TIDMARTL
RNS Number : 2647I
Alpha Real Trust Limited
16 June 2017
16 June 2017
ALPHA REAL TRUST LIMITED ("ART" OR THE "COMPANY")
ART ANNOUNCES ITS FULL YEAR RESULTS FOR THE YEARED 31 MARCH
2017
-- NAV per share 158.9p: 31 March 2017 (137.9p: 31 March 2016)
-- Adjusted earnings per share of 7.4p for the year ended 31 March 2017 (7.0p: 31 March 2016)*
-- Declaration of a quarterly dividend of 0.6p per share, expected to be paid on 21 July 2017
-- Basic earnings per share of 18.6p for the year ended 31 March 2017 (23.1p: 31 March 2016)
-- Balanced portfolio: continued capital allocation to a mix of
investments which balance income returns while creating potential
for capital value growth, including build to rent
-- H2O Madrid: post period end, ART entered an agreement,
subject to certain conditions, to form a joint venture with CBRE
European Co-Investment Fund, who will acquire 70% of the
shareholding in the asset. The agreement for the partial sale
creates the opportunity to recycle capital and help rebalance ART's
investment portfolio while allowing for participation in the
continued income yield and future value growth potential from the
asset
-- H2O Madrid new debt facility: post period end, ART refinanced
the borrowings secured on the shopping centre with a new EUR65
million seven year bank debt facility
-- H2O Madrid site purchase: acquisition of a vacant site in the
same planning zone as H2O that, subject to transfer of building
rights and planning permission, could create potential for the
expansion of the H2O shopping centre
-- Private rented sector residential: planning consent secured
for the PRS developments: detailed consent for 162 units in central
Birmingham and detailed consent for 307 units with outline consent
for a further 300 units in central Leeds
-- Mezzanine loan investment: agreement entered into with a
specialist finance provider, to co-invest and create a portfolio of
mezzanine loan investments. During the year GBP1.7 million was also
invested in a new mezzanine loan with an annualised return in
excess of 15% secured on a hotel located in central Newcastle
-- Data centre: ART entered into an agreement to purchase,
subject to planning, an industrial site which has potential for the
development of a data centre; detailed planning and power
applications have been submitted
-- IMPT loan and equity divestment: post period end, ART
redeemed its outstanding unsecured subordinated debt provided to
IMPT of GBP10.9 million (including outstanding interest and exit
fee); ART also sold its shares in IMPT for 330p (representing a
receipt of GBP5.3 million), an increase over nine times ART's
initial acquisition price
-- 95.0% of the Group's portfolio is allocated to investments in
the UK and Europe that are or are expected to be income
producing
* The basis of the adjusted earnings per share is provided in
note 9
David Jeffreys, Chairman of Alpha Real Trust, commented:
"ART currently focuses on high-yielding property, infrastructure
and asset backed debt and equity investments in Western Europe that
are capable of delivering strong risk adjusted cash flows,
including build to own investments.
ART actively manages its investment portfolio which continues to
be replenished via capital recycling from the sale of non-core
assets, loan repayments or strategic full or partial disinvestment
from assets that allow for profit-taking and portfolio
optimisation. This creates the opportunity for capital allocation
to new investments.
Post period end, ART entered into an agreement to form a joint
venture to sell a 70% equity interest in the H2O shopping centre in
Madrid for a consideration of circa GBP30 million.
Post period end, the Company has also completed the refinance of
the borrowings secured on the shopping centre with a new EUR65
million seven year loan.
The potential realisation of c.GBP46 million from investment
disposals this year and next will enable ART to further invest in
its build to rent investments with the potential for capital
investment in excess of GBP30 million in the next 12 months. This
number does not include potential investment opportunities in other
portfolio assets and new investment in the Company's mezzanine
portfolio.
ART continues to actively manage its portfolio to enhance the
value of the underlying assets, recycle capital from investments
where profit taking and portfolio optimisation opportunities are
identified and to originate and secure new investment
opportunities.
The Company remains well positioned to continue to deliver
attractive returns through investing, realising and re-investing
its capital in asset backed investment opportunities."
The Investment Manager of Alpha Real Trust is Alpha Real Capital
LLP.
For further information please contact:
Alpha Real Trust Limited
David Jeffreys, Chairman, Alpha Real Trust +44 (0) 1481 231
100
Gordon Smith, Joint Fund Manager, Alpha Real Trust +44 (0) 207
391 4700
Brad Bauman, Joint Fund Manager, Alpha Real Trust +44 (0) 207
391 4700
Panmure Gordon, Broker to the Company
Richard Gray / Andrew Potts +44 (0) 20 7886 2500 Notes to
editors:
About Alpha Real Trust
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.
Further information on the Company can be found on the Company's
website: www.alpharealtrustlimited.com.
About Alpha Real Capital LLP
Alpha Real Capital is a value-adding international property fund
management group. Alpha Real Capital is the Investment Manager to
ART. Brad Bauman and Gordon Smith of Alpha Real Capital are joint
Fund Managers to ART. Both have experience in the real estate and
finance industries throughout the UK, Europe and Asia.
For more information on Alpha Real Capital please visit
www.alpharealcapital.com.
Trust summary and objective
Strategy
Alpha Real Trust Limited ("the Company" or "ART") targets
investment, development, financing and other opportunities in real
estate, real estate operating companies and securities, real estate
services, infrastructure, infrastructure services, other
asset-backed businesses and related operations and services
businesses that offer attractive risk-adjusted total returns.
ART currently focuses on high-yielding property, infrastructure
and asset backed debt and equity investments in Western Europe that
are capable of delivering strong risk adjusted cash flows,
including build to own investments. The current portfolio mix,
excluding sundry assets/liabilities, is as follows:
High yielding debt: 14.2%
High yielding equity
in property investments: 47.1%
Ground rent investments: 18.8%
Other investments: 8.2%
Build-to-rent investments: 9.7%
Cash: 2.0%
Dividends
The current intention of the Directors is to pay a dividend
quarterly.
Listing
The Company's shares are traded on the Specialist Fund Segment
("SFS") of the London Stock Exchange ("LSE"), ticker ARTL:LSE.
Management
The Company's Investment Manager is Alpha Real Capital LLP
("ARC"), whose team of investment and asset management
professionals focus on the potential to enhance earnings in
addition to adding value to the underlying assets and also on the
risk profile of each investment within the capital structure to
best deliver high risk adjusted returns.
Control of the Company rests with the non-executive Guernsey
based Board of Directors.
Financial highlights
Year ended 6 months Year ended
31 March ended 31 March
2017 30 September 2016
2016
--------------------------- ----------- -------------- -----------
Net asset value (GBP'000) 110,173 105,317 95,621
--------------------------- ----------- -------------- -----------
Net asset value per
share 158.9p 151.9 137.9p
--------------------------- ----------- -------------- -----------
Adjusted earnings
per share (basic and
diluted)* 7.4p 3.9p 7.0p
--------------------------- ----------- -------------- -----------
Earnings per share
(basic and diluted) 18.6p 10.1p 23.1p
--------------------------- ----------- -------------- -----------
Dividend per share
(paid during the period) 2.4p 1.2p 2.4p
The basis of the adjusted earnings per share is provided in note
9.
Chairman's statement
I am pleased to present the Company's annual report and accounts
for the year ended 31 March 2017.
It has been a very active year for ART with new investments,
capital recycling and asset management successes secured during the
period.
The Company continually evaluates its investment portfolio and
actively pursues a broad range of new opportunities while assessing
the opportunity to divest and recycle capital from the current
assets where potential for profit-taking and / or portfolio
rebalancing is identified. Our aim is to maintain a balanced mix of
investments that have an overall weighting towards income returns
while creating potential for future income and capital value
growth.
We continue to target investments that are capable of being
repositioned, developed or where enhanced planning can be secured
to generate attractive risk adjusted total returns. Diverse asset
types will be considered and the Company is prepared to enter at an
early stage in the build-to-rent process on specific investments in
order to enhance returns.
The potential realisation of c.GBP46 million from investment
disposals this year and next will enable ART to further invest in
its build to rent investments with the potential for capital
investment in excess of GBP30 million in the next 12 months. This
number does not include potential investment opportunities in other
portfolio assets and new investment in the Company's mezzanine
portfolio.
ART's current investment focus is on high-yielding property and
asset backed debt and equity assets in Western Europe. The Company
will consider investments and assets that offer scope to generate
long term income streams off a lower entry cost. This approach
provides ART with the flexibility to take advantage of new
investment opportunities where ART sees best value. A balance of
stable income and capital value growth will be targeted as
demonstrated by the new mezzanine loan investments and the
build-to-rent data centre opportunity in Frankfurt entered into
during the year.
H2O partial sale and refinancing
Post period end, ART entered into an agreement to form a joint
venture with CBRE European Co-Investment Fund, managed by CBRE
Global Investors. ART will sell a 70% equity interest in the H2O
shopping centre in Madrid for a consideration of circa GBP30
million. The sale contract has conditions attached that are
expected to be met by the end of June, following which completion
would occur; a further update will be provided at that time. ART
will retain a 30% stake in the joint venture, in order to
participate in the future growth of the centre.
ART originally purchased H2O in March 2010 at a value of EUR83.3
million, including acquisition costs. Since acquisition, H2O's
annual footfall increased from 5.7 million to 7.7 million visitors
and tenant sales have experienced strong year-on-year growth. To
attract a high number of new and repeat visitors, ART invested in
physical upgrades, including the creation of a new lakeside
restaurant and leisure plaza, and innovative marketing events such
as launching the first Lego Fun Factory children's play area in
Spain. ART significantly enhanced the centre's commercial mix
through an active leasing strategy that included adding new retail
and leisure anchors, including Mercadona and Nike, and promoting a
programme of store refurbishments and expansions, the latest of
example of which being an enlarged H&M.
Post period end, the Company has also completed the refinance of
the borrowings secured on the shopping centre with a new EUR65
million seven year loan.
Site acquisition, H2O shopping centre potential expansion
In February 2017, ART completed the acquisition of a small
vacant site located in the same planning zone as the H2O shopping
centre in Madrid. The site has over 11,000 square metres of
allocated building rights, and subject to planning consent, part of
these rights could be transferred to the H2O plot creating
potential for the future expansion the shopping centre. Such
expansion is unlikely to be implemented in the short term, unless
it meets the demand of specific tenants. However, the acquisition
does create the opportunity to add value in the longer term. This
site is included in the joint venture with CBRE European
Co-Investment Fund.
Private Rented Sector investment
The Company's investments in the residential Private Rented
Sector ("PRS") in central Leeds and central Birmingham are
opportunities that were secured early in the build-to-rent process
that offer potential to create resilient equity income returns at
an attractive yield on cost. The PRS investments assist in building
a portfolio of critical mass to afford participation in a maturing
market which is attracting greater institutional participation.
Detailed planning consent for both sites has been secured. The
Birmingham project has established non-material amendments to its
planning consent for 162 residential units and ground floor
commercial space. The Leeds project has been granted detailed
planning consent for 307 residential units (which the Company
intends to develop for PRS) plus commercial development within the
adjacent existing railway arches and outline planning consent for a
further 300 residential units. Discussions are underway with
potential partners to investigate joint funding opportunities. Both
investments have been revalued by independent valuers at year end.
The Company estimates that up to GBP16.0 million could be invested
to undertake the development of its PRS sites as part of its build
to rent investment strategy alongside debt financing.
New mezzanine investment
The Company's successful mezzanine loan investments, including
Active UK Real Estate Fund ("AURE") and Industrial Multi Property
Trust plc ("IMPT") (now repaid), have provided double digit income
returns.
In October 2016, ART provided a new GBP1.7 million mezzanine
loan secured on a hotel located in central Newcastle operated under
a franchise agreement from Intercontinental Hotels Group ("IHG") as
a Staybridge Suites, IHG's extended stay brand. The facility
matures in October 2019 and earns an annualised return in excess of
15% plus arrangement and exit fees.
ART has further extended its mezzanine lending investment
business during the year with the objective of creating a
diversified portfolio of smaller mezzanine investments secured on
real estate assets. Each loan will typically have a two year term
and a maximum 75% loan to value ratio and be targeted to generate
double digit income returns. Repayment proceeds will be rotated
into new loan business. By 31 March 2017, ART had invested GBP0.3
million into a property development mezzanine loan facility; a
further two loans were drawn-down post period end bringing the
total invested in smaller mezzanine transactions to GBP1.0
million.
Post period end, ART redeemed its outstanding unsecured
subordinated loan provided to IMPT of GBP10.9 million (including
outstanding interest and exit fee). This mezzanine investment
returned an IRR of 17.6% per annum and an equity multiple of 1.5
times for ART.
Looking ahead, the Company remains alert to further investment
of this type across both real estate and asset backed sectors.
Data centre investment
In November 2016, ART entered into a binding agreement to
purchase an industrial site in Frankfurt subject to securing
planning consent for a data centre with a minimum gross external
area of 24,500 square metres and a specified minimum electrical
power supply with a dual feed for the proposed development.
Following a detailed design process, both planning permission and
power applications have been filed as per the envisaged
schedule.
If the power and planning conditions are not secured by agreed
target dates during 2017, ART may terminate the agreement. ART has
created a new special purpose vehicle ("SPV") to enter into the
acquisition contract and undertake the development.
ART is funding the planning and predevelopment costs to the new
SPV which are estimated to cost up to EUR2.6 million net of
refundable costs. To date, EUR2.3 million (GBP2.0 million) has been
funded. This includes real estate transfer tax of EUR0.8 million
which would be refundable if the transaction does not complete. If
the requisite planning and electrical supply are confirmed, then
the agreed site purchase price will be payable.
The investment offers ART the opportunity to build and hold the
leased development for income. Development finance will be sought
to part fund the development cost and site value, optimising
further equity investment to complete the development. The Group
estimates that should the purchase conditions be satisfied, up to
GBP14.5 million will be invested to complete the acquisition of the
site.
Asset management successes
The performance of ART's direct and indirectly held equity
investments continued to benefit from successful asset management
initiatives. This is evident both in the UK and in other markets
across Europe.
In Spain, the H2O shopping centre investment in Madrid delivered
a revaluation increase of 4.4% during the period. H2O attracted
record visitor numbers in 2016, with an increase of over 10.8%
above 2015. This trend has continued in 2017, with visitor numbers
increasing 5.9% in the quarter to 31 March 2017, versus the same
period in 2016. A significant letting of a 2,600 square metre,
previously vacant, unit to a leisure operator was completed in the
first quarter of 2017. Once opened, the attraction is expected to
further enhance the shopping centre's appeal as a family
entertainment destination.
In the UK, AURE was placed in the top 5% of performance against
the year to date IPD benchmark. AURE provided a year to date return
of 4.0% compared to the IPD benchmark of 2.2%.
Our investment in Freehold Investment Authorised Fund ("FIAF"),
that holds a diversified ground rent portfolio, continues to
generate attractive risk-adjusted returns and stable cashflows
which assist the Company's earnings whilst offering monthly
liquidity. FIAF announced a total return for the year to 31 March
2017 of 9.7%.
Galaxia, India
As announced in January 2015, the International Chamber of
Commerce (ICC) Arbitration declared an award in favour of the
Company with respect to its Galaxia investment, a joint venture
with the Logix Group ("Logix") located in an 11.2 acre Special
Economic Zone, in NOIDA, the National Capital Region, India. The
total award amounted to GBP9.2 million based on exchange rates at
the time. Additionally, a further 15% p.a. interest on all sums was
awarded to the Company from 20 January 2015 until the actual date
of payment by Logix of the award. The sum has now accrued to
GBP14.0 million at the current exchange rate. ART continues to hold
the indirect investment at INR 450 million (GBP5.5 million) in the
accounts due to uncertainty over timing and final value.
Following a challenge of the award by Logix, the Company
announced in February 2017 that the Delhi High Court upheld the
award and dismissed the Logix petition with costs.
Logix subsequently appealed to a division bench of the Delhi
High Court. On 8 May 2017 the Division Bench of the Delhi High
Court upheld the award declared in favour of the Company and
rejected Logix's appeal. Logix can seek a review of the dismissal
before the Supreme Court of India within 90 days. ART has commenced
execution of the award and the Logix promoters have been restrained
from alienating their Corporate Office in NOIDA as well as their
residential home in New Delhi and further directed by the Delhi
High Court to submit on affidavit a list of all their assets and
bank statements.
Post period end, the Delhi High Court has issued a warrant of
attachment against the primary residential property owned by Shakti
Nath and Meena Nath, promoters of Logix Group. The Company has had
the residential property independently valued at approximately
GBP6m. ART continues to actively pursue Logix directors for the
recovery of the award.
Capital recycling
ART actively manages its investment portfolio which continues to
be replenished via capital recycling from the sale of non-core
assets, loan repayments or strategic full or partial disinvestment
from assets that allow for profit-taking and portfolio
optimisation. This creates the opportunity for capital allocation
to new investments.
Post period end, the sale of 70% of the equity interest in the
H2O shopping centre in Madrid will, upon successful completion,
generate circa GBP30 million of proceeds. ART's subordinated debt
facility to Industrial Multi Property Trust Limited, which had an
outstanding balance (including accrued interest and exit fees) of
GBP10.9 million, was fully repaid and the Company's equity
shareholding in IMPT was realised for GBP5.3 million. The potential
realisation of approximately GBP46 million from investments
disposals this year and next will enable ART to further invest in
its build to rent investments with the potential for capital
investment in excess of GBP30 million in the next 12 months. This
excludes potential investment opportunities in other portfolio
assets and new investment in the Company's mezzanine portfolio.
Positioning for continued growth
ART benefits from the depth of experience, strength and size of
the Investment Manager's business with a team of over 80
investment, asset management and debt restructuring professionals
based throughout the UK and Europe. ART's active management
approach has helped deliver improvements in underlying asset
values, in both directly and indirectly held investments across our
investment markets.
A detailed summary of the Company's investments is contained
within the investment review section.
Results and dividends
Dividends
Adjusted earnings for the year are GBP5.2 million and adjusted
earnings per share for the year are 7.4 pence (see note 9 of the
financial statements). This compares with adjusted earnings per
share of 7.0 pence for the same period in 2016.
In line with its aim to pay dividends quarterly, the Board
announces a dividend of 0.6 pence per share which is expected to be
paid on 21 July 2017 (ex dividend date 29 June 2017 and record date
30 June 2017).
The dividends paid and declared for the twelve month period to
31 March 2017 total 2.4 pence per share, representing an annual
dividend yield of 2.5% p.a. on the average share price over the
period.
The net asset value per share at 31 March 2017 is 158.9 pence
per share (31 March 2016: 137.9 pence per share) (see note 10 of
the financial statements).
Financing
ART's underlying investments are part funded through loan
facilities with external debt providers, which are secured on
underlying assets and non-recourse to the Group's other asset
investments.
As at 31 March 2017 bank borrowings secured on the H2O shopping
centre were EUR71.1 million (GBP60.5 million), which, following
capital repayments, represents a reduction of EUR3.9 million from
the initial EUR75.0 million original advance. Post period end, ART
completed the refinance of the borrowings secured on the shopping
centre with a new EUR65 million seven year loan. This loan has been
used to partly repay the previous bank loan. The new margin of 1.8%
(1.7% on swapped fixed rate borrowings) represents a significant
cost saving on the previous financing which had a weighted average
margin of 2.5%.
Further details of individual asset financing can be found under
the individual investment review sections later in this report.
Principal risks and uncertainties
During the year, the "Brexit" Referendum was held, in which the
United Kingdom voted to leave the European Union. No material
adverse impacts have been noted within the Company's portfolio to
date. However, given the unprecedented decision, the Board
continues to monitor the situation for potential risks to the
Company's investments. Equally, the Board remains alert to possible
new investment opportunities that may arise.
Despite a pre and post-Brexit pause, transaction volumes across
the Company's investment markets remain sound. In some markets and
sectors investors are failing to deploy capital citing the limited
availability of good quality opportunities.
The other principal risks faced by the Group are financial
risks; these are described in note 23 to the financial
statements.
Foreign currency
The Board monitors foreign exchange exposures and considers
hedging where appropriate and has noted the increased market
volatility in exchange rates following the Brexit Referendum
result. All foreign currency balances have been translated at the
period-end rates of GBP1:EUR1.172, GBP1:NOK10.753 and
GBP1:INR81.305.
Share buyback
On 9 March 2016, the Company published a circular giving notice
of an Extraordinary General Meeting on 1 April 2016. Consistent
with the Company's commitment to shareholder value, the Company
asked its shareholders to approve a general authority allowing the
Company to acquire up to 24.99% of the Voting Share Capital during
the period expiring on the earlier of (i) the conclusion of the
Annual General Meeting of the Company in 2017 and (ii) 4 September
2017. The shareholders approved the proposal.
During the period, the Company made no share buybacks.
Summary
ART continues to actively manage its portfolio to enhance the
value of the underlying assets, recycle capital from investments
where profit taking and portfolio optimisation opportunities are
identified and to originate and secure new investment
opportunities.
Post period end, the sale of 70% of the equity interest in the
H2O shopping centre in Madrid will, upon successful completion,
generate circa GBP30 million of proceeds. ART's subordinated debt
facility to Industrial Multi Property Trust Limited, which had an
outstanding balance (including accrued interest and exit fees) of
GBP10.9 million, was fully repaid and the Company's equity
shareholding in IMPT was realised for GBP5.3 million. The potential
realisation of c.GBP46 million from investments disposals this year
and next will enable ART to further invest in its build to rent
investments, an increasing area of focus for the Company, with the
potential for capital investment in excess of GBP30 million in the
next 12 months. This excludes potential investment opportunities in
other portfolio assets and new investment in the Company's
mezzanine portfolio.
Accordingly, the Company remains well positioned to continue to
deliver attractive returns through investing, realising and
re-investing its capital in asset backed investment
opportunities.
David Jeffreys
Chairman
15 June 2017
Investment review
Portfolio overview as at 31 March 2017
Investment name
Investment Investment Income Investment Property type Investment % of
type value return location / underlying notes portfolio(1)
p.a. security
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
High yielding debt (14.2%)
--------------------------------------------------------------------------------------------- -------------
Active UK Real Estate Fund plc ("AURE")
High-yield
Mezzanine GBP3.4m 9.0% diversified Preferred
loan (2) (3) UK portfolio capital structure 3.0%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Industrial Multi Property Trust plc ("IMPT")
High-yield Unsecured
Subordinated GBP10.7m 15.0% diversified subordinated
debt (2) (3) UK portfolio debt 9.4%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Staybridge Suites, Newcastle
Central
Mezzanine GBP1.7m 15.0% Newcastle Secured mezzanine
loan (2) (3) UK hotel facility 1.5%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Mezzanine Finance
Development
loan as seed
Mezzanine GBP0.3m 14.0% investment Secured mezzanine
loan (2) (3) UK in new portfolio facility 0.3%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
High yielding equity in property investments
(47.1%)
--------------------------------------------------------------------------------------------- -------------
H2O shopping centre
Post period
end; agreement
High-yield, to divest
dominant 70% shareholding
Direct GBP42.1m 8.7% Madrid shopping and refinance
property (EUR49.3m) (4) Spain centre of bank debt 37.0%
Site - Vacant site;
building building Potential
rights rights capable expansion
Direct GBP1.2m of transfer capacity for
property (EUR1.4m) n/a Spain to H2O H2O 1.1%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Active UK Real Estate Fund plc
High-yield 20.5% of ordinary
commercial shares in
Equity GBP3.9m n/a UK portfolio fund 3.4%
------------------ -------------- -------- ---------- ---------------- ----------------- -------------
Cambourne Business Park
Bank facility
at 60.0% LTV
for 2 years
then 55% till
High-yield maturity (current
business interest cover
Indirect 12.0% park located of 2.0 times
property GBP1.5m (4) UK in Cambridge covenant level) 1.3%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Industrial Multi Property Trust plc
High-yield 19% of ordinary
diversified shares in
Equity GBP4.9m n/a UK portfolio fund 4.3%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Ground rent investments (18.8%)
--------------------------------------------------------------------------------------------- -------------
Freehold Income Authorised Fund
Highly defensive
Ground 3.9% income; freehold No gearing;
rent fund GBP21.2m (5) UK ground rents monthly liquidity 18.8%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Build-to-rent investments (9.7%)
--------------------------------------------------------------------------------------------- -------------
Unity and Armouries, Birmingham
Central Planning consent
Birmingham for 90,000
residential square feet
build to / 162 units
PRS development GBP3.5m n/a UK own plus commercial 3.1%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Monk Bridge, Leeds
Planning consent
for 140,000
Central Leeds square feet
residential / 269 units
build to plus commercial
PRS development GBP5.5m n/a UK own opportunities 4.8%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Data centre
Frankfurt
Industrial
site with Agreement to
potential purchase, subject
Direct GBP2.0m for data to planning
property (EUR2.3m) n/a Germany centre use permission 1.8%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Other investments (8.2%)
--------------------------------------------------------------------------------------------- -------------
Galaxia
Legal process
underway
to recover
Development investment
GBP5.5m site located by enforcing
Indirect (INR in NOIDA, arbitration
property 450m) n/a India Delhi, NCR award 4.8%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Europip plc
An ungeared
logistics
and office
investment
- awaiting
final 47% of ordinary
Indirect GBP2.5m shareholder shares in
property (EUR2.9m) n/a Norway distribution fund 2.2%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Healthcare & Leisure Property Limited
Indirect Leisure property No external
property GBP1.4m n/a UK fund gearing 1.2%
------------------ --------------- ------- ---------- ---------------- ----------------- -------------
Cash (2.0%)
--------------------------------------------------------------------------------------------- -------------
Current or
Cash (Company 'on call'
only) GBP2.3m 0.1-1% UK accounts 2.0%
------------------- -------------- ------- ---------- ---------------- ----------------- -------------
(1) Percentage share shown based on NAV excluding the rent
company's sundry assets/liabilities
(2) Including accrued coupon at the balance sheet date
(3) Annual coupon
(4) Yield on equity over 12 months to 31 March 2017 (note: H2O
yield on cost 20.5%, Cambourne yield on cost 14.1%)
(5) 12 months income return; post tax
High yielding equity in property investments
Property market overview
There is still a significant amount of capital seeking
investment opportunities globally that have the potential to
deliver yield or high risk adjusted total returns. Cash deposit
interest rates remain at close to zero while an increasingly
stabilised debt market provides liquidity and an ability to borrow
at relatively low interest rates. A combination of these factors
continues to create high investor demand for real estate and asset
backed sectors in general.
Research suggests the next phase of the current property cycle
is likely to see income growth having a greater weighting within
total returns, although, to date, rental growth has lagged
increased pricing recorded in the investment market. There are
signs that occupier demand is improving across the Company's
portfolio evidenced by the volume of new leases signed across
assets in various investment markets and asset types.
ART continues to remain focused on investments that offer the
potential to deliver attractive risk-adjusted returns by way of
value enhancement through active asset management, improvement of
net rental income, selective deployment of capital expenditure,
development for access to future yielding assets and the ability to
undertake strategic sales when appropriate.
Active UK Real Estate Fund plc
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
============= =========== =========== ======== =================== ===========
Active UK Equity GBP3.9m n/a High-yield 20.5% of
Real Estate commercial ordinary
Fund plc UK portfolio capital
============= =========== =========== ======== =================== ===========
AURE is a fund that invests in a portfolio of high yielding UK
commercial property and aims to deliver a high and stable income
yield, together with the potential for capital appreciation. AURE's
shares are listed on The International Stock Exchange (formerly the
Channel Islands Securities Exchange) (www.tisegroup.com).
ART holds 20.5% of the share capital and voting rights in AURE,
representing GBP3.9 million in equity value based on AURE's share
price, as at 31 March 2017.
The following highlights were included in AURE's quarterly
update for the period ended 31 March 2017 (published May 2017):
-- Portfolio valuation: GBP36.8 million for the 10 property portfolio
-- AURE performance: successful delivery of the asset management
business plan is reflected in AURE being placed in the top 5% of
performance against the year to date IPD benchmark. AURE provided a
year to date return of 4.0% compared to the IPD benchmark of
2.2%.
-- Increased NAV: the net asset value per share has increased by
4.4% from last quarter (31 Dec 2016), which equates to an increase
of GBP0.8 million in net assets.
ARC is the investment manager of AURE.
ARC is pursuing value enhancement opportunities in the AURE
portfolio assets to increase net income and improve the profile of
this income through lease extensions, renewals and reducing
unrecoverable void costs.
Industrial Multi Property Trust plc
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
================ =========== =========== ======== =================== ===========
Industrial Equity GBP4.9m n/a High-yield 19.0% of
Multi Property diversified ordinary
Trust plc UK portfolio capital
================ =========== =========== ======== =================== ===========
As at 31 March 2017, ART held 19.0% of IMPT's ordinary share
capital, representing GBP4.9 million in equity value based on
IMPT's share price of 304.5p, as at 31 March 2017.
Post period end, ART sold its shares in IMPT for 330.0p per
share (representing a receipt of GBP5.3 million), an increase over
nine times ART's initial acquisition price and an IRR of 69% per
annum.
Cambourne Business Park, Phase 1000, Cambridge
Investment Investment Investment Income Property Investment
type value return type / notes
underlying
security
=========== =========== =========== ======== ============ ==============
Cambourne Indirect GBP1.5m 12.0% High-yield Bank facility
Business property p.a. business at 60.0%
Park (4) park LTV for 2
years then
55.0% till
maturity
(current
interest
cover of
2.0 times
covenant
level)
=========== =========== =========== ======== ============ ==============
(4) Yield on equity over 12 months to 31 March 2017 (Yield on
cost: 14.1%)
The Company has an investment of GBP1.5 million in a joint
venture that owns Phase 1000 of Cambourne Business Park. The
property consists of three Grade A specification modern office
buildings constructed in 1999 and located in the town of Cambourne,
approximately 8 miles west of Cambridge city centre. The property
comprises 9,767 square metres of lettable area, is self-contained
and has 475 car parking spaces. Phase 1000 is situated at the front
of the business park with good access and visibility.
Phase 1000 is a high quality asset, fully let to Netcracker
Technology EMEA Ltd, Citrix Systems and Cambridge Cambourne Centre
Ltd (previously called 'Regus (Cambridge Cambourne) Ltd'). The
property has open B1 Business user planning permission and has
potential value-add opportunities.
Phase 1000 was purchased in a joint venture partnership with a
major overseas investor for GBP23.0 million including acquisition
costs. ART's equity contribution of GBP1.1 million, which
represented 10.0% of the total equity commitment at acquisition, is
invested into a joint venture entity, a subsidiary of which holds
the property. The property is currently delivering an equity income
return of 12.0% per annum as at 31 March 2017.
The Cambourne asset is funded by way of a GBP14.0 million
(GBP12.7 million as at 31 March 2017 following quarterly
amortisation) non-recourse bank debt facility which matures in
2020.
ARC is the investment manager to the joint venture owning the
Cambourne property and continues to pursue opportunities to add
value to the investment.
H2O Shopping Centre, Madrid
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
=========== =========== ============ ======== =================== ==================
H2O Direct GBP42.1m 8.7% High-yield, Post period
property (EUR49.3m) p.a. dominant end; agreement
(4) shopping to divest
centre 70% shareholding
and refinance
of bank debt
=========== =========== ============ ======== =================== ==================
(4) Yield on equity over 12 months to 31 March 2017 (Yield on
cost: 20.5%)
H2O was opened in June 2007 and built to a high standard
providing shopping, restaurants and leisure around a central theme
of landscaped gardens and an artificial lake. H2O has a gross
lettable area of approximately 52,000 square metres comprising 118
retail units. In addition to a multiplex cinema, supermarket (let
to leading Spanish supermarket operator Mercadona) and restaurants,
it has a large fashion retailer base, including some of the
strongest international fashion brands, such as Nike, Zara, Mango,
Cortefiel, H&M, C&A and Massimo Dutti.
Post period end the Company has agreed to sell a 70% equity
interest in the H2O shopping centre in Madrid to CBRE European
Co-Investment Fund, managed by CBRE Global Investors for a
consideration of circa GBP30.2 million. The sale contract has
conditions attached that are expected to be met by the end of June,
following which completion will occur, and a further update will be
provided at that time.
ART will retain a 30% stake in joint venture with CBRE Global
Investors to participate in the future growth of the centre. Alpha
Real Capital, will continue to manage the shopping centre.
In February 2017, ART completed the acquisition of a small
vacant site located in the same planning zone as the H2O shopping
centre in Madrid. The site has with over 11,000 square metres of
allocated building rights, and subject to planning consent, part of
these rights could be transferred to the H2O plot, creating
potential for the future expansion the shopping centre. This site
is included in the joint venture with CBRE Global Investors.
Post period end, Alpha Real Trust has also completed the
refinance of the borrowings secured on the shopping centre with a
new EUR65 million seven year loan. This loan has been used to
partly repay the previous bank loan (EUR71.1 million) which had
been provided by a syndicate of banks and which was due to be
repaid in October 2017. The new margin of 1.80% (1.70% on swapped
fixed rate borrowings) represents a significant saving on the
previous financing which had incurred a weighted average margin of
2.50%. ART has funded the refinancing gap and fees and CBRE
European Co-Investment Fund will, as part of the completion of the
sale above, pay 70% of this cost. The borrowings are non-recourse
to ART.
The asset management highlights are as follows:
-- Valuation: 4.4% valuation increase during the year to 31 March 2017.
-- Centre occupancy: 92.4% by area as at 31 March 2017 (96.7% by
rental value with short term temporary rent discounts also
remaining in place to create further potential upside).
-- Footfall: the year to date visitor numbers at H2O reached
record levels in 2016, increasing 10.8% with the positive momentum
continuing and an increase of 5.9% recorded in the period to 31
March 2017 was assisted by the upgraded physical space, presence of
new brands and improving commercial mix.
-- Leasing: A significant letting of a 2,600 square metre
previously vacant unit to a leisure operator was completed in the
first quarter of 2017. Once opened, the attraction is expected to
further enhance the shopping centre's appeal as a family
entertainment destination
-- Lease length: weighted average lease length of 2.9 years to
next break and 9.7 years to expiry (as at 31 March 2017).
High yielding debt
Market overview
Underlying asset values have benefited from an improvement in
the wider investment market, resulting in enhanced credit quality
as loan to value ratios have either improved or are more firmly
supported as a result of greater liquidity and debt
availability.
Although this remains a competitive environment, ART continues
to explore new high yielding mezzanine lending and preferred equity
opportunities and with the support of the Investment Manager's
experience and knowledge of the underlying assets and sectors. The
strategy of investment in smaller mezzanine loans in partnership
with specialist mezzanine investors, and the loan investment
secured on the central Newcastle, Staybridge Suites hotel are
examples of the debt investment strategies that the Company is
targeting.
Active UK Real Estate Fund plc
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
============= =========== =========== ======== =================== ===================
Active UK Mezzanine GBP3.4m 9.0% High-yield Preferred
Real Estate loan (2) p.a. commercial capital structure
Fund plc (3) UK portfolio
============= =========== =========== ======== =================== ===================
(2) Including accrued coupon at the balance sheet date
(3) Annual coupon
ART provides a GBP3.4 million (including accrued interest)
two-year mezzanine facility to AURE, which, following renewal in
2016, matures in November 2018 and earns a coupon of 9.0% per
annum.
Based upon the value of the underlying AURE portfolio of GBP36.8
million (valuation as at 31 March 2017) and the balance of the bank
finance of GBP15.5 million as at 31 December 2016, ART's loan is
positioned between a 42.1% and 51.1% loan to value.
Staybridge Suites
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
=========== =========== =========== ======== =================== =====================
Staybridge Mezzanine GBP1.7m 15.0% Extended Secured subordinated
Suites loan (2) p.a. stay hotel; debt
(3) central
Newcastle,
UK
=========== =========== =========== ======== =================== =====================
(2) Including accrued coupon at the balance sheet date
(3) Annual coupon
In October 2016, ART provided a GBP1.7 million mezzanine loan
secured on a hotel located in central Newcastle operated under a
franchise agreement from Intercontinental Hotels Group ("IHG") as a
Staybridge Suites, IHG's extended stay brand. The facility matures
in October 2019 and earns an annualised return in excess of 15%
plus arrangement and exit fees.
The GBP1.7 million facility has a 3 year term and earns an
annualised return in excess of 15%. The facility earned an
arrangement fee on drawdown and will receive scaled exit fees
depending on the repayment date.
Mezzanine Finance
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
=========== =========== =========== ======== =================== =====================
Mezzanine Mezzanine GBP0.3m 14.0% Portfolio Secured subordinated
finance loan (2) p.a. of mezzanine debt
(3) loan investments
=========== =========== =========== ======== =================== =====================
(2) Including accrued coupon at the balance sheet date
(3) Annual coupon
ART has further extended its mezzanine lending investment
business during the year with the objective of creating a
diversified portfolio of smaller mezzanine investments secured on
real estate assets. Each loan will typically have a two year term
and a maximum 75% loan to value ratio and are targeted to generate
double digit income returns. Repayment proceeds will be rotated
into new loan business.
By 31 March 2017, ART had invested GBP0.3 million into a
property development mezzanine loan facility; a further two loans
were drawn-down post period end, bringing the total invested to
GBP1.0 million.
Industrial Multi Property Trust plc
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
================ ============= =========== ======== =================== ==============
Industrial Subordinated GBP10.7m 15.0% High-yield Unsecured
Multi Property debt (2) p.a. diversified subordinated
Trust plc (3) UK portfolio debt
================ ============= =========== ======== =================== ==============
(2) Including rolled up and accrued coupon at the balance sheet
date
(3) Annual coupon
Further to its equity investment (described above) ART, as at 31
March 2017, provided a subordinated debt facility to IMPT of
GBP10.0 million (GBP10.7 million including rolled up interest and
accrued coupon).
Post period end IMPT fully repaid its loan from ART for GBP10.9
million (including outstanding interest and exit fees).
Build to rent investments
Private Rented Sector
ART's investment in the PRS sector targets the increasing growth
opportunities identified in the private rented residential market
as a result of rising occupier demand and an undersupply of
accommodation. The opportunity exists to create a portfolio
delivering an attractive yield on equity. The securing of a
portfolio of critical mass will afford participation in a maturing
market which is attracting greater institutional investment.
The Group's PRS investments offer scope to create resilient
equity income returns at an attractive yield on cost, with
potential for operating leverage to further enhance returns. The
investments also offer scope for capital growth as the sites mature
or planning is enhanced.
The investments provide the Group with flexibility to add value
by either constructing the development, funded with either
partnership equity capital, debt or contractor finance, and
subsequently holding the completed assets as investments; or,
alternatively, forward selling all or some of the developed units.
ART may also potentially benefit from government support for
borrowings secured against PRS assets.
Unity and Armouries, Birmingham
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
============ =========== =========== ======== =================== ===============
Unity and Direct GBP3.5m n/a Central Planning
Armouries, property Birmingham consent for
Birmingham residential 90,000 square
build to feet / 162
own units plus
commercial
============ =========== =========== ======== =================== ===============
ART owns Unity and Armouries, a development site located in
central Birmingham with planning consent for 90,000 net developable
square feet comprising 162 residential apartments with ground floor
commercial areas.
Detailed planning consent for ART's proposed project has been
granted. There are no outstanding Section 106/Community
Infrastructure Levy requirements and the site has an affordable
unit designation for nine flats. The approved project includes 162
residential units with ground floor commercial (3,700 sq. ft.) and
car parking spaces.
The project design team is working with the preferred
construction partner to review the existing detailed planning
consent for possible enhancements to meet best in class PRS
requirements and a value engineering process is underway to
identify the most efficient and effective construction processes
and potential cost savings.
As at 31 March 2017, an independent valuation has been
undertaken by GVA valuing the site at GBP3.5 million and also
underwriting all of the current cost and value parameters currently
assumed. The project has a potential Gross Development Value
('GDV') in excess of GBP34.8 million.
Monk Bridge, Leeds
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
============= =========== =========== ======== =================== ================
Monk Bridge, Direct GBP5.5m n/a Central Planning
Leeds property Leeds residential consent for
build to 140,000 square
own feet / 269
units plus
commercial
opportunities
============= =========== =========== ======== =================== ================
ART owns Monk Bridge, a central Leeds development site.
Post period end, detailed planning was obtained for 307
residential flats in three buildings over 180,049 square feet of
net saleable space and the restoration of the adjacent Grade II
listed former railway arches as a raised park and ancillary retail,
leisure and restaurant uses over 25,080 square feet in 16
units.
Outline consent was also granted for a further 300 residential
units in two buildings of up to 21 storeys over 193,071 square feet
of net saleable space. The revised project has a potential
estimated gross development value in excess of GBP148.0
million.
The approval includes a provision for 5% of the 607 units as
affordable.
The Company acquired the development site in December 2015 for a
price of GBP3.75 million at which time the site had implemented
planning consent for 269 residential units with an estimated GDV of
GBP55 million.
The project design team is working with the preferred
construction partner to review the existing detailed planning
consent for possible enhancements to meet best in class PRS
requirements and a value engineering process is underway to
identify the most efficient and effective construction processes
and potential cost savings.
As at 31 March 2017 (prior to planning having been enhanced), an
independent valuation has been undertaken by Savills valuing the
site at GBP5.5 million and also underwriting all of the current
cost and value parameters currently assumed.
Data centre, Frankfurt
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
============= =========== =========== ======== =================== ==============
Data centre, Direct GBP2.0m n/a Industrial Agreement
Frankfurt property (EUR2.3m) site with to purchase,
potential subject to
for data planning
centre use permission
============= =========== =========== ======== =================== ==============
In November 2016, ART entered into an agreement to purchase,
subject to planning, an industrial site in Frankfurt which it has
identified as being suitable for the development of a data centre,
where the high barriers of entry to this sector are potentially
capable of being met. ART has entered into a binding agreement to
purchase the asset subject to securing planning consent for a data
centre with a minimum gross external area of 24,500 square metres
and a specified minimum electrical power supply with a dual feed
for the proposed development.
Following a detailed design process, both planning permission
and power applications have been filed as per the envisaged
schedule.
If the power and planning conditions are not secured by agreed
target dates during 2017, ART may terminate the agreement. ART has
created a new special purpose vehicle ("SPV") to enter into the
acquisition contract and undertake the development.
ART is funding the planning and predevelopment costs to the new
SPV which are estimated to cost up to EUR2.6 million net of
refundable costs. To date, EUR2.3 million (GBP2.0 million) has been
funded. This includes real estate transfer tax of EUR0.8 million
which would be refundable if the transaction does not complete. If
the requisite planning and electrical supply are confirmed, then
the agreed site purchase price will be payable.
The investment offers ART the opportunity to sell the site with
enhanced planning and a pre-let to a data centre operator or to
enter the development process and build and hold the leased
development for income. Development finance will be sought to part
fund the development cost and site value, optimising further equity
investment to complete the development.
The Group estimates that should the purchase conditions be
satisfied, up to GBP14.5 million will be invested to complete the
acquisition of the site.
Freehold ground rent investments
ART invests in a fund which holds a diversified portfolio of UK
residential property freehold ground rents with a view to achieving
steady and predictable returns, a consistent income stream and
prospects for growth.
A ground rent is the payment made by the lessee of a property to
the freeholder of that property. The investment represents the
underlying freehold interest in a property which is subject to a
lease for a period of time usually between 99 and 999 years.
Freehold Income Authorised Fund ("FIAF")
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
=================== =========== =========== ======== =================== ===================
Freehold Equity GBP21.2m 3.9% Highly defensive No gearing;
Income Authorised in ground p.a. income; monthly liquidity
Fund rent fund (5) freehold
ground rents
=================== =========== =========== ======== =================== ===================
(5) 12 months income return; post tax
The Company has invested GBP21.2 million as at 31 March 2017 in
FIAF, an open-ended fund that invests in UK freehold ground rents
with a net asset value of GBP290.2 million as at 31 March 2017.
The following highlights were reported in the FIAF fact sheet as
at 31 March 2017 (published in April 2017):
-- FIAF continues its unbroken 24 year track record of positive inflation beating returns.
-- 85% of its freeholds have a form of inflation protection
through periodic uplifts linked to Retail Price Index (RPI),
property values or fixed uplifts.
-- From 12 January 2017, a 5% dilution levy will be applied to
subscriptions into FIAF. This levy remains constantly under
review.
ART's total return on its investment in FIAF was 8.8%
(annualised post tax) for the year ending 31 March 2017.
Cash balances
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
============= =========== =========== ======== =================== ====================
Cash balance Cash GBP2.3m 0.1 - Cash deposits Held between
1.0% / current banks with
p.a. accounts a range of
deposit maturities
============= =========== =========== ======== =================== ====================
As at 31 March 2017, the Company had cash balances of GBP2.3
million.
Other investments
European Property Investment Portfolio plc ("Europip")
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
=========== =========== =========== ======== =================== =============
Europip Indirect GBP2.5m n/a A geared 47.0% of
Norway property (EUR2.9m) office and ordinary
logistics shares in
investment fund with
vehicle medium term
debt
=========== =========== =========== ======== =================== =============
ART has a 47.0% stake in Europip (shares are non-voting), an
Isle of Man domiciled open ended investment company. Europip
invested in directly owned commercial property portfolio in
Norway.
The portfolio is undergoing an orderly realisation process.
Following asset sales, the bank loan secured on the Europip assets
has been fully repaid.
During the year, ART received GBP0.3 million from Europip and a
further payment was received post period end of GBP1.8 million.
A subsidiary of ARC, Alpha Real Property Investment Advisers LLP
("ARPIA") is the investment manager for the Norway portfolio.
Healthcare & Leisure Property Limited ("HLP")
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
=========== =========== =========== ======== =================== ============
Healthcare Indirect GBP1.4m n/a Leisure No external
& Leisure property property gearing
Property fund
Limited
=========== =========== =========== ======== =================== ============
HLP has invested in companies operating in the hotel, care home,
house building and leisure sectors throughout the UK. HLP's
investments are predominantly un-geared.
HLP is managed by Albion Ventures LLP, a specialist UK venture
capital manager. No new investments are being made by HLP.
As at 31 March 2017, ART had GBP1.4 million invested in HLP. HLP
subsequently holds minority stakes in the underlying
investments.
ART continues to receive income from its investment while HLP's
underlying assets are sold.
Galaxia, National Capital Region, NOIDA
Investment Investment Investment Income Property Investment
type value return type / underlying notes
security
=========== =========== =========== ======== =================== ===========
Galaxia Direct GBP5.5m n/a Development Asset held
property (INR site in for sale
450m) NOIDA, Delhi,
NCR
=========== =========== =========== ======== =================== ===========
ART invested INR 450 million (GBP5.5 million) in the Galaxia
project, a development site extending to 11.2 acres with the
potential to develop 1.2 million square feet. Galaxia is located in
NOIDA, an established, well planned suburb of Delhi that continues
to benefit from new infrastructure projects and is one of the
principal office micro-markets in India. The Company has a 50.0%
shareholding in the SPV which controls the Galaxia site. There are
no bank borrowings on the asset.
On 2 February 2011, ART recommenced arbitration proceedings
against its development partner Logix Group ("Logix") in order to
protect its Galaxia investment.
In January 2015, the Arbitral Tribunal, by a majority, decreed
that Logix and its principals had breached the terms of the
shareholders' agreement and has awarded the Company:
-- Return of its entire capital invested of INR 450 million
(equivalent to GBP5.5 million using an exchange rate of INR81.305
as at 31 March 2017) along with interest at 18.0% per annum from 31
January 2011 to 20 January 2015.
-- All costs incurred towards the arbitration.
-- A further 15.0% interest per annum on all sums was awarded to
the Company from 20 January 2015 until the actual date of payment
by Logix of the award.
Logix challenged the validity of the arbitration award in the
Delhi High Court. This appeal was dismissed during February 2017
and the Delhi High Court upheld the arbitration award.
Logix subsequently appealed to a division bench of the Delhi
High Court. On 8 May 2017 the Division Bench of the Delhi High
Court upheld the award declared in favour of the Company and
rejected Logix's appeal. Logix can seek a review of the dismissal
before the Supreme Court of India within 90 days. ART has commenced
execution of the award and the Logix promoters have been restrained
from alienating their Corporate Office in NOIDA as well as their
residential home in New Delhi and further directed by the Delhi
High Court to submit on affidavit a list of all their assets and
bank statements. Subsequently, the Delhi High Court has issued a
warrant of attachment against the primary residential property
owned by Shakti Nath and Meena Nath, promoters of Logix Group. The
Company has had the residential property independently valued at
approximately GBP6m. ART continues to actively pursue Logix
directors for the recovery of the award.
Following the determination of the arbitration noted above, the
award to the Company represents a potential total of approximately
GBP14.0 million based on 31 March 2017 exchange rates. ART
continues to hold the indirect investment at INR 450 million
(GBP5.5 million) in the accounts due to uncertainty over timing and
final value.
Summary
ART's portfolio provides a balance of stable high yielding
assets and investments that offer scope to deliver strong
cashflows, capital value growth and attractive risk adjusted total
returns.
Brad Bauman and Gordon Smith
For and on behalf of the Investment Manager
15 June 2017
Directors
David Jeffreys (aged 57)
Chairman
David Jeffreys qualified as a Chartered Accountant with Deloitte
Haskins and Sells in 1985. He works as an independent non-executive
director to a number of Guernsey based investment fund companies
and managers and is a Guernsey resident.
From 2007 until 2009 David was the Managing Director of EQT
Funds Management Limited, the Guernsey management office of the EQT
group of private equity funds. He was previously the Managing
Director of Abacus Fund Managers (Guernsey) Limited between 1993
and 2004, a third party administration service provider to
primarily corporate and fund clients.
In addition to the Company, David is a director of the following
listed companies: Alpha Pyrenees Trust Limited and Tetragon
Financial Group Limited.
Phillip Rose (aged 57)
Phillip Rose is a Fellow of the Securities Institute and holds a
Master of Law degree. He has over 30 years' experience in the real
estate, funds management and banking industries in Europe, the USA
and Australasia. He has been the Head of Real Estate for ABN AMRO
Bank, Chief Operating Officer of European shopping centre investor
and developer TrizecHahn Europe, Managing Director of retail and
commercial property developer and investor Lend Lease Global
Investment and Executive Manager of listed fund General Property
Trust.
Phillip is currently CEO of Alpha Real Capital LLP and has been
a member of the Management Committee for Hermes Property Unit Trust
and its Audit Committee, and has been a Non-Executive Director of
Great Portland Estates plc.
Serena Tremlett (aged 52)
Serena has over 25 years' experience in financial services,
specialising in closed-ended property and private equity funds and
fund administration over the last 20 years.
She is a non-executive director on the listed company board of
Alpha Pyrenees Trust Limited, in addition to various unlisted
property and private funds and general partners. Serena was
previously company secretary (and a director) of Assura Group, at
that time a FTSE 250 company listed on the London Stock Exchange,
investing in primary healthcare property and ran Assura's Guernsey
head office.
Prior to working for Assura, Serena was head of Guernsey
property funds at Mourant International Finance Administration (now
State Street) for two years and worked for Guernsey International
Fund Managers (now Northern Trust) for seven years where she sat on
a number of listed and unlisted fund boards. From 2008, Serena was
co-founder and managing director of Morgan Sharpe Administration, a
specialist closed-ended fund administrator which was sold to Estera
on 28 April 2017. Serena remains its managing director.
Jeff Chowdhry (aged 56)
Jeff Chowdhry is currently Director, Emerging Market Equities at
BMO Global Asset Management (EMEA). He has over 30 years of
investment experience, the last 20 of which have been in Emerging
Markets, focusing on key countries in Asia, Latin America and EMEA.
Jeff began his career in 1982 and has held portfolio management
positions at Royal Insurance plc and BZW Investment Management
where he launched and managed one of the very first India funds
available to foreign investors. He has an MBA from Kingston
Business School and a BSc (Hons) in Economics from Brunel
University, London.
Roddy Sage (aged 64)
Roddy Sage is currently Chief Executive Officer of the AFP group
of companies, providing corporate and taxation advisory services in
Asia. Prior to that, he spent 20 years with KPMG Hong Kong, 10
years of which were as Senior Tax Partner for Hong Kong and China.
He has held Chairmanships within KPMG and outside as Chairman of
the Hong Kong General Chamber of Commerce's Taxation Committee and
is a non-executive director of Tai Ping Carpets International and
Guoco Group Limited.
Directors' and Corporate Governance report
The Directors present their report and financial statements of
the Alpha Real Trust Limited group ("the Group") for the year ended
31 March 2017.
Principal activities and status
During the year, the Company, an authorised closed-ended
Guernsey registered investment company, carried on business as a
property investment and development company, investing in
commercial property.
The Company's shares are traded on the Specialist Fund Segment
("SFS") of the London Stock Exchange ("LSE").
Business review, results and dividend
A review of the business during the year is contained in the
Chairman's Statement above.
The results for the year to 31 March 2017 are set out in the
financial statements.
On 3 March 2017, the Company declared a dividend of 0.6p per
share, which was paid to shareholders on 24 March 2017. The
intention of the Company is to pay a dividend quarterly. Further
details on dividends are given in note 8 of the financial
statements.
Corporate governance
As a Guernsey registered company traded on SFS, the Company is
not required to comply with the UK Corporate Governance Code ("UK
Code"). However, as a company authorised by the Guernsey Financial
Services Commission ("GFSC"), it is required to follow the
principles and guidance set out in the Finance Sector Code of
Corporate Governance issued by the GFSC and effective from 1
January 2012 ("Guernsey Code"). Compliance with the Guernsey Code
and general principles of good corporate governance are reviewed by
the Board at least annually and, at the date of signing these
financial statements, the Board is satisfied that the Company is
fully compliant with the Guernsey Code. The Guernsey Code is
available for consultation on the GFSC website: www.gfsc.gg.
The Board
Biographies of the Directors are set out above. All of the
Directors were appointed on 15 May 2006.
The Directors' interests in the shares of the Company as at 31
March 2017 are set out below and there have been no changes in such
interests up to the current date:
Number of Number of
ordinary shares ordinary shares
31 March 2017 31 March 2016
----------------- ----------------- -----------------
David Jeffreys 10,000 10,000
----------------- ----------------- -----------------
Phillip Rose 139,695 139,695
----------------- ----------------- -----------------
Serena Tremlett 15,000 15,000
----------------- ----------------- -----------------
Jeff Chowdhry 40,000 40,000
----------------- ----------------- -----------------
Roddy Sage - -
Non-executive directors are not appointed for specified terms;
appointments of Board members can be terminated at any time without
penalty and the Company's Articles of Association ("Articles")
require each Director to retire and submit himself/herself to
re-election by the shareholders at every third year. In addition,
the Board believes that continuity and experience adds to its
strength.
The Annual General Meeting of the Company will take place on 7
September 2017. At this meeting, Jeff Chowdhry and Roddy Sage will
retire and submit themselves for re-election. The remainder of the
Board recommend their re-appointment and confirm their
independence.
Individual Directors may seek independent legal advice in
relation to their duties on behalf of the Company.
Operations of the Board
The Board has determined that its role is to consider and
determine the following principal matters which it considers are of
strategic importance to the Company:
1) Review the overall objectives for the Company and set the
Company's strategy for fulfilling those objectives within an
appropriate risk framework
2) Consider any shifts in strategy that it considers may be
appropriate in light of market conditions
3) Review the capital structure of the Company including
consideration of any appropriate use of gearing both for the
Company and in any joint ventures in which the Company may invest
from time to time
4) Appoint the Investment Manager, Administrator and other
appropriately skilled service providers and monitor their
effectiveness through regular reports and meetings
5) Review key elements of the Company's performance including
Net Asset Value and payment of dividends.
At Board meetings, the Board ensures that all the strategic
matters are considered and resolved by the Board. Certain issues
associated with implementing the Company's strategy are delegated
either to the Investment Manager or the Administrator. Such
delegation is over minor incidental matters and the Board
continually monitors the services provided by these independent
agents. The Board considers matters that are significant enough to
be of strategic importance and are therefore reserved solely for
the Board (e.g. all acquisitions, all disposals, significant
capital expenditure, leasing and decisions affecting the Company's
financial gearing).
The Board meets at least quarterly and as required from time to
time to consider specific issues reserved for decision by the Board
including all potential acquisitions of investments.
At the Board's quarterly meetings it considers papers circulated
in advance including reports provided by the Investment Manager and
the Administrator. The Investment Manager's report comments on:
-- The property markets of the UK, Europe and India including
recommendations for any changes in strategy that the Investment
Manager considers may be appropriate
-- Performance of the Group's portfolio and key asset management initiatives
-- Transactional activity undertaken over the previous quarter
and being contemplated for the future
-- The Group's financial position including relationships with bankers and lenders.
These reports enable the Board to assess the success with which
the Group's property strategy and other associated matters are
being implemented and also consider any relevant risks and to
consider how they should be properly managed.
The Company's service providers issue reports on their own
internal controls and these reports are considered by the Board
periodically.
In between its regular quarterly meetings, the Board has also
met on a number of occasions during the year to approve specific
transactions and for other matters.
Board and Directors' appraisals
The Board carries out an annual review of its composition and
performance (including the performance of individual Directors) and
that of its standing committees. Such appraisal includes reviewing
the performance and composition of the Board (and whether it has an
appropriate mix of knowledge, skills and experience), the
relationships between the Board and the Investment Manager and
Administrator, the processes in place and the information provided
to the Board and communication between Board members.
Board Meeting attendance
The table below shows the attendance at Board meetings during
the year to 31 March 2017:
Director No of
meetings
attended
----------------- ----------
David Jeffreys 15
----------------- ----------
Phillip Rose 4
----------------- ----------
Serena Tremlett 15
----------------- ----------
Jeff Chowdhry 10
----------------- ----------
Roddy Sage 12
----------------- ----------
No. of meetings
during the
year 15
Directors' and officers' insurance
An appropriate level of Directors' and officers' insurance is
maintained whereby Directors are indemnified against liabilities to
third parties to the extent permitted by Guernsey company law.
Board Committees
The Board has established three standing committees, all of
which operate under detailed terms of reference, copies of which
are available on request from the Company Secretary.
Audit Committee
The Audit Committee consists of David Jeffreys (Chairman), Roddy
Sage and Serena Tremlett. The Board is satisfied that David
Jeffreys continues to have the requisite recent and relevant
financial experience to fulfil his role as Chairman of the Audit
Committee.
Role of the Committee
The role of the Audit Committee, which meets at least twice a
year, includes:
-- The engagement, review of the work carried out by and the
performance of the Group's external auditor
-- To monitor and review the independence, objectivity and
effectiveness of the external auditor
-- To develop and apply a policy for the engagement of the
external audit firm to provide non-audit services
-- To assist the Board in discharging its duty to ensure that
financial statements comply with all legal requirements
-- To review the Group's financial reporting and internal
control policies and to ensure that the procedures for the
identification, assessment and reporting of risks are adequate
-- To review regularly the need for an internal audit function
-- To monitor the integrity of the Group's financial statements,
including its annual and half-year reports and announcements
relating to its financial performance, reviewing the significant
financial reporting issues and judgements which they contain
-- To review the consistency of accounting policies and practices
-- To review and challenge where necessary the financial results
of the Group before submission to the Board.
The Audit Committee makes recommendations to the Board which are
within its terms of reference and considers any other matters as
the Board may from time to time refer to it.
Members of the Audit Committee may also, from time to time, meet
with the Group's independent property valuers to discuss the scope
and conclusions of their work.
Committee meeting attendance
Director No of
meetings
attended
----------------- ----------
David Jeffreys 4
----------------- ----------
Roddy Sage 4
----------------- ----------
Serena Tremlett 4
----------------- ----------
No. of meetings
during the
year 4
Policy for non audit services
The Committee has adopted a policy for the provision of
non-audit services by the Company's external auditor, BDO Limited,
and reviews and approves all material non-audit related services in
accordance with the need to ensure the independence and objectivity
of the external auditor. No services, other than audit-related
ones, were carried out by BDO Limited during the year.
Internal audit
The Board relies upon the systems and procedures employed by the
Investment Manager and the Administrator which are regularly
reviewed and are considered to be sufficient to provide it with the
required degree of comfort. Therefore, the Board continues to
believe that there is no need for an internal audit function,
although the Audit Committee considers this annually, reporting its
findings to the Board.
Nomination Committee and attendance
The Nomination Committee consists of Roddy Sage (Chairman),
Phillip Rose and Serena Tremlett.
The Committee's principal task is to review the structure, size
and composition of the Board in relation to its size and position
in the market and to make recommendations to fill Board vacancies
as they arise and it meets at least annually. It met once during
the year and all Committee members were present.
Remuneration Committee and attendance
The Remuneration Committee consists of Serena Tremlett
(Chairman), Jeff Chowdhry and David Jeffreys.
The Board has approved formal terms of reference for the
Committee and a copy of these is available on request from the
Company Secretary.
As the Company comprises only non-executive directors, the
Committee's main role is to determine their remuneration within the
cap set out in the Company's Articles. It met once during the year
and all Committee members were present.
Remuneration report
The aggregate fees payable to the Directors are limited to
GBP200,000 per annum under the Company's Articles and the annual
fees payable to each Director have been increased by only 10%
(Chairman) and 15% (other Directors) since the Company's shares
were listed in 2006. The fees payable to the Directors are expected
to reflect their expertise, responsibilities and time spent on the
business of the Group, taking into account market equivalents, the
activities, the size of the Group and market conditions. Under
their respective appointment letters, each Director is entitled to
an annual fee together with a provision for reimbursement for any
reasonable out of pocket expenses.
During the year the Directors received the following emoluments
in the form of fees from Group companies:
Year ended Year ended
31 March 2017 31 March 2016
GBP GBP
----------------- --------------- ---------------
David Jeffreys 34,875 31,500
----------------- --------------- ---------------
Phillip Rose 23,000 22,000
----------------- --------------- ---------------
Serena Tremlett 35,250 34,500
----------------- --------------- ---------------
Jeff Chowdhry 23,000 22,000
----------------- --------------- ---------------
Roddy Sage 23,000 22,000
----------------- --------------- ---------------
Total 139,125 132,000
Internal control and risk management
The Board understands its responsibility for ensuring that there
are sufficient, appropriate and effective systems, procedures,
policies and processes for internal control of financial,
operational, compliance and risk management matters in place in
order to manage the risks which are an inherent part of business.
Such risks are managed rather than eliminated in order to permit
the Company to meet its financial and other objectives.
The Board reviews the internal procedures of both its Investment
Manager and its Administrator upon which it is reliant. The
Investment Manager has a schedule of matters which have been
delegated to it by the Board and upon which it reports to the Board
on a quarterly basis. These matters include quarterly management
accounts and reporting both against key financial performance
indicators and its peer group. Further, a compliance report is
produced by the Administrator for the Board on a quarterly
basis.
The Company maintains a risk management framework which
considers the non-financial as well as financial risks and this is
reviewed by the Audit Committee prior to submission to the
Board.
Investment management agreement
The Company has an agreement with the Investment Manager. This
sets out the Investment Manager's key responsibilities, which
include proposing a property investment strategy to the Board,
identifying property investments to recommend for acquisition and
arranging appropriate lending facilities. The Investment Manager is
also responsible to the Board for all issues relating to property
asset management.
Substantial shareholding
Shareholders with holdings of more than 3 per cent of the voting
rights of the Company as at 18 May 2017 were as follows:
Name of investor Number of %
voting rights held
------------------------ --------------- ------
Alpha Global Property
Securities Fund Pte.
Ltd 22,550,000 32.53
------------------------ --------------- ------
Billien Limited 14,154,593 20.42
------------------------ --------------- ------
Armstrong Investments 5,275,000 7.61
------------------------ --------------- ------
Charles Stanley 3,197,435 4.61
------------------------ --------------- ------
IPGL Limited 3,010,100 4.34
------------------------ --------------- ------
Miton Asset Management 2,980,000 4.30
------------------------ --------------- ------
Amiya Capital 2,600,000 3.75
------------------------ --------------- ------
Shareholder relations
The Board places high importance on its relationship with its
shareholders, with members of the Investment Manager's Investment
Committee making themselves available for meetings with key
shareholders and sector analysts. Reporting of these meetings and
market commentary is received by the Board on a quarterly basis to
ensure that shareholder communication fulfils the needs of being
useful, timely and effective. One or more members of the Board and
the Investment Manager will be available at the Annual General
Meeting to answer any questions that shareholders attending may
wish to raise.
Directors' Responsibilities Statement
The Directors are responsible for preparing the annual report
and the financial statements in accordance with the applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year, which give a true and fair view
of the state of affairs of the Group at the end of the year and of
the profit or loss of the Group for that year.
In preparing those financial statements, the Directors are
required to:
1) select suitable accounting policies and then apply them consistently;
2) make judgements and estimates that are reasonable and prudent;
3) state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
4) prepare the financial statements on the going concern basis
unless it is appropriate to assume that the Group will not continue
in business.
So far as each of the Directors is aware, there is no relevant
information of which the Group's auditor is unaware, and they have
taken all the steps they ought to have taken as Directors to make
themselves aware of any relevant information and to establish that
the Group's auditor is aware of that information.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Group and to enable them to ensure that
the financial statements comply with the Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
Going concern
After making enquiries, and bearing in mind the nature of the
Group's business and assets, the Directors consider that the Group
has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
Annual General Meeting
The AGM of the Company will be held in Guernsey at 9.00 am on 7
September 2017 at Old Bank Chambers, La Grande Rue, St Martin's,
Guernsey. The meeting will be held to receive the Annual Report and
Financial Statements, re-elect Directors and propose the
reappointment of the auditor and that the Directors be authorised
to determine the auditor's remuneration.
Independent Auditor
BDO Limited has expressed its willingness to continue in office
as auditor.
By order of the Board,
David Jeffreys Serena Tremlett
Director Director
15 June 2017
Directors' statement pursuant to the Disclosure and Transparency
Rules
Each of the Directors, whose names and functions are listed in
the Directors' and corporate governance report confirm that, to the
best of each person's knowledge and belief:
-- The financial statements, prepared in accordance with IFRSs
as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the Group, and
-- The Chairman's statement and the investment review include a
fair review of the development and performance of the business and
the position of the Group and note 23 to the financial statements
provides a description of the principal risks and uncertainties
that the Group faces. The decision by the United Kingdom to leave
the European Union, following the "Brexit" Referendum held in June
2016, is also considered to be a significant risk and uncertainty
for the Group that the Board will continue to monitor.
By order of the Board,
David Jeffreys Serena Tremlett
Director Director
15 June 2017
Independent Auditor's Report
To the Members of Alpha Real Trust Limited
We have audited the consolidated financial statements of Alpha
Real Trust Limited for the year ended 31 March 2017 which comprise
the consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated cash flow statement,
the consolidated statement of changes in equity and the related
notes 1 to 24. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
This report is made solely to the company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work is undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of the directors and auditor
As explained more fully in the Directors' Responsibilities
Statement within the Directors' Report, the directors are
responsible for the preparation of the consolidated financial
statements and for being satisfied that they give a true and fair
view.
Our responsibility is to audit and express an opinion on the
consolidated financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all
the financial and non--financial information in the Directors'
Report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent
misstatements or inconsistencies we consider the implications for
our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 March 2017 and of the group's profit for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the parent company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and
explanations, which, to the best of our knowledge and belief, are
necessary for the purposes of our audit.
.......................................................
Richard Michael Searle FCA
For and on behalf of BDO Limited
Chartered Accountants and Recognised Auditor
Place du Pré
Rue du Pré
St Peter Port
Guernsey
Date: 15 June 2017
Consolidated statement of comprehensive income
For the year For the year
ended ended
31 March 2017 31 March 2016
--------------------------- ------- ------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Income
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Revenue 3 9,881 - 9,881 7,908 - 7,908
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Change in the revaluation
of investment property 13 - 8,790 8,790 - 11,967 11,967
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Net gains on financial
assets and liabilities
held at fair value
through profit or
loss 23 1,899 1,664 3,563 1,548 780 2,328
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Total income 11,780 10,454 22,234 9,456 12,747 22,203
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit on investment
property disposal - 122 122 - - -
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Expenses
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Property operating
expenses 3 (4,400) - (4,400) (3,394) - (3,394)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Investment Manager's
fee 22 (1,912) (2,743) (4,655) (1,626) (1,440) (3,066)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other administration
costs 4 (1,036) - (1,036) (812) - (812)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Total operating expenses (7,348) (2,743) (10,091) (5,832) (1,440) (7,272)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Operating profit 4,432 7,833 12,265 3,624 11,307 14,931
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Share of profit/(loss)
of joint venture 12 131 (19) 112 94 (20) 74
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance income 5 2,391 - 2,391 2,895 49 2,944
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance costs 6 (1,778) (79) (1,857) (1,700) - (1,700)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit before taxation 5,176 7,735 12,911 4,913 11,336 16,249
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Taxation 7 (25) - (25) (12) - (12)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit for the year 5,151 7,735 12,886 4,901 11,336 16,237
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
income for the year
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Items that may be
classified to profit
and loss in subsequent
periods
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Exchange differences
arising on translation
of foreign operations - 3,330 3,330 - 2,104 2,104
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
income for the year - 3,330 3,330 - 2,104 2,104
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Total comprehensive
income for the year 5,151 11,065 16,216 4,901 13,440 18,341
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Earnings per share
(basic & diluted) 9 18.6p 23.1p
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Adjusted earnings
per share (basic &
diluted) 9 7.4p 7.0p
The total column of this statement represents the Group's
statement of comprehensive income, prepared in accordance with
IFRS. The revenue and capital columns are supplied as supplementary
information permitted under IFRS. All items in the above statement
derive from continuing operations.
The accompanying notes below form an integral part of the
financial statements.
Consolidated balance sheet
Notes 31 March 2017 31 March 2016
GBP'000 GBP'000
--------------------------- ------ -------------- --------------
Non-current assets
--------------------------- ------ -------------- --------------
Investment property 13 112,442 91,971
--------------------------- ------ -------------- --------------
Indirect property
investment held
at fair value 14 5,535 4,738
--------------------------- ------ -------------- --------------
Investments held
at fair value 15 7,814 10,439
--------------------------- ------ -------------- --------------
Investment in joint
venture 12 1,538 1,596
--------------------------- ------ -------------- --------------
Trade and other
receivables 16 5,280 10,000
--------------------------- ------ -------------- --------------
132,609 118,744
--------------------------- ------ -------------- --------------
Current assets
--------------------------- ------ -------------- --------------
Investments held
at fair value 15 26,113 20,931
--------------------------- ------ -------------- --------------
Derivatives held 23 - -
at fair value through
profit or loss
--------------------------- ------ -------------- --------------
Trade and other
receivables 16 13,461 12,883
--------------------------- ------ -------------- --------------
Cash and cash equivalents 5,397 3,863
--------------------------- ------ -------------- --------------
44,971 37,677
--------------------------- ------ -------------- --------------
Total assets 177,580 156,421
--------------------------- ------ -------------- --------------
Current liabilities
--------------------------- ------ -------------- --------------
Derivatives held
at fair value through
profit or loss 23 - (745)
--------------------------- ------ -------------- --------------
Trade and other
payables 17 (6,789) (4,000)
--------------------------- ------ -------------- --------------
Bank borrowings 18 (60,618) (543)
--------------------------- ------ -------------- --------------
(67,407) (5,288)
--------------------------- ------ -------------- --------------
Total assets less
current liabilities 110,173 151,133
--------------------------- ------ -------------- --------------
Non-current liabilities
--------------------------- ------ -------------- --------------
Bank borrowings 18 - (55,512)
--------------------------- ------ -------------- --------------
Total liabilities (67,407) (60,800)
--------------------------- ------ -------------- --------------
Net assets 110,173 95,621
--------------------------- ------ -------------- --------------
Equity
--------------------------- ------ -------------- --------------
Share capital 19 - -
--------------------------- ------ -------------- --------------
Special reserve 20 79,306 79,306
--------------------------- ------ -------------- --------------
Translation reserve 20 2,011 (1,319)
--------------------------- ------ -------------- --------------
Capital reserve 20 10,511 2,776
--------------------------- ------ -------------- --------------
Revenue reserve 20 18,345 14,858
--------------------------- ------ -------------- --------------
Total equity 110,173 95,621
--------------------------- ------ -------------- --------------
Net asset value
per ordinary share 10 158.9p 137.9p
The financial statements were approved by the Board of Directors
and authorised for issue on 15 June 2017. They were signed on its
behalf by David Jeffreys and Serena Tremlett.
David Jeffreys Serena Tremlett
Director Director
The accompanying notes below form an integral part of the
financial statements.
Consolidated cash flow statement
For the year For the year
ended ended
31 March 31 March
2017 2016
GBP'000 GBP'000
------------------------------------------ ------------- -------------
Operating activities
------------------------------------------ ------------- -------------
Profit for the year after taxation 12,886 16,237
------------------------------------------ ------------- -------------
Adjustments for:
------------------------------------------ ------------- -------------
Change in revaluation of investment
property (8,790) (11,967)
------------------------------------------ ------------- -------------
Net gains on financial assets
and liabilities held at fair
value through profit or loss (3,563) (2,328)
------------------------------------------ ------------- -------------
Profit on investment property (122) -
disposal
------------------------------------------ ------------- -------------
Taxation 25 12
------------------------------------------ ------------- -------------
Share of profit of joint venture (112) (74)
------------------------------------------ ------------- -------------
Finance income (2,391) (2,944)
------------------------------------------ ------------- -------------
Finance costs 1,857 1,700
------------------------------------------ ------------- -------------
Operating cash flows before movements
in working capital (210) 636
------------------------------------------ ------------- -------------
Movements in working capital:
------------------------------------------ ------------- -------------
Movement in trade and other receivables (1,216) (150)
------------------------------------------ ------------- -------------
Movement in trade and other payables 1,913 1,657
------------------------------------------ ------------- -------------
Cash flows from operations 487 2,143
------------------------------------------ ------------- -------------
Interest received 10 69
------------------------------------------ ------------- -------------
Interest paid (1,552) (1,499)
------------------------------------------ ------------- -------------
Taxation paid (13) (16)
------------------------------------------ ------------- -------------
Cash flows (used in)/from operating
activities (1,068) 697
------------------------------------------ ------------- -------------
Investing activities
------------------------------------------ ------------- -------------
Acquisition of investments (1,072) (7,200)
------------------------------------------ ------------- -------------
Acquisition of investment property (2,826) (7,781)
------------------------------------------ ------------- -------------
Proceeds on disposal of investment 1,890 -
property
------------------------------------------ ------------- -------------
Redemption of investments 2,530 405
------------------------------------------ ------------- -------------
Redemption on preference shares'
investment 404 500
------------------------------------------ ------------- -------------
Capital expenditure on investment
property (2,615) (227)
------------------------------------------ ------------- -------------
Loan repayments received 6,300 2,843
------------------------------------------ ------------- -------------
Loan interest received 2,056 2,854
------------------------------------------ ------------- -------------
Loans granted to third parties (1,980) -
------------------------------------------ ------------- -------------
Dividend income from joint venture 40 41
------------------------------------------ ------------- -------------
Dividend income from other investments 23 361
------------------------------------------ ------------- -------------
Cash flows from/(used in) investing
activities 4,750 (8,204)
------------------------------------------ ------------- -------------
Financing activities
------------------------------------------ ------------- -------------
Bank loan repayments (114) (398)
------------------------------------------ ------------- -------------
Share buybacks - (953)
------------------------------------------ ------------- -------------
Share buyback costs - (2)
------------------------------------------ ------------- -------------
Share issue costs - (16)
------------------------------------------ ------------- -------------
Foreign exchange forward settlement (1,649) 347
------------------------------------------ ------------- -------------
Foreign exchange forward collateral
received/(paid) 1,220 (920)
------------------------------------------ ------------- -------------
Dividends paid (1,664) (1,684)
------------------------------------------ ------------- -------------
Cash flows used in financing
activities (2,207) (3,626)
------------------------------------------ ------------- -------------
Net increase/(decrease) in cash
and cash equivalents 1,475 (11,133)
------------------------------------------ ------------- -------------
Cash and cash equivalents at
beginning of year 3,863 14,817
------------------------------------------ ------------- -------------
Exchange translation movement 59 179
------------------------------------------ ------------- -------------
Cash and cash equivalents at
end of year 5,397 3,863
The accompanying notes below form an integral part of the
financial statements.
Consolidated statement of changes in equity
For the year Special Translation Capital Revenue Total
ended 31 March 2016 reserve reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ------------ --------- --------- ---------
At 1 April 2015 80,277 (3,423) (8,560) 11,641 79,935
------------------------- --------- ------------ --------- --------- ---------
Total comprehensive
income for the year
------------------------- --------- ------------ --------- --------- ---------
Profit for the year - - 11,336 4,901 16,237
------------------------- --------- ------------ --------- --------- ---------
Exchange differences
arising on translation
of foreign operations - 2,104 - - 2,104
------------------------- --------- ------------ --------- --------- ---------
Total comprehensive
income for the year - 2,104 11,336 4,901 18,341
------------------------- --------- ------------ --------- --------- ---------
Transactions with
owners
------------------------- --------- ------------ --------- --------- ---------
Dividends - - - (1,684) (1,684)
------------------------- --------- ------------ --------- --------- ---------
Share issue costs (16) - - - (16)
------------------------- --------- ------------ --------- --------- ---------
Share buyback (953) - - - (953)
------------------------- --------- ------------ --------- --------- ---------
Share buyback costs (2) - - - (2)
------------------------- --------- ------------ --------- --------- ---------
Total transactions
with owners (971) - - (1,684) (2,655)
------------------------- --------- ------------ --------- --------- ---------
At 31 March 2016 79,306 (1,319) 2,776 14,858 95,621
------------------------- --------- ------------ --------- --------- ---------
Notes 19, 20
------------------------- --------- ------------ --------- --------- ---------
For the year Special Translation Capital Revenue Total
ended 31 March 2017 reserve reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ------------ --------- --------- ---------
At 1 April 2016 79,306 (1,319) 2,776 14,858 95,621
------------------------- --------- ------------ --------- --------- ---------
Total comprehensive
income for the year
------------------------- --------- ------------ --------- --------- ---------
Profit for the year - - 7,735 5,151 12,886
------------------------- --------- ------------ --------- --------- ---------
Exchange differences
arising on translation
of foreign operations - 3,330 - - 3,330
------------------------- --------- ------------ --------- --------- ---------
Total comprehensive
income for the year - 3,330 7,735 5,151 16,216
------------------------- --------- ------------ --------- --------- ---------
Transactions with
owners
------------------------- --------- ------------ --------- --------- ---------
Dividends - - - (1,664) (1,664)
------------------------- --------- ------------ --------- --------- ---------
Total transactions
with owners - - - (1,664) (1,664)
------------------------- --------- ------------ --------- --------- ---------
At 31 March 2017 79,306 2,011 10,511 18,345 110,173
------------------------- --------- ------------ --------- --------- ---------
Notes 19, 20
------------------------- --------- ------------ --------- --------- ---------
The accompanying notes below form an integral part of the
financial statements.
Notes to the financial statements for the year ended 31 March
2017
1. General information
The Company is a limited liability, closed-ended investment
company incorporated in Guernsey. The address of the registered
office is given below. The nature of the Group's operations and its
principal activities are set out in the Chairman's Statement above.
The financial statements were approved and authorised for issue on
15 June 2017 and signed by David Jeffreys and Serena Tremlett on
behalf of the Board.
2. (a) Significant accounting policies
A summary of the principal accounting policies is set out below.
The policies have been consistently applied for all periods
presented unless otherwise stated.
The preparation of financial statements in conformity with IFRS,
as adopted by the EU, requires the use of certain critical
accounting estimates. It also requires management to exercise its
judgement in the process of applying the accounting policies. The
areas involving a high degree of judgement or complexity, or areas
where the assumptions and estimates are significant to the
financial statements are disclosed in this note.
Basis of preparation
These financial statements have been prepared in accordance with
IFRS, which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB"), and
International Accounting Standards and Standards Interpretations
Committee's interpretations approved by the International
Accounting Standards Committee ("IASC") that remain in effect, and
to the extent that they have been adopted by the European
Union.
a) Adoption of new and revised Standards
None of the new or revised standards and interpretations issued
by the IASB and the International Financial Reporting
Interpretations Committee that have become effective in the current
year has had a material effect on the Group.
b) Standards and Interpretations in issue and not yet
effective
At the date of authorisation of these financial statements,
there are a number of standards and interpretations, which have not
been applied in these financial statements, that were in issue but
not yet effective. Those which may have an effect on the Group's
financial statements are set out below:
IFRS 9: Financial instruments - for accounting periods commencing on or after 1 January 2018
IFRS 15: Revenue from contracts with customers - for accounting
periods commencing on or after 1 January 2018
IFRS 16: Leases - for accounting periods commencing on or after 1 January 2019*
Revised and amended Standards
IFRS 7: Financial Instruments: disclosures - amendments
requiring disclosures about the initial application of IFRS 9 - for
accounting periods commencing on or after 1 January 2018*
IAS 7: Statement of cash flows - amendment as result of the
disclosure initiative - for accounting periods commencing on or
after 1 January 2017*
In December 2016, the IASB issued further improvements to IFRS,
which will become effective for accounting periods commencing on or
after 1 January 2018*. These covered amendments to three
standards.
*Still to be endorsed by the EU
The Directors anticipate that, with the exception of IFRS 9, the
adoption of these standards and interpretations in future periods
will not have a material impact on the financial statements of the
Group.
IFRS 9 uses a single approach to determine whether a financial
asset is measured at amortised cost or at fair value, replacing the
many different rules in IAS 39. The approach in IFRS 9 is based on
how an entity manages its financial instruments (its business
model) and the contractual cash flow characteristics of the
financial assets (payments that are solely payments of principal
and interest).
IFRS 9 will also fundamentally change the loan loss impairment
methodology. The standard will replace IAS 39's incurred loss
approach with a forward-looking expected loss approach. The Group
will be required to record an allowance for expected losses for all
loans and other debt financial assets not held at fair value
through profit or loss. The allowance is based on the expected
credit losses associated with the probability of default in the
next twelve months unless there has been a significant increase in
credit risk since origination, in which case, the allowance is
based on the probability of default over the life of the asset. The
Group will establish a policy to perform an assessment at the end
of each reporting period of whether credit risk has increased
significantly since initial recognition by considering the change
in the risk of default occurring over the remaining life of the
financial instrument. To calculate the expected credit loss, the
Group will estimate the risk of a default occurring on the
financial instrument during its expected life. Expected credit
losses are estimated based on the present value of all cash
shortfalls over the remaining expected life of the financial asset
(i.e. the difference between the contractual cash flows that are
due to the Group under the contract, and the cash flows that the
Group expects to receive, discounted at the effective interest rate
of the loan). In comparison to IAS 39, the Group expects the
impairment charge under IFRS 9 to be more volatile than under IAS
39 and to result in an increase in the total level of current
impairment allowances.
The recognition and de-recognition requirements for financial
assets and financial liabilities are unchanged from those set out
in IAS 39.
The classification and measurement requirements of financial
liabilities are broadly similar to IAS 39 although the requirements
relating to financial liabilities measured at fair value have been
amended so that changes in fair value relating to an entity's own
credit risk are generally recognised directly in other
comprehensive income. IFRS 9 requires one impairment method which
would replace the various different methods indicated by IAS 39
that arise from the different categories' classification. At the
time of adoption of the new standard it is expected only that the
Group's financial assets will be required to be classified in
accordance with the new standard and no changes in measurement will
be required.
IFRS 15 deals with revenue recognition and establishes
principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity's contracts with
customers. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contracts' and related interpretations and is
effective for annual periods beginning on or after 1 January 2018.
As the Group's revenue is mainly derived from leases, the
application of IFRS 15 is not expected to change the nature or
timing of revenue recognised.
IFRS 16 substantially carries forward the lessor accounting
requirements of IAS 17. Accordingly, a lessor will continue to
classify its leases as finance leases or operating leases, and
account for those two types of leases differently. Therefore, the
Directors anticipate that the adoption of this standard will not
have a material impact on the financial statements of the
Group.
The principal accounting policies adopted are set out below.
Basis of consolidation
a) Subsidiaries
The consolidated financial statements incorporate the financial
statements of the Company and the subsidiary undertakings
controlled by the Company, made up to 31 March each year. Control
is achieved where the Company has power over the investee, exposure
or rights, to variable returns from its involvement with the
investee and the ability to use its power to affect the amount of
the investor's returns.
The results of subsidiary undertakings acquired or disposed of
during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition or up
to the effective date of disposal as appropriate.
When necessary, adjustments are made to the financial statements
of subsidiary undertakings to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
ART holds a number of direct property investments through
subsidiary undertakings. The Group is actively involved in the
management of these property investments and its investment plans
do not include specified exit strategies for these investments. As
a result, ART plans to hold these property investments
indefinitely. Although, in accordance with IAS 40, ART reports its
investment properties at fair value in its financial statements,
this is not the primary measurement attribute used by management to
evaluate the performance of these investments. In consequence,
management have concluded that ART does not meet the definition of
an investment entity and the subsidiaries have been consolidated
into the Group's balance sheet, rather than being carried at fair
value.
b) Joint ventures
The Group applies IFRS 11 to its joint arrangement. Under IFRS
11 investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights
and obligations of each investor. The Group has assessed the nature
of its joint arrangements and determined them to be joint ventures.
Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint
ventures are initially recognised at cost and adjusted thereafter
to recognise the Group's share of the post-acquisition profits or
losses and movements in other comprehensive income. When the
Group's share of losses in a joint venture equals or exceeds its
interests in the joint ventures (which includes any long-term
interests that, in substance, form part of the Group's net
investment in the joint ventures), the Group does not recognise
further losses, unless it has incurred obligations or made payments
on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint
ventures are eliminated to the extent of the Group's interest in
the joint ventures. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset
transferred.
Presentation of statement of comprehensive income
In order to better reflect the activities of an investment
company and in accordance with guidance issued by the Association
of Investment Companies ("AIC"), supplementary information, which
analyses the statement of comprehensive income between items of a
revenue and capital nature, has been presented alongside the
statement of comprehensive income (see note 20).
Revenue recognition
Rental income and service charge income from investment property
leased out under an operating lease are recognised in the statement
of comprehensive income on a straight line basis over the term of
the lease. Lease incentives granted are recognised as an integral
part of the net consideration for the use of the property and are
therefore also recognised on the same straight line basis. Rental
revenues are accounted for on an accruals basis. Therefore,
deferred revenue generally represents advance payments from
tenants. Revenue is recognised when it is probable that the
economic benefits associated with the transaction will flow to the
Group and the amount of revenue can be measured reliably. Upon
early termination of a lease by the lessee, the receipt of a
surrender premium, net of dilapidations and non-recoverable
outgoings relating to the lease concerned, is immediately
recognised as revenue.
Interest income is accrued on a time basis, by reference to the
principal outstanding and the effective interest rate
applicable.
Other income is recognised when received.
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Foreign currencies
a) Functional and presentation currency
Items included in the financial statements of each of the Group
entities are measured in the currency of the primary economic
environment in which the entity operates (the "functional
currency"). The consolidated financial statements are presented in
Sterling, which is the Company's functional and presentation
currency.
b) Transactions and balances
Transactions in currencies other than the functional currency
are recorded at the rates of exchange prevailing on the dates of
the transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date.
Gains and losses arising on retranslation are included in profit or
loss for the year.
c) Group companies
The results and financial position of all the Group entities
that have a functional currency which differs from the presentation
currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the balance
sheet;
(ii) income and expenses for each statement of comprehensive
income are translated at the average exchange rate prevailing in
the period; and
(iii) all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, the exchange differences arising from the
translation of the net investment in foreign entities are taken to
equity. When a foreign operation is sold, such exchange differences
are recognised in the statement of comprehensive income as part of
the gain or loss on sale.
For Euro based balances the year end exchange rate used is
GBP1:EUR1.172 (2016: GBP1:EUR1.265) and the average rate for the
year used is GBP1:EUR1.191 (2016: GBP1:EUR1.365). The year-end
exchange rate used for Indian rupee (INR) balances is
GBP1:INR81.305 (2016: GBP1:INR94.969) and the average rate for the
year used is GBP1:INR87.668 (2016: GBP1:INR98.441).
Expenses
All expenses are accounted for on an accruals basis and include
fees and other expenses paid to the Administrators, the Investment
Manager and the Directors. In respect of the analysis between
revenue and capital items, presented within the statement of
comprehensive income, all expenses have been presented as revenue
items except expenses which are incidental to the acquisition of an
investment property which are included within the cost of that
investment property. The Investment Manager's performance fee is
charged to the capital column in the statement of comprehensive
income in order to reflect that the fee is due primarily to the
capital performance of the Group.
Taxation
The Company is exempt from Guernsey taxation on income derived
outside of Guernsey and bank interest earned in Guernsey. A fixed
annual fee of GBP1,200 was payable to the States of Guernsey in
respect of this exemption for the year. No charge to Guernsey
taxation arises on capital gains. The Group is liable to foreign
tax arising on activities in the overseas subsidiaries. The Group
has subsidiary operations in Cyprus and India. The Group also holds
investments in Spain, owned through investment entities in
Luxembourg and the Netherlands, in Germany, owned through a limited
partnership incorporated in Germany with corporate partners
incorporated in Luxembourg, in the United Kingdom, owned through
investment entities incorporated in Jersey (Cambourne) and owned
through limited partnerships incorporated in the UK (PRS
investments). The Group is therefore liable to taxation in these
overseas jurisdictions.
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income and expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates
that have been enacted at the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible timing differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the year
when the liability is settled or the asset realised. Deferred tax
is charged or credited in the statement of comprehensive income,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity.
Dividends
Dividends are recognised as a liability in the Group's financial
statements in the period in which they become obligations of the
Group.
Fair value measurement
The Group measures certain financial instruments such as
derivatives and non-financial assets such as investment property,
at fair value at the end of each reporting period, using recognised
valuation techniques and following the principles of IFRS 13. In
addition, fair values of financial instruments measured at
amortised cost are disclosed in the financial statements.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
-- in the principal market for the asset or liability
or
-- in the absence of a principal market, in the most
advantageous market for the asset or liability.
The Group must be able to access the principal or the most
advantageous market at the measurement date. The fair value of an
asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming that market participants act in their economic best
interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs significant to
the fair value measurement as a whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
-- Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable.
-- Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
Investment property
Investment property, which is property held to earn rentals
and/or for capital appreciation, is initially recognised at cost
being the fair value of consideration given including related
transaction costs.
After initial recognition at cost and/or upon commencement of
construction, investment property is carried at its fair value
based on half yearly professional valuations made by independent
valuers. The valuations are in accordance with standards complying
with the Royal Institution of Chartered Surveyors Appraisal and
Valuation manual and the International Valuation Standards
Committee.
Gains or losses arising from changes in fair value of investment
property are included in the statement of comprehensive income in
the period in which they arise. Investment property is treated as
acquired when the Group assumes the significant risks and returns
of ownership and as disposed of when these are transferred to the
buyer.
All costs directly associated with the purchase of an investment
property and all subsequent expenditures qualifying as acquisition
costs are capitalised.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, which is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors of the
Company.
The investing policy means the Group may invest in real estate
opportunities unconstrained by geography, but with a particular
focus on the UK, Europe and Asia. At present, for management
purposes, the Group is organised into one main operating segment
being Europe.
All of the Group's revenue is from entities that are
incorporated in Europe.
With the exception of the Galaxia investment (note 14), all of
the Group's non-current assets are located in Europe.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument. The Group shall offset
financial assets and financial liabilities if the Group has a
legally enforceable right to set off the recognised amounts and
interests and intends to settle on a net basis.
a) Financial assets
The Group's financial assets fall into the categories discussed
below, with the allocation depending to an extent on the purpose
for which the asset was acquired. Although the Group uses
derivative financial instruments in economic hedges of currency and
interest rate risk, it does not hedge account for these
transactions. The Group has not classified any of its financial
assets as held to maturity or as available for sale.
Unless otherwise indicated, the carrying amounts of the Group's
financial assets are a reasonable approximation of their fair
values.
(a) (i) Investments held at fair value through profit or
loss
Investments are classified as 'fair value through profit or
loss' and are initially recognised at cost, being the fair value of
the consideration given.
Financial assets designated at fair value through profit or loss
at inception are those that are managed and their performance
evaluated on a fair value basis in accordance with the Group's
investment strategy. The Group's policy is for the Investment
Manager and the Board of Directors to evaluate the information
about these financial assets on a fair value basis together with
other related financial information.
Recognition
Purchases and sales of investments are recognised on the
transaction date, the date on which the Group commits to purchase
or sell the investment.
Measurement
Financial assets at fair value through profit or loss are
initially recognised at fair value with transaction costs being
expensed in the statement of comprehensive income. Subsequent to
initial recognition, all financial assets at fair value through
profit or loss are measured at fair value. Gains and losses arising
from changes in the fair value of the 'financial assets at fair
value through profit or loss' category are presented in the
statement of comprehensive income in the period in which they
arise.
(a) (ii) Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
mainly relate to interest bearing loans granted to related and
third parties but also arise through rental leases with tenants
(e.g. trade receivables and cash and cash equivalents) and
incorporate other types of contractual monetary assets. They are
initially recognised at fair value plus transaction costs that are
directly attributable to the acquisition or issue and subsequently
carried at amortised cost using the effective interest rate method,
less provision for impairment.
The effect of discounting on these financial instruments is not
considered to be material.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms of the receivable, the amount of such a provision being
the difference between the net carrying amount and the present
value of the future expected cash flows associated with the
impaired receivable. For trade receivables, such impairments
directly reduce the carrying amount of the impaired asset and are
recognised against the relevant income category in the statement of
comprehensive income.
Cash and cash equivalents are carried at cost and consist of
cash in hand and short term deposits in banks with an original
maturity of three months or less.
(a) (iii) Derivatives at fair value through profit or loss
This category comprises only 'in the money' financial
derivatives. They are carried in the balance sheet at fair value
with changes in fair value recognised in the statement of
comprehensive income.
The fair value of the Group's derivatives is based on valuations
as described in note 24.
(a) (iv) Derecognition of financial assets
A financial asset (in whole or in part) is derecognised
either:
-- when the Group has transferred substantially all the risks and rewards of ownership, or
-- when it has neither transferred nor retained substantially
all the risks and rewards and when it no longer has control over
the asset or a portion of the asset, or
-- when the contractual right to receive cash flow has expired.
(b) Financial liabilities
The Group classifies its financial liabilities into one of two
categories, depending on the purpose for which the liability was
issued and its characteristics. Although the Group uses derivative
financial instruments in economic hedges of currency and interest
rate risk, it does not hedge account for these transactions.
Unless otherwise indicated, the carrying amounts of the Group's
financial liabilities are a reasonable approximation of their fair
values.
(b) (i) Derivatives at fair value through profit or loss
This category comprises only 'out-of-the-money' financial
derivatives. They are carried in the balance sheet at fair value
with changes in fair value recognised in the statement of
comprehensive income. Other than derivative financial instruments,
the Group does not have any liabilities held for trading nor has it
designated any other financial liabilities as being at fair value
through profit or loss.
The fair value of the Group's derivatives is based on the
valuations as described in note 24.
(b) (ii) Financial liabilities measured at amortised cost
Other financial liabilities include the following items:
-- Trade payables and other short-term monetary liabilities,
which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method;
-- Bank borrowings which are initially recognised at fair value
net of attributable transaction costs incurred. Such interest
bearing liabilities are subsequently measured at amortised cost
using the effective interest rate method.
(b) (iii) Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when
the Company or Group has extinguished its contractual obligations,
it expires or is cancelled. Any gain or loss on derecognition is
taken to the statement of comprehensive income.
(c) Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Company's ordinary shares and class A
shares are classified as equity instruments. For the purposes of
the disclosures given in note 23 the Group considers all its share
capital, share premium and all other reserves as equity. The
Company is not subject to any externally imposed capital
requirements.
(d) Effective interest rate method
The effective interest rate method is a method of calculating
the amortised cost of a financial asset or liability and of
allocating interest income or expense over the relevant period. The
effective interest rate is the rate that exactly discounts
estimated future cash receipts or payments (including all fees on
points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial asset or liability, or,
where appropriate, a shorter period.
2. (b) Significant accounting estimates and judgements
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
(a) Investment property
The Group uses the valuations carried out by its independent
valuers as the fair value of its investment properties. The
valuations are based upon assumptions including future rental
income, anticipated maintenance costs, future development costs and
the appropriate discount rate. The valuers also make reference to
market evidence of transaction prices for similar properties.
Investment property which is in the course of construction is
carried at cost plus associated costs and this has been considered
by the Directors to represent fair value at the balance sheet date:
upon commencement of construction, valuations will be carried out
by independent valuers. Refer to note 13 for further details.
(b) Estimate of fair value of indirect property investment -
Galaxia
The property interest in Galaxia is classified as an indirect
property investment held at fair value through profit or loss and
has been included within the financial statements based on the
current estimate of realisable value to the Group (see note
14).
3. Revenue
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
----------------------- ----------- -----------
Rental income 7,178 5,724
----------------------- ----------- -----------
Service charge income 2,702 2,168
----------------------- ----------- -----------
Other income 1 16
----------------------- ----------- -----------
Total 9,881 7,908
At 31 March 2017, the Group recognised non recoverable property
operating expenditure as follows:
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
------------------------------------ ----------- -----------
Service charge income 2,702 2,168
------------------------------------ ----------- -----------
Property operating expenditure (4,400) (3,394)
------------------------------------ ----------- -----------
Non recoverable property operating
expenditure (1,698) (1,226)
The Group recognises revenue from its investment in one
property: the H2O Shopping Centre in Madrid, Spain.
On 18 May 2017, the Group agreed to sell a 70% equity interest
in the H2O property to CBRE European Co-Investment Fund, managed by
CBRE Global Investors. The sale is at a 4.8% premium to the latest
published valuation of the shopping centre, as at 30 September
2016. The sale contract has conditions attached that are expected
to be met by the end of June, following which completion will
occur, and a further update will be provided at that time. The
Group will retain a 30% stake in joint venture with CBRE Global
Investors to participate in the future growth of the centre.
The H2O Shopping Centre is leased on standard institutional
Spanish retail operating leases with a minimum guaranteed monthly
rent and the possibility for the landlord to earn additional income
on most leases if the tenants' turnover exceeds certain pre-set
levels. The leases are typically for a minimum guaranteed term of 5
years from the opening of the centre in mid-2007 with 5 year
renewal options thereafter, e.g. 5+5+5, and generally a 10 to 15
year term.
At 31 March 2017, the Group had contracted with tenants at the
H2O Shopping Centre for the following future minimum lease
payments:
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
---------------------------------------- ----------- -----------
Within one year 5,659 4,983
---------------------------------------- ----------- -----------
In the second to fifth years inclusive 10,583 8,387
---------------------------------------- ----------- -----------
After five years 1,323 1,380
---------------------------------------- ----------- -----------
Total 17,565 14,750
4. Other administration costs
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
------------------------------------ ----------- -----------
Auditors' remuneration for audit
services 97 87
------------------------------------ ----------- -----------
Accounting and administrative fees 447 328
------------------------------------ ----------- -----------
Non-executive directors' fees 139 132
------------------------------------ ----------- -----------
Other professional fees 353 265
------------------------------------ ----------- -----------
Total 1,036 812
5. Finance income
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
--------------------------------- ----------- -----------
Bank interest receivable 10 69
--------------------------------- ----------- -----------
Interest receivable on loans to
related parties 2,284 2,826
--------------------------------- ----------- -----------
Interest receivable on loans to 97 -
third parties (note 16, 22)
--------------------------------- ----------- -----------
Foreign exchange gain - 49
--------------------------------- ----------- -----------
Total 2,391 2,944
6. Finance costs
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
----------------------------- ----------- -----------
Interest on bank borrowings 1,778 1,700
----------------------------- ----------- -----------
Foreign exchange loss 79 -
----------------------------- ----------- -----------
Total 1,857 1,700
The above finance costs arise on financial liabilities measured
at amortised cost using the effective interest rate method. No
other losses have been recognised in respect of financial
liabilities at amortised cost other than those disclosed above.
7. Taxation
(a) Parent Company
The Parent Company is exempt from Guernsey taxation on income
derived outside of Guernsey and bank interest earned in Guernsey. A
fixed annual fee of GBP1,200 (31 March 2016: GBP1,200) was payable
to the States of Guernsey in respect of this exemption for the
year. No charge to Guernsey taxation arises on capital gains. The
Group is liable to foreign tax arising on activities in its
overseas subsidiaries. The Company has investments, subsidiaries
and joint venture operations in Luxembourg, the United Kingdom,
Germany, the Netherlands, Spain, Cyprus, Jersey and India.
(b) Group
The Group's tax expense for the year comprises:
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
-------------- ----------- -----------
Deferred tax - -
-------------- ----------- -----------
Current tax 25 12
-------------- ----------- -----------
Tax Expense 25 12
The charge for the year can be reconciled to the profit per the
consolidated statement of comprehensive income as follows:
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
--------------------------------- ----------- -----------
Tax expense reconciliation
--------------------------------- ----------- -----------
Profit before taxation 12,911 16,249
--------------------------------- ----------- -----------
Less: income not taxable (8,920) (9,747)
--------------------------------- ----------- -----------
Add: expenditure not deductible 5,574 6,332
--------------------------------- ----------- -----------
Un-provided deferred tax asset (9,454) (12,792)
--------------------------------- ----------- -----------
Total 111 42
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
-------------------------- ----------- -----------
Analysed as arising from
-------------------------- ----------- -----------
Cyprus entities 64 42
-------------------------- ----------- -----------
Dutch entity 47 -
-------------------------- ----------- -----------
India entity - -
-------------------------- ----------- -----------
Luxembourg entities - -
-------------------------- ----------- -----------
UK investment - -
-------------------------- ----------- -----------
Total 111 42
Tax at domestic rates applicable to profits in the countries
concerned is as follows:
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
----------------------------------- ----------- -----------
Cypriot taxation at 12.50% 8 5
----------------------------------- ----------- -----------
Dutch taxation at 20% 9 -
----------------------------------- ----------- -----------
India taxation at 22.66% - -
----------------------------------- ----------- -----------
Luxembourg entities at an average
rate of 29.22% * 8 7
----------------------------------- ----------- -----------
UK taxation at 20% - -
----------------------------------- ----------- -----------
Total 25 12
*The taxation incurred in Luxembourg mainly relates to the
minimum net wealth tax charge of EUR3,210 per entity.
(c) Deferred taxation
The following is the deferred tax recognised by the Group and
movements thereon:
Revaluation of Accelerated tax Tax Losses Other temporary Total
Investment Property depreciation GBP'000 differences GBP'000
GBP'000 GBP'000
GBP'000
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
At 31 March 2015 - 3 (272) 269 -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
Release to income - 1 (74) 73 -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
At 31 March 2016 - 4 (346) 342 -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
Release to income - - (79) 79 -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
At 31 March 2017 - 4 (425) 421 -
Certain deferred tax assets and liabilities have been offset.
The following is the analysis of the deferred tax balances (after
offset) for financial reporting purposes available for offset
against future profits.
2017 2016
GBP'000 GBP'000
-------------------------- --------- ---------
Deferred tax liabilities 425 346
-------------------------- --------- ---------
Deferred tax assets (425) (346)
-------------------------- --------- ---------
Total - -
At the balance sheet date the Group has unused tax losses of
GBP2.3 million (2016: GBP1.9 million). Due to the unpredictability
of future taxable profits, the Directors believe it is not prudent
to recognise a deferred tax asset for the unused tax losses.
Unused tax losses in Luxembourg, Spain and the United Kingdom
can be carried forward indefinitely. Unused tax losses in the
Netherlands can be carried forward for nine years. Unused tax
losses in Cyprus can be carried forward for five years.
8. Dividends
Dividend reference Shares Dividend Paid Date
period
'000 per share GBP
Quarter ended 31 22 July
March 2016 69,323 0.6p 415,939 2016
-------------------- ------- ---------- ---------- -------------
Quarter ended 30 23 September
June 2016 69,323 0.6p 415,939 2016
-------------------- ------- ---------- ---------- -------------
Quarter ended 30 16 December
September 2016 69,323 0.6p 415,939 2016
-------------------- ------- ---------- ---------- -------------
Quarter ended 31 24 March
December 2016 69,323 0.6p 415,939 2017
-------------------- ------- ---------- ---------- -------------
Total 1,663,756
-------------------- ------- ---------- ---------- -------------
The Company will pay a dividend for the quarter ended 31 March
2017 on 21 July 2017. In accordance with IAS 10, this dividend has
not been included in these financial statements as the dividend was
declared and paid after the year end. The current intention of the
Directors is to pay a dividend quarterly.
9. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
1 April 1 April 1 April 2015
2016 2016 to
to to 31 March
31 March 30 September 2016
2017 2016
------------------------------------ ---------- -------------- -------------
Earnings per statement of
comprehensive income (GBP'000) 12,886 7,007 16,237
------------------------------------ ---------- -------------- -------------
Basic and diluted earnings
pence per share 18.6p 10.1p 23.1p
------------------------------------ ---------- -------------- -------------
Earnings per income statement
(GBP'000) 12,886 7,007 16,237
------------------------------------ ---------- -------------- -------------
Net change in the revaluation
of investment property (8,790) (4,662) (11,967)
------------------------------------ ---------- -------------- -------------
Profit on investment property
disposal (122) (138) -
------------------------------------ ---------- -------------- -------------
Movement in fair value of
investment in ordinary shares (2,424) (320) (2,271)
------------------------------------ ---------- -------------- -------------
Movement in fair value of
investments in redeemable
preference shares (144) (124) 694
------------------------------------ ---------- -------------- -------------
Movement in fair value of
interest rate cap (mark to
market) - - 10
------------------------------------ ---------- -------------- -------------
Movement in fair value of
the foreign exchange forward
(mark to market) 904 890 787
------------------------------------ ---------- -------------- -------------
Movement in fair value of
the joint venture's interest
rate swap (mark to market) - - (7)
------------------------------------ ---------- -------------- -------------
Net change in the revaluation
of the joint venture's investment
property 19 13 27
------------------------------------ ---------- -------------- -------------
Investment Manager's fees
(performance fee) 2,743 - 1,440
------------------------------------ ---------- -------------- -------------
Foreign exchange loss/(gain) 79 23 (49)
------------------------------------ ---------- -------------- -------------
Adjusted earnings 5,151 2,689 4,901
------------------------------------ ---------- -------------- -------------
Adjusted earnings per share 7.4p 3.9p 7.0p
------------------------------------ ---------- -------------- -------------
Weighted average number of
ordinary shares (000's) 69,323 69,323 70,143
The adjusted earnings are presented to provide what the Board
believes is a more appropriate assessment of the operational income
accruing to the Group's activities. Hence, the Group adjusts basic
earnings for income and costs which are not of a recurrent nature
or which may be more of a capital nature.
10. Net asset value per share
31 March 30 September 31 March
2017 2016 2016
------------------------------ --------- ------------- ---------
Net asset value (GBP'000) 110,173 105,317 95,621
------------------------------ --------- ------------- ---------
Net asset value per ordinary
share 158.9p 151.9p 137.9p
------------------------------ --------- ------------- ---------
Total number of shares
(000's) 69,323 69,323 69,323
11. Investment in subsidiary undertakings
A list of the significant investments in subsidiaries as at 31
March 2017, including the name, country of incorporation and the
proportion of ownership interest is given below.
Name of subsidiary Class % of class Country Principal
undertaking of shares/units held with of activity
voting incorporation
rights
--------------------- ----------------- ----------- --------------- ----------
Alpha Tiger Cyprus Ordinary 100 Cyprus Holding
Holdings Limited shares Company
--------------------- ----------------- ----------- --------------- ----------
Alpha Tiger Cyprus Ordinary 100 Cyprus Holding
Investments No. 2 shares Company
Limited
--------------------- ----------------- ----------- --------------- ----------
Alpha Tiger Cyprus Ordinary 100 Cyprus Holding
Investments No. 3 shares Company
Limited
--------------------- ----------------- ----------- --------------- ----------
Luxco 114 SARL Ordinary 100 Luxembourg Finance
shares company
--------------------- ----------------- ----------- --------------- ----------
Luxco 111 SARL Ordinary 100 Luxembourg Holding
shares Company
--------------------- ----------------- ----------- --------------- ----------
Skyred International Ordinary 100 Luxembourg Holding
SARL shares Company
--------------------- ----------------- ----------- --------------- ----------
Iron Bridge Finance Ordinary 100 Luxembourg Holding
Luxembourg SARL shares Company
--------------------- ----------------- ----------- --------------- ----------
Sixteen Rock Rose Ordinary 100 Luxembourg Holding
SARL shares Company
--------------------- ----------------- ----------- --------------- ----------
Sixteen Rock Rose Ordinary 100 Luxembourg Holding
2 SARL shares Company
--------------------- ----------------- ----------- --------------- ----------
Sixteen Guava SARL Ordinary 100 Luxembourg Holding
shares Company
--------------------- ----------------- ----------- --------------- ----------
KMS Holding BV Ordinary 100 Netherlands Holding
shares Company
--------------------- ----------------- ----------- --------------- ----------
Alpha Tiger Spain Ordinary 100 Spain Property
1, SLU shares Company
--------------------- ----------------- ----------- --------------- ----------
Alpha Tiger Spain Ordinary 100 Spain Property
2, SLU shares Company
--------------------- ----------------- ----------- --------------- ----------
Alpha Tiger Spain Ordinary 100 Spain Property
3, SLU shares Company
--------------------- ----------------- ----------- --------------- ----------
Alpha Tiger Guernsey Ordinary 100 Guernsey Holding
Holdings No.1 Ltd shares Company
--------------------- ----------------- ----------- --------------- ----------
ART Resi Unit Trust Ordinary 100 Guernsey Holding
units Company
--------------------- ----------------- ----------- --------------- ----------
Iron Sky 1 Limited Ordinary 100 Guernsey Holding
shares Company
During the year, the Group liquidated Alpha Tiger Cyprus
Investments No. 1 Limited in Cyprus and disposed of Iron Sky 2
Limited in Guernsey ("Acharn" investment, see note 13).
The Group also incorporated one limited partnership in Germany
(Sixteen Rock Rose Sàrl & Co Vermögensverwaltungs KG) to hold
its Frankfurt data centre investment.
12. Investment in joint venture
The joint venture in the Scholar Property Holdings Limited group
(Cambourne) is accounted for by equity accounting.
The movement in the Group's share of net assets of the joint
venture can be summarised as follows:
31 March 31 March
2017 2016
GBP'000 GBP'000
---------------------------------------- --------- ---------
As at 1 April 1,596 1,563
---------------------------------------- --------- ---------
Group's share of joint venture profits
before fair value movements and
dividends 131 94
---------------------------------------- --------- ---------
Fair value adjustment for interest
rate swap - 7
---------------------------------------- --------- ---------
Fair value adjustment for investment
property (19) (27)
---------------------------------------- --------- ---------
Equity return (130) -
---------------------------------------- --------- ---------
Dividends paid by joint venture
to the Group (40) (41)
---------------------------------------- --------- ---------
As at 31 March 1,538 1,596
13. Investment property
31 March 31 March
2017 2016
GBP'000 GBP'000
-------------------------------------- --------- ---------
Fair value of investment property
at 1 April 91,971 65,544
-------------------------------------- --------- ---------
Additions 3,185 7,781
-------------------------------------- --------- ---------
Subsequent capital expenditure after
acquisition 3,119 227
-------------------------------------- --------- ---------
Disposals (1,752) -
-------------------------------------- --------- ---------
Movement in rent incentives/initial
costs 299 187
-------------------------------------- --------- ---------
Fair value adjustment in the year 8,790 11,967
-------------------------------------- --------- ---------
Foreign exchange movement 6,830 6,265
-------------------------------------- --------- ---------
Fair value of investment property
at 31 March 112,442 91,971
The fair value of the H2O property in Madrid (Spain) of EUR117.5
million (GBP100.2 million) (31 March 2016: EUR106.5 million,
GBP84.2 million) has been arrived at on the basis of an independent
valuation carried out at the balance sheet date by Aguirre Newman
Valoraciones y Tasaciones S.A. ("Aguirre").
The fair value of the Unity and Armouries property in Birmingham
(UK) of GBP3.5 million (31 March 2016: GBP2.5 million) has been
arrived at on the basis of an independent valuation carried out at
the balance sheet date by GVA.
The fair value of the Monk Bridge property in Leeds (UK) of
GBP5.5 million (31 March 2016: GBP3.8 million) has been arrived at
on the basis of an independent valuation carried out at the balance
sheet date by Savills.
Aguirre, GVA and Savills are independent valuers and are not
connected to the Group.
The valuation basis used is fair value as defined by the Royal
Institution of Chartered Surveyors Appraisal and Valuations
Standards ("RICS"). The approved RICS definition of fair value is
"the price that would be received to sell an asset, or paid to
transfer a liability, in an orderly transaction between market
participants at the measurement date". See note 24 for details of
the property valuations.
The H2O property has been pledged as security for the borrowings
in Alpha Tiger Spain 1, SLU ('ATS1'), the Spanish SPV in which the
property is held (note 18).
In February 2017, ART completed the purchase of a new plot of
land, adjacent to the H2O property in Madrid (Spain), for EUR1.4
million (GBP1.2 million). This new investment is not included in
the H2O valuation: the GBP1.2 million cost has been considered by
the Directors to represent fair value at the balance sheet date;
the relevant market activity since the investment was made is not
considered to be significant in terms of value.
In October 2016, ART entered into a binding agreement to
purchase, subject to securing planning consent, a data centre
development at Borsigallee 1-7, Frankfurt, Germany with a minimum
gross external area of 24,500 square metres and a specified minimum
electrical power supply with a dual feed for the proposed
development. If the power and planning conditions are not secured
by agreed target dates during 2017, ART may terminate the
agreement. ART has created a new special purpose vehicle ("SPV") to
enter into the acquisition contract and undertake the development.
The planning and pre-development costs will be funded by ART to the
new SPV and are estimated to cost up to EUR2.6 million net of
refundable costs. To date, EUR2.3 million (GBP2.0 million) has been
funded. This includes real estate transfer tax of EUR0.8 million
(GBP0.7 million) which would be refundable if the transaction does
not complete. The Group estimates that should the purchase
conditions be satisfied, up to GBP14.5 million will be invested to
complete the acquisition of the site. The GBP2.0 million cost
incurred for this investment as at 31 March 2017 has been
considered by the Directors to represent fair value at the balance
sheet date; the relevant market activity since the investment was
made is not considered to be significant in terms of value.
On 2 August 2016, the Group sold its investment at "Acharn",
Killin, Perthshire, Scotland to Biomass Energy Renewables LLP
('BERL') for GBP1.9 million (note 22). The site had been acquired
in December 2015 and the Group had invested a total of GBP1.5
million by the year ended 31 March 2016. A further GBP0.3 million
was invested after year end up to completion, thus generating a
profit for the Group of GBP0.1 million.
Foreign exchange movement is recognised in other comprehensive
income.
14. Indirect property investment held at fair value
31 March 31 March
2017 2016
GBP'000 GBP'000
--------------------------- --------- ---------
As at 1 April 4,738 4,851
--------------------------- --------- ---------
Foreign exchange movement 797 (113)
--------------------------- --------- ---------
As at 31 March 5,535 4,738
The Galaxia investment is carried at a fair value of INR 450
million (GBP5.5 million).
In January 2015, the International Chamber of Commerce ('ICC')
Arbitration concluded its arbitration proceedings and declared in
favour of the Group's claims against Logix Group, which was found
to have breached the Terms of the Shareholders Agreement with the
Group. The ICC awarded the Group the return of its entire capital
invested of INR 450 Million, with interest at 18% p.a. from 31
January 2011 to 20 January 2015, and the refund of all costs
incurred towards the Arbitration. The total award amounted to
GBP9.2 million (the "Award") based on exchange rates at the time.
Additionally, a further 15% p.a. interest on all sums was awarded
to the Group from 20 January 2015 until the actual date of payment
by Logix of the Award. The sum has now accrued to GBP14.0 million
at the current exchange rate. In April 2015, the Group was notified
that Logix has filed a petition, under Section 34 of the Indian
Arbitration and Conciliation Act 1996, before the Delhi High Court
challenging the Award. The challenge to the Award was heard on
several dates during the years 2015 and 2016: following these
hearings, the Delhi High Court has ordered that the site be placed
in a court monitored auction process, with proceeds to be used to
repay outstanding ground lease rents with the balance to be held
until the outcome of the appeal to the Arbitration claim. In
February 2017, the Delhi High Court upheld the award and dismissed
the Logix petition with costs. Following the last hearings held in
Delhi in April and May 2017, the division bench dismissed Logix's
appeal. The Directors, taking into consideration legal advice
received following Logix's challenge of the Award, consider it
appropriate to continue to value the indirect investment at INR 450
million, which is the amount invested but excludes penalty interest
payment and other payments awarded in ART's favour due to
uncertainty over timing and final value of the Award. Post period
end, the Delhi High Court has issued a warrant of attachment
against the primary residential property owned by Shakti Nath and
Meena Nath, promoters of Logix Group. The Company has had the
residential property independently valued at approximately
GBP6m.
Foreign exchange movement is recognised in other comprehensive
income.
15. Investments held at fair value
31 March 31 March
2017 2016
GBP'000 GBP'000
--------------------------------------- --------- ---------
Non-current
--------------------------------------- --------- ---------
As at 1 April 10,439 6,566
--------------------------------------- --------- ---------
Additions during the year - 3,200
--------------------------------------- --------- ---------
Redemptions during the year (404) (905)
--------------------------------------- --------- ---------
Movement in fair value of investments 131 1,578
--------------------------------------- --------- ---------
Transfer to current (IMPT investment) (2,352) -
--------------------------------------- --------- ---------
As at 31 March 7,814 10,439
The investments, which are disclosed as non-current investments
held at fair value, are as follows:
-- Europip (participating redeemable preference shares): in July
2016, ART received GBP0.3 million as return of capital from
Europip; Europip provides quarterly valuations of the net asset
value of its shares; the net asset value of the investment as at 31
March 2017 was GBP2.5 million (31 March 2016: GBP2.5 million).
-- HLP (participating redeemable preference shares): HLP
provides half yearly valuations of the net asset value of its
shares; during the year ended 31 March 2017, HLP redeemed a total
of GBP0.2 million of shares (2016: GBP0.5 million); the net asset
value of the investment has been calculated by using the unaudited
value provided by the directors of HLP on 5 March 2017, this being
the closest point to the Group's balance sheet date; the resulting
value of the investment was GBP1.4 million (31 March 2016: GBP1.6
million).
-- AURE (ordinary shares): the investment is fair-valued by
reference to the dealing price of the shares provided monthly by
AURE, which is published on The International Stock Exchange
(formerly the Channel Islands Securities Exchange): the resulting
fair value of the investment at period end was GBP3.9 million (31
March 2016: GBP4.0 million).
The Board considers that the above investments will be held for
the long term and has therefore disclosed them as non-current
assets.
31 March 31 March
2017 2016
GBP'000 GBP'000
--------------------------------------- --------- ---------
Current
--------------------------------------- --------- ---------
As at 1 April 20,931 15,868
--------------------------------------- --------- ---------
Transfer from non current (IMPT 2,352 -
investment)
--------------------------------------- --------- ---------
Additions during the year 1,072 4,000
--------------------------------------- --------- ---------
Redemptions during the year (2,400) -
--------------------------------------- --------- ---------
Distributed investment income in
year - (318)
--------------------------------------- --------- ---------
Undistributed investment income
in year 1,721 1,381
--------------------------------------- --------- ---------
Movement in fair value of investments 2,437 -
--------------------------------------- --------- ---------
As at 31 March 26,113 20,931
The investments, which are disclosed as current investments held
at fair value, are as follows:
-- IMPT (ordinary shares): the ordinary shares of IMPT are
traded on the LSE (SFS) and are valued quarterly by reference to
market price; the market price of the investment as at 31 March
2017 was GBP4.9 million (31 March 2016: GBP2.4 million). Post year
end, on 28 April 2017, IMPT made a full equity return to ART at a
share price of 330.0p per share: the total cash received by ART was
GBP5.3 million.
-- FIAF (income units): FIAF allows monthly redemptions and
hence the investment is reported as a current asset; during the
year, ART has made net redemptions of GBP1.4 million of FIAF units.
FIAF provides monthly pricing of its units. The market value of the
investment as at 31 March 2017, based on the published price of the
relevant units, was GBP21.2 million (31 March 2016: GBP20.9
million).
-- ART also has an investment in Romulus. Any realised value
from this investment is passed exclusively to ART A shareholders.
As at 31 March 2017, the net asset value of ART's investment in
Romulus was nil (31 March 2016: nil). Post year end, Romulus
completed the disposal of all of its real estate assets. The
completion of the sale resulted in Romulus having positive net
assets and, consequently, ART received proceeds of GBP0.3 million
from Romulus. ART will therefore pay a special dividend to holders
of ART A Shares of GBP0.3 million, less administrative costs. The
proceeds are not material to the Group financial statements and
hence the investment was valued at nil at the balance sheet
date.
16. Trade and other receivables
31 March 31 March
2017 2016
GBP'000 GBP'000
---------------------------------------- --------- ---------
Non-current
---------------------------------------- --------- ---------
Loan granted to related parties
(note 22) 3,300 10,000
---------------------------------------- --------- ---------
Loan granted to third parties 1,980 -
---------------------------------------- --------- ---------
Total 5,280 10,000
---------------------------------------- --------- ---------
Current
---------------------------------------- --------- ---------
Trade debtors 1,215 1,246
---------------------------------------- --------- ---------
VAT 796 111
---------------------------------------- --------- ---------
Loan granted to related party 10,378 9,600
---------------------------------------- --------- ---------
Other debtors 692 1,492
---------------------------------------- --------- ---------
Interest receivable from loans granted
to related parties (note 22) 348 434
---------------------------------------- --------- ---------
Interest receivable from loans granted 32 -
to third parties
---------------------------------------- --------- ---------
Total 13,461 12,883
Loans granted to related parties can be detailed as follows:
-- GBP10.4 million (31 March 2016: GBP10.0 million) unsecured
loan to IMPT, expiring in December 2018 and carrying a coupon of
15% per annum. Post year end, on 7 April 2017, the loan has been
repaid in full, including accrued and rolled up interest and
applicable fees: the total cash received by ART was GBP10.9
million.
-- GBP3.3 million (31 March 2016: GBP9.6 million) loan to AURE,
expiring in November 2018 and carrying a coupon of 9% per annum.
During the year, AURE made capital repayments to ART amounting to
GBP6.3 million. The loan is unsecured but ART has the ability to
request AURE to provide a first legal charge security over its
non-core assets, once certain conditions on AURE's bank borrowings
are met and a second priority charge over AURE's other assets.
During the year, the Group granted mezzanine loans to third
parties that can be detailed as follows:
-- GBP1.7 million to SN Holdco. Ltd, a UK entity. This is a 36
month facility which will assist with the purchase of the virtual
freehold of an existing extended stay hotel known as The Staybridge
Suites Newcastle in Newcastle (UK). This loan earns a 15% coupon,
1% of arrangement fees and applicable exit fees calculated in
relation to the time of repayment of the loan.
-- GBP0.3 million to Shemron Homes (Ferndown) Ltd, a UK entity.
This is a 20 month facility which will assist with the purchase of
a property development in Dorset, UK. The Group is entitled to an
overall 14% return on the investment.
All loans mentioned above are relatively short term in nature
and have been issued solely with the intention of collecting
principal and interest. They do not form part of the portfolio of
assets which management assesses on a fair value basis and, in
consequence, they have not been designated at fair value through
profit or loss or presented as part of the group's investment
portfolio in the consolidated balance sheet.
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value. See note 2 (a)
(a) (ii) 'financial instruments' for more details.
17. Trade and other payables
31 March 31 March
2017 2016
GBP'000 GBP'000
---------------------------------- --------- ---------
Trade creditors 2,929 1,906
---------------------------------- --------- ---------
Investment Manager's fee payable 3,228 1,847
---------------------------------- --------- ---------
Accruals 439 233
---------------------------------- --------- ---------
Other creditors 180 13
---------------------------------- --------- ---------
Corporation tax 13 1
---------------------------------- --------- ---------
Total 6,789 4,000
Trade creditors and accruals primarily comprise amounts
outstanding for trade purchases and ongoing costs. The Group has
financial management policies in place to ensure that all payables
are paid within the credit time frame.
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
18. Bank borrowings
31 March 31 March
2017 2016
GBP'000 GBP'000
------------------------------------------ --------- ---------
Current liabilities: interest payable 109 114
------------------------------------------ --------- ---------
Current liabilities: bank borrowings 60,509 429
------------------------------------------ --------- ---------
Total current liabilities 60,618 543
------------------------------------------ --------- ---------
Non-current liabilities: bank borrowings - 55,512
------------------------------------------ --------- ---------
Total liabilities 60,618 56,055
------------------------------------------ --------- ---------
The borrowings are repayable as
follows:
------------------------------------------ --------- ---------
Interest payable 109 114
------------------------------------------ --------- ---------
On demand or within one year 60,509 429
------------------------------------------ --------- ---------
In the second to fifth years inclusive - 55,512
------------------------------------------ --------- ---------
Total 60,618 56,055
Movements in the Group's bank borrowings are analysed as
follows:
31 March 31 March
2017 2016
GBP'000 GBP'000
----------------------------------------- --------- ---------
As at 1 April 55,512 51,557
----------------------------------------- --------- ---------
Repayment of borrowings (114) (398)
----------------------------------------- --------- ---------
Reclassification to current liabilities 429 (32)
----------------------------------------- --------- ---------
Amortisation of deferred finance
costs 240 211
----------------------------------------- --------- ---------
Foreign exchange movement 4,442 4,174
----------------------------------------- --------- ---------
As at 31 March 60,509 55,512
The bank borrowings represent the syndicated loan finance
provided to ATS1, owner of the H2O property in Madrid, Spain.
The ATS1 loan was originally provided by a syndicate of three
banks (Eurohypo AG, Deutsche Hypothekenbank and Landesbank
Hessen-Thuringen Girozentrale). In August 2014, Deutsche
Hypothekenbank transferred its share of the loan to MHB Bank AG, a
subsidiary of the Lone Star group. The loan had two tranches of
debt of which one tranche had an agreed schedule of amortisation as
reflected in the repayment table above. The loans were secured by a
first charge mortgage against the Spanish property. ATS1 had
entered into an interest rate cap under which the floating rate
element of the interest charge was capped at 2.85% for the full
term of the loan on EUR50 million of the principal borrowings of
EUR75 million (note 23).
Post year end, on 18 May 2017, ATS1 has completed the refinance
of its borrowings, secured on the H2O property, with a new EUR65.0
million seven year loan with Aareal Bank. This loan has been used
to partly repay the previous bank loan (EUR71.1 million), which was
due to be repaid in October 2017. The Group has funded the
refinancing gap and fees. The borrowings are non-recourse to the
Group's other asset investments.
Foreign exchange movement is recognised in other comprehensive
income/(expense).
19. Share capital
Number
of shares
-------------------- ---------- ----------- ----------- ------------ -----------
Authorised
-------------------- ---------- ----------- ----------- ------------ -----------
Ordinary shares Unlimited
of no par value
-------------------- ---------- ----------- ----------- ------------ -----------
Ordinary Ordinary Ordinary A shares Total
-------------------- ---------- ----------- ----------- ------------ -----------
Issued and fully treasury external total external shares
paid
-------------------- ---------- ----------- ----------- ------------ -----------
At 1 April 2016 6,794,398 61,834,950 68,629,348 7,488,267 76,117,615
-------------------- ---------- ----------- ----------- ------------ -----------
Share conversion - 1,151,225 1,151,225 (1,151,225) -
-------------------- ---------- ----------- ----------- ------------ -----------
Shares cancelled - - - - -
following buyback
-------------------- ---------- ----------- ----------- ------------ -----------
Shares bought - - - - -
back
-------------------- ---------- ----------- ----------- ------------ -----------
At 31 March
2017 6,794,398 62,986,175 69,780,573 6,337,042 76,117,615
The Company has one class of ordinary shares which carries no
right to fixed income and class A shares, which carry the same
rights as ordinary shares save that class A shares carry the
additional right to participation in the Company's investment in
Romulus and the right to convert into ordinary shares on a one for
one basis.
The Company has the right to reissue or cancel the remaining
treasury shares at a later date.
On 9 March 2016, the Company published a circular giving notice
of an Extraordinary General Meeting on 1 April 2016. Consistent
with the Company's commitment to shareholder value, the Company
asked its shareholders to approve a general authority allowing the
Company to acquire up to 24.99% of the Voting Share Capital during
the period expiring on the earlier of (i) the conclusion of the
Annual General Meeting of the Company in 2017 and (ii) 4 September
2017. The shareholders approved the proposal.
During the year, the Company made no share buybacks. As at 31
March 2017, the ordinary share capital of the Company was
69,780,573 (including 6,794,398 shares held in treasury). The
Company also had 6,337,042 A shares in issue. The total voting
rights in ART are unchanged from prior year at 69,323,217.
Post year end, the Company has made no share buybacks and 63,927
A shares were converted into ordinary shares. At the date of
signing these financial statements the ordinary share capital of
the Company was 69,844,500 (including 6,794,398 shares held in
treasury). The Company also has 6,273,115 A shares in issue. The
total voting rights in ART are unchanged at 69,323,217.
20. Reserves
The movements in the reserves for the Group are shown above.
Special reserve
The special reserve is a distributable reserve to be used for
all purposes permitted under Guernsey company law, including the
buy-back of shares and payment of dividends.
Translation reserve
The translation reserve contains exchange differences arising on
consolidation of the Group's overseas operations. These amounts may
be subsequently reclassified to profit or loss.
Capital reserve
The capital reserve contains increases and decreases in the fair
value of the Group's investment property, gains and losses on the
disposal of property, gains and losses arising from indirect
property investment at fair value together with expenses allocated
to capital.
Revenue reserve
Any surplus arising from net profit after tax is taken to this
reserve, which may be utilised for the buy-back of shares and
payment of dividends.
21. Events after the balance sheet date
After the balance sheet date, IMPT made a full loan repayment
and equity return to ART:
-- On 7 April 2017, IMPT repaid in full the loan to ART,
including accrued and rolled up interest and applicable fees: the
total cash received by ART was GBP10.9 million.
-- On 28 April 2017, IMPT made a full equity return to ART at a
share price of 330.0p per share: the total cash received by ART was
GBP5.3 million.
During April and May 2017, ART made a further investment in FIAF
units of GBP5.0 million and granted two new mezzanine loans to UK
entities: of GBP0.5 million to Rippon Homes Welton Ltd and GBP0.3
million to Devlux (Weald) Ltd.
On 18 May 2017, the Group agreed to sell a 70% equity interest
in the H2O property to CBRE European Co-Investment Fund, managed by
CBRE Global Investors. The sale is at a 4.8% premium to the latest
published valuation of the shopping centre, as at 30 September
2016. The sale contract has conditions attached that are expected
to be met by the end of June 2017, following which completion will
occur, and a further update will be provided at that time. The
Group will retain a 30% stake in the joint venture with CBRE Global
Investors to participate in the future growth of the centre.
On 18 May 2017, ATS1 has also completed the refinance of its
borrowings, secured on the H2O property, with a new EUR65.0 million
seven year loan with Aareal Bank (note 18). This loan has been used
to partly repay the previous bank loan (EUR71.1 million), which was
due to be repaid in October 2017. The Group has funded the
refinancing gap and fees. The borrowings are non-recourse to the
Group.
On 31 May 2017, Europip made an equity return to ART of GBP1.8
million.
In June 2017, ART received proceeds of GBP0.3 million from
Romulus. ART will therefore pay a special dividend to holders of
ART A Shares of GBP0.3 million, less administrative costs.
Post year end, a total of 63,927 A Shares were converted into
Ordinary Shares (Note 19).
22. Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions. ARC is the Investment Manager to the Company under the
terms of the Investment Manager Agreement and is thus considered a
related party of the Company. The current management agreement with
the Investment Manager will expire on 21 December 2022.
The Investment Manager is entitled to receive a fee from the
Company at an annual rate of 2 per cent of the net assets of the
Company, payable quarterly in arrears. During the year a total of
GBP1.0 million (31 March 2016: GBP1.0 million), net of rebates, was
billed by ARC to ART. As at 31 March 2017, a total of GBP0.3
million (31 March 2016: GBP0.2 million) was outstanding.
The Investment Manager is also entitled to receive an annual
performance fee calculated with reference to total shareholder
return ("TSR"), whereby the fee is 20 per cent of any excess over
an annualised TSR of 15 per cent subject to a rolling 3 year high
water mark. As at 31 March 2017, a performance fee of GBP2.7
million (31 March 2016: GBP1.4 million) was due to ARC: the related
calculations have been audited by the Group's auditor and the fee
has been accrued in the consolidated financial statements.
The Investment Manager has a management agreement directly with
the H2O property company, Alpha Tiger Spain 1, SLU under which it
earns a fee of 0.9% per annum based upon the gross assets of Alpha
Tiger Spain 1, SLU. During the year a total of GBP0.9 million (31
March 2016: GBP0.7 million) was billed by ARC to Alpha Tiger Spain
1, SLU. As at 31 March 2017, a total of nil (31 March 2016: nil)
was outstanding. In order to avoid double charging fees to the
Company, the Investment Manager provides a rebate to the Company of
a proportion of its current fee equivalent to the value of the
Company's net asset value attributable to the H2O investment.
The Company had invested in IMPT (until 28 April 2017) where ARC
was the Investment Manager. Mark Rattigan, a partner of ARC, was a
Director (resigned on 3 May 2017) on the Board of IMPT. ARC rebated
fees earned in relation to the Company's investment in IMPT.
The Company has invested in FIAF where ARPIA, a subsidiary of
ARC, is the Investment Manager. ARC is the Authorised Corporate
Director of FIAF. ARC rebates fees earned in relation to the
Company's investment in FIAF.
The Company has invested in AURE, where ARC is the Investment
Manager. Brad Bauman, a partner of ARC, is a Director on the Board
of AURE. ARC rebates fees earned in relation to the Company's
investment in AURE.
The Company has invested in Europip, where ARPIA, a subsidiary
of ARC, is the Investment Adviser. ARC rebates fees earned in
relation to the Company's investment in Europip.
The Company has invested in Romulus, where ARPIA, a subsidiary
of ARC, is Trust Manager and Property Manager. ARC rebates fees
earned in relation to the Company's investment in Romulus.
The Company has invested in Phase 1000, Cambourne Business Park,
Cambridge, and ARC was appointed as Asset and Property Manager of
the joint venture entity. ARC rebates to ART the relevant
proportion of fees earned by ARC, which apply to the Company's
investment.
During the year, the Group disposed of its investment at
"Acharn", Killin, Perthshire, Scotland (note 13). ARPIA, a
subsidiary of ARC, provides investment management services to the
owners of BERL.
Total rebates for the year were GBP1.1 million (31 March 2016:
GBP0.8 million).
Loans granted to related parties include loans granted to IMPT
and AURE. Details of the loan amounts outstanding and interest
receivable as at year end are provided in note 16.
Details of the Investment Manager's fees for the year are
disclosed on the face of the consolidated statement of
comprehensive income and the balance payable at 31 March 2017 is
provided in note 17.
Alpha Global Property Securities Fund Pte. Ltd, a wholly owned
subsidiary of ARC registered in Singapore, held 22,550,000 shares
in the Company at 31 March 2017 (31 March 2016: 22,550,000).
ARC did not hold any shares in the Company at 31 March 2017 (31
March 2016: nil).
The following, being partners of the Investment Manager, have
interests in the following shares of the Company at 31 March
2017:
31 March 31 March
2017 2016
Number of Number of
shares held shares held
--------------- ------------- -------------
IPGL Limited 3,010,100 3,010,100
--------------- ------------- -------------
Brian Frith 1,125,000 1,125,000
--------------- ------------- -------------
Phillip Rose 139,695 139,695
--------------- ------------- -------------
Brad Bauman 55,006 55,006
--------------- ------------- -------------
Ronald Armist 500 500
Details of the Directors' fees and share interests in the
Company are included in the Directors Report.
Karl Devon-Lowe, a partner of ARC, received fees of GBP7,000 (31
March 2016: GBP5,000) in relation to directorial responsibilities
on a number of the Company's subsidiary companies.
Serena Tremlett is also the Managing Director and a major
shareholder of Morgan Sharpe Administration Limited (sold to Estera
on 28 April 2017), the Company's Administrator and Secretary.
During the year the Company paid Morgan Sharpe Administration
Limited fees of GBP95,300 (2016: GBP95,300) and no amount was
outstanding at year end.
23. Financial instruments risk exposure and management
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group from which
financial instrument risk arises, are as follows:
Financial assets
and liabilities carrying
value
------------------------------ ----------------------------
31 March 31 March
2017 2016
GBP'000 GBP'000
------------------------------ ------------- -------------
Financial assets at fair
value through profit or
loss
------------------------------ ------------- -------------
Investments held at fair
value 33,927 31,370
------------------------------- ------------- -------------
Indirect property investment
at fair value 5,535 4,738
------------------------------- ------------- -------------
Total financial assets at
fair value through profit
or loss 39,462 36,108
------------------------------- ------------- -------------
Trade and other receivables 18,741 22,883
------------------------------- ------------- -------------
Cash and cash equivalents 5,397 3,863
------------------------------- ------------- -------------
Total financial assets 63,600 62,854
------------------------------- ------------- -------------
Financial liabilities at
fair value through profit
or loss
------------------------------ ------------- -------------
Interest rate cap - -
------------------------------ ------------- -------------
Foreign exchange forward
contract - (745)
------------------------------- ------------- -------------
Financial liabilities at - -
amortised cost
------------------------------ ------------- -------------
Trade and other payables (6,789) (4,000)
------------------------------- ------------- -------------
Bank borrowings (60,618) (56,055)
------------------------------- ------------- -------------
Total financial liabilities (67,407) (60,800)
------------------------------- ------------- -------------
Net changes in realised and unrealised gains or losses on
financial instruments can be summarised as follows:
31 March 31 March
2017 2016
GBP'000 GBP'000
------------------------------------ --------- ---------
Realised gains or losses
on loans and receivables
------------------------------------ --------- ---------
Bank interest receivable 10 69
------------------------------------- --------- ---------
Interest receivable on loans
granted to related parties 2,284 2,826
------------------------------------- --------- ---------
Interest receivable on loans 97 -
granted to third parties
------------------------------------ --------- ---------
Impairment of trade and
other receivables 3 35
------------------------------------- --------- ---------
Net realised gains on loans
and receivables 2,394 2,930
------------------------------------- --------- ---------
Unrealised gains and losses
on financial assets and
liabilities held at fair
value through profit or
loss
------------------------------------ --------- ---------
Movement in fair value of
interest rate cap - (10)
------------------------------------- --------- ---------
Movement in fair value of
foreign exchange forward
contract (904) (787)
------------------------------------- --------- ---------
Movement in fair value of
investments 2,568 1,577
------------------------------------- --------- ---------
Undistributed investment
income 1,876 1,187
------------------------------------- --------- ---------
Realised gains and losses
on financial assets and
liabilities held at fair
value through profit or
loss
------------------------------------ --------- ---------
Dividend received from investments
held at fair value 23 43
------------------------------------- --------- ---------
Distributed investment income - 318
------------------------------------- --------- ---------
Net gains on financial assets
and liabilities held at
fair value through profit
or loss 3,563 2,328
------------------------------------- --------- ---------
Net interest income can be summarised as follows:
31 March 31 March
2017 2016
GBP'000 GBP'000
------------------------------ --------- ---------
Bank interest receivable 10 69
------------------------------- --------- ---------
Interest receivable on loans
granted to related parties 2,284 2,826
------------------------------- --------- ---------
Interest receivable on loans 97 -
granted to third parties
------------------------------ --------- ---------
Interest on bank borrowings (1,778) (1,700)
------------------------------- --------- ---------
Net interest income 613 1,195
------------------------------- --------- ---------
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function.
The overall objective of the Board is to set polices that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below.
Project monitoring
Projects are monitored through regular Project Control Meetings
held with development partners to discuss progress and monitor
risks. The Investment Manager attends these meetings and reports to
the Board on a quarterly basis.
Credit risk
Credit risk arises when a failure by counter parties to
discharge their obligations could reduce the amount of future cash
inflows from financial assets on hand at the balance sheet
date.
At 31 March 2017, trade and other receivables past due but not
impaired amounted to nil (31 March 2016: nil).
The carrying amount of financial assets recorded in the
financial statements, which is net of impairment losses, represents
the Group's maximum exposure to credit risk.
The Group policy is to maintain its cash and cash equivalent
balances with a number of financial institutions as a means of
diversifying credit risk. The Group monitors the placement of cash
balances on an ongoing basis and has policies to limit the amount
of credit exposure to any financial institution.
With regards to the investment property business, a property
advisor monitors the tenants in order to anticipate and minimise
the impact of default by occupational tenants. Where possible,
tenants' risk is mitigated through rental guarantees. The Group
meets with the tenant frequently and monitors its financial
performance closely.
With regards to the loan granted to AURE, the Board continues to
monitor the financial performance of this company. The Board,
having considered the publically available information provided by
AURE (see above), currently considers that the amount owed is fully
recoverable.
With regards to its other investments, the Group receives
regular updates from the relevant Investment Manager as to the
performance of the underlying investments and assesses credit risk
as a result.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk
of losses. The Group has procedures with the object of minimising
these risks such as maintaining sufficient cash and other highly
liquid current assets. Cash and cash equivalents are placed with
financial institutions on a short term basis reflecting the Group's
desire to maintain a high level of liquidity in order to enable
timely completion of investment transactions.
The following table illustrates the contractual maturity
analysis of the Group's financial liabilities.
Within 1-2 2-5 Over Total Total
31 March 2017 1 year years years 5 years GBP'000 carrying
GBP'000 GBP'000 GBP'000 GBP'000 amount
GBP'000
--------------------- --------- --------- --------- --------- --------- ----------
Trade and other
payables 6,776 - - - 6,776 6,776
--------------------- --------- --------- --------- --------- --------- ----------
Interest payable
on bank borrowings 782 - - - 782 109
--------------------- --------- --------- --------- --------- --------- ----------
Bank borrowings 60,509 - - - 60,509 60,509
--------------------- --------- --------- --------- --------- --------- ----------
Foreign exchange - - - - - -
forward contract
--------------------- --------- --------- --------- --------- --------- ----------
Total 68,067 - - - 68,067 67,394
Within 1-2 2-5 Over Total Total
31 March 2016 1 year years years 5 years GBP'000 carrying
GBP'000 GBP'000 GBP'000 GBP'000 amount
GBP'000
--------------------- --------- --------- --------- --------- --------- ----------
Trade and other
payables 3,999 - - - 3,999 3,999
--------------------- --------- --------- --------- --------- --------- ----------
Interest payable
on bank borrowings 1,468 746 - - 2,214 114
--------------------- --------- --------- --------- --------- --------- ----------
Bank borrowings 429 55,855 - - 56,284 55,941
--------------------- --------- --------- --------- --------- --------- ----------
Foreign exchange
forward contract 745 - - - 745 745
--------------------- --------- --------- --------- --------- --------- ----------
Total 6,641 56,601 - - 63,242 60,799
Market risk
a) Foreign exchange risk
The Group operates in India, Germany and Spain and is exposed to
foreign exchange risk arising from currency exposures with respect
to Indian Rupees and Euros. Foreign exchange risk arises from
recognised monetary assets and liabilities.
The Group's policy is, where possible, to allow Group entities
to settle liabilities denominated in their functional currency with
the cash generated from their own operations in that currency.
The Group does not currently hedge its Indian foreign currency
exposure and only partially hedges its Euro currency exposure
through a foreign exchange forward contract: the Group entered into
this contract to hedge EUR17.5 million of Euro exposure.
The Board monitors the Group's exposure to foreign currencies on
a quarterly basis as part of its Risk Management review.
A strengthening of the Rupee by 10% against Sterling
(representing management's assessment of a reasonably possible
change) would increase the net assets by GBP615,000 (2016:
GBP526,000). A weakening of the Rupee by 10% would decrease net
assets by GBP503,000 (2016: GBP431,000). A strengthening of the
Euro by 5 cents would increase the net assets by GBP1,929,000
(2016: GBP1,302,000). A weakening of the Euro by 5 cents would
decrease net assets by GBP1,771,000 (2016: GBP1,203,000).
b) Cash flow and fair value interest rate risk
The Group's interest rate risk arises primarily from bank
borrowings. The Group has interest rate caps, entered into by ATS1,
under which the floating rate element of the interest charge is
capped at 2.85% for the full term of the loan on EUR50 million of
the principal borrowings of EUR75 million.
The Group also holds significant cash balances and loan assets
which accrue interest based on variable interest rates.
The Group's cash flow is periodically monitored by the
Board.
The sensitivity analysis below is based on a change in an
assumption while holding all other assumptions constant. In
practice, this is unlikely to occur, and changes in some of the
assumptions may be correlated - for example, changes in interest
rate and changes in market value.
For the Group, a decrease of 25 basis points in interest rates
would result in an increase in post-tax profits of GBP146,000
(2016: GBP137,000). An increase of 25 basis points in interest
rates would result in a decrease in post-tax profits of GBP146,000
(2016: GBP137,000).
c) Price risk
The Company announced on 28 May 2010 that it had entered into a
Settlement Agreement with Logix Group under which it has sold its
interest in its Technova investment and has agreed a floor price
mechanism for the sale of the Galaxia project. The Settlement
Agreement lapsed on 28 May 2011 returning the parties to the
pre-existing agreement. The terms of the pre-existing agreement
provide for a minimum return of INR 450 million and an additional
preferred return and profit. As detailed in note 14, in January
2015, the ICC Arbitration concluded its arbitration proceedings and
declared in favour of the Group's claims against Logix Group. The
Award granted by the ICC to the Group equals GBP10.5 million, based
on year end exchange rates; plus 15% p.a. interest on all sums
awarded until the actual date of payment by Logix. The Directors,
taking into consideration legal advice received following Logix's
challenge of the Award, consider it appropriate to continue to
value the indirect investment at INR 450 million, which is the
amount invested but excludes penalty interest payment and other
payments awarded in ART's favour due to uncertainty over timing and
final value of the Award.
The Group has invested in income units of FIAF, a fund offering
monthly redemptions (note 15). FIAF is an open ended unauthorised
unit trust which operates a monthly dealing facility to provide
investment liquidity. The value of the income units are assessed
monthly and are subject to fluctuation.
The Group had invested (until 28 April 2017) in IMPT's ordinary
shares, which are traded on the LSE so are subject to market
fluctuation.
The Group has invested in ordinary shares in AURE and
participating redeemable preference shares in Europip and HLP; the
value of these shares is assessed regularly and is subject to
fluctuation: AURE provide pricing monthly, Europip quarterly and
HLP half yearly.
If the price of the aggregated investments in participating
redeemable preference shares had increased by 5%, with all other
variables held constant, this would have increased the net assets
value of the Group by GBP194,000 (31 March 2016: GBP207,000).
Conversely, if the price of the aggregated investments in
participating redeemable preference shares had decreased by 5% this
would have decreased the net assets value of the Group by
GBP194,000 (31 March 2016: GBP207,000).
d) Fair values
The following methods and assumptions were used to estimate fair
values:
-- Cash and short-term deposits, trade receivables, trade
payables, and other current liabilities approximate their carrying
amounts due to the short-term maturities of these instruments
-- The fair value of the derivative interest rate cap contracts
is determined by reference to an applicable valuation model
employed by the contractual counter parties; valuations are
provided quarterly; the fair value as at 31 March 2017 is nil (31
March 2016: nil)
-- The fair value of the foreign exchange forward contract is
determined by reference to the quarter end one year forward market
rate provided by the contractual counter party
-- The fair value of the Galaxia investment is based on
quarterly Directors' estimate of the recoverable amount based upon
legal advice
-- The fair value of the investment in IMPT's ordinary shares,
which are traded on the LSE, is based upon the mid price of the
ordinary shares at the balance sheet date
-- The fair value of the investment in AURE is based upon the
dealing price of the shares provided by AURE at the balance sheet
date, which is published on The International Stock Exchange
(formerly the Channel Islands Securities Exchange)
-- The fair value of the FIAF investment is based upon the price
provided by the issuer for the relevant share class owned: this is
calculated by reference to the net asset value of the investment
and based on observable inputs; this investment is therefore deemed
to be a level 2 financial asset (see note 24)
-- The fair value of the HLP investment is based upon the price
provided by the issuer for the relevant share class owned: this is
calculated by reference to the net asset value of the investment
and principally driven by the fair value of HLP's underlying
property investments. This net asset value is therefore mainly
based on unobservable inputs and is deemed to be level 3 financial
assets (see note 24). HLP's accounts are audited annually. HLP's
underlying investment properties are fair valued as per RICS
definition and the ART Board consider that any reasonable possible
movement in the valuation of HLP's individual properties would not
be material to the value of ART's investment.
-- The fair value of the Europip investment is based upon the
price provided by the issuer for the relevant share class owned:
this is calculated by reference to the net asset value of the
investment and principally driven by the fair value of Europip's
underlying property investments. This net asset value is therefore
mainly based on unobservable inputs and is deemed to be level 3
financial assets (see note 24). Europip's accounts are audited
annually. As at 31 March 2017, Europip have sold its remaining
property and is preparing to distribute the proceeds to
shareholders.
As a result the carrying values less impairment provision of
loans and receivables and financial liabilities measured at
amortised cost are approximate to their fair values.
Note 24 contains details regarding the fair value measurement of
the interest rate cap contracts.
Capital risk management
The Board's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
The Board regularly reviews the adequacy of the Group's level of
borrowings by monitoring its compliance with the relevant bank
covenants.
24. Fair value measurement
IFRS 13 requires disclosure of the fair value measurement of the
Group's assets and liabilities, the related valuation techniques,
the valuations' recurrence and the inputs used to assess and
develop those measurements.
The Group discloses fair value measurements by level of the
following fair value measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The level in the fair value hierarchy within which the asset or
liability is categorised is determined on the basis of the lowest
input that is significant to the fair value measurement. Assets and
liabilities are classified in their entirety into one of the three
levels.
Investment property is valued on a recurring basis: half
yearly.
The Group's valuers derive the fair value of the investment
property by applying the methodology and valuation guidelines as
set out by the Royal Institution of Chartered Surveyors in the
United Kingdom. This approach is based on discounting the future
net income receivable from properties to arrive at the net present
value of that future income stream. Future net income comprises the
rent secured under existing leases, less any known or expected
non-recoverable costs and the current market rent attributable to
vacant units. The consideration basis for this calculation excludes
the effects of any taxes on the net income. The discount factors
used to calculate fair value are consistent with those used to
value similar properties, with comparable leases in each of the
respective markets. A decrease in the net rental income or an
increase in the discount rate will decrease the fair value of the
investment property.
Investment property in the course of construction (Frankfurt
data centre investment) is carried at cost plus associated costs
and this has been considered by the Directors to represent fair
value at the balance sheet date. Upon commencement of construction,
valuations will be carried out by independent valuers in accordance
with the Company's accounting policy.
The indirect property investment at fair value, investments held
at fair value and derivative contracts are valued on a recurring
basis as indicated in note 23.
The following table shows an analysis of the fair values of
assets and liabilities recognised in the balance sheet by level of
the fair value hierarchy described above:
Assets and liabilities measured
at fair value
----------------------------- ----------------------------------------
Level Level Level Total
1 2 3
-------- --------- -------- ---------
31 March 2017 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- --------- -------- ---------
Assets measured at
fair value
----------------------------- -------- --------- -------- ---------
Non-current
----------------------------- -------- --------- -------- ---------
Investment property
(note 13) - - 112,442 112,442
----------------------------- -------- --------- -------- ---------
Indirect property
investment at fair
value (note 14) - - 5,535 5,535
----------------------------- -------- --------- -------- ---------
Investments held at
fair value - 3,941 3,873 7,814
----------------------------- -------- --------- -------- ---------
Interest rate cap - - - -
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Investments held at
fair value 4,861 21,252 - 26,113
----------------------------- -------- --------- -------- ---------
Assets for which fair
values are disclosed
----------------------------- -------- --------- -------- ---------
Non-current
----------------------------- -------- --------- -------- ---------
Trade and other receivables - 5,280 - 5,280
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Trade and other receivables - 13,461 - 13,461
----------------------------- -------- --------- -------- ---------
Liabilities measured
at fair value
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Foreign exchange forward - - - -
contract
----------------------------- -------- --------- -------- ---------
Liabilities for which
fair values are disclosed
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Trade and other payables - (6,789) - (6,789)
----------------------------- -------- --------- -------- ---------
Bank borrowings - (60,618) - (60,618)
----------------------------- -------- --------- -------- ---------
Assets and liabilities measured
at fair value
----------------------------- ----------------------------------------
Level Level Level Total
1 2 3
-------- --------- -------- ---------
31 March 2016 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- --------- -------- ---------
Assets measured at
fair value
----------------------------- -------- --------- -------- ---------
Non-current
----------------------------- -------- --------- -------- ---------
Investment property
(note 13) - - 91,971 91,971
----------------------------- -------- --------- -------- ---------
Indirect property
investment at fair
value (note 14) - - 4,738 4,738
----------------------------- -------- --------- -------- ---------
Investments held at
fair value 2,352 3,954 4,133 10,439
----------------------------- -------- --------- -------- ---------
Interest rate cap - - - -
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Investments held at
fair value - 20,931 - 20,931
----------------------------- -------- --------- -------- ---------
Assets for which fair
values are disclosed
----------------------------- -------- --------- -------- ---------
Non-current
----------------------------- -------- --------- -------- ---------
Trade and other receivables - 10,000 - 10,000
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Trade and other receivables - 12,883 - 12,883
----------------------------- -------- --------- -------- ---------
Liabilities measured
at fair value
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Foreign exchange forward
contract - (745) - (745)
----------------------------- -------- --------- -------- ---------
Liabilities for which
fair values are disclosed
----------------------------- -------- --------- -------- ---------
Current
----------------------------- -------- --------- -------- ---------
Trade and other payables - (4,000) - (4,000)
----------------------------- -------- --------- -------- ---------
Bank borrowings - (543) - (543)
----------------------------- -------- --------- -------- ---------
Non-current
----------------------------- -------- --------- -------- ---------
Bank borrowings - (55,512) - (55,512)
----------------------------- -------- --------- -------- ---------
The Group determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation (based on
the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
Movements in level 3 of the fair value measurements, during the
year ended 31 March 2017, can be summarised as follows:
Investment Indirect Investments
property property held at
investment fair value
at fair
value
-------------------------------------
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ----------- -----------
At 1 April 2016 91,971 4,738 4,133
------------------------------------- ----------- ----------- -----------
Additions 3,185 - -
------------------------------------- ----------- ----------- -----------
Subsequent capital expenditure
after acquisition 3,119 - -
------------------------------------- ----------- ----------- -----------
Disposals (1,752) - -
------------------------------------- ----------- ----------- -----------
Redemptions - - (404)
------------------------------------- ----------- ----------- -----------
Movement in rent incentives/initial
costs 299 - -
------------------------------------- ----------- ----------- -----------
Fair value adjustment 8,790 - 144
------------------------------------- ----------- ----------- -----------
Effect of foreign exchange 6,830 797 -
------------------------------------- ----------- ----------- -----------
At 31 March 2017 112,442 5,535 3,873
------------------------------------- ----------- ----------- -----------
There were no transfers between level 1 and level 2 fair value
measurements and no transfers into or out of level 3 fair value
measurements during the year ended 31 March 2017.
The fair value of investment property is based on unobservable
inputs and it is therefore disclosed as level 3. The following
methods, assumptions and inputs were used to estimate fair values
of investment property:
31 March 2017 - H2O Shopping centre, Madrid (Spain)
-----------------------------------------------------------------------------------------------------------------------------------------------
Class of Carrying Area Valuation technique Significant unobservable inputs Range/Value
investment amount / (square meters)
property fair value
'000
------------ --------------- ----------------- ---------------------- ------------------------------------------------- ------------------
Europe GBP100,256 51,825 Discounted cash flow Gross Estimated Rental Value ('ERV') per sqm p.a EUR3.04/EUR847.58
.
(EUR117,500)
------------------------------------------------------------------------------------------------------------- --------- ------------------
Discount rate 12.50%
31 March 2016 - H2O Shopping centre, Madrid (Spain)
-----------------------------------------------------------------------------------------------------------------------------------------------
Class of Carrying Area Valuation technique Significant unobservable inputs Range/Value
investment amount / (square meters)
property fair value
'000
------------ --------------- ----------------- ---------------------- ------------------------------------------------- ------------------
Europe GBP84,190 51,825 Discounted cash flow Gross Estimated Rental Value ('ERV') per sqm p.a EUR5.00/EUR165.00
.
(EUR106,500)
------------------------------------------------------------------------------------------------------------- --------- ------------------
Discount rate 10.50%
At H2O, the high range of ERVs reflects the nature of the
shopping centre assets which typically comprise units ranging from
in-mall kiosks of less than 10 square metres to large floorplate
retailers which can occupy units in excess of 3,000 square
metres.
The Directors assessed at the balance sheet date whether the
Group's investment property is being exploited according to its
highest and best use and they are satisfied that this is the
case.
31 March 2017 - Unity and Armouries, Birmingham (UK)
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount / Area Valuation Significant Range/Value
investment fair value (square meters) technique unobservable
property '000 inputs
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Income
capitalisation
90,000 net and residual
developable development
Europe GBP3,500 square feet appraisal Investment yield 4.4%
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Market rent GBP740/GBP1,200
per month
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Development costs GBP165/GBP177
per square foot
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Developer's profits 20%
31 March 2017 - Monk Bridge, Leeds (UK)
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount / Area Valuation Significant Value
investment fair value (square meters) technique unobservable
property '000 inputs
------------------- ------------------ ------------------- ------------------ ------------------- ---------------
Europe GBP5,500 Planning consent Comparable Comparable Not applicable
for 140,000 square residential land evidence
feet transactions
analysis
The Frankfurt data centre investment, which is investment
property in the course of construction, is carried at cost plus
associated costs and this has been considered by the Directors to
represent fair value at the balance sheet date; the relevant market
activity since the investment was made is not considered to be
significant in terms of value.
Directors and Company information
Directors
David Jeffreys (Chairman)
Jeff Chowdhry
Roddy Sage
Phillip Rose
Serena Tremlett
Registered office
Old Bank Chambers
La Grande Rue
St Martin's
Guernsey GY4 6RT
Investment Manager
Alpha Real Capital LLP
Level 6, 338 Euston Road
London NW1 3BG
Administrator and secretary
Morgan Sharpe
Administration Limited
(sold to Estera on 28 April 2017)
Old Bank Chambers
La Grande Rue
St Martin's
Guernsey GY4 6RT
Broker
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Independent valuers in the UK
GVA
3 Brindley place
Birmingham B1 2JB
Savills
Ground Floor, City Point
12 King Street
Leeds LS1 2HL
Independent valuers in India
Colliers International (Hong Kong) Limited
Suite 5701 Central Plaza
18 Harbour Road
Wanchai, Hong Kong
Independent valuers in Spain
Aguirre Newman Valoraciones y Tasaciones S.A.
Calle de General Lacy, 23
Madrid, 28045
Spain
Independent Auditor
BDO Limited
Place du Pré, Rue du Pré
St Peter Port
Guernsey GY1 3LL
Tax advisors in Europe
KPMG LLP
15 Canada Square
London E14 5GL
Legal advisors in Guernsey
Carey Olsen
PO Box 98, Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Legal advisors in the UK
Norton Rose
3 More London Riverside
London SE1 2AQ
Legal advisors in India
AZB & Partners
Plot A-8 Sector 4
NOIDA 201 301
India
Legal advisors in Spain
Ashurst LLP
Alcalá, 44
Madrid, 28014
Spain
Registrar
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey JE1 1ES
Shareholder information
Further information on the Company, compliant with the SFS
regulations, can be found at the Company's website:
www.alpharealtrustlimited.com
Share price
The Company's Ordinary Shares are listed on the SFS of the
London Stock Exchange.
Change of address
Communications with shareholders are mailed to the addresses
held on the share register. In the event of a change of address or
other amendment, please notify the Company's Registrar under the
signature of the registered holder.
Investment Manager
The Company is advised by Alpha Real Capital LLP which is
authorised and regulated by the Financial Conduct Authority in the
United Kingdom
Financial calendar
Financial Reporting/Meeting Dividend period Ex-dividend date Record date Payment date
reporting dates
------------------ ------------------- ------------------- ----------------- ----------------- ------------------
Annual report 30 June 2017 Quarter ending 29 June 2017 30 June 2017 21 July 2017
published 31 March 2017
------------------ ------------------- ------------------- ----------------- ----------------- ------------------
Annual General 7 September 2017
Meeting
------------------ ------------------- ------------------- ----------------- ----------------- ------------------
Trading update Quarter ending 31 August 2017 1 September 2017 22 September 2017
statement (Qtr 1) 30 June 2017
------------------ ------------------- ------------------- ----------------- ----------------- ------------------
Half year report Quarter ending 30 November 2017 1 December 2017 15 December 2017
30 September 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UVUWRBNANAAR
(END) Dow Jones Newswires
June 16, 2017 02:00 ET (06:00 GMT)
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