REG - Alpha Real Tst Ltd - Half Year Report
25/11/2022 07:00
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RNS Number : 5602H Alpha Real Trust Limited 25 November 2022
LEI: 213800BMY95CP6CYXK69
25 November 2022
ALPHA REAL TRUST LIMITED ("ART" OR THE "COMPANY" OR "THE GROUP")
ART ANNOUNCES ITS HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
· NAV per ordinary share 219.6p as at 30 September 2022 (31 March
2022: 216.0p).
· Basic earnings for the six months ended 30 September 2022 of 0.4p
per ordinary share (six months ended 30 September 2021: 2.5p per ordinary
share).
· Adjusted earnings for the six months ended 30 September 2022 of
3.3p per ordinary share (six months ended 30 September 2021: 3.0p per ordinary
share)*.
· Declaration of a quarterly dividend of 1.0p per ordinary share
expected to be paid on 6 January 2023.
· Robust financial position: ART continues to adopt a cautious
approach to new investment and has conserved cash as a result of the
uncertainty that characterised the past year; this has placed the Company in a
robust financial footing making it well positioned to take advantage of new
investment opportunities.
· Investment targets: the Company is currently focussed on its loan
portfolio and extending its wider investment strategy to target investments
offering inflation protection via index linked income adjustments and
investments that have potential for capital gains.
· Long leased investments: during the period the Company acquired
for £4.3 million a UK hotel leased to Travelodge Hotels Limited, the United
Kingdom's largest independent hotel brand, with a 20-year unexpired lease
term. A similar investment was acquired by ART in June 2022 for £3.1 million.
The current rents reflect a net initial yield in excess of 6% p.a. with the
investments benefitting from inflation linked rent adjustments.
· Diversified portfolio of secured senior and secured mezzanine
loan investments: as at 30 September 2022, the size of ART's drawn secured
loan portfolio was £48.1 million, representing 38.5% of the investment
portfolio.
· The senior portfolio has an average Loan to Value ('LTV')** of
64.4% based on loan commitments (with mezzanine loans having an LTV range of
between 48.8% and 78.6% whilst the highest approved senior loan LTV is 72.9%).
· Loan commitments: including existing loans at the balance sheet
date and loans committed post period end, ART's current total committed but
undrawn loan commitments amount to £17.4 million
* The basis of the adjusted earnings per share is provided in note 7
** See below for more details
William Simpson, Chairman of Alpha Real Trust, commented:
"ART's investment portfolio benefits from diversification across geographies,
sectors and asset types. As inflationary pressures increasingly dominate the
economic backdrop in which the Company operates, ART remains on a robust
financial footing and is well placed to capitalise on new investment
opportunities. ART remains committed to growing its diversified investment
portfolio. In recent years the Company focused on reducing exposure to direct
development risk and recycling capital into cashflow driven investments. The
Company is currently focussed on its loan portfolio and also on its wider
investment strategy which targets investments offering inflation protection
via index linked income adjustments and investments that have potential for
capital gains."
The Investment Manager of Alpha Real Trust is Alpha Real Capital LLP.
For further information please contact:
Alpha Real Trust Limited
William Simpson, Chairman, Alpha Real Trust +44 (0) 1481 742 742
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
Atholl Tweedie +44 (0) 20 7886 2500
Notes to editors:
About Alpha Real Trust
Alpha Real Trust Limited 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.
Further information on the Company can be found on the Company's website:
www.alpharealtrustlimited.com (http://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 (http://www.alpharealcapital.com) .
Company's summary and objective
Strategy
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 asset-backed lending, debt investments and high
return property investments in Western Europe that are capable of delivering
strong risk adjusted cash flows. The portfolio mix at 30 September 2022,
excluding sundry assets/liabilities, was as follows:
30 September 2022 31 March 2022
High return debt: 38.5% 27.3%
High return equity in property investments: 27.5% 18.8%
Other investments: 4.4% 13.1%
Cash: 29.6% 40.8%
The Company is currently focussed on its loan portfolio and extending its
wider investment strategy to target investments offering inflation protection
via index linked income adjustments and investments that have potential for
capital gains.
Dividends
The current intention of the Directors is to pay a dividend and offer a scrip
dividend alternative quarterly to all shareholders.
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 attractive risk adjusted returns.
The Company and the Investment Manager have extended the current management
agreement for a further term of five years from the expiry of the current term
on 21 December 2022. The Company believes this will provide the Company's
shareholders with greater certainty going forward on the continued access to
the management resources, and broader group support, of the Investment Manager
which will assist the Company to continue to achieve its investment
objectives. The annual management fee and performance fee arrangements remain
unchanged.
Control of the Company rests with the non-executive Guernsey based Board of
Directors.
Financial highlights
6 months ended 12 months ended 6 months ended
30 September 31 March 30 September 2021
2022 2022
Net asset value (£'000) 125,025 133,256 127,585
Net asset value per ordinary share 219.6 216.0 208.5p
Earnings per ordinary share (basic and diluted) (adjusted)* 3.3p 4.0p 3.0p
Earnings per ordinary share (basic and diluted) 0.4p 13.3p 2.5p
Dividend per ordinary share (paid during the period) 2.0p 4.0p 2.0p
* 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 7 to the accounts.
Chairman's statement
I am pleased to present the Company's half year report and accounts for the
six months ended 30 September 2022.
ART's investment portfolio benefits from diversification across geographies,
sectors and asset types. As inflationary pressures increasingly dominate the
economic backdrop in which the Company operates, ART remains on a robust
financial footing and is well placed to capitalise on new investment
opportunities.
During the quarter there has been elevated volatility in the UK gilt market,
with yields spiking in response to UK political events and subsequently
normalising with support from Bank of England intervention. UK fiscal
discipline remains under increased scrutiny from international financial
markets. Combined with higher inflation and supply constraints evident across
the UK and in Europe and substantial increases in borrowing costs, the impact
of these events on real asset prices is yet to be determined.
The uncertain market will offer opportunities in the medium term for ART to
opportunistically grow its diversified investment portfolio. In recent years
the Company focused on recycling capital into cashflow driven investments. The
Company is currently focussed on its loan portfolio and extending its wider
investment strategy to target investments offering inflation protection via
index linked income adjustments and investments that have potential for
capital gains.
ART continues to adhere to its disciplined strategy and investment
underwriting principles which seek to manage risk through a combination of
operational controls, diversification and an analysis of the underlying asset
security.
Investment in long leased assets
In August 2022 ART acquired a hotel in Wadebridge, Cornwall (UK) for £4.3
million (including acquisition costs). The property is leased to Travelodge
Hotels Limited, the UK's largest independent hotel brand with more than 590
hotels. The hotel has a 20 year unexpired lease term.
Under the lease, the tenant is responsible for building maintenance and the
passing rent of £0.3 million p.a. has inflation linked adjustments,
reflecting a net initial yield in excess of 6.0% p.a.
The Wadebridge hotel is a 55-bedroom property that is held freehold and is
situated on the outskirts of Wadebridge in the county of Cornwall. The hotel
is in a well-connected location in close proximity to the A39. This follows
from a June 2022 acquisition of a hotel in Lowestoft (UK), leased to
Travelodge Hotels Limited, for £3.1 million (including acquisition costs)
which also has a long term lease contract. The Lowestoft hotel is a 47-bedroom
property that is held freehold and occupies a site of 1.08 acres in Lowestoft,
a well-established and well connected area located in close proximity to the
A47 which runs to Norwich. ART has acquired both assets for cash.
These acquisitions offer the Company the potential to benefit from a long
term, predictable, inflation linked income stream whilst contributing
additional diversification to ART's portfolio. In addition, the investments
offer the potential for associated capital growth.
Diversified secured lending investment
The Company has a diversified portfolio of secured senior and mezzanine loan
investments. The loans are typically secured on predominately residential real
estate investment and development assets with attractive risk adjusted income
returns. As at 30 September 2022, ART had committed £67.3 million across
nineteen loans, of which £48.1 million (excluding a £3.2 million provision
for Expected Credit Loss discussed below) was drawn.
The Company's debt portfolio comprises predominately floating rate loans.
Borrowing rates are typically set at a margin over Bank of England ('BoE')
Base Rate and benefit from rising interest rates as outstanding loans deliver
increasing returns as loan rates track increases in the BoE Base Rate.
During the six months to 30 September 2022, four loans for £9.0 million
(including accrued interest and exit fees) were fully repaid and a further
£2.4 million (including accrued interest) was received as part repayments.
Post period end, one loan of £1.1 million was drawn, additional drawdowns of
£1.9 million were made on existing loans and part loan repayments were
received amounting to £0.6 million (including accrued interest).
As at 30 September 2022, 68.8% of the Company's loan investments were senior
loans and 31.2% were mezzanine loans. The senior portfolio has an average LTV
of 64.4% based on loan commitments (with mezzanine loans having an LTV range
of between 48.8% and 78.6% whilst the highest approved senior loan LTV is
72.9%). Portfolio loans are underwritten against value for investment loans or
gross development value for development loans as relevant and collectively
referred to as LTV in this report.
The largest individual loan in the portfolio as at 30 September 2022 is a
senior loan of £11.1 million which represents 16.5% of committed loan capital
and 8.9% of the Company's NAV.
Two loans in the portfolio have entered receivership: ART is closely working
with stakeholders to maximise capital recovery. The Company has considered the
security on these loans (which are a combination of a first charge and a
second charge over the respective assets and personal guarantees) and have
calculated an Expected Credit Loss ('ECL') on these two loans of approximately
£2.3 million; the Group have also provided for an ECL on the remainder of the
loans' portfolio for an additional £0.9 million: in total, the Group have
provided for an ECL of £3.2 million in its consolidated accounts.
Aside from the two cases of receivership, illustrated above, the Company's
loan portfolio has proved to be resilient despite the recent extended period
of heightened macroeconomic uncertainty and risk. In terms of debt servicing,
allowing for some temporary agreed extensions, interest and debt repayments
have been received in accordance with the loan agreements. Where it is
considered appropriate, on a case-by-case basis, underlying loan terms may be
extended or varied with a view to maximising ART's risk adjusted returns and
collateral security position. The Company's loan portfolio and new loan
targets continue to be closely reviewed to consider the potential impact on
construction timelines, building cost inflation and sales periods.
The underlying assets in the loan portfolio as at 30 September 2022 had
geographic diversification with a London and Southeast focus. The South of
England (including London) accounted for 49%, of which London accounted for
21%, of the committed capital within the loan investment portfolio.
H2O, Madrid
ART has a 30% stake in a joint venture with CBRE Investment Management in the
H2O shopping centre in Madrid.
H2O occupancy, by area, as at 30 September 2022 was 90.4%. The centre trading
levels remain below the pre-covid highs, however a recovery is evident. In the
calendar year to 30 September 2022, visitor numbers were approximately 12%
below those of the same period in 2019 (pre-Covid) and 13% above the same
period in 2021.
The residual impact of Covid-19 on tenant activities continues to affect the
earnings of H2O compared to pre-Covid levels.
Other investments
Investment in listed and authorised funds
The Company invested a total of £6.0 million (value as at 30 September 2022:
£4.8 million) across three investments that offered potential to generate
attractive risk adjusted returns. Current market volatility and rise in
interest rates has impacted the capital value of these investments. The
investment yield offers a potentially accretive return to holding cash while
the Company deploys capital in opportunities in line with its investment
strategy. These funds invest in ungeared long-dated leased real estate, debt
and infrastructure.
During the period the Company fully divested £5.3 million from a further
investment, delivering a 8.1% capital return over the holding period.
Results and dividends
Results
Basic earnings for the six months ended 30 September 2022 are £0.2 million
(0.4 pence per ordinary share, see note 7 of the financial statements).
Adjusted earnings, which the Board believe is a more appropriate assessment of
the operational income accruing to the Group's activities, for the six months
ended 30 September 2022 are £1.9 million (3.3 pence per ordinary share, see
note 7 of the financial statements). This compares with adjusted earnings per
ordinary share of 3.0 pence in the same period last year. Earnings have
increased primarily due to increased rental income following the UK hotels'
acquisitions in Lowestoft and Wadebridge.
The net asset value per ordinary share at 30 September 2022 is 219.6 pence per
share (31 March 2022: 216.0 pence per ordinary share) (see note 8 of the
financial statements). The positive movement over the period reflects the
impact of the share buyback (following the result of the tender offer in July
2022) combined with earnings (less dividends) and supported further by
positive foreign exchange movements.
Dividends
The Board announces a dividend of 1.0 pence per ordinary share which is
expected to be paid on 6 January 2023 (ex-dividend date 8 December 2022 and
record date 9 December 2022).
The dividends paid and declared in respect of the twelve month period ended 30
September 2022 totalled 4.0 pence per ordinary share representing an annual
dividend yield of 2.6% p.a. by reference to the average closing share price
over the twelve months to 30 September 2022.
During the period, £249,783 dividends were paid in cash and £987,126 settled
by scrip issue of shares.
Scrip dividend alternative
Shareholders of the Company have the option to receive shares in the Company
in lieu of a cash dividend, at the absolute discretion of the Directors, from
time to time.
The number of ordinary shares that an Ordinary Shareholder will receive under
the Scrip Dividend Alternative will be calculated using the average of the
closing middle market quotations of an ordinary share for five consecutive
dealing days after the day on which the ordinary shares are first quoted "ex"
the relevant dividend.
The Board has elected to offer the scrip dividend alternative to Shareholders
for the dividend for the quarter ended 30 September 2022. Shareholders who
returned the Scrip Mandate Form and elected to receive the scrip dividend
alternative will receive shares in lieu of the next dividend. Shareholders who
have not previously elected to receive scrip may complete a Scrip Mandate Form
(this can be obtained from the registrar: contact Computershare (details
below)), which must be returned by 20 December 2022 to benefit from the scrip
dividend alternative for the next dividend.
Financing
As at 30 September 2022 the Group has one direct bank loan of €9.5 million
(£8.4 million), with no financial covenant tests, to a subsidiary used to
finance the acquisition of the Hamburg property. The loan is secured over the
Hamburg property and has no recourse to the other assets of the Group.
Further details of individual asset financing can be found under the
individual investment review sections later in this report.
Share buybacks
Under the general authority, approved by Shareholders on 6 August 2021, the
Company announced a tender offer on 29 June 2022 for up to 6,428,353 ordinary
shares at a price (before expenses) of 175.0 pence per share. In July 2022, a
total of 5,419,016 ordinary shares were validly tendered under the tender
offer. All purchased ordinary shares are held in treasury.
During the period, the Company purchased 46,500 shares in the market at an
average price of £1.51 per share: these shares are held in treasury.
Post period end, the Company made no share buybacks
As at the date of this announcement, the ordinary share capital of the Company
is 65,016,962 (including 7,717,581 ordinary shares held in treasury) and the
total voting rights in the Company is 57,299,381.
Foreign currency
The Company monitors foreign exchange exposures and considers hedging where
appropriate. Foreign currency balances have been translated at the period end
rates of £1:€1.128 and £1:INR89,923, as appropriate.
Russian invasion of Ukraine, Covid-19 pandemic and going concern
The Company has assessed potential impacts on the ART's portfolio arising from
the Russian invasion of Ukraine. ART has no investments in Ukraine or Russia,
nor exposure to any companies that have investments in, or links to, Ukraine
or Russia. ART has no arrangements with any person currently on (or
potentially on) any sanctions list, or links to Ukraine or Russia. The
immediate economic impact of the invasion has been a sharp increase in the
price of oil and other energy based commodities. ART has no direct exposure to
these commodities. None of the borrowers or other counterparties in ART's loan
book have links to Ukraine or Russia. It is too early to measure any impact or
increased risk to the underlying values supporting ART's loan portfolio, but
we do not expect any material change to these values on account of the
conflict. The Board will continue to monitor the situation regularly, and will
consider the wider impact on the economy (such as potential further increases
in inflation and interest rates) and if there would be any potential material
impact on ART's portfolio.
The Company has not been isolated from the ubiquitous impact of the Covid-19
pandemic on global economies. The Company's long term strategy remains
resilient. The Company adopted a prudent short term strategy to move to cash
conservation and a cautious approach to commitments to new investments during
the financial periods affected. Alert to the impact of potentially reducing
income returns, this approach supported a robust balance sheet position during
these uncertain times. The Company continues to adopt this cautious approach
to new investment and is conserving cash as a result of the uncertainty that
has characterised the past few months; this ensures the Company retains a
robust financial footing, making it well positioned to take advantage of new
investment opportunities. As noted above, the Company held approximately 29.6%
of its assets (excluding sundry net assets) in cash as at 30 September 2022
with limited current contractual capital commitments. While there is external
financing in the Group's investment interests, this is limited and
non-recourse to the Company; the borrowings in these special purpose vehicles
are compliant with their banking covenants. While the Board's dividend policy
intention is unchanged the Company continues to actively monitor its
investments and the impact of these unusual economic circumstances on earnings
and dividends. See the investment review section for more details on the
pandemic's impact on relevant investments.
Bearing in mind the nature of the Group's business and assets, after making
enquiries, with the support of revenue forecasts for the next twelve months
and considering the above, 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.
Strategy and outlook
ART's investment portfolio benefits from diversification across geographies,
sectors and asset types. As inflationary pressures increasingly dominate the
economic backdrop in which the Company operates, ART remains on a robust
financial footing and is well placed to capitalise on new investment
opportunities. ART remains committed to growing its diversified investment
portfolio. In recent years the Company focused on reducing exposure to direct
development risk and recycling capital into cashflow driven investments. The
Company is currently focussed on its loan portfolio and also on its wider
investment strategy which targets investments offering inflation protection
via index linked income adjustments and investments that have potential for
capital gains.
William Simpson
Chairman
24 November 2022
Investment review
Portfolio overview as at 30 September 2022
Investment name
Investment type Carrying value Income return p.a. Investment location Property type / underlying security Investment notes % of portfolio(1) Notes*
High return debt (38.5%)
Secured senior finance
Senior secured loans (excluding committed but undrawn facilities of £19.2 £33.1m (2) 5.8% (3) UK Diversified loan portfolio focussed on real estate investments and Senior secured debt 26.5% 13
million) developments
Secured mezzanine finance
Second charge mezzanine loans £15.0m (2) 15.7% (3) UK Diversified loan portfolio focussed on real estate investments and Secured mezzanine debt and subordinated debt 12.0% 13
developments
High return equity in property investments (27.5%)
H2O shopping centre
Indirect property £18.5m 7.0% (4) Spain Dominant Madrid shopping centre and separate development site 30% shareholding; moderately geared bank finance facility 14.8% 12
(€20.9m)
Long leased industrial facility, Hamburg
Direct property £8.9m (5) 6.2% (4) Germany Long leased industrial complex in major European industrial and logistics hub Long term moderately geared bank finance facility 7.1% 9
with RPI linked rent
(€10.0m)
Long leased hotel, Wadebridge
Direct property £4.0m 5.4% (6) UK Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing 3.2% 9
Long leased hotel, Lowestoft
Direct property £3.0m 5.3% (6) UK Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing 2.4% 9
Other investments (4.4%)
Listed and authorised fund investments
£4.8m UK & Channel Islands Commercial real estate, infrastructure and debt funds Short to medium term investment in listed and authorised funds
5.9%(4) 3.9% 11
Affordable housing
Residential Investment £0.6m n/a UK High-yield residential UK portfolio 100% shareholding; no external gearing 0.5% 9
Cash and short-term investments (29.6%)
Cash (7) £37.0m 0.3% (8) UK 'On call' and current accounts 29.6%
* See notes to the financial statements
(1) Percentage share shown based on NAV excluding the company's sundry
assets/liabilities
(2) Including accrued interest/coupon at the balance sheet date
(3) The income returns for high return debt are the annualised actual finance
income return over the period shown as a percentage of the average committed
capital over the period
(4) Yield on equity over 12 months to 30 September 2022
(5) Property value including sundry assets/liabilities, net of associated debt
(6) Annualised monthly return
(7) Group cash of £37.9m excluding cash held with the Hamburg holding company
of £0.9m
(8) Weighted average interest earned on call accounts
High return debt
Overview
ART has a portfolio of secured loan investments which contribute a diversified
return to the Company's earnings position. The portfolio comprises high return
senior (first charge) loans and mezzanine (second charge) loans secured on
real estate investment assets and developments. ART loan underwriting is
supported by the Investment Manager's asset-backed lending experience,
developer and investor relationships and knowledge of the underlying assets
and sectors, in addition to the Group's partnerships with specialist debt
providers.
Secured Finance
Investment Investment type Carrying value Income return p.a. Property type / underlying security Investment notes
Secured senior finance First charge secured loans £33.1m * 5.8%** Diversified loan portfolio focussed on real estate investments and Secured debt
developments
Secured mezzanine finance Second charge secured loans £15.0m * 15.7%** Diversified loan portfolio focussed on real estate investments and Second charge secured debt and secured subordinated debt
developments
* Including accrued interest/coupon at the balance sheet date
** The income returns for high return debt are the annualised actual
finance income return over the period shown as a percentage of the average
committed capital over the period
ART's portfolio of secured senior and mezzanine loan investments have
increased in scale and diversity over the past year. These loans are typically
secured on real estate investment and development assets with attractive
risk-adjusted income returns from either current or capitalised interest or
coupons.
As at 30 September 2022, ART had invested a total amount of £48.1 million
across nineteen loans. Over the past twelve months the loan portfolio has
increased by 37.0%.
During the six months to 30 September 2022, four loans for £9.0 million
(including accrued interest and exit fees) were fully repaid and a further
£2.4 million (including accrued interest) was received as part repayments.
Post period end, one loan of £1.1 million was drawn, additional drawdowns of
£1.9 million were made on existing loans and part loan repayments were
received amounting to £0.6 million (including accrued interest).
Each loan will typically have a term of up to two years, a maximum 75% loan to
gross development value ratio and be targeted to generate attractive
risk-adjusted income returns. As at 30 September 2022, the senior portfolio
has an average LTV of 64.4% based on loan commitments (with mezzanine loans
having an LTV range of between 48.8% and 78.6% whilst the highest approved
senior loan LTV is 72.9%).
Two loans in the portfolio have entered receivership: ART is closely working
with stakeholders to maximise capital recovery. The Company has considered the
security on these loans (which are a combination of a first charge and a
second charge over the respective assets and personal guarantees) and have
calculated an ECL on these two loans of approximately £2.3 million; the Group
have also provided for an ECL on the remainder of the loans' portfolio for an
additional £0.9 million: in total, the Group have provided for an ECL of
£3.2 million in its consolidated accounts.
Current loan investment examples:
Location Total commitment Loan type Loan term Current LTV Underlying security
Fleet, Hampshire £1,704,000 Senior Development Loan 15 64.18% Development of nine new build apartments
St. Lawrence, Jersey £11,731,000 Senior Development Loan 24 63.00% Development of eleven new build apartments
Temple Fortune, London £8,600,000 Senior Development Loan 19 63.00% Development of eight new build houses
Throughout the UK £12,000,000 Mezzanine Investment Loan 36 61.31% Refinance of a portfolio of six care homes
High return 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 income, selective deployment of
capital expenditure and the ability to undertake strategic sales when the
achievable price is accretive to returns.
H2O Shopping Centre, Madrid
Investment Investment type Carrying value Income return p.a. Property type / underlying security Investment notes
H2O Indirect property £18.5m 7.0%* High-yield, dominant Madrid shopping centre and separate development site 30% shareholding; 6-year term bank finance facility
(€20.9m)
* Yield on equity over twelve months to 30 September 2022
ART has a 30% stake in joint venture with CBRE Investment Management in the
H2O shopping centre in Madrid. H2O was opened in 2007 and built to a high
standard providing shopping, restaurants and leisure around a central theme of
landscaped gardens and an artificial lake. H2O has a gross lettable area of
approximately 52,425 square metres comprising 123 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,
JD Sports, Cortefiel, H&M and C&A.
It continues to be a challenging period for shopping centre assets. Whilst
legislative restrictions on retailer trading hours and store capacities and
indoor mask requirements have largely been relaxed to allow for normalised
trading operations, the lingering social and economic impacts of Covid-19
continue to impact performance. This has resulted in supressed visitor numbers
and tenant sales performance being recorded for most shopping centre assets in
Spain and H2O is no exception.
H2O occupancy, by area, as at 30 September 2022 was 90.4%. The centre trading
levels remain below the pre-covid highs, however a recovery is evident. In the
calendar year to 30 September 2022, visitor numbers were approximately 12%
below those of the same period in 2019 (pre-Covid) and 13% above the same
period in 2021.
The lingering economic effect of Covid-19 on the retail sector is expected to
continue to impact on the earnings of H2O for the financial year.
The asset management highlights are as follows:
· Valuation: 30 September 2022: €121.8 million (£108.0 million)
(31 March 2022: €121.0 million (£102.1 million)).
· Centre occupancy: 90.4% by area as at 30 September 2022.
· Weighted average lease length to next break of 2.4 years and 7.4
years to expiry as at 30 September 2022.
Long leased industrial facility, Hamburg
Investment Investment type Carrying value Income return p.a. Property type / Investment notes
underlying security
Industrial facility, Werner-Siemens-Straße Hamburg, Germany Direct property £8.9m* 6.2%** High return industrial facility in Hamburg Germany Long leased investment with moderately geared, long term, bank finance
facility
(€10.0m)
* Property value including sundry assets/liabilities and cash, net of
associated debt
** Yield on equity over twelve months to 30 September 2022
ART has an investment of €10.0 million (£8.9 million) in an industrial
facility leased to a leading international group.
The property is held freehold and occupies a site of 11.8 acres in Billbrook,
a well-established and well-connected industrial area located approximately 8
kilometres south-east of Hamburg centre. Hamburg is one of the main industrial
and logistics markets in Germany.
The property is leased to Veolia Umweltservice Nord GmbH, part of the Veolia
group, an international industrial specialist in water, waste and energy
management, with a 23-year unexpired lease term. Under the operating lease,
the tenant is responsible for building maintenance and the rent has periodic
inflation linked adjustments.
The Hamburg asset is funded by way of a €9.5 million (£8.4 million)
non-recourse, fixed rate, bank debt facility which matures in 31 July 2028.
The facility carries no financial covenant tests.
This investment offers the potential to benefit from a long term secure and
predictable inflation-linked income stream which is forecast to generate
stable high single digit income returns. In addition, the investment offers
the potential for associated capital growth from an industrial location in a
major German logistics and infrastructure hub.
Long leased hotel, Wadebridge, Cornwall
Investment Investment type Carrying value Income return p.a. Property type / Investment notes
underlying security
Hotel, Wadebridge Cornwall, UK Direct property £4.0m 5.4%* Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing
* Annualised monthly return
ART has an investment of £4.0 million (property valuation as at 30 September
2022) in a 55-bedroom property, which is held freehold and is situated on the
outskirts of Wadebridge in the county of Cornwall. The hotel is in a
well-connected location in close proximity to the A39.
The property is leased to Travelodge Hotels Limited on a 20 year unexpired
lease term. Under the lease, the tenant is responsible for building
maintenance
The passing rent of £0.3 million p.a. has inflation linked adjustments.
Long leased hotel, Lowestoft
Investment Investment type Carrying value Income return p.a. Property type / Investment notes
underlying security
Hotel, Lowestoft, UK Direct property £3.0m 5.3%* Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing
* Annualised monthly return
ART has an investment of £3.0 million (property valuation as at 30 September
2022) in a 47-bedroom property, which is held freehold and occupies a site of
1.08 acres in Lowestoft, a well established and well connected area located in
close proximity to the A47 which runs to Norwich.
The property is leased to Travelodge Hotels Limited on an 18 year unexpired
lease term. Under the lease, the tenant is responsible for building
maintenance
The passing rent of £0.2 million p.a. has inflation linked adjustments.
Other Investments
Listed and authorised fund investments
Investment Investment type Carrying value Income return p.a. * Property type / underlying security Investment notes
Sequoia Economic Infrastructure Income Fund Limited Listed equity £2.3m 5.5% Listed investment fund FTSE 250 infrastructure debt fund
GCP Infrastructure Investments Limited Listed equity £1.3m 6.7% Listed investment fund FTSE 250 infrastructure fund
GCP Asset Backed Income Fund Limited Listed equity £1.2m 6.1% Listed investment fund Diversified asset back debt fund
Total £4.8m 5.9%
*Yield on equity based on 12 months to 30 September 2022
The Company invested a total of £6.0 million (value as at 30 September 2022:
£4.8 million) across three investments that offered potential to generate
attractive risk adjusted returns. Current market volatility and rise in
interest rates has impacted the capital value of these investments. The
investment yield offers a potentially accretive return to holding cash while
the Company deploys capital in opportunities in line with its investment
strategy. These funds invest in ungeared long-dated leased real estate, debt
and infrastructure.
During the period the Company fully divested £5.3 million from the investment
in the Commercial Long Income PAIF, delivering a 8.1% capital return over the
holding period.
Affordable Housing
The Company's wholly owned investment, RealHousingCo Limited ("RHC") has
obtained successful registration with the Regulator of Social Housing as a For
Profit Registered Provider of affordable homes. This status provides RHC with
a platform to undertake future investment in the affordable housing sector
which offers scope to generate long term, inflation-linked returns while
addressing the chronic undersupply of affordable homes in the UK.
RHC owns a residential property located in Liverpool (UK), which is comprised
of seven units, all of which are occupied by private individuals, each with a
six month term contract. The fair value of the Liverpool property as at 30
September 2022 was £0.6 million.
Cash balances
Investment Investment type Carrying value Income return p.a. Property type / underlying security Investment notes
Cash balance * Cash £37.0m 0.3% ** 'On call' and current accounts n/a
* Group cash of £37.9m excluding cash held with the Hamburg holding
company of £0.9m
** weighted average interest earned on call accounts
As at 30 September 2022, the Group had cash balances of £37.0 million,
excluding cash held with the Hamburg holding company of £0.9 million.
The Group's cash is held with established banks with strong credit ratings.
Summary
ART has a diversified portfolio focussed on asset-backed lending and property
investments in Western Europe. The Company is currently focussed on its loan
portfolio and extending its wider investment strategy to target investments
offering inflation protection via index linked income adjustments and
investments that have potential for capital gains
Brad Bauman and Gordon Smith
For and on behalf of the Investment Manager
24 November 2022
Principal risks and uncertainties
The principal risks and uncertainties facing the Group can be outlined as
follows:
· Rental income, fair value of investment properties (directly or
indirectly held) and fair value of the Group's equity investments are
affected, together with other factors, by general economic conditions and/or
by the political and economic climate of the jurisdictions in which the
Group's investments and investment properties are located.
· The Group's loan investments are exposed to credit risk which
arise by the potential failure of the Group's counter parties to discharge
their obligations when falling due; this could reduce the amount of future
cash inflows from financial assets on hand at the balance sheet date; the
Group receives regular updates from the relevant investment manager as to the
performance of the underlying investments and assesses their credit risk as a
result.
· The Russian invasion of Ukraine is also considered to be a
significant risk and uncertainty for the Group: this is discussed on the first
paragraph of the above going concern section.
The Board believes that the above principal risks and uncertainties, which are
discussed more extensively in the annual report for the year ended 31 March
2022, would be equally applicable to the remaining six month period of the
current financial year.
Statement of Directors' Responsibilities
The Directors confirm that to the best of their knowledge:
· the condensed consolidated financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted
by the European Union; and
· the half year report includes a fair review of the information
required by DTR 4.2.7R, being an indication of the important events that have
occurred during the first six months of the financial year, and their impact
on the half year report, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
· the half year report includes a fair review of the information
required by DTR 4.2.8R, being the related parties transactions that have taken
place in the first six months of the current financial year and that have
materially affected the financial position or the performance of the Group
during that period; and any changes in the related parties transactions
described in the last annual report that could have a material effect on the
financial position or performance of the enterprise in the first six months of
the current financial year.
The Directors of ART are listed below.
By order of the Board
William Simpson
Chairman
24 November 2022
Independent review report
To Alpha Real Trust Limited
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated set of financial statements in the
half-yearly financial report for the six months ended 30 September 2022 is not
prepared, in all material respects, in accordance with International
Accounting Standard 34, as adopted by the European Union, and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2022 which comprises the condensed consolidated statement of
comprehensive income, condensed consolidated balance sheet, condensed
consolidated cash flow statement, condensed consolidated statement of changes
in equity and related notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim Financial
Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the 'Basis for conclusion' section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410, however future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the 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 company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our 'Conclusions
relating to going concern', are based on procedures that are less extensive
than audit procedures, as described in the 'Basis for conclusion' paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO Limited
Chartered Accountants
Place du Pré
Rue du Pré
St Peter Port
Guernsey
24 November 2022
Condensed consolidated statement of comprehensive income
For the six months ended For the six months ended
30 September 2022 30 September 2021
(unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income
Revenue 3 2,977 - 2,977 2,829 - 2,829
Change in the revaluation of investment properties 9 - 143 143 - 343 343
Gains/(losses) on financial assets and liabilities held at fair value through 4 272 (1,406) (1,134) 207 (361) (154)
profit or loss
Total income/(expense) 3,249 (1,263) 1,986 3,036 (18) 3,018
Expenses
Expected credit losses - (608) (608) - - -
Property operating expenses (41) - (41) (36) - (36)
Investment Manager's fee 20 (1,189) - (1,189) (1,151) - (1,151)
Other administration costs (476) - (476) (427) - (427)
Total operating expenses (1,706) (608) (2,314) (1,614) - (1,614)
Operating profit/(loss) 1,543 (1,871) (328) 1,422 (18) 1,404
Share of profit/(loss) of joint ventures and associates 12 525 324 849 497 (140) 357
Finance income 44 - 44 1 1 2
Finance costs (100) (66) (166) (101) - (101)
Profit/(loss) before taxation 2,012 (1,613) 399 1,819 (157) 1,662
Taxation 5 (66) (112) (178) (7) (116) (123)
Profit/(loss) after taxation 1,946 (1,725) 221 1,812 (273) 1,539
Other comprehensive income/(expense) for the period
Items that may be reclassified to profit or loss in subsequent periods:
Exchange differences arising on translation of foreign operations - 1,478 1,478 - 361 361
Other comprehensive income for the period - 1,478 1,478 - 361 361
Total comprehensive income/(expense) for the period 1,946 (247) 1,699 1,812 88 1,900
Earnings per ordinary share (basic & diluted) 7 0.4p 2.5p
Adjusted earnings per ordinary share (basic & diluted) 7 3.3p 3.0p
The total column of this statement represents the Group's statement of
comprehensive income, prepared in accordance with IFRS. The revenue and
capital columns are supplied as supplementary information permitted under
IFRS. All items in the above statement derive from continuing operations. The
accompanying notes form an integral part of these financial statements.
Condensed consolidated balance sheet
Notes 30 September 2022 31 March 2022
(unaudited) (audited)
£'000 £'000
Non-current assets
Investment property 9 24,330 15,984
Investment in joint ventures and associates 12 18,517 17,193
Loans advanced 13 30,369 13,093
73,216 46,270
Current assets
Joint venture in arbitration 10 - 5,868
Investments held at fair value 11 4,756 10,990
Derivatives held at fair value through profit or loss - 88
Loans advanced 13 17,772 23,341
Collateral deposit 14 1,284 936
Trade and other receivables 15 150 13,711
Cash and cash equivalents 37,934 41,250
61,896 96,184
Total assets 135,112 142,454
Current liabilities
Derivatives held at fair value through profit or loss (375) -
Trade and other payables 16 (927) (971)
Corporation tax (31) (12)
Bank borrowings 17 (32) (29)
Total current liabilities (1,365) (1,012)
Total assets less current liabilities 133,747 141,442
Non-current liabilities
Bank borrowings 17 (8,329) (7,921)
Deferred tax (393) (265)
(8,722) (8,186)
Total liabilities (10,087) (9,198)
Net assets 125,025 133,256
Equity
Share capital 18 - -
Special reserve 59,550 68,243
Translation reserve 677 (801)
Capital reserve 42,292 44,017
Revenue reserve 22,506 21,797
Total equity 125,025 133,256
Net asset value per ordinary share 8 219.6p 216.0p
The financial statements were approved by the Board of Directors and
authorised for issue on 24 November 2022. They were signed on its behalf by
William Simpson.
William
Simpson
Director
The accompanying notes form an integral part of these financial statements.
Condensed consolidated cash flow statement
For the six months ended For the six months ended
30 September 2022 30 September 2021
(unaudited) £'000 (unaudited) £'000
Operating activities
Profit for the period after taxation 221 1,539
Adjustments for:
Change in revaluation of investment property (143) (343)
Net losses on financial assets and liabilities held at fair value through 1,134 154
profit or loss
Taxation 178 123
Share of profit of joint ventures and associates (849) (357)
Interest receivable on loans to third parties (2,394) (2,336)
Expected credit losses 608 -
Finance income (44) (2)
Finance cost 166 101
Operating cash flows before movements in working capital (1,123) (1,121)
Movements in working capital:
Movement in trade and other receivables (123) (20)
Movement in trade and other payables (43) 54
Cash flows used in operations (1,289) (1,087)
Loan interest received 1,091 979
Loans granted to third parties (9,581) (11,229)
Loans repaid by third parties 10,359 10,309
Cash returned from escrow for loans granted post year end 1,928 -
Interest received 44 1
Interest paid (91) (92)
Tax paid (29) (22)
Cash flows generated from/(used in) operating activities 2,432 (1,141)
Investing activities
Acquisition of investments - (10,998)
Acquisition of investment property (7,403) -
Investment in joint ventures - (84)
Redemption on investments 5,348 -
Capital return from joint venture in arbitration 5,868 -
Dividend income from joint ventures and associates 411 -
Dividend income from investments 178 89
Collateral deposit increase (348) -
Cash flows generated from/(used in) investing activities 4,054 (10,993)
Financing activities
Share issue costs (78) (21)
Share buyback (9,553) (150)
Share buyback costs (49) (1)
Ordinary dividends paid (250) (219)
Cash flows used in financing activities (9,930) (391)
Net decrease in cash and cash equivalents (3,444) (12,525)
Cash and cash equivalents at beginning of period 41,250 68,213
Exchange translation movement 128 12
Cash and cash equivalents at end of period 37,934 55,700
The accompanying notes form an integral part of these financial statements.
Condensed consolidated statement of changes in equity
For the six months ended 30 September 2022 Notes Special reserve Translation reserve Capital Revenue Total equity
(unaudited) £'000 £'000 reserve reserve £'000
£'000 £'000
At 1 April 2022 68,243 (801) 44,017 21,797 133,256
Total comprehensive income/(expense) for the period
Loss/(profit) for the period - - (1,725) 1,946 221
Other comprehensive income for the period - 1,478 - - 1,478
Total comprehensive income/(expense) for the period - 1,478 (1,725) 1,946 1,699
Transactions with owners
Cash dividends 6 - - - (250) (250)
Scrip dividends 6 987 - - (987) -
Share issue costs (78) - - - (78)
Share buyback 20 (9,553) - - - (9,553)
Share buyback costs (49) - - - (49)
Total transactions with owners (8,693) - - (1,237) (9,930)
At 30 September 2022 59,550 677 42,292 22,506 125,025
For the six months ended 30 September 2021 Notes Special reserve Translation reserve Capital Revenue Total equity
(unaudited) £'000 £'000 reserve reserve £'000
£'000 £'000
At 1 April 2021 66,655 (677) 38,295 21,803 126,076
Total comprehensive income/(expense) for the period
Profit/(loss) for the period - - (273) 1,812 1,539
Other comprehensive income for the period - 361 - - 361
Total comprehensive income/(expense) for the period - 361 (273) 1,812 1,900
Transactions with owners
Cash dividends 6 - - - (219) (219)
Scrip dividends 6 998 - - (998) -
Share issue costs (21) - - - (21)
Share buyback 20 (150) - - - (150)
Share buyback costs (1) - - - (1)
Total transactions with owners 826 - - (1,217) (391)
At 30 September 2021 67,481 (316) 38,022 22,398 127,585
The accompanying notes form an integral part of these financial statements.
Notes to the condensed consolidated financial statements for the period ended
30 September 2022
1. General information
The Company is a limited liability, closed-ended investment company
incorporated in Guernsey. The Group comprises the Company and its
subsidiaries. The condensed consolidated financial statements are presented in
pounds Sterling as this is the currency in which the funds are raised and in
which investors are seeking a return. The Company's functional currency is
Sterling and the subsidiaries' currencies are Euro, Indian Rupees and
Sterling. The presentation currency of the Group is Sterling. The period end
exchange rate used is £1:INR89,923 (31 March 2022: £1:INR99.678) and the
average rate for the period used is £1:INR95.355 (30 September 2021:
£1:INR102.634). For Euro based transactions the period end exchange rate used
is £1:€1.128 (31 March 2022: £1:€1.185) and the average rate for the
period used is £1:€1.174 (30 September 2021: £1:€1.165).
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. The half year report was approved and authorised for issue on 24
November 2022 and signed by William Simpson on behalf of the Board.
2. Significant accounting policies
Basis of preparation
The unaudited condensed consolidated financial statements in the half year
report for the six months ended 30 September 2022 have been prepared in
accordance with International Accounting Standard (IAS) 34, 'Interim Financial
Reporting' as adopted by the European Union. This half year report and
condensed consolidated financial statements should be read in conjunction with
the Group's annual report and consolidated financial statements for the year
ended 31 March 2022, which have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and are
available at the Company's website (www.alpharealtrustlimited.com
(http://www.alpharealtrustlimited.com) ).
The accounting policies adopted and methods of computation followed in the
condensed consolidated financial statements are consistent with those applied
in the preparation of the Group's annual consolidated financial statements for
the year ended 31 March 2022 and are expected to be applied to the Group's
annual consolidated financial statements for the year ending 31 March 2023.
The Group continues to only have one operating segment.
3. Revenue
For the six months ended For the six months ended
30 September 2022 30 September 2021
£'000 £'000
Rental income 552 412
Service charges 26 26
Rental revenue 578 438
Interest receivable on loans to third parties 2,394 2,336
Interest revenue 2,394 2,336
Other income 5 55
Other revenue 5 55
Total 2,977 2,829
4. Net gains and losses on financial assets and liabilities held at fair value
through profit or loss
For the six months ended For the six months ended
30 September 2022 30 September 2021
£'000 £'000
Unrealised gains and losses on financial assets and liabilities held at fair
value through profit or loss
Movement in fair value of investments (943) (232)
Movement in fair value of foreign exchange forward contract (463) (47)
Undistributed investment income 57 -
Realised gains and losses on financial assets and liabilities held at fair
value through profit or loss
Movement in fair value of loans 37 36
Dividends received from investments held at fair value 178 89
Net losses on financial assets and liabilities held at fair value through (1,134) (154)
profit or loss
5. Taxation
For the six months ended For the six months ended
30 September 2022 30 September 2021
£'000 £'000
Current tax 66 7
Deferred tax 112 116
Tax expense 178 123
The Company is exempt from Guernsey taxation on income derived outside of
Guernsey and bank interest earned in Guernsey. A fixed annual fee of £1,200
is payable to the States of Guernsey in respect of this exemption. No charge
to Guernsey taxation arises on capital gains. The Group is liable to foreign
tax arising on activities in the overseas subsidiaries. The Company has
investments, subsidiaries and joint venture operations in Luxembourg, United
Kingdom, the Netherlands, Spain, Germany and Cyprus.
The current tax charge is due in Cyprus, Luxembourg and the Netherlands.
Unused tax losses in Luxembourg, Spain, Germany 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.
A deferred tax liability has been provided for in relation to the Hamburg
investment property in Germany.
6. Dividends
Dividend reference period Shares Dividend Paid Date of payment
'000 per share £
Quarter ended 31 December 2021 12,545 1.0p 125,450 6 April 2022
Quarter ended 31 March 2022 12,433 1.0p 124,333 20 July 2022
Total paid in the period 249,783
Quarter ended 30 June 2022 5,316 1.0p 53,160 26 October 2022
Total 302,943
The Company will pay a dividend of 1.0p per share for the quarter ended 30
September 2022 on 6 January 2023.
In accordance with IAS 10, the dividends for quarters ended 30 June 2022 and
30 September 2022 have not been included in these financial statements as the
dividends were declared or paid after the period end. The current intention of
the Directors is to pay a dividend quarterly.
Dividends paid and payable after the balance sheet date have not been included
as a liability in the half year report.
Scrip dividend alternative
In the circular published on 18 December 2018, the Company sought
shareholders' approval to enable a scrip dividend alternative to be offered to
ordinary shareholders whereby they could elect to receive additional ordinary
shares in lieu of a cash dividend, at the absolute discretion of the
Directors, from time to time. This was approved by shareholders at the
extraordinary general meeting on 8 January 2019.
The number of ordinary shares that an ordinary shareholder will receive under
the scrip dividend alternative will be the average of the closing middle
market quotations of an ordinary share for five consecutive dealing days after
the day on which the ordinary shares are first quoted "ex" the relevant
dividend.
The Board elected to offer the scrip dividend alternative to shareholders for
all quarterly dividends from the quarter ended 31 December 2018 onwards. These
issued shares are ranked pari passu in all respects with the Company's
existing issued ordinary shares.
During the six month period ended 30 September 2022, the Company issued
717,554 ordinary shares: on 6 April 2022, 346,379 were issued at the price of
£1.42 and, on 20 July 2022, 371,175 were issued at the price of £1.34.
7. Earnings per share
The calculation of the basic and diluted earnings per ordinary share is based
on the following data:
For the Year For the
six months ended 30 September 2022 ended six months ended 30 September 2021
31 March
2022
Ordinary share Ordinary share Ordinary share
Earnings per statement of comprehensive income (£'000) 221 8,160 1,539
Basic and diluted earnings (pence per share) 0.4p 13.3p 2.5p
Earnings per statement of comprehensive income (£'000) 221 8,160 1,539
Net change in the revaluation of investment properties (143) (1,195) (343)
Gain on joint venture in arbitration - (5,868) -
Movement in fair value of investments 943 302 314
Movement in fair value of foreign exchange forward contract 463 (88) 47
Net change in the revaluation of the joint ventures' investment property (324) (500) 140
Expected credit losses 608 1,310 -
Foreign exchange loss/(gain) 66 265 (1)
Deferred tax 112 52 116
Adjusted earnings 1,946 2,438 1,812
Adjusted earnings (pence per share) 3.3p 4.0p 3.0p
Weighted average number of shares ('000s) 59,778 61,311 61,074
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.
8. Net asset value per share
At 30 September 2022 At 31 March 2022 At 30 September 2021
£'000 £'000 £'000
Net asset value (£'000) 125,025 133,256 127,585
Net asset value per ordinary share 219.6p 216.0p 208.5p
Number of ordinary shares ('000s) 56,937 61,685 61,205
9. Investment property
30 September 2022 31 March 2022
£'000 £'000
Fair value of investment property at 1 April 15,984 14,918
Additions 7,403 -
Fair value adjustment in the period/year 143 1,195
Foreign exchange movements 800 (129)
Fair value of investment property at 30 September / 31 March 24,330 15,984
Investment property is represented by a property located in Hamburg
(Werner-Siemens-Straße), Germany, a residential property located in
Liverpool, UK and two hotels located in the UK.
The fair value of the Hamburg property of €18.9 million (£16.8 million) (31
March 2022: €18.2 million (£15.4 million)) has been arrived at on the basis
of an independent valuation carried out at the balance sheet date by Cushman
& Wakefield ('C&W').
During the period, the Group acquired two UK hotels leased to Travelodge
Hotels Limited, the United Kingdom's largest independent hotel brand, with a
20-year unexpired lease term. On 1 June 2022, ART acquired a hotel located in
Lowestoft for £3.1 million (including acquisition costs) and, on 29 July
2022, ART acquired a hotel located in Wadebridge for £4.3 million (including
acquisition costs).
The fair values of the two UK hotels of £4.0 million (located in Wadebridge)
and £3.0 million (located in Lowestoft) have been arrived at on the basis of
an independent valuation carried out at the balance sheet date by C&W.
The fair value of the Liverpool residential property of £0.6 million (31
March 2022: £0.6 million) has been arrived at on the basis of an independent
valuation carried out at the balance sheet date by ASL Chartered Surveyors
& Valuers ('ASL').
C&W and ASL 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.
10. Joint venture in arbitration
30 September 2022 31 March 2022
£'000 £'000
As at 1 April 5,868 -
Final proceeds receivable - 5,868
Capital return (5,868) -
As at 30 September / 31 March - 5,868
In February 2022, the Supreme Court of India issued an order concluding the
litigation regarding the Company's Galaxia investment, a 50:50 joint venture
with Logix in relation to an 11.2 acre development site located in NOIDA, the
National Capital Region, India.
As part of a prior court ruling, Logix were permitted to sell the Galaxia site
to raise capital for the award. The sale completed and the funds lodged by
the purchaser with the Supreme Court have since been repatriated to ART in
return for ART's subsidiary and Logix relinquishing their title interests.
The Company has commenced the liquidation process for the Cypriot structure
which had been holding the Galaxia investment and estimates completion by the
end of the calendar year 2022.
11. Investments held at fair value
30 September 2022 31 March 2022
£'000 £'000
Non-current
As at 1 April - 31
Movement in fair value of investments - -
Transfer to current - (31)
As at 30 September / 31 March - -
Current
As at 1 April 10,990 -
Additions - 10,998
Redemptions (5,348) -
Movement in fair value of investments (886) (39)
Transfer from non-current - 31
As at 30 September / 31 March 4,756 10,990
The investments, which are disclosed as current investments held at fair
value, are as follows:
· Sequoia Economic Infrastructure Income Fund Limited ('SEQI'), a
listed fund: the market value of SEQI as at 30 September 2022 was £2.3
million.
· GCP Infrastructure Investments Limited ('GCP') a listed fund: the
market value of GCP as at 30 September 2022 was £1.3 million.
· GCP Asset Backed Income Fund Limited ('GABI'): the market value
of GABI as at 30 September 2022 was £1.2 million.
· Europip (participating redeemable preference shares): Europip has
distributed its final liquidation proceeds to ART in August 2022 for £28,086;
Europip is in the final phases of its liquidation process.
· HLP (participating redeemable preference shares): HLP provides
quarterly valuations of the net asset value of its shares; the net asset value
of the investment as at 30 September 2022 was nil (31 March 2022: nil).
During the period ended 30 September 2022, the Group's investment in the
Commercial Long Income PAIF ('CLIP') was fully redeemed for £5.3 million. ARC
is the Authorised Corporate Director and Alternative Investment Fund Manager
of CLIP and TIME Investments, a subsidiary of ARC, is the Investment Manager.
12. Investment in joint ventures and associates
The movement in the Group's share of net assets of the joint ventures and
associates can be summarised as follows:
H2O SPHL Total H2O SPHL Total
30 Sep 30 Sep 30 Sep 31 March 2022 31 March 2022 31 March 2022
2022 2022 2022
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 17,075 118 17,193 16,000 1,761 17,761
Additions - - - - 84 84
Group's share of joint ventures' profits before fair value movements and 525 - 525 1,162 53 1,215
dividends
Fair value adjustment for investment property 324 - 324 58 442 500
Dividends paid by joint venture and associate to the Group (294) - (294) - (959) (959)
Capital return - (118) (118) - (1,263) (1,263)
Foreign exchange movements 887 - 887 (145) - (145)
As at 30 September / 31 March 18,517 - 18,517 17,075 118 17,193
The Group's investments in joint ventures can be summarised as follows:
· Joint venture investment in the 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 30 September 2022, the carrying value of
ART's investment in CBRE H2O was £18.5 million (€20.9 million) (31 March
2022: £17.1 million (€20.2 million)).
· Joint venture investment in the Phase 1000 of Cambourne Business
Park, Cambridge, UK: the Group held a 10% equity investment in the Scholar
Property Holdings Limited ('SPHL') group, owner of the property. In August
2022, ART received the final liquidation proceeds for £118,000 and, in
September 2022, SPHL was dissolved.
Foreign exchange movement is recognised in other comprehensive income.
The fair value of the H2O property in Madrid (Spain) of €121.8 million
(£108.0 million) (31 March 2022: €121.0 million (£102.1 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., an
independent valuer 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".
The CBRE H2O group bank borrowings' balance as at 30 September 2022 is €63.3
million (£56.1 million): this loan is provided by Aareal Bank, carries an
interest rate of EURIBOR plus 190 basis points and matures on 18 May 2024. The
bank loan is secured by a first charge mortgage against the Spanish property.
The above borrowings are non-recourse to the Group's other investments.
13. Loans advanced
30 September 2022 31 March 2022
£'000 £'000
Non-current
Loans granted to third parties 30,021 12,882
Interest receivable from loans granted to third parties 348 211
Total loans at amortised cost 30,369 13,093
Loans at fair value through profit or loss - -
Total non-current loans 30,369 13,093
Current
Loans granted to third parties 18,056 22,945
Interest receivable from loans granted to third parties 2,366 2,473
Total loans at amortised cost 20,422 25,418
Loans at fair value through profit or loss 530 495
Expected credit losses (3,180) (2,572)
Total current loans 17,772 23,341
As at 30 September 2022, the Group had granted a total of £48.1 million (31
March 2022: £36.4 million) of secured senior and secured mezzanine loans to
third parties. These comprised nineteen loans to UK entities, which assisted
with the purchase of property developments, predominantly residential, in the
UK. These facilities typically range from a 6 to 36 month term and entitle the
Group to a weighted average overall return on the investment of 15.7% for
mezzanine loans and 5.8% for senior loans.
All senior and mezzanine loans granted by the Group are secured asset backed
real estate loans. Senior loans have a first charge security and mezzanine
loans have a second charge security on the property developments.
Loans at fair value through profit or loss represents loans that failed the
'solely payment of principal and interest' criteria of IFRS 9 to be measured
at amortised cost: this is due to a loan facility agreement's clause that
links those loans to a return other than interest.
Movement in expected credit losses can be summarised as follows:
30 September 2022 31 March 2022
£'000 £'000
Opening balance of ECL (2,572) -
Movement for the period (revenue) - (1,262)
Movement for the period (capital) (608) (1,310)
Closing balance of ECL (3,180) (2,572)
As at 30 September 2022 two loans in the portfolio are in receivership: ART is
closely working with stakeholders to maximise their capital recovery. The
Company has considered the security on these loans (which are a combination of
a first charge and a second charge over the respective assets and personal
guarantees) and have calculated an ECL on these two loans of approximately
£2.3 million; the Group have also provided for an ECL on the remainder of the
loans' portfolio for an additional £0.9 million: in total, the Group have
provided for an ECL of £3.2 million in its consolidated accounts.
Loans maturity of the total £48.1 million loans granted by the Group at year
end, can be analysed as follows:
Less than 6 months Between 6 to 12 months Between 12 to 24 months £'m Over 24 months Total
£'m £'m £'m £'m
Non-current - - 30,369 - 30,369
Current 13,433 4,339 - - 17,772
Post period end, one loan of £1.1 million was drawn, additional drawdowns of
£1.9 million were made on existing loans and part loan repayments were
received amounting to £0.6 million (including accrued interest).
Despite all of the loans having a set repayment term all but two of the loans
have a repayable on demand feature so the Group may call for an early
repayment of their principal, interest and applicable fees at any time.
Considering the 'on demand' clause, the Group concluded that the loans are in
stage 3 of the IFRS 9 model as should the loans be called on demand the
borrowers would technically be in default as repayment would only be possible
on demand if the property had already been sold. One of the loans without a
repayable on demand clause amounts to £3.7 million, matured during the period
but is in the process of being extended; the second loan without a repayable
on demand clause amounts to £11.1 million and matures on 1 April 2025; both
loans remain in stage 1 of the IFRS 9 model.
14. Collateral deposit
30 September 2022 31 March 2022
£'000 £'000
Collateral deposit 1,284 936
The collateral deposit of £1.3 million (31 March 2022: £0.9 million) is a
cash deposit with Barclays Bank PLC ('Barclays') in Guernsey in relation to
the foreign exchange forward contract entered into by the Group at period end:
this cash has been placed on deposit.
15. Trade and other receivables
30 September 2022 31 March 2022
£'000 £'000
Current
Trade debtors 75 14
VAT 2 9
Other debtors 73 13,688
Total 150 13,711
The balance of other debtors as at 31 March 2022 represented funds held in
escrow for two loan investments to be granted post year end: one of these
loans completed in April 2022 for £11.8 million whilst the other loan
investment for £1.9 million was aborted so the cash was returned to the
Group.
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
16. Trade and other payables
30 September 2022 31 March 2022
£'000 £'000
Trade creditors 32 60
Deferred revenue 48 1
Investment Manager's fee payable 566 610
Accruals 271 277
Other creditors 10 23
Total 927 971
Trade and other payables primarily comprise amounts outstanding for trade
purchases and ongoing costs. The Group has financial risk 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 their fair value.
17. Bank borrowings
30 September 2022 31 March 2022
£'000 £'000
Current liabilities: interest payable 32 29
Total current liabilities 32 29
Non-current liabilities: bank borrowings 8,329 7,921
Total liabilities 8,361 7,950
The borrowings are repayable as follows:
Interest payable 32 29
On demand or within one year - -
In the second to fifth years inclusive - -
After five years 8,329 7,921
Total 8,361 7,950
Movements in the Group's non-current bank borrowings are analysed as follows:
30 September 2022 31 March 2022
£'000 £'000
As at 1 April 7,921 7,973
Amortisation of deferred finance costs 8 15
Exchange differences on translation of foreign currencies 400 (67)
As at 30 September / 31 March 8,329 7,921
As at 30 September 2022, bank borrowings represent the Nord LB (a German bank)
loan principal for €9.5 million (£8.4 million), excluding deferred finance
costs, which was used to partly fund the acquisition of the investment
property in Hamburg (Werner-Siemens-Straße), Germany. This loan is composed
of two tranches of €4.9 million and €4.6 million, which bear a 1.85% and
2.7% fixed rate respectively and that are due to mature in August 2028.
The borrowings are secured over the Hamburg property and have no recourse to
the other assets of the Group and the facility carries no financial covenant
tests. The fair value of bank borrowings at the balance sheet date is €9.6
million (£8.5 million).
The table below sets out an analysis of net debt and the movements in net debt
for the period ended 30 September 2022.
Other assets Derivatives Liabilities from
financing activities
Cash Foreign exchange forward Interest payable Borrowings Total
£'000 £'000 £'000 £'000 £'000
Net asset/(debt) as at 1 April 2022 41,250 88 (29) (7,921) 33,388
Cash movements (3,444) - 91 - (3,353)
Non cash movements
Foreign exchange adjustments 128 - 6 (400) (266)
Unrealised gain on foreign exchange forward contract - (463) - (463)
Loan fee amortisation and other costs - - - (8) (8)
Interest charge - - (100) - (100)
Net asset/(debt) as at 30 September 2022 37,934 (375) (32) (8,329) 29,198
Other assets Derivatives Liabilities from
financing activities
Cash Foreign exchange forward Interest payable Borrowings Total
£'000 £'000 £'000 £'000 £'000
Net asset/(debt) as at 1 April 2021 68,213 - (29) (7,973) 60,211
Cash movements (12,525) - 92 - (12,433)
Non cash movements
Foreign exchange adjustments 12 - 7 (124) (105)
Unrealised gain on foreign exchange forward contract - (47) - - (47)
Loan fee amortisation and other costs - - - (8) (8)
Interest charge - - (101) - (101)
Net asset/(debt) as at 30 September 2021 55,700 (47) (31) (8,105) 47,517
18. Share capital
Number of shares
Authorised
Ordinary shares of no par value Unlimited
Ordinary Ordinary Ordinary
Issued and fully paid treasury external total
At 1 April 2022 2,252,065 61,685,086 63,937,151
Share issue for scrip dividend - 717,554 717,554
Shares bought back 5,465,516 (5,465,516) -
Shares cancelled following buyback - - -
At 30 September 2022 7,717,581 56,937,124 64,654,705
The Company has one class of ordinary shares. The Company has the right to
reissue or cancel the remaining treasury shares at a later date.
Under the general authority, approved by Shareholders on 6 August 2021, the
Company announced a tender offer on 29 June 2022 for up to 6,428,353 ordinary
shares at a price (before expenses) of 175.0 pence per share. In July 2022, a
total of 5,419,016 ordinary shares were validly tendered under the tender
offer. All purchased ordinary shares are held in treasury.
During the period, the Company purchased 46,500 shares in the market at an
average price of £1.51 per share: these shares are held in treasury.
As at 30 September 2022, the ordinary share capital of the Company was
64,654,705 (including 7,717,581 ordinary shares held in treasury) and the
total voting rights in the Company is 56,937,124.
Scrip dividend alternative
In the circular published on 18 December 2018, the Company sought
shareholders' approval to enable a scrip dividend alternative to be offered to
ordinary shareholders whereby they could elect to receive additional ordinary
shares in lieu of a cash dividend, at the absolute discretion of the
Directors, from time to time. This was approved by shareholders at the
extraordinary general meeting on 8 January 2019.
The number of ordinary shares that an ordinary shareholder will receive under
the scrip dividend alternative will be the average of the closing middle
market quotations of an ordinary share for five consecutive dealing days after
the day on which the ordinary shares are first quoted "ex" the relevant
dividend.
The Board elected to offer the scrip dividend alternative to shareholders for
all quarterly dividends from the quarter ended 31 December 2018 onwards. These
issued shares are ranked pari passu in all respects with the Company's
existing issued ordinary shares.
During the six month period ended 30 September 2022, the Company issued
717,554 ordinary shares: on 6 April 2022, 346,379 were issued at the price of
£1.42 and, on 20 July 2022, 371,175 were issued at the price of £1.34.
All transaction amounts in relation to the issue and buyback of shares in the
period are recognised within the Special Reserve and shown in the Statement of
Changes in Equity.
Post period end, the Company made no share buybacks.
On 26 October 2022, as a result of the scrip dividend elections related to the
dividend of the quarter ended 30 June 2022, the Company issued 362,257
ordinary shares at the price of £1.43.
As at the date of this announcement, the ordinary share capital of the Company
is 65,016,962 (including 7,717,581 ordinary shares held in treasury) and the
total voting rights in the Company is 57,299,381.
19. Events after the balance sheet date
Post period end, one loan of £1.1 million was drawn, additional drawdowns of
£1.9 million were made on existing loans and part loan repayments were
received amounting to £0.6 million (including accrued interest).
On 26 October 2022, as a result of the scrip dividend elections related to the
dividend of the quarter ended 30 June 2022, the Company issued 362,257
ordinary shares at the price of £1.43 (note 18).
As at the date of this announcement, the Company declares a quarterly dividend
of 1.0p per ordinary share, which is expected to be paid on 6 January 2023.
20. 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 Management Agreement and is thus considered
a related party of the Company.
The Investment Manager is entitled to receive a fee from the Company at an
annual rate of 2% of the net assets of the Group, payable quarterly in
arrears. 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% of any excess over an annualised TSR of 15% subject to
a rolling three year high water mark.
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 invested in CLIP, where ARC is the Authorised Corporate Director
and Alternative Investment Fund Manager and TIME Investments, a subsidiary of
ARC, is the Investment Manager. ARC rebated fees earned in relation to the
Company's investment in CLIP.
Details of the Investment Manager's fees for the current period are disclosed
on the face of the condensed consolidated statement of comprehensive income
and the balance payable at 30 September 2022 is provided in note 16.
The Directors of the Company received total fees as follows:
For the six months ended For the six months ended
30 September 2022 30 September 2021
David Jeffreys* - 18,000
Phillip Rose 13,750 12,500
Jeff Chowdhry 13,750 12,500
Melanie Torode 27,811 28,000
William Simpson 19,750 12,500
Peter Griffin** 13,750 -
Total 88,811 83,500
The Directors' interests in the shares of the Company are detailed below:
30 September 2022 31 March 2022
Number of ordinary shares held Number of ordinary shares held
Phillip Rose 966,257 953,872
Jeff Chowdhry 5,000 5,000
Melanie Torode - -
William Simpson 18,000 18,000
Peter Griffin** - -
* retired on 30 September 2021
** appointed on 30 September 2021
Alpha Global Property Securities Fund Pte. Ltd, a company registered in
Singapore, owned directly by the partners of ARC, held 24,515,113 shares in
the Company at 30 September 2022 (31 March 2022: 24,162,566).
ARC did not hold any shares in the Company at 30 September 2022 (31 March
2021: nil). The following, being partners of the Investment Manager, hold
direct interests in the following shares of the Company:
30 September 2022 31 March 2022
Number of ordinary shares held Number of ordinary shares held
Brian Frith - -
Phillip Rose 966,257 953,872
Brad Bauman 59,218 58,367
Karl Devon-Lowe, a partner of ARC, received fees of £2,500 (31 March 2022:
£5,000) in relation to directorial responsibilities on a number of the
Company's subsidiary companies.
During the period the Company paid Ocorian fees of £45,200 (31 March 2022:
£96,300) and no amount was outstanding at period end.
21. Financial assets and liabilities held at fair value through profit or loss
Financial assets and liabilities carrying value
30 September 2022 31 March 2022
£'000 £'000
Financial assets at fair value through profit or loss
Investments held at fair value 4,756 10,990
Foreign exchange forward contract - 88
Loans advanced 530 495
Total financial assets at fair value through profit or loss 5,286 11,573
Financial liabilities at fair value through profit or loss
Foreign exchange forward contract (375) -
Fair value measurement
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 financial asset or
financial liability is categorised is determined on the basis of the lowest
input that is significant to the fair value measurement. Financial instruments
are classified in their entirety into one of the three levels.
The following methods and assumptions are used to estimate fair values:
Level 1
· The fair values of the ART's investments in the SEQI, GCP and
GABI shares, which are traded daily on the LSE, are based upon the market
value of the shares at the balance sheet date.
Level 2
· The fair value of the foreign exchange forward contract is
determined by reference to the quarter end applicable forward market rate
provided by the contractual counter party.
· The fair value of the CLIP investment, which can be traded daily
as an open ended investment fund, is based upon daily valuations, provided by
the issuer, of the net asset value of its accumulation shares.
Level 3
· 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 a
level 3 financial asset. HLP's accounts are audited annually. HLP's underlying
investment properties are fair valued as per RICS definition and the ART Board
considers 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 was based upon the price
provided by the issuer for the relevant share class owned: this was calculated
by reference to the net asset value of the investment and principally driven
by the fair value of Europip's underlying property investments. That net asset
value was therefore mainly based on unobservable inputs and was deemed to be a
level 3 financial asset. Europip's accounts were audited annually. Europip has
distributed its final liquidation proceeds to ART in August 2022 for £28,086
and is in the final phases of its liquidation process.
Financial assets and liabilities held at fair value are valued on a recurring
basis as indicated above. There have been no changes to the valuation methods
applied from the Group's annual report and accounts for the year ended 31
March 2022.
The Board 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.
The following table shows an analysis of the fair values of financial
instruments recognised in the balance sheet by level of the fair value
hierarchy described above:
Assets and liabilities measured at fair value
30 September 2022
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets measured at fair value
Non-current
Investment property - - 24,330 24,330
Loans advanced - - 530 530
Current
Investments held at fair value 4,756 - - 4,756
Liabilities measured at fair value
Current
Foreign exchange forward contract - (375) - (375)
Assets and liabilities measured at fair value
31 March 2022
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets measured at fair value
Non-current
Investment property - - 15,984 15,984
Loans advanced - - 495 495
Current
Investments held at fair value 5,696 5,263 31 10,990
Foreign exchange forward contract - 88 - 88
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 six
month period ended 30 September 2022.
Directors and Company information
Directors Independent valuers in Spain Legal advisors in Guernsey
William Simpson (Chairman) Savills Aguirre Newman Carey Olsen
Jeff Chowdhry
Peter Griffin Paseo de la Castellana, 81 PO Box 98, Carey House
Phillip Rose
Melanie Torode Madrid, 28046 Les Banques
Spain St Peter Port
Guernsey GY1 4BZ
Registered office Independent valuers in Germany Legal advisors in the UK
Floor 2, Trafalgar Court Cushman & Wakefield Norton Rose
Les Banques Rathenauplatz, 1 3 More London Riverside
St Peter Port Frankfurt, 60313 London SE1 2AQ
Guernsey GY1 4LY Germany
Investment Manager Independent Auditor Legal advisors in Spain
Alpha Real Capital LLP BDO Limited Ashurst LLP
Level 6, 338 Euston Road
Place du Pré, Rue du Pré
St Peter Port Alcalá, 44
London NW1 3BG
Guernsey GY1 3LL
Madrid, 28014
Spain
Administrator and secretary Tax advisors in Europe Registrar
Ocorian Administration (Guernsey) Limited KPMG LLP Computershare Investor Services (Jersey) Limited
15 Canada Square
Floor 2, Trafalgar Court
13 Castle Street
London E14 5GL
St Helier
Les Banques, St Peter Port
Jersey JE1 1ES
Guernsey GY1 4LY
Ernst & Young LLP
1 More London Place
London SE1 2AF
Broker
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Independent valuers in the UK
Cushman & Wakefield
No 1 Colmore Square
Birmingham B4 6AJ
Shareholder information
Further information on the Company can be found at the Company's website:
www.alpharealtrustlimited.com (http://www.alpharealtrustlimited.com)
Dividends
Ordinary dividends are declared and paid quarterly. Shareholders who wish to
have dividends paid directly into a bank account rather than by cheque to
their registered address can complete a mandate form for this purpose.
Mandates may be obtained from the Company's Registrar. Where dividends are
paid directly to shareholders' bank accounts, dividend vouchers are sent
directly to shareholders' registered addresses.
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 Reporting/ Dividend period Ex-dividend date Record date Last date for election to scrip dividend Share certificates posted Payment date
Meeting dates (if applicable) (if applicable)
Half year report and dividend announcement 25 Quarter ending 8 9 December 2022 20 5 6
November 30 September 2022 December 2022 December 2022 January January
2022 2023 2023
Trading update 24 Quarter ending 31 December 2022 9 10 22 5 6
(Qtr 3) February March March March April April
2023 2023 2023 2023 2023 2023
Annual report and dividend announcement 23 Quarter ending 31 March 6 7 13 27 28
June 2023 July July July July July
2023 2023 2023 2023 2023 2023
Annual report published 7
July
2023
Annual General Meeting 7
September 2023
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