ordinary 100 Spain PropertyCompany

AlphaTigerSpain2,SLU Ordinary 100 Spain PropertyCompany



12. Investment in joint venture ThejointventureintheScholarPropertyHoldingsLimitedgroup(Cambourne)isaccountedforbyequityaccounting.

ThemovementintheGroup’sshareofnetassetsofthejointventurecanbesummarisedasfollows:


£’000


£’000

As at 1 April 1,214 1,203

Group’sshareofjointventureprofitsbeforefairvaluemovementsanddividends 131 135

Fairvalueadjustmentforinterestrateswap 7 15

Fairvalueadjustmentforinvestmentproperty 335 -

DividendspaidbyjointventuretotheGroup (124) (139)

As at 31 March 1,563 1,214

13. Investment property


£’000


£’000

Fair value of investment property at 1 April 69,942 71,433

Subsequentcapitalexpenditureafteracquisition 602 417

Movementinrentincentives/ initialcosts 576 226

Fairvalueadjustmentintheyear 2,721 (658)

Foreignexchangemovement (8,297) (1,476)

Fair value of investment property at 31 March 65,544 69,942

ThefairvalueoftheH2OpropertyhasbeenarrivedatonthebasisofanindependentvaluationcarriedoutatthebalancesheetdatebyAguirreNewmanValoracionesyTasacionesS.A.(“Aguirre”).AguirreareindependentvaluersandarenotconnectedtotheGroup.

ThevaluationbasisusedisfairvalueasdefinedbytheRoyalInstitutionofCharteredSurveyorsAppraisalandValuationsStandards(“RICS”).TheapprovedRICSdefinitionoffairvalueis“thepricethatwouldbereceivedtosellanasset,orpaidtotransferaliability,inanorderlytransactionbetweenmarketparticipantsatthemeasurementdate”.Seenote24fordetailsofthepropertyvaluation.

TheH2OpropertyhasbeenpledgedassecurityfortheborrowingsintheSpanishSPVinwhichthepropertyisheld(note18).

Foreignexchangemovementisrecognisedinothercomprehensiveincome/(expense).

14. Indirect property investment held at fair value


£’000


£’000

As at 1 April 4,525 5,451

Foreignexchangemovement 326 (926)

As at 31 March 4,851 4,525

TheGalaxiainvestmentiscarriedatafairvalueofINR450million(£4.9million).

Seenote2(b)(b)formoredetails.




15. Investments held at fair value


£’000


£’000

Non-current

As at 1 April 11,275 12,869

Additionsduringtheyear - -

Redemptionsduringtheyear (2,945) (100)

Distributedinvestmentincomeduringtheyear (130) -

Movementinfairvalueofinvestments (1,634) (1,494)

As at 31 March 6,566 11,275

On3December2012,theGroupcompletedtheacquisitionofthemajorityoftheinvestmentportfolioofPIP.

Theacquiredinvestments,whicharedisclosedasnon-currentinvestmentsheldatfairvalue,canbedetailedasfollows:

● £0.5 millioninordinarysharesofIMPT;theordinarysharesaretradedontheLSEandarethereforevaluedquarterlybymarketprice;themarketpriceoftheinvestmentasat31March2015was£0.8 million(2014:£1.2 million).

● £3.2 millioninparticipatingredeemablepreferencesharesofBCP;thefundprovidesquarterlyvaluationsofthenetassetvalueofitsshares;duringtheyearended31 March2015,BCP,followingthedisposalofitspropertyportfolio,redeemedatotalof£2.6 millionofshares(circa95%ofART’sholding)andenteredintoavoluntaryliquidationprocess;thenetassetvalueoftheinvestmentasat31 March2015of£0.1 millionreflectstheestimatedamountreceivablebyARTattheendofBCP’sliquidationprocess.

● £6.4 millioninparticipatingredeemablepreferencesharesofEuropip,whichprovidesquarterlyvaluationsofthenetassetvalueofitsshares;thenetassetvalueoftheinvestmentasat31 March2015was£3.6 million(2014:£5.0 million).

● £3.7 millioninparticipatingredeemablepreferencesharesofHLP,whichprovideshalfyearlyvaluationsofthenetassetvalueofitsshares;duringtheyearended31 March2015,HLPredeemedatotalof£0.4 millionofshares(2014:£0.1 million);thenetassetvalueoftheinvestmenthasbeencalculatedbyusingtheunauditedvalueprovidedbythedirectorsofHLPon5March2015,thisbeingtheclosestpointtotheGroup’sbalancesheetdate;theresultingvalueoftheinvestmentwas£2.0 million(2014:£2.3 million).

ARThasalsoacquiredfromPIP,atanascribedzerovalue,theinvestmentsinACEandRomulus.AnyrealisedvaluefromtheseinvestmentsispassedexclusivelytoARTAshareholders.

Duringtheyearended31 March2014,ACEdisposedofitspropertyportfolio,which,followingtheliquidationofACE,generated£0.1 millionforARTAshareholders:thisamountwasthereforepaidtoARTAshareholdersasaspecialdividendon15August2014.ACEwasformallydissolvedon29October2014.

Asat31 March2015,thenetassetvalueofART’sinvestmentinRomuluswasnil(2014:nil).

TheBoardconsidersthattheaboveinvestmentswillbeheldforthelongtermandhasthereforedisclosedthemasnon-currentassets.

Investments held at fair value Year ended 31 March 2015

£’000


£’000

Current

As at 1 April 13,145 15,252

Additionsduringtheyear 2,000 -

Redemptionsduringtheyear - (2,500)

Distributedinvestmentincomeinyear (250) (454)

Undistributedinvestmentincomeinyear 973 847

As at 31 March 15,868 13,145

TheGrouphasinvestedinincomeunitsofFIAF.FIAFallowsmonthlyredemptionsandhencetheinvestmentisreportedasacurrentasset.On20June2012,theGroupinvestedafurther£4 millioninFIAF.On3December2012,followingthecompletionofthePIPacquisition,theGroupacquiredanadditional£4.6 millionofFIAFunits.Duringtheyearended31 March2014,ARTmadenetredemptionsofFIAFunitsamountingto£2.5 million.On12August2014,theGroupinvestedafurther£2 millioninFIAF.FIAFprovidesmonthlyvaluationsofthenetassetvalueofitsunits.TheinvestmenthasbeenvaluedatthenetassetvalueofFIAFasat31 March2015.



16. Trade and other receivables

31 March 2015

£’000

31 March 2014

£’000

Non-current

Loangrantedtorelatedparty 22,443 11,500

Total 22,443 11,500

Current

ConvertibleLoan - 7,823

Tradedebtors 1,225 73

VAT 99 81

Loansgrantedtorelatedparties - 9,080

Otherdebtors 518 650

Interestreceivablefromloansgrantedtorelatedparties 461 482

InterestreceivablefromCULSandConvertibleLoan - 946

Total 2,303 19,135

On9August2010,theCompanysubscribedfor£4.75millionofCULSinIMPT.TheCULScarriedanannualcouponof4.75%andcouldhavebeenconvertedatanytimeuptoandincluding30June2013intoOrdinarySharesataConversionPriceof31pence.ThesettlementoftheCULSannualcouponwasmadeasaPaymentInKind(“PIK”)bytheissuanceoffurtherCULSateachrelevantdate.TheCULSattractedan18%redemptionpremiumifnotconverted.Additionally,IMPThadissued4millionshareoptionstotheCompanyatanexercisepriceof50pencepershare.

On1July2013,ARTannouncedtheredemptionofalloutstandingIMPTCULSinfullatparplusthepaymentofthepremiumof18percent.ThePreferenceSharesstapledtotheCULShaveautomaticallybeenredeemedandtheassociatedoptionshaveexpiredwithoutbeingexercised.Theredemptionamountwas£6.4million,whichARTagreedtoprovidetoIMPTasunsecuredloan,earningacouponof15%perannumcompoundedquarterly.On6December2013,ARTagreedtoprovideIMPTwithanetadditionalinvestmentof£4.6million,whichwasincorporatedwiththeexisting£6.4millionloanplus£0.5millionofaccruedinterestintoanewunsecuredloanamountingto£11.5million.ThenewunsecuredloanisforfiveyearsexpiringinDecember2018andcarriesacouponof15%perannum.TheIMPTloanbalanceasat31 March2015is£11.8million,whichreflectstheprincipalagreedforthenewunsecuredloanof£11.5millionplusaccruedinterestof£0.3million.

On18October2011,theCompanycompletedtheinvestmentof£7.5millionbywayofathreeyearConvertibleLoaninAURE.Theloancouldhavebeenconvertedatanytimeuptoexpiry(20November2014)intoordinarysharesataneffectivepriceof41.4pperFundshare.TheConvertibleLoanhadanannualcouponof6%payablequarterlyincashandwasredeemableatapremiumof14%toitsfacevalue.InNovember2014,theConvertibleLoanexpiredandtheconversionoptionwasnotexercised.Atthatdate,theredemptionamountoftheConvertibleLoanwas£8.9millionand,aspartofalargerrefinancingofAURE’sloanfacilities,theConvertibleLoanwasrolledupintoanewmezzanineloanfacilityprovidedbyARTtoAUREof£10.3million.Aspartofthisrestructuringprocess,ARTreceived£2.3millionincash.ThenewloanfacilityisfortwoyearsexpiringinNovember2016andearnsacouponof9%perannumplusapplicablefees.TheloanisunsecuredbutARThastheabilitytorequestAUREtoprovideafirstlegalchargesecurityoveritsnon-coreassets,oncecertainconditionsonAURE’sbankborrowingsaremet,andasecondprioritychargeoverAURE’sotherassets.

On27September2013,theCompanygranteda£6.0milliononeyearloantoAURE.Theloanhadanannualcouponof9%andwasunsecured.TheloanwaspartlyrepaidinNovember2013by£1.8millionandbyafurther£0.8millionuptoNovember2014,atwhichpointtheloan,withanoutstandingbalanceof£3.5million,wasincludedaspartoftherestructuringintoanewmezzanineloanfacilityprovidedbyARTtoAUREof£10.3million,asdescribedabove.

On3December2012,followingthecompletionofthePIPacquisition,theCompanyacquiredaoneyearloanreceivablegrantedtoEuropipamountingto£6.8million.On27November2012theCompanyhadalsoadvancedanadditional£2millionloantoEuropip,whichwasfullyrepaidbyApril2013.Theremainingloanhadanannualcouponof9%,whichwascapitalisedquarterlyifunpaid,andhadsharepledges,assecurity,overtwooftheun-gearedEuropipNorwegianassetsandadditionalrightsoverproceedsreleasedfromtheEuropip’sMosaicinvestment.InNovember2013,theloanwasextendedbyoneyear.Duringtheyearended31 March2014,Europipmadepartrepaymentstowardstheloanof£2.6millionandinOctober2014afurtherrepaymentof£0.6million.InNovember2014theloanwasrolledupintoanew£4.3millionfacilitygrantedforafurthertwoyearsonsubstantiallythesameterms.Upto31 March2015,Europipmadefurtherrepaymentsamountingto£3.0million.Asat31 March2015,thebalanceoftheloangrantedtoEuropipistherefore£1.3million(2014:£5.0million,including£0.1millionofaccruedinterest).

TheDirectorsconsiderthatthecarryingamountoftradeandotherreceivablesapproximatestotheirfairvalue.



17. Trade and other payables

31 March 2015

£’000

31 March 2014

£’000

Tradecreditors 1,685 607

InvestmentManager’sfeepayable 390 432

Accruals 252 333

Othercreditors 15 -

Corporationtax 5 2

Total 2,347 1,374

Tradecreditorsandaccrualsprimarilycompriseamountsoutstandingfortradepurchasesandongoingcosts.TheGrouphasfinancialmanagementpoliciesinplacetoensurethatallpayablesarepaidwithinthecredittimeframe.

TheDirectorsconsiderthatthecarryingamountoftradeandotherpayablesapproximatestotheirfairvalue.

18. Bank borrowings

31 March 2015

£’000

31 March 2014

£’000

Currentliabilities:interestpayable 118 146

Currentliabilities:repayments 397 449

Total current liabilities 515 595

Non-currentliabilities:bankborrowings 51,557 58,740

Total liabilities 52,072 59,335

The borrowings are repayable as follows:

Interestpayable 118 146

Ondemandorwithinoneyear 397 449

Inthesecondtofifthyearsinclusive 51,557 58,740

Afterfiveyears - -

Total 52,072 59,335

MovementsintheGroup’snon-currentbankborrowingsareanalysedasfollows:


£’000


£’000

As at 1 April 58,740 60,736

Repaymentofborrowings (426) (916)

Reclassificationtocurrentliabilities 52 9

Deferredfinancecosts (194) -

Amortisationofdeferredfinancecosts 151 160

Foreignexchangemovement (6,766) (1,249)

As at 31 March 51,557 58,740

ThebankborrowingsrepresentthesyndicatedloanfinanceprovidedtotheSpanishSPV,owneroftheH2OpropertyinMadrid,Spain.

TheSpanishSPVloanwasoriginallyprovidedbyasyndicateofthreebanks(EurohypoAG,DeutscheHypothekenbankandLandesbankHessen-ThuringenGirozentrale).InAugust2014,DeutscheHypothekenbanktransferreditsshareoftheloantoMHBBankAG,asubsidiaryoftheLoneStargroup.Theloanhastwotranchesofdebtofwhichonetranchehasanagreedscheduleofamortisationasreflectedintherepaymenttableabove;thebalanceoftheloansafteramortisationisrepayableon4October2017.TheloansaresecuredbyafirstchargemortgageagainsttheSpanishproperty.

TheSpanishpropertyowningSPVhasenteredintoaninterestratecapunderwhichthefloatingrateelementoftheinterestchargeiscappedat2.85%forthefulltermoftheloanon€50millionoftheprincipalborrowingsof€75million(note23).




19. Share capital

Number of shares

Authorised

Ordinarysharesofnoparvalue Unlimited

Issued and fully paid Ordinary treasury

Ordinary external

Ordinary total

A shares external

Total shares

At 1 April 2014 6,009,974 55,465,727 61,475,701 15,148,128 76,623,829

Shareconversion - 5,297,702 5,297,702 (5,297,702) -

Sharescancelledfollowingbuyback - - - - -

Sharesboughtback - - - - -

At 31 March 2015 6,009,974 60,763,429 66,773,403 9,850,426 76,623,829

TheCompanyhasoneclassofordinaryshareswhichcarriesnorighttofixedincomeandclassAshares,whichcarrythesamerightsasordinarysharessavethatclassAsharescarrytheadditionalrighttoparticipationintheCompany’sinvestmentinRomulusandtherighttoconvertintoordinarysharesonaoneforonebasis.

TheCompanyhastherighttoreissueorcanceltheremainingtreasurysharesatalaterdate.

On13August2014,theCompanypublishedacirculargivingnoticeofitsAnnualGeneralMeetingon5September2014.ConsistentwiththeCompany’scommitmenttoshareholdervalue,theCompanyaskeditsshareholderstoapproveageneralauthorityallowingtheCompanytoacquireupto24.99%oftheVotingShareCapitalduringtheperiodexpiringontheearlierof(i)theconclusionoftheAnnualGeneralMeetingoftheCompanyin2016and(ii)4March2016.Theshareholdersapprovedtheproposal.

Duringtheyearended31March2015,theCompanymadenosharebuybacksand5,297,702Ashareswereconvertedintoordinaryshares.Asat31March2015,theordinarysharecapitaloftheCompanywas66,763,429(including6,009,974sharesheldintreasury).TheCompanyalsohad9,850,426Asharesinissue.ThetotalvotingrightsinARTwere76,623,829.

Postyearend,theCompanyhasmadenosharebuybacksand532,750Ashareswereconvertedintoordinaryshares.AtthedateofsigningthesefinancialstatementstheordinarysharecapitaloftheCompanywas67,306,153(including6,009,974sharesheldintreasury).TheCompanyalsohas9,317,676Asharesinissue.ThetotalvotingrightsinARTareunchangedat76,623,829.

20. ReservesThemovementsinthereservesfortheGroupareshownonpage34.

Special reserveThespecialreserveisadistributablereservetobeusedforallpurposespermittedunderGuernseycompanylaw,includingthebuy-backofsharesandpaymentofdividends.

Translation reserveThetranslationreservecontainsexchangedifferencesarisingonconsolidationoftheGroup’soverseasoperations.Theseamountsmaybesubsequentlyreclassifiedtoprofitorloss.

Capital reserveThecapitalreservecontainsincreasesanddecreasesinthefairvalueoftheGroup’sinvestmentproperty,gainsandlossesonthedisposalofproperty,gainsandlossesarisingfromindirectpropertyinvestmentatfairvaluetogetherwithexpensesallocatedtocapital.

Revenue reserveAnysurplusarisingfromnetprofitaftertaxistakentothisreserve,whichmaybeutilisedforthebuy-backofsharesandpaymentofdividends.

21. Events after the balance sheet dateAfterthebalancesheetdate,atotalof532,750AShareswereconvertedintoOrdinaryShares(Note19).InApril2015,ARTreceiveda£0.5 millionredemptionfromHLP,bringingART’scurrentinvestmentinHLPdownto£1.6million.InMay2015,ARTalsoreceiveda£0.8 millioncapitalrepaymentfromEuropip,reducingART’sloaninvestmentinEuropipto£0.5million.



22. Related party transactionsPartiesareconsideredtoberelatedifonepartyhastheabilitytocontroltheotherpartyorexercisesignificantinfluenceovertheotherpartyinmakingfinancialoroperationaldecisions.ARCistheInvestmentManagertotheCompanyunderthetermsoftheInvestmentManagerAgreementandisthusconsideredarelatedpartyoftheCompany.

Duringtheprioryear,theCompanyannouncedtheextensionofitsmanagementagreementwiththeInvestmentManagerforafurthertermofeightyearsexpiringon21December2022.

TheInvestmentManagerisentitledtoreceiveafeefromtheCompanyatanannualrateof2percentofthenetassetsoftheCompany,payablequarterlyinarrears.TheInvestmentManagerisalsoentitledtoreceiveanannualperformancefeecalculatedwithreferencetototalshareholderreturn(“TSR”),wherebythefeeis20percentofanyexcessoveranannualisedTSRof15percentsubjecttoarolling3yearhighwatermark.

TheInvestmentManagerhasamanagementagreementdirectlywiththeH2Opropertycompany,AlphaTigerSpain1,SLUunderwhichitearnsafeeof0.9%perannumbaseduponthegrossassetsofAlphaTigerSpain1,SLU.InordertoavoiddoublechargingfeestotheCompany,theInvestmentManagerwillprovidearebatetotheCompanyofaproportionofitscurrentfeeequivalenttothevalueoftheCompany’snetassetvalueattributabletotheH2Oinvestment.

TheCompanyhasinvestedinIMPTwhereARCistheInvestmentManager.MarkRattigan,aspartnerofARC,isaDirectorontheBoardofIMPT.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinIMPT.

TheCompanyhasinvestedinFIAFwhereARPIA,asubsidiaryofARC,istheInvestmentManager.ARCistheAuthorisedCorporateDirectorofFIAF.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinFIAF.

TheCompanyhasinvestedinAURE,whereARCistheInvestmentManager.MarkRattiganandBradBauman,partnersofARC,areDirectorsontheBoardofAURE.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinAURE.

TheCompanyhasinvestedinEuropip,whereARPIA,asubsidiaryofARC,istheInvestmentAdviser.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinEuropip.

TheCompanyhasinvestedinBCP,whereARPIA,asubsidiaryofARC,istheIndustryAdviser.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinBCP.

TheCompanyhasinvestedinRomulus,whereARPIA,asubsidiaryofARC,isTrustManagerandPropertyManager.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinRomulus.

TheCompanyhadinvestedinACE,whereARPIA,asubsidiaryofARC,waspropertyinvestmentadviser.ARCrebatedfeesearnedinrelationtotheCompany’sinvestmentinACE.ACEwasdissolvedon29October2014.

TheCompanyhasinvestedinPhase1000,CambourneBusinessPark,Cambridge,andARCwasappointedasAssetandPropertyManagerofthejointventureentity.ARCrebatestoARTtherelevantproportionoffeesearnedbyARC,whichapplytotheCompany’sinvestment.

LoansgrantedtorelatedpartiesincludeloansgrantedtoIMPT,AUREandEuropip.Detailsoftheloanamountsoutstandingandinterestreceivableasatyearendareprovidedinnote16.

DetailsoftheInvestmentManager’sfeesfortheyeararedisclosedonthefaceoftheconsolidatedstatementofcomprehensiveincomeandthebalancepayableat31March2015isprovidedinnote17.

AlphaGlobalPropertySecuritiesFundPte.Ltd,awhollyownedsubsidiaryofARCregisteredinSingapore,held22,550,000sharesintheCompanyat31March2015(31March2014:20,000,000).

ARCdidnotholdanysharesintheCompanyat31March2015(31March2014:2,550,000).Thefollowing,beingpartnersoftheInvestmentManager,haveinterestsinthefollowingsharesoftheCompanyat31March2015:

31 March 2015

Numberofsharesheld

31 March 2014

Numberofsharesheld

IPGLLimited 3,010,100 3,010,100

BrianFrith 1,125,000 1,125,000


BradBauman 55,006 55,006

RonaldArmist 500 500

DetailsoftheDirectors’feesandshareinterestsintheCompanyareincludedintheDirectorsReport.

SerenaTremlettisalsotheManagingDirectorandamajorshareholderofMorganSharpeAdministrationLimited,theCompany’sAdministratorandSecretary.DuringtheyeartheCompanypaidMorganSharpeAdministrationLimitedfeesof£81,000(2014:£77,000)andnoamountwasoutstandingatyearend.



23. Financial instruments risk exposure and managementIncommonwithsimilarbusinesses,theGroupisexposedtorisksthatarisefromitsuseoffinancialinstruments.ThisnotedescribestheGroup’sobjectives,policiesandprocessesformanagingthoserisksandthemethodsusedtomeasurethem.Furtherquantitativeinformationinrespectoftheserisksispresentedthroughoutthesefinancialstatements.

TherehavebeennosubstantivechangesintheGroup’sexposuretofinancialinstrumentrisks,itsobjectives,policiesandprocessesformanagingthoserisksorthemethodsusedtomeasurethemfrompreviousperiodsunlessotherwisestatedinthisnote

Principal financial instrumentsTheprincipalfinancialinstrumentsusedbytheGroupfromwhichfinancialinstrumentriskarises,areasfollows:

Financial assets and liabilities carrying value 31 March 2015

£’000

31 March 2014

£’000

Current financial assets

Investmentheldatfairvalue 15,868 13,145

Tradeandotherreceivables 2,303 19,135

Cashandcashequivalents 14,817 5,444

Derivatives held at fair value through profit or loss

Foreignexchangeforwardcontract 388 159

Total current financial assets 33,376 37,883

Non-current financial assets

Derivatives held at fair value through profit or loss

Interestratecap 11 63

Total derivatives held at fair value through profit or loss 11 63

Investmentsheldatfairvalue 6,566 11,275

Indirectpropertyinvestmentatfairvalue 4,851 4,525

Tradeandotherreceivables 22,443 11,500

Total non-current financial assets 33,871 27,363

Total financial assets 67,247 65,246

Current financial liabilities

Tradeandotherpayables (2,347) (1,374)

Bankborrowings (515) (595)

Total current financial liabilities (2,862) (1,969)

Non-current financial liabilities

Bankborrowings (51,557) (58,740)

Totalnon-currentfinancialliabilities (51,557) (58,740)

Total financial liabilities (54,419) (60,709)



Netchangesinrealisedandunrealisedgainsorlossesonfinancialinstrumentscanbesummarisedasfollows:


£’000


£’000

Realised gains or losses on loans and receivables



Interestreceivableonloansgrantedtorelatedparties 2,922 2,014

Impairmentoftradeandotherreceivables (67) 33

Net realised gains on loans and receivables 3,429 3,149

Unrealised gains and losses on financial assets and liabilities held at fair value through profit or loss

Movementinfairvalueofinterestratecap (48) (94)

Movementinfairvalueofcurrencyswap - (110)

Movementinfairvalueofforeignexchangeforwardcontract 551 159

Movementinfairvalueofinvestments (1,634) (1,494)

Undistributedinvestmentincome 831 474

Realised gains and losses on financial assets and liabilities held at fair value through profit or loss

Dividendreceivedfrominvestmentsheldatfairvalue 64 88

Distributedinvestmentincome 512 691

Net gains/(losses) on financial assets and liabilities held at fair value through profit or loss 276 (286)

Netinterestincomecanbesummarisedasfollows:


£’000


£’000



Interestreceivableonloansgrantedtorelatedparties 2,922 2,014

Interestonbankborrowings (1,899) (2,098)

Net interest income 1,597 1,018

General objectives, policies and processesTheBoardhasoverallresponsibilityforthedeterminationoftheGroup’sriskmanagementobjectivesandpoliciesand,whilstretainingultimateresponsibilityforthem,ithasdelegatedtheauthorityfordesigningandoperatingprocessesthatensuretheeffectiveimplementationoftheobjectivesandpoliciestotheGroup’sfinancefunction.

TheoverallobjectiveoftheBoardistosetpolicesthatseektoreduceriskasfaraspossiblewithoutundulyaffectingtheGroup’scompetitivenessandflexibility.Furtherdetailsregardingthesepoliciesaresetoutbelow.

Project monitoringProjectsaremonitoredthroughregularProjectControlMeetingsheldwithdevelopmentpartnerstodiscussprogressandmonitorrisks.TheInvestmentManagerattendsthesemeetingsandreportstotheBoardonaquarterlybasis.

23. Financial instruments risk exposure and management (continued)



Credit riskCreditriskariseswhenafailurebycounterpartiestodischargetheirobligationscouldreducetheamountoffuturecashinflowsfromfinancialassetsonhandatthebalancesheetdate.

Thecarryingamountoffinancialassetsrecordedinthefinancialstatements,whichisnetofimpairmentlosses,representstheGroup’smaximumexposuretocreditrisk.

TheGrouppolicyistomaintainitscashandcashequivalentbalanceswithanumberoffinancialinstitutionsasameansofdiversifyingcreditrisk.TheGroupmonitorstheplacementofcashbalancesonanongoingbasisandhaspoliciestolimittheamountofcreditexposuretoanyfinancialinstitution.

Withregardstotheinvestmentpropertybusiness,apropertyadvisormonitorsthetenantsinordertoanticipateandminimisetheimpactofdefaultbyoccupationaltenants.Wherepossible,tenants’riskismitigatedthroughrentalguarantees.TheGroupmeetswiththetenantfrequentlyandmonitorsitsfinancialperformanceclosely.

Withregardtoitsotherinvestments,theGroupreceivesregularupdatesfromtherelevantInvestmentManagerastotheperformanceoftheunderlyinginvestmentsandassessesitscreditriskasaresult.

Liquidity riskLiquidityriskistheriskthatariseswhenthematurityofassetsandliabilitiesdoesnotmatch.Anunmatchedpositionpotentiallyenhancesprofitability,butcanalsoincreasetheriskoflosses.TheGrouphasprocedureswiththeobjectofminimisingtheseriskssuchasmaintainingsufficientcashandotherhighlyliquidcurrentassets.CashandcashequivalentsareplacedwithfinancialinstitutionsonashorttermbasisreflectingtheGroup’sdesiretomaintainahighlevelofliquidityinordertoenabletimelycompletionofinvestmenttransactions.

ThefollowingtableillustratesthecontractualmaturityanalysisoftheGroup’sfinancialliabilities.

31 March 2015 Within 1 year

£’000

1-2 years

£’000

2-5 years

£’000

Over 5 years

£’000

Total

£’000

Tradeandotherpayables 2,342 - - - 2,342

Interestpayableonbankborrowings 1,509 1,498 761 - 3,768

Bankborrowings 397 397 51,687 - 52,481

Total 4,248 1,895 52,448 - 58,591

31 March 2014 Within 1 year

£’000

1-2 years

£’000

2-5 years

£’000

Over 5 years

£’000

Total

£’000

Tradeandotherpayables 1,372 - - - 1,372

Interestpayableonbankborrowings 1,877 1,863 2,793 - 6,533

Bankborrowings 449 449 58,842 - 59,740

Total 3,698 2,312 61,635 - 67,645

Market risk

(a) Foreign exchange riskTheGroupoperatesinIndiaandSpainandisexposedtoforeignexchangeriskarisingfromcurrencyexposureswithrespecttoIndianRupeesandEuros.Foreignexchangeriskarisesfromfuturecommercialtransactions,recognisedmonetaryassetsandliabilitiesandnetinvestmentsinforeignoperations.

TheGroup’spolicyis,wherepossible,toallowGroupentitiestosettleliabilitiesdenominatedintheirfunctionalcurrencywiththecashgeneratedfromtheirownoperationsinthatcurrency.

TheGroupdoesnotcurrentlyhedgeitsIndianforeigncurrencyexposureandonlypartiallyhedgesitsEurocurrencyexposurethroughaforeignexchangeforwardcontract:theGroupenteredintothiscontracttohedge€5millionofEuroexposure.

TheBoardmonitorstheGroup’sexposuretoforeigncurrenciesonaquarterlybasisaspartofitsRiskManagementreview.

AstrengtheningoftheRupeeby5RupeesagainstSterling(representingmanagement’sassessmentofareasonablypossiblechange)wouldincreasethenetassetsby£276,000(2014:£240,000).AweakeningoftheRupeeby5Rupeeswoulddecreasenetassetsby£248,000(2014:£217,000).AstrengtheningoftheEuroby5centswouldincreasethenetassetsby£578,000(2014:£500,000).AweakeningoftheEuroby5centswoulddecreasenetassetsby£537,000(2014:£544,000).




b) Cash flow and fair value interest rate riskTheGroup’sinterestrateriskarisesprimarilyfromlongtermborrowings.TheGrouphasinterestratecaps,enteredintobytheSpanishpropertyowningSPV,underwhichthefloatingrateelementoftheinterestchargeiscappedat2.85%forthefulltermoftheloanon€50millionoftheprincipalborrowingsof€75million.

TheGroupalsoholdssignificantcashbalancesandloanassetswhichaccrueinterestbasedonvariableinterestrates.

TheGroup’scashflowisperiodicallymonitoredbytheBoard.

Thesensitivityanalysisbelowisbasedonachangeinanassumptionwhileholdingallotherassumptionsconstant.Inpractice,thisisunlikelytooccur,andchangesinsomeoftheassumptionsmaybecorrelated–forexample,changesininterestrateandchangesinmarketvalue.

FortheGroup,adecreaseof100basispointsininterestrateswouldresultinanincreaseinpost-taxprofitsof£386,000(2014: £555,000).Anincreaseof100basispointsininterestrateswouldresultinadecreaseinposttaxprofitsof£386,000(2014: £555,000).

c) Price riskTheCompanyannouncedon28May2010thatithadenteredintoaSettlementAgreementwithLogixGroupunderwhichithassolditsinterestinitsTechnovainvestmentandhasagreedafloorpricemechanismforthesaleoftheGalaxiaproject.TheSettlementAgreementlapsedon28May2011returningthepartiestothepre-existingagreement.Thetermsofthepre-existingagreementprovideforaminimumreturnofINR450millionandanadditionalpreferredreturnandprofit.Asdetailedinnote14,inJanuary2015,theICCArbitrationconcludeditsarbitrationproceedingsanddeclaredinfavouroftheGroup’sclaimsagainstLogixGroup.TheAwardgrantedbytheICCtotheGroupequals£9.2 million,basedonyearendexchangerates;plus15%perannuminterestonallsumsawardeduntiltheactualdateofpaymentbyLogix.TheDirectors,takingintoconsiderationlegaladvicereceivedfollowingLogix’schallengeoftheAward,consideritprudenttocontinuetovaluetheindirectinvestmentatINR450millionduetouncertaintyovertimingandfinalvalueofthe Award.

TheGrouphasinvestedinincomeunitsofFIAF,afundofferingmonthlyredemptions(note15).FIAFisanopenendedunauthorisedunittrustwhichoperatesamonthlydealingfacilitytoprovideinvestmentliquidity.Thevalueoftheincomeunitsareassessedmonthlyandaresubjecttofluctuation.

TheGrouphasinvestedinIMPT’sordinaryshares,whicharetradedontheLSEsoaresubjecttomarketfluctuation.

TheGrouphasinvestedinParticipatingRedeemablePreferenceSharesinEuropip,BCPandHLP;thevalueofthesesharesisassessedregularlyandissubjecttofluctuation:EuropipandBCPprovidepricingquarterlyandHLPprovidespricinghalfyearly.

IfthepriceoftheaggregatedinvestmentsinParticipatingRedeemablePreferenceShareshadincreasedby5%,withallothervariablesheldconstant,thiswouldhaveincreasedthenetassetsvalueoftheGroupby£287,000(31March2014:£495,000).Conversely,ifthepriceoftheaggregatedinvestmentsinParticipatingRedeemablePreferenceShareshaddecreasedby5%thiswouldhavedecreasedthenetassetsvalueoftheGroupby£287,000(31March2014:£495,000).

d) Fair valuesThefollowingmethodsandassumptionswereusedtoestimatefairvalues:

● Cashandshort-termdeposits,tradereceivables,tradepayables,andothercurrentliabilitiesapproximatetheircarryingamountsduetotheshort-termmaturitiesoftheseinstruments

● Thefairvalueofthederivativeinterestratecapcontractsisdeterminedbyreferencetoanapplicablevaluationmodelemployedbythecontractualcounterparties;valuationsareprovidedquarterly

● Thefairvalueoftheforeignexchangeforwardcontractisdeterminedbyreferencetothequarterendoneyearforwardmarketrateprovidedbythecontractualcounterparty

● ThefairvalueoftheGalaxiainvestmentisbasedonquarterlyDirectors’estimateoftherecoverableamountbaseduponlegaladvice

● ThefairvalueoftheinvestmentinIMPT’sordinaryshares,whicharetradedontheLSE,isbaseduponthemidpriceoftheordinarysharesatthebalancesheetdate

● ThefairvalueoftheFIAF,BCP,HLPandEuropip’sinvestmentsisbaseduponthepriceprovidedbytheissuersfortherelevantshareclassowned:thisiscalculatedbyreferencetothenetassetvalueoftherespectiveinvestment.Thesenetassetvaluesarebasedonobservableinputsandthereforearedeemedtobelevel2financialassets(seenote24).

Asaresultthecarryingvalueslessimpairmentprovisionofloansandreceivablesandfinancialliabilitiesmeasuredatamortisedcostareapproximatetotheirfairvalues.

Note24containsdetailsregardingthefairvaluemeasurementoftheinterestratecapcontracts.

Capital risk managementTheBoard’sobjectiveswhenmanagingcapitalaretosafeguardtheGroup’sabilitytocontinueasagoingconcerninordertoprovidereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.

Inordertomaintainoradjustthecapitalstructure,theGroupmayadjusttheamountofdividendspaidtoshareholders,returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.

TheBoard’sregularlyreviewstheadequacyoftheGroup’slevelofborrowingsbymonitoringitscompliancewiththerelevantbankcovenants.




24. Fair value measurement IFRS13requiresdisclosureofthefairvaluemeasurementoftheGroup’sassetsandliabilities,therelatedvaluationtechniques,thevaluations’recurrenceandtheinputsusedtoassessanddevelopthosemeasurements.

TheGroupdisclosesfairvaluemeasurementsbylevelofthefollowingfairvaluemeasurementhierarchy:

● Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities(level1).

● Inputsotherthanquotedpricesincludedwithinlevel1thatareobservablefortheassetorliability,eitherdirectly(thatis,asprices)orindirectly(thatis,derivedfromprices)(level2).

● Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(thatis,unobservableinputs)(level3).

Thelevelinthefairvaluehierarchywithinwhichtheassetorliabilityiscategorisedisdeterminedonthebasisofthelowestinputthatissignificanttothefairvaluemeasurement.Assetsandliabilitiesareclassifiedintheirentiretyintooneofthethreelevels.

Investmentpropertyisvaluedonarecurringbasis:halfyearly.

TheGroup’svaluersderivethefairvalueoftheinvestmentpropertybyapplyingthemethodologyandvaluationguidelinesassetoutbytheRoyalInstitutionofCharteredSurveyorsintheUnitedKingdom.Thisapproachisbasedondiscountingthefuturenetincomereceivablefrompropertiestoarriveatthenetpresentvalueofthatfutureincomestream.Futurenetincomecomprisestherentsecuredunderexistingleases,lessanyknownorexpectednon-recoverablecostsandthecurrentmarketrentattributabletovacantunits.Theconsiderationbasisforthiscalculationexcludestheeffectsofanytaxesonthenetincome.Thediscountfactorsusedtocalculatefairvalueareconsistentwiththoseusedtovaluesimilarproperties,withcomparableleasesineachoftherespectivemarkets.Adecreaseinthenetrentalincomeoranincreaseinthediscountratewilldecreasethefairvalueoftheinvestmentproperty.

Indirectpropertyinvestmentatfairvalue,investmentsheldatfairvalue,derivativecontractsandtheConvertibleLoan’soptionarevaluedonarecurringbasisasindicatedinnote23.

Thefollowingtableshowsananalysisofthefairvaluesofassetsandliabilitiesrecognisedinthebalancesheetbylevelofthefairvaluehierarchydescribedabove:

31 March 2015 Assets and liabilities measured at fair value

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Assets measured at fair value

Non-current

Investmentproperty(note13) - - 65,544 65,544

Indirectpropertyinvestmentatfairvalue(note14) - - 4,851 4,851

Investmentsheldatfairvalue 834 5,732 - 6,566

Interestratecap - 11 - 11

Current

Investmentsheldatfairvalue - 15,868 - 15,868

Foreignexchangeforwardcontract - 388 - 388

Assets for which fair values are disclosed

Non-current

Tradeandotherreceivables - 22,443 - 22,443

Current


Liabilities for which fair values are disclosed

Current

Tradeandotherpayables - (2,347) - (2,347)

Bankborrowings - (515) - (515)

Non-current

Bankborrowings - (51,557) - (51,557)



31 March 2014 Assets and liabilities measured at fair value

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Assets measured at fair value

Non-current

Investmentproperty(note13) - - 69,942 69,942

Indirectpropertyinvestmentatfairvalue(note14) - - 4,525 4,525

Investmentsheldatfairvalue 1,243 10,032 - 11,275

Interestratecap - 63 - 63

Current

Investmentsheldatfairvalue - 13,145 - 13,145

Foreignexchangeforwardcontract - 159 - 159

Assets for which fair values are disclosed

Non-current


Current


Liabilities for which fair values are disclosed

Current

Tradeandotherpayables - (1,374) - (1,374)

Bankborrowings - (595) - (595)

Non-current

Bankborrowings - (58,740) - (58,740)

TheGroupdetermineswhethertransfershaveoccurredbetweenlevelsinthehierarchybyre-assessingcategorisation(basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.

Movementsinlevel3ofthefairvaluemeasurements,duringtheyearended31March2015,canbesummarisedasfollows:

Investment property

£’000

Indirect property investment at fair

value

£’000

At 1 April 2014 69,942 4,525

Subsequentcapitalexpenditureafteracquisition 602 -

Movementinrentincentives/ initialcosts 576 -

Fairvalueadjustment 2,721 -

Effectofforeignexchange (8,297) 326

At 31 March 2015 65,544 4,851

Therewerenotransfersbetweenlevel1andlevel2fairvaluemeasurementsandnotransfersintooroutoflevel3fairvaluemeasurementsduringtheyearended31March2015.

24. Fair value measurement (continued)



Thefairvalueofinvestmentpropertyisbasedonunobservableinputsanditisthereforedisclosedaslevel3.Thefollowingmethods,assumptionsandinputswereusedtoestimatefairvaluesofinvestmentproperty:

31 March 2015

Class of investment property Carrying amount / fair value

’000

Area

(squaremeters)

Valuation technique Significant unobservable inputs Range/value

Europe £65,544(€89,598) 51,825 Discountedcashflow GrossEstimatedRentalValue(‘ERV’)persqmp.a.

€6.00/€129.50

Discountrate 11.75%

31 March 2014

Class of investment property Carrying amount / fair value

’000

Area

(squaremeters)

Valuation technique Significant unobservable inputs Range/value

Europe £69,942(€84,630) 51,825 Discountedcashflow GrossERVpersqmp.a. €6.00/€129.50

Discountrate 11.75%

ThehighrageofERVsreflectsthenatureoftheshoppingcentreassetswhichtypicallycompriseunitsrangingfromin-mallkiosksoflessthan10squaremetrestolargefloorplateretailerswhichcanoccupyunitsinexcessof3,000squaremetres.

TheDirectorsassessedatthebalancesheetdatewhethertheGroup’sinvestmentpropertyisbeingexploitedaccordingtoitshighestandbestuseandtheyaresatisfiedthatthisisthecase.

25. Commitments

TheGrouphadnoun-providedmaterialcommitmentswithinitsGroupundertakings.

24. Fair value measurement (continued)


Directors

DavidJeffreys(Chairman)JeffChowdhryRoddySagePhillipRoseSerenaTremlett

Registered office

OldBankChambersLaGrandeRueStMartin’sGuernseyGY46RT

Investment Manager

AlphaRealCapitalLLPLevel6,338EustonRoadLondonNW13BG

Administrator and secretary

MorganSharpeAdministration LimitedOldBankChambersLaGrandeRueStMartin’sGuernseyGY46RT

Broker

PanmureGordon(UK)LimitedOneNewChangeLondonEC4M9AF

Independent valuers in India

ColliersInternational(Hong Kong)LimitedSuite5701CentralPlaza18HarbourRoadWanchaiHongKong

Independent valuers in Spain

AguirreNewmanValoracionesyTasacionesS.A.U.CalledeGeneralLacy,23Madrid,28045Spain

Independent Auditor

BDOLimitedPlaceduPréRueduPréStPeterPortGuernseyGY13LL

Tax advisors in Europe

Ernst&YoungLLP1MoreLondonPlaceLondonSE12AF

Tax advisors in India

BMRAdvisorsTheGreatEasternCentreFirstFloor70,NehruPlaceNewDelhi–110019India

Legal advisors in Guernsey

CareyOlsenPOBox98,CareyHouseLes BanquesStPeterPortGuernseyGY14BZ

Legal advisors in the UK

NortonRose3MoreLondonRiversideLondonSE12AQ

Legal advisors in India

AZB&PartnersPlotA-8Sector4NOIDA201301India

Legal advisors in Spain

PerezLlorcaAlcalá,6128014MadridSpain

Registrar

ComputershareInvestorServices(Jersey)LimitedQueenswayHouseHilgroveStreetStHelierJerseyJE11ES

Directors and Company information


Shareholder information FurtherinformationontheCompany,compliantwiththeSFMregulations,canbefoundattheCompany’swebsite:www.alpharealtrustlimited.com

Share price

TheCompany’sOrdinarySharesarelistedontheSFMoftheLondonStockExchange.

Change of address

Communicationswithshareholdersaremailedtotheaddressesheldontheshareregister.Intheeventofachangeofaddressorotheramendment,pleasenotifytheCompany’sRegistrarunderthesignatureoftheregisteredholder.

Investment Manager

TheCompanyisadvisedbyAlphaRealCapitalLLPwhichisauthorisedandregulatedbytheFinancialConductAuthorityintheUnitedKingdom.

Financial calendar

Financial reporting Reporting/Meeting dates Dividend period Ex-dividend date Record date Payment date

Annualreportpublished 26June2015 Quarterending31March2015

2July2015 3July2015 17July2015

AnnualGeneralMeeting 12August2015

Tradingupdatestatement(Qtr1)

13August2015 Quarterending30June2015

27August2015 28August2015 25September2015

Halfyearreport 11November2015 Quarterending30September2015

3December2015 4December2015 18December2015

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2015 - Alpha Real Trust Limited · Annual report and financial statements For the year ended 31...

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