Share Name Share Symbol Market Type Share ISIN Share Description
Alpha Real Trust Limited LSE:ARTL London Ordinary Share GB00B13VDP26 ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -8.00 -3.92% 196.00 192.00 200.00 204.00 196.00 204.00 21,374 14:40:27
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment & Services 3.2 2.7 33.1 5.9 131

Alpha Real Trust Limited Half-year Report

29/11/2019 7:00am

UK Regulatory (RNS & others)


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Alpha Real Trust Limited

29 November 2019

29 November 2019

ALPHA REAL TRUST LIMITED ("ART" OR THE "COMPANY" OR THE "GROUP")

ART ANNOUNCES ITS HALF YEAR RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2019

   --      NAV per ordinary share 213.5p: 30 September 2019 (204.3p: 31 March 2019). 

-- Basic earnings for the six months ended 30 September 2019 of 5.9p per ordinary share (33.1p per ordinary share and 33.5p per A share for the year ended 31 March 2019).

-- Adjusted earnings for the six months ended 30 September 2019 of 3.0p per ordinary share (3.9p per ordinary and A share for year ended 31 March 2019).

-- Declaration of a quarterly dividend of 1.0p per ordinary share expected to be paid on 10 January 2020.

-- Increased portfolio weighting towards secured loan investment: ART continues to augment and diversify its portfolio of secured senior and secured mezzanine loan investments. As at 30 September 2019, the size of ART's secured loan portfolio was GBP47.5 million, representing 38.6% of the investment portfolio; post period end, further loans totalling GBP3.4 million have been funded.

-- UK industrial portfolio: the Company increased its shareholding in Alpha UK Property Fund Asset Company (No 2) Limited to 100% from 33.6%, with the purchase consideration being paid by way of re-issue of ART ordinary shares from treasury.

-- H2O shopping centre Madrid: record visitor numbers were recorded in the nine months to September 2019. Following a successful transfer of additional building rights to the shopping centre, a pre-let commitment has been signed for a new retail park unit which is to be created on the surface parking area.

David Jeffreys, Chairman of Alpha Real Trust, commented:

"ART's diversified portfolio continues to increase the weighting towards cashflow driven investments, particularly senior debt, whilst retaining scope for creating capital value growth. Following an active period of capital recycling, ART currently focusses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk-adjusted cashflows.

ART continues to actively augment and diversify its portfolio of secured real estate loan and secured mezzanine loan investments which are expected to enhance the Company's current earnings. Over the past twelve months the loan portfolio has more than doubled, with GBP18.4 million of investment into the secured loan portfolio completing in the six month period ended 30 September 2019, with an additional GBP3.4 million of loans granted post period end.

As the Company continues to actively reposition its investments to deliver attractive income returns, for the medium term, the Company's returns are likely to see greater contributions from the growing senior debt and mezzanine loan portfolio and less from capital gains. The Company maintains an active pipeline of potential new secured senior and mezzanine loans and equity investment opportunities under review."

The Investment Manager of Alpha Real Trust is Alpha Real Capital LLP.

For further information please contact:

Alpha Real Trust Limited

David Jeffreys, Chairman, Alpha Real Trust +44 (0)1481 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 / Joanna Langley +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.

About Alpha Real Capital LLP

Alpha Real Capital is a value-adding international property fund management group. Alpha Real Capital is the Investment Manager to ART. Brad Bauman and Gordon Smith of Alpha Real Capital are joint Fund Managers to ART. Both have experience in the real estate and finance industries throughout the UK, Europe and Asia.

For more information on Alpha Real Capital please visit www.alpharealcapital.com.

Trust summary and objective

Strategy

Alpha Real Trust Limited ("the Company" or "ART" or "Trust") targets investment, development, financing and other opportunities in real estate, real estate operating companies and securities, real estate services, infrastructure, infrastructure services, other asset-backed businesses and related operations and services businesses that offer attractive risk-adjusted total returns.

ART currently focusses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk adjusted cash flows. The portfolio mix at 30 September 2019, excluding sundry assets/liabilities, was as follows:

 
                           30 September 
                                   2019   31 Mar 2019 
 High return equity in 
  property investments:           36.0%         25.1% 
 High return debt:                38.6%         26.3% 
 Other investments:                7.1%          6.3% 
 Cash:                            18.3%         42.3% 
 

The Company currently plans to invest the majority of its cash into secured senior or secured mezzanine debt.

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   12 months        6 months 
                                                     ended       ended           ended 
                                              30 September    31 March    30 September 
                                                      2019        2019            2018 
------------------------------------------  --------------  ----------  -------------- 
 Net asset value (GBP'000)                         126,440     136,673         122,157 
------------------------------------------  --------------  ----------  -------------- 
 Net asset value per ordinary and 
  A share                                           213.5p      204.3p          178.4p 
------------------------------------------  --------------  ----------  -------------- 
 Earnings per ordinary share (basic 
  and diluted) (adjusted)*                            3.0p        3.9p            2.5p 
------------------------------------------  --------------  ----------  -------------- 
 Earnings per A share (basic and 
  diluted) (adjusted)*                                   -        3.9p            2.5p 
------------------------------------------  --------------  ----------  -------------- 
 Total earnings per ordinary and 
  A share (basic and diluted) (adjusted)*             3.0p        3.9p            2.5p 
------------------------------------------  --------------  ----------  -------------- 
 Earnings per ordinary share (basic 
  and diluted)                                        2.7p       33.1p            6.5p 
------------------------------------------  --------------  ----------  -------------- 
 Earnings per A share (basic and 
  diluted)**                                             -       33.5p            6.5p 
------------------------------------------  --------------  ----------  -------------- 
 Total earnings per ordinary and 
  A share (basic and diluted)                         2.7p       33.2p            6.5p 
------------------------------------------  --------------  ----------  -------------- 
 Dividend per share (paid during 
  the period)                                         1.6p        2.4p            1.8p 
 

* The adjusted earnings per share includes adjustments for the effect of the fair value revaluation of investment property and indirect property investments, capital element on Investment Manager's fees, the fair value movements on financial assets and deferred tax provisions: full analysis is provided in note 9 to the accounts.

** The difference in basic and diluted EPS between ordinary and A shares was due to the Romulus investment, which was exclusively for the benefit of ART A shareholders (note 9).

Chairman's statement

I am pleased to present the Company's annual report and accounts for the six months ended 30 September 2019.

It has been an active period for ART in which the Company has continued to focus on recycling capital into cashflow driven investments, and in particular asset backed lending, while reducing exposure to development and leasing risk.

In line with ART's approach to actively manage shareholder returns, the Company undertook a tender offer as a result of which 13,065,348 ordinary shares were validly tendered in July 2019, representing approximately 19.48 per cent of the Company's voting shares. All valid tenders were subsequently satisfied in full.

Income focussed investment

Following an active period of capital recycling, ART currently focusses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk-adjusted cashflows. In line with this focus, capital is predominantly being deployed to augment and diversify its portfolio of secured real estate senior and secured mezzanine loan investments. Over the medium term the Company's returns are likely to see greater contributions from the growing senior debt and mezzanine loan portfolio and less from capital gains.

The Company continues to maintain a pipeline of new investment opportunities under active review which compete for capital allocation. ART benefits from the depth of experience, strength and size of its Investment Manager. Alpha Real Capital has a well resourced team of investment professionals based throughout the UK and Europe. ART's active management approach has helped deliver improvements in underlying asset values, in both directly and indirectly held investments across our investment markets.

New secured lending investment

The Company's portfolio of secured senior and mezzanine loan investments continues to increase in scale and diversity. The loans are typically secured on real estate investment and development assets with attractive risk-adjusted income returns.

As at 30 September 2019, ART had invested a total amount of GBP47.5 million across thirty-eight loans, of which seven were completed during the quarter to 30 September 2019. Over the past twelve months the loan portfolio has more than doubled, with GBP18.4 million of investment into the secured loan portfolio completing in the six month period ended 30 September 2019, with an additional GBP3.4 million of loans granted post period end.

During the period ended 30 September 2019, six loans were fully repaid for GBP4.5 million (including accrued interest and exit fees) and six loans were partly repaid by GBP4.5 million. Post period end, loan repayments of GBP3.4 million were received.

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. Repayment proceeds will be reinvested into new facilities. The Company continues to develop a strong pipeline of new lending opportunities.

Acquisition of 100% interest in UK industrial portfolio

In September 2019, the Company announced that it acquired 66.4% of the shares in Alpha UK Property Fund Asset Company (No 2) Limited ("Alpha2"). The acquisition increased ART's ownership interest in Alpha2 to 100%. The Alpha2 portfolio consisted of two unleveraged industrial assets located in England and has a net asset value of GBP16.2 million as at 30 September 2019.

The shares in Alpha2 were purchased from Antler Investment Holdings Limited, a related party to the Company. The shares in Alpha2 were purchased at its adjusted net asset value with its portfolio independently valued as at 31 August 2019. The purchase consideration for the increased Alpha2 shareholding was satisfied by the re-issue from treasury of 5,030,284 ordinary shares in ART at an issue price equivalent to ART's estimated adjusted net asset value of 211.4p per share based upon the Company's net asset value as at 30 June 2019 with adjustments made for dividends paid and share buybacks completed, including the Company's tender offer, following this date. The total consideration was therefore GBP10.6 million and has been accounted for as a share based payment in accordance with IFRS 2.

Post period end, the sale of the penultimate asset in the Alpha2 portfolio completed realising proceeds of GBP5.2 million. The sale price was in line with the asset's 30 September 2019 valuation.

H2O, Madrid

ART has a 30% stake in joint venture with CBRE Global Investors in the H2O shopping centre in Madrid. H2O continues to benefit from ongoing asset management initiatives, attracting record visitor numbers during the nine-month period to 30 September 2019, increasing 6.6% above the same period in 2018.

Earlier in 2019, 9,000 square metres of building rights were transferred to the H2O plot from a small vacant site located in the same planning zone and held as part of the H2O investment. An active leasing programme has helped secure a pre-let of a 1,100 square metre retail park unit. Construction has commenced and is targeted for completion in the first quarter of 2020. The new unit is to be located on part of the centre's surface car park area, as envisaged within a recently completed masterplan design for the shopping centre.

Selective asset disposals

ART owns Unity and Armouries, a development site located in central Birmingham with planning consent for 90,000 square feet of net saleable space comprising 162 residential apartments with ground floor commercial areas. A sale of the investment is being pursued.

Galaxia, India

ART holds a 50.0% shareholding in a joint venture that owns an 11.2 acre development site in NOIDA, in the National Capital Region, India. Following a breach of the terms of the shareholders agreement by its joint venture partner, Logix Group ("Logix"), ART initiated arbitration proceedings which were awarded in the Company's favour. ART subsequently successfully defended appeals by Logix at the Delhi High Court. Logix latterly appealed to the Supreme Court of India, where hearings are on-going.

ART continues to actively pursue Logix directors for the recovery of the award. As at 30 September 2019, the sum awarded to ART, including the previously recovered deposits, has accrued to GBP15.5 million at the period end exchange rates. The Directors, taking into consideration legal advice received following Logix's challenge of the Award and following the recovery of INR 100 million (GBP1.1 million) deposited by Logix at the Supreme Court, consider it appropriate to carry this joint venture in its accounts at INR 350 million (GBP4.0 million) (31 March 2019: INR 350 million (GBP3.9 million)). The amount recognised in the accounts does not include the additional compensation awarded by the courts due to uncertainty over timing and final value of the award.

Post period end, in November 2019, the Supreme Court ruled that ART was entitled to withdraw a further INR 100 million (GBP1.1 million) deposited by Logix with the court. The Company has since made an application to withdraw funds. Further hearings are scheduled for December 2019.

Results and dividends

Share buybacks

Under the general authority, approved by Shareholders on 8 January 2019, the Company announced a tender offer on 14 June 2019 for up to 16,666,771 ordinary shares at a price (before expenses) of 175.0 pence per share. In total 13,065,348 ordinary shares were validly tendered under the tender offer. All purchased ordinary shares were cancelled.

The Company additionally purchased 62,124 shares in the market during the six month period ended 30 September 2019: these shares are held in treasury.

As at the date of this announcement, the ordinary share capital of the Company is 61,165,783 (including 1,940,797 ordinary shares held in treasury) and the total voting rights in the Company are 59,224,986.

Dividends

Adjusted earnings for the six months ended 30 September 2019 are GBP1.8 million (3.0 pence per ordinary share, see note 9 of the financial statements). This compares with adjusted earnings per ordinary share of 2.5 pence for the same period in 2018.

The Board announces a dividend of 1.0 pence per ordinary share which is expected to be paid on 10 January 2020 (ex-dividend date 12 December 2019 and record date 13 December 2019).

The dividends paid and declared for the twelve months to 30 September 2019 totalled 3.6 pence per ordinary share representing an annual dividend yield of 2.3% p.a. on the average share price over the twelve months to 30 September 2019.

The net asset value per ordinary share at 30 September 2019 is 213.5 pence per share (31 March 2019: 204.3 pence per ordinary share) (see note 10 of the financial statements).

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 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 2019. Shareholders who returned the Scrip Mandate Form and elected to receive the scrip dividend alternative will receive shares in lieu of the next dividend. Shareholders who have not previously elected to receive scrip may complete a Scrip Mandate Form (this can be obtained from the registrar: contact Computershare (details below)), which must be returned by 20 December 2019 to benefit from the scrip dividend alternative for the next dividend.

Financing

As at 30 September 2019 the Group has one direct bank loan of EUR9.5 million (GBP8.4 million), a non-recourse facility used to finance the acquisition of the Hamburg property.

Further details of individual asset financing can be found under the individual investment review sections later in this report.

Brexit

While the UK Parliament has demonstrated its wish to avoid a 'no-deal Brexit', there appears little consensus about what form any future arrangement with the European Union should take. No material adverse impacts have been noted within the Company's portfolio to date and risks are mitigated by the Company's investments held in Europe. However, the Board continues to monitor the situation for potential risks to the Company's investments. The economic backdrop is highly dynamic and the spread of possible outcomes is wide. In this context, ART is well placed to both weather market volatility and take advantage of any dislocation should it arise.

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 GBP1:EUR1.128 or GBP1:INR86.973, as appropriate.

Strategy and outlook

ART's diversified portfolio continues to increase the weighting towards cashflow driven investments, particularly senior debt, whilst retaining scope for creating capital value growth. Following an active period of capital recycling, ART currently focusses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk-adjusted cashflows.

ART continues to actively augment and diversify its portfolio of secured real estate loan and secured mezzanine loan investments which are expected to enhance the Company's current earnings. Over the past twelve months the loan portfolio has more than doubled, with GBP18.4 million of investment into the secured loan portfolio completing in the six month period ended 30 September 2019, with an additional GBP3.4 million of loans granted post period end.

As the Company continues to actively reposition its investments to deliver attractive income returns, for the medium term, the Company's returns are likely to see greater contributions from the growing senior debt and mezzanine loan portfolio and less from capital gains. The Company maintains an active pipeline of potential new secured senior and mezzanine loans and equity investment opportunities under review.

David Jeffreys

Chairman

28 November 2019

Investment review

Portfolio overview as at 30 September 2019

 
Investment name 
Investment        Carrying       Income  Investment  Property type       Investment notes      % of          Notes* 
 type              value         return   location    / underlying                             portfolio(1) 
                                 p.a.                 security 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
High return debt (38.6%) 
---------------------------------------------------------------------------------------------  ------------  ------ 
Secured senior 
 finance 
                                                     Diversified 
                                                      loan portfolio 
                                                      focussed on 
                                                      real estate 
Senior secured         GBP26.5m   11.8%               investments        Senior secured 
 loans                      (2)     (3)      UK       and developments    debt                        21.5%    16 
Secured mezzanine finance 
                                                     Diversified 
                                                      loan portfolio 
                                                      focussed on        Secured mezzanine 
Second charge                                         real estate        debt and 
 mezzanine             GBP21.0m   15.1%               investments        subordinated 
 loans                      (2)     (3)      UK       and developments   debt                         17.1%    16 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
High return equity in property investments (36.0%) 
---------------------------------------------------------------------------------------------  ------------  ------ 
H2O shopping centre 
                                                     Dominant Madrid     30% shareholding; 
                                                      shopping centre     medium term 
                                                      and separate        moderately geared 
Indirect               GBP19.5m    5.7%               development         bank finance 
 property            (EUR22.0m)     (4)    Spain      site                facility                    15.8%    15 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
Long leased industrial facility, Hamburg 
                                                     Long leased 
                                                     industrial complex 
                                                     in major European   Long term moderately 
                        GBP7.0m    7.0%              industrial and       geared bank 
Direct property             (5)     (4)   Germany    logistics hub        finance facility             5.7%    11 
                      (EUR7.9m) 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
Alpha UK Property Fund Asset Company (No 2) 
                                                     High-yield          100% shareholding; 
Indirect               GBP16.2m    8.9%              commercial           no external 
 property                   (6)     (7)      UK      UK portfolio         gearing                     13.1%    12 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
Cambourne Business Park 
                                                     High-yield          Medium term 
                                                     business            moderately 
Indirect                          10.0%              park located        geared bank finance 
 property               GBP1.7m     (4)      UK      in Cambridge        facility                      1.4%    15 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
 Other investments (7.1%) 
---------------------------------------------------------------------------------------------  ------------  ------ 
Unity and Armouries, Birmingham 
                                                                         Planning consent 
                                                                         for 90,000 square 
                                                                         feet / 162 units 
                                                                         plus commercialHeads 
                                                                         of Terms and 
PRS development,                                     Central Birmingham  exclusivity 
 held for                                             residential        agreed for offer 
 sale                   GBP4.5m     n/a      UK       build-to-rent      of GBP4.9m                    3.7%    12 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
Galaxia 
                                                                         Legal process 
                                                                          underway to 
                                                     Development          recover investment 
                        GBP4.0m                       site located        by enforcing 
Joint venture              (INR                       in NOIDA, Delhi,    arbitration 
 in arbitration           350m)     n/a    India      NCR                 award                        3.2%    13 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
Healthcare & Leisure Property Limited 
Indirect                                             Leisure property    No external 
 property               GBP0.2m     n/a      UK       fund                gearing                      0.2%    14 
----------------  -------------  ------  ----------  ------------------  --------------------  ------------  ------ 
Cash and short-term investments (18.3%) 
---------------------------------------------------------------------------------------------  ------------  ------ 
                                   0.1%              'On call' and 
Cash (8)               GBP22.6m     (9)      UK       current accounts                                18.3% 
---------------------  --------  ------  ----------  ------------------  --------------------  ------------  ------ 
 
 

* 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) Weighted average income return

(4) Yield on equity over 12 months to 30 September 2019

(5) Property value net of associated debt including sundry assets/liabilities

(6) As at 30 September 2019, this investment included cash of GBP6.1m (post period end, cash increased to GBP11.3m following the penultimate asset sale)

(7) Annualised income return, post tax

(8) Company only

(9) Weighted average interest earned on call accounts

High return debt

Overview

ART is actively augmenting and diversifying its portfolio of secured loan investments which is expected to increase the Company's current earnings. This will however limit the Company's opportunity to benefit from potential capital gains from the capital deployed in these investments.

ART continues to remain focussed on creating a diversified portfolio of high return senior (first charge) loans and mezzanine (second charge) loans secured on real estate assets. ART seeks opportunities that it can fully underwrite with the support of the Investment Manager's asset-backed lending experience and knowledge of the underlying assets and sectors, or in partnership with specialist debt providers. Repayment proceeds from current lending is expected to be progressively recycled into new loans.

Secured Finance

 
 Investment          Investment      Carrying   Income    Property type       Investment notes 
                      type            value      return    / underlying 
                                                 p.a.      security 
==================  ==============  =========  ========  ==================  ================== 
 Secured senior      First charge    GBP26.5m   11.8%**   Diversified         Secured debt 
  finance             secured         *                    loan portfolio 
                      loans                                focussed on 
                                                           real estate 
                                                           investments 
                                                           and developments 
==================  ==============  =========  ========  ==================  ================== 
 Secured mezzanine   Second charge   GBP21.0m   15.1%**   Diversified         Second charge 
  finance             secured         *                    loan portfolio      secured debt 
                      loans                                focussed on         and subordinated 
                                                           real estate         debt 
                                                           investments 
                                                           and developments 
==================  ==============  =========  ========  ==================  ================== 
 

* Including accrued interest/coupon at the balance sheet date

** Weighted average income return

 
 Loan portfolio by geography   Loan portfolio by asset class 
 
 

ART has a portfolio of secured senior and mezzanine loan investments which continues to increase in scale and diversity. 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 coupon.

As at 30 September 2019, ART had invested a total amount of GBP47.5 million across thirty-eight loans. Over the past twelve months the loan portfolio has more than doubled, with GBP18.4 million of investment into the secured loan portfolio completing in the six month period ended 30 September 2019, with an additional GBP3.4 million of loans granted post period end.

During the period ended 30 September 2019, six loans were fully repaid for GBP4.5 million (including accrued interest and exit fees) and six loans were partly repaid by GBP4.5 million. Post period end, loan repayments of GBP3.4 million were received.

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.

Repayment proceeds will be reinvested into new facilities. The Company continues to develop a strong pipeline of new lending opportunities.

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   Carrying      Income    Property type      Investment notes 
               type         value         return    / underlying 
                                          p.a.      security 
===========  ===========  ============  ========  =================  ================== 
 H2O          Indirect     GBP19.5m      5.7%*     High-yield,        30% shareholding; 
               property     (EUR22.0m)              dominant Madrid    6-year term 
                                                    shopping centre    bank finance 
                                                    and separate       facility 
                                                    development 
                                                    site 
===========  ===========  ============  ========  =================  ================== 
 

* Yield on equity over twelve months to 30 September 2019

H2O shopping centre was opened in 2007 and built to a high standard providing shopping, restaurants and leisure around a central theme of landscaped gardens and an artificial lake. H2O has a gross lettable area of approximately 52,425 square metres comprising 123 retail units. In addition to a multiplex cinema, supermarket (let to leading Spanish supermarket operator Mercadona) and restaurants, it has a large fashion retailer base, including some of the strongest international fashion brands, such as Nike, Zara, Mango, Cortefiel, H&M, C&A and Massimo Dutti.

ART has a 30% stake in a joint venture with CBRE Global Investors. The continued equity interest allows ART to participate in the future growth of the centre. ARC, the investment manager of ART, continues to manage the shopping centre.

The joint venture has a EUR65.0 million bank loan which matures in 2024, secured on the shopping centre. The borrowings are secured on the underlying asset and are non-recourse to the Group's other investments.

The asset management highlights are as follows:

-- Centre occupancy: 93% by area as at 30 September 2019 (97% by rental value, excluding potential new build leasable area). Weighted average lease length to next break of 2.2 years and 8.6 years to expiry (30 September 2019).

-- Footfall: record visitor numbers to the shopping centre have been recorded in the 9 months to 30 September 2019, with footfall increasing 6.6% over the same period in 2018.

-- Tenant sales performance: tenant sales continue to increase in the six months to 30 September 2019, with like-for-like sales increasing 8.2% over the same period in 2018.

-- Building rights transfer: the H2O investment includes a small vacant site located in the same planning zone as H2O that was acquired during 2017. As previously announced, following a successful planning process which involved an amendment to the local zoning plan, 9,000 square metres of building rights have been transferred to the H2O plot which, subject to obtaining building licences, creates potential for the future expansion of the shopping centre.

-- Pre-leasing of new leasable area: an active leasing programme has helped secured a pre-let to a leading Spanish pet supplies company for a 1,100 square metre retail park unit. The unit is located on part of the centre's surface car park area, as envisaged within a recently completed masterplan design for the shopping centre. Construction commenced in October 2019 and is due for completion in the first quarter of 2020.

UK industrial portfolio

 
 Investment          Investment   Carrying   Income    Property type   Investment notes 
                      type         value      return    / underlying 
                                              p.a.      security 
==================  ===========  =========  ========  ==============  ================= 
 Alpha UK Property   Indirect     GBP16.2m   8.9%*     High-yield      100% of the 
  Fund Asset          property                          commercial      total ordinary 
  Company (No                                           UK portfolio    shares in the 
  2) Limited                                                            company 
==================  ===========  =========  ========  ==============  ================= 
 

* Annualised income return; post tax

In September 2019, the Company announced that it purchased 66.4% of the shares in Alpha UK Property Fund Asset Company (No 2) Limited ("Alpha2"). The acquisition increased ART's ownership interest in Alpha2 to 100%. The Alpha2 portfolio consisted of two unlevered industrial assets located in England and cash of GBP6.1 million and has a net asset value of GBP16.2 million as at 30 September 2019.

The shares in Alpha2 were purchased from Antler Investment Holdings Limited, a related party to the Company. The shares in Alpha2 were purchased at its adjusted net asset value with its portfolio independently valued as at 31 August 2019. The purchase consideration for the increased Alpha2 shareholding was satisfied by the re-issue from treasury of 5,030,284 ordinary shares in ART at an issue price equivalent to ART's estimated adjusted net asset value of 211.4p per share based upon the Company's net asset value as at 30 June 2019 with adjustments made for dividends paid and share buybacks completed, including the Company's tender offer, following this date. The total consideration was therefore GBP10.6 million.

Post period end, the sale of the penultimate asset in the Alpha2 portfolio completed realising proceeds of GBP5.2 million. The sale price was in line with the asset's 30 September 2019 valuation; post period end, cash reserves within Alpha2 are GBP11.3 million.

Long leased industrial facility, Hamburg

 
 Investment                            Investment        Carrying     Income    Property type      Investment notes 
                                        type              value        return    / 
                                                                       p.a.      underlying 
                                                                                 security 
====================================  ================  ===========  ========  =================  ==================== 
 Industrial                            Direct property   GBP7.0m*     7.0%**    High return        Long leased 
 facility,                                                (EUR7.9m)              industrial         investment with 
 Werner-Siemens-Straße                                                      facility in        moderately geared, 
 Hamburg, Germany                                                                Hamburg Germany    long term, bank 
                                                                                                    finance facility 
====================================  ================  ===========  ========  =================  ==================== 
 

* Property value net of associated debt including sundry assets/liabilities

** Yield on equity over twelve months to 30 September 2019

ART has an investment of EUR7.9 million (GBP7.0 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 EUR9.5 million (GBP8.4 million) non-recourse, fixed rate, bank debt facility which matures in 2028.

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.

The investment was revalued at EUR16.8 million (GBP14.9 million) as at 30 September 2019 (31 March 2019: EUR16.0 million (GBP13.8 million)), with the increase reflecting a rent review that completed during the period.

Cambourne Business Park, Phase 1000, Cambridge

 
 Investment           Investment   Carrying   Income    Property type    Investment notes 
                       type         value      return    / 
                                               p.a.      underlying 
                                                         security 
===================  ===========  =========  ========  ===============  =================== 
 Cambourne Business   Indirect     GBP1.7m    10.0%     High-yield       Medium term 
  Park                 property                *         business park    moderately geared 
                                                         located in       bank finance 
                                                         Cambridge        facility 
===================  ===========  =========  ========  ===============  =================== 
 

* Yield on equity over twelve months to 30 September 2019

The Company has an investment of GBP1.7 million in a joint venture that owns Phase 1000 of Cambourne Business Park. The property consists of three Grade A specification modern office buildings constructed in 1999 and located in the town of Cambourne, approximately 8 miles west of Cambridge city centre. The property comprises 9,767 square metres of lettable area, is self-contained and has 475 car parking spaces. Phase 1000 is situated at the front of the business park with good access and visibility.

Phase 1000 is a high-quality asset, fully let to Netcracker Technology EMEA Ltd, Cambridge Cambourne Centre Ltd (previously called 'Regus (Cambridge Cambourne) Ltd') and Carl Zeiss Microscopy Ltd & Carl Zeiss Ltd. The property has open B1 Business user planning permission and has potential value-add opportunities.

Phase 1000 was purchased in a joint venture partnership with a major overseas investor for GBP23.0 million including acquisition costs. ART's equity contribution of GBP1.1 million, which represented 10.0% of the total equity commitment at acquisition, is invested into a joint venture entity, a subsidiary of which holds the property. The property is currently delivering an equity income return of 9.4% per annum as at 30 September 2019.

The Cambourne asset is funded by way of a GBP13.5 million (as at 30 September 2019) non-recourse bank debt facility which matures in 2023.

ARC is the investment manager to the joint venture owning the Cambourne property and continues to pursue opportunities to add value to the investment.

Cash balances

 
 Investment     Investment   Carrying   Income    Property type       Investment notes 
                 type         value      return    / underlying 
                                         p.a.      security 
=============  ===========  =========  ========  ==================  ================= 
 Cash balance   Cash         GBP22.6m   0.1% **   'On call' and       n/a 
  *                                                current accounts 
=============  ===========  =========  ========  ==================  ================= 
 

* Company only

** weighted average interest earned on call accounts

As at 30 September 2019, the Company had cash balances of GBP22.6 million.

Other investments

Unity and Armouries, Birmingham

 
 Investment             Investment         Carrying   Income    Property type        Investment notes 
                         type               value      return    / underlying 
                                                       p.a.      security 
=====================  =================  =========  ========  ===================  =================== 
 Unity and Armouries,   PRS development,   GBP4.5m    n/a       Central Birmingham   Planning consent 
  Birmingham             held for                                residential          for 90,000 square 
                         sale                                    build-to-rent        feet / 162 units 
                                                                                      plus commercial 
=====================  =================  =========  ========  ===================  =================== 
 

ART owns Unity and Armouries, a development site located in central Birmingham with planning consent for 90,000 square feet of net saleable space comprising 162 residential apartments with ground floor commercial areas. Following a sale of the Company's other build to rent residential investments, a sale of the investment is being pursued.

Detailed planning consent for ART's proposed project has been granted. There are no outstanding Section 106/Community Infrastructure Levy requirements and the site has an affordable unit designation for nine flats. The approved project includes 162 residential units with ground floor commercial (3,700 square feet) and car parking spaces.

As at 30 September 2019, an independent valuation has been undertaken by GVA valuing the site at GBP4.5 million.

Galaxia, National Capital Region, NOIDA, India

 
 Investment   Investment        Carrying      Income    Property type       Investment notes 
               type              value         return    / underlying 
                                               p.a.      security 
===========  ================  ============  ========  ==================  ==================== 
 Galaxia      Joint venture     GBP4.0m       n/a       Development         Legal process 
               in arbitration    (INR 350m)              site located        underway to 
                                                         in NOIDA, Delhi,    recover investment 
                                                         NCR                 by enforcing 
                                                                             arbitration 
                                                                             award 
===========  ================  ============  ========  ==================  ==================== 
 

ART holds a 50.0% shareholding in a joint venture that owns an 11.2 acre development site in NOIDA, in the National Capital Region, India. Following a breach of the terms of the shareholders agreement by its joint venture partner, Logix Group ("Logix"), ART initiated arbitration proceedings which were awarded in the Company's favour. ART subsequently successfully defended appeals by Logix at the Delhi High Court. Logix latterly appealed to the Supreme Court of India, where hearings are on-going.

ART continues to actively pursue Logix directors for the recovery of the award. As at 30 September 2019, the sum awarded to ART, including the previously recovered deposits, has accrued to GBP15.5 million at the period end exchange rates. The Directors, taking into consideration legal advice received following Logix's challenge of the Award and following the recovery of INR 100 million (GBP1.1 million) deposited by Logix at the Supreme Court, consider it appropriate to carry this joint venture in its accounts at INR 350 million (GBP4.0 million) (31 March 2019: INR 350 million (GBP3.9 million)). The amount recognised in the accounts does not include the additional compensation awarded by the courts due to uncertainty over timing and final value of the award.

Post period end, in November 2019, the Supreme Court ruled that ART was entitled to withdraw a further INR 100 million (GBP1.1 million) deposited by Logix with the court. The Company has since made an application to withdraw funds. Further hearings are scheduled for December 2019.

Summary

ART currently focusses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk adjusted cash flows. ART continues to actively pursue, and is well positioned to secure, new investment targets.

Brad Bauman and Gordon Smith

For and on behalf of the Investment Manager

28 November 2019

Independent review report

To Alpha Real Trust Limited

Introduction

We have been engaged by the Company to review the condensed consolidated set of financial statements in the half year report for the six months ended 30 September 2019 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. We have read the other information contained in the half year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half year report is the responsibility of and has been approved by the Directors. The Directors are responsible for preparing the half year report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

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 consolidated set of financial statements included in this half year report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated set of financial statements in the half year report based on our review.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of half year reporting in accordance with the Disclosure 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.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. 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 Ireland) 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.

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 year report for the six months to 30 September 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

BDO Limited

Chartered Accountants

Place du Pré

Rue du Pré

St Peter Port

Guernsey

28 November 2019

Condensed consolidated statement of comprehensive income

 
                                                         For the six months ended             For the six months ended 
                                                    30 September 2019 (unaudited)        30 September 2018 (unaudited) 
--------------------------------------------  -----------------------------------  ----------------------------------- 
                                                  Revenue     Capital       Total      Revenue     Capital       Total 
                                       Notes      GBP'000     GBP'000     GBP'000      GBP'000     GBP'000     GBP'000 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Income 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Revenue                                   3        2,729           -       2,729        1,438           -       1,438 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Change in the revaluation of 
  investment properties and assets 
  held for sale                        11-12            -         697         697            -       1,604       1,604 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Gains/(losses) on financial assets 
  and liabilities held at fair 
  value through profit or loss             6          207       (348)       (141)        1,104         181       1,285 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Total income                                       2,936         349       3,285        2,542       1,785       4,327 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
 Expenses 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Property operating expenses                         (77)           -        (77)         (26)           -        (26) 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Investment Manager's fee                         (1,183)           -     (1,183)      (1,035)           -     (1,035) 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Other administration costs                         (646)           -       (646)        (550)           -       (550) 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Total operating expenses                         (1,906)           -     (1,906)      (1,611)           -     (1,611) 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
 Operating profit                                   1,030         349       1,379          931       1,785       2,716 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
 Share of profit of joint ventures 
  and associates                          15          843       (473)         370          831         980       1,811 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Finance income                            4           94           -          94            2           -           2 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Finance costs                             5        (104)        (42)       (146)         (23)        (34)        (57) 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
 Profit/(loss) before taxation                      1,863       (166)       1,697        1,741       2,731       4,472 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
 Taxation                                  7         (23)           -        (23)         (30)         (3)        (33) 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
 Profit/(loss) after taxation                       1,840       (166)       1,674        1,711       2,728       4,439 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
 Other comprehensive income for the 
 period 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Items that may be reclassified to 
 profit or loss in subsequent 
 periods: 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Exchange differences arising on 
  translation of foreign operations                     -         930         930            -         513         513 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Other comprehensive income for the 
  period                                                -         930         930            -         513         513 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 Total comprehensive income for the 
  period                                            1,840         764       2,604        1,711       3,241       4,952 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
 
            Earnings per ordinary 
             share (basic & 
             diluted)                      9                                 2.7p                                 6.5p 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
            Earnings per A share 
             (basic & diluted)             9                                  n/a                                 6.5p 
-----------------------------------  -------  -----------  ----------  ----------  -----------  ----------  ---------- 
            Adjusted earnings per 
             ordinary share and A 
             share (basic & 
             diluted)                      9                                 3.0p                                 2.5p 
 

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 2019   31 March 2019 
                                               (unaudited)       (audited) 
                                                   GBP'000         GBP'000 
------------------------------  ------  ------------------  -------------- 
 
 Non-current assets 
------------------------------  ------  ------------------  -------------- 
 Investment property                11              14,894          13,764 
------------------------------  ------  ------------------  -------------- 
 Joint venture in arbitration       13               4,024           3,882 
------------------------------  ------  ------------------  -------------- 
 Investments held at fair 
  value                             14                 198             390 
------------------------------  ------  ------------------  -------------- 
 Investment in joint ventures 
  and associates                    15              21,196          28,535 
------------------------------  ------  ------------------  -------------- 
 Loans advanced                     16              15,644          15,036 
------------------------------  ------  ------------------  -------------- 
 Trade and other receivables        18                   -           1,929 
------------------------------  ------  ------------------  -------------- 
                                                    55,956          63,536 
------------------------------  ------  ------------------  -------------- 
 
 Current assets 
------------------------------  ------  ------------------  -------------- 
 Assets held for sale               12              12,725           4,500 
------------------------------  ------  ------------------  -------------- 
 Derivatives held at fair 
  value through profit or 
  loss                                                 165             514 
------------------------------  ------  ------------------  -------------- 
 Loans advanced                     16              31,897          21,100 
------------------------------  ------  ------------------  -------------- 
 Collateral deposit                 17               1,286           1,302 
------------------------------  ------  ------------------  -------------- 
 Trade and other receivables        18               5,424             353 
------------------------------  ------  ------------------  -------------- 
 Cash and cash equivalents                          28,748          58,181 
------------------------------  ------  ------------------  -------------- 
                                                    80,245          85,950 
------------------------------  ------  ------------------  -------------- 
 
 Total assets                                      136,201         149,486 
------------------------------  ------  ------------------  -------------- 
 
 Current liabilities 
------------------------------  ------  ------------------  -------------- 
 Trade and other payables           19             (1,390)         (2,097) 
------------------------------  ------  ------------------  -------------- 
 Corporation tax                                      (57)         (2,647) 
------------------------------  ------  ------------------  -------------- 
 Bank borrowings                    20                (32)            (30) 
------------------------------  ------  ------------------  -------------- 
 Total current liabilities                         (1,479)         (4,774) 
------------------------------  ------  ------------------  -------------- 
 
 Total assets less current 
  liabilities                                      134,722         144,712 
------------------------------  ------  ------------------  -------------- 
 
 Non-current liabilities 
------------------------------  ------  ------------------  -------------- 
 Bank borrowings                    20             (8,282)         (8,039) 
------------------------------  ------  ------------------  -------------- 
 
 Total liabilities                                 (9,761)        (12,813) 
------------------------------  ------  ------------------  -------------- 
 
 Net assets                                        126,440         136,673 
------------------------------  ------  ------------------  -------------- 
 
 Equity 
------------------------------  ------  ------------------  -------------- 
 Share capital                      21                   -               - 
------------------------------  ------  ------------------  -------------- 
 Special reserve                                    64,267          76,032 
------------------------------  ------  ------------------  -------------- 
 Translation reserve                                   348           (582) 
------------------------------  ------  ------------------  -------------- 
 Capital reserve                                    40,523          40,689 
------------------------------  ------  ------------------  -------------- 
 Revenue reserve                                    21,302          20,534 
------------------------------  ------  ------------------  -------------- 
 
 Total equity                                      126,440         136,673 
------------------------------  ------  ------------------  -------------- 
 
 Net asset value per ordinary 
  and A share                       10              213.5p          204.3p 
 

The financial statements were approved by the Board of Directors and authorised for issue on 28 November 2019. They were signed on its behalf by David Jeffreys.

David Jeffreys

Director

The accompanying notes form an integral part of these financial statements.

Condensed consolidated cash flow statement

 
                                                      For the six months     For the six months 
                                                                   ended                  ended 
                                                       30 September 2019      30 September 2018 
                                                     (unaudited) GBP'000    (unaudited) GBP'000 
-------------------------------------------------  ---------------------  --------------------- 
 Operating activities 
-------------------------------------------------  ---------------------  --------------------- 
    Profit for the period after 
     taxation                                                      1,674                  4,439 
-------------------------------------------------  ---------------------  --------------------- 
  Adjustments for: 
-------------------------------------------------  ---------------------  --------------------- 
  Change in revaluation of investment 
   property and assets held for 
   sale                                                            (697)                (1,604) 
-------------------------------------------------  ---------------------  --------------------- 
  Net gains on financial assets 
   and liabilities held at fair 
   value through profit or loss                                      141                (1,285) 
-------------------------------------------------  ---------------------  --------------------- 
  Taxation                                                            23                     33 
-------------------------------------------------  ---------------------  --------------------- 
  Share of profit of joint ventures 
   and associates                                                  (370)                (1,811) 
-------------------------------------------------  ---------------------  --------------------- 
  Interest receivable on loans 
   to third parties                                              (2,263)                (1,341) 
-------------------------------------------------  ---------------------  --------------------- 
  Finance income                                                    (94)                    (2) 
-------------------------------------------------  ---------------------  --------------------- 
  Finance cost                                                       146                     57 
-------------------------------------------------  ---------------------  --------------------- 
 Operating cash flows before 
  movements in working capital                                   (1,440)                (1,514) 
-------------------------------------------------  ---------------------  --------------------- 
  Movements in working capital: 
-------------------------------------------------  ---------------------  --------------------- 
  Movement in trade and other 
   receivables                                                   (2,685)                    446 
-------------------------------------------------  ---------------------  --------------------- 
  Movement in trade and other 
   payables                                                          929                  (325) 
-------------------------------------------------  ---------------------  --------------------- 
 Cash flows used in operations                                   (3,196)                (1,393) 
-------------------------------------------------  ---------------------  --------------------- 
 
   Interest received                                                  94                      2 
-------------------------------------------------  ---------------------  --------------------- 
   Interest paid                                                    (95)                    (1) 
-------------------------------------------------  ---------------------  --------------------- 
   Tax paid                                                      (2,690)                    (3) 
-------------------------------------------------  ---------------------  --------------------- 
 Cash flows used in operating 
  activities                                                     (5,887)                (1,395) 
-------------------------------------------------  ---------------------  --------------------- 
 
 Investing activities 
-------------------------------------------------  ---------------------  --------------------- 
  Acquisition of investment property                                   -               (14,835) 
-------------------------------------------------  ---------------------  --------------------- 
  Redemption on investments                                            -                 20,330 
-------------------------------------------------  ---------------------  --------------------- 
  Redemption on preference shares' 
   investments                                                       193                    343 
-------------------------------------------------  ---------------------  --------------------- 
  Cash recognised on Alpha2 transaction                            5,787                      - 
   (note 2) 
-------------------------------------------------  ---------------------  --------------------- 
  Capital return from investment 
   receivable                                                          -                  1,106 
-------------------------------------------------  ---------------------  --------------------- 
  Capital expenditure on investment 
   property                                                            -                (3,915) 
-------------------------------------------------  ---------------------  --------------------- 
  Loans granted to third parties                                (18,396)               (12,637) 
-------------------------------------------------  ---------------------  --------------------- 
  Loans repayment from third parties                               8,741                  6,272 
-------------------------------------------------  ---------------------  --------------------- 
  Loan interest received                                             721                    379 
-------------------------------------------------  ---------------------  --------------------- 
  Dividend income from other investments                               -                    505 
-------------------------------------------------  ---------------------  --------------------- 
  Dividend income from joint ventures                              2,776                      - 
   and associates 
-------------------------------------------------  ---------------------  --------------------- 
  Collateral deposit account increase/(decrease)                      16                (1,550) 
-------------------------------------------------  ---------------------  --------------------- 
 Cash flows used in investing 
  activities                                                       (162)                (4,002) 
-------------------------------------------------  ---------------------  --------------------- 
 
 Financing activities 
-------------------------------------------------  ---------------------  --------------------- 
   Bank loan advanced                                                  -                  8,400 
-------------------------------------------------  ---------------------  --------------------- 
   Bank loan costs                                                     -                  (111) 
-------------------------------------------------  ---------------------  --------------------- 
   Share issue costs                                                (68)                      - 
-------------------------------------------------  ---------------------  --------------------- 
   Share buyback                                                (22,960)                   (13) 
-------------------------------------------------  ---------------------  --------------------- 
   Share buyback costs                                              (72)                      - 
-------------------------------------------------  ---------------------  --------------------- 
   Cash paid on maturity of foreign 
    exchange forward                                                   -                   (16) 
-------------------------------------------------  ---------------------  --------------------- 
   Ordinary dividends paid                                         (371)                (1,233) 
-------------------------------------------------  ---------------------  --------------------- 
 Cash flows generated from/(used 
  in) financing activities                                      (23,471)                  7,027 
-------------------------------------------------  ---------------------  --------------------- 
 
 Net (decrease)/increase in cash 
  and cash equivalents                                          (29,520)                  1,630 
-------------------------------------------------  ---------------------  --------------------- 
 
 Cash and cash equivalents at 
  beginning of period                                             58,181                  6,273 
-------------------------------------------------  ---------------------  --------------------- 
 Exchange translation movement                                        87                   (35) 
-------------------------------------------------  ---------------------  --------------------- 
 Cash and cash equivalents at 
  end of period                                                   28,748                  7,868 
 

The accompanying notes form an integral part of these financial statements.

Condensed consolidated statement of changes in equity

 
      For the six months ended   Notes    Special   Translation    Capital    Revenue      Total 
             30 September 2019            reserve       reserve    reserve    reserve     equity 
                   (unaudited)            GBP'000       GBP'000    GBP'000    GBP'000    GBP'000 
 
 At 1 April 2019                           76,032         (582)     40,689     20,534    136,673 
                                ------  ---------  ------------  ---------  ---------  --------- 
 
 Total comprehensive income 
  for the period 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Profit/(loss) for the period                   -             -      (166)      1,840      1,674 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Other comprehensive income 
  for the period                                -           930          -          -        930 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Total comprehensive income 
  for the period                                -           930      (166)      1,840      2,604 
                                ------  ---------  ------------  ---------  ---------  --------- 
 
 Transactions with owners 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Cash dividends                      8          -             -          -      (371)      (371) 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Scrip dividends                     8        701             -          -      (701)          - 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Share issue for acquisition 
  (note 2)                          21     10,634             -          -          -     10,634 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Share issue costs                  21       (68)             -          -          -       (68) 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Share buyback                      21   (22,960)             -          -          -   (22,960) 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Share buyback costs                21       (72)             -          -          -       (72) 
                                ------  ---------  ------------  ---------  ---------  --------- 
 Total transactions with 
  owners                                 (11,765)             -          -    (1,072)   (12,837) 
                                ------  ---------  ------------  ---------  ---------  --------- 
 
 At 30 September 2019                      64,267           348     40,523     21,302    126,440 
                                ------  ---------  ------------  ---------  ---------  --------- 
 
 
    For the six months ended   Notes    Special   Translation    Capital    Revenue      Total 
           30 September 2018            reserve       reserve    reserve    reserve     equity 
                 (unaudited)            GBP'000       GBP'000    GBP'000    GBP'000    GBP'000 
 
 At 1 April 2018                         78,261         (190)     20,880     19,500    118,451 
                              ------  ---------  ------------  ---------  ---------  --------- 
 
 Total comprehensive income 
  for the period 
                              ------  ---------  ------------  ---------  ---------  --------- 
 Profit for the period                        -             -      2,728      1,711      4,439 
                              ------  ---------  ------------  ---------  ---------  --------- 
 Other comprehensive income 
  for the period                              -           513          -          -        513 
                              ------  ---------  ------------  ---------  ---------  --------- 
 Total comprehensive income 
  for the period                              -           513      2,728      1,711      4,952 
                              ------  ---------  ------------  ---------  ---------  --------- 
 
 Transactions with owners 
                              ------  ---------  ------------  ---------  ---------  --------- 
 Dividends                         8          -             -          -    (1,233)    (1,233) 
                              ------  ---------  ------------  ---------  ---------  --------- 
 Share buyback                    21       (13)             -          -          -       (13) 
                              ------  ---------  ------------  ---------  ---------  --------- 
 Total transactions with 
  owners                                   (13)             -          -    (1,233)    (1,246) 
                              ------  ---------  ------------  ---------  ---------  --------- 
 
 At 30 September 2018                    78,248           323     23,608     19,978    122,157 
                              ------  ---------  ------------  ---------  ---------  --------- 
 

The accompanying notes form an integral part of these financial statements.

Notes to the condensed consolidated financial statements for the period ended 30 September 2019

1. General information

The Company is a limited liability, closed-ended investment company incorporated in Guernsey. The Group comprises the Company and its subsidiaries. The condensed consolidated financial statements are presented in pounds Sterling as this is the currency in which the funds are raised and in which investors are seeking a return. The Company's functional currency is Sterling and the subsidiaries' currencies are Euro, Indian Rupees and Sterling. The presentation currency of the Group is Sterling. The period end exchange rate used is GBP1:INR86.973 (31 March 2019: GBP1:INR90.155) and the average rate for the period used is GBP1:INR88.086 (30 September 2018: GBP1:INR91.276). For Euro based transactions the period end exchange rate used is GBP1:EUR1.128 (31 March 2019: GBP1:EUR1.161) and the average rate for the period used is GBP1:EUR1.126 (30 September 2018: GBP1:EUR1.131).

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 28 November 2019 and signed by David Jeffreys 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 2019 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 2019, 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).

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 2019 and are expected to be applied to the Group's annual consolidated financial statements for the year ending 31 March 2020.

The Group has adopted IFRS 16 (Leases), which was due for accounting periods commencing on or after 1 January 2019.

IFRS 16 substantially carries forward the lessor accounting requirements of IAS 17. Accordingly, a lessor will continue to classify its leases as finance leases or operating leases, and account for those two types of leases differently. The adoption of IFRS 16 has not had a material impact on the financial statements.

Alpha2 acquisition

In September 2019, the Company announced that it acquired 66.4% of the shares in Alpha2. The acquisition increased ART's ownership interest in Alpha2 to 100%. The Alpha2 portfolio consisted of two unleveraged industrial assets located in England and has a net asset value of GBP16.2 million as at 30 September 2019.

As from 18 September 2019, in accordance with IFRS 3 (Business combinations), the Group has therefore consolidated its 100% investment in Alpha2.

The shares in Alpha2 were purchased from Antler Investment Holdings Limited, a related party to the Company. The shares in Alpha2 were purchased at its adjusted net asset value of GBP10.6 million with its portfolio independently valued as at 31 August 2019. The purchase consideration for the increased Alpha2 shareholding was satisfied by the re-issue from treasury of 5,030,284 ordinary shares in ART at an issue price equivalent to ART's estimated adjusted net asset value of 211.4p per share (GBP10.6 million). Given the nature of the transaction and the underlying assets, the Company has accounted for the transaction as a property acquisition as opposed to a business combination. As a result, the shares issued as consideration for the acquisition have been recognised at the fair value of the assets received as opposed to the traded price on the day of issue.

Up to the 18 September 2019, the Group accounted for its 33.6% investment in Alpha2 as an associate by the equity method, in accordance with IFRS 11. As from 18 September 2019, income and expenses related to the Alpha2 investment have been recognised in the statement of comprehensive income.

3. Revenue

 
                                 For the six months   For the six months 
                                              ended                ended 
                                  30 September 2019    30 September 2018 
                                            GBP'000              GBP'000 
------------------------------  -------------------  ------------------- 
 Rental income                                  445                   97 
------------------------------  -------------------  ------------------- 
 Service charges                                 19                    - 
------------------------------  -------------------  ------------------- 
 Rental revenue                                 464                   97 
------------------------------  -------------------  ------------------- 
 
 Interest receivable on loans 
  to third parties                            2,263                1,341 
------------------------------  -------------------  ------------------- 
 Interest revenue                             2,263                1,341 
------------------------------  -------------------  ------------------- 
 
 Other income                                     2                    - 
------------------------------  -------------------  ------------------- 
 Other revenue                                    2                    - 
------------------------------  -------------------  ------------------- 
 
 Total                                        2,729                1,438 
 

The rental revenue for the six months ended 30 September 2018 relates to the Hamburg investment property. As from 18 September 2019, rental revenue also includes the rental income generated by the Alpha2 investment property portfolio.

4. Finance income

 
                           For the six months   For the six months 
                                        ended                ended 
                            30 September 2019    30 September 2018 
                                      GBP'000              GBP'000 
------------------------  -------------------  ------------------- 
 Bank interest received                    94                    2 
------------------------  -------------------  ------------------- 
 Foreign exchange gain                      -                    - 
------------------------  -------------------  ------------------- 
 Total                                     94                    2 
 

5. Finance costs

 
                                For the six months   For the six months 
                                             ended                ended 
                                 30 September 2019    30 September 2018 
                                           GBP'000              GBP'000 
-----------------------------  -------------------  ------------------- 
 Interest on bank borrowings                   104                   23 
-----------------------------  -------------------  ------------------- 
 Foreign exchange loss                          42                   34 
-----------------------------  -------------------  ------------------- 
 Total                                         146                   57 
 

6. Net gains and losses on financial assets and liabilities held at fair value through profit or loss

 
                                           For the six months   For the six months 
                                                        ended                ended 
                                            30 September 2019    30 September 2018 
                                                      GBP'000              GBP'000 
----------------------------------------  -------------------  ------------------- 
 Unrealised gains and losses on 
  financial assets and liabilities 
  held at fair value through profit 
  or loss 
----------------------------------------  -------------------  ------------------- 
 Movement in fair value of investments                      1                  297 
                                          -------------------  ------------------- 
 Movement in fair value of foreign                      (349)                    - 
  exchange forward contract 
                                          -------------------  ------------------- 
 Undistributed investment income                            -                  501 
                                          -------------------  ------------------- 
 
 Realised gains and losses on financial 
  assets and liabilities held at 
  fair value through profit or loss 
                                          -------------------  ------------------- 
 Realised loss on foreign exchange 
  forward contract                                          -                (116) 
                                          -------------------  ------------------- 
 Dividend received from investments 
  held at fair value                                        -                    1 
                                          -------------------  ------------------- 
 Distributed investment income                              -                  602 
                                          -------------------  ------------------- 
 Movement in fair value of loans                          207                    - 
                                          -------------------  ------------------- 
 Net (losses)/gains on financial 
  assets and liabilities held at 
  fair value through profit or loss                     (141)                1,285 
                                          -------------------  ------------------- 
 

7. Taxation

 
                 For the six months   For the six months 
                              ended                ended 
                  30 September 2019    30 September 2018 
                            GBP'000              GBP'000 
--------------  -------------------  ------------------- 
 Current tax                     23                   30 
--------------  -------------------  ------------------- 
 Deferred tax                     -                    3 
--------------  -------------------  ------------------- 
 Tax expense                     23                   33 
 

The Company is exempt from Guernsey taxation on income derived outside of Guernsey and bank interest earned in Guernsey. A fixed annual fee of GBP1,200 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, Cyprus, Jersey and India.

The current tax charge is due in Cyprus, Luxembourg and the Netherlands.

Unused tax losses in Luxembourg, Spain, Germany and the United Kingdom can be carried forward indefinitely. Unused tax losses in the Netherlands can be carried forward for nine years. Unused tax losses in Cyprus can be carried forward for five years.

Due to the unpredictability of future taxable profits, the Directors believe it is not prudent to recognise a deferred tax asset for the Group's unused tax losses.

8. Dividends

 
 Dividend reference period    Shares    Dividend      Paid   Date of payment 
                                '000   per share       GBP 
 Quarter ended 31 December                                          26 April 
  2018                        23,259        0.8p   186,069              2019 
---------------------------  -------  ----------  --------  ---------------- 
 Quarter ended 31 March 
  2019                        23,117        0.8p   184,933      19 July 2019 
---------------------------  -------  ----------  --------  ---------------- 
 Quarter ended 30 June                                            18 October 
  2019                        12,572        1.0p   125,717              2019 
---------------------------  -------  ----------  --------  ---------------- 
 Total                                             496,719 
---------------------------  -------  ----------  --------  ---------------- 
 

The Company will pay a dividend of 1.0p per share for the quarter ended 30 September 2019 on 10 January 2020.

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 2019, the Company issued 419,832 ordinary shares.

9. Earnings per share

The calculation of the basic and diluted earnings per ordinary share is based on the following data:

 
                                         For the        Year        Year         For the         For the 
                                      six months       ended       ended      six months      six months 
                                           ended    31 March    31 March           ended           ended 
                                    30 September        2019        2019    30 September    30 September 
                                            2019                                    2018            2018 
-------------------------------   --------------  ----------  ----------  --------------  -------------- 
                                        Ordinary    Ordinary     A share        Ordinary         A share 
                                           share       share                       share 
-------------------------------   --------------  ----------  ----------  --------------  -------------- 
 Earnings per statement 
  of comprehensive income 
  (GBP'000)                                1,674      21,181       1,310           4,119             320 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Basic and diluted earnings 
  pence per share                            2.7        33.1        33.5             6.5             6.5 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 
 Earnings per statement 
  of comprehensive income 
  (GBP'000)                                1,674      21,181       1,310           4,119             320 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Net change in the revaluation 
  of investment properties                 (697)     (1,240)        (76)         (1,488)           (116) 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Profit on investment 
  property disposal                            -    (17,020)     (1,041) 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Movement in fair value 
  of investments                             (1)       (260)        (17)           (276)            (21) 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Movement in fair value 
  of foreign exchange forward 
  contract                                   349       (375)        (23)             108               8 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Movement in fair value 
  of the joint ventures' 
  interest rate swaption 
  (mark to market)                             3           -           -            (27)             (2) 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Net change in the revaluation 
  of the joint ventures' 
  and associates' investment 
  property                                   470     (1,807)       (110)           (882)            (69) 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Investment Manager's 
  fees (performance fee)                       -         726          45               -               - 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Deferred tax                                  -       2,000         123               3               - 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Romulus capital return                        -           -        (14)               -               - 
-------------------------------   --------------  ----------  ----------  --------------  -------------- 
 Foreign exchange (gain)/loss                 42       (692)        (42)              32               2 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Adjusted earnings                         1,840       2,513         155           1,589             122 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 Adjusted earnings (pence 
  per share)                                 3.0         3.9         3.9             2.5             2.5 
--------------------------------  --------------  ----------  ----------  --------------  -------------- 
 
 Weighted average number 
  of shares ('000s)                       61,219      63,905       3,907          63,564           4,931 
 

The adjusted earnings are presented to provide what the Board believes is a more appropriate assessment of the operational income accruing to the Group's activities. Hence, the Group adjusts basic earnings for income and costs which are not of a recurrent nature or which may be more of a capital nature.

10. Net asset value per share

 
                                 At 30 September   At 31 March   At 30 September 
                                            2019          2019              2018 
                                         GBP'000       GBP'000           GBP'000 
------------------------------  ----------------  ------------  ---------------- 
 Net asset value (GBP'000)               126,440       136,673           122,157 
------------------------------  ----------------  ------------  ---------------- 
 Net asset value per ordinary 
  and A share                             213.5p        204.3p            178.4p 
------------------------------  ----------------  ------------  ---------------- 
 
 Number of ordinary and A 
  shares ('000s)                          59,225        66,902            68,497 
 

11. Investment property

 
                                             30 September   31 March 2019 
                                                     2019         GBP'000 
                                                  GBP'000 
------------------------------------------  -------------  -------------- 
 Fair value of investment property 
  at 1 April                                       13,764          33,021 
------------------------------------------  -------------  -------------- 
 Additions                                              -          14,795 
------------------------------------------  -------------  -------------- 
 Subsequent capital expenditure after 
  acquisition                                           -           5,203 
------------------------------------------  -------------  -------------- 
 Disposals                                              -        (35,864) 
------------------------------------------  -------------  -------------- 
 Fair value adjustment in the period/year             697           1,316 
------------------------------------------  -------------  -------------- 
 Foreign exchange movements                           433           (207) 
------------------------------------------  -------------  -------------- 
 Transfer to asset held for sale                        -         (4,500) 
------------------------------------------  -------------  -------------- 
 Fair value of investment property 
  at 30 September / 31 March                       14,894          13,764 
 

Investment property comprises an investment property located in Hamburg (Werner-Siemens-Straße), Germany.

The fair value of the Hamburg property of EUR16.8 million (GBP14.9 million) (31 March 2019: EUR16.0 million (GBP13.8 million)) has been arrived at on the basis of an independent valuation carried out at the balance sheet date by Cushman & Wakefield ('C&W').

C&W are independent valuers and are not connected to the Group.

The valuation basis used is fair value as defined by the Royal Institution of Chartered Surveyors Appraisal and Valuations Standards ("RICS"). The approved RICS definition of fair value is "the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date".

Foreign exchange movement is recognised in other comprehensive income.

12. Assets held for sale

 
                                      30 September   31 March 2019 
                                              2019         GBP'000 
                                           GBP'000 
-----------------------------------  -------------  -------------- 
 Fair value at 1 April                       4,500               - 
-----------------------------------  -------------  -------------- 
 Additions                                   8,225 
-----------------------------------  -------------  -------------- 
 Transfer from investment property               -           4,500 
-----------------------------------  -------------  -------------- 
 Fair value of investment property 
  at 30 September / 31 March                12,725           4,500 
 

Asset held for sale is represented by the Unity and Armouries property in Birmingham (UK) and two industrial assets located in the UK, part of the Alpha2 property investment portfolio. which are all being actively marketed for disposal.

The fair value of the Unity and Armouries property of GBP4.5 million (31 March 2019: GBP4.5 million) has been arrived at on the basis of an independent valuation carried out at the balance sheet date by GVA.

The fair value of the Alpha2 property investment portfolio of GBP8.3 million has been arrived at on the basis of an independent valuation carried out at the balance sheet date by CBRE for one asset (GBP5.3 million) and on the basis of a directors' valuation for the other asset (GBP3.0 million).

GVA and CBRE 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".

13. Joint venture in arbitration

 
                                  30 September   31 March 2019 
                                          2019         GBP'000 
                                       GBP'000 
-------------------------------  -------------  -------------- 
 As at 1 April                           3,882           4,921 
-------------------------------  -------------  -------------- 
 Capital return                              -         (1,106) 
-------------------------------  -------------  -------------- 
 Effect of foreign exchange                142              67 
-------------------------------  -------------  -------------- 
 As at 30 September / 31 March           4,024           3,882 
 

The Galaxia investment is carried at INR 350.0 million (GBP4.0 million) (31 March 2019: INR 350.0 million, GBP3.9 million).

Following a breach of the terms of the shareholders agreement by its joint venture partner, Logix Group ("Logix"), ART initiated arbitration proceedings which were awarded in the Company's favour. ART subsequently successfully defended appeals by Logix at the Delhi High Court. Logix latterly appealed to the Supreme Court of India, where hearings are on-going.

ART continues to actively pursue Logix directors for the recovery of the award. As at 30 September 2019, the sum awarded to ART, including the previously recovered deposits, has accrued to GBP15.5 million at the period end exchange rates. The Directors, taking into consideration legal advice received following Logix's challenge of the Award and following the recovery of INR 100 million (GBP1.1 million) deposited by Logix at the Supreme Court, consider it appropriate to carry this joint venture in its accounts at INR 350 million (GBP4.0 million) (31 March 2019: INR 350 million (GBP3.9 million)). The amount recognised in the accounts does not include the additional compensation awarded by the courts due to uncertainty over timing and final value of the award.

Post period end, in November 2019, the Supreme Court ruled that ART was entitled to withdraw a further INR 100 million (GBP1.1 million) deposited by Logix with the court. The Company has since made an application to withdraw funds. Further hearings are scheduled for December 2019.

Foreign exchange movement is recognised in other comprehensive income.

14. Investments held at fair value

 
                                          30 September   31 March 2019 
                                                  2019         GBP'000 
                                               GBP'000 
---------------------------------------  -------------  -------------- 
 Non-current 
---------------------------------------  -------------  -------------- 
 As at 1 April                                     390           6,798 
---------------------------------------  -------------  -------------- 
 Disposals                                           -         (6,347) 
---------------------------------------  -------------  -------------- 
 Redemptions                                     (193)           (343) 
---------------------------------------  -------------  -------------- 
 Movement in fair value of investments               1             282 
---------------------------------------  -------------  -------------- 
 As at 30 September / 31 March                     198             390 
 

The investments, which are disclosed as non-current investments held at fair value, are as follows:

-- Europip (participating redeemable preference shares): during the period, ART received GBP0.2 million as return of capital from Europip; Europip provides quarterly valuations of the net asset value of its shares; the net asset value of the investment as at 30 September 2019 was approximately GBP30,000 (31 March 2019: GBP0.2 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 2019 was GBP0.2 million (31 March 2019: GBP0.2 million).

The Board considers that the investments in Europip and HLP will be held for the long term and has therefore disclosed them as non-current assets.

 
                                           30 September   31 March 2019 
                                                   2019         GBP'000 
                                                GBP'000 
---------------------------------------  --------------  -------------- 
 Current 
---------------------------------------  --------------  -------------- 
 As at 1 April                                        -          33,692 
---------------------------------------  --------------  -------------- 
 Additions during the period / year                   -               - 
---------------------------------------  --------------  -------------- 
 Redemptions                                          -        (34,065) 
---------------------------------------  --------------  -------------- 
 Undistributed investment income in                   - 
  period / year                                                       - 
---------------------------------------  --------------  -------------- 
 Movement in fair value of investments                -             373 
---------------------------------------  --------------  -------------- 
 As at 30 September / 31 March                        -               - 
 

As at 30 September 2019, the Group had no current investments held at fair value.

15. 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:

 
                              Alpha2        H2O       SPHL      Total     Alpha2        H2O       SPHL      Total 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                              30 Sep     30 Sep     30 Sep     30 Sep   31 March   31 March   31 March   31 March 
                                2019       2019       2019       2019       2019       2019       2019       2019 
                             GBP'000    GBP'000    GBP'000    GBP'000    GBP'000    GBP'000    GBP'000    GBP'000 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 As at 1 April                 7,403     19,434      1,698     28,535          -     17,653      1,679     19,332 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 Additions                         -          -          -          -      6,347          -          -      6,347 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 Group's share 
  of joint venture 
  and associate 
  profits before 
  fair value movements 
  and dividends                  117        657         69        843        196      1,355        127      1,678 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 Fair value adjustment 
  for interest 
  rate swaption                    -        (3)          -        (3)          -       (63)          -       (63) 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 Fair value adjustment 
  for investment 
  property                     (421)       (14)       (35)      (470)        860        843        277      1,980 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 Dividends paid 
  by joint venture 
  and associate 
  to the Group               (1,597)    (1,159)       (20)    (2,776)          -          -      (385)      (385) 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 Foreign exchange 
  movements                        -        569          -        569          -      (354)          -      (354) 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 Transfer of 
  the associate's 
  assets and liabilities 
  for consolidation 
  (note 2)                   (5,502)          -          -    (5,502)          -          -          -          - 
-------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 As at 30 September 
  / 31 March                       -     19,484      1,712     21,196      7,403     19,434      1,698     28,535 
 

The Group's investments in joint ventures and associates 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 2019, the carrying value of ART's investment in CBRE H2O was GBP19.5 million (EUR22.0 million) (31 March 2019: GBP19.4 million (EUR22.5 million)).

-- Joint venture investment in the Phase 1000 of Cambourne Business Park, Cambridge, UK: the Group holds a 10% equity investment in the Scholar Property Holdings Limited ('SPHL') group, owner of the property. As at 30 September 2019, the carrying value of ART's investment in Scholar Property Holdings Limited was GBP1.7 million (31 March 2019: GBP1.7 million).

-- Associate investment in a portfolio of investment properties in the UK industrial sector: until 18 September 2019, the Group held a 33.6% equity investment in Alpha2, owner of two industrial assets in the United Kingdom. On 18 September 2019, the Group acquired the remaining 66.4% of the Alpha2 shares from Antler Investment Holdings Limited, a related party to the Group. As from 18 September 2019, the Group has therefore consolidated its 100% investment in Alpha2.

Foreign exchange movement is recognised in other comprehensive income.

The fair value of the H2O property in Madrid (Spain) of EUR131.7 million (GBP116.8 million) (31 March 2019: EUR130.4 million (GBP116.0 million) has been arrived at on the basis of an independent valuation carried out at the balance sheet date by Aguirre Newman Valoraciones y Tasaciones S.A. ("Aguirre"), an independent valuer not connected to the Group.

The fair value of Phase 1000 of Cambourne Business Park, Cambridge (UK) is GBP30.5 million (31 March 2019: GBP30.5 million), which has been arrived at on the basis of a Directors' valuation.

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".

16. Loans advanced

 
                                       30 September   31 March 2019 
                                               2019         GBP'000 
                                            GBP'000 
------------------------------------  -------------  -------------- 
 Non-current 
------------------------------------  -------------  -------------- 
 Loans to third parties                      15,644          15,036 
------------------------------------  -------------  -------------- 
 Total loans at amortised cost               15,644          15,036 
------------------------------------  -------------  -------------- 
 Loans at fair value through profit               -               - 
  or loss 
------------------------------------  -------------  -------------- 
 Total non-current loans                     15,644          15,036 
------------------------------------  -------------  -------------- 
 
 Current 
------------------------------------  -------------  -------------- 
 Loans to third parties                      27,592          17,389 
------------------------------------  -------------  -------------- 
 Total loans at amortised cost               27,592          17,389 
------------------------------------  -------------  -------------- 
 Loans at fair value through profit 
  or loss                                     4,305           3,711 
------------------------------------  -------------  -------------- 
 Total current loans                         31,897          21,100 
 

As at 30 September 2019, the Group had granted a total of GBP47.5 million (31 March 2019: GBP35.1 million) of secured senior and secured mezzanine loans to third parties. These comprised thirty-eight loans to UK entities, which assisted with the purchase of property developments, predominantly residential, in the UK. These facilities typically range from a 6 to 36 month term and entitle the Group to a weighted average overall return on the investment of 15.1% for mezzanine loans and 11.8% for senior loans.

Post period end, a further two loans totalling GBP2.0 million were funded, additional drawdowns of GBP1.4m were made on existing loans and part payments for other loans were received amounting to GBP3.4 million.

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.

17. Collateral deposit

 
                       30 September   31 March 2019 
                               2019         GBP'000 
                            GBP'000 
--------------------  -------------  -------------- 
 Collateral deposit           1,286           1,302 
 

The collateral deposit of GBP1.3 million (31 March 2019: GBP1.3 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 year end: this cash has been placed on deposit.

18. Trade and other receivables

 
                  30 September   31 March 2019 
                          2019         GBP'000 
                       GBP'000 
---------------  -------------  -------------- 
 Non-current 
---------------  -------------  -------------- 
 Other debtors               -           1,929 
---------------  -------------  -------------- 
 Total                       -           1,929 
---------------  -------------  -------------- 
 
 Current 
---------------  -------------  -------------- 
 Trade debtors             222              28 
---------------  -------------  -------------- 
 VAT                        21              28 
---------------  -------------  -------------- 
 Rent deposit            2,000               - 
---------------  -------------  -------------- 
 Other debtors           3,181             297 
---------------  -------------  -------------- 
 Total                   5,424             353 
 

Other debtors comprise a GBP2.0 million (EUR2.3 million) residual receivable for an investment property disposed of in the prior year (31 March 2019: GBP1.9 million (EUR2.3 million)): this is due to be received in August 2020), GBP0.3 million cash held by property managers and GBP0.6 million cash held in escrow with lawyers.

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

19. Trade and other payables

 
                                     30 September   31 March 2019 
                                             2019         GBP'000 
                                          GBP'000 
----------------------------------  -------------  -------------- 
 Trade creditors                              511             356 
----------------------------------  -------------  -------------- 
 Investment Manager's fee payable             599           1,439 
----------------------------------  -------------  -------------- 
 Accruals                                     231             289 
----------------------------------  -------------  -------------- 
 Other creditors                               49              13 
----------------------------------  -------------  -------------- 
 Total                                      1,390           2,097 
 

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.

20. Bank borrowings

 
                                             30 September   31 March 2019 
                                                     2019         GBP'000 
                                                  GBP'000 
------------------------------------------  -------------  -------------- 
 Current liabilities: interest payable                 32              30 
------------------------------------------  -------------  -------------- 
 Total current liabilities                             32              30 
------------------------------------------  -------------  -------------- 
 Non-current liabilities: bank borrowings           8,282           8,039 
------------------------------------------  -------------  -------------- 
 Total liabilities                                  8,314           8,069 
------------------------------------------  -------------  -------------- 
 
 The borrowings are repayable as follows: 
------------------------------------------  -------------  -------------- 
 Interest payable                                      32              30 
------------------------------------------  -------------  -------------- 
 On demand or within one year                           -               - 
------------------------------------------  -------------  -------------- 
 In the second to fifth years inclusive                 -               - 
------------------------------------------  -------------  -------------- 
 After five years                                   8,282           8,039 
------------------------------------------  -------------  -------------- 
 Total                                              8,314           8,069 
 

Movements in the Group's non-current bank borrowings are analysed as follows:

 
                                        30 September   31 March 2019 
                                                2019         GBP'000 
                                             GBP'000 
-------------------------------------  -------------  -------------- 
 As at 1 April                                 8,039               - 
-------------------------------------  -------------  -------------- 
 Borrowings, additions                             -           8,377 
-------------------------------------  -------------  -------------- 
 Deferred finance costs, additions                 -           (151) 
-------------------------------------  -------------  -------------- 
 Amortisation of deferred finance 
  costs                                            8               4 
-------------------------------------  -------------  -------------- 
 Exchange differences on translation 
  of foreign currencies                          235           (191) 
-------------------------------------  -------------  -------------- 
 As at 30 September / 31 March                 8,282           8,039 
 

As at 30 September 2019, bank borrowings represent the Nord LB (a German bank) loan for EUR9.5 million (GBP8.4 million), 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 EUR4.9 million and EUR4.6 million, which bear a 1.85% and 2.7% fixed rate respectively and that are due to mature in August 2028.

The borrowings are non-recourse to ART.

The table below sets out an analysis of net debt and the movements in net debt for the period ended 30 September 2019.

 
                                 Derivatives      Liabilities from 
                                                 financing activities 
------------------------------  ------------  ------------------------  --------- 
                                   Foreign      Interest    Borrowings      Total 
                                   exchange      payable       GBP'000    GBP'000 
                                   forward       GBP'000 
                                   GBP'000 
------------------------------  ------------  ----------  ------------  --------- 
 Net asset/(debt) as at 1 
  April 2019                             514        (30)       (8,039)    (7,555) 
------------------------------  ------------  ----------  ------------  --------- 
 Cash movements                            -          95             -         95 
------------------------------  ------------  ----------  ------------  --------- 
 Non cash movements 
------------------------------  ------------  ----------  ------------  --------- 
 Foreign exchange adjustments              -           7         (235)      (228) 
------------------------------  ------------  ----------  ------------  --------- 
 Unrealised loss on foreign 
  exchange forward contract            (349)           -             -      (349) 
------------------------------  ------------  ----------  ------------  --------- 
 Loan fee amortisation and 
  other costs                              -           -           (8)        (8) 
------------------------------  ------------  ----------  ------------  --------- 
 Interest charge                           -       (104)             -      (104) 
------------------------------  ------------  ----------  ------------  --------- 
 Net asset/(debt) as at 30 
  September 2019                         165        (32)       (8,282)    (8,149) 
------------------------------  ------------  ----------  ------------  --------- 
 
 
                                      Derivatives           Liabilities from 
                                                           financing activities 
------------------------------  ----------------------  ------------------------  --------- 
                                  Foreign    Interest     Interest    Borrowings      Total 
                                  exchange      rate       payable       GBP'000    GBP'000 
                                  forward     swaption     GBP'000 
                                  GBP'000     GBP'000 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Net asset/(debt) as 
  at 1 April 2018                      100           -           -             -        100 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Cash movements                         16           -           -       (8,400)    (8,384) 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Non cash movements 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Foreign exchange adjustments            -           -           -          (52)       (52) 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Realised loss on foreign 
  exchange forward contract          (116)           -           -             -      (116) 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Loan fees paid                          -           -           -           111        111 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Loan fees amortisation 
  and other costs                        -           -           -           (1)        (1) 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Interest charge                         -           -        (22)             -       (22) 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 Net asset/(debt) as 
  at 30 September 2018                   -           -        (22)       (8,342)    (8,364) 
------------------------------  ----------  ----------  ----------  ------------  --------- 
 

21. Share capital

 
                                                          Number 
                                                       of shares 
--------------------  ------------  -------------  ------------- 
 Authorised 
--------------------  ------------  -------------  ------------- 
 Ordinary shares                                       Unlimited 
  of no par value 
--------------------  ------------  -------------  ------------- 
 
                          Ordinary       Ordinary       Ordinary 
--------------------  ------------  -------------  ------------- 
 Issued and fully         treasury       external          total 
  paid 
--------------------  ------------  -------------  ------------- 
 At 1 April 2019         6,908,957     66,902,342     73,811,299 
--------------------  ------------  -------------  ------------- 
 Share issue for 
  scrip dividend                 -        419,832        419,832 
--------------------  ------------  -------------  ------------- 
 Share issue from 
  treasury (note 2)    (5,030,284)      5,030,284              - 
--------------------  ------------  -------------  ------------- 
 Shares bought back         62,124       (62,124)              - 
--------------------  ------------  -------------  ------------- 
 Shares cancelled 
  following buyback              -   (13,065,348)   (13,065,348) 
--------------------  ------------  -------------  ------------- 
 At 30 September 
  2019                   1,940,797     59,224,986     61,165,783 
 

The Company has one class of ordinary shares. The Company has the right to reissue or cancel the remaining treasury shares at a later date.

Under the general authority, approved by Shareholders on 8 January 2019, the Company announced a tender offer on 14 June 2019 for up to 16,666,771 ordinary shares at a price (before expenses) of 175.0 pence per share. In total 13,065,348 ordinary shares were validly tendered under the tender offer for a total cost of GBP22.9 million. All purchased ordinary shares were cancelled.

During the period, the Company additionally purchased 62,124 shares in the market at the weighted average price per share of 155p (total cost of GBP0.1 million) and, in September 2019, ART re-issued from treasury 5,030,284 ordinary shares as consideration for Alpha2. The 5,030,284 ordinary shares were issued at an issue price equivalent to ART's estimated adjusted net asset value of 211.4p per share based upon the Company's net asset value as at 30 June 2019 with adjustments made for dividends paid and share buybacks completed, including the Company's tender offer, following this date. The total consideration was therefore GBP10.6 million and has been accounted for as a share based payment in accordance with IFRS 2.

As at 30 September 2019, the ordinary share capital of the Company was 61,165,783 (including 1,940,797 ordinary shares held in treasury) and the total voting rights in the Company is 59,224,986.

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 2019, the Company issued 419,832 ordinary shares: on 26 April 2019, 216,698 were issued at the price of GBP1.611 and, on 19 July 2019, 203,134 were issued at the price of GBP1.731.

Post period end, the Company made no share buybacks. On 18 October 2019, as a result of the scrip dividend elections related to the dividend of the quarter ended 30 June 2019, the Company issued 231,625 ordinary shares at the price of GBP1.797. At the date of signing these financial statements the ordinary share capital of the Company is 61,397,408 (including 1,940,797 ordinary shares held in treasury) and the total voting rights in the Company is 59,456,611.

22. Events after the balance sheet date

Post period end, a further two loans totalling GBP2.0 million were funded, additional drawdowns of GBP1.4m were made on existing loans and part payments for other loans were received amounting to GBP3.4 million.

Post period end, the sale of the penultimate asset in the Alpha2 portfolio completed realising proceeds of GBP5.2 million. The sale price was in line with the asset's 30 September 2019 valuation.

On 18 October 2019, as a result of the scrip dividend elections related to the dividend of the quarter ended 30 June 2019, the Company issued 231,625 ordinary shares at the price of GBP1.797 (note 21).

On 22 Friday 2019, the Group completed the acquisition of an investment property located in Liverpool, UK, for GBP0.6 million.

23. Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. ARC is the Investment Manager to the Company under the terms of the Management Agreement and is thus considered a related party of the Company.

The Investment Manager is entitled to receive a fee from the Company at an annual rate of 2% of the net assets of the Group, payable quarterly in arrears. The Investment Manager is also entitled to receive an annual performance fee calculated with reference to total shareholder return ("TSR"), whereby the fee is 20% of any excess over an annualised TSR of 15% subject to a rolling three year high water mark.

Prior to the 70% disposal of the H2O property, ARC had a management agreement directly with the H2O property company, Alpha Tiger Spain 1, SLU ('ATS1') under which it earned a fee of 0.9% per annum based upon the gross assets of ATS1. In order to avoid double counting of fees, ARC provided a rebate to the Company of a proportion of its fee equivalent to the value of the Group's net asset value attributable to the H2O investment. Subsequent to the sale of ATS1 to CBRE H2O Rivas Holding NV ('CBRE H2O'), ARC has been appointed as Asset Manager to ATS1 and Investment Manager to CBRE H2O. ARC has agreed to rebate to ART all of the fees charged by ARC directly to CBRE H2O and ATS1 that relate to the Company's 30% share in CBRE H2O.

The Company invests in Alpha2, where ARC is the Investment Manager. ARC rebates fees earned in relation to the Company's investment in Alpha2.

In September 2019, the Company announced that it acquired 66.4% of the shares in Alpha2. The acquisition increased ART's ownership interest in Alpha2 to 100% (note 2). The shares in Alpha2 were purchased from Antler Investment Holdings Limited, a related party to the Company.

The Company has invested in Europip, where ARPIA, a subsidiary of ARC, is the Investment Adviser. ARC rebates fees earned in relation to the Company's investment in Europip.

The Company has invested in Phase 1000, Cambourne Business Park, Cambridge, and ARC was appointed as Asset and Property Manager of the joint venture entity. ARC rebates to ART the relevant proportion of fees earned by ARC, which apply to the Company's investment.

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 2019 is provided in note 19.

The Directors of the Company received total fees as follows:

 
                       For the six     For the six 
                      months ended    months ended 
                      30 September    30 September 
                              2019            2018 
------------------  --------------  -------------- 
 David Jeffreys             18,000          17,000 
------------------  --------------  -------------- 
 Phillip Rose               12,500          11,500 
------------------  --------------  -------------- 
 Jeff Chowdhry              12,500          11,500 
------------------  --------------  -------------- 
 Melanie Torode             23,750          11,750 
------------------  --------------  -------------- 
 William Simpson            12,500               - 
------------------  --------------  -------------- 
 Serena Tremlett*                -          18,000 
------------------  --------------  -------------- 
 Total                      79,250          69,750 
 

* Resigned on 8 October 2018.

The Directors' interests in the shares of the Company are detailed below:

 
                           30 September         31 March 2019 
                                   2019    Number of ordinary 
                     Number of ordinary           shares held 
                            shares held 
-----------------  --------------------  -------------------- 
 David Jeffreys                  15,000                15,000 
-----------------  --------------------  -------------------- 
 Phillip Rose                   899,833               892,220 
-----------------  --------------------  -------------------- 
 Jeff Chowdhry                   10,000                10,000 
-----------------  --------------------  -------------------- 
 Melanie Torode                       -                     - 
-----------------  --------------------  -------------------- 
 William Simpson                      -                     - 
 

Alpha Global Property Securities Fund Pte. Ltd, a wholly owned subsidiary of ARC registered in Singapore, held 22,766,714 shares in the Company at 30 September 2019 (31 March 2019: 22,550,000).

ARC did not hold any shares in the Company at 30 September 2019 (31 March 2019: nil). The following, being partners of the Investment Manager, hold direct interests in the following shares of the Company:

 
                              30 September         31 March 2019 
                                      2019    Number of ordinary 
                        Number of ordinary           shares held 
                               shares held 
--------------------  --------------------  -------------------- 
 Rockmount Ventures 
  Limited                        2,279,270             2,257,575 
--------------------  --------------------  -------------------- 
 Brian Frith                     1,125,000             1,125,000 
--------------------  --------------------  -------------------- 
 Phillip Rose                      899,833               892,220 
--------------------  --------------------  -------------------- 
 Brad Bauman                        55,006                55,006 
 

Karl Devon-Lowe, a partner of ARC, received fees of GBP4,183 (31 March 2019: GBP5,100) in relation to directorial responsibilities on a number of the Company's subsidiary companies.

Melanie Torode is the Operations Director of Estera Administration (Guernsey) Limited ('Estera'), the Company's administrator and secretary. During the period the Company paid Estera fees of GBP47,400 (31 March 2019: GBP96,500) and no amount was outstanding at period end.

24. Financial assets and liabilities held at fair value through profit or loss

 
                                              Financial assets and liabilities 
                                                                carrying value 
----------------------------------------   ----------------------------------- 
                                               30 September      31 March 2019 
                                                       2019            GBP'000 
                                                    GBP'000 
----------------------------------------   ----------------  ----------------- 
 Financial assets at fair value through 
  profit or loss 
----------------------------------------   ----------------  ----------------- 
 Investments held at fair value                         198                390 
-----------------------------------------  ----------------  ----------------- 
 Foreign exchange forward contract                      165                514 
-----------------------------------------  ----------------  ----------------- 
 Loans advanced                                       4,305              3,711 
-----------------------------------------  ----------------  ----------------- 
 Total financial assets at fair value 
  through profit or loss                              4,668              4,615 
 

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

-- As at 30 September 2019, the Group does not hold any investment which can be categorised as Level 1.

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.

-- The fair value of the Europip investment is based upon the price provided by the issuer for the relevant share class owned: this is calculated by reference to the net asset value of the investment and principally driven by the fair value of Europip's underlying property investments. This net asset value is therefore mainly based on unobservable inputs and is deemed to be a level 3 financial asset. Europip's accounts are audited annually. As at 30 September 2019, Europip has sold its remaining property and has partly distributed the related proceeds to shareholders; Europip is currently preparing to distribute the final proceeds to shareholders.

Financial assets and liabilities held at fair value are valued on a recurring basis as indicated above. There have been no changes to the valuation methods applied from the Group's annual report and accounts for the year ended 31 March 2019.

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 
 ------------------------------------------------------------------------------ 
                                  Level 1      Level 2     Level 3      Total 
                                -----------  ----------  ----------  ---------- 
            30 September 2019     GBP'000      GBP'000     GBP'000     GBP'000 
                                -----------  ----------  ----------  ---------- 
 Assets measured at fair 
  value 
------------------------------  -----------  ----------  ----------  ---------- 
 Non-current 
------------------------------  -----------  ----------  ----------  ---------- 
 Investments held at fair 
  value                                   -           -         198         198 
------------------------------  -----------  ----------  ----------  ---------- 
 Current 
------------------------------  -----------  ----------  ----------  ---------- 
 Loans advanced                           -           -       4,305       4,305 
------------------------------  -----------  ----------  ----------  ---------- 
 Foreign exchange forward 
  contract                                -         165           -         165 
 
 
                   Assets and liabilities measured at fair 
                                    value 
 -------------------------------------------------------------------------- 
                              Level 1      Level 2     Level 3      Total 
                            -----------  ----------  ----------  ---------- 
            31 March 2019     GBP'000      GBP'000     GBP'000     GBP'000 
                            -----------  ----------  ----------  ---------- 
 Assets measured at fair 
  value 
--------------------------  -----------  ----------  ----------  ---------- 
 Non-current 
--------------------------  -----------  ----------  ----------  ---------- 
 Investments held at fair 
  value                               -           -         390         390 
--------------------------  -----------  ----------  ----------  ---------- 
 Loans advanced                       -           -       3,711       3,711 
--------------------------  -----------  ----------  ----------  ---------- 
 Current 
--------------------------  -----------  ----------  ----------  ---------- 
 Foreign exchange forward 
  contract                            -         514           -         514 
 

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 2019.

Directors and Company information

 
 Directors                     Independent valuers         Legal advisors in Guernsey 
  David Jeffreys (Chairman)     in India                    Carey Olsen 
  Jeff Chowdhry                 Colliers International      PO Box 98, Carey House 
  William Simpson               (Hong Kong) Limited         Les Banques 
  Phillip Rose                  Suite 5701 Central Plaza    St Peter Port 
  Melanie Torode                18 Harbour Road             Guernsey GY1 4BZ 
                                Wanchai, Hong Kong 
 Registered office             Independent valuers         Legal advisors in the 
  Floor 2, Trafalgar Court      in Spain                    UK 
  Les Banques                   Savills Aguirre Newman      Norton Rose 
  St Peter Port                 Paseo de la Castellana,     3 More London Riverside 
  Guernsey                      81                          London SE1 2AQ 
  GY1 4LY                       Madrid, 28046 
                                Spain 
 Investment Manager            Independent valuers         Legal advisors in India 
  Alpha Real Capital LLP        in Germany                  AZB & Partners 
  Level 6, 338 Euston           Cushman & Wakefield         Plot A-8 Sector 4 
  Road                          Rathenauplatz, 1            NOIDA 201 301 
  London NW1 3BG                Frankfurt, 60313            India 
                                Germany 
 Administrator and secretary   Independent Auditor         Legal advisors in Spain 
  Estera Administration         BDO Limited                 Ashurst LLP 
  (Guernsey) Limited            Place du Pré,          Alcalá, 44 
  Floor 2, Trafalgar Court      Rue du Pré             Madrid, 28014 
  Les Banques, St Peter         St Peter Port               Spain 
  Port                          Guernsey GY1 3LL 
  Guernsey 
  GY1 4LY 
 Broker                        Tax advisors in Europe      Registrar 
  Panmure Gordon (UK)           KPMG LLP                    Computershare Investor 
  Limited                       15 Canada Square            Services (Jersey) Limited 
  One New Change                London E14 5GL              Queensway House 
  London                        Grant Thornton UK LLP       Hilgrove Street 
  EC4M 9AF                      30 Finsbury Square          St Helier 
                                London EC2A 1AG             Jersey JE1 1ES 
 Independent valuers 
  in the UK 
  GVA 
  3 Brindley place 
  Birmingham B1 2JB 
  Savills 
  Ground Floor, City Point 
  12 King Street 
  Leeds LS1 2HL 
  CBRE Limited 
  Henrietta House 
  Henrietta Place 
  London W1G 0NB 
 

Shareholder information

Further information on the Company can be found at the Company's website:

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/     Dividend     Ex-dividend     Record         Last date           Share        Payment 
  reporting         Meeting       period          date          date       for election      certificates       date 
                     dates                                                   to scrip           posted 
                                                                             dividend       (if applicable) 
                                                                          (if applicable) 
---------------  -----------  -------------  ------------  ------------  ----------------  ----------------  --------- 
 Half year            29         Quarter      12 December   13 December         20                 9             10 
  report and       November      ended 30         2019          2019          December          January        January 
  dividend           2019        September                                      2019              2020          2020 
  announcement                     2019 
---------------  -----------  -------------  ------------  ------------  ----------------  ----------------  --------- 
 Trading              28         Quarter          12            13              26                 8             9 
  update           February       ending         March         March           March             April          April 
  (Qtr 3)            2020       31 December       2020          2020            2020              2020          2020 
                                   2019 
---------------  -----------  -------------  ------------  ------------  ----------------  ----------------  --------- 
 Annual report        12         Quarter          25            26               3                16             17 
  and dividend       June         ending          June          June            July              July          July 
  announcement       2020        31 March         2020          2020            2020              2020          2020 
                                   2020 
---------------  -----------  -------------  ------------  ------------  ----------------  ----------------  --------- 
 Annual report        26 
  published          June 
                     2020 
---------------  -----------  -------------  ------------  ------------  ----------------  ----------------  --------- 
 Annual General       7 
  Meeting           August 
                     2020 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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