Active UK Real Estate Fund

Active UK Real Estate Fund Half year report 2015 For the six months ended

Active UK Real Estate Fund Contents 1 Highlights 2 About the Fund 3 Investment review 7 Condensed consolidated statement of comprehensive income 8 Condensed consolidated balance sheet 9 Condensed consolidated statement of cash flows 10 Condensed consolidated statement of changes in net assets attributable to holders of redeemable shares 11 Notes to the condensed consolidated financial statements 20 Company information, management and administration www.activeukrealestatefund.com

Active UK Real Estate Fund plc : Half year report 2015 1 Active 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 Strategic sales following the completion of successful asset management initiatives, two* properties were sold for 3.2 million (ahead of the 30 September 2014 valuation) Valuation uplift on a like-for-like basis after sales, the portfolio valuation has increased by 3.5 million (+7.8%) over the reporting period Adjusted Net Asset Value ( NAV ) uplift the adjusted NAV per share increased from 27 pence per share as at 30 September 2014 to 32 pence per share as at 31 March 2015 (an increase of 18.5%) Streamlined reporting the Fund has redomiciled from Ireland to Jersey, streamlining reporting requirements and creating the opportunity to employ more flexible finance structures Refinance the maturing sub-ordinated debt and convertible loan facilities were refinanced with a new junior loan facility in November 2014 3.2m 3.2 million strategic sale achieved ahead of 30 September 2014 valuation 7.8% 7.8% of portfolio valuation uplift on a like-for-like basis 18.5% 18.5% increase in adjusted NAV per share during the period * The Horley property was sold in April 2015 post the balance sheet date.

2 Active UK Real Estate Fund plc : Half year report 2015 About the Fund Active 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 and subscriptions The Fund is currently closed. Listing The Company is structured as a closed-ended investment company in Jersey. The Company s property assets are held through its subsidiary company, Alpha UK Property Fund Asset Company ( No 2 ) Limited. The Company s shares are listed on the Channel Islands Securities Exchange and it is regulated by the Jersey Financial Services Commission. Management The Investment Manager, Promoter and Asset Manager of the Fund is Alpha Real Capital LLP, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom Website www.activeukrealestatefund.com

Active UK Real Estate Fund plc : Half year report 2015 3 Investment review Financial highlights 30 September 2014 31 March 2014 Adjusted Net Asset Value pence per share 32 27 22* Net Asset Value 17.5m 14.9m 11.9m* Market value of the property portfolio provided by independent valuers, CBRE 47.9m 45.2m 40.7m * Restated; see note 2 for details. Portfolio summary Property Sector Lettable area sq ft Independent valuation Well Street, Bradford Offices 43,130 1,080,000 Southfields, Dunstable Offices 32,300 4,250,000 Victoria Road, Horley Offices 15,120 2,500,000 Academy Street, Inverness Offices 17,350 600,000 Brooks Road, Lewes Offices 15,520 2,150,000 Kings Manor, Newcastle-upon-Tyne Offices 42,910 3,150,000 St George s Street, Norwich Offices 35,630 3,400,000 Kings Road, Reading Offices 21,950 3,000,000 Marsh Barton, Exeter Industrial 24,960 1,000,000 Trafford Park, Manchester Industrial 42,240 2,360,000 Willow Lane, Mitcham Industrial 61,720 4,300,000 Lakeside Industrial Estate, Redditch Industrial 128,250 6,375,000 Chesford Grange, Warrington Industrial 102,560 4,195,000 Tilley Road, Washington Industrial 134,460 3,300,000 Qualcast Road, Wolverhampton Industrial 176,040 6,200,000 Total 894,140 47,860,000

4 Active UK Real Estate Fund plc : Half year report 2015 Investment review (continued) Marsh Barton, Exeter St George s Street, Norwich Financial Performance The adjusted earnings per share ( EPS ) for the six months to is a loss of 0.4 pence (for the six months ending 31 March 2014: a loss of 1.5 pence (restated)). The improvement in the adjusted EPS is due to an increase in occupancy rate. Due to cash constraints within the Fund, no dividends were declared or paid in the period. Net asset value per share at was 32 pence (30 September 2014: 27 pence). The improvement in net asset value is primarily due to the increase in the valuation of the property portfolio. The Fund s independent valuation of investment properties was 47.9 million as at 31 March 2015 (30 September 2014: 45.2 million). Taking into account disposals made during the period, on a like-for-like basis the portfolio valuation at 30 September 2014 was 44.4 million, an increase of 3.5 million (7.8%) over the period. Portfolio overview Active UK Real Estate Fund plc, via its subsidiary company, Alpha UK Property Fund Asset Company ( No 2 ) Limited, holds a regionally diversified portfolio of 15 properties in offices and warehouses in the UK The current weighted average unexpired term to the first tenant break or lease expiry is 5.6 years Average property value in the portfolio is 3.2 million The void rate as a percentage of total Estimated Rental Value ( ERV ) at the end of the period was 25.8 % The initial yield from the portfolio was 5.5 %, with a reversionary yield of 9.0% as at Finance At, the Fund had borrowings from the senior lender (RBS) of 31.0 million against a portfolio valuation of 47.9 million. This represented a Loan to Value ( LTV ) ratio of 64.7%. The Fund is within the terms of its borrowing covenants regarding LTV. In addition the Fund has additional subordinated borrowings of 9.6 million from Alpha Real Trust ( ART ) which has no LTV related covenants. 49% 9% 32% 10% Regional split by value n South East Offices n Rest of UK Offices n South East Industrial n Rest of UK Industrial The Fund s interest cover ratio of 2.44 times remains at a comfortable margin above the senior lender s bank interest cover ratio covenant test level of 1.75 times. Sector breakdown by portfolio valuation 58% 42% n Offices n Industrial

Active UK Real Estate Fund plc : Half year report 2015 5 Investment review (continued) 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. 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 has identified and undertaken a number of value-add initiatives within the portfolio. A selection of these initiatives that have been completed are detailed in the table below. Further strategic asset disposals are planned to be undertaken in due course upon completion of certain asset management plan value-add initiatives. During the period the Investment Manager has focussed on re-gearing existing leases by removing tenant breaks and improving the portfolio s overall leasing position. As a result of these initiatives the weighted average unexpired lease term (WAULT) for the Fund has improved from 5.43 years as at 30 September 2014 to 5.60 years as at. Value-add initiatives completed since 30 September 2014 Strategic disposals Alternative use Corporation Street, Rotherham Single let retail unit with perceived high re-leasing risk and no immediate rental growth prospects was sold within the period. Kings Road, Reading Planning permission was obtained for conversion from offices into student accommodation, improving property valuation by 0.6 million (25%) over the period. Victoria Road, Horley (sold in April 2015, post period end) Following the grant of planning permission for conversion to residential, the sale of this mixed use office and retail property completed on 8 April 2015. The sale price was 2.5 million ahead of the September 2014 valuation of 1.8 million. Academy Street, Inverness Planning permission was obtained to convert the part vacant offices into a hotel. Lease re-gears Willow Lane, Mitcham and Marsh Barton, Exeter Two lease extensions were completed with a key tenant, increasing the lease term by 5 years.

6 Active UK Real Estate Fund plc : Half year report 2015 Investment review (continued) Economic overview Economic expansion continued for the UK with annual gross domestic product (GDP) estimated to have increased by 2.6% during 2014. Whilst the annual growth rate in 2014 is 0.9 percentage points higher than the annual GDP growth seen for 2013, the latest annual estimate is lower than previous expectations due to weaker private consumption and flat private investment. On a quarterly basis GDP output increased by 0.5% in Q4 2014. Inflation has continued to fall due to unusually weak contributions from energy, airfares and food prices. The UK entered a deflationary environment in May this year, with prices having fallen by 0.1% over the past year. The last time deflation was recorded was in 1960. Lower oil prices and falling food prices alongside the broader effect on traded goods prices of the appreciation of sterling since the spring of 2013 have combined to further push down inflation. The labour market continues to improve with increases in employment figures, however underlying real wage growth has shown little movement. The unemployment rate of the labour force fell to 5.7% as at March 2015, down from 7.2% the same time a year ago. However, wage growth remains flat with the annual growth rate for employee earnings increasing by 1.6% for the three months to January 2015, little changed from the annual growth rate between October and December 2014 of 1.7%. UK property market overview The current low interest rate economic environment has continued to contribute towards improving investor sentiment towards the higher relative returns on offer from UK commercial property investments. Inflows into retail and institutional property funds during 2014 were strong and the weight of money targeting UK commercial property is now at its highest level for eight years with 4.5 billion of inflows reported during 2014. After a strong finish to 2014 in which 20.5 billion of commercial property transacted in the final quarter alone, the UK commercial property market has had a steady start to 2015 with 3.9 billion of commercial transactions taking place in January 2015. Capital value growth continues to be witnessed albeit at a slower rate than the preceding year. The performance through yield compression seen during 2014 has significantly slowed and it is expected that throughout 2015 there will be more emphasis on income management and asset management initiatives to deliver returns. Summary The Investment Manager has achieved a number of strategic sales, completed several value-add initiatives and achieved new lettings which are expected to underpin the value of the properties in the portfolio. The medium term strategy for the portfolio continues to be to secure a number of strategic asset sales to further reduce the level of the debt outstanding to ensure the Fund is well positioned for future growth. The Investment Manager will continue to focus on enhancing the Fund s income profile by building on the asset management success delivered in the first six months of the year. Alpha Real Capital LLP Investment Manager Brooks Road, Lewes Active management of the Fund s portfolio has helped to stabilise and improve the valuation of the core assets.

Active UK Real Estate Fund plc : Half year report 2015 7 Condensed consolidated statement of comprehensive income For the six months ended For the six months ended For the six months ended 31 March 2014 (restated) Notes Revenue Capital Total Revenue Capital Total Income Revenue 1,954-1,954 2,000-2,000 Property operating expenses 4 (647) - (647) (1,074) - (1,074) Net rental income 1,307-1,307 926-926 Expenses Net change in gains/(losses) on revaluation of investment 11-3,225 3,225-2,175 2,175 Properties Losses on property disposal - 1 1 - (15) (15) Property investment manager fees (194) (194) (312) - (312) Other administration costs 5 (148) - (148) (207) - (207) Operating profit/(loss) 965 3,226 4,191 407 2,160 2,567 Finance income 6 - - - 5 9 14 Finance costs 6 (1,183) (309) (1,492) (1,220) - (1,220) (Loss)/profit before taxation (218) 2,917 2,699 (808) 2,169 1,361 Taxation 7 - - - - - - (Loss)/profit for the period (218) 2,917 2,699 (808) 2,169 1,361 Other comprehensive expenses - (64) (64) - - - Total comprehensive income for the period (218) 2,853 2,635 (808) 2,169 1,361 Earnings pence per share-basic & diluted 9 4.9 2.5 Adjusted earnings per share -basic & diluted 9 (0.4) (1.5) The accompanying notes form an integral part of the financial statements. On behalf of the Board Charlotte Cruickshank Director Chris Marshall Director 29 May 2015

8 Active UK Real Estate Fund plc : Half year report 2015 Condensed consolidated balance sheet (All amounts stated in GBP) Notes 31 March 2015 30 September 2014 Non-current assets Investment properties 11 47,860 45,230 47,860 45,230 Current assets Trade and other receivables 12 1,305 1,842 Cash and cash equivalents 1,813 891 3,118 2,733 Total assets 50,978 47,963 Current liabilities Interest bearing loans and borrowings 13 - (12,563) Trade and other payables 14 (2,117) (2,941) Financial liabilities at fair value through profit or loss 15 (355) (46) (2,472) (15,550) Total assets less current liabilities 48,506 32,413 Non current liabilities Interest bearing loans and borrowings 13 (30,997) (17,539) (30,997) (17,539) Total liabilities (33,469) (33,089) Net assets 17,509 14,874 Represented by Net assets attributable to holders of participating shares 17,509 14,874 Number of participating shares in issue (000 s) 17 55,292 55,292 Net asset value pence per share based on participating shares in issue 32 27 The accompanying notes form an integral part of the financial statements. On behalf of the Board Charlotte Cruickshank Director Chris Marshall Director 29 May 2015

Active UK Real Estate Fund plc : Half year report 2015 9 Condensed consolidated statement of cash flows For the six months ended (All amounts stated in GBP) Six months ended Six months ended 31 March 2014 (restated) Operating activities Net profit before taxation 2,699 1,361 Adjustments for: Net change on revaluation of investment properties (3,225) (2,175) (Profit)/Loss on sale of properties (1) 15 Taxation - - Finance income - (14) Finance costs 1,492 1,220 Operating cash flows before movements in working capital 965 407 Movements in working capital Decrease in operating trade and other receivables 537 711 (Decrease)/increase in operating trade and other payables (824) 934 Cash generated from operations 678 2,052 Interest received - 5 Bank loan interest paid and costs (1,183) (1,858) Cash flows from operating activities (505) 199 Investing activities Proceeds from sale of fixed assets 651 3,486 Capital expenditure and lease incentive costs (653) - Cash flows from investing activities (2) 3,486 Financing activities Borrowings repaid (13,230) (3,525) New borrowings 14,350 - Change in fair value of interest rate swap 309 (9) Net cash flow from financing activities 1,429 (3,534) Net increase in cash and cash equivalents 922 151 Cash and cash equivalents at beginning of the period 891 3,934 Cash and cash equivalents at end of the period 1,813 4,085 The accompanying notes form an integral part of the financial statements.

10 Active UK Real Estate Fund plc : Half year report 2015 Condensed consolidated statement of changes in net assets attributable to holders of participating shares For the six months ended (All amounts stated in GBP) Six months ended Year ended 30 September 2014 Balance at the beginning of the period/year 14,874 9,893 Change in net assets attributable to holders of redeemable shares from operations 2,699 4,981 Dividends paid and payable - - Other comprehensive expenses (adjustment on restructuring) (64) - Balance at the end of the period/year 17,509 14,874 The accompanying notes form an integral part of the financial statements.

Active UK Real Estate Fund plc : Half year report 2015 11 Notes to the condensed consolidated financial statements For the six months ended 1. General information On 24 November 2014 the Alpha UK Real Estate Fund plc group made up of the Irish parent company, Alpha UK Real Estate Fund plc and its Jersey subsidiaries, were restructured as follows: The name of the Jersey subsidiary, Alpha UK Property Fund Asset Company ( No. 1 ) Limited was changed to Active UK Real Estate Fund plc. Active UK Real Estate Fund plc was converted from a private limited company to a public limited Company. New participating shares in Active UK Real Estate Fund plc were issued to the shareholders of the Irish Company. The number of Distribution Shares issued was equal to the number of participating shares of the Irish Company which were in issue. All contractual entitlements, obligations, assets and liabilities of the Irish Company, other than a provision for the liquidation expenses of the Irish Company, have been transferred to Active UK Real Estate Fund plc. This transfer included the Irish Company s shareholding in Alpha UK Property Fund Asset Company ( No. 2 ) Limited. Following the planned liquidation of the Irish Company, any amount remaining from the provision retained for the payment of liquidation expenses will be paid to Active UK Real Estate Fund plc. All Existing Shares in the Irish Company have been redeemed. The Irish Company has satisfied the redemptions by dividing amongst the shareholders all of the assets of the Irish Company, being the Distribution Shares, according to the number of Existing Shares then held by each shareholder. On 24 November 2014, except for the property at Corporation Street, Rotherham, all contractual entitlements, obligations, assets and liabilities, in place prior to the restructuring of Active UK Real Estate Fund plc were transferred, assigned or novated to Alpha UK Property Fund Asset Company ( No. 2 ) Limited. Hence Active UK Real Estate Fund plc Group is made up of two Jersey domiciled companies, Active UK Real Estate Fund plc and its subsidiary Alpha UK Property Fund Asset Company ( No 2 ) Limited. Active UK Real Estate Fund plc is a closed ended investment company regulated by the Jersey Financial Services Commission and listed on the Channel Islands 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 2014, 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 2014, which are available on the Company s website (www.activeukrealestatefund.com). Predecessor accounting as permitted under IFRS 3 was applied to reflect the substance of the corporate restructuring transaction which the Group undertook in November 2014. Adoption of new and revised Standards 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 Group s accounting policies and they had no material impact on the financial statements of the Group. Restatement At the prior year end the Group considered it appropriate to account for the redemption premium on the Alpha Real Trust Limited convertible loan over the life of the agreement in accordance with IAS 39. Therefore, the Group has determined that an adjustment is required in relation to prior year balances. The total amount of the adjustment required was 639,086. Due to the amount of the adjustment it is appropriate to reflect the adjustment by way of a prior year adjustment. Consequently, the Consolidated Income Statement, and Consolidated Statement of Cash flows and the related notes for the Group have been restated for the period ending 31 March 2014. Income Statement Previously reported 31 March 2014 Restated 31 March 2014 Financial expenses (1,859) (1,220) Increase in net assets attributable to holders of redeemable shares from operations 722 1,361 Earnings per share (pence per share) 1.3 2.5 Adjusted earnings per share (pence per share) (2.6) (1.5)

12 Active UK Real Estate Fund plc : Half year report 2015 Notes to the condensed consolidated financial statements (continued) For the six months ended 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 2014 to 1 October 2013 to 31 March 2014 Irrecoverable insurance and service charge (79) (200) Direct recoverable expenditure (33) (37) Valuation fee (1) (6) Service charge recoverable (212) (211) Non-recoverable expenditure (252) (271) Bad and doubtful debts 1 (284) Professional fees (59) (61) Property management fees (12) (4) (647) (1,074) 5. Other administrative costs 1 October 2014 to 1 October 2013 to 31 March 2014 Administration fee (80) (67) Custodian fee - (2) Audit fee (24) (43) Tax services fees (5) (8) Directors' fees (22) (35) Legal and professional fees (17) (24) Operating expenses - (28) (148) (207) 6. Finance income and finance costs Finance income 1 October 2014 to 1 October 2013 to 31 March 2014 Bank interest received - 5 Net gains on financial liabilities through profit or loss - 9-14 Finance costs 1 October 2014 to 1 October 2013 to 31 March 2014 (restated) Bank charges and loan interest (1,183) (1,220) Net loss on financial liabilities through profit or loss (309) - (1,492) (1,220)

Active UK Real Estate Fund plc : Half year report 2015 13 Notes to the condensed consolidated financial statements (continued) For the six months ended 7. Taxation Profits arising in the Company for the year of assessment and future periods are subject to Jersey Income Tax at a rate of 0% (31 March 2014: 0%). The Group invests in UK property and therefore is 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 Group 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 Nil (31 March 2014: Nil). 8. 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 2014: Nil) were declared for the Group for the period of which Nil (30 September 2014: Nil) is outstanding as at. 9. 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 2014 to 1 October 2013 to 31 March 2014 (restated) Earnings per income statement 2,699 1,361 Basic earnings per share 4.9 2.5 Earnings per income statement 2,699 1,361 Revaluation gains in investment properties (3,225) (2,175) Loss/(profit) on property disposal (1) 15 Mark to market of interest rate swaps 309 (9) Adjusted earnings (218) (808) Adjusted earnings pence per share (0.4) (1.5) Weighted average number of participating shares 55,292 55,292

14 Active UK Real Estate Fund plc : Half year report 2015 Notes to the condensed consolidated financial statements (continued) For the six months ended 10. Reconciliation of basic and adjusted NAV pence per share 30 September 2014 Net asset value 17,509 14,874 Net asset value pence per share 32 27 Net asset value 17,509 14,874 Interest rate swap 355 46 Adjusted net asset value 17,864 14,920 Adjusted net asset value pence per share 32 27 Number of shares 55,292 55,292 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. 11. Investments Investment properties 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 2014 Market value as at 1 October 45,230 42,015 Capex during the period 855 13 Properties disposed of during the period (1,450) (4,115) Fair value adjustment 3,225 7,317 Market value as at 31 March 47,860 45,230 12. Trade and other receivables 30 September 2014 Rental income receivable 734 1,434 Other receivables 501 408 Prepayments and accrued income 70-1,305 1,842

Active UK Real Estate Fund plc : Half year report 2015 15 Notes to the condensed consolidated financial statements (continued) For the six months ended 13. Borrowings Royal Bank of Scotland plc ( RBS ) Loans At the end of the period, the Group had a facility with RBS for 18 million, 13.5 million of which as at an all in rate of 4.76% and 4.5 million was charged at 3.0% floating above LIBOR. This entire facility will mature in September 2018. On 24 November 2014, RBS provided an additional loan of 4.05 million with a floating rate of 3.25% above LIBOR co-terminus with the existing 18.0 million loan. Alpha Real Trust Limited ( ART ) Mezzanine Loan ART provided new mezzanine finance on 24 November 2014 of 10.3 million maturing on 24 November 2016. The proceeds raised from the refinancing were substantially used to fund the redemption of the ART convertible loan, together with a redemption premium of 1.05 million and repay the existing ART mezzanine finance facility. On 3 December 2014, 0.7 million of the proceeds of the sale of the Rotherham property were used to partially repay the mezzanine finance facility. ART Convertible Loan The convertible loan was repaid in November 2014 and carried a coupon of 6% per annum and a 14% redemption premium if not converted. Interest was paid on a quarterly basis on the following dates; 25 January, 25 April, 25 July and 25 October. ART had the right to convert the principal amount of the loan and the conversion premium into participating shares or to its permitted nominee at the Net Asset Value per participating shares at the conversion date. The conversion right could have been 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. The convertible loan balance included the redemption premium accrued on an effect yield basis 30 September 2014 External borrowings RBS Loan 1 18,000 18,000 RBS Loan 2 4,050 - ART Mezzanine Loan 9,600 3,738 ART Convertible Loan - 8,841 31,650 30,579 Unamortised finance costs RBS (501) (458) Unamortised finance costs ART (152) (19) (653) (477) 30,997 30,102 Classified as: Current - 12,563 Non current 30,997 17,539 30,997 30,102 14. Trade and other payables 30 September 2014 Accruals and deferred income (1,720) (2,080) Other payables (397) (861) (2,117) (2,941)

16 Active UK Real Estate Fund plc : Half year report 2015 Notes to the condensed consolidated financial statements (continued) For the six months ended 15. Financial liabilities at fair value through profit and loss The Fund has entered into a swap to hedge interest rate exposure of the external borrowing. All gains and losses both realised and unrealised along with any movements arising during the period through the use of these swaps are disclosed in the income statement and the current fair value of the swaps is disclosed on the balance sheet. Financial Liabilities 30 September 2014 Interest rate swap (355) (46) 16. Fair value measurement The Group measures certain financial instruments such as derivatives and non financial assets such as investment property, at fair value at the end of each reporting period, using recognised valuation techniques and following the principles of IFRS 13. In addition, fair values of financial instruments measured at amortised cost are disclosed in the financial statements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The Group must be able to access the principal or the most advantageous market at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non financial asset takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. IFRS 13 requires disclosure of the fair value measurement of the Group s assets and liabilities, the related valuation techniques, the valuations recurrence and the inputs used to assess and develop those measurements. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole: Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. Investment properties and interest rate swaps are valued on a recurring basis: investment properties are valued monthly and interest rate swaps are valued quarterly. The fair value of the derivative interest rate swap contracts is recorded in the Balance Sheet and determined by discounting future cash flows at the prevailing market rates at the Balance Sheet date. The Group s valuer derives the fair value by applying the methodology and valuation guidelines as set out by the Royal Institution of Chartered Surveyors in the United Kingdom in accordance with IAS40. This approach is based on discounting the future net income receivable from properties to arrive at the net present value of that future income stream. Future net income comprises the rent secured under existing leases, less any known or expected non-recoverable costs and the current market rent attributable to vacant units. The consideration basis for this calculation excludes the effects of any taxes on the net income. The discount factors used to calculate fair value are consistent with those used to value similar properties, with comparable leases in each of the respective markets. A decrease in the net rental income or an increase in the discount rate will decrease the fair value of the investment property.

Active UK Real Estate Fund plc : Half year report 2015 17 Notes to the condensed consolidated financial statements (continued) For the six months ended 16. Fair value measurement (continued) The following table shows an analysis of the fair values of assets and liabilities recognised in the balance sheet by level of the fair value hierarchy described above: Assets and liabilities measured at fair value Level 1 Level 2 Level 3 Total Assets measured at fair value Investment properties - - 47,860 47,860 Assets for which fair values are disclosed Trade and other receivables - (1,305) - (1,305) Liability for which fair values are disclosed Current Trade and other payables - (2,117) - (2,117) Interest rate swap - (355) - (355) Non-current Bank borrowings - (30,761) - (30,761) 30 September 2014 Assets and liabilities measured at fair value Level 1 Level 2 Level 3 Total Assets measured at fair value Investment properties - - 45,230 45,230 Assets for which fair values are disclosed Trade and other receivables - 1,842-1,842 Liability for which fair values are disclosed Current Trade and other payables - (2,941) - (2,941) Bank borrowings - (3,722) - (3,722) Interest rate swap - (46) - (46) Alpha Real Trust Limited Loan - (8,841) - (8,841) Non-current Bank borrowings - (17,539) - (17,539) The Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. There were no transfers between level 1 and level 2 fair value measurements and no transfers into or out of the level 3 fair value measurements during the period ending.

18 Active UK Real Estate Fund plc : Half year report 2015 Notes to the condensed consolidated financial statements (continued) For the six months ended 16. Fair value measurement (continued) The fair value of investment properties is based on unobservable inputs and it is therefore disclosed as level 3. The following methods, assumptions and inputs were used to estimate fair values of investment properties: Class of investment properties Carrying ammount / fair value Area sq ft Valuation technique UK 47,860 894,140 Income capitalisation Significant unobservable inputs Range Weighted average Gross ERV per sft p.a 2.25 / 12.69 5.11 Net initial yield 0.00% / 10.31% 5.21% Reversionary yield 5.91% / 27.83% 9.65% Gross equivalent yield 0.00% / 10.31% 7.21% 30 September 2014 Class of investment properties Carrying ammount / fair value Area sq ft Valuation technique UK 45,230 914,560 Income Capitalisation Significant unobservable inputs Range Weighted average Gross ERV per sft p.a 2.38 / 11.78 5.05 Net initial yield 0.00% / 13.95% 6.07% Reversionary yield 6.24% / 27.83% 9.81% Gross equivalent yield 0.00% / 13.95% 10.21% The Directors assessed at the balance sheet date whether the Group s investment properties are being exploited according to their highest and best use and they are satisfied that this is the case. 17. Capital and Reserves The Company has authorised share capital of 500,000,000,000 Participating shares of no par value and 2 Non-Redeemable shares of no par value. The issued share capital of the Company is two Non-Redeemable shares, which are paid up to the amount of 2 and 55,291,856 Participating shares. During the period ended the number of shares issued, redeemed and outstanding were as follows: 1 October 2014 to 000 1 October 2013 to 30 September 2014 Opening shares in issue * 55,292 55,292 Shares redeemed (55,292) - Shares issued 55,292 - Shares in issue 55,292 55,292 000 * Following the restructuring of the Group in November 2014, the parent company has changed from Alpha UK Real Estate plc to Active UK Real Estate Fund plc, on a share for share exchange. There was no change in the ultimate share ownership of the Company through this process. Further details are contained in Note 1.

Active UK Real Estate Fund plc : Half year report 2015 19 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. Alpha Real Capital LLP earned a fee of 193,824 (31 March 2014: 312,177) for the period ended of which 165,294 (30 September 2014: 351,517) was due at period end. Brad Bauman, a director of the Company, is a partner of Alpha Real Capital. Brad Bauman is also a director of the subsidiary company, Alpha UK Property Fund Asset Company ( No 2 ) Limited. Brad Bauman earned a fee of 5,500 for combined director services to the Company and subsidiary company (31 March 2014: 7,250), of which 3,500 was due at period end (30 September 2014: 3,394). Peter Blessing, Chris Marshall and Charlotte Cruickshank are also directors of both the subsidiary company and the Company. Chris Marshall and Charlotte Cruickshank are directors of Langham Hall Fund Management (Jersey) Limited, the Administrator to the Fund. During the period ended, Langham Hall Fund Management (Jersey) Limited earned a fee of 12,500 for combined director services to the Company and subsidiary company (31 March 2014: nil), of which nil was due at period end (30 September 2014: nil). The Company borrowed 10.3 million on 24 November 2014 from Alpha Real Trust Limited ( ART ) a related party of the Investment Manager. The proceeds raised from the refinancing were substantially used to fund the redemption of the ART convertible loan, together with a redemption premium of 1.05 million and repay the existing ART mezzanine finance facility. Unpaid interest of 153,863 had been capitalised. The interest paid for the period ended was 151,700 (31 March 2014: 234,443). A redemption premium of nil was accrued for the period ended (30 September 2014: 360,536). On 3 December 2014, 0.7 million of the proceeds of the sale of the Rotherham property were used to partially repay the mezzanine finance facility. 19. Capital Commitments The Group did not have any capital commitments to purchase properties or other assets as at. 20. Subsequent Events Following the grant of planning permission for conversion to residential, the sale of the mixed use office and retail property at Victoria Road, Horley completed on 8 April 2015. The sale price was 0.7 million (39%) ahead of the September 2014 valuation. Net proceeds from the sale have gone to pay down the RBS loan 2. 21. Approval of Financial Statements The Directors approved the financial statements on 29 May 2015.

20 Active UK Real Estate Fund plc : Half year report 2015 Company information, management and administration Directors of the Company Peter Blessing, Irish - Independent Chris Marshall, British Charlotte Cruickshank, British Brad Bauman, Australian Registered office 3rd Floor Walker House 28-34 Hill Street St Helier Jersey, Channel Islands JE4 8PN Administrator Langham Hall Fund Management (Jersey) Limited 3rd Floor Walker House 28-34 Hill Street St Helier Jersey, Channel Islands JE4 8PN Independent valuer CB Richard Ellis St Martin s Court 10 Paternoster Row London EC4M 7HP England Promoter, Investment Manager and Distributor Alpha Real Capital LLP 338 Euston Road London NW1 3BG England Legal advisors Reed Smith LLP The Broadgate Tower 20 Primrose Street London EC2A 2RS England Legal advisors & listing sponsor Carey Olsen 47 Esplanade St Helier Jersey JE1 0BD Independent auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT England Bankers Royal Bank of Scotland plc 3rd Floor 5-10 Great Tower Street London EC3R 5DJ England Royal Bank of Scotland International Limited Royal Bank House 71 Bath Street St. Helier Jersey JE4 8PJ

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Active UK Real Estate Fund