TIDMARTL
RNS Number : 4817R
Alpha Real Trust Limited
15 June 2018
15 June 2018
LEI 213800BMY95CP6CYXK69
ALPHA REAL TRUST LIMITED ("ART" OR THE "COMPANY")
ART ANNOUNCES ITS FULL YEAR RESULTS FOR THE YEARED 31 MARCH
2018
-- NAV per ordinary and A share 172.9p: 31 March 2018 (158.9p: 31 March 2017)
-- Basic earnings for the year ended 31 March 2018 of 18.5p per
ordinary share and of 23.3p per A share (18.6p per ordinary and A
share for the year ended 31 March 2017)
-- Adjusted earnings for the year ended 31 March 2018 of 3.5p
per ordinary and A share (7.4p per ordinary and A share for the
year ended 31 March 2017) *
-- Declaration of a quarterly dividend of 0.6p per ordinary and
A share, expected to be paid on 20 July 2018
-- Balanced portfolio: continued capital allocation to a mix of
investments which balance income returns while creating potential
for capital value growth, including a growing portfolio of
mezzanine and property secured loans
-- Mezzanine loan investment: twelve loans were completed during
the year with GBP12.8 million invested at year end; post year end,
further loans totalling GBP2.4 million were funded
-- Data centre Frankfurt: following the securing of planning
consent and power upgrade commitments, preparatory site remediation
works have commenced along with the construction of an electricity
receptor building, and funding for power delivery has commenced
-- 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 detailed
planning consent sought for a further 357 units in central
Leeds
-- H2O shopping centre Madrid: completion of joint venture and
divestment of 70% of the shareholding in the shopping centre
-- H2O shopping centre Madrid: record visitor numbers recorded
in 2017, increasing 3.9% over 2016, with like for like tenant sales
increasing 6.4% over the year. Positive trend continuing in 2018. A
masterplan for the shopping centre is being prepared with a view to
potentially creating additional leasable space and upgrading the
centre's common areas.
-- AURE increased shareholding: increased exposure to the
diversified UK industrial sector through the acquisition of 7.3% of
AURE's issued shares thus increasing ART's equity holding in AURE
to 27.8%
* The basis of the adjusted earnings per share is provided in
note 9
David Jeffreys, Chairman of Alpha Real Trust, commented:
"ART's diversified portfolio provides a balance of investments
that offer scope to deliver strong cashflows, capital value growth
and attractive risk adjusted total returns.
The Company currently focusses 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 an increasing focus on build to own
investments.
The Company will consider investments and assets that offer
scope to generate long term income streams off a lower entry cost
through development. This approach provides ART with the
flexibility to take advantage of new investment opportunities where
ART sees best value. During the year, the Company's build-to-rent
projects have achieved the significant milestone of having secured
planning consent. Capital investment in excess of GBP38 million has
been identified in order to advance the private rented sector
residential and data centre projects through development stages.
These investments offer the opportunity to create a higher yield on
cost than is available from purchasing existing built investments
of the same quality. During the development period, a greater
proportion of the Company's total return is likely to come from
capital growth rather than earnings until its build-to-rent
investments become income producing.
ART continues to actively augment and diversify its portfolio of
mezzanine loan investments. During the year the Company has
increased its mezzanine loan investment portfolio. New investment
opportunities that are capable of delivering strong risk adjusted
cash flows are being actively pursued. ART's active investment
approach means that short term investment positions will be
considered when accretive to overall returns.
The Company remains well positioned to continue to deliver
attractive returns through investing, realising and reinvesting 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 focusses 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-rent investments. The current portfolio mix,
excluding sundry assets/liabilities, is as follows:
31 Mar 31 Mar
2018 2017
High yielding equity in property
investments: 21.7% 47.1%
Ground rent investments: 24.3% 18.8%
Build-to-rent investments: 28.2% 9.7%
High yielding debt: 11.0% 14.2%
Other investments: 9.4% 8.2%
Cash: 5.4% 2.0%
Dividends
The current intention of the Directors is to pay a dividend
quarterly to all shareholders. Any realised value from the Romulus
investment is exclusively for the benefit of ART A shareholders,
however this is unlikely to be material.
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 focus
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
12 months 6 months 12 months
ended ended ended
31 March 30 September 31 March
2018 2017 2017
------------------------------------ ---------- -------------- ----------
Net asset value (GBP'000) 118,451 114,626 110,173
------------------------------------ ---------- -------------- ----------
Net asset value per ordinary and
A share 172.9p 167.3p 158.9p
------------------------------------ ---------- -------------- ----------
Earnings per ordinary share (basic
and diluted) (adjusted)* 3.5p 3.0p 7.4p
------------------------------------ ---------- -------------- ----------
Earnings per A share (basic and
diluted) (adjusted)* 3.5p 3.0p 7.4p
------------------------------------ ---------- -------------- ----------
Earnings per ordinary share (basic
and diluted) 18.5p 13.3p 18.6p
------------------------------------ ---------- -------------- ----------
Earnings per A share (basic and
diluted)** 23.3p 17.7p 18.6p
------------------------------------ ---------- -------------- ----------
Dividend per share (paid during
the period)*** 1.8p 1.2p 2.4p
------------------------------------ ---------- -------------- ----------
Special dividend per A share (paid
during the period) 4.3p 4.3p -
* The adjusted earnings per share includes adjustments for the
effect of the fair value revaluation of investment property and
indirect property investments, capital element on Investment
Manager's fees, the fair value movements on financial assets and
deferred tax provisions: full analysis is provided in note 9 to the
accounts.
** The difference in basic and diluted EPS between ordinary and
A shares is due to the Romulus investment, which is exclusively for
the benefit of ART A shareholders (note 8).
*** Dividends for the quarter ended 31 December 2017 were paid
on 6 April 2018.
Chairman's statement
I am pleased to present the Company's annual report and accounts
for the year ended 31 March 2018.
It has been an active year for ART with new investment, capital
recycling and successful active asset management continuing to help
deliver our strategy of maintaining a diversified portfolio of
assets across various sectors that are capable of delivering
attractive risk adjusted returns. It has also been a year in which
ART achieved the significant milestone of securing planning consent
for each of its build-to-rent investments.
Our target investment criteria currently focuses on
high-yielding property, infrastructure and asset backed debt and
equity investments in Western Europe, including build-to-rent
investments.
New mezzanine investment
ART continues to actively augment and diversify its portfolio of
secured real estate loans and mezzanine loan investments. These
loans are typically secured on real estate investment and
development assets with high risk-adjusted income returns. During
the year, twelve loans were completed with GBP12.8 million invested
at year end. Post year end, a further three loans totalling GBP2.4
million were funded, an existing loan was increased by GBP0.3
million and one mezzanine loan of GBP0.3 million was repaid.
During the year, one loan was repaid, generating an annualised
return of circa 14.0%.
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 reinvested into new loan
opportunities.
AURE increased equity shareholding and loan repayment
During the year, ART increased its shareholding in Active UK
Real Estate Fund ("AURE"), a fund that principally invests in the
diversified UK industrial property sector. ART acquired a further
7.3% of the total AURE shares, at a price representing a 10%
discount to the reported AURE NAV at the time, bringing its total
shareholding in AURE to 27.8%. AURE repaid its outstanding
borrowings with Royal Bank of Scotland PLC and is now an ungeared
investment.
During the year, ART's mezzanine loan to AURE of GBP3.5 million
(including outstanding interest and exit fee) was repaid. This
mezzanine investment returned an IRR of 12.2% per annum for
ART.
Data centre investment
In October 2017 ART was granted detailed planning consent for a
five-storey data centre extending to 40,338 square metres on site
in Frankfurt. Further, the local utility provider has also
contracted to upgrade the power supply to the site to deliver a 35
Mega Volt Ampere ('MVA') dual feed power supply on a phased basis
to 2020, synchronised with local electricity substation and cable
route upgrades.
ART had initially secured the site on a conditional contract,
with acquisition and payment of the purchase price being contingent
on the target planning consent and the electricity supply being
obtained. As part securing such consents, ART undertook a detailed
planning exercise, creating detailed designs for a data centre
building and its mechanical and electrical systems.
Following the achievement of the above milestones and completion
of the site acquisition, pre-identified ground remediation works
and the creation of an electricity receptor building have
commenced. The site acquisition and pre-development costs have been
funded from the Company's cash reserves.
The Company's primary strategy is to secure a tenant pre-let and
fund the balance of development costs with debt. Active marketing
of the project to potential data centre occupiers is underway.
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 an initial capital uplift in value
through enhanced planning and the opportunity to develop and let in
order to achieve resilient equity income returns at an attractive
yield on cost.
Planning consent for both sites has been secured. The Birmingham
project has implemented non-material amendments to its planning
consent for 162 residential units and ground floor commercial
space. The Leeds project has 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 consent for a further 357 residential units has been
submitted to the local authority for approval of detailed
planning.
Both investments have been revalued by independent valuers as at
31 March 2018.
The Company estimates that up to GBP29.3 million could be
invested to undertake the development of its PRS sites alongside
debt financing and capital partners. The positive planning consent
achieved at the Leeds project, where outline planning consent for
additional residential units was received, has notably enhanced the
valuation of the site.
The Company is exploring ways to optimise the returns from its
PRS investments and is exploring joint development and forward sale
opportunities with potential partners.
H2O, Madrid
During the year, ART completed the sale of a 70% equity interest
in the H2O shopping centre in Madrid for a consideration of circa
GBP37.3 million. ART retains a 30% stake in the joint venture, in
order to participate in the future growth of the centre, which was
originally purchased in March 2010. Under the Company's ownership,
annual footfall at the shopping centre has increased from 5.7
million to 7.9 million visitors and continues to grow strongly.
Before the sale, ART also completed the refinance of the borrowings
secured on the shopping centre with a new EUR65.0 million loan
maturing in 2024.
ART's 30% stake in the joint venture (with CBRE Global
Investors) in the shopping centre continues to benefit from asset
management initiatives implemented during ART's ownership. The
centre attracted record visitor numbers in the 2017 calendar year
and the strong performance has continued into 2018. Over the twelve
month period to 31 March 2018, visitor numbers increased by 1.9%
over the preceding twelve month period. Like-for-like sales
performance from tenants increased strongly by 9.4% over the same
period. One of H2O's principal anchors, Mercadona supermarket,
undertook a complete refurbishment of its store during February
2018. This major investment follows an active ART policy of seeking
store fit-out upgrades, and is a positive sign of the tenant's
commitment to the shopping centre and provides H2O's customers with
an enhanced shopping experience.
A specialist masterplan architect has been appointed to help
create a design plan for the shopping centre that is capable of
being implemented over the medium term with a view to identifying
potential value enhancing upgrades of the physical space and,
subject to planning consent, the creation of new retail stores.
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") regarding an 11.2 acre Special
Economic Zone located 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.
Following challenges of the award by Logix, both the Delhi High
Court and latterly a division bench of the Delhi High Court upheld
the award declared in favour of the Company and rejected Logix's
appeal. Logix appealed the dismissal before the Supreme Court of
India. The Supreme Court admitted the appeal and ordered Logix to
deposit GBP2.2 million (INR 200 million) with the court and has
listed the matter for final disposal in July 2018. In May 2018, the
Supreme Court has permitted the Company to unconditionally withdraw
INR 100 million (GBP1.1 million) and the remaining INR 100 million
(GBP1.1 million) deposited by Logix against a bank guarantee.
ART has commenced execution of the award and 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 Court has also restrained Logix from alienating
their immovable assets. ART continues to actively pursue Logix
directors for the recovery of the award.
The sum awarded to ART has now accrued to GBP13.9 million at the
current exchange rate. ART continues to hold the investment
receivable at INR 450.0 million (GBP4.9 million) in the accounts
due to uncertainty over timing and final value.
Capital recycling and reinvestment
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. This successful capital recycling allows for capital to
be reinvested in new opportunities that meet the Company's return
criteria.
Build-to-rent earnings outlook
The Company's 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. With
the ultimate strategy of creating income producing assets that
generate a higher yield on cost than is available from purchasing
existing built investments of the same quality, an increased
capital commitment to the development of build-to-rent investments
is likely. This allocation of capital to build-to-rent investments
will mean that a larger proportion of the Company's returns will be
generated from capital growth rather than earnings during the
development phases of the projects, prior to such investments
becoming incoming producing.
Active shareholder value management
The Company adopts an active approach in seeking to enhance
shareholder returns and during the period undertook a tender offer
at an offer price of 123.1p per Ordinary Share. A total of 826,311
Ordinary Shares were validly tendered under the tender offer,
representing approximately 1.2% of the Company's voting shares in
issue as at 25 September 2017 (excluding Ordinary Shares held in
treasury).
Positioning for continued investment
The Company continues to maintain a pipeline of new investment
opportunities under active review which compete for capital
allocation. An increased capital investment is planned for high
yielding mezzanine loans and high yielding equity, including
build-to-rent, across a range of markets and asset types.
ART benefits from the depth of experience, strength and size of
the Investment Manager's business with a team of over 100
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 GBP2.4 million (3.5 pence per
ordinary share and A share, see note 9 of the financial
statements). This compares with adjusted earnings per ordinary and
A share of 7.4 pence for the same period in 2017.
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 20 July 2018 (ex dividend date 28 June 2018 and record date
29 June 2018).
The dividends paid and declared for the year to 31 March 2018
totalled 2.4 pence per ordinary share representing an annual
dividend yield of 1.9% p.a. on the average share price over the
year.
In addition, during the year, Romulus disposed of its property
portfolio, which generated approximately GBP0.3 million for ART A
shareholders: this amount was therefore paid to ART A shareholders
as a special dividend on 7 July 2017.
The net asset value per ordinary and A share at 31 March 2018 is
172.9 pence per share (31 March 2017: 158.9 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 are non-recourse to the Group's other asset
investments.
As at 31 March 2018 the Group has no direct bank borrowings.
Bank borrowings related to the Group's joint ventures are
discussed in notes 12 and 19.
Further details of individual asset financing can be found under
the individual investment review sections later in this report.
Brexit
In June 2016, 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.
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
year-end rates of GBP1:EUR1.141 and GBP1:INR91.445.
Summary
ART's diversified portfolio provides a balance of investments
that offer scope to deliver strong cashflows, capital value growth
and attractive risk adjusted total returns.
The Company currently focusses 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 an increasing focus on build to own
investments.
The Company will consider investments and assets that offer
scope to generate long term income streams off a lower entry cost
through development. This approach provides ART with the
flexibility to take advantage of new investment opportunities where
ART sees best value. During the year, the Company's build-to-rent
projects have achieved the significant milestone of having secured
planning consent. Capital investment in excess of GBP38 million has
been identified in order to advance the private rented sector
residential and data centre projects through development stages.
These investments offer the opportunity to create a higher yield on
cost than is available from purchasing existing built investments
of the same quality. During the development period, a greater
proportion of the Company's total return is likely to come from
capital growth rather than earnings until its build-to-rent
investments become income producing.
ART continues to actively augment and diversify its portfolio of
mezzanine loan investments. During the year the Company has
increased its mezzanine loan investment portfolio. New investment
opportunities that are capable of delivering strong risk adjusted
cash flows are being actively pursued. ART's active investment
approach means that short term investment positions will be
considered when accretive to overall returns.
The Company remains well positioned to continue to deliver
attractive returns through investing, realising and reinvesting its
capital in asset backed investment opportunities.
David Jeffreys
Chairman
14 June 2018
Investment review
Portfolio overview as at 31 March 2018
Investment name
Investment Carrying Income Investment Property type Investment notes % of Note*
type value return location / underlying portfolio(1)
p.a. security
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
High yielding debt (11.0%)
----------------------------------------------------------------------------------------- ------------- -----
Secured finance
Diversified
loan
portfolio
focussed
on real estate
9.0% to investments Secured debt
GBP12.8m 16.0% and and subordinated
Secured loans (2) (3) UK developments debt 11.0% 16
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
High yielding equity in property investments (21.7%)
----------------------------------------------------------------------------------------- ------------- -----
H2O shopping centre
High-yield,
dominant
Madrid
shopping
centre and
separate 30% shareholding;
Indirect GBP17.6m development 7 year term bank
property (EUR20.1m) 6.3% (4) Spain site finance facility 15.1% 12
Active UK Real Estate Fund plc
High-yield
commercial 27.8% of ordinary
Equity GBP6.0m n/a UK UK portfolio shares in fund 5.1% 15
--------------- -------------- --------- ---------- -------------- ----------------- ------------- -----
Cambourne Business Park
Medium term
High-yield moderately
business geared bank
Indirect 11.2% park located finance
property GBP1.7m (4) UK in Cambridge facility 1.5% 12
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Ground rent investments (24.3%)
----------------------------------------------------------------------------------------- ------------- -----
Freehold Income Authorised Fund
Highly
defensive
income; No gearing;
Ground rent freehold monthly
fund GBP28.4m 4.6% (5) UK ground rents liquidity 24.3% 15
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Build-to-rent investments (28.2%)
----------------------------------------------------------------------------------------- ------------- -----
Unity and Armouries, Birmingham
Direct Central Planning consent
property, Birmingham for 90,000 square
PRS residential feet / 162 units
development GBP4.7m n/a UK build-to-rent plus commercial 4.0% 13
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Monk Bridge, Leeds
Planning consent
for 205,129
square
feet / 307 units
plus commercial
Outline consent
for further
Direct 193,071
property, Central Leeds square feet /
PRS residential 357 units plus
development GBP9.0m n/a UK build-to-rent commercial 7.7% 13
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Frankfurt,
Germany
Site with
Direct planning
property, and committed Freehold site
data centre GBP19.3m power for data with
development (EUR22.0m) n/a Germany centre use no debt 16.5% 13
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Other investments (9.4%)
----------------------------------------------------------------------------------------- ------------- -----
Galaxia
Legal process
underway to
Development recover
site investment by
located in enforcing
Investment GBP4.9m NOIDA, arbitration
receivable (INR 450m) n/a India Delhi, NCR award 4.2% 14
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
ELM Trading Limited
Indirect
investment
in diversified Short term
real estate investment
Indirect asset and in fund with
backed renewables low external
investment GBP5.3m 5% UK portfolio gearing 4.6% 15
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Europip plc
Awaiting final 47% of the total
GBP0.4m shareholder ordinary shares
Indirect equity (EUR0.5m) n/a N/A distribution in fund 0.3% 15
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Healthcare & Leisure Property Limited
Leisure
Indirect property No external
property GBP0.4m n/a UK fund gearing 0.3% 15
--------------- --------------- -------- ---------- -------------- ----------------- ------------- -----
Cash and short term investments (5.4%)
----------------------------------------------------------------------------------------- ------------- -----
Current or 'on
Cash GBP6.3m 0.1% UK call' accounts 5.4%
---------------- -------------- -------- ---------- -------------- ----------------- ------------- -----
(*) See notes to the financial statements for more details.
(1) Percentage share shown based on NAV excluding the 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 2018
(5) 12 month income return; post tax
High yielding equity in property investments
Overview
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 and
the ability to undertake strategic sales when the achievable price
is accretive to returns.
There continues to be significant amounts 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.
H2O Shopping Centre, Madrid
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
=========== =========== ============ ========= ================= ==================
H2O Indirect GBP17.6m 6.3% (*) High-yield, 30% shareholding;
property (EUR20.1m) dominant Madrid 7 year term
shopping centre bank finance
and separate facility
development
site
=========== =========== ============ ========= ================= ==================
(*) Yield on equity over 12 months to 31 March 2018
H2O shopping centre 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 51,825 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.
Following the sale of a 70% equity interest in the H2O during
2017 for a consideration of approximately GBP37.3 million, ART
retains a 30% stake in the joint venture. The continued equity
interest allows ART to participate in the future growth of the
centre. ARC, the investment manager of ART, continues to manage the
shopping centre.
In August 2017, the Company completed the refinance of the
borrowings secured on the shopping centre with a new EUR65.0
million seven year loan. The borrowings are secured on the
underlying asset and are non-recourse to the Group's other asset
investments.
The asset management highlights are as follows:
-- Valuation: +6.7% valuation increase over the year ending 31 March 2018
-- Additional site: the H2O investment includes a small vacant
site located in the same planning zone as H2O that was acquired
during 2017. The site has over 11,000 square metres of allocated
building rights. A planning application has been made to transfer
part of these building rights to the H2O plot, which if successful,
could create potential for the future expansion of the shopping
centre.
-- Centre occupancy: 90.8% by area as at 31 March 2018 (93.8% by
rental value with short term temporary rent discounts also
remaining in place to create further potential upside). Weighted
average lease length to next break of 2.4 years and 9.5 years to
expiry (31 March 2018).
-- Footfall and sales: over the 12 month period to 31 March
2018, visitor numbers increased 1.9% above the preceding 12 month
period. Like-for-like sales performance from tenants increased
strongly by 9.4% over the same period.
-- Tenant store upgrades: Mercadona supermarket, one of H2O's
principal anchor tenants, has undertaken a complete refurbishment
of its store during February 2018. This major investment is a
positive sign of the tenant's commitment to the shopping centre and
provides H2O's customers with an enhanced shopping experience.
-- A specialist masterplan architect has been appointed to help
create a design plan for the shopping centre that is capable of
being implemented over the medium term with a view to identifying
potential value enhancing upgrades of the physical space and,
subject to planning consent, the creation of new retail stores.
Active UK Real Estate Fund plc
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
=============== =========== ========= ======== ============== =================
Active UK Real Equity GBP6.0m n/a High-yield 27.8% of the
Estate Fund commercial total ordinary
plc UK portfolio shares in fund
=============== =========== ========= ======== ============== =================
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
(www.tisegroup.com).
During the year, ART increased its shareholding in AURE by
acquiring a further 7.3% of AURE shares at a 10% discount to latest
NAV. The investment increases ART's holding of the share capital
and voting rights in AURE from 20.5% to 27.8%. Following certain
strategic asset sales, AURE has repaid its outstanding debts and is
now ungeared.
The following highlights were included in AURE's quarterly
update for the period ended 31 March 2018 (published May 2018):
-- Fund Performance & Benchmark Ranking: successful delivery
of the business plan is reflected in AURE being placed in the top
10% of performance against the one year IPD benchmark. AURE
provided an annual return of 13.8% compared to the IPD benchmark of
10.1%.
-- Increased NAV: the net asset value per share has increased by
13.2% over its twelve month reporting period, which equates to an
increase of GBP2.5 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.
Cambourne Business Park, Phase 1000, Cambridge
Investment Investment Carrying Income Property type Investment notes
type value return /
p.a. underlying
security
=================== =========== ========= ======== =============== ===================
Cambourne Business Indirect GBP1.7m 11.2% High-yield Medium term
Park property (*) business park moderately geared
located in bank finance
Cambridge facility
=================== =========== ========= ======== =============== ===================
(*) Yield on equity over 12 months to 31 March 2018
The Company has an investment of GBP1.7 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 11.2% per annum as at 31 March 2018.
The Cambourne asset is funded by way of a GBP11.2 million (as at
31 March 2018) 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.
High yielding debt
Overview
ART continues to remain focussed on creating a diversified
portfolio of high yielding smaller secured loans and mezzanine
loans secured on real estate assets. ART seeks opportunities that
it can fully underwrite with the support of the Investment
Manager's asset-backed lending experience and knowledge of the
underlying assets and sectors, or in partnership with specialist
mezzanine providers. Repayment proceeds from current loans, such as
the repayment of the AURE loan during the period, are expected be
recycled into new loan business.
Secured Finance
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
================== =========== ========= ================ ================== ==================
Secured mezzanine Secured GBP12.8m 14.0%/16.0%(**) Diversified Secured debt
finance loans (*) loan portfolio and subordinated
focussed on debt
real estate
investments
and developments
================== =========== ========= ================ ================== ==================
(*) Including accrued coupon at the balance sheet date
(**) Annual coupon
In line with the objective of creating a diversified portfolio
of smaller mezzanine loans, ART has furthered its mezzanine lending
investment, extending twelve further loans during the year.
As at 31 March 2018, ART had invested GBP12.8 million in smaller
real estate mezzanine loans. Post year end, a further three loans
totalling GBP2.4 million were funded, an existing loan was
increased by GBP0.3 million and one mezzanine loan of GBP0.3
million was repaid.
Further loan investments are continually being evaluated. Each
loan will typically have a two year term and a maximum 75.0% loan
to value ratio and is targeted to generate a double digit income
return. Repayment proceeds will be rotated into new loan
business.
Build-to-rent investments
Overview
ART has achieved the significant milestone of securing planning
consent for each of its build-to-rent investments. These
investments offer the opportunity to create a higher yield on cost
than is available from purchasing existing built investments of the
same quality. The investments also offer scope for capital growth
as the sites mature or planning enhancements are achieved.
Build-to-rent investments provide the Company with flexibility
to add value by either constructing the development, funded with
either equity capital, joint venture capital or debt, and
subsequently holding the completed assets as investments; or,
alternatively, forward selling all or some of the developed
property.
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 and affords participation in a maturing market which
is attracting greater institutional participation. 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.
Unity and Armouries, Birmingham
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
===================== ================ ========= ======== =================== ===================
Unity and Armouries, Direct property GBP4.7m n/a Central Birmingham Planning consent
Birmingham residential for 90,000 square
build-to-rent feet / 162 units
plus commercial
===================== ================ ========= ======== =================== ===================
ART owns Unity and Armouries, a development site located in
central Birmingham with planning consent for 90,000 square feet of
net saleable space 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.
As at 31 March 2018, an independent valuation has been
undertaken by GVA valuing the site at GBP4.7 million and also
underwriting all of the current cost and value parameters currently
assumed. The project has a potential gross development value in
excess of GBP35 million.
Preferred construction partners have been selected. The project
design team continues 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. Discussions are underway with potential
partners to investigate joint funding opportunities.
Monk Bridge, Leeds
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
============= ================ ========= ======== =============== ==================
Monk Bridge, Direct property GBP9.0m n/a Central Leeds Planning consent
Leeds residential for 205,129
build-to-rent square feet
/ 307 units
plus commercial
Outline consent
for further
193,071 square
feet / 357 units
plus commercial
============= ================ ========= ======== =============== ==================
ART owns Monk Bridge, a central Leeds development site with
detailed planning for 307 residential flats in three buildings over
180,049 square feet of net saleable space. The planning consent
includes the restoration of the adjacent Grade II listed former
railway arches as a raised park and ancillary retail, leisure and
restaurant uses of 25,080 square feet in 16 units. Outline consent
exists for a further 357 residential units in two buildings of up
to 21 storeys over 193,071 square feet of net saleable space. The
Company has submitted an application for detailed planning on this
subsequent phase. The approval includes a provision for 5% of the
664 units as affordable.
As at 31 March 2018, an independent valuation was undertaken by
Savills valuing the site at GBP9.0 million. The project has a
potential estimated gross development value in excess of GBP160
million.
Preferred construction partners have been selected. The project
design team continues 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. Discussions are underway with potential
partners to investigate joint funding opportunities.
Data centre, Frankfurt
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
============= ================ ============ ======== =================== =================
Data centre, Direct property GBP19.3m n/a Site with planning Freehold site
Frankfurt (EUR22.0m) and committed with no debt
power for data
centre use
============= ================ ============ ======== =================== =================
ART owns an industrial site in Frankfurt, Germany, for which it
has secured detailed planning consent for a five-story data centre
extending to 40,338 square metres and a commitment from the local
utility provider to install a 35 MVA a dual feed power supply to
the site. The power supply, funded by ART, will be installed on a
phased basis over the coming three years, synchronised with local
electricity substation and cable route upgrades.
Competitive tendering for pre-identified ground remediation
works and the creation of an electricity receptor building have
been completed and costs are in line with the Company's budget.
These works are now underway and will create an on-site receptor
required to receive the upgraded electricity supply connection and
also create site conditions that are suitable for the construction
of a data centre.
The acquisition of the site and planning and design costs in
addition to ongoing site preparation works and electricity
connection costs are being funded by the Company's cash reserves.
Including the cost of site acquisition and planning costs funded to
date, the Company's total investment into the data centre project
is estimated to be up to EUR28 million (GBP24.5 million).
The Company's strategy is to secure a tenant pre-let and fund
the balance of development costs with debt. Active marketing of the
project to potential data centre occupiers is already underway.
Freehold ground rent investments
Overview
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 Carrying Income Property type Investment notes
type value return / underlying
p.a. security
================ ============ ========= ========= ================== ===================
Freehold Income Ground rent GBP28.4m 4.6% (*) Highly defensive No gearing;
Authorised fund income; freehold monthly liquidity
Fund ground rents
================ ============ ========= ========= ================== ===================
(*) 12 months income return; post tax
The Company has invested GBP28.4 million as at 31 March 2018 in
FIAF, an open-ended fund that invests in UK freehold ground rents
with a net asset value of GBP306.1 million as at 31 March 2018.
The following highlights were reported in the FIAF fact sheet as
at 30 April 2018 (published in May 2018):
-- FIAF owns over 65,000 freeholds with a gross annual ground
rent income of circa GBP8.9 million
-- FIAF continues its unbroken 25 year track record of positive inflation beating returns.
-- 86% of its freeholds have a form of inflation protection
through periodic uplifts linked to Retail Price Index (RPI),
property values or fixed uplifts.
-- As of 12 January 2017, a 5% dilution levy is applied to
subscriptions into FIAF. This levy remains constantly under
review.
ART's total return on its investment in FIAF was 8.9%
(annualised post tax) for the year ended 31 March 2018.
Cash balances
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
============= =========== ========= ======== ==================== =================
Cash balance Cash GBP6.3m 0.1% Current or n/a
'on call' accounts
============= =========== ========= ======== ==================== =================
As at 31 March 2018, the Group had cash balances of GBP6.3
million.
Other investments
ELM Trading Limited - indirect asset backed investment
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
============ ============== ========= ======== ==================== ======================
ELM Trading Indirect GBP5.3m 5% Indirect investment Short term investment
Limited asset backed in diversified in fund with
investment real estate low external
and renewables gearing
portfolio
============ ============== ========= ======== ==================== ======================
ART invests in ELM Trading Limited ("ELM"), a fund with a
diversified portfolio of GBP223.9 million, which principally
comprises real estate debt and renewable energy infrastructure
investments. The investment is anticipated to be short term and is
expected to provide a better return than currently earned on the
Company's cash balances.
In September 2017, ART invested GBP15.0 million in ELM's
ordinary shares and, from January to March 2018, GBP10 million in
total were redeemed. As at 31 March 2018, ART had GBP5.3 million
invested in ELM.
The Board of Directors of ELM is drawn from the partners and
employees of Alpha Real Property Investment Advisers LLP ("ARPIA"),
a subsidiary of ARC.
European Property Investment Portfolio plc ("Europip")
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
=========== =========== =========== ======== =============== =================
Europip Indirect GBP0.4m n/a Awaiting final 47% of ordinary
equity (EUR0.5m) shareholder shares in fund
distribution
=========== =========== =========== ======== =============== =================
ART has a 47.0% stake in Europip (shares are non-voting), an
Isle of Man domiciled open ended investment company. Europip
invested in a directly owned commercial property portfolio in
Norway.
The portfolio has undergone an orderly realisation process and
has completed the sale of its final asset and is in the process of
being wound-up. Proceeds from asset sales have been used to redeem
85.0% of ART's shares. The remaining value of ART's investment in
Europip is valued at GBP0.4 million and a further capital
redemption distribution is expected in late 2018.
A subsidiary of ARC, ARPIA is the investment manager for
Europip.
Healthcare & Leisure Property Limited ("HLP")
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
==================== =========== ========= ======== ================= =================
Healthcare Indirect GBP0.4m n/a Leisure property No external
& Leisure Property property fund gearing
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 2018, ART had GBP0.4 million invested in HLP. ART
continues to receive income from its investment while HLP's
underlying assets are sold.
Galaxia, National Capital Region, NOIDA
Investment Investment Carrying Income Property type Investment notes
type value return / underlying
p.a. security
=========== ============ ============ ======== ================== ====================
Galaxia Investment GBP4.9m n/a Development Legal process
receivable (INR 450m) site located underway to
in NOIDA, Delhi, recover investment
NCR by enforcing
arbitration
award
=========== ============ ============ ======== ================== ====================
ART invested INR 450.0 million (GBP4.9 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 450.0 million
(equivalent to GBP4.9 million using the period end exchange rate)
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 and latterly to the Division Bench of the Delhi
High Court. Both courts dismissed the respective appeals and upheld
the award declared in favour of the Company. Logix appealed the
dismissal before the Supreme Court of India. The Supreme Court
admitted the appeal and ordered Logix to deposit GBP2.2 million
(INR 200 million) with the court and has listed the matter for
final disposal in July 2018. In May 2018, the Supreme Court has
permitted the Company to unconditionally withdraw INR 100 million
(GBP1.1 million) and the remaining INR 100 million (GBP1.1 million)
deposited by Logix against a bank guarantee.
ART has commenced execution of the award and 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 Court has also restrained Logix from alienating
their immovable assets. ART continues to actively pursue Logix
directors for the recovery of the award.
The sum awarded to ART has now accrued to GBP13.9 million at the
current exchange rate. ART continues to hold the investment
receivable at INR 450.0 million (GBP4.9 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.
ART continues to actively pursue new investment targets that
have the potential to generate attractive risk adjusted total
returns while undertaking selective divestment from the current
portfolio where profit taking opportunities are identified to
enable capital recycling.
Brad Bauman and Gordon Smith
For and on behalf of the Investment Manager
14 June 2018
Directors
David Jeffreys (aged 58)
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 58)
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 53)
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 57)
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.
Mel Torode (aged 38)
Melanie Torode has 20 years' experience in the fund
administration industry in Guernsey, focussing on closed-ended
funds including private equity, property and mezzanine debt. She is
the Co-Founder of Estera Administration (Guernsey) Limited
(formerly Morgan Sharpe Administration Limited) and the Operations
Directors of the Estera Guernsey business, a third party fund and
fiduciary administrator.
Melanie worked at Guernsey International Fund Managers (now
Northern Trust), on large private equity funds and European holding
companies, moving to Mourant International Finance Administration
(now State Street) where she spent more than two years
concentrating primarily on listed property funds.
Between 2006 and founding Morgan Sharpe in April 2008, Melanie
was the Company Secretary of Assura Administration and responsible
for all company secretarial matters, the operational running of the
office and overseeing the administration of listed property
funds.
Melanie is currently a Director on a number of boards, including
funds, general partners and associated Guernsey companies.
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 2018.
Principal activities and status
During the year, the Company, an authorised closed-ended
Guernsey registered investment company, carried on business as an
investment company, investing in direct property, 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.
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 2018 are set out in the
financial statements.
On 9 March 2018, the Company declared a dividend of 0.6p per
share, which was paid to shareholders on 6 April 2018. 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 (re-issued in 2016, effective from 1 April 2016 year
ends onwards) ("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. The initial
Directors were appointed on 15 May 2006, with the exception of Mel
Torode, appointed on 1 June 2018. On 30 May 2018, it was announced
that Roddy Sage ceased to be a Director of the Company.
The Directors' interests in the shares of the Company as at 31
March 2018 are set out below and there have been no changes in such
interests up to the current date:
Number of ordinary Number of ordinary
shares shares
31 March 2018 31 March 2017
----------------- ------------------- -------------------
David Jeffreys 10,000 10,000
----------------- ------------------- -------------------
Phillip Rose 139,695 139,695
----------------- ------------------- -------------------
Serena Tremlett 15,000 15,000
----------------- ------------------- -------------------
Jeff Chowdhry 30,000 40,000
----------------- ------------------- -------------------
Roddy Sage* - -
----------------- ------------------- -------------------
Mel Torode** - -
* ceased to be a Director, as announced on 30 May 2018
** appointed on 1 June 2018
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 10
August 2018. At this meeting, Serena Tremlett and David Jeffreys
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 2018:
No of
meetings
attended
------------------ ----------
David Jeffreys 17
------------------ ----------
Phillip Rose 4
------------------ ----------
Serena Tremlett 17
------------------ ----------
Jeff Chowdhry 12
------------------ ----------
Roddy Sage 10
------------------ ----------
No. of meetings
during the year 19
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 and Risk Committee
The Audit and Risk Committee (name changed on 12 October 2017,
previously called Audit Committee) now consists of David Jeffreys
(Chairman), Jeff Chowdhry 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 and Risk Committee.
Role of the Committee
The role of the Audit and Risk 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 and Risk 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 and Risk 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
No of
meetings
attended
------------------ ----------
David Jeffreys 3
------------------ ----------
Roddy Sage 2
------------------ ----------
Serena Tremlett 3
------------------ ----------
No. of meetings
during the year 3
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 and Risk Committee considers this annually,
reporting its findings to the Board.
Nomination Committee and attendance
The Nomination Committee now consists of David Jeffreys
(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 2018 31 March 2017
GBP GBP
----------------- --------------- ---------------
David Jeffreys 33,910 34,875
----------------- --------------- ---------------
Phillip Rose 23,000 23,000
----------------- --------------- ---------------
Serena Tremlett 36,318 35,250
----------------- --------------- ---------------
Jeff Chowdhry 23,000 23,000
----------------- --------------- ---------------
Roddy Sage 23,000 23,000
----------------- --------------- ---------------
Total 139,228 139,125
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 and Risk 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 22 May 2018 were as follows:
Name of investor Number of % held
voting rights
---------------------------------- --------------- -------
Alpha Global Property Securities
Fund Pte. Ltd 22,550,000 35.50
---------------------------------- --------------- -------
Billien Limited 14,154,593 22.29
---------------------------------- --------------- -------
Armstrong Investments 5,150,000 8.11
---------------------------------- --------------- -------
Miton Asset Management 3,335,000 5.25
---------------------------------- --------------- -------
IPGL Limited 3,010,100 4.74
---------------------------------- --------------- -------
Charles Stanley 2,810,535 4.43
---------------------------------- --------------- -------
Amiya Capital 2,600,000 4.09
---------------------------------- --------------- -------
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 10
August 2018 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
14 June 2018
Directors' statement pursuant to the Disclosure Guidance 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 24 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 (see above) that the Board will continue to
monitor.
By order of the Board,
David Jeffreys Serena Tremlett
Director Director
14 June 2018
Independent Auditor's Report
To the Members of Alpha Real Trust Limited
1.1 Opinion
We have audited the consolidated financial statements of Alpha
Real Trust Limited (the "parent company") and its subsidiaries (the
"group") for the year ended 31 March 2018 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 notes to the
financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial
Reporting Standards as adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 March 2018 and of the group's profit for the year then
ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European Union;
and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
1.2 Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
1.3 Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the Directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the Directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter Audit Response
H2O - Part disposal (notes
2 and 11) We audited management's part
During the year the company disposal workings and adjustments
sold 70% of its 100% holding made in the consolidation to
in H20 to CBRE European Co-Investment ensure that H2O had been correctly
Fund. Up until the point of part disposed and that the resulting
disposal the Investment has gain on disposal and subsequent
been consolidated. On disposal recycling of the foreign currency
a profit on disposal arose. reserve in relation to this
IFRS requires any foreign currency subsidiary, was calculated in
translation reserve in connection accordance with IFRS.
with the disposal of a subsidiary In calculating the gain on disposal,
(even if becoming a joint venture management utilised the balance
following disposal) to be recycled sheet as at the date of disposal.
through the statement of comprehensive We have agreed this to the sale
income and the amount included agreement and the subsequent
within the gain on disposal net asset adjustment agreed
of the subsidiary. by both purchaser and seller
This resulting gain on disposal following final completion of
is a material figure to the the transaction.
financial statements and requires The most significant change
analysis of the results of from the prior audited financial
the subsidiaries disposed of statements of the disposed subsidiary
from the date of their incorporation. was in relation to the loan
This transaction involves complex refinancing. We obtained and
accounting and as such is susceptible reviewed the new loan agreement
to error. and obtained a final statement
confirming full repayment of
the balance on refinancing.
In addition to the above, we
undertook procedures on the
principal income statement elements
(rent and interest paid) to
the point of part disposal.
Further we performed an analytical
review of the remainder of the
profit and loss items.
--------------------------------------------
H2O - Equity accounting (notes
2 and 12) We audited management's consolidation
Following the sale of a 70% workings and adjustments made
interest in H20, the group in the consolidation to ensure
maintained a 30% equity interest. that H2O had been correctly
The remaining interest is accounted accounted for as a Joint Venture
for under the equity method in accordance with accounting
despite only owning 30% of standards.
the equity. We undertook procedures on the
Equity accounting results in principal income statement elements
an asset representing the group's (rent and interest paid) from
share of the investment and the point of part disposal.
a resulting profit and loss Further we performed an analytical
movement. Accordingly, the review of the remainder of the
underlying financial results profit and loss items.
of H2O continue to have a significant In addition, we utilised the
impact on the group's financial work of the component auditor,
statements. to assess the reasonableness
This is the first year of application of the results and hence the
of equity accounting in respect allocation of profits post de-recognition
of this entity and is a complex as a subsidiary to the share
area following the part disposal of profit of the joint venture
and hence is susceptible to and the share of the joint venture
error. under the equity accounting
method.
H2O remains a significant component
and as such we issued group
instructions to the component
auditor and obtained and reviewed
their relevant audit papers.
In addition, we undertook our
own work in respect of the property
valuation (see separate key
audit matter).
--------------------------------------------
Property valuations (notes
12, 13 and 24) For all independent property
The group holds several investment valuations, we evaluated the
properties within its subsidiaries competence of the external valuers,
and joint venture structures. which included consideration
With the exception of the property of their qualifications and
held within the Cambourne joint expertise. We read the terms
venture structure which is of engagement with the group
carried at directors' valuation, to determine whether there were
all properties have independent any matters that might have
RICS valuations performed by affected their objectivity or
independent valuers. may have imposed scope limitations
Such property valuations are upon their work.
a highly subjective area as We have read the valuation reports
the valuers will make judgements for the properties, discussed
as to property yields, quality the basis of the property valuations
of tenants, development costs with the valuers to understand
and other variables to arrive the process undertaken by them
at the current open market and we confirmed that the valuations
value of the property. had been prepared in accordance
Any input inaccuracies or unreasonable with professional valuation
bases used in the valuation standards and IFRS.
judgements (such as in respect We have considered the reasonableness
of estimated rental value and of the inputs used by the valuers
yield profile applied) could in the valuation, such as the
result in a material misstatement terms of void periods, rent
of the group statement of comprehensive free periods and other assumptions
income and the group balance that impact the value.
sheet. For the Cambourne property we
have obtained and considered
the valuation prepared by the
directors to confirm our expectation
that all reasonable outcomes
would not give rise to a material
impact to the group due to the
group holding only 10% of the
joint venture vehicle.
Investment valuations (notes
15 and 23(d)) For the three material investments,
Investments are a principal AURE, FIAF and Elm Trading,
element of the financial statements we tested the valuation of all
and consist of either investment investments held by agreeing
in funds whose price is notified the prices used in the valuation
on an exchange or unlisted to independent third party sources
investments. such as the price notified to
As some of the portfolio is the exchange or underlying net
unlisted, the availability asset value statements.
of external evidence regarding Due to the related party relationship
pricing and valuation is limited. of these investments we also
This is a key accounting estimate undertook additional procedures
where there is an inherent such as:-
risk of management override * Obtaining the latest audited financial statements and
arising from the investment ascertaining whether the underlying investments are
valuations being prepared by being carried at fair value and whether the financial
the Investment Manager. statements contain an unmodified audit report.
* Obtaining and reviewing the latest fact sheets to
identify anything that could indicate that the net
asset value statements do not represent fair value.
In addition, for the Elm Trading
investment, due to its closed
ended nature and being unlisted,
we reviewed the other shareholder
transactions within the investment
around the year end and whether
these indicated that the net
asset value statement represents
fair value.
-------------------------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole to be GBP2,110,000 (2017:
GBP2,560,000), which is based on a level of 1.75% (2017: 1.5%) of
total assets. We considered total assets to be the most appropriate
benchmark due to the group being an investment fund with the
objective of long term capital growth.
Performance materiality for the company has been set at
GBP1,583,000 which is 75% of materiality. This has been set based
upon the control environment in place, the directors' assessment of
risk and our past experience of adjustments.
International Standards on Auditing (UK) also allow the auditor
to set a lower materiality for particular classes of transaction,
balances or disclosures for which misstatements of lesser amounts
than materiality for the financial statements as a whole could
reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements. In this context, we
set a lower level of materiality to apply to sensitive fees
including: management fees, performance fees, legal fees,
directors' fees and audit fees. We determined materiality for these
areas to be GBP211,000.
Component materiality has been set for the components which are
significant to the group financial statements. Materiality for
these components has been set at GBP1,000,000.
We agreed with the audit committee that we would report to the
committee all individual audit differences identified during the
course of our audit in excess of GBP63,300 (2017: GBP76,000). We
also agreed to report differences below these thresholds that, in
our view, warranted reporting on qualitative grounds.
There were no misstatements identified during the course of our
audit that were individually, or in aggregate, considered to be
material in terms of their absolute monetary value or on
qualitative grounds.
An overview of the scope of our audit
We tailored the scope of our audit taking into account the
nature of the group's investments, involvement of the Investment
Manager, the accounting and reporting environment and the industry
in which the group operates.
This assessment took into account the likelihood, nature and
potential magnitude of any misstatement. As part of this risk
assessment we considered the group's interaction with the
Investment Manager. We assessed the control environment in place
within the group to the extent that it was relevant to our audit.
Following this assessment, we applied professional judgement to
determine the extent of testing required over each balance in the
financial statements.
The parent company and each subsidiary and joint venture entity
form separate components of the group. Each component was assessed
as to whether they were significant or not significant to the group
by either their size or risk.
The following were considered significant components due to
risks identified and size:-
-- The parent company.
-- The significant property holding company within the H2O joint
venture (2017: subsidiary) structure.
These components have both been subject to full scope audits.
The audit work on property holding companies within the H2O
structure were completed by the component auditor and reviewed by
us. In addition to the work performed by the component auditor, we
have performed audit procedures on all key risk areas.
The following were considered significant components due to
risks identified only:-
-- The Cypriot entity with the investment receivable via the Logix litigation.
-- The property holding company within the Cambourne joint venture structure.
-- All property investment holding entities.
-- All secured financing entities.
These components were not subject to full scope audits but
instead we performed audit procedures over all of the risk areas
identified.
For other entities within the group which are either
intermediary holding companies or dormant entities, we have
performed desktop reviews on them, as they are not significant to
the group.
Other information
The Directors are responsible for the other information. The
other information comprises the information included in the annual
report other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
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.
Responsibilities of Directors
As explained more fully in the Directors' and Corporate
Governance report, the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view and for such internal control
as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located at the Financial Reporting
Council's website at:
https://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor's report.
The engagement director on the audit resulting in this
independent auditor's report is Justin Marc Hallett.
Use of our report
This report is made solely to the parent company's members, as a
body, in accordance with Section 262 of the Companies (Guernsey)
Law, 2008. Our audit work has been undertaken so that we might
state to the parent 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 parent company and the
parent company's members, as a body, for our audit work, for this
report, or for the opinions we have formed.
.......................................................
Justin Marc Hallett FCA
For and on behalf of BDO Limited
Chartered Accountants and Recognised Auditor
Place du Pré, Rue du Pré
St Peter Port, Guernsey
Date: 14 June 2018
Consolidated statement of comprehensive income
For the year ended For the year ended
31 March 2018 31 March 2017
------------------------------------------- ------- ------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Income
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Revenue 3 4,662 - 4,662 12,262 - 12,262
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Change in the revaluation
of investment property 13 - 4,994 4,994 - 8,790 8,790
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Gains on financial assets
and liabilities held at
fair value through profit
or loss 24 2,412 571 2,983 1,899 1,664 3,563
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Total income 7,074 5,565 12,639 14,161 10,454 24,615
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit on investment property
disposal - - - - 122 122
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit on subsidiary disposal 2(c) - 4,281 4,281 - - -
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Expenses
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Property operating expenses 3 (1,438) - (1,438) (4,400) - (4,400)
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Investment Manager's fee 23 (2,033) (310) (2,343) (1,912) (2,743) (4,655)
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Other administration costs 4 (1,342) - (1,342) (1,036) - (1,036)
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Total operating expenses (4,813) (310) (5,123) (7,348) (2,743) (10,091)
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Operating profit 2,261 9,536 11,797 6,813 7,833 14,646
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Share of profit/(loss) of
joint ventures 12 815 1,473 2,288 131 (19) 112
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance income 5 8 158 166 10 - 10
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance costs 6 (648) - (648) (1,778) (79) (1,857)
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit before taxation 2,436 11,167 13,603 5,176 7,735 12,911
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Taxation 7 (38) (526) (564) (25) - (25)
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit for the year 2,398 10,641 13,039 5,151 7,735 12,886
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive income/(expense)
for the year
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Items that may be classified
to profit and loss in subsequent
periods
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Exchange differences arising
on translation
of foreign operations - 1,786 1,786 - 3,330 3,330
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Reclassification of foreign
exchange gains on translation
of foreign operations following
disposals 11 - (3,987) (3,987) - - -
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive (expense)/income
for the year - (2,201) (2,201) - 3,330 3,330
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Total comprehensive income
for the year 2,398 8,440 10,838 5,151 11,065 16,216
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Earnings per ordinary share
(basic & diluted) 9 18.5p 18.6p
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Earnings per A share (basic
& diluted) 9 23.3p 18.6p
------------------------------------------- ------- --------- --------- --------- --------- --------- ---------
Adjusted earnings per ordinary
share and A share (basic
& diluted) 9 3.5p 7.4p
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 form an integral part of the financial
statements.
Consolidated balance sheet
Notes 31 March 2018 31 March 2017
GBP'000 GBP'000
------------------------------ ------ -------------- --------------
Non-current assets
------------------------------ ------ -------------- --------------
Investment property 13 33,021 112,442
------------------------------ ------ -------------- --------------
Investment receivable 14 4,921 5,535
------------------------------ ------ -------------- --------------
Investments held at fair
value 15 6,798 7,814
------------------------------ ------ -------------- --------------
Investment in joint ventures 12 19,332 1,538
------------------------------ ------ -------------- --------------
Loans advanced 16 3,283 5,280
------------------------------ ------ -------------- --------------
67,355 132,609
------------------------------ ------ -------------- --------------
Current assets
------------------------------ ------ -------------- --------------
Investments held at fair
value 15 33,692 26,113
------------------------------ ------ -------------- --------------
Derivatives held at fair
value through profit or
loss 24 100 -
------------------------------ ------ -------------- --------------
Loans advanced 16 9,817 10,758
------------------------------ ------ -------------- --------------
Trade and other receivables 17 3,403 2,703
------------------------------ ------ -------------- --------------
Cash and cash equivalents 6,273 5,397
------------------------------ ------ -------------- --------------
53,285 44,971
------------------------------ ------ -------------- --------------
Total assets 120,640 177,580
------------------------------ ------ -------------- --------------
Current liabilities
------------------------------ ------ -------------- --------------
Trade and other payables 18 (1,663) (6,789)
------------------------------ ------ -------------- --------------
Bank borrowings 19 - (60,618)
------------------------------ ------ -------------- --------------
(1,663) (67,407)
------------------------------ ------ -------------- --------------
Total assets less current
liabilities 118,977 110,173
------------------------------ ------ -------------- --------------
Non-current liabilities
------------------------------ ------ -------------- --------------
Bank borrowings 19 - -
------------------------------ ------ -------------- --------------
Deferred tax 7 (526) -
------------------------------ ------ -------------- --------------
Total liabilities (2,189) (67,407)
------------------------------ ------ -------------- --------------
Net assets 118,451 110,173
------------------------------ ------ -------------- --------------
Equity
------------------------------ ------ -------------- --------------
Share capital 20 - -
------------------------------ ------ -------------- --------------
Special reserve 21 78,261 79,306
------------------------------ ------ -------------- --------------
Translation reserve 21 (190) 2,011
------------------------------ ------ -------------- --------------
Capital reserve 21 20,880 10,511
------------------------------ ------ -------------- --------------
Revenue reserve 21 19,500 18,345
------------------------------ ------ -------------- --------------
Total equity 118,451 110,173
------------------------------ ------ -------------- --------------
Net asset value per ordinary
share 10 172.9p 158.9p
The financial statements were approved by the Board of Directors
and authorised for issue on 14 June 2018. They were signed on its
behalf by David Jeffreys and Serena Tremlett.
David Jeffreys Serena Tremlett
Director Director
The accompanying notes form an integral part of the financial
statements.
Consolidated cash flow statement
For the year For the year
ended ended
31 March 2018 31 March 2017
GBP'000 GBP'000
------------------------------------------------------- --------------- ---------------
Operating activities
------------------------------------------------------- --------------- ---------------
Profit for the year after taxation 13,039 12,886
------------------------------------------------------- --------------- ---------------
Adjustments for:
------------------------------------------------------- --------------- ---------------
Change in revaluation of investment property (4,994) (8,790)
------------------------------------------------------- --------------- ---------------
Net gains on financial assets and liabilities
held at fair value through profit or loss (2,983) (3,563)
------------------------------------------------------- --------------- ---------------
Profit on subsidiary and investment property
disposals (note2(c)) (4,281) (122)
------------------------------------------------------- --------------- ---------------
Taxation 564 25
------------------------------------------------------- --------------- ---------------
Share of profit of joint ventures (2,288) (112)
------------------------------------------------------- --------------- ---------------
Interest receivable on loans to third
and related parties (1,017) (2,381)
------------------------------------------------------- --------------- ---------------
Finance income (166) (10)
------------------------------------------------------- --------------- ---------------
Finance costs 648 1,857
------------------------------------------------------- --------------- ---------------
Operating cash flows before movements
in working capital (1,478) (210)
------------------------------------------------------- --------------- ---------------
Movements in working capital:
------------------------------------------------------- --------------- ---------------
Movement in trade and other receivables (1,451) (1,216)
------------------------------------------------------- --------------- ---------------
Movement in trade and other payables (1,745) 1,913
------------------------------------------------------- --------------- ---------------
Cash flows (used in)/from operations (4,674) 487
------------------------------------------------------- --------------- ---------------
Interest received 8 10
------------------------------------------------------- --------------- ---------------
Interest paid (315) (1,552)
------------------------------------------------------- --------------- ---------------
Tax paid (28) (13)
------------------------------------------------------- --------------- ---------------
Cash flows used in operating activities (5,009) (1,068)
------------------------------------------------------- --------------- ---------------
Investing activities
------------------------------------------------------- --------------- ---------------
Acquisition of investments (21,260) (1,072)
------------------------------------------------------- --------------- ---------------
Acquisition of investment property (11,262) (2,826)
------------------------------------------------------- --------------- ---------------
Disposal of 70% equity interest in H2O 37,285 -
(note2(c))
------------------------------------------------------- --------------- ---------------
Cash disposed of as part of H2O partial (4,811) -
disposal (note2(c))
------------------------------------------------------- --------------- ---------------
Proceeds on disposal of investment property - 1,890
------------------------------------------------------- --------------- ---------------
Redemption of investments 15,269 2,530
------------------------------------------------------- --------------- ---------------
Redemption on preference shares' investment 3,121 404
------------------------------------------------------- --------------- ---------------
Capital expenditure on investment property (5,543) (2,615)
------------------------------------------------------- --------------- ---------------
Loan repayments from related parties 13,678 6,300
------------------------------------------------------- --------------- ---------------
Loan interest received 956 2,056
------------------------------------------------------- --------------- ---------------
Loans granted to third parties (12,679) (1,980)
------------------------------------------------------- --------------- ---------------
Loans repaid by third parties 2,000 -
------------------------------------------------------- --------------- ---------------
Dividend income from joint venture - 40
------------------------------------------------------- --------------- ---------------
Dividend income from other investments 105 23
------------------------------------------------------- --------------- ---------------
Capital distribution from other investments 274 -
------------------------------------------------------- --------------- ---------------
Cash flows from investing activities 17,133 4,750
------------------------------------------------------- --------------- ---------------
Financing activities
------------------------------------------------------- --------------- ---------------
Bank loan repayment (60,810) (114)
------------------------------------------------------- --------------- ---------------
Bank loan advanced 55,622 -
------------------------------------------------------- --------------- ---------------
Bank loan costs (1,432) -
------------------------------------------------------- --------------- ---------------
Share buyback (1,018) -
------------------------------------------------------- --------------- ---------------
Share buyback costs (27) -
------------------------------------------------------- --------------- ---------------
Cash paid on maturity of foreign exchange
forward (1,406) (1,649)
------------------------------------------------------- --------------- ---------------
Foreign exchange forward collateral (paid)/received (850) 1,220
------------------------------------------------------- --------------- ---------------
Interest rate swaption paid (290) -
------------------------------------------------------- --------------- ---------------
Ordinary dividends paid (1,243) (1,664)
------------------------------------------------------- --------------- ---------------
Special dividend paid to A shareholders (272) -
------------------------------------------------------- --------------- ---------------
Cash flows used in financing activities (11,726) (2,207)
------------------------------------------------------- --------------- ---------------
Net increase in cash and cash equivalents 398 1,475
------------------------------------------------------- --------------- ---------------
Cash and cash equivalents at beginning
of year 5,397 3,863
------------------------------------------------------- --------------- ---------------
Exchange translation movement 478 59
------------------------------------------------------- --------------- ---------------
Cash and cash equivalents at end of year 6,273 5,397
The accompanying notes 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 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
--------- ------------ --------- --------- ---------
Reclassification of foreign - - - - -
exchange losses/(gains)
on translation of foreign
operations following disposals
--------- ------------ --------- --------- ---------
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 20, 21
--------- ------------ --------- --------- ---------
For the year Special Translation Capital Revenue Total
ended 31 March 2018 reserve reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2017 79,306 2,011 10,511 18,345 110,173
--------- ------------ --------- --------- ---------
Total comprehensive income
for the year
--------- ------------ --------- --------- ---------
Profit for the year - - 10,641 2,398 13,039
--------- ------------ --------- --------- ---------
Exchange differences arising
on translation
of foreign operations - 1,786 - - 1,786
--------- ------------ --------- --------- ---------
Reclassification of foreign
exchange gains on translation
of foreign operations following
disposals - (3,987) - - (3,987)
--------- ------------ --------- --------- ---------
Total comprehensive income
for the year - (2,201) 10,641 2,398 10,838
--------- ------------ --------- --------- ---------
Transactions with owners
--------- ------------ --------- --------- ---------
Dividends - - (272) (1,243) (1,515)
--------- ------------ --------- --------- ---------
Share buyback (1,018) - - - (1,018)
--------- ------------ --------- --------- ---------
Share buyback costs (27) - - - (27)
--------- ------------ --------- --------- ---------
Total transactions with
owners (1,045) - (272) (1,243) (2,560)
--------- ------------ --------- --------- ---------
At 31 March 2018 78,261 (190) 20,880 19,500 118,451
--------- ------------ --------- --------- ---------
Notes 20, 21
--------- ------------ --------- --------- ---------
The accompanying notes form an integral part of the financial
statements.
Notes to the financial statements for the year ended 31 March
2018
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
14 June 2018 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
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 April 2017 that
impacted the Group's accounting policies except for the Disclosure
Initiative Amendment to IAS7: this amendment requires disclosure of
changes in liabilities arising from financing activities (see note
19).
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
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 ('SPPI')).
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.
As at 31 March 2018, the Group has invested in loan receivables,
which are held at amortised cost, for a total of GBP12.8 million.
As per IFRS 9 requirements, these loans will be subject to the SPPI
test and, if they were to fail the test's requirements, the loans
will be required to be held at fair value. The Group has commenced
a process of assessment for each of these loans to consider whether
they meet the SPPI test.
Other financial assets held by the Group are investments held at
fair value through profit and loss, which would require no change
in disclosure under IFRS 9.
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 and IFRS 15
scopes out lease income, the application of IFRS 15 will not 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. 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.
When a partial disposal of a subsidiary occurs which causes the
entity to no longer be controlled and hence no longer a subsidiary,
the company derecognises the subsidiary and recognises the retained
interest initially at fair value.
When calculating the profit or loss on disposal the company
measures the retained interest at fair value and includes this in
the fair value of the consideration received. The profit or loss on
disposal is the difference between the fair value of the
consideration received and the carrying value of the assets and
liabilities disposed of, as reduced by transactions costs incurred
and any foreign currency gains or losses recycled on disposal as
per the foreign currency accounting policy in respect of group
companies.
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 21).
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:EUR1.141 (2017: GBP1:EUR1.172) and the average rate for the
year used is GBP1:EUR1.134 (2017: GBP1:EUR1.191). The year-end
exchange rate used for Indian rupee (INR) balances is
GBP1:INR91.445 (2017: GBP1:INR81.305) and the average rate for the
year used is GBP1:INR85.526 (2017: GBP1:INR87.668).
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 substantively 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 receivable (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 25.
(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 24 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 notes 13 and 25 for further
details.
(b) Estimate of fair value of indirect property investment -
Galaxia
The property interest in Galaxia is classified as an investment
receivable and has been included within the financial statements
based on the current estimate of realisable value to the Group (see
note 14).
The Directors, taking into consideration legal advice received
following Logix's challenge of the Award, consider it appropriate
to carry this investment in its accounts as a receivable of INR
450.0 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.
2. (c) Significant transactions: part disposal of H2O (Madrid,
Spain)
On 4 August 2017, the Group disposed of 70% of its equity
interest in the H2O shopping centre in Madrid, Spain ('H2O'), to
CBRE European Co-Investment Fund ('CBRE'), managed by CBRE Global
Investors, for EUR41.3 million (GBP37.3 million). The 30%
investment retained by ART is made via its Dutch subsidiary, KMS
Holding NV, into CBRE H2O Rivas Holding NV ('CBRE H2O'), a company
also based in the Netherlands, which in turn owns 100% of the
Spanish entities that are owners of the H2O shopping centre (Alpha
Tiger Spain 1, SLU, Alpha Tiger Spain 2, SLU and Alpha Tiger Spain
3).
As per the joint venture agreement, entered into by ART and
CBRE, there are no different voting rights attached to the ordinary
shares of CBRE H2O; risks and rewards are shared as per the
investment ratio of ART (30%) and CBRE (70%); CBRE H2O has a
management board comprised of two Directors, one appointed by ART
and one by CBRE; the joint venture business needs to be conducted
by unanimous vote of each Director or, in case of decisions
escalated to the shareholders, by unanimous vote of each
shareholder. As of 4 August 2017, ART has therefore no power to
directly govern the financial and operating policies of H2O;
accordingly, the Group no longer consolidates its interest in the
structure holding H2O: in compliance with IFRS 11 (Joint
Arrangements), the Group has adopted the equity method of
accounting for its joint venture. Income and expenses related to
the H2O investment have been recognised in the statement of
comprehensive income up to 4 August 2017; thereafter the Group has
recognised its share of the joint venture profit up to the period
end (note 12).
The Group's part disposal of its equity interest in H2O can be
summarised as follows:
Year ended
31 March
2018
GBP'000
------------------------------------------------ -----------
Consideration received at fair value:
------------------------------------------------ -----------
Cash 37,285
------------------------------------------------ -----------
30% interest retained (note 12) 15,979
------------------------------------------------ -----------
Total consideration 53,264
------------------------------------------------ -----------
Assets and liabilities disposed of at carrying
value:
------------------------------------------------ -----------
Investment property (note 13) (107,449)
------------------------------------------------ -----------
Cash (4,811)
------------------------------------------------ -----------
Borrowings (note 19) 57,191
------------------------------------------------ -----------
Other assets and liabilities 2,138
------------------------------------------------ -----------
Total assets and liabilities (52,931)
------------------------------------------------ -----------
Total consideration less disposed assets and
liabilities 333
------------------------------------------------ -----------
Transaction costs (39)
------------------------------------------------ -----------
Foreign exchange gain on translation following
disposal 3,987
------------------------------------------------ -----------
Profit on disposal 4,281
3. Revenue
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
------------------------------------------------- ----------- -----------
Rental income 2,535 7,178
------------------------------------------------- ----------- -----------
Service charge income 1,099 2,702
------------------------------------------------- ----------- -----------
Rental revenue 3,634 9,880
------------------------------------------------- ----------- -----------
Interest receivable on loans to related parties
(note 16, 23) 359 2,284
------------------------------------------------- ----------- -----------
Interest receivable on loans to third parties
(note 16) 658 97
------------------------------------------------- ----------- -----------
Interest revenue 1,017 2,381
------------------------------------------------- ----------- -----------
Other income 11 1
------------------------------------------------- ----------- -----------
Other revenue 11 1
------------------------------------------------- ----------- -----------
Total 4,662 12,262
At 31 March 2018, the Group recognised non recoverable property
operating expenditure as follows:
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
------------------------------------------------ ----------- -----------
Service charge income 1,099 2,702
------------------------------------------------ ----------- -----------
Property operating expenditure (1,438) (4,400)
------------------------------------------------ ----------- -----------
Non recoverable property operating expenditure (339) (1,698)
The total revenue and non recoverable property operating
expenditure for the year relates to the H2O investment up to 4
August 2017; thereafter the Group has recognised its share of the
joint venture profit up to the year end (note 2(c)).
As at 31 March 2018, the Group directly owned three investment
properties in the course of development (Unity and Armouries
(Birmingham) and Monk Bridge (Leeds) in the UK and the data centre
at Borsigallee 1-7 (Frankfurt) in Germany) so it had no contracted
future minimum lease payments with any tenant; the comparatives as
at 31 March 2017 represent the projected payments at that time with
the Group's tenants at the H2O Shopping Centre.
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
---------------------------------------- ------------ -----------
Within one year - 5,659
---------------------------------------- ------------ -----------
In the second to fifth years inclusive - 10,583
---------------------------------------- ------------ -----------
After five years - 1,323
---------------------------------------- ------------ -----------
Total - 17,565
4. Other administration costs
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
------------------------------------------- ----------- -----------
Auditors' remuneration for audit services 90 97
------------------------------------------- ----------- -----------
Accounting and administrative fees 538 447
------------------------------------------- ----------- -----------
Non-executive directors' fees 139 139
------------------------------------------- ----------- -----------
Other professional fees 575 353
------------------------------------------- ----------- -----------
Total 1,342 1,036
5. Finance income
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
-------------------------- ----------- -----------
Bank interest receivable 8 10
-------------------------- ----------- -----------
Foreign exchange gain 158 -
-------------------------- ----------- -----------
Total 166 10
6. Finance costs
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
----------------------------- ----------- -----------
Interest on bank borrowings 648 1,778
----------------------------- ----------- -----------
Foreign exchange loss - 79
----------------------------- ----------- -----------
Total 648 1,857
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.
Interest on bank borrowings for the period relates to the H2O
investment up to 4 August 2017; thereafter the Group has recognised
its share of the joint venture profit up to the period end (note
2(c)).
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 2017: 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
2018 2017
GBP'000 GBP'000
-------------- ----------- -----------
Deferred tax 526 -
-------------- ----------- -----------
Current tax 38 25
-------------- ----------- -----------
Tax Expense 564 25
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
2018 2017
GBP'000 GBP'000
--------------------------------- ----------- -----------
Tax expense reconciliation
--------------------------------- ----------- -----------
Profit before taxation 13,603 12,911
--------------------------------- ----------- -----------
Less: income not taxable (40,901) (8,920)
--------------------------------- ----------- -----------
Add: expenditure not deductible 33,820 5,574
--------------------------------- ----------- -----------
Un-provided deferred tax asset (3,085) (9,454)
--------------------------------- ----------- -----------
Total 3,437 111
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
-------------------------- ----------- -----------
Analysed as arising from
-------------------------- ----------- -----------
Cyprus entities 42 64
-------------------------- ----------- -----------
Dutch entity 72 47
-------------------------- ----------- -----------
India entity - -
-------------------------- ----------- -----------
Luxembourg entities - -
-------------------------- ----------- -----------
German investment 3,323 -
-------------------------- ----------- -----------
UK investment - -
-------------------------- ----------- -----------
Total 3,437 111
Tax at domestic rates applicable to profits in the countries
concerned is as follows:
Year ended Year ended
31 March 31 March
2018 2017
GBP'000 GBP'000
------------------------------------------- ----------- -----------
Cypriot taxation at 12.50% 5 8
------------------------------------------- ----------- -----------
Dutch taxation at 20% 14 9
------------------------------------------- ----------- -----------
India taxation at 22.66% - -
------------------------------------------- ----------- -----------
Luxembourg entities at an average rate of
29.22% * 19 8
------------------------------------------- ----------- -----------
German taxation at 15.825% 526 -
------------------------------------------- ----------- -----------
UK taxation at 20% - -
------------------------------------------- ----------- -----------
Total 564 25
*The taxation incurred in Luxembourg mainly relates to the
minimum net wealth tax charge of EUR4,815 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 2016 - 4 (346) 342 -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
Release to income - - (79) 79 -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
At 31 March 2017 - 4 (425) 421 -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
Release to income 526 (4) 306 (302) -
------------------- ----------------------- ----------------------- ----------- ----------------------- ---------
At 31 March 2018 526 - (119) 119 -
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.
2018 2017
GBP'000 GBP'000
-------------------------- --------- ---------
Deferred tax liabilities 645 425
-------------------------- --------- ---------
Deferred tax assets (119) (425)
-------------------------- --------- ---------
Total 526 -
At the balance sheet date the Group has unused tax losses of
GBP0.5 million (2017: GBP2.3 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 period Shares Dividend Paid Date
'000 per share GBP
Quarter ended 31 March
2017 69,323 0.6p 415,939 21 July 2017
---------------------------- ------- ---------- ---------- -------------
Quarter ended 30 June 22 September
2017 69,323 0.6p 415,939 2017
---------------------------- ------- ---------- ---------- -------------
Quarter ended 30 September 15 December
2017 68,497 0.6p 410,981 2017
---------------------------- ------- ---------- ---------- -------------
Total 1,242,859
---------------------------- ------- ---------- ---------- -------------
On 6 April 2018, the Company paid a dividend for the quarter
ended 31 December 2017 of GBP410,981 (0.6p per share).
In addition, during the year, Romulus disposed of its property
portfolio, which generated approximately GBP0.3 million for ART A
shareholders: this amount was therefore paid to ART A shareholders
as a special dividend on 7 July 2017.
The Company will pay a dividend for the quarter ended 31 March
2018 on 20 July 2018. 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:
Year Year For the For the Year
ended ended six months six months ended
31 March 31 March ended ended 31 March
2018 2018 30 September 30 September 2017
2017 2017
------------------------------------ ---------- ---------- -------------- -------------- ----------
Ordinary A share Ordinary A share Ordinary
share share and A
share
------------------------------------ ---------- ---------- -------------- -------------- ----------
Earnings per statement of
comprehensive income (GBP'000) 11,703 1,336 8,383 1,103 12,886
------------------------------------ ---------- ---------- -------------- -------------- ----------
Basic and diluted earnings
pence per share 18.5 23.3 13.3 17.7 18.6p
------------------------------------ ---------- ---------- -------------- -------------- ----------
Earnings per statement of
comprehensive income (GBP'000) 11,703 1,336 8,383 1,103 12,886
------------------------------------ ---------- ---------- -------------- -------------- ----------
Net change in the revaluation
of investment properties (4,578) (416) (1,503) (149) (8,790)
------------------------------------ ---------- ---------- -------------- -------------- ----------
Profit on subsidiary disposal (3,924) (357) (3,813) (378) -
------------------------------------ ---------- ---------- -------------- -------------- ----------
Profit on investment property
disposal - - - - (122)
------------------------------------ ---------- ---------- -------------- -------------- ----------
Movement in fair value of
investments (1,457) (132) (1,069) (105) (2,568)
------------------------------------ ---------- ---------- -------------- -------------- ----------
Gain on interest rate swaption (13) (1) (13) (1) -
------------------------------------ ---------- ---------- -------------- -------------- ----------
Loss on foreign exchange
forward 1,197 109 1,279 127 904
------------------------------------ ---------- ---------- -------------- -------------- ----------
Movement in fair value of
the joint ventures' interest
rate swaption (mark to market) (3) - 5 - -
------------------------------------ ---------- ---------- -------------- -------------- ----------
Net change in the revaluation
of the joint ventures' investment
property (1,348) (122) (209) (21) 19
------------------------------------ ---------- ---------- -------------- -------------- ----------
Investment Manager's fees
(performance fee) 284 26 - - 2,743
------------------------------------ ---------- ---------- -------------- -------------- ----------
Deferred tax 482 44 - - -
------------------------------------ ---------- ---------- -------------- -------------- ----------
Romulus capital return - (274) - (274) -
------------------------------------ ---------- ---------- -------------- -------------- ----------
Foreign exchange (gain)/loss (145) (13) (1,189) (117) 79
------------------------------------ ---------- ---------- -------------- -------------- ----------
Adjusted earnings 2,198 200 1,871 185 5,151
------------------------------------ ---------- ---------- -------------- -------------- ----------
Adjusted earnings per share 3.5 3.5 3.0p 3.0p 7.4p
------------------------------------ ---------- ---------- -------------- -------------- ----------
Weighted average number of
shares ('000s) 63,163 5,739 63,066 6,244 69,323
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
2018 2017 2017
-------------------------------- --------- ------------- ---------
Net asset value (GBP'000) 118,451 114,626 110,173
-------------------------------- --------- ------------- ---------
Net asset value per ordinary
share 172.9p 167.3p 158.9p
-------------------------------- --------- ------------- ---------
Total number of shares ('000s) 68,497 68,497 69,323
11. Investment in subsidiary undertakings
A list of the significant investments in subsidiaries as at 31
March 2018, including the name, country of incorporation and the
proportion of ownership interest is given below.
Name of subsidiary undertaking Class of % of class Country Principal
shares/units held with of activity
voting rights incorporation
------------------------------- -------------- --------------- --------------- ----------------
Alpha Tiger Cyprus Holdings Ordinary 100 Cyprus Holding Company
Limited shares
------------------------------- -------------- --------------- --------------- ----------------
Alpha Tiger Cyprus Investments Ordinary 100 Cyprus Holding Company
No. 2 Limited shares
------------------------------- -------------- --------------- --------------- ----------------
Alpha Tiger Cyprus Investments Ordinary 100 Cyprus Holding Company
No. 3 Limited shares
------------------------------- -------------- --------------- --------------- ----------------
Luxco 111 SARL Ordinary 100 Luxembourg Holding Company
shares
------------------------------- -------------- --------------- --------------- ----------------
Skyred International SARL Ordinary 100 Luxembourg Holding Company
shares
------------------------------- -------------- --------------- --------------- ----------------
Iron Bridge Finance Luxembourg Ordinary 100 Luxembourg Holding Company
SARL shares
------------------------------- -------------- --------------- --------------- ----------------
Sixteen Rock Rose SARL Ordinary 100 Luxembourg Holding Company
shares
------------------------------- -------------- --------------- --------------- ----------------
Sixteen Rock Rose 2 SARL Ordinary 100 Luxembourg Holding Company
shares
------------------------------- -------------- --------------- --------------- ----------------
Sixteen Guava SARL Ordinary 100 Luxembourg Holding Company
shares
------------------------------- -------------- --------------- --------------- ----------------
KMS Holding NV Ordinary 100 Netherlands Holding Company
shares
------------------------------- -------------- --------------- --------------- ----------------
Alpha Tiger Guernsey Holdings Ordinary 100 Guernsey Holding Company
No.1 Ltd shares
------------------------------- -------------- --------------- --------------- ----------------
ART Resi Unit Trust Ordinary 100 Guernsey Holding Company
units
During the year, the Group liquidated Luxco 114 SARL in
Luxembourg and Iron Sky 1 Limited in Guernsey.
The Group also owns one limited partnership in Germany (Sixteen
Rock Rose Sàrl & Co Vermögensverwaltungs KG) to hold its
Frankfurt data centre investment.
Following the Group's part disposal of its equity interest in
H2O (note 2(c)), Alpha Tiger Spain 1, SLU, Alpha Tiger Spain 2, SLU
and Alpha Tiger Spain 3, SLU are no longer subsidiaries of the
Group.
12. Investment in joint ventures
The movement in the Group's share of net assets of the joint
ventures can be summarised as follows:
H2O Cambourne Total Cambourne
-------------------------------------- --------- ---------- --------- ----------
31 March 31 March 31 March 31 March
2018 2018 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- --------- ----------
As at 1 April - 1,538 1,538 1,596
-------------------------------------- --------- ---------- --------- ----------
Transfer of 70% equity interest
in H2O (note 2) 15,979 - 15,979 -
-------------------------------------- --------- ---------- --------- ----------
Group's share of joint venture
profits before fair value movements
and dividends 677 138 815 131
-------------------------------------- --------- ---------- --------- ----------
Fair value adjustment for interest
rate swaption (18) - (18) -
-------------------------------------- --------- ---------- --------- ----------
Fair value adjustment for investment
property 1,488 3 1,491 (19)
-------------------------------------- --------- ---------- --------- ----------
Equity return - - - (130)
-------------------------------------- --------- ---------- --------- ----------
Dividends paid by joint venture
to the Group - - - (40)
-------------------------------------- --------- ---------- --------- ----------
Foreign exchange movements (473) - (473) -
-------------------------------------- --------- ---------- --------- ----------
As at 31 March 17,653 1,679 19,332 1,538
The Group's investments in joint ventures can be summarised as
follows:
-- H2O shopping centre in Madrid, Spain: the Group holds a 30%
equity investment in CBRE H2O Rivas Holding NV ('CBRE H2O'), a
company based in the Netherlands, which in turn owns 100% of the
Spanish entities that are owners of H2O. CBRE H2O is a Euro
denominated company hence the Group translates its share of this
investment at the relevant year end exchange rate with movements in
the period translated at the average rate for the period. As at 31
March 2018, the carrying value of ART's investment in CBRE H2O was
GBP17.6 million (EUR20.1 million).
-- Phase 1000 of Cambourne Business Park, Cambridge, UK: the
Group holds a 10% equity investment in the Scholar Property
Holdings Limited group, owner of the property. As at 31 March 2018,
the carrying value of ART's investment in Scholar Property Holdings
Limited was GBP1.7 million (31 March 2017: GBP1.5 million).
Foreign exchange movement is recognised in other comprehensive
income.
The investment in CBRE H2O is deemed to be significant and
material for the Group; the CBRE H2O financial information can
therefore be summarised as follows:
Statement of comprehensive income 4 August
2017 to
31 March
2018
GBP'000
-------------------------------------- ----------
Revenue 6,768
-------------------------------------- ----------
Change in the revaluation of
investment property 4,960
-------------------------------------- ----------
Total income 11,728
-------------------------------------- ----------
Operating expenses (3,644)
-------------------------------------- ----------
Operating profit 8,084
-------------------------------------- ----------
Finance income -
-------------------------------------- ----------
Finance costs (922)
-------------------------------------- ----------
Profit before taxation 7,162
-------------------------------------- ----------
Taxation -
-------------------------------------- ----------
Profit for the period 7,162
-------------------------------------- ----------
Other comprehensive income/(expense) -
-------------------------------------- ----------
Total comprehensive income 7,162
Balance sheet 31 March
2018
GBP'000
-------------------------------- ----------
Investment property 111,218
-------------------------------- ----------
Derivatives held at fair value
through profit or loss 218
-------------------------------- ----------
Non-current assets 111,436
-------------------------------- ----------
Trade debtors 1,181
-------------------------------- ----------
Other debtors 469
-------------------------------- ----------
Cash 5,533
-------------------------------- ----------
Current assets 7,183
-------------------------------- ----------
Trade and other payables (4,003)
-------------------------------- ----------
Bank borrowings (123)
-------------------------------- ----------
Current liabilities (4,126)
-------------------------------- ----------
Bank borrowings (55,650)
-------------------------------- ----------
Non-current liabilities (55,650)
-------------------------------- ----------
Net assets 58,843
-------------------------------- ----------
Equity 51,728
-------------------------------- ----------
Translation reserve (47)
-------------------------------- ----------
Capital and revenue reserve 7,162
-------------------------------- ----------
Total equity 58,843
The fair value of the H2O property in Madrid (Spain) of EUR126.9
million (GBP111.2 million) (31 March 2017: EUR117.5 million,
GBP100.2 million) has been arrived at on the basis of an
independent valuation carried out at the balance sheet date by
Savills Aguirre Newman Valoraciones y Tasaciones S.A. ("Savills
Aguirre"), an independent valuer not connected to the Group. The 31
March 2018 valuation carried out by Savills Aguirre includes a new
plot of land, adjacent to the H2O property, which was purchased in
February 2017 for EUR1.4 million (GBP1.2 million): this investment
was not included in the H2O independent valuation as at 31 March
2017 but valued by the Directors (see note 13).
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".
The fair value of the H2O property is based on unobservable
inputs. The following methods, assumptions and inputs were used to
estimate fair values of investment property:
31 March 2018 - H2O Shopping centre, Madrid (Spain)
---------------------------------------------------------------------------------------------------------------------------------------
Class of Carrying Area Valuation technique Significant unobservable inputs Weighted
investment amount / (square meters) average/Value
property fair value
'000
------------ -------------- ---------------- --------------------- ------------------------------------------------ --------------
Gross Estimated Rental Value ('ERV') per sqm p.
Europe GBP111,218 51,825 Discounted cash flow a. EUR216.8
(EUR126,900)
------------ -------------- ---------------- --------------------- ------------------------------------------------ --------------
Discount rate 13.00%
The fair value of Phase 1000 of Cambourne Business Park,
Cambridge (UK) is GBP26.3 million (31 March 2017: GBP26.3 million),
which has been considered by the Directors to represent fair value
at the balance sheet date; the relevant market conditions since the
investment was made is not considered to be significant in terms of
value.
The CBRE H2O group bank borrowings represent the EUR65.0 million
provided by Aareal Bank to Alpha Tiger Spain 1, SLU less the
balance of unamortised deferred finance costs of EUR1.5 million.
This loan has a 1.887% fixed coupon, matures on 18 May 2024 and is
secured by a first charge mortgage against the Spanish property.
The borrowings are non-recourse to the Group's other
investments.
The Scholar Property Holdings Limited group bank borrowings'
balance as at 31 March 2018 is GBP11.2 million: this is a loan
provided by Royal Bank of Scotland PLC to Scholar Property
Investments Limited, which is secured by a first charge mortgage
against the UK property. This loan has a 2.5% margin over 3 month
LIBOR and matures on 27 April 2020.
13. Investment property
31 March 31 March
2018 2017
GBP'000 GBP'000
-------------------------------------------------- ---------- ---------
Fair value of investment property at 1 April 112,442 91,971
-------------------------------------------------- ---------- ---------
Additions 11,262 3,185
-------------------------------------------------- ---------- ---------
Subsequent capital expenditure after acquisition 6,024 3,119
-------------------------------------------------- ---------- ---------
Disposals - (1,752)
-------------------------------------------------- ---------- ---------
Movement in rent incentives/initial costs (53) 299
-------------------------------------------------- ---------- ---------
Fair value adjustment in the year 4,994 8,790
-------------------------------------------------- ---------- ---------
Transfer of 70% equity interest in H2O (note
2) (107,449) -
-------------------------------------------------- ---------- ---------
Foreign exchange movement 5,801 6,830
-------------------------------------------------- ---------- ---------
Fair value of investment property at 31 March 33,021 112,442
Investment property comprises the Group's investments in Unity
and Armouries (Birmingham) and Monk Bridge (Leeds), two investment
properties in the course of development located in the United
Kingdom and a data centre development at Borsigallee 1-7,
Frankfurt, Germany.
On 4 August 2017, the Group disposed of 70% of its equity
interest in the H2O shopping centre in Madrid, Spain, to CBRE
European Co-Investment Fund, managed by CBRE Global Investors. In
compliance with IFRS 11 (Joint Arrangements), the Group has adopted
the equity method of accounting for its joint venture (see note
2(c)). As at 31 March 2017, the fair value of the H2O property was
EUR117.5 million (GBP100.2 million), which had been arrived at on
the basis of an independent valuation carried out at the balance
sheet date by Savills Aguirre; that valuation did not include a
plot of land, adjacent to H2O, separately valued by the Directors
at GBP1.2 million.
The fair value of the Unity and Armouries property in Birmingham
(UK) of GBP4.7 million (31 March 2017: GBP3.5 million) has been
arrived at on the basis of an independent valuation carried out at
the balance sheet date by GVA (note 24).
The fair value of the Monk Bridge property in Leeds (UK) of
GBP9.0 million (31 March 2017: GBP5.5 million) has been arrived at
on the basis of an independent valuation carried out at the balance
sheet date by Savills (note 24).
In November 2017, the Group completed the site purchase of the
data centre development at Borsigallee 1-7 in Frankfurt (Germany)
and entered into the power commitment contract. The payment of the
outstanding site purchase price was EUR12.85 million (GBP11.3
million). As at 31 March 2018, the fair value of the data centre of
EUR22.0 million (GBP19.3 million) (31 March 2017: EUR2.3 million
(GBP2.0 million) as Director's valuation) has been arrived at on
the basis of an independent valuation carried out at the balance
sheet date by Cushman and Wakefield ('C&W') (note 24).
GVA, Savills and C&W 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".
Foreign exchange movement is recognised in other comprehensive
income.
14. Investment receivable
31 March 31 March
2018 2017
GBP'000 GBP'000
--------------------------- --------- ---------
As at 1 April 5,535 4,738
--------------------------- --------- ---------
Foreign exchange movement (614) 797
--------------------------- --------- ---------
As at 31 March 4,921 5,535
The Galaxia investment is carried at INR 450.0 million (GBP4.9
million) (31 March 2017: INR 450.0 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 450.0 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 GBP13.8 million
at the year end 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. Logix have since appealed the dismissal to the Supreme
Court of India. The Supreme Court admitted the appeal and ordered
Logix to deposit GBP2.2 million (INR 200 million) with the court
and has listed the matter for final disposal in July 2018. ART has
commenced execution of the award and 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. In May 2018, the Supreme Court has permitted the Company to
unconditionally withdraw INR 100 million (GBP1.1 million) and the
remaining INR 100 million (GBP1.1 million) deposited by Logix
against a bank guarantee. As at 31 March 2017, the Company had the
residential property independently valued at approximately GBP6.0
million. ART continues to actively pursue Logix directors for the
recovery of the Award.
The Directors, taking into consideration legal advice received
following Logix's challenge of the Award, consider it appropriate
to carry this investment in its accounts as a receivable of INR
450.0 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.
Foreign exchange movement is recognised in other comprehensive
income.
15. Investments held at fair value
31 March 31 March
2018 2017
GBP'000 GBP'000
--------------------------------------- --------- ---------
Non-current
--------------------------------------- --------- ---------
As at 1 April 7,814 10,439
--------------------------------------- --------- ---------
Additions during the year 1,260 -
--------------------------------------- --------- ---------
Redemptions during the year (3,121) (404)
--------------------------------------- --------- ---------
Movement in fair value of investments 845 131
--------------------------------------- --------- ---------
Transfer to current (IMPT investment) - (2,352)
--------------------------------------- --------- ---------
As at 31 March 6,798 7,814
The investments, which are disclosed as non-current investments
held at fair value, are as follows:
-- Europip (participating redeemable preference shares): during
the period, ART received GBP2.0 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 2018 was GBP0.4 million (31 March 2017: 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 2018, HLP redeemed a total
of GBP1.1 million of shares (2017: GBP0.2 million); the net asset
value of the investment has been calculated by using the unaudited
value provided by the directors of HLP on 20 February 2018, this
being the closest point to the Group's balance sheet date; the
resulting value of the investment was GBP0.4 million (31 March
2017: GBP1.4 million).
-- AURE (ordinary shares): during the year, ART invested a
further GBP1.3 million in 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: the resulting fair value of the investment at
period end was GBP6.0 million (31 March 2017: GBP3.9 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
2018 2017
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Current
--------------------------------------------- --------- ---------
As at 1 April 26,113 20,931
--------------------------------------------- --------- ---------
Transfer from non current (IMPT investment) - 2,352
--------------------------------------------- --------- ---------
Additions during the year 20,000 1,072
--------------------------------------------- --------- ---------
Redemptions during the year (15,269) (2,400)
--------------------------------------------- --------- ---------
Undistributed investment income in year 2,104 1,721
--------------------------------------------- --------- ---------
Movement in fair value of investments 744 2,437
--------------------------------------------- --------- ---------
As at 31 March 33,692 26,113
The investments, which are disclosed as current investments held
at fair value, are as follows:
-- FIAF (income units): FIAF allows monthly redemptions and
hence the investment is reported as a current asset; during the
year, ART has made a further investment of GBP5.0 million in FIAF
units. FIAF provides monthly pricing of its units. The market value
of the investment as at 31 March 2018, based on the published price
of the relevant units, was GBP28.4 million (31 March 2017: GBP21.2
million).
-- ART also had an investment in Romulus. Any realised value
from this investment had to be passed exclusively to ART A
shareholders. As at 31 March 2017, the net asset value of ART's
investment in Romulus was nil. During the year ended 31 March 2018,
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 a capital return of GBP0.3
million from Romulus. ART has therefore paid a special dividend to
holders of ART A Shares of GBP0.3 million, less administrative
costs.
-- ELM Trading (ordinary shares): in September 2017, ART
invested GBP15.0 in ELM Trading ordinary shares, which are
redeemable on a weekly basis, provided ELM is able to match
redemptions with new investors' purchases. Therefore, between
January and March 2018, ART redeemed GBP10 million of shares. ELM
Trading provides monthly valuations of the net asset value of its
shares; the net asset value of the investment as at 31 March 2018
was GBP5.3 million. The intention of ART is to hold this investment
for a short term hence this has been disclosed within current
assets.
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.
16. Loans receivable
31 March 31 March
2018 2017
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Non-current
--------------------------------------------------- --------- ---------
Loan granted to related parties (note 23) - 3,300
--------------------------------------------------- --------- ---------
Loans granted to third parties 3,224 1,980
--------------------------------------------------- --------- ---------
Interest receivable from loans granted to third 59 -
parties
--------------------------------------------------- --------- ---------
Total 3,283 5,280
--------------------------------------------------- --------- ---------
Current
--------------------------------------------------- --------- ---------
Loan granted to related party (note 23) - 10,378
--------------------------------------------------- --------- ---------
Loans granted to third parties 9,577 -
--------------------------------------------------- --------- ---------
Interest receivable from loans granted to related
parties (note 23) - 348
--------------------------------------------------- --------- ---------
Interest receivable from loans granted to third
parties 240 32
--------------------------------------------------- --------- ---------
Total 9,817 10,758
During the year, loans granted to related parties have been
fully repaid as follows:
-- Unsecured loan to IMPT (31 March 2017 balance: GBP10.4
million), due to expire in December 2018 and carrying a coupon of
15% per annum. On 7 April 2017, the loan was repaid in full,
including accrued and rolled up interest and applicable fees: the
total cash received by ART was GBP10.9 million.
-- Loan to AURE (31 March 2017 balance: GBP3.3 million), due to
expire in November 2018 and carrying a coupon of 9% per annum.
During the year, the loan has been repaid in full, including
accrued interest and applicable fees: the total cash received by
ART was GBP3.5 million.
As at 31 March 2018, the Group had granted a total of GBP12.8
million (31 March 2017: nil) of mezzanine loans to third parties.
These comprised twelve loans to UK entities, which assisted with
the purchase of property developments in the UK. These facilities
range from a 6 to 36 month term and entitle the Group to overall
returns on the investment that range from 14% to 16.0%.
Post year end, three further mezzanine loans were granted to UK
borrowers for a total of GBP2.4 million, an existing loan was
increased by GBP0.3 million and one mezzanine loan of GBP0.3
million was repaid, including accrued interest and applicable
fees.
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.
17. Trade and other receivables
31 March 31 March
2018 2017
GBP'000 GBP'000
--------------- --------- ---------
Current
--------------- --------- ---------
Trade debtors 35 1,215
--------------- --------- ---------
VAT 706 796
--------------- --------- ---------
Other debtors 2,662 692
--------------- --------- ---------
Total 3,403 2,703
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.
18. Trade and other payables
31 March 31 March
2018 2017
GBP'000 GBP'000
---------------------------------- --------- ---------
Trade creditors 565 2,929
---------------------------------- --------- ---------
Investment Manager's fee payable 805 3,228
---------------------------------- --------- ---------
Accruals 118 439
---------------------------------- --------- ---------
Other creditors 153 180
---------------------------------- --------- ---------
Corporation tax 22 13
---------------------------------- --------- ---------
Total 1,663 6,789
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.
19. Bank borrowings
31 March 31 March
2018 2017
GBP'000 GBP'000
------------------------------------------ ---------- ---------
Current liabilities: interest payable - 109
------------------------------------------ ---------- ---------
Current liabilities: bank borrowings - 60,509
------------------------------------------ ---------- ---------
Total current liabilities - 60,618
------------------------------------------ ---------- ---------
Non-current liabilities: bank borrowings - -
------------------------------------------ ---------- ---------
Total liabilities - 60,618
------------------------------------------ ---------- ---------
The borrowings are repayable as follows:
------------------------------------------ ---------- ---------
Interest payable - 109
------------------------------------------ ---------- ---------
On demand or within one year - 60,509
------------------------------------------ ---------- ---------
In the second to fifth years inclusive - -
------------------------------------------ ---------- ---------
Total - 60,618
Movements in the Group's bank borrowings are analysed as
follows:
31 March 31 March
2018 2017
GBP'000 GBP'000
----------------------------------------- --------- ---------
As at 1 April 60,509 55,512
----------------------------------------- --------- ---------
Borrowings, additions 55,622 -
----------------------------------------- --------- ---------
Deferred finance costs, additions (1,432) -
----------------------------------------- --------- ---------
Repayment of borrowings (60,810) (114)
----------------------------------------- --------- ---------
Reclassification to current liabilities - 429
----------------------------------------- --------- ---------
Amortisation of deferred finance costs 169 240
----------------------------------------- --------- ---------
Disposal of 70% equity interest in H2O (57,191) -
----------------------------------------- --------- ---------
Foreign exchange movement 3,133 4,442
----------------------------------------- --------- ---------
As at 31 March - 60,509
As at 31 March 2017, bank borrowings represented the syndicated
loan finance provided to ATS1, owner of the H2O shopping centre in
Madrid, Spain.
On 18 May 2017, ATS1 completed the refinance of its borrowings,
secured on the H2O property, with a new EUR65.0 million (GBP55.6
million) seven year loan with Aareal Bank. This loan was used to
partly repay the previous bank loan (EUR71.1 million; GBP60.8
million), which was due to be repaid in October 2017. The Group
funded the refinancing gap and fees. The borrowings are
non-recourse to the Group's other investments.
On 4 August 2017, the Group disposed of 70% of its equity
interest in the H2O property to CBRE European Co-Investment Fund,
managed by CBRE Global Investors. In compliance with IFRS 11 (Joint
Arrangements), the Group has adopted the equity method of
accounting for its joint venture (see note 2).
Foreign exchange movement is recognised in other comprehensive
income/(expense).
The table below sets out an analysis of net debt and the
movements in net debt for the year ended 31 March 2018.
Other Derivatives Liabilities from
assets financing activities
------------------------------ --------- ---------------------- ------------------------ ---------
Cash Foreign Interest Interest Borrowings Total
GBP'000 exchange rate payable GBP'000 GBP'000
forward swaption GBP'000
GBP'000 GBP'000
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Net asset/(debt) as
at 1 April 2017 5,397 - - (109) (60,509) (55,221)
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Cash movements 398 1,406 290 315 6,620 9,029
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Non cash movements
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Foreign exchange adjustments 478 - - - (3,133) (2,655)
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Realised gain on foreign
exchange forward contract - (1,306) - - - (1,306)
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Realised gain on interest
rate swaption contract - - 14 - - 14
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Loan fee amortisation
and other costs - - - 169 (169) -
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Interest charge - - - (648) - (648)
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Disposal of 70% equity
interest in H2O - - (304) 273 57,191 57,160
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
Net asset/(debt) as
at 31 March 2018 6,273 100 - - - 6,373
------------------------------ --------- ---------- ---------- ---------- ------------ ---------
20. 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 1 April 2017 6,794,398 62,986,175 69,780,573 6,337,042 76,117,615
-------------------- ---------- ----------- ----------- ------------ -----------
Share conversion - 1,302,238 1,302,238 (1,302,238) -
-------------------- ---------- ----------- ----------- ------------ -----------
Shares cancelled
following buyback (918,123) - (918,123) - (918,123)
-------------------- ---------- ----------- ----------- ------------ -----------
Shares bought back 826,311 (826,311) - - -
-------------------- ---------- ----------- ----------- ------------ -----------
At 31 March 2018 6,702,586 63,462,102 70,164,688 5,034,804 75,199,492
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.
Under its general authority, approved by shareholders on 1 April
2016, the Company announced a tender offer on 1 September 2017 for
up to 10,000,000 ordinary shares. In total, 826,311 ordinary shares
were validly tendered under the tender offer, representing
approximately 1.2 per cent of the Company's voting shares in issue
at the time.
On 28 September 2017, the Company bought back the 826,311
ordinary shares tendered under the tender offer at a price (before
expenses) of 123.1 pence per share. All of the 826,311 repurchased
ordinary shares were cancelled, together with 91,812 shares held in
treasury. During the year 1,302,238 A shares were converted into
ordinary shares. As at 31 March 2018, the ordinary share capital of
the Company, following the purchase and cancellation of those
ordinary shares, was 70,164,688 (including 6,702,586 shares held in
treasury). The Company also had 5,034,804 A shares in issue. The
total voting rights in ART following the purchase and cancellation
of ordinary shares was 68,496,906.
Post year end, the Company has made no share buybacks and 89,283
A shares were converted into ordinary shares. At the date of
signing these financial statements the ordinary share capital of
the Company was 70,253,971 (including 6,702,586 shares held in
treasury). The Company also has 4,945,521 A shares in issue. The
total voting rights in ART are unchanged at 68,496,906.
21. 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.
22. Events after the balance sheet date
Between April and June 2018, three further mezzanine loans were
granted to UK borrowers for a total of GBP2.4 million, an existing
loan was increased by GBP0.3 million and one mezzanine loan of
GBP0.3 million was repaid, including accrued interest and
applicable fees.
In April and May 2018, ART received GBP5.3 million from ELM
Trading as full redemption of that investment.
On 6 April 2018, the Company paid a dividend for the quarter
ended 31 December 2017 of GBP410,981 (0.6p per share).
In May 2018, with regards to the ongoing Galaxia litigation, the
Supreme Court has permitted the Company to unconditionally withdraw
INR 100 million (GBP1.1 million) (note 14): the funds were received
on 30 May 2018.
In June 2018, ART received GBP3.0 million as units' redemption
from FIAF and GBP0.3 million as part redemption from HLP.
Post year end, a total of 89,283 A Shares were converted into
Ordinary Shares (Note 20).
23. 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
GBP1.7 million (31 March 2017: GBP1.0 million), net of rebates, was
billed by ARC to ART. As at 31 March 2018, a total of GBP0.5
million (31 March 2017: GBP0.3 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 2018, a performance fee of GBP0.3
million (31 March 2017: GBP2.7 million) was due to ARC.
Prior to the 70% disposal of the H2O property, ARC had a
management agreement directly with the H2O property company, Alpha
Tiger Spain 1, SLU ('ATS1') under which it earned a fee of 0.9% per
annum based upon the gross assets of ATS1. In order to avoid double
counting of fees, ARC provided a rebate to the Company of a
proportion of its fee equivalent to the value of the Group's net
asset value attributable to the H2O investment. Subsequent to the
sale of ATS1 to CBRE H2O Rivas Holding NV ('CBRE H2O'), ARC has
been appointed as Asset Manager to ATS1 and Investment Manager to
CBRE H2O. ARC has agreed to rebate to ART all of the fees charged
by ARC directly to CBRE H2O and ATS1 that relate to the Company's
30% share in CBRE H2O.
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 ELM Trading where the Board of
Directors is drawn from the partners and employees of ARPIA, a
subsidiary of ARC. ARC rebates fees earned in relation to the
Company's investment in ELM Trading.
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.
Total rebates for the year were GBP0.9 million (31 March 2017:
GBP1.1 million).
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 2018 is
provided in note 18.
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 2018 (31 March 2017: 22,550,000).
ARC did not hold any shares in the Company at 31 March 2018 (31
March 2017: nil).
The following, being partners of the Investment Manager, have
interests in the following shares of the Company at 31 March
2018:
31 March 2018 31 March 2017
Number of shares Number of shares
held 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 GBP7,100 (31
March 2017: GBP7,000) in relation to directorial responsibilities
on a number of the Company's subsidiary companies.
Serena Tremlett is also the Managing Director of Estera
Administration (Guernsey) Limited ('Estera'), the Company's
administrator and secretary. During the year, the Company paid
Estera fees of GBP92,300 (2017: GBP95,300) and no amount was
outstanding at year end.
Melanie Torode is the Operations Director of Estera; considering
her appointment date of 1 June 2018, no fees were paid in respect
of this directorship during the year.
24. 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 2018 31 March 2017
GBP'000 GBP'000
---------------------------------------- ----------------- ----------------
Financial assets at fair value through
profit or loss
---------------------------------------- ----------------- ----------------
Investments held at fair value 40,490 33,927
----------------------------------------- ----------------- ----------------
Foreign exchange forward contract 100 -
---------------------------------------- ----------------- ----------------
Total financial assets at fair value
through profit or loss 40,590 33,927
----------------------------------------- ----------------- ----------------
Loans and receivables
---------------------------------------- ----------------- ----------------
Investment receivable 4,921 5,535
----------------------------------------- ----------------- ----------------
Loans and receivables 13,100 16,038
----------------------------------------- ----------------- ----------------
Trade and other receivables 3,403 2,703
----------------------------------------- ----------------- ----------------
Cash and cash equivalents 6,273 5,397
----------------------------------------- ----------------- ----------------
Total loans and receivables 27,697 29,673
----------------------------------------- ----------------- ----------------
Total financial assets 68,287 63,600
----------------------------------------- ----------------- ----------------
Financial liabilities at amortised
cost
---------------------------------------- ----------------- ----------------
Trade and other payables (1,663) (6,789)
----------------------------------------- ----------------- ----------------
Bank borrowings - (60,618)
----------------------------------------- ----------------- ----------------
Deferred tax (526) -
---------------------------------------- ----------------- ----------------
Total financial liabilities (2,189) (67,407)
----------------------------------------- ----------------- ----------------
On 4 August 2017, the Group disposed of 70% of its equity
interest in the H2O shopping centre in Madrid, Spain, to CBRE
European Co-Investment Fund, managed by CBRE Global Investors. In
compliance with IFRS 11 (Joint Arrangements), the Group has adopted
the equity method of accounting for its joint venture (see note
2(c)).
As at 31 March 2017, bank borrowings represented the loans
provided by a syndicate of three banks (Eurohypo AG, MHB Bank AG
and Landesbank Hessen-Thuringen Girozentrale) to Alpha Tiger Spain
1, SLU. The loans were secured by a first charge mortgage against
the Spanish property.
Net changes in realised and unrealised gains or losses on
financial instruments can be summarised as follows:
31 March 2018 31 March 2017
GBP'000 GBP'000
--------------------------------------------- -------------- --------------
Realised gains or losses on loans
and receivables
--------------------------------------------- -------------- --------------
Bank interest receivable 8 10
---------------------------------------------- -------------- --------------
Interest receivable on loans granted
to related parties 359 2,284
---------------------------------------------- -------------- --------------
Interest receivable on loans granted
to third parties 658 97
---------------------------------------------- -------------- --------------
Impairment of trade and other receivables (3) 3
---------------------------------------------- -------------- --------------
Net realised gains on loans and receivables 1,022 2,394
---------------------------------------------- -------------- --------------
Unrealised gains and losses on financial
assets and liabilities held at fair
value through profit or loss
--------------------------------------------- -------------- --------------
Realised loss on foreign exchange
forward contract (1,406) (904)
-------------- --------------
Unrealised gain on foreign exchange 100 -
forward contract
-------------- --------------
Movement in fair value of investments 1,863 2,568
-------------- --------------
Movement in fair value of interest 14 -
rate swaption
-------------- --------------
Undistributed investment income 2,307 1,876
-------------- --------------
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 7 23
-------------- --------------
Distributed investment income 98 -
-------------- --------------
Net gains on financial assets and
liabilities held at fair value through
profit or loss 2,983 3,563
-------------- --------------
Net interest income can be summarised as follows:
31 March 2018 31 March 2017
GBP'000 GBP'000
-------------------------------------- -------------- --------------
Bank interest receivable 8 10
--------------------------------------- -------------- --------------
Interest receivable on loans granted
to related parties 359 2,284
--------------------------------------- -------------- --------------
Interest receivable on loans granted
to third parties 658 97
--------------------------------------- -------------- --------------
Interest on bank borrowings (648) (1,778)
--------------------------------------- -------------- --------------
Net interest income 377 613
--------------------------------------- -------------- --------------
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 2018, trade and other receivables past due but not
impaired amounted to nil (31 March 2017: 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.
The Group owns a portfolio of secured real estate loans and
mezzanine loan investments. These loans are typically secured on
real estate investment and development assets with high
risk-adjusted income returns. The Group receives monthly updates
from its investment advisors regarding the credit worthiness of the
borrowers and values of the real estate investment and development
assets, which the loans are secured on, and assesses the
recoverability of each loan investment.
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 450.0 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 GBP13.8 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 450.0 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.
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 years 2-5 years Over 5 Total Total carrying
31 March 2018 1 year GBP'000 GBP'000 years GBP'000 amount
GBP'000 GBP'000 GBP'000
--------------------- --------- ---------- ---------- --------- --------- ---------------
Trade and other
payables 1,641 - - - 1,641 1,641
--------------------- --------- ---------- ---------- --------- --------- ---------------
Interest payable - - - - - -
on bank borrowings
--------------------- --------- ---------- ---------- --------- --------- ---------------
Bank borrowings - - - - - -
--------------------- --------- ---------- ---------- --------- --------- ---------------
Foreign exchange - - - - - -
forward contract
--------------------- --------- ---------- ---------- --------- --------- ---------------
Total 1,641 - - - 1,641 1,641
Within 1-2 years 2-5 years Over 5 Total Total carrying
31 March 2017 1 year GBP'000 GBP'000 years GBP'000 amount
GBP'000 GBP'000 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
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 GBP547,000 (2017:
GBP615,000). A weakening of the Rupee by 10% would decrease net
assets by GBP447,000 (2017: GBP503,000). A strengthening of the
Euro by 5 cents would increase the net assets by GBP1,693,000
(2017: GBP1,929,000). A weakening of the Euro by 5 cents would
decrease net assets by GBP1,551,000 (2017: GBP1,771,000).
b) Cash flow and fair value interest rate risk
The Group's interest rate risk arose primarily from bank
borrowings. Following the 70% disposal of the H2O property (note
19), the Group is not directly exposed to interest rate risk
related to bank borrowings.
The Group 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 a negligible post-tax profit movement (2017:
GBP146,000). An increase of 25 basis points in interest rates would
result in a negligible post-tax profit movement (2017:
GBP146,000).
c) Price risk
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 has invested in redeemable shares of ELM Trading, a
company offering weekly redemptions (note 15). The value of the
redeemable shares is assessed monthly and is subject to
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 GBP38,000 (31 March 2017: GBP194,000).
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 GBP38,000
(31 March 2017: GBP194,000).
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 interest rate swaption contract is
determined by reference to an applicable valuation model employed
by the contractual counter party; valuations are provided
quarterly
-- The fair value of the foreign exchange forward contract is
determined by reference to the year end forward market rate and
based on observable inputs; this investment is therefore deemed to
be a level 2 financial asset (see note 25)
-- The fair value of the investment in IMPT's ordinary shares,
which were traded on the LSE until 8 June 2017, was based upon the
mid price of the ordinary shares at the balance sheet date. On 28
April 2017, IMPT made a full equity return to ART at a share price
of 330.0p per share; the Group does not currently hold any
investment which can be categorised as Level 1.
-- 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, and
based on observable inputs; this investment is therefore deemed to
be a level 2 financial asset (see note 25)
-- 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 25)
-- 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 25). 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 25). Europip's accounts are audited
annually. As at 31 March 2018, Europip holds no investment property
and is preparing to distribute its final liquidation proceeds to
shareholders.
-- The fair value of the ELM Trading ('ELM') 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 ELM's
underlying investments. This net asset value is therefore mainly
based on unobservable inputs and is deemed to be level 3 financial
assets. ELM's accounts are audited annually. ELM's underlying
investments are fair valued and the ART Board considers that any
reasonable possible movement in the valuation of ELM's individual
investments would not be material to the value of ART's
investment.
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.
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 reviewed the adequacy of the Group's level
of borrowings by monitoring its compliance with the relevant bank
covenants. Following the sale of 70% of the Group's equity interest
in the H2O property to CBRE European Co-Investment Fund (note 2),
the Group has no more direct borrowings.
25. 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.
The valuation approach adopted by valuers differs between
investment property available to rent (H2O, Cambourne) and
investment property under development (Unity and Armouries, Monk
Bridge and Frankfurt data centre).
The valuation approach for investment property available to rent
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.
The valuation approach for investment property under development
is based on the residual development appraisal, which assesses the
amount a developer can afford to spend for an undeveloped site and
project, considering the potential income from sale of the site and
total cost for its full construction. The potential sale price is
based on the income capitalisation approach whereby the estimated
rental value for the investment property has been capitalised in
perpetuity. The valuation also considers comparable evidence for
land transactions with similar parameters and market locations.
The investments held at fair value and derivative contracts are
valued on a recurring basis as indicated in note 25.
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 1 Level 2 Level 3 Total
----------- ---------- ---------- ----------
31 March 2018 GBP'000 GBP'000 GBP'000 GBP'000
----------- ---------- ---------- ----------
Assets measured at fair
value
------------------------------ ----------- ---------- ---------- ----------
Non-current
------------------------------ ----------- ---------- ---------- ----------
Investment property (note
13) - - 33,021 33,021
------------------------------ ----------- ---------- ---------- ----------
Investments held at fair
value (note 15) - 6,043 755 6,798
------------------------------ ----------- ---------- ---------- ----------
Current
------------------------------ ----------- ---------- ---------- ----------
Investments held at fair
value (note 15) - 28,356 5,336 33,692
------------------------------ ----------- ---------- ---------- ----------
Foreign exchange forward
contract (note 24) - 100 - 100
------------------------------ ----------- ---------- ---------- ----------
Assets for which fair values
are disclosed
------------------------------ ----------- ---------- ---------- ----------
Non-current
------------------------------ ----------- ---------- ---------- ----------
Trade and other receivables
(note 17) - 3,283 - 3,283
------------------------------ ----------- ---------- ---------- ----------
Current
------------------------------ ----------- ---------- ---------- ----------
Trade and other receivables
(note 17) - 13,220 - 13,220
------------------------------ ----------- ---------- ---------- ----------
Liabilities for which fair
values are disclosed
------------------------------ ----------- ---------- ---------- ----------
Non-current
------------------------------ ----------- ---------- ---------- ----------
Deferred tax - (526) - (526)
------------------------------ ----------- ---------- ---------- ----------
Current
------------------------------ ----------- ---------- ---------- ----------
Trade and other payables
(note 18) - (1,663) - (1,663)
------------------------------ ----------- ---------- ---------- ----------
Assets and liabilities measured at fair
value
----------------------------------------------
Level 1 Level 2 Level 3 Total
---------- ----------- --------- ----------
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
------------------------------ ---------- ----------- --------- ----------
Investments held at fair
value (note 15) - 3,941 3,873 7,814
------------------------------ ---------- ----------- --------- ----------
Current
------------------------------ ---------- ----------- --------- ----------
Investments held at fair
value (note 15) 4,861 21,252 - 26,113
------------------------------ ---------- ----------- --------- ----------
Assets for which fair values
are disclosed
------------------------------ ---------- ----------- --------- ----------
Non-current
------------------------------ ---------- ----------- --------- ----------
Trade and other receivables
(note 17) - 5,280 - 5,280
------------------------------ ---------- ----------- --------- ----------
Current
------------------------------ ---------- ----------- --------- ----------
Trade and other receivables
(note 17) - 13,461 - 13,461
------------------------------ ---------- ----------- --------- ----------
Liabilities for which fair
values are disclosed
------------------------------ ---------- ----------- --------- ----------
Current
------------------------------ ---------- ----------- --------- ----------
Trade and other payables
(note 18) - (6,789) - (6,789)
------------------------------ ---------- ----------- --------- ----------
Bank borrowings (note 19) - (60,618) - (60,618)
------------------------------ ---------- ----------- --------- ----------
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 2018, can be summarised as follows:
Investment Investments Total
property held at fair
value
--------------------------------------
GBP'000 GBP'000 GBP'000
-------------------------------------- ----------- ------------- ---------
At 1 April 2017 112,442 3,873 116,315
-------------------------------------- ----------- ------------- ---------
Additions 11,262 15,000 26,262
-------------------------------------- ----------- ------------- ---------
Subsequent capital expenditure after
acquisition 6,024 - 6,024
-------------------------------------- ----------- ------------- ---------
Redemptions - (13,121) (13,121)
-------------------------------------- ----------- ------------- ---------
Movement in rent incentives/initial
costs (53) - (53)
-------------------------------------- ----------- ------------- ---------
Fair value adjustment 4,994 339 5,333
-------------------------------------- ----------- ------------- ---------
Transfer of 70% equity interest in
H2O (note 2) (107,449) - (107,449)
-------------------------------------- ----------- ------------- ---------
Effect of foreign exchange 5,801 - 5,801
-------------------------------------- ----------- ------------- ---------
At 31 March 2018 33,021 6,091 39,112
-------------------------------------- ----------- ------------- ---------
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 2018.
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 Weighted
investment amount / (square meters) average/Value
property fair value
'000
------------ -------------- ---------------- --------------------- ------------------------------------------------ --------------
Gross Estimated Rental Value ('ERV') per sqm p.
Europe GBP100,256 51,825 Discounted cash flow a. EUR213.8
(EUR117,500)
------------ -------------- ---------------- --------------------- ------------------------------------------------ --------------
Discount rate 12.50%
31 March 2018 - Unity and Armouries, Birmingham (UK)
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount / Area Valuation Significant Range/Value
investment fair value (square feet) technique unobservable
property '000 inputs
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Income
capitalisation
90,000 net and residual
developable development
Europe GBP4,740 square feet appraisal Investment yield 4.3%
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Market rent GBP925/GBP1,200
per month
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Development costs GBP206
per square foot
------------------ ------------------- ------------------ ------------------ ------------------ -----------------
Developer's profits 19%
----------------------------------------------------------------------------------------------- -----------------
31 March 2017 - Unity and Armouries, Birmingham (UK)
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount / Area Valuation Significant Range/Value
investment fair value (square feet) 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 2018 - Monk Bridge, Leeds (UK)
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount / Area Valuation Significant Value
investment fair value (square feet) technique unobservable
property '000 inputs
------------------- ------------------ ------------------- ------------------ ------------------- ---------------
Europe GBP9,000 Planning consent Comparable Comparable Not applicable
for 398,200 square residential land evidence
feet transactions
analysis
------------------- ------------------ ------------------- ------------------ ------------------- ---------------
31 March 2017 - Monk Bridge, Leeds (UK)
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount / Area Valuation Significant Value
investment fair value (square feet) technique unobservable
property '000 inputs
------------------- ------------------ ------------------- ------------------ ------------------- ---------------
Europe GBP5,500 Planning consent Comparable Comparable Not applicable
for 140,000 square residential land evidence
feet transactions
analysis
31 March 2018 - Data centre, Frankfurt (Germany)*
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Class of Carrying Area Valuation technique Significant Value
investment amount / (square feet) unobservable
property fair value inputs
'000
------------ -------------- ------------------------------------------- ---------------------------------------------------------- ------------------ ------------
Europe EUR22,000 Planning consent for 40,338 square meters Income capitalisation and residual development appraisal Investment yield 6.0%
(GBP19,281)
------------------------------------------------------------------------------------------------------------------------------------------- --------- ------------
Market rent EUR10/EUR17
per square
meter
per month
------------ -------------- ------------------------------------------- ---------------------------------------------------------- ------------------ ------------
Development costs EUR1,480
per square
meter
------------ -------------- ------------------------------------------- ---------------------------------------------------------- ------------------ ------------
Developer's profits 30/40%
*As at 31 March 2017, the data centre was valued by the
Directors (note 13).
Directors and Company information
Directors
David Jeffreys (Chairman)
Jeff Chowdhry
Mel Torode
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
Estera Administration (Guernsey) Limited (formerly Morgan Sharpe
Administration Limited)
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
Savills Aguirre Newman
José Abascal, 45
Madrid, 28003
Spain
Independent valuers in Germany
Cushman & Wakefield
Rathenauplatz, 1
Frankfurt, 60313
Germany
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
LSE.
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 29 June 2018 Quarter ending 28 June 2018 29 June 2018 20 July 2018
published 31 March 2018
------------------ ------------------- ------------------- ----------------- ----------------- ------------------
Annual General 10 August 2018
Meeting
------------------ ------------------- ------------------- ----------------- ----------------- ------------------
Trading update 17 August 2018 Quarter ending 30 August 2018 31 August 2018 21 September 2018
statement (Qtr 1) 30 June 2018
------------------ ------------------- ------------------- ----------------- ----------------- ------------------
Half year report 16 November 2018 Quarter ending 29 November 2018 30 November 2018 14 December 2018
30 September 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SFSFULFASEIM
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