Half year report. For the six months ended 31 March 2013

Transcription

1 Half year report 2013 For the six months ended

2 Contents 1 Highlights 2 About the Fund 3 Investment review 8 Condensed consolidated statement of comprehensive income 9 Condensed consolidated balance sheet 10 Condensed consolidated statement of cash flows 11 Condensed consolidated statement of changes in net assets attributable to holders of redeemable shares 12 Notes to the condensed consolidated financial statements 18 Company information, management and administration

3 Alpha UK Real Estate Fund plc : Half year report Alpha UK Real Estate Fund plc aims to deliver a high and stable income yield, together with the potential for capital appreciation through active asset management, by investing in a diversified portfolio of UK property. Highlights Bank borrowings reduced by 4.6 million outstanding debt balance reduced during the period from 36.1 million (as at 30 September 2012) to 31.5 million (as at ) Additional debt repayment of 4.4 million after the period end, sales proceeds from Cardiff and Fulham further reduced borrowings to 27.1 million (as at 25 April 2013) Strategic sales Northampton, Cardiff and Fulham sold at prices comparable with valuation, totalling 5.5 million New lettings lease extensions and new leases covering approximately 200,000 square feet achieved New income lease extensions and new leases totalling approximately 1.2 million per annum of contracted rental income, after future stepped rental uplifts and rent free periods 9.0m 9.0 million reduction of bank borrowings to 25 April k 200,000 sqft of lease extensions and new leases 5.5m 5.5 million of strategic sales achieved in line with recent valuations

4 2 Alpha UK Real Estate Fund plc : Half year report 2013 About the Fund Alpha UK Real Estate Fund plc (the Company or Fund ) provides investors with the opportunity to participate in the principal commercial property investment sectors in the UK on a pooled basis, without taking direct responsibility for the acquisition and day to day management of individual properties. The Company aims to deliver a high and stable income yield, together with the potential for capital appreciation, by investing in a diversified portfolio of UK commercial property. Dividends The Company paid no dividends during the six-month period to and no dividend is currently proposed. Redemptions As noted in the Annual Report, the Fund is currently closed for redemptions. The Board has resolved to continue suspension of redemptions to 30 December Management The Investment Manager and Promoter of the Fund is Alpha Real Capital LLP. The Asset Manager for the Fund is Aberdeen Real Estates Operations Limited and Aberdeen Property Investors UK Limited. Website Listing The Company is an umbrella fund established as an open ended investment company in Ireland. The Company s assets are held through two subsidiary companies (Alpha UK Property Fund Asset Company ( No 1 ) Limited and Alpha UK Property Fund Asset Company ( No 2 ) Limited (the Subsidiaries ) which together own a portfolio of 23 properties. The Company s shares are listed on the Main Securities Market of the Irish Stock Exchange.

5 Alpha UK Real Estate Fund plc : Half year report Investment review Financial highlights 30 September March 2012 Net Asset Value ( NAV ) pence per share Net Asset Value 12.4m 16.7m 19.2m Market value of property portfolio provided by independent valuers, CBRE 48.8m 54.8m 60.9m Portfolio summary Property Sector Lettable area (sq ft) Independent valuation Corporation Street, Rotherham Retail 20, m High Street, Southend Retail 2, m Park Street, Walsall Retail 4, m Well Street, Bradford Offices 43, m Elmfield Road, Bromley Offices 12, m Southfields, Dunstable Offices 32, m Roseberry House, Epsom Offices 17, m Victoria Road, Horley Offices 15, m Academy Street, Inverness Offices 17, m Brooks Road, Lewes Offices 15, m Wyfold Road Fulham, London* Offices 13, m Front Street, Longbenton Offices 20, m Kings Manor, Newcastle-upon-Tyne Offices 42, m St Georges Street, Norwich Offices 35, m Kings Road, Reading Offices 21, m Marsh Barton, Exeter Industrial 24, m Trafford Park, Manchester Industrial 42, m Willow Lane, Mitcham Industrial 61, m Lakeside Industrial Estate, Redditch Industrial 128, m Neepsend, Sheffield Industrial 82, m Chesford Grange, Warrington Industrial 102, m Tilley Road, Washington Industrial 170, m Qualcast Road, Wolverhampton Industrial 176, m Total 1,104, m * Property disposed of post balance sheet on 22 April 2013 (refer page 6 for further detail)

6 4 Alpha UK Real Estate Fund plc : Half year report 2013 Investment review (continued) Economic outlook The UK economy grew by 0.3% during the first quarter of 2013, in contrast to the contraction in output seen in the wider Euro area where GDP growth continued to be affected by a lack of momentum. The improvement in UK GDP output in the first quarter of the year followed a contraction of 0.3% in the final quarter of 2012, which was largely due to the unwinding of the short term boost from the Olympic Games. The Bank of England continues to support monetary stimulus to the UK economy with its programme of asset purchases now totalling 375 billion. The official bank base rate remains at 0.5% with the first rise in base rate not priced into market rates until Employment growth remains robust with the upward trend seen since mid-2011 continuing to underpin growth prospects in the UK. There were 29.7 million people in employment at March 2013, an improvement of 0.8% from March The reported UK unemployment rate was 7.8% at March 2013, down 0.4% from a year earlier. Property market outlook The first quarter of the year has seen improving market sentiment toward opportunities in the regional and secondary markets as the search for yield pushes investors to look beyond prime assets. As anticipated, the scarcity of stock at the prime end of the market has caused investors to gradually move up the risk curve and look at opportunities where the concentration of demand is lower, and where supply is greater such as the regional markets. In particular, increased interest has been seen in parts of the secondary market in London and the South during the quarter as opportunity funds seek to take advantage of well-priced assets; especially those where asset management potential exists and where yields are high. However, investors remain highly selective and are focusing on locations where a lack of development pipeline will mean that supply is limited in the future. The selectivity of investors has meant that the market continues to be challenging for vendors outside the key regional centres and yields have continued to soften as a result. Compounding this situation, a lack of transactional evidence in the secondary market means that its pricing remains largely untested and, as such, a disconnect continues to exist between asset valuations and purchaser aspirations. Caburn House, Lewes St Georges Street, Norwich

7 Alpha UK Real Estate Fund plc : Half year report Investment review (continued) Portfolio overview Alpha UK Real Estate Fund plc, via the Subsidiaries, holds a regionally diversified portfolio of 23 properties in high street retail, offices and warehouses in the UK The current weighted average unexpired term to the first tenant break or lease expiry is 4.6 years Average property value in the portfolio is 2.1 million The void rate (as a percentage of total ERV) at the end of the period was 23.0% The initial yield from the portfolio was 8.0%, with a reversionary yield of 9.8% at Investment strategy and asset management review The Investment Manager s strategy to deliver shareholder value will continue to focus on the following objectives: To enhance net rental income the marketing strategy for vacant units will aim to meet tenant requirements for good quality affordable accommodation on flexible lease terms. To selectively deploy capital expenditure when value-add opportunities are identified a priority will be given to works where a property can be significantly enhanced to attract additional tenant demand. The Investment Manager is also working to identify opportunities to extend leases and or remove tenant breaks where appropriate value can be unlocked. 45% 1% 3% 6% 11% 34% Regional split by value n South East - standard retail n South East - offices n South East - industrials n Rest of UK - standard retail n Rest of UK - offices n Rest of UK - industrials To undertake targeted strategic sales disposals may be considered where it is believed that the price likely to be achieved is accretive to shareholder returns having considered the current yield and the future realisable capital value. The strategy to concentrate on active asset management initiatives within the portfolio offers tangible opportunities to improve the Fund s returns to investors. The Investment Manager continues to work on a number of value-add initiatives within the portfolio, and progress on these are detailed in the following table overleaf. 51% 3% 46% Sector breakdown by portfolio valuation n Retail n Office n Industrial Strategic asset disposals have been identified within the portfolio and these properties are currently being selectively marketed for sale. Attention to individual property management remains a priority as evidenced by the high rental collection rate of 99.7% within 28 days of the quarter end during the period. Following the appointment of administrators Ernst & Young to Dreams plc (the sole tenant at Warrington) on 06 March 2013, the Fund has been advised that Dreams plc, intends to vacate the premises by 23 June Leasing agents have been appointed and the warehouse space is being actively marketed by the Fund. Active asset management remains a key priority. Six new lettings were completed in the period amounting to 1.2 million per annum - post uplifts and rent-free periods. Six new lettings and lease renewals amounting to contracted rental income of 1.2 million per annum, after future stepped rental uplifts occur and rent free periods expire, were completed during the period to March In addition to this, various lease negotiations are under way with a number of key tenants who have upcoming breaks or expiries.

8 6 Alpha UK Real Estate Fund plc : Half year report 2013 Investment review (continued) Value-add initiatives completed since 30 September 2012 Strategic disposals New lettings Wyfold Road, Fulham Subsequent to the period end, the sale of this vacant office property completed on 22 April 2013 at 3.65 million. Cathedral Road, Cardiff In Q1 2013, the sale of this multi-let office property successfully completed at 0.8 million. Corporation Street, Rotherham Terms have been agreed with the existing tenant to extend its lease by a further 5 years. Marsh Barton, Exeter Terms have been agreed with the occupational tenant to remove its break clause in 2016 thereby securing contracted rental income until Abington Street, Northampton The sale of this part vacant mixed use property completed in Q at 1.1 million. Willow Lane, Mitcham Terms have been contracted with the existing warehouse occupier to increase the current rent passing and extend its lease until Various lease negotiations are under way with a number of key tenants who have upcoming breaks or expiries. Well Street, Bradford Corporation Street, Rotherham

9 Alpha UK Real Estate Fund plc : Half year report Investment review (continued) Results and distribution The adjusted earnings per share for the six months to 31 March 2013 is 0.20 pence (for the six months ending 31 March 2012: 0.30 pence). As a consequence of the continued amortisation of the bank borrowings, no distributions were made in the period. Revaluation and net asset value Net asset value per share at is 22 pence (30 September 2012: 30 pence). The decline in net asset value reflects the like-for-like impact of the property portfolio revaluation. The Fund s independent valuation of investment properties was 48.8 million as at (30 September 2012: 54.8 million). Taking into account disposals made during the period, on a like-for-like basis the portfolio valuation at 30 September 2012 was 52.6 million. Summary Despite the current difficult market conditions with occupiers facing financial challenges, good progress continues to be made in retaining tenants and letting up vacant properties. The medium term strategy for the portfolio is to continue to secure a number of strategic asset sales, so as to reduce the level of the debt outstanding and hence place the Fund on a firm financial footing for the future. The immediate goal is to arrange the refinancing programme for the Fund, and continue to enhance its income profile by building on the asset management success delivered in the first six months of the year. Alpha Real Capital LLP (Investment Manager) 28 May 2013 Finance At, the Fund had borrowings of 31.5 million against a portfolio valuation of 48.8 million this represented a Loan to Value ( LTV ) ratio of 64.6%. Following post balance sheet application of net proceeds from the sales of Cardiff and Fulham, the bank borrowings now total 27.1 million, representing an LTV ratio of 61.4%, based upon the 30 April 2013 valuation. The Fund is within the terms of its borrowing covenants regarding LTV, with the next covenant test due in September Good progress continues to be made in retaining tenants and letting up vacant properties. The Fund continues to maintain a comfortable margin above the bank interest cover ratio covenant of 1.5 times. A key goal for the Company is re-financing the bank loan facility and the Company is looking to complete this in advance of the facility expiry date of 12 December Repositioning the Fund The key initiatives planned include: Strengthening the Fund s finances through debt reduction and a further long term refinancing of its bank loan facility Crystallising the value-add initiatives identified within the portfolio Realising assets likely to underperform or under-contribute to earnings Enhancing income by reducing voids and decreasing irrecoverable outgoings via a comprehensive leasing programme

10 8 Alpha UK Real Estate Fund plc : Half year report 2013 Condensed consolidated statement of comprehensive income For the six months ended (All amounts stated in GBP) Notes For the six months ended For the six months ended 31 March 2012 Revenue Capital Total Revenue Capital Total Income Revenue 2,959 2,959 2,812-2,812 Property operating expenses 4 (1,201) - (1,201) (721) - (721) Net rental income 1,758-1,758 2,091-2,091 Expenses Net change in gains/(losses) on revaluation of investment properties 10 - (4,486) (4,486) - (3,850) (3,850) Losses on property disposals - (310) (310) - (8) (8) Property investment manager fees (368) (368) (411) - (411) Other administration costs 5 (263) - (263) (247) - (247) Operating profit /(loss) 1,127 (4,796) (3,669) 1,433 (3,858) (2,425) Finance income Finance costs 6 (1,216) - (1,216) (1,096) - (1,096) Profit /(loss) before taxation (72) (4,432) (4,504) 348 (3,404) (3,056) Taxation (141) - (141) Profit /(loss) for the period/year 117 (4,432) (4,315) 207 (3,404) (3,197) Total comprehensive income for the period/year 117 (4,432) (4,315) 207 (3,404) (3,197) Earnings pence per share - basic & diluted 7 (7.8) (5.4) Adjusted earnings pence per share - basic & diluted The accompanying notes form an integral part of the financial statements. On behalf of the board Peter Blessing Director Desmond Murray Director 28 May 2013

11 Alpha UK Real Estate Fund plc : Half year report Condensed consolidated balance sheet As at 30 September 2012 (All amounts stated in GBP) Notes Non-current assets Investment properties 10 48,755 54,775 Current assets Trade and other receivables 11 2,101 3,923 Cash and cash equivalents 3,796 7,478 Corporate tax asset ,199 11,515 Total assets 54,954 66,290 Current liabilities Corporate tax liability - (35) Trade and other payables 12 (3,785) (5,957) Convertible loan 13 (7,500) (7,500) Financial liabilities at fair value through profit or loss 14 - (364) Bank borrowings 15 (31,251) (35,701) (42,536) (49,557) Net assets 12,418 16,733 Represented by: Net assets attributable to holders of redeemable shares 12,418 16,733 Redeemable shares 17 55,292 55,292 Net asset value pence per share Net asset value pence per share (adjusted) The accompanying notes form an integral part of the financial statements. On behalf of the board Peter Blessing Director Desmond Murray Director 28 May 2013

12 10 Alpha UK Real Estate Fund plc : Half year report 2013 Condensed consolidated statement of cash flows For the six months ended (All amounts stated in GBP) Six months ended Year ended 30 September 2012 Net loss before taxation (4,504) (5,481) Adjustments for: Movement in unrealised valuation gains and losses on investment property 4,486 7,075 Loss on sale of properties Interest expense 1,216 2,154 Movement in unrealised gain on swap position (364) (831) Interest income (17) (33) Tax expense 190 (152) Operating profit before changes in operating assets and liabilities 1,317 3,064 Cash flows from operating activities Proceeds from sale of fixed assets 1,826 2,107 Capital expenditure on fixed assets (650) - Interest received Increase in trade and other receivables 1,821 (1,961) (Decrease)/increase in trade and other payables (2,347) 619 Net cash used in operating activities 1,984 3,863 Cash flows from financing activities Proceeds from the issue of share capital - - Redemption of redeemable share capital - (2,500) Alpha Real Trust Limited Loan - 7,500 External loan (repaid) (4,450) (1,994) Interest paid (1,216) (2,158) Dividends paid - - Net cash from financing activities (5,666) 848 Net (decrease)/increase in cash and cash equivalents (3,682) 4,711 Cash and cash equivalents at beginning of the period 7,478 2,767 Cash and cash equivalents at end of the period 3,796 7,478

13 Alpha UK Real Estate Fund plc : Half year report Condensed consolidated statement of changes in net assets attributable to holders of redeemable shares For the six months ended (All amounts stated in GBP) Six months ended Year ended 30 September 2012 Balance at the beginning of the period 16,733 24,864 Change in net assets attributable to holders of redeemable shares from operations for the period (4,315) (5,633) Issue of redeemable shares during the period - 2 Redemption of redeemable shares during the period - (2,500) Balance at the end of the period 12,418 16,733

14 12 Alpha UK Real Estate Fund plc : Half year report 2013 Notes to the condensed consolidated financial statements For the six months ended 1. General information Alpha UK Real Estate plc is a company domiciled in Ireland, which was incorporated on 6 July 2003.The company is an open-ended investment company with variable capital authorised by the Central Bank of Ireland and pursuant to Part XIII of the Companies Act, 1990 and in accordance with the Non-UCITS Notices issued by the Central Bank of Ireland. The Company commenced operations on 3 March Alpha UK Real Estate Fund plc shares are listed on the Irish Stock Exchange. 2. Significant accounting policies The unaudited condensed financial information included in the half year report for the six months ended, have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting as adopted by the European Union. The half year report should be read in conjunction with the Group s Annual Reporting and Accounts for the year ended 30 September 2012, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The same accounting policies and methods of computation are followed in these condensed financial statements as were applied in the preparation of the Group s financial statements for the year ended 30 September 2012, which are available on the Company s website ( The Directors considered all relevant new standards, amendments and interpretations to existing standards effective for the half year report for the six months ended : their adoption has not led to any changes in the Groups accounting policies and they had no material impact on the financial statements of the Group. The interim condensed financial statements are made up from 1 October 2012 to, and have been prepared under the historical cost convention as modified by the revaluation of investment properties and the mark to market of derivative instruments. The preparation of the interim condensed financial statements requires Directors to make estimates and assumptions that affect the reporting amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the condensed interim financial statements. If in the future such estimates and assumptions, which are based on the Directors best judgement at the date of the interim condensed financial statements, deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. 3. Presentation of income statement In order to better reflect the activities of an investment company and in accordance with guidance issued by the Association of Investment Companies ( AIC ), supplementary information, which analyses the income statement between items of a revenue and capital nature, has been presented alongside the statement of comprehensive income. 4. Property operating expenses 1 October 2012 to 1 October 2011 to 31 March 2012 Irrecoverable insurance and service charge (221) (108) Direct recoverable expenditure (39) (32) Valuation fee (7) (12) Service charges recoverable (320) (265) Non-recoverable expenditure (466) (265) Bad and doubtful debts (30) (2) Professional fees (107) (37) Property management fees (11) - (1,201) (721)

15 Alpha UK Real Estate Fund plc : Half year report Notes to the condensed consolidated financial statements (continued) For the six months ended 5. Administrative expenses 1 October 2012 to 1 October 2011 to 31 March 2012 Administration fee (47) (57) Custodian fee (6) (8) Audit fee (54) (31) Tax Fees (9) (8) Directors fees (34) (27) Legal and professional fees (108) (93) Operational expenses (5) (23) (263) (247) 6. Finance income and finance costs Finance income 1 October 2012 to 1 October 2011 to 31 March 2012 Bank interest received Net gains on financial liabilities through profit or loss Finance costs 1 October 2012 to 1 October 2011 to 31 March 2012 Bank charges and loan interest 1,216 1,096 1,216 1, Earnings per share The adjusted earnings are presented to provide what the Company believes is a more appropriate assessment of the operational income accruing to the Group s activities. Hence, the Company adjusts basic earnings for income and costs which are not of a recurrent nature or which may be more of a capital nature. 1 October 2012 to 1 October 2011 to 31 March 2012 Earnings per income statement (4,315) (3,197) Basic earnings pence per share (7.8) (5.4) Earnings per income statement (4,315) (3,197) Revaluation losses in investment properties 4,486 3,850 Losses on property disposals Mark to market of interest rate swaps (364) (454) Adjusted earnings Adjusted earnings pence per share Weighted average number of ordinary shares 55,292 59,651

16 14 Alpha UK Real Estate Fund plc : Half year report 2013 Notes to the condensed consolidated financial statements (continued) For the six months ended 8. Tax Liability The Company is not liable to tax in respect of its income and gains, other than on the occurrence of a chargeable event. Shareholders, other than Irish residents, who complete a declaration confirming that they are not Irish residents, will not be liable to Irish tax on income or gains arising to them from their investment in the Fund and no tax will be deducted on distributions from the Company or payments by the Company in respect of a redemption or other disposal of their investment. In the absence of an appropriate declaration, the Company will be liable to Irish tax on the occurrence of a chargeable event. A chargeable event includes any distribution to Shareholders or any redemption or transfer of shares. A chargeable event does not include: (i) any transactions in relation to Shares held in a recognised clearing system as designated by order of the Revenue Commissioners of Ireland; or (ii) an exchange of Shares arising on a qualifying amalgamation or reconstruction of the Company with another fund. Capital gains, dividends and interest received may be subject to withholding taxes imposed by the country of origin and such taxes may not be recoverable by the Company or its Shareholders. The Subsidiaries invest in UK property and therefore are liable to income tax in the UK on the net rental profits. The current rate of UK income tax for a non-resident company is 20%. Based on current UK law, the Subsidiaries will not be liable to UK capital gains tax, or corporation tax on capital gains, on the realisation of UK investment property gains. The taxation charge for the period of 189,758 (30 September 2012: 152,495) relates to UK income taxation payable in respect of the Subsidiaries. The tax credit/ (charge) is only applicable to the Subsidiaries as the Company is not liable to tax. 9. Dividends payable Dividends are included in financial expenses. Net income, excluding unrealised gains and losses, after deduction of costs and expenses applicable to the Company and its proportionate share of costs and expenses of the Company and after deduction of interest and any amortising loans shall be distributed as dividends quarterly within twenty business days of each quarter being the last business days of March, June, September and December in each year by electronic transfer. Dividends are paid out of capital. Dividends of Nil (30 September 2012: Nil) were declared for the Group for the period of which Nil (30 September 2012: Nil) is outstanding as at. The dividend per share outstanding at is Nil (30 September 2012: Nil). 10. Investments Investment property The carrying amount of investment property is the fair value of the property as determined by a registered independent appraiser having an appropriate recognised professional qualification and recent experience in the location and category of the property being valued. 30 September 2012 Market value as at the beginning of the period 54,775 64,770 Properties acquired during the period - - Properties disposed of during the period (2,185) (2,920) Fair value adjustment (3,835) (7,075) Market value as at the end of the period 48,755 54,775

17 Alpha UK Real Estate Fund plc : Half year report Notes to the condensed consolidated financial statements (continued) For the six months ended 11. Trade and other receivables 30 September 2012 Trade debtors 971 1,375 Prepayments - 11 Other debtors 697 2,157 Expenses recoverable 14 6 Accrued income Taxation - 1 2,101 3, Trade and other payables 30 September 2012 Accruals & deferred income (2,062) (1,931) Alpha Real Trust Limited loan interest payable (195) - Other creditors including taxation (1,528) (4,026) (3,785) (5,957) 13. Convertible loan 30 September 2012 Alpha Real Trust Limited Convertible Loan (7,500) (7,500) (7,500) (7,500) This loan is repayable on 20th November 2014 and carries a coupon of 6% per annum and a 14% redemption premium if not converted. Interest is payable on a quarterly basis on the following dates; 25 January, 25 April, 25 July and 25 October. Alpha Real Trust Limited has the right to convert the principal amount of the loan and the conversion premium into participating shares or to its permitted nominee at the NAV per participating shares at the conversion date. The conversion right may be exercised at any time on or after the date of drawdown and on or prior to the repayment date. Once the conversion note is served it is irrevocable. 14. Financial liabilities at fair value through profit and loss Following the expiry of the Fund s previous facility on 12th December 2012, the swaps associated with that facility were settled.

18 16 Alpha UK Real Estate Fund plc : Half year report 2013 Notes to the condensed consolidated financial statements (continued) For the six months ended 15. Bank borrowing The loans are secured on the portfolio of assets held by the Subsidiaries. The liability of million included in the Balance Sheet is as follows: 30 September 2012 Gross facility 31,485 36,094 Loan amortisation payment accrued at - (393) Loan fees not amortised at the period end (234) - Long term loan balance as at 31,251 35,701 The Company s Subsidiaries currently have a loan facility with Hypothekenbank which expires on 31 December The interest payable will be 4.5% per annum above three-month LIBOR. A 1.0 million repayment has been agreed for 30 September Following post balance sheet application of net proceeds from the sale of Fulham to repayment of borrowings and agreed amortisation, the bank borrowings now total 27.1 million. The quarterly loan-to-value covenant is a maximum of 65% until 30 September 2013, reducing to 50% at 31 December The quarterly interest cover covenant is a minimum of 150% of the projected net income on a twelve month look-forward basis. The facilities are cross-collaterised over the assets of the two Subsidiary companies with covenants tested on an aggregated basis. 16. Reconciliation of Dealing NAV / Financial Statement NAV and basic and adjusted NAV pence per share At At per unit At 30 September 2012 At 30 September 2012 per unit Dealing NAV 12, , Less: Unrealised loss on Swaps (184) (0.0033) (364) (0.0066) Adjustment as per IAS Dilaps Accrual Write off* Timing Differences (35) (0.0006) NAV per Financial Statements 12, , The adjusted net assets are presented to provide what the Company believes is a more relevant assessment of the Group s net asset position. The Company has determined that certain fair value and accounting adjustments may not be realisable in the longer term. 17. Capital and Reserves The Company has authorised share capital of 500,000,000,000 shares of no par value and 1,000 shares of 1.00 designated as Subscriber Shares. The issued share capital of the Company is two Subscriber Shares, which are paid up to the amount of Shares of the Initial Fund are available for subscription in accordance with the Articles and the Prospectus. During the period ended the numbers of shares issued, redeemed and outstanding were as follows: 30 September 2012 Opening shares in issue 55,292 61,762 Subscriptions - 5 Redemptions - (6,475) Shares in issue at the period end 55,292 55,292

19 Alpha UK Real Estate Fund plc : Half year report Notes to the condensed consolidated financial statements (continued) For the six months ended 18. Related Parties The following transactions with related parties were entered into during the period by the Company in the ordinary course of business and on normal commercial terms: The Company earned loan interest during the period from the subsidiaries of 810,900 (30 September 2012: 1,429,556). The Company incurred capital contributions to the subsidiaries of 1,098,814 (30 September 2012: 992,907) during the period. During the period Alpha Real Capital LLP and Aberdeen Property Investors UK Limited as Investment and Asset managers earned a fee of 368,194 (year ended 30 September 2012: 430,088). At 518,857 (30 September 2012: 629,758) of fees were outstanding to be paid. As at, the shareholder below owns more than 20% of the shares in the Company and is considered to be a related party, being a sister company of the Asset Manager, for the purpose of this disclosure: Aberdeen Investments Jersey Limited 12,136,649 shares Derek Short, director of the Company, is also a director of the two subsidiary companies, Alpha UK Property Fund Asset Company ( No 1 ) Limited and Alpha UK Property Fund Asset Company ( No 2 ) Limited. Brad Bauman and Desmond Murray, directors of the Company, were appointed directors of the two subsidiary companies, Alpha UK Property Fund Asset Company ( No 1 ) Limited and Alpha UK Property Fund Asset Company ( No 2 ) Limited on 22 November Brad Bauman and Mark Rattigan are partners of Alpha Real Capital LLP. The Company borrowed 7,500,000 from Alpha Real Trust Limited (formerly Alpha Tiger Property Trust Limited) a related party. The interest paid for the period ended was 30,737. The remaining interest is outstanding and is disclosed as loan interest accrued in note Soft Commission Arrangements During the year, there were no soft commission arrangements entered into by the Group. 20. Capital Commitments The Group did not have any capital commitments to purchase properties or other assets as at (2012: Nil). 21. Subsequent Events On 22nd April 2013, the Fund sold its property at Fulham, London for an initial consideration of 3.65 million. All net proceeds were used to reduce the Fund s external loan. 22. Approval of Financial Statements The Directors approved the financial statements on 28 May 2013.

20 18 Alpha UK Real Estate Fund plc : Half year report 2013 Company information, management and administration Company information (unaudited) Applications for shares in the Company can be made at any time. Applications received up to 5:00pm on the business day proceeding the last business day of each month will normally be accepted and contract notices evidencing ownership of the shares will be sent to the successful applicants within five business days after the last business day of each month. The subscription price per share shall be equal to the net asset value per share plus an appropriate provision for duties and charges. The Directors have determined that while the subscription proceeds of new issues of shares are used to repay borrowings of the Company rather than to acquire new properties, new shares will be issued at the prevailing net asset value and that no provision will be added to the subscription price to reflect duties and charges incurred in the purchase of the investments of the Company. The Directors anticipate that in the short term all subscription proceeds will be applied towards debt reduction. Redemption notices may normally be made to the company with the same time scale as above. Payment of redemption proceeds will be paid by the company not later than the last business day of the third month after the last business day of the month in which the shares were redeemed. The redemption price per share shall be equal to the net asset value per share less an appropriate provision for duties and charges. If redemptions amounting to 10% or more of the total number of shares in issue at the time such redemptions are received, the Company may, by notice in writing to all Shareholders, elect to suspend redemptions in whole or in part for such period (not exceeding 12 months) as the Directors shall consider reasonable. Distribution arrangements Net income of the portfolio, after deduction of costs and expenses applicable to the portfolio, and its proportionate share of costs and expenses of the Company and after deduction of interest and any amortising loans shall be distributed as dividends quarterly within 20 business days of March, June, September and December. Distributions will to be affected by the requirement to amortise the loan facility. Valuations All the portfolio s properties are re-valued monthly. Valuations are undertaken in accordance with the current edition of the Appraisal and Valuation Standards issued by the Royal Institution of Chartered Surveyors. The figure represents the aggregate of the individual values and should not be regarded as a valuation of the portfolio as a single lot. Gearing The Company is able to borrow to finance its investments. Borrowing is limited to 100% of the net assets of the portfolio and should not exceed 50% of the gross assets of the portfolio. Borrowings under the Prospectus may be secured on the properties held within the portfolio. The Company s borrowing limit set out in its Prospectus is 50% of the gross assets of the portfolio. However the loan facility allows the Company to borrow up to 67.5% loan to value. As the Company s current borrowing is 196% of net assets, it is currently in excess of the prospectus borrowing limits. The Central Bank of Ireland is aware of the breach by the Company of its borrowing limits but acknowledges the Company is taking steps to move back within the limit. Management fees The Investment Manager receives a base fee at a rate up to 1.25% per annum of the gross asset value of the portfolio. The Investment Manager is paid sales fees up to 1 % of any subscription price, in respect of each shareholder which subscribed during the month.

21 Alpha UK Real Estate Fund plc : Half year report Company information, management and administration (continued) Directors of the Company Peter Blessing, Irish - Independent Desmond Murray, Irish - Independent Derek Short, British, Jersey resident Brad Bauman, Australian Mark Rattigan, British Registered office George s Court Townsend Street Dublin 2 Ireland Administrator Northern Trust International Fund Administration Services (Ireland) Limited George s Court Townsend Street Dublin 2 Ireland Independent valuer CB Richard Ellis St Martin s Court 10 Paternoster Row London EC4M 7HP England Listing Sponsor NCB Stockbrokers Limited 3 George s Dock International Financial Services Centre Dublin 1 Ireland Bankers to the Subsidiaries Hypothekenbank London Branch 4th Floor 90 Long Acre WC2E 2RA England Barclays Bank PLC 90 St Vincent Street Glasgow G2 5UQ Scotland Promoter, Investment Manager and Distributor Alpha Real Capital LLP 1B Portland Place London W1B 1PN England Legal advisors LK Shields Solicitors 39/40 Upper Mount Street Dublin 2 Ireland Custodian Northern Trust Fiduciary Services (Ireland) Limited George s Court Townsend Street Dublin 2 Ireland Asset Manager Aberdeen Property Investors UK Limited One Bow Bells House London EC4M 9HH England Aberdeen Real Estate Operations Limited 10 Queen s Terrace Aberdeen Ab10 1YG Scotland Independent auditors PricewaterhouseCoopers Chartered Accountants One Spencer Dock London WC2E 9RA North Wall Quay Dublin 1 Ireland

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