REG - Alpha Real Tst Ltd - Half-year Report
24/11/2023 07:00
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RNS Number : 5224U Alpha Real Trust Limited 24 November 2023
LEI: 213800BMY95CP6CYXK69
24 November 2023
ALPHA REAL TRUST LIMITED ("ART" OR THE "COMPANY" OR "THE GROUP")
ART ANNOUNCES ITS HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
· NAV per ordinary share 214.3p as at 30 September 2023 (31 March
2023: 216.8p).
· Basic earnings for the six months ended 30 September 2023 of 1.5p
per ordinary share (six months ended 30 September 2022: basic earnings of 0.4p
per ordinary share).
· Adjusted earnings for the six months ended 30 September 2023 of
4.6p per ordinary share (six months ended 30 September 2022: adjusted earnings
of 3.3p per ordinary share)*.
· Declaration of a quarterly dividend of 1.0p per ordinary share
expected to be paid on 24 January 2024.
· Robust financial position: ART remains on a robust financial
footing and is well positioned to take advantage of new investment
opportunities.
· Investment targets: the Company is currently focussed on managing
risk in its loan portfolio and opportunistically extending its wider
investment strategy to target investments offering inflation protection via
index linked income adjustments and investments that have potential for
capital gains.
· Addition to long leased property portfolio: in August 2023, ART
acquired a hotel and public house in Yardley, Birmingham for £5.1 million
(including acquisition costs) with inflation linked rentals.
· Diversified portfolio of secured senior and secured mezzanine
loan investments: as at 30 September 2023, the size of ART's drawn secured
loan portfolio was £57.9 million, representing 46.4% of the investment
portfolio.
· The senior portfolio has an average Loan to Value ('LTV')** of
60.1% based on loan commitments (with mezzanine loans having an LTV range of
between 49.5% and 68.0% whilst the highest approved senior loan LTV is 65.6%).
· 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 £3.4 million.
· H2O Madrid: three Inditex group brands entered into updated lease
contracts to extend the footprint of existing stores and extend the lease
terms.
· Cash management: including investments post period end, the
Company has invested £12.0 million in short term UK Treasury Bonds (Gilts)
and £7.1 million in UK Treasury Bills to enhance returns on its liquid
holdings.
* The basis of the adjusted earnings per share is provided in note 8
** 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 and interest rate policy
continue to shape 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 selectively focusses on asset-backed lending, debt investments
and high return property investments in Western Europe that are capable of
delivering strong risk adjusted returns.
The portfolio mix at 30 September 2023, excluding sundry assets/liabilities,
was as follows:
30 September 2023 31 March 2023
High return debt: 46.4% 44.5%
High return equity in property investments: 29.7% 26.5%
Other investments: 14.3% 15.2%
Cash: 9.6% 13.8%
The Company is currently focussed on risk managing its loan portfolio and
opportunistically extending its wider investment strategy to target high
return mezzanine and property investments offering inflation protection via
index linked income adjustments and investments that have potential for
capital gains.
The Company's Investment Manager is Alpha Real Capital LLP ("ARC").
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.
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 2022
2023 2023
Net asset value (£'000) 125,354 125,067 125,025
Net asset value per ordinary share 214.3 216.8p 219.6
Earnings per ordinary share (basic and diluted) (adjusted)* 4.6p 7.7p 3.3p
Earnings per ordinary share (basic and diluted) 1.5p 1.1p 0.4p
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 8 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 2023.
ART's investment portfolio benefits from diversification across geographies,
sectors and asset types and the Company remains on a robust financial footing
and is well placed to capitalise on new investment opportunities.
Inflationary pressures and persistently relatively high central bank interest
rates continue dominate the economic backdrop in which the Company operates
and clouds the outlook for the real estate market. The uncertain market will
offer opportunities in the medium term for ART to grow its diversified
investment portfolio. The Company is currently focussed on risk managing its
loan portfolio and opportunistically extending its wider investment strategy
to target mezzanine opportunities as companies seek to refinance and
recapitalise. The Company is also investing in assets offering inflation
protection via index linked income adjustments and investments that have
potential for capital appreciation.
ART's investment portfolio benefits from diversification across geographies,
sectors and asset types. We continue to take a cautious approach to new
investment, including new lending, as we observe ongoing pressures in the
economy. Recently the Company has again focused on recycling capital into more
conservative asset backed lending while reducing exposure to development risk.
In this time of heightened uncertainty, the Company is benefiting from that
strategy and it has placed the Company on a robust financial footing.
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.
Long leased assets
The Company's portfolio of long leased properties, comprising three hotels
leased to Travelodge in the UK and an industrial facility in Hamburg, Germany,
leased to a leading industrial group are well positioned in the current
inflationary environment. The leased assets have inflation linked rent
adjustments which offer the potential to benefit from a long term,
predictable, inflation linked income stream and the potential for associated
capital growth.
During the period ART acquired a hotel and public house in Yardley,
Birmingham, United Kingdom for £5.1 million (including acquisition costs),
leased to Travelodge Hotels Limited reflecting an initial yield of 8.3% p.a.
ART has acquired the asset for cash.
The property is let until November 2060 with a tenant only break option in
2035, providing 12 years term certain to the break clause and the rent has
inflation linked adjustments.
The 64-bedroom hotel and public house is held freehold and is situated to the
east of Birmingham City Centre off the A45. The hotel is in a well-connected
location equidistant between Birmingham City Centre to the west and Birmingham
Airport to the east.
Diversified secured lending investment
The Company invests in 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 2023, ART had committed £67.6 million
across eighteen loans, of which £57.9 million (excluding a £5.1 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 quarter ended 30 September 2023, one new loan was drawn for £0.8
million and additional drawdowns of £5.0 million were made on existing loans,
one loan totalling £0.5 million (including accrued interest and exit fees)
was fully repaid and a further £5.0 million (including accrued interest) was
received as part repayments.
Post period end, £1.5 million of drawdowns were made on existing loans, one
loan was fully repaid for £1.5 million (including accrued interest and
applicable fees) and part payments were received amounting to £4.5 million
(including accrued interest).
As at 30 September 2023, 68.6% of the Company's loan investments were senior
loans and 31.4% were mezzanine loans. The portfolio has an average LTV of
60.1% based on loan commitments (with mezzanine loans having a LTV range of
between 49.5% and 68.0% whilst the highest approved senior loan LTV is 65.6%).
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 2023 is a
senior loan of £10.2 million which represents 15.1% of committed loan capital
and 8.1% of the Company's NAV.
Four 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 has
calculated an Expected Credit Loss ('ECL') on these four loans of
approximately £3.7 million; the Group have also provided for an ECL on the
remainder of the loans' portfolio for an additional £1.4 million: in total,
the Group have provided for an ECL of £5.1 million in its consolidated
accounts.
Aside from the isolated cases of receivership, illustrated above, the
Company's loan portfolio has proved to be resilient despite the recent
extended period of heightened 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 2023 had
geographic diversification with a London and South East focus. London
accounted for 25.4% and the South East of England accounted for 17.1% of the
committed facilities 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 2023 was 91.5%. The centre's
visitor numbers remain below pre-Covid highs; however, a recovery is evident.
In the calendar year to 30 September 2023, visitor numbers were approximately
6.8% below those in 2019 (pre-Covid) and 7.0% above 2022.
During the period, a notable asset management action included the signing of
contracts with three existing Inditex group brands within the centre to extend
the footprint of existing stores and extend the lease terms. The works to
deliver the new 3,000 square metre store for anchor retailer Primark continue
to advance on schedule. The store is expected to be delivered during 2024.
Other investments
Investment in listed and authorised funds
The Company has invested (value as at 30 September 2023: £4.1 million) across
three investments that offer potential to generate attractive risk adjusted
returns. Current market volatility and rises in interest rates have 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.
Cash management
The Company adopts an active approach to enhance returns on its cash balances.
As at 30 September 2023, the Company had invested a total of £6.0 million in
short dated UK Treasury Bonds (Gilts) (annualised yield to maturity of 4.8%
with maturity in September 2024) and £7.1 million in UK Treasury Bills
(annualised yield to maturity of 5.5% with maturity in March 2024). These
government backed short term investments offer the Company enhanced returns
over cash balances.
Post period end, the Company invested further £6.0 million in short dated UK
Treasury Bonds (Gilts) with an annualised yield to maturity of 4.9% with
maturity in October 2025.
During the period, the Company also invested £6.0 million in the Morgan
Stanley GBP Liquidity Fund, which invests in high quality short-term money
market instruments denominated in sterling, offers same day liquidity and
earns an annualised return, net of Morgan Stanley's fees, of 5.3%.
Results and dividends
Results
Basic earnings for the six months ended 30 September 2023 are £0.9 million
(1.5 pence per ordinary share, see note 8 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 2023 are £2.7 million: this represents 4.6 pence per
ordinary share, which compares with adjusted earnings of 3.3 pence per
ordinary share in the same period of last year (see note 8 of the financial
statements). Earnings have increased primarily due to enhanced revenues from
new long income investments and accretion from cash/treasury management.
The net asset value per ordinary share at 30 September 2023 is 214.3 pence per
share (31 March 2023: 216.8 pence per ordinary share) (see note 9 of the
financial statements). The net asset values reflects the fair value movement
on the investment property and listed and authorised funds, an increase in the
ECL provisions on the loan portfolio mitigated by positive earnings in excess
of dividends.
Dividends
The Board announces a dividend of 1.0 pence per ordinary share which is
expected to be paid on 24 January 2024 (ex-dividend date 7 December 2023 and
record date 8 December 2023).
The dividends paid and declared in respect of the twelve month period ended 30
September 2023 totalled 4.0 pence per ordinary share representing an annual
dividend yield of 3.0% p.a. by reference to the average closing share price
over the twelve months to 30 September 2023.
During the period, £105,561 dividends were paid in cash and £1,052,519
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 2023. 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 9 January 2024 to benefit from the scrip
dividend alternative for the next dividend.
Financing
As at 30 September 2023 the Group has one direct bank loan of €9.5 million
(£8.2 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
Following the Annual General Meeting held on 7 September 2023 the Company has
the authority to buy back 14.99% of its share capital (assessed on 29 June
2023) for a total of 8,709,579 shares. No shares have been yet bought back
under this authority.
During the period and post period end, the Company did not purchase any shares
in the market.
As at the date of this announcement, the ordinary share capital of the Company
is 66,629,772 (including 7,717,581 ordinary shares held in treasury) and the
total voting rights in the Company is 58,912,191.
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:€1.154 as appropriate.
Russian invasion of Ukraine and going concern
As previously stated, ART has no investments in Ukraine, 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 Board continues to monitor
the global political and economic situation regularly assessing impacts
arising from inflation and interest rate changes for a potential material
impact on ART's portfolio.
The Company has adopted a prudent short-term strategy to move to cash
conservation and a cautious approach to commitments to new investments over
this uncertain time. Alert to the impact of potentially reducing income
returns, this approach has supported a robust balance sheet position. The
Company continues to adopt this cautious approach to new investment and is
conserving cash because 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 (as at 30 September 2023) 9.6%
of its assets (excluding sundry net assets) in cash (including the investment
in the Morgan Stanley GBP Liquidity Fund) and 10.5% in highly liquid UK
Treasury Bonds and Bills 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. See the
investment review section for more details 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 and interest rate policy
continue to shape 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
23 November 2023
Investment review
Portfolio overview & risk analysis as at 30 September 2023
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 (46.4%)
Secured senior finance
Senior secured loans (excluding committed but undrawn facilities of £4.6 £39.7m (2) 9.8% (3) UK Diversified loan portfolio focussed on real estate investments and Senior secured debt 31.8% 13
million) developments
Secured mezzanine finance
Second charge mezzanine loans £18.2m (2) 18.6% (3) UK Diversified loan portfolio focussed on real estate investments and Secured mezzanine debt and subordinated debt 14.6% 13
developments
High return equity in property investments (29.7%)
H2O shopping centre
Indirect property £17.4m 5.1% (4) Spain Dominant Madrid shopping centre and separate development site 30% shareholding; moderately geared bank finance facility 14.0% 12
(€20.1m)
Long leased industrial facility, Hamburg
Direct property £8.4m (5) 8.9% (4) Germany Long leased industrial complex in major European industrial and logistics hub Long term moderately geared bank finance facility 6.7% 10
with RPI linked rent
(€9.7m)
Long leased hotel, Wadebridge
Direct property £3.6m 5.3% (6) UK Long leased hotel to Travelodge, a large UK hotel group with CPI linked rent No external gearing 2.9% 10
Long leased hotel, Lowestoft
Direct property £2.7m 5.2% (6) UK Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing 2.2% 10
Long leased hotel, Yardley
Direct property £4.8m 7.7% (6) UK Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing 3.9% 10
Other investments (14.3%)
Listed and authorised fund investments
£4.1m UK & Channel Islands Commercial real estate, infrastructure and debt funds Short to medium term investment in listed and authorised funds
6.2% (4) 3.3% 11
Affordable housing
Residential Investment £0.6m n/a UK High-yield residential UK portfolio 100% shareholding; no external gearing 0.5% 10
UK Treasury Bonds £6.0m 4.8% (7) UK UK government bonds - 4.8% 11
2.8% (8)
UK Treasury Bills £7.1m 5.5% (7) UK UK government bonds - 5.7% 11
Cash and short-term investments (9.6%)
Cash (9) £6.0m 1.5% (10) UK 'On call' and current accounts - 4.8% -
Sterling Liquidity Fund £6.0m 5.3% UK Money market fund, daily liquidity - 4.8% 16
( )
* Return from underlying investments excluding Fund fees
** 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 2023
(5) Property value including sundry assets/liabilities, net of associated debt
(6) Annualised monthly return
(7) Annualised yield to maturity
(8) Fixed annual coupon
(9) Group cash of £7.1m excluding cash held with the Hamburg holding company
of £1.1m
(10) 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 £39.7m * 9.8%** Diversified loan portfolio focussed on real estate investments and Secured debt
developments
Secured mezzanine finance Second charge secured loans £18.2m * 18.6%** 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
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 2023, ART had invested a total amount of £57.9 million
across eighteen loans. Over the past twelve months the loan portfolio has
increased by 20.4%.
During the six months to 30 September 2023, one new loan was drawn for £0.8
million and additional drawdowns of £8.9 million were made on existing loans;
two loans for £2.1 million (including accrued interest and exit fees) were
fully repaid and a further £7.3 million (including accrued interest) was
received as part repayments.
Post period end, £1.5 million of drawdowns were made on existing loans, one
loan was fully repaid for £1.5 million (including accrued interest and
applicable fees) and part payments were received amounting to £4.5 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 2023, the senior portfolio
has an average LTV of 59.5% based on loan commitments (with mezzanine loans
having an LTV range of between 49.5% and 68.0% whilst the highest approved
senior loan LTV is 65.6%).
Four 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 four loans of approximately £3.7 million; the
Group have also provided for an ECL on the remainder of the loans' portfolio
for an additional £1.4 million: in total, the Group have provided for an ECL
of £5.1 million in its consolidated accounts.
Current loan investment examples:
Location Total commitment Loan type Loan term Current LTV Underlying security
Fleet, Hampshire £1,400,000 MezzanineDevelopment Loan 18 55.00% Development of eight 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 Senior Investment Loan 36 60.58% 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 £17.4m 5.1%* High-yield, dominant Madrid shopping centre and separate development site 30% shareholding; 6-year term bank finance facility
(€20.1m)
* Yield on equity over twelve months to 30 September 2023, excluding
Fund fees
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 55,000 square metres comprising over 100 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.
H2O occupancy, by area, as at 30 September 2023 was 92.6%. The centre trading
levels remain below the pre-covid highs, however a recovery is evident. In the
calendar year to 30 September 2023, visitor numbers were approximately 6.8%
below those of the same period in 2019 (pre-Covid) and 7.0% above the same
period in 2021.
During the period, a notable asset management action included the signing of
contracts with three existing Inditex group brands within the centre to extend
the footprint of existing stores and extend the lease terms. The works to
deliver the new 3,000 square metre store for anchor retailer Primark continue
to advance on schedule. The store is expected to be delivered during 2024.
The asset management highlights are as follows:
· Valuation: 30 September 2023: €120.0 million (£103.9 million)
(31 March 2023: €119.3 million (£104.9 million)).
· Centre occupancy: 92.6% by area as at 30 September 2023.
· Weighted average lease length to next break of 2.3 years and 7.9
years to expiry as at 30 September 2023.
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 £8.4m* 8.9%** High return industrial facility in Hamburg Germany Long leased investment with moderately geared, long term, bank finance
facility
(€9.7m)
* Property value including sundry assets/liabilities and cash, net of
associated debt
** Yield on equity over twelve months to 30 September 2023, excluding
Fund fees
ART has an investment of €9.7 million (£8.4 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 (£8.2 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 £3.6m 5.3%* Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing
* Annualised monthly return, excluding Fund fees
ART has an investment of £3.6 million (property valuation as at 30 September
2023) 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 £2.7m 5.2%* Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing
* Annualised monthly return, excluding Fund fees
ART has an investment of £2.7 million (property valuation as at 30 September
2023) 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.
Long leased hotel, Yardley, Birmingham
Investment Investment type Carrying value Income return p.a. Property type / Investment notes
underlying security
Hotel, Yardley, UK Direct property £4.8m 7.7%* Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent No external gearing
* Annualised monthly return, excluding Fund fees
ART has an investment of £4.8 million in a 64-bedroom property, which is held
freehold and occupies a site of 1.42 acres and has 116 car parking spaces in
Yardley. The hotel is situated to the east of Birmingham City Centre off the
A45. The hotel is in a well-connected location equidistant between Birmingham
City Centre to the west and Birmingham Airport to the east.
The property is leased to Travelodge Hotels Limited until November 2060 with a
tenant only break option in 2035. Under the lease, the tenant is responsible
for building maintenance.
The passing rent of £0.4 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 6.1% Listed investment fund FTSE 250 infrastructure debt fund
GCP Infrastructure Investments Limited Listed equity £0.9m 6.7% Listed investment fund FTSE 250 infrastructure fund
GCP Asset Backed Income Fund Limited Listed equity £0.9m 6.1% Listed investment fund Diversified asset back debt fund
Total £4.1m 6.2%
*Yield on equity based on 12 months to 30 September 2023
The Company invested (value as at 30 September 2023: £4.1 million) across
three investments that offer 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.
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 2023 was £0.6 million.
UK Treasury Bonds (Gilts) and Bills
Investment Investment type Carrying value Income return p.a. * Property type / underlying security Investment notes
Gilts UK Treasury Bonds £6.0m 4.8% Liquid Government security Short dated (maturity in September 2024)
Treasuries UK Treasury Bills £7.1m 5.5% Liquid Government security Short dated (maturity in March 2024)
Total £13.1m 5.2% **
* Annualised yield to maturity
** Weighted average
These government backed short term investments offer the Company enhanced
returns over cash balances.
During the period, £7.0m in Gilts matured and earned a yield to maturity of
4.0% and £7.1m in UK Treasury Bills matured and earned a yield to maturity of
4.2%. Post period end, the Company invested further £6.0 million in short
dated Gilts with an annualised yield to maturity of 4.9% with maturity in
October 2025.
Cash balances
Investment Investment type Carrying value Income return p.a. Property type / underlying security Investment notes
Cash balance * Cash £6.0m 1.5% ** 'On call' and current accounts n/a
Morgan Stanley Sterling Liquidity Fund Short-term investment £6.0m 5.3% Money market fund, daily liquidity n/a
* Group cash of £7.1m excluding cash held with the Hamburg holding
company of £1.1m
** weighted average interest earned on call accounts
As at 30 September 2023, the Group had cash balances of £6.0 million,
excluding cash held with the Hamburg holding company of £1.1 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 risk managing its loan portfolio and
extending its wider investment strategy to opportunistically target
investments in mezzanine and assets 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
23 November 2023
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
2023, 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
23 November 2023
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 2023 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 consolidated set
of financial statements in the half-yearly financial report for the six months
ended 30 September 2023 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
23 November 2023
Condensed consolidated statement of comprehensive income
For the six months ended For the six months ended
30 September 2023 30 September 2022
(unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income
Revenue 3 4,218 - 4,218 2,977 - 2,977
Change in the revaluation of investment properties 10 - (867) (867) - 143 143
(Losses)/gains on financial assets and liabilities held at fair value through 5 (62) (48) (110) 272 (1,406) (1,134)
profit or loss
Total income/(expense) 4,156 (915) 3,241 3,249 (1,263) 1,986
Expenses
Expected credit losses (277) (779) (1,056) - (608) (608)
Property operating expenses (41) - (41) (41) - (41)
Investment Manager's fee 21 (1,158) - (1,158) (1,189) - (1,189)
Other administration costs (546) - (546) (476) - (476)
Total operating expenses (2,022) (779) (2,801) (1,706) (608) (2,314)
Operating profit/(loss) 2,134 (1,694) 440 1,543 (1,871) (328)
Share of profit/(loss) of joint ventures and associates 12 167 (120) 47 525 324 849
Finance income 4 481 4 485 44 - 44
Finance costs (102) - (102) (100) (66) (166)
Profit/(loss) before taxation 2,680 (1,810) 870 2,012 (1,613) 399
Taxation 6 (18) 23 5 (66) (112) (178)
Profit/(loss) after taxation 2,662 (1,787) 875 1,946 (1,725) 221
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 - (443) (443) - 1,478 1,478
Other comprehensive (expense)/income for the period - (443) (443) - 1,478 1,478
Total comprehensive income/(expense) for the period 2,662 (2,230) 432 1,946 (247) 1,699
Earnings per ordinary share (basic & diluted) 8 1.5p 0.4p
Adjusted earnings per ordinary share (basic & diluted) 8 4.6p 3.3p
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 2023 31 March 2023
(unaudited) (audited)
£'000 £'000
Non-current assets
Investment property 10 27,506 23,496
Investment in joint ventures and associates 12 17,441 17,654
Loans advanced 13 10,296 16,051
55,243 57,201
Current assets
Investments held at fair value 11 17,214 18,310
Derivatives held at fair value through profit or loss 243 -
Loans advanced 13 47,583 39,385
Collateral deposit 14 1,131 1,143
Trade and other receivables 15 471 414
Cash and cash equivalents 16 13,092 18,455
79,734 77,707
Total assets 134,977 134,908
Current liabilities
Derivatives held at fair value through profit or loss - (171)
Trade and other payables 17 (1,088) (986)
Corporation tax (26) (34)
Bank borrowings 18 (31) (30)
Total current liabilities (1,145) (1,221)
Total assets less current liabilities 133,832 133,687
Non-current liabilities
Bank borrowings 18 (8,157) (8,271)
Deferred tax 6 (321) (349)
(8,478) (8,620)
Total liabilities (9,623) (9,841)
Net assets 125,354 125,067
Equity
Share capital 19 - -
Special reserve 61,564 60,550
Translation reserve 9 452
Capital reserve 38,360 40,147
Revenue reserve 25,421 23,918
Total equity 125,354 125,067
Net asset value per ordinary share 9 214.3p 216.8p
The financial statements were approved by the Board of Directors and
authorised for issue on 23 November 2023. 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 2023 (unaudited) £'000
(unaudited) £'000
Operating activities
Profit for the period after taxation 875 221
Adjustments for:
Change in revaluation of investment property 867 (143)
Net losses on financial assets and liabilities held at fair value through 110 1,134
profit or loss
Taxation (5) 178
Share of profit of joint ventures and associates (47) (849)
Interest receivable on loans to third parties (3,398) (2,394)
Expected credit losses 1,056 608
Finance income (485) (44)
Finance cost 102 166
Operating cash flows before movements in working capital (925) (1,123)
Movements in working capital:
Movement in trade and other receivables (42) (123)
Movement in trade and other payables 93 (43)
Cash flows used in operations (874) (1,289)
Loan interest received 678 1,091
Loans granted to third parties (9,739) (9,581)
Loans repaid by third parties 8,710 10,359
Cash returned from escrow for loans granted post year end - 1,928
Interest received 131 44
Interest paid (93) (91)
Tax paid (30) (29)
Cash flows (used in)/generated from operating activities (1,217) 2,432
Investing activities
Acquisition of investment property (5,118) (7,403)
Investment in UK Treasury Bonds and Bills (13,140) -
Redemption of UK Treasury Bonds and Bills 14,130 -
Investment in Morgan Stanley Sterling Liquidity Fund (5,990) -
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 187 178
Income from UK Treasury Bonds and Bills 163 -
Dividend income from Morgan Stanley Sterling Liquidity Fund 33 -
Collateral deposit increase 12 (348)
Cash flows (used in)/generated from investing activities (9,723) 4,054
Financing activities
Share issue costs - (78)
Share buyback - (9,553)
Share buyback costs (39) (49)
Cash paid on maturity of foreign exchange forward (202) -
Ordinary dividends paid (106) (250)
Cash flows used in financing activities (347) (9,930)
Net decrease in cash and cash equivalents (11,287) (3,444)
Cash and cash equivalents at beginning of period 18,455 41,250
Exchange translation movement (66) 128
Cash and cash equivalents at end of period 7,102 37,934
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 2023 Notes Special reserve Translation reserve Capital Revenue Total equity
(unaudited) £'000 £'000 reserve reserve £'000
£'000 £'000
At 1 April 2023 60,550 452 40,147 23,918 125,067
Total comprehensive income/(expense) for the period
Loss/(profit) for the period - - (1,787) 2,662 875
Other comprehensive expense for the period - (443) - - (443)
Total comprehensive (expense)/income for the period - (443) (1,787) 2,662 432
Transactions with owners
Cash dividends 7 - - - (106) (106)
Scrip dividends 7 1,053 - - (1,053) -
Share issue costs (39) - - - (39)
Total transactions with owners 1,014 - - (1,159) (145)
At 30 September 2023 61,564 9 38,360 25,421 125,354
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 7 - - - (250) (250)
Scrip dividends 7 987 - - (987) -
Share issue costs (78) - - - (78)
Share buyback 21 (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
The accompanying notes form an integral part of these financial statements.
Notes to the condensed consolidated financial statements for the period ended
30 September 2023
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 and Sterling. The
presentation currency of the Group is Sterling. For Euro based transactions
the period end exchange rate used is £1:€1.154 (31 March 2023:
£1:€1.137) and the average rate for the period used is £1:€1.157 (30
September 2022: £1:€1.174).
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 23
November 2023 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 2023 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 2023, 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 2023 and are expected to be applied to the Group's
annual consolidated financial statements for the year ending 31 March 2024.
The Group continues to only have one operating segment.
3. Revenue
For the six months ended For the six months ended
30 September 2023 30 September 2022
£'000 £'000
Rental income 768 552
Service charges 26 26
Rental revenue 794 578
Interest receivable on loans to third parties 3,398 2,394
Interest revenue 3,398 2,394
Other income 26 5
Other revenue 26 5
Total 4,218 2,977
4. Finance income
For the six months ended For the six months ended
30 September 2023 30 September 2022
£'000 £'000
Bank interest receivable 131 44
Income from UK Treasury Bonds and Bills 317 -
Income from Morgan Stanley GBP Liquidity Fund 33 -
Foreign exchange gain 4 -
Total 485 44
5. 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 2023 30 September 2022
£'000 £'000
Unrealised gains and losses on financial assets and financial liabilities held
at fair value through profit or loss
Movement in fair value of loans (314) -
Movement in fair value of investments (260) (943)
Movement in fair value of foreign exchange forward contract 414 (463)
Undistributed investment income - 57
Realised gains and losses on financial assets and financial liabilities held
at fair value through profit or loss
Movement in fair value of loans 65 37
Dividends received from investments held at fair value 187 178
Realised loss on foreign exchange forward contract (202) -
Net losses on financial assets and financial liabilities held at fair value (110) (1,134)
through profit or loss
6. Taxation
For the six months ended For the six months ended
30 September 2023 30 September 2022
£'000 £'000
Current tax 18 66
Deferred tax (23) 112
Tax expense 5 178
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 (where all Company's subsidiaries are
in the liquidation process and all local taxes have been settled), 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.
A deferred tax liability has been provided for in relation to the Hamburg
investment property in Germany and its movement can be analysed as follows:
30 September 2023 31 March 2023
£'000 £'000
Opening balance 349 265
Movement for the period (23) 74
Foreign exchange movements (5) 10
Closing balance 321 349
7. Dividends
Dividend reference period Shares Dividend Paid Date of payment
'000 per share £
Quarter ended 31 December 2022 5,299 1.0p 52,990 6 April 2023
Quarter ended 31 March 2023 5,257 1.0p 52,570 28 July 2023
Total paid in the period 105,560
Quarter ended 30 June 2023 5,037 1.0p 50,368 27 October 2023
Total 155,928
The Company will pay a dividend of 1.0p per share for the quarter ended 30
September 2023 on 24 January 2024.
In accordance with IAS 10, the dividends for quarters ended 30 June 2023 and
30 September 2023 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 2023, the Company issued
791,549 ordinary shares: on 6 April 2023, 401,545 were issued at the price of
£1.31 and, on 28 July 2023, 390,004 were issued at the price of £1.36.
8. 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 2023 ended six months ended 30 September 2022
31 March
2023
Ordinary share Ordinary share Ordinary share
Earnings per statement of comprehensive income (£'000) 875 631 221
Basic and diluted earnings (pence per share) 1.5 1.1 0.4
Earnings per statement of comprehensive income (£'000) 875 631 221
Net change in the revaluation of investment properties 867 548 (143)
Movement in fair value of investments 260 1,338 943
Movement in fair value of foreign exchange forward contract (212) 259 463
Net change in the revaluation of the joint ventures' investment property 120 569 (324)
Expected credit losses 779 881 608
Foreign exchange (gain)/loss (4) 201 66
Deferred tax (23) 74 112
Adjusted earnings 2,662 4,501 1,946
Adjusted earnings (pence per share) 4.6 7.7 3.3
Weighted average number of shares ('000s) 57,879 58,606 59,778
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.
9. Net asset value per share
At 30 September 2023 At 31 March 2023 At 30 September 2022
£'000 £'000 £'000
Net asset value (£'000) 125,354 125,067 125,025
Net asset value per ordinary share 214.3p 216.8p 219.6p
Number of ordinary shares ('000s) 58,493 57,701 56,937
10. Investment property
30 September 2023 31 March 2023
£'000 £'000
Fair value of investment property at 1 April 23,496 15,984
Additions 5,118 7,407
Fair value adjustment in the period/year (867) (548)
Foreign exchange movements (241) 653
Fair value of investment property at 30 September / 31 March 27,506 23,496
Investment property is represented by a property located in Hamburg
(Werner-Siemens-Straße), Germany, a residential property located in
Liverpool, UK and three hotels located in the UK.
The fair value of the Hamburg property of €18.2 million (£15.8 million) (31
March 2023: €18.5 million (£16.3 million)) has been arrived at on the basis
of an independent valuation carried out at the balance sheet date by Cushman
& Wakefield ('C&W').
On 23 August 2023, the Group acquired a further UK hotel located in Yardley,
Birmingham, leased to Travelodge Hotels Limited, the United Kingdom's largest
independent hotel brand, for £4.8 million plus acquisition costs of £0.3
million. This hotel is carried in the balance sheet at its cost of £4.8
million.
The fair values of the two UK hotels of £3.6 million (31 March 2023: £3.8
million; located in Wadebridge) and £2.7 million (31 March 2023: £2.8
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 2023: £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.
11. Investments held at fair value
30 September 2023 31 March 2023
£'000 £'000
Current
As at 1 April 18,310 10,990
Additions 13,140 13,948
Redemptions (14,130) (5,290)
Accrued income on UK Treasury Bonds and Bills 154 -
Movement in fair value of investments (260) (1,338)
As at 30 September / 31 March 17,214 18,310
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 2023 was £2.3
million (31 March 2023: £2.2 million).
· GCP Infrastructure Investments Limited ('GCP') a listed fund: the
market value of GCP as at 30 September 2023 was £0.9 million (31 March 2023:
£1.1 million).
· GCP Asset Backed Income Fund Limited ('GABI'): the market value
of GABI as at 30 September 2023 was £0.9 million (31 March 2023: £1.0
million).
· In June 2023, ART invested £6.0 million in UK Treasury Bonds
earning a coupon of 2.75% and with maturity in September 2024: the market
value of this investment as at 30 September 2023 was £6.0 million.
· In September 2023, ART invested £7.0 million in UK Treasury
Bills: the market value of this investment as at 30 September 2023 was £7.1
million.
· 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 2023 was nil (31 March 2023: nil).
During the period, one investment in UK Treasury Bonds and one investment in
UK Treasury Bills came to maturity and generated proceeds for ART of £7.0 and
£7.1 million, respectively.
ART also received payments of coupon interests on UK Treasury Bonds amounting
to £0.2 million.
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 H2O SPHL Total
30 Sep 2023 31 March 2023 31 March 2023 31 March 2023
£'000 £'000 £'000 £'000
As at 1 April 17,654 17,075 118 17,193
Group's share of joint ventures' profits before fair value movements and 167 1,012 - 1,012
dividends
Fair value adjustment for investment property and interest rate cap (119) (569) - (569)
Dividends paid by joint venture and associate to the Group - (582) - (582)
Capital return - - (118) (118)
Foreign exchange movements (261) 718 - 718
As at 30 September / 31 March 17,441 17,654 - 17,654
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 2023, the carrying value of
ART's investment in CBRE H2O was £17.4 million (€20.1 million) (31 March
2023: £17.7 million (€20.1 million)).
Foreign exchange movement is recognised in other comprehensive income.
The fair value of the H2O property in Madrid (Spain) of €120.0 million
(£103.9 million) (31 March 2023: €119.3 million (£104.9 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 2023 is €62.2
million (£53.9 million): this loan is provided by Aareal Bank, carries an
interest rate of EURIBOR plus 190 basis points and matures on 18 May 2024.
During the period, the CBRE H2O group entered into an interest rate cap
contract with Nomura Financial Products Europe Gmbh to cap EURIBOR at the
strike rate of 2.5%. 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 2023 31 March 2023
£'000 £'000
Non-current
Loans granted to third parties 10,296 15,530
Interest receivable from loans granted to third parties - 521
Total loans at amortised cost 10,296 16,051
Loans at fair value through profit or loss - -
Total non-current loans 10,296 16,051
Current
Loans granted to third parties 48,454 40,187
Interest receivable from loans granted to third parties 3,516 2,279
Total loans at amortised cost 51,970 42,466
Loans at fair value through profit or loss 354 604
Expected credit losses (4,741) (3,685)
Total current loans 47,583 39,385
As at 30 September 2023, the Group had granted a total of £57.9 million (31
March 2023: £55.4 million) of secured senior and secured mezzanine loans to
third parties. These comprised eighteen 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 18.6% for
mezzanine loans and 9.8% 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 2023 31 March 2023
£'000 £'000
Opening balance of ECL (3,685) (2,572)
Movement for the period (revenue) (277) (232)
Movement for the period (capital) (779) (881)
Closing balance of ECL (4,741) (3,685)
As at 30 September 2023 four 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 impaired one loan, which is accounted for at fair value,
by £0.3 million; the Group also calculated an ECL on the other three loans of
approximately £3.3 million and provided for an ECL on the remainder of the
loans' portfolio for an additional £1.4 million: in total, the Group have
provided for an ECL of £4.7 million in its consolidated accounts.
Loans maturity of the total £57.9 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 - - 10,296 - 10,296
Current 41,418 6,165 - - 47,583
Post period end, £1.5 million of drawdowns were made on existing loans, one
loan was fully repaid for £1.5 million (including accrued interest and
applicable fees) and part payments were received amounting to £4.5 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 £3.8 million and matures on 31 December
2025, the second loan without a repayable on demand clause amounts to £9.5
million and matures on 1 April 2025; both loans remain in stage 1 of the IFRS
9 model.
14. Collateral deposit
30 September 2023 31 March 2023
£'000 £'000
Collateral deposit 1,131 1,143
The collateral deposit of £1.1 million (31 March 2023: £1.1 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 2023 31 March 2023
£'000 £'000
Current
Trade debtors 330 295
VAT - -
Other debtors 141 119
Total 471 414
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
16. Cash and cash equivalents
30 September 2023 31 March 2023
£'000 £'000
Morgan Stanley Sterling Liquidity Fund 5,990 -
Cash at bank 7,102 18,455
Total 13,092 18,455
During period, the Company invested £6.0 million in the Morgan Stanley
Sterling Liquidity Fund, which invests in high quality short-term money market
instruments denominated in sterling, offers same day liquidity and earns an
annualised return, net of Morgan Stanley's fees, of 5.3%.
17. Trade and other payables
30 September 2023 31 March 2023
£'000 £'000
Trade creditors 36 51
Deferred revenue 218 106
Investment Manager's fee payable 584 589
Accruals 207 229
VAT 20 5
Other creditors 23 6
Total 1,088 986
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.
18. Bank borrowings
30 September 2023 31 March 2023
£'000 £'000
Current liabilities: interest payable 31 30
Total current liabilities 31 30
Non-current liabilities: bank borrowings 8,157 8,271
Total liabilities 8,188 8,301
The borrowings are repayable as follows:
Interest payable 31 30
On demand or within one year - -
In the second to fifth years inclusive 8,157 -
After five years - 8,271
Total 8,188 8,301
Movements in the Group's non-current bank borrowings are analysed as follows:
30 September 2023 31 March 2023
£'000 £'000
As at 1 April 8,271 7,921
Amortisation of deferred finance costs 8 15
Exchange differences on translation of foreign currencies (122) 335
As at 30 September / 31 March 8,157 8,271
As at 30 September 2023, bank borrowings represent the Nord LB (a German bank)
loan principal for €9.5 million (£8.2 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 (£4.2 million) and €4.6 million (£4.0
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 €9.5
million (£8.2 million).
The table below sets out an analysis of net debt and the movements in net debt
for the period ended 30 September 2023.
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 2023 18,455 (171) (30) (8,271) 9,983
Cash movements (11,287) 202 93 - (10,992)
Non cash movements
Foreign exchange adjustments (66) - 8 122 64
Unrealised gain on foreign exchange forward contract - 212 - 212
Loan fee amortisation and other costs - - - (8) (8)
Interest charge - - (102) - (102)
Net asset/(debt) as at 30 September 2023 7,102 243 (31) (8,157) (843)
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
19. 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 2023 7,717,581 57,701,049 65,418,630
Share issue for scrip dividend - 791,549 791,549
Shares bought back - - -
Shares cancelled following buyback - - -
At 30 September 2023 7,717,581 58,492,598 66,210,179
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.
Following the Annual General Meeting held on 7 September 2023 the Company has
the authority to buy back 14.99% of its share capital (assessed on 29 June
2023) for a total of 8,709,579 shares. No shares have been yet bought back
under this authority.
During the period, the Company did not purchase any shares in the market.
As at 30 September 2023, the ordinary share capital of the Company was
66,210,179 (including 7,717,581 ordinary shares held in treasury) and the
total voting rights in the Company was 58,492,598.
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 2023, the Company issued
791,549 ordinary shares: on 6 April 2023, 401,545 were issued at the price of
£1.31 and, on 28 July 2023, 390,004 were issued at the price of £1.36.
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 27 October 2023, as a result of the scrip dividend elections related to the
dividend of the quarter ended 30 June 2023, the Company issued 419,593
ordinary shares at the price of £1.27.
As at the date of this announcement, the ordinary share capital of the Company
is 66,629,772 (including 7,717,581 ordinary shares held in treasury) and the
total voting rights in the Company is 58,912,191.
20. Events after the balance sheet date
Post period end, £1.5 million of drawdowns were made on existing loans, one
loan was fully repaid for £1.5 million (including accrued interest and
applicable fees) and part payments were received amounting to £4.5 million
(including accrued interest).
In October 2023, ART invested a further £6.0 million in UK Treasury Bonds
earning a coupon of 3.5% and with maturity in October 2025.
On 27 October 2023, as a result of the scrip dividend elections related to the
dividend of the quarter ended 30 June 2023, the Company issued 419,593
ordinary shares at the price of £1.27 (note 19).
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 24 January 2024.
21. 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.
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 2023 is provided in note 17.
The Directors of the Company received total fees as follows:
For the six months ended For the six months ended
30 September 2023 30 September 2022
Phillip Rose 13,750 13,750
Jeff Chowdhry 13,750 13,750
Melanie Torode 24,000 27,811
William Simpson 19,750 19,750
Peter Griffin 13,750 13,750
Total 85,000 88,811
The Directors' interests in the shares of the Company are detailed below:
30 September 2023 31 March 2023
Number of ordinary shares held Number of ordinary shares held
Phillip Rose 992,195 978,999
Brad Bauman 61,000 60,092
Jeff Chowdhry 5,000 -
Melanie Torode - -
William Simpson 40,000 -
Peter Griffin - -
Post period end, following the October 2023 scrip issue by the Company,
Phillip Rose and Brad Bauman increased their shareholdings in ART to 999,159
and 61,478 ordinary shares, respectively.
Alpha Global Property Securities Fund Pte. Ltd, a company registered in
Singapore, owned directly by the partners of ARC, held 25,491,369 shares in
the Company at 30 September 2023 (31 March 2023: 25,060,728).
ARC did not hold any shares in the Company at 30 September 2023 (31 March
2023: nil). The following, being partners of the Investment Manager, hold
direct interests in the following shares of the Company:
30 September 2023 31 March 2023
Number of ordinary shares held Number of ordinary shares held
Brian Frith - -
Phillip Rose 992,195 978,999
Brad Bauman 61,000 60,092
Karl Devon-Lowe, a partner of ARC, received fees of £3,750 (31 March 2023:
£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 £31,200 (31 March 2023:
£96,300) and an amount of £14,200 was outstanding at period end.
22. Financial assets and financial liabilities held at fair value through
profit or loss
Financial assets and liabilities carrying value
30 September 2023 31 March 2023
£'000 £'000
Financial assets at fair value through profit or loss
Investments held at fair value 17,214 18,310
Foreign exchange forward contract 243 -
Loans advanced 354 604
Total financial assets at fair value through profit or loss 17,811 18,914
Financial liabilities at fair value through profit or loss
Foreign exchange forward contract - (171)
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.
· The fair value of the investments in UK Treasury Bonds which are
traded on the LSE, is based upon the market price of those instruments at the
balance sheet date.
· The fair value of the investments in UK Treasury Bills, is based
upon the market valuation of those instruments provided by Barclays Bank PLC
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.
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.
Financial assets and financial 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 2023.
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 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets measured at fair value
Non-current
Investment property - - 27,506 27,506
Loans advanced - - 354 354
Current
Investments held at fair value 17,214 - - 17,214
Foreign exchange forward contract - 243 - 243
Assets and liabilities measured at fair value
31 March 2023
Level 1 Level 2 Level 1 Total
£'000 £'000 £'000 £'000
Assets measured at fair value
Non-current
Investment property (note 13) - - 23,496 23,496
Loans advanced - - 604 604
Current
Investments held at fair value (note 15) 18,310 - - 18,310
Liabilities measured at fair value
Current
Foreign exchange forward contract - (171) - (171)
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 2023.
Directors and Company information
Directors Independent valuers in the UK Legal advisors in Guernsey
William Simpson (Chairman) Cushman & Wakefield Carey Olsen
Jeff Chowdhry
Peter Griffin No 1 Colmore Square PO Box 98, Carey House
Phillip Rose
Melanie Torode Birmingham B4 6AJ Les Banques
St Peter Port
Guernsey GY1 4BZ
Registered office Independent valuers in Spain Legal advisors in the UK
Floor 2, Trafalgar Court Savills Aguirre Newman Norton Rose
Les Banques Paseo de la Castellana, 81 3 More London Riverside
St Peter Port Madrid, 28046 London SE1 2AQ
Guernsey GY1 4LY Spain
Investment Manager Independent valuers in Germany Legal advisors in Spain
Alpha Real Capital LLP Cushman & Wakefield Ashurst LLP
Level 6, 338 Euston Road
Rathenauplatz, 1 Alcalá, 44
London NW1 3BG
Frankfurt, 60313 Madrid, 28014
Germany Spain
Administrator and secretary Independent Auditor Registrar
Ocorian Administration (Guernsey) Limited BDO Limited Computershare Investor Services (Jersey) Limited
Place du Pré, Rue du Pré
Floor 2, Trafalgar Court
St Peter Port 13 Castle Street
Guernsey GY1 3LL
St Helier
Les Banques, St Peter Port
Jersey JE1 1ES
Guernsey GY1 4LY
Broker Tax advisors in Europe
Panmure Gordon (UK) Limited KPMG LLP
15 Canada Square
One New Change
London E14 5GL
London EC4M 9AF
Ernst & Young LLP
1 More London Riverside
London SE1 2AF
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 24 Quarter ending 7 8 9 23 24
November 30 September 2023 December 2023 December 2023 January January January
2023 2024 2024 2024
Trading update 1 Quarter ending 31 December 2023 14 15 26 11 12
(Qtr 3) March March March March April April
2024 2024 2024 2024 2024 2024
Annual report and dividend announcement 21 Quarter ending 31 March 4 5 11 25 26
June 2024 July July July July July
2024 2024 2024 2024 2024 2024
Annual report published 5
July
2024
Annual General Meeting 5
September 2024
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AnnouncementREG - Alpha Real Tst Ltd - Director/PDMR Shareholding
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