Half-year Report

Alpha Real Trust Limited
24 November 2023
 

LEI: 213800BMY95CP6CYXK69

24 November 2023

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

 

ART ANNOUNCES ITS HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023

 

·      NAV per ordinary share 214.3p as at 30 September 2023 (31 March 2023: 216.8p).

 

·      Basic earnings for the six months ended 30 September 2023 of 1.5p per ordinary share (six months ended 30 September 2022: basic earnings of 0.4p per ordinary share).

 

·      Adjusted earnings for the six months ended 30 September 2023 of 4.6p per ordinary share (six months ended 30 September 2022: adjusted earnings of 3.3p per ordinary share)*.

 

·      Declaration of a quarterly dividend of 1.0p per ordinary share expected to be paid on 24 January 2024.

 

·      Robust financial position: ART remains on a robust financial footing and is well positioned to take advantage of new investment opportunities.

 

·      Investment targets: the Company is currently focussed on managing risk in its loan portfolio and opportunistically extending its wider investment strategy to target investments offering inflation protection via index linked income adjustments and investments that have potential for capital gains.

 

·      Addition to long leased property portfolio: in August 2023, ART acquired a hotel and public house in Yardley, Birmingham for £5.1 million (including acquisition costs) with inflation linked rentals.

 

·      Diversified portfolio of secured senior and secured mezzanine loan investments: as at 30 September 2023, the size of ART's drawn secured loan portfolio was £57.9 million, representing 46.4% of the investment portfolio.

 

·      The senior portfolio has an average Loan to Value ('LTV')** of 60.1% based on loan commitments (with mezzanine loans having an LTV range of between 49.5% and 68.0% whilst the highest approved senior loan LTV is 65.6%).

 

·      Loan commitments: including existing loans at the balance sheet date and loans committed post period end, ART's current total committed but undrawn loan commitments amount to £3.4 million.

 

·      H2O Madrid: three Inditex group brands entered into updated lease contracts to extend the footprint of existing stores and extend the lease terms.

 

·      Cash management: including investments post period end, the Company has invested £12.0 million in short term UK Treasury Bonds (Gilts) and £7.1 million in UK Treasury Bills to enhance returns on its liquid holdings.

 

 

* The basis of the adjusted earnings per share is provided in note 8

** See below for more details



 

William Simpson, Chairman of Alpha Real Trust, commented:

 

"ART's investment portfolio benefits from diversification across geographies, sectors, and asset types. As inflationary pressures and interest rate policy continue to shape the economic backdrop in which the Company operates, ART remains on a robust financial footing and is well placed to capitalise on new investment opportunities. 

ART remains committed to growing its diversified investment portfolio. In recent years the Company focused on reducing exposure to direct development risk and recycling capital into cashflow driven investments. The Company is currently focussed on its loan portfolio and also on its wider investment strategy which targets investments offering inflation protection via index linked income adjustments and investments that have potential for capital gains."

 

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

 

For further information please contact:

 

Alpha Real Trust Limited

William Simpson, Chairman, Alpha Real Trust +44 (0) 1481 742 742

Gordon Smith, Joint Fund Manager, Alpha Real Trust +44 (0) 207 391 4700

Brad Bauman, Joint Fund Manager, Alpha Real Trust +44 (0) 207 391 4700

 

Panmure Gordon, Broker to the Company

Atholl Tweedie +44 (0) 20 7886 2500

 

Notes to editors:

 

About Alpha Real Trust

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

Further information on the Company can be found on the Company's website: www.alpharealtrustlimited.com.

 

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.

 



 

Company's summary and objective

 

Strategy

 

ART targets investment, development, financing and other opportunities in real estate, real estate operating companies and securities, real estate services, infrastructure, infrastructure services, other asset-backed businesses and related operations and services businesses that offer attractive risk-adjusted total returns.

ART currently selectively focusses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk adjusted returns.

The portfolio mix at 30 September 2023, excluding sundry assets/liabilities, was as follows:


30 September 2023

31 March 2023

 

High return debt:

46.4%

44.5%


High return equity in property investments:

29.7%

26.5%


Other investments:

14.3%

15.2%


Cash:

9.6%

13.8%






The Company is currently focussed on risk managing its loan portfolio and opportunistically extending its wider investment strategy to target high return mezzanine and property investments offering inflation protection via index linked income adjustments and investments that have potential for capital gains.

The Company's Investment Manager is Alpha Real Capital LLP ("ARC").

Dividends

The current intention of the Directors is to pay a dividend and offer a scrip dividend alternative quarterly to all shareholders.

Listing

The Company's shares are traded on the Specialist Fund Segment ("SFS") of the London Stock Exchange ("LSE"), ticker ARTL: LSE.

Management

The Company's Investment Manager is Alpha Real Capital LLP ('ARC'), whose team of investment and asset management professionals focus on the potential to enhance earnings in addition to adding value to the underlying assets, and also focus on the risk profile of each investment within the capital structure to best deliver attractive risk adjusted returns.

Control of the Company rests with the non-executive Guernsey based Board of Directors.

Financial highlights

 

6 months ended

30 September

2023

12 months ended

31 March

2023

6 months ended

30 September 2022

Net asset value (£'000)

125,354

125,067

125,025

Net asset value per ordinary share

214.3

216.8p

219.6

Earnings per ordinary share (basic and diluted) (adjusted)*

4.6p

7.7p

3.3p

Earnings per ordinary share (basic and diluted)

1.5p

1.1p

0.4p

Dividend per ordinary share (paid during the period)

2.0p

4.0p

2.0p

* The adjusted earnings per share includes adjustments for the effect of the fair value revaluation of investment property and indirect property investments, capital element on Investment Manager's fees, the fair value movements on financial assets and deferred tax provisions: full analysis is provided in note 8 to the accounts.

 

 



 

Chairman's statement

I am pleased to present the Company's half year report and accounts for the six months ended 30 September 2023.

ART's investment portfolio benefits from diversification across geographies, sectors and asset types and the Company remains on a robust financial footing and is well placed to capitalise on new investment opportunities.

Inflationary pressures and persistently relatively high central bank interest rates continue dominate the economic backdrop in which the Company operates and clouds the outlook for the real estate market. The uncertain market will offer opportunities in the medium term for ART to grow its diversified investment portfolio. The Company is currently focussed on risk managing its loan portfolio and opportunistically extending its wider investment strategy to target mezzanine opportunities as companies seek to refinance and recapitalise. The Company is also investing in assets offering inflation protection via index linked income adjustments and investments that have potential for capital appreciation.

ART's investment portfolio benefits from diversification across geographies, sectors and asset types. We continue to take a cautious approach to new investment, including new lending, as we observe ongoing pressures in the economy. Recently the Company has again focused on recycling capital into more conservative asset backed lending while reducing exposure to development risk. In this time of heightened uncertainty, the Company is benefiting from that strategy and it has placed the Company on a robust financial footing.

ART continues to adhere to its disciplined strategy and investment underwriting principles which seek to manage risk through a combination of operational controls, diversification and an analysis of the underlying asset security.

Long leased assets

The Company's portfolio of long leased properties, comprising three hotels leased to Travelodge in the UK and an industrial facility in Hamburg, Germany, leased to a leading industrial group are well positioned in the current inflationary environment. The leased assets have inflation linked rent adjustments which offer the potential to benefit from a long term, predictable, inflation linked income stream and the potential for associated capital growth.

During the period ART acquired a hotel and public house in Yardley, Birmingham, United Kingdom for £5.1 million (including acquisition costs), leased to Travelodge Hotels Limited reflecting an initial yield of 8.3% p.a. ART has acquired the asset for cash.

The property is let until November 2060 with a tenant only break option in 2035, providing 12 years term certain to the break clause and the rent has inflation linked adjustments.

The 64-bedroom hotel and public house is held freehold and is situated to the east of Birmingham City Centre off the A45. The hotel is in a well-connected location equidistant between Birmingham City Centre to the west and Birmingham Airport to the east.

Diversified secured lending investment

The Company invests in a diversified portfolio of secured senior and mezzanine loan investments. The loans are typically secured on predominately residential real estate investment and development assets with attractive risk adjusted income returns. As at 30 September 2023, ART had committed £67.6 million across eighteen loans, of which £57.9 million (excluding a £5.1 million provision for Expected Credit Loss discussed below) was drawn.

The Company's debt portfolio comprises predominately floating rate loans. Borrowing rates are typically set at a margin over Bank of England ('BoE') Base Rate and benefit from rising interest rates as outstanding loans deliver increasing returns as loan rates track increases in the BoE Base Rate.

During the quarter ended 30 September 2023, one new loan was drawn for £0.8 million and additional drawdowns of £5.0 million were made on existing loans, one loan totalling £0.5 million (including accrued interest and exit fees) was fully repaid and a further £5.0 million (including accrued interest) was received as part repayments.

Post period end, £1.5 million of drawdowns were made on existing loans, one loan was fully repaid for £1.5 million (including accrued interest and applicable fees) and part payments were received amounting to £4.5 million (including accrued interest).

As at 30 September 2023, 68.6% of the Company's loan investments were senior loans and 31.4% were mezzanine loans. The portfolio has an average LTV of 60.1% based on loan commitments (with mezzanine loans having a LTV range of between 49.5% and 68.0% whilst the highest approved senior loan LTV is 65.6%). Portfolio loans are underwritten against value for investment loans or gross development value for development loans as relevant and collectively referred to as LTV in this report.

The largest individual loan in the portfolio as at 30 September 2023 is a senior loan of £10.2 million which represents 15.1% of committed loan capital and 8.1% of the Company's NAV.

Four loans in the portfolio have entered receivership: ART is closely working with stakeholders to maximise capital recovery. The Company has considered the security on these loans (which are a combination of a first charge and a second charge over the respective assets and personal guarantees) and has calculated an Expected Credit Loss ('ECL') on these four loans of approximately £3.7 million; the Group have also provided for an ECL on the remainder of the loans' portfolio for an additional £1.4 million: in total, the Group have provided for an ECL of £5.1 million in its consolidated accounts.

Aside from the isolated cases of receivership, illustrated above, the Company's loan portfolio has proved to be resilient despite the recent extended period of heightened uncertainty and risk. In terms of debt servicing, allowing for some temporary agreed extensions, interest and debt repayments have been received in accordance with the loan agreements. Where it is considered appropriate, on a case-by-case basis, underlying loan terms may be extended or varied with a view to maximising ART's risk adjusted returns and collateral security position. The Company's loan portfolio and new loan targets continue to be closely reviewed to consider the potential impact on construction timelines, building cost inflation and sales periods.

The underlying assets in the loan portfolio as at 30 September 2023 had geographic diversification with a London and South East focus. London accounted for 25.4% and the South East of England accounted for 17.1% of the committed facilities within the loan investment portfolio.

H2O, Madrid

ART has a 30% stake in a joint venture with CBRE Investment Management in the H2O shopping centre in Madrid.

H2O occupancy, by area, as at 30 September 2023 was 91.5%. The centre's visitor numbers remain below pre-Covid highs; however, a recovery is evident. In the calendar year to 30 September 2023, visitor numbers were approximately 6.8% below those in 2019 (pre-Covid) and 7.0% above 2022.

During the period, a notable asset management action included the signing of contracts with three existing Inditex group brands within the centre to extend the footprint of existing stores and extend the lease terms. The works to deliver the new 3,000 square metre store for anchor retailer Primark continue to advance on schedule. The store is expected to be delivered during 2024.

Other investments

Investment in listed and authorised funds

The Company has invested (value as at 30 September 2023: £4.1 million) across three investments that offer potential to generate attractive risk adjusted returns. Current market volatility and rises in interest rates have impacted the capital value of these investments. The investment yield offers a potentially accretive return to holding cash while the Company deploys capital in opportunities in line with its investment strategy. These funds invest in ungeared long-dated leased real estate, debt and infrastructure.

Cash management

The Company adopts an active approach to enhance returns on its cash balances.

As at 30 September 2023, the Company had invested a total of £6.0 million in short dated UK Treasury Bonds (Gilts) (annualised yield to maturity of 4.8% with maturity in September 2024) and £7.1 million in UK Treasury Bills (annualised yield to maturity of 5.5% with maturity in March 2024). These government backed short term investments offer the Company enhanced returns over cash balances.

Post period end, the Company invested further £6.0 million in short dated UK Treasury Bonds (Gilts) with an annualised yield to maturity of 4.9% with maturity in October 2025.

During the period, the Company also invested £6.0 million in the Morgan Stanley GBP Liquidity Fund, which invests in high quality short-term money market instruments denominated in sterling, offers same day liquidity and earns an annualised return, net of Morgan Stanley's fees, of 5.3%.

Results and dividends

Results

Basic earnings for the six months ended 30 September 2023 are £0.9 million (1.5 pence per ordinary share, see note 8 of the financial statements).

Adjusted earnings, which the Board believe is a more appropriate assessment of the operational income accruing to the Group's activities, for the six months ended 30 September 2023 are £2.7 million: this represents 4.6 pence per ordinary share, which compares with adjusted earnings of 3.3 pence per ordinary share in the same period of last year (see note 8 of the financial statements). Earnings have increased primarily due to enhanced revenues from new long income investments and accretion from cash/treasury management.

The net asset value per ordinary share at 30 September 2023 is 214.3 pence per share (31 March 2023: 216.8 pence per ordinary share) (see note 9 of the financial statements). The net asset values reflects the fair value movement on the investment property and listed and authorised funds, an increase in the ECL provisions on the loan portfolio mitigated by positive earnings in excess of dividends.

Dividends

The Board announces a dividend of 1.0 pence per ordinary share which is expected to be paid on 24 January 2024 (ex-dividend date 7 December 2023 and record date 8 December 2023).

The dividends paid and declared in respect of the twelve month period ended 30 September 2023 totalled 4.0 pence per ordinary share representing an annual dividend yield of 3.0% p.a. by reference to the average closing share price over the twelve months to 30 September 2023.

During the period, £105,561 dividends were paid in cash and £1,052,519 settled by scrip issue of shares.

Scrip dividend alternative

Shareholders of the Company have the option to receive shares in the Company in lieu of a cash dividend, at the absolute discretion of the Directors, from time to time.

The number of ordinary shares that an Ordinary Shareholder will receive under the Scrip Dividend Alternative will be calculated using the average of the closing middle market quotations of an ordinary share for five consecutive dealing days after the day on which the ordinary shares are first quoted "ex" the relevant dividend.

The Board has elected to offer the scrip dividend alternative to Shareholders for the dividend for the quarter ended 30 September 2023. Shareholders who returned the Scrip Mandate Form and elected to receive the scrip dividend alternative will receive shares in lieu of the next dividend. Shareholders who have not previously elected to receive scrip may complete a Scrip Mandate Form (this can be obtained from the registrar: contact Computershare (details below)), which must be returned by 9 January 2024 to benefit from the scrip dividend alternative for the next dividend.

Financing

As at 30 September 2023 the Group has one direct bank loan of €9.5 million (£8.2 million), with no financial covenant tests, to a subsidiary used to finance the acquisition of the Hamburg property. The loan is secured over the Hamburg property and has no recourse to the other assets of the Group.

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

Share buybacks

Following the Annual General Meeting held on 7 September 2023 the Company has the authority to buy back 14.99% of its share capital (assessed on 29 June 2023) for a total of 8,709,579 shares. No shares have been yet bought back under this authority.

During the period and post period end, the Company did not purchase any shares in the market.

As at the date of this announcement, the ordinary share capital of the Company is 66,629,772 (including 7,717,581 ordinary shares held in treasury) and the total voting rights in the Company is 58,912,191.

Foreign currency

The Company monitors foreign exchange exposures and considers hedging where appropriate. Foreign currency balances have been translated at the period end rates of £1:€1.154 as appropriate.

Russian invasion of Ukraine and going concern

As previously stated, ART has no investments in Ukraine, Russia, nor exposure to any companies that have investments in, or links to, Ukraine or Russia. ART has no arrangements with any person currently on (or potentially on) any sanctions list, or links to Ukraine or Russia. The Board continues to monitor the global political and economic situation regularly assessing impacts arising from inflation and interest rate changes for a potential material impact on ART's portfolio.

The Company has adopted a prudent short-term strategy to move to cash conservation and a cautious approach to commitments to new investments over this uncertain time. Alert to the impact of potentially reducing income returns, this approach has supported a robust balance sheet position. The Company continues to adopt this cautious approach to new investment and is conserving cash because of the uncertainty that has characterised the past few months; this ensures the Company retains a robust financial footing, making it well positioned to take advantage of new investment opportunities.

As noted above, the Company held approximately (as at 30 September 2023) 9.6% of its assets (excluding sundry net assets) in cash (including the investment in the Morgan Stanley GBP Liquidity Fund) and 10.5% in highly liquid UK Treasury Bonds and Bills with limited current contractual capital commitments. While there is external financing in the Group's investment interests, this is limited and non-recourse to the Company; the borrowings in these special purpose vehicles are compliant with their banking covenants. See the investment review section for more details on relevant investments.

Bearing in mind the nature of the Group's business and assets, after making enquiries, with the support of revenue forecasts for the next twelve months and considering the above, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Strategy and outlook

ART's investment portfolio benefits from diversification across geographies, sectors, and asset types. As inflationary pressures and interest rate policy continue to shape the economic backdrop in which the Company operates, ART remains on a robust financial footing and is well placed to capitalise on new investment opportunities. 

ART remains committed to growing its diversified investment portfolio. In recent years the Company focused on reducing exposure to direct development risk and recycling capital into cashflow driven investments. The Company is currently focussed on its loan portfolio and also on its wider investment strategy which targets investments offering inflation protection via index linked income adjustments and investments that have potential for capital gains. 

 

William Simpson
Chairman

23 November 2023

Investment review

Portfolio overview & risk analysis as at 30 September 2023

Investment name

 

 

Investment type

Carrying value

Income return p.a. *

Investment location

Property type / underlying security

Investment notes

% of portfolio1

Notes **

High return debt (46.4%)

 

 

Secured senior finance








Senior secured loans (excluding committed but undrawn facilities of £4.6 million)

 

£39.7m 2

9.8% 3

UK

Diversified loan portfolio focussed on real estate investments and developments

Senior secured debt

 

31.8%

13

Secured mezzanine finance


Second charge mezzanine loans

£18.2m 2

18.6% 3

UK

Diversified loan portfolio focussed on real estate investments and developments

Secured mezzanine debt and subordinated debt

 

14.6%

13

High return equity in property investments (29.7%)

 


H2O shopping centre



Indirect property

£17.4m

(€20.1m)

5.1% 4

Spain

 

Dominant Madrid shopping centre and separate development site

30% shareholding; moderately geared bank finance facility

14.0%

12

Long leased industrial facility, Hamburg


Direct property

£8.4m 5

(€9.7m)

8.9% 4

Germany

Long leased industrial complex in major European industrial and logistics hub with RPI linked rent

Long term moderately geared bank finance facility

6.7%

10

Long leased hotel, Wadebridge



Direct property

£3.6m

 

5.3% 6

UK

Long leased hotel to Travelodge, a large UK hotel group with CPI linked rent

No external gearing

2.9%

10

Long leased hotel, Lowestoft







Direct property

£2.7m

 

5.2% 6

UK

Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent

No external gearing

2.2%

10

Long leased hotel, Yardley


Direct property

£4.8m

 

7.7% 6

UK

Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent

No external gearing

3.9%

10

Other investments (14.3%)

 


Listed and authorised fund investments

 

                     £4.1m

 

 

6.2% 4

 

UK & Channel Islands

 

Commercial real estate, infrastructure and debt funds

 

Short to medium term investment in listed and authorised funds

        

 

3.3%

 

 

11

Affordable housing








Residential Investment

£0.6m

n/a

UK

High-yield residential UK portfolio

100% shareholding; no external gearing

0.5%

10

UK Treasury Bonds

£6.0m

4.8% 7

2.8% 8  

UK

UK government bonds

-

4.8%

11

UK Treasury Bills

£7.1m

5.5% 7 

UK

UK government bonds

-

5.7%

11

Cash and short-term investments (9.6%)

 


Cash 9

£6.0m

1.5% 10

UK

'On call' and current accounts

-

4.8%

-

Sterling Liquidity Fund

£6.0m

5.3% 

UK

Money market fund, daily liquidity

-

4.8%

16

 

* Return from underlying investments excluding Fund fees

** See notes to the financial statements

 

1 Percentage share shown based on NAV excluding the company's sundry assets/liabilities

2 Including accrued interest/coupon at the balance sheet date

3 The income returns for high return debt are the annualised actual finance income return over the period shown as a percentage of the average committed

   capital over the period

4 Yield on equity over 12 months to 30 September 2023

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

6 Annualised monthly return

7 Annualised yield to maturity

8 Fixed annual coupon

9 Group cash of £7.1m excluding cash held with the Hamburg holding company of £1.1m

10 Weighted average interest earned on call accounts


High return debt

Overview

ART has a portfolio of secured loan investments which contribute a diversified return to the Company's earnings position. The portfolio comprises high return senior (first charge) loans and mezzanine (second charge) loans secured on real estate investment assets and developments. ART loan underwriting is supported by the Investment Manager's asset-backed lending experience, developer and investor relationships and knowledge of the underlying assets and sectors, in addition to the Group's partnerships with specialist debt providers.

Secured Finance

Investment

Investment type

Carrying value

Income return p.a.

Property type / underlying security

Investment notes

Secured senior finance

First charge secured loans

£39.7m *

9.8%**

Diversified loan portfolio focussed on real estate investments and developments

Secured debt

Secured mezzanine finance

Second charge secured loans

£18.2m *

18.6%**

Diversified loan portfolio focussed on real estate investments and developments

Second charge secured debt and secured subordinated debt

*      Including accrued interest/coupon at the balance sheet date

**     The income returns for high return debt are the annualised actual finance income return over the period shown as a percentage of the average committed capital over the period

 

These loans are typically secured on real estate investment and development assets with attractive risk-adjusted income returns from either current or capitalised interest or coupons.

As at 30 September 2023, ART had invested a total amount of £57.9 million across eighteen loans. Over the past twelve months the loan portfolio has increased by 20.4%.

During the six months to 30 September 2023, one new loan was drawn for £0.8 million and additional drawdowns of £8.9 million were made on existing loans; two loans for £2.1 million (including accrued interest and exit fees) were fully repaid and a further £7.3 million (including accrued interest) was received as part repayments.

Post period end, £1.5 million of drawdowns were made on existing loans, one loan was fully repaid for £1.5 million (including accrued interest and applicable fees) and part payments were received amounting to £4.5 million (including accrued interest).

Each loan will typically have a term of up to two years, a maximum 75% loan to gross development value ratio and be targeted to generate attractive risk-adjusted income returns. As at 30 September 2023, the senior portfolio has an average LTV of 59.5% based on loan commitments (with mezzanine loans having an LTV range of between 49.5% and 68.0% whilst the highest approved senior loan LTV is 65.6%).

Four loans in the portfolio have entered receivership: ART is closely working with stakeholders to maximise capital recovery. The Company has considered the security on these loans (which are a combination of a first charge and a second charge over the respective assets and personal guarantees) and have calculated an ECL on these four loans of approximately £3.7 million; the Group have also provided for an ECL on the remainder of the loans' portfolio for an additional £1.4 million: in total, the Group have provided for an ECL of £5.1 million in its consolidated accounts.

Current loan investment examples:

 

Location

Total commitment

Loan type

Loan term

Current LTV

Underlying security

Fleet, Hampshire

£1,400,000

MezzanineDevelopment Loan

18

55.00%

Development of eight new build apartments

St. Lawrence, Jersey

£11,731,000

Senior Development Loan

24

63.00%

Development of eleven new build apartments

Temple Fortune, London

£8,600,000

Senior Development Loan

19

63.00%

Development of eight new build houses

Throughout the UK

£12,000,000

Senior Investment Loan

36 

60.58%

Refinance of a portfolio of six care homes

 



 

High return equity in property investments

Overview

ART continues to remain focused on investments that offer the potential to deliver attractive risk-adjusted returns by way of value enhancement through active asset management, improvement of income, selective deployment of capital expenditure and the ability to undertake strategic sales when the achievable price is accretive to returns.

H2O Shopping Centre, Madrid

Investment

Investment type

Carrying value

Income return p.a.

Property type / underlying security

Investment notes

H2O

Indirect property

£17.4m

(€20.1m)

 

5.1%*

High-yield, dominant Madrid shopping centre and separate development site

30% shareholding; 6-year term bank finance facility

 

*      Yield on equity over twelve months to 30 September 2023, excluding Fund fees

ART has a 30% stake in joint venture with CBRE Investment Management in the H2O shopping centre in Madrid. H2O was opened in 2007 and built to a high standard providing shopping, restaurants and leisure around a central theme of landscaped gardens and an artificial lake. H2O has a gross lettable area of approximately 55,000 square metres comprising over 100 retail units. In addition to a multiplex cinema, supermarket (let to leading Spanish supermarket operator Mercadona) and restaurants, it has a large fashion retailer base, including some of the strongest international fashion brands, such as Nike, Zara, Mango, JD Sports, Cortefiel, H&M and C&A.

H2O occupancy, by area, as at 30 September 2023 was 92.6%. The centre trading levels remain below the pre-covid highs, however a recovery is evident. In the calendar year to 30 September 2023, visitor numbers were approximately 6.8% below those of the same period in 2019 (pre-Covid) and 7.0% above the same period in 2021. 

During the period, a notable asset management action included the signing of contracts with three existing Inditex group brands within the centre to extend the footprint of existing stores and extend the lease terms. The works to deliver the new 3,000 square metre store for anchor retailer Primark continue to advance on schedule. The store is expected to be delivered during 2024.

The asset management highlights are as follows:

·     Valuation: 30 September 2023: €120.0 million (£103.9 million) (31 March 2023: €119.3 million (£104.9 million)). 

·     Centre occupancy: 92.6% by area as at 30 September 2023.

·     Weighted average lease length to next break of 2.3 years and 7.9 years to expiry as at 30 September 2023.

Long leased industrial facility, Hamburg

Investment

Investment type

Carrying value

Income return p.a.

Property type /

underlying security

Investment notes

Industrial facility, Werner-Siemens-Straße Hamburg, Germany

Direct property

£8.4m*

(€9.7m)

 

8.9%**

High return industrial facility in Hamburg Germany

Long leased investment with moderately geared, long term, bank finance facility

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

**     Yield on equity over twelve months to 30 September 2023, excluding Fund fees

ART has an investment of €9.7 million (£8.4 million) in an industrial facility leased to a leading international group.

The property is held freehold and occupies a site of 11.8 acres in Billbrook, a well-established and well-connected industrial area located approximately 8 kilometres south-east of Hamburg centre. Hamburg is one of the main industrial and logistics markets in Germany.

The property is leased to Veolia Umweltservice Nord GmbH, part of the Veolia group, an international industrial specialist in water, waste and energy management, with a 23-year unexpired lease term. Under the operating lease, the tenant is responsible for building maintenance and the rent has periodic inflation linked adjustments.

The Hamburg asset is funded by way of a €9.5 million (£8.2 million) non-recourse, fixed rate, bank debt facility which matures in 31 July 2028. The facility carries no financial covenant tests.

This investment offers the potential to benefit from a long term secure and predictable inflation-linked income stream which is forecast to generate stable high single digit income returns. In addition, the investment offers the potential for associated capital growth from an industrial location in a major German logistics and infrastructure hub.



 

Long leased hotel, Wadebridge, Cornwall

Investment

Investment type

Carrying value

Income return p.a.

Property type /

underlying security

Investment notes

Hotel, Wadebridge Cornwall, UK

Direct property

£3.6m

 

5.3%*

Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent

No external gearing

*      Annualised monthly return, excluding Fund fees

ART has an investment of £3.6 million (property valuation as at 30 September 2023) in a 55-bedroom property, which is held freehold and is situated on the outskirts of Wadebridge in the county of Cornwall. The hotel is in a well-connected location in close proximity to the A39. 

The property is leased to Travelodge Hotels Limited on a 20 year unexpired lease term. Under the lease, the tenant is responsible for building maintenance

The passing rent of £0.3 million p.a. has inflation linked adjustments.

Long leased hotel, Lowestoft

Investment

Investment type

Carrying value

Income return p.a.

Property type /

underlying security

Investment notes

Hotel, Lowestoft, UK

Direct property

£2.7m

 

5.2%*

Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent

No external gearing

*      Annualised monthly return, excluding Fund fees

ART has an investment of £2.7 million (property valuation as at 30 September 2023) in a 47-bedroom property, which is held freehold and occupies a site of 1.08 acres in Lowestoft, a well established and well connected area located in close proximity to the A47 which runs to Norwich.

The property is leased to Travelodge Hotels Limited on an 18 year unexpired lease term. Under the lease, the tenant is responsible for building maintenance.

The passing rent of £0.2 million p.a. has inflation linked adjustments.

Long leased hotel, Yardley, Birmingham

Investment

Investment type

Carrying value

Income return p.a.

Property type /

underlying security

Investment notes

Hotel, Yardley, UK

Direct property

£4.8m

 

7.7%*

Long leased hotel to Travelodge, a large UK hotel group with RPI linked rent

No external gearing

*      Annualised monthly return, excluding Fund fees

ART has an investment of £4.8 million in a 64-bedroom property, which is held freehold and occupies a site of 1.42 acres and has 116 car parking spaces in Yardley. The hotel is situated to the east of Birmingham City Centre off the A45. The hotel is in a well-connected location equidistant between Birmingham City Centre to the west and Birmingham Airport to the east.

The property is leased to Travelodge Hotels Limited until November 2060 with a tenant only break option in 2035. Under the lease, the tenant is responsible for building maintenance.

The passing rent of £0.4 million p.a. has inflation linked adjustments.

 

Other Investments

Listed and authorised fund investments

Investment

Investment type

Carrying value

Income return p.a. *

Property type / underlying security

Investment notes

Sequoia Economic Infrastructure Income Fund Limited

Listed equity

£2.3m

6.1%

Listed investment fund

FTSE 250 infrastructure debt fund

GCP Infrastructure Investments Limited

Listed equity

£0.9m

6.7%

Listed investment fund

FTSE 250 infrastructure fund

GCP Asset Backed Income Fund Limited

Listed equity

£0.9m

6.1%

Listed investment fund

Diversified asset back debt fund

Total

 

£4.1m

6.2%



*Yield on equity based on 12 months to 30 September 2023

 

The Company invested (value as at 30 September 2023: £4.1 million) across three investments that offer potential to generate attractive risk adjusted returns. Current market volatility and rise in interest rates has impacted the capital value of these investments. The investment yield offers a potentially accretive return to holding cash while the Company deploys capital in opportunities in line with its investment strategy. These funds invest in ungeared long-dated leased real estate, debt and infrastructure.

Affordable Housing

The Company's wholly owned investment, RealHousingCo Limited ("RHC") has obtained successful registration with the Regulator of Social Housing as a For Profit Registered Provider of affordable homes. This status provides RHC with a platform to undertake future investment in the affordable housing sector which offers scope to generate long term, inflation-linked returns while addressing the chronic undersupply of affordable homes in the UK.

RHC owns a residential property located in Liverpool (UK), which is comprised of seven units, all of which are occupied by private individuals, each with a six month term contract. The fair value of the Liverpool property as at 30 September 2023 was £0.6 million.

UK Treasury Bonds (Gilts) and Bills

Investment

Investment type

Carrying value

Income return p.a. *

Property type / underlying security

Investment notes

Gilts

UK Treasury Bonds

£6.0m

4.8%

Liquid Government security

Short dated (maturity in September 2024)

Treasuries

UK Treasury Bills

£7.1m

5.5%

Liquid Government security

Short dated (maturity in March 2024)

Total

 

£13.1m

5.2% **



*      Annualised yield to maturity

**     Weighted average

These government backed short term investments offer the Company enhanced returns over cash balances.

During the period, £7.0m in Gilts matured and earned a yield to maturity of 4.0% and £7.1m in UK Treasury Bills matured and earned a yield to maturity of 4.2%. Post period end, the Company invested further £6.0 million in short dated Gilts with an annualised yield to maturity of 4.9% with maturity in October 2025.

Cash balances

Investment

Investment type

Carrying value

Income return p.a.

Property type / underlying security

Investment notes

Cash balance *

Cash

£6.0m

1.5% **

'On call' and current accounts

n/a

Morgan Stanley Sterling Liquidity Fund

Short-term investment

£6.0m

5.3%

Money market fund, daily liquidity

n/a

*      Group cash of £7.1m excluding cash held with the Hamburg holding company of £1.1m

**     weighted average interest earned on call accounts

As at 30 September 2023, the Group had cash balances of £6.0 million, excluding cash held with the Hamburg holding company of £1.1 million.

The Group's cash is held with established banks with strong credit ratings.

 

Summary

ART has a diversified portfolio focussed on asset-backed lending and property investments in Western Europe.

The Company is currently focussed on risk managing its loan portfolio and extending its wider investment strategy to opportunistically target investments in mezzanine and assets offering inflation protection via index linked income adjustments and investments that have potential for capital gains.

 

Brad Bauman and Gordon Smith

For and on behalf of the Investment Manager

23 November 2023



 

Principal risks and uncertainties

The principal risks and uncertainties facing the Group can be outlined as follows:

·      Rental income, fair value of investment properties (directly or indirectly held) and fair value of the Group's equity investments are affected, together with other factors, by general economic conditions and/or by the political and economic climate of the jurisdictions in which the Group's investments and investment properties are located.

·      The Group's loan investments are exposed to credit risk which arise by the potential failure of the Group's counter parties to discharge their obligations when falling due; this could reduce the amount of future cash inflows from financial assets on hand at the balance sheet date; the Group receives regular updates from the relevant investment manager as to the performance of the underlying investments and assesses their credit risk as a result.

·      The Russian invasion of Ukraine is also considered to be a significant risk and uncertainty for the Group: this is discussed on the first paragraph of the above going concern section.

The Board believes that the above principal risks and uncertainties, which are discussed more extensively in the annual report for the year ended 31 March 2023, would be equally applicable to the remaining six month period of the current financial year.

 

Statement of Directors' Responsibilities

The Directors confirm that to the best of their knowledge:

·      the condensed consolidated financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union; and

·      the half year report includes a fair review of the information required by DTR 4.2.7R, being an indication of the important events that have occurred during the first six months of the financial year, and their impact on the half year report, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·      the half year report includes a fair review of the information required by DTR 4.2.8R, being the related parties transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period; and any changes in the related parties transactions described in the last annual report that could have a material effect on the financial position or performance of the enterprise in the first six months of the current financial year.

The Directors of ART are listed below.

 

By order of the Board

 

William Simpson
Chairman

23 November 2023



 

Independent review report

To Alpha Real Trust Limited

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 September 2023 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

We have been engaged by the company to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 September 2023 which comprises the condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated cash flow statement, condensed consolidated statement of changes in equity and related notes.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting".

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

BDO Limited

Chartered Accountants

Place du Pré

Rue du Pré

St Peter Port

Guernsey

 

23 November 2023

Condensed consolidated statement of comprehensive income

 

For the six months ended

30 September 2023

(unaudited)

For the six months ended

30 September 2022

(unaudited)

 


Notes

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Income








Revenue

3

4,218

-

4,218

2,977

-

2,977

Change in the revaluation of investment properties

10

-

(867)

(867)

-

143

143

(Losses)/gains on financial assets and liabilities held at fair value through profit or loss

5

(62)

(48)

(110)

272

(1,406)

(1,134)

Total income/(expense)


4,156

(915)

3,241

3,249

(1,263)

1,986









Expenses








Expected credit losses


(277)

(779)

(1,056)

-

(608)

(608)

Property operating expenses


(41)

-

(41)

(41)

-

(41)

Investment Manager's fee

21

(1,158)

-

(1,158)

(1,189)

-

(1,189)

Other administration costs


(546)

-

(546)

(476)

-

(476)

Total operating expenses

 

(2,022)

(779)

(2,801)

(1,706)

(608)

(2,314)

 








Operating profit/(loss)

 

2,134

(1,694)

440

1,543

(1,871)

(328)









Share of profit/(loss) of joint ventures and associates

12

167

(120)

47

525

324

849

Finance income

4

481

4

485

44

-

44

Finance costs


(102)

-

(102)

(100)

(66)

(166)


 

 

 

 

 

 

 

Profit/(loss) before taxation

 

2,680

(1,810)

870

2,012

(1,613)

399









Taxation

6

(18)

23

5

(66)

(112)

(178)









Profit/(loss) after taxation


2,662

(1,787)

875

1,946

(1,725)

221









Other comprehensive income/(expense) for the period








Items that may be reclassified to profit or loss in subsequent periods:








Exchange differences arising on translation of foreign operations


-

(443)

(443)

-

1,478

1,478

Other comprehensive (expense)/income for the period


-

(443)

(443)

-

1,478

1,478

Total comprehensive income/(expense) for the period


2,662

(2,230)

432

1,946

(247)

Earnings per ordinary share (basic & diluted)

8



1.5p



0.4p

Adjusted earnings per ordinary share (basic & diluted)

8



4.6p



3.3p

The total column of this statement represents the Group's statement of comprehensive income, prepared in accordance with IFRS. The revenue and capital columns are supplied as supplementary information permitted under IFRS. All items in the above statement derive from continuing operations.

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

Condensed consolidated balance sheet

 

Notes

30 September 2023

(unaudited)

£'000

31 March 2023

(audited)

£'000



 

 

Non-current assets


 

 

Investment property

10

27,506

23,496

Investment in joint ventures and associates

12

17,441

17,654

Loans advanced

13

10,296

16,051



55,243

57,201



 

 

Current assets




Investments held at fair value

11

17,214

18,310

Derivatives held at fair value through profit or loss


243

-

Loans advanced

13

47,583

39,385

Collateral deposit

14

1,131

1,143

Trade and other receivables

15

471

414

Cash and cash equivalents

16

13,092

18,455



79,734

77,707




 

Total assets


134,977

134,908





Current liabilities




Derivatives held at fair value through profit or loss


-

(171)

Trade and other payables

17

(1,088)

(986)

Corporation tax


(26)

(34)

Bank borrowings

18

(31)

(30)

Total current liabilities


(1,145)

(1,221)





Total assets less current liabilities


133,832

133,687





Non-current liabilities




Bank borrowings

18

(8,157)

(8,271)

Deferred tax

6

(321)

(349)



(8,478)

(8,620)

 




Total liabilities


(9,623)

(9,841)





Net assets


125,354

125,067





Equity




Share capital

19

-

-

Special reserve


61,564

60,550

Translation reserve


9

452

Capital reserve


38,360

40,147

Revenue reserve


25,421

23,918





Total equity


125,354

125,067





Net asset value per ordinary share

9

214.3p

216.8p

 

The financial statements were approved by the Board of Directors and authorised for issue on 23 November 2023. They were signed on its behalf by William Simpson.

William Simpson                                                                                  

Director

                                                                                                               

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

Condensed consolidated cash flow statement

 

For the six months ended

30 September 2023

(unaudited) £'000

For the six months ended 30 September 2022

(unaudited) £'000

Operating activities

 

 

    Profit for the period after taxation

875

221

Adjustments for:



Change in revaluation of investment property

867

(143)

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

110

1,134

Taxation

(5)

178

Share of profit of joint ventures and associates

(47)

(849)

Interest receivable on loans to third parties

(3,398)

(2,394)

Expected credit losses

1,056

608

Finance income

(485)

(44)

Finance cost

102

166

Operating cash flows before movements in working capital

(925)

(1,123)

Movements in working capital:



Movement in trade and other receivables

(42)

(123)

Movement in trade and other payables

93

(43)

Cash flows used in operations

(874)

(1,289)




   Loan interest received

678

1,091

   Loans granted to third parties

(9,739)

(9,581)

   Loans repaid by third parties

8,710

10,359

   Cash returned from escrow for loans granted post year end

-

1,928

   Interest received

131

44

   Interest paid

(93)

(91)

   Tax paid

(30)

(29)

Cash flows (used in)/generated from operating activities

(1,217)

2,432




Investing activities



  Acquisition of investment property

(5,118)

(7,403)

  Investment in UK Treasury Bonds and Bills

(13,140)

-

  Redemption of UK Treasury Bonds and Bills

14,130

-

  Investment in Morgan Stanley Sterling Liquidity Fund

(5,990)

-

  Redemption on investments

-

5,348

  Capital return from joint venture in arbitration

-

5,868

  Dividend income from joint ventures and associates

-

411

  Dividend income from investments

187

178

  Income from UK Treasury Bonds and Bills

163

-

  Dividend income from Morgan Stanley Sterling Liquidity Fund

33

-

  Collateral deposit increase

12

(348)

Cash flows (used in)/generated from investing activities

(9,723)

4,054




Financing activities



   Share issue costs

-

(78)

   Share buyback

-

(9,553)

   Share buyback costs

(39)

(49)

   Cash paid on maturity of foreign exchange forward

(202)

-

   Ordinary dividends paid

(106)

(250)

Cash flows used in financing activities

(347)

(9,930)




Net decrease in cash and cash equivalents

(11,287)

(3,444)




Cash and cash equivalents at beginning of period

18,455

41,250

Exchange translation movement

(66)

128

Cash and cash equivalents at end of period

7,102

37,934

 

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

Condensed consolidated statement of changes in equity

For the six months ended 30 September 2023

(unaudited)

 

Notes

Special reserve

£'000

Translation reserve

£'000

Capital

reserve

£'000

Revenue

reserve

£'000

Total equity

£'000








At 1 April 2023

 

 

60,550

452

40,147

23,918

125,067


 

 

 

 

 

 

Total comprehensive income/(expense) for the period







Loss/(profit) for the period


-

-

(1,787)

2,662

875

Other comprehensive expense for the period


-

(443)

-

-

(443)

Total comprehensive (expense)/income for the period

 

-

(443)

(1,787)

2,662

432








Transactions with owners







Cash dividends

7

-

-

-

(106)

(106)

Scrip dividends

7

1,053

-

-

(1,053)

-

Share issue costs


(39)

-

-

-

(39)

Total transactions with owners

 

1,014

-

-

(1,159)

(145)








At 30 September 2023

 

61,564

9

38,360

25,421

125,354

 

For the six months ended 30 September 2022

(unaudited)

 

Notes

Special reserve

£'000

Translation reserve

£'000

Capital

reserve

£'000

Revenue

reserve

£'000

Total equity

£'000








At 1 April 2022

 

 

68,243

(801)

44,017

21,797

133,256


 

 

 

 

 

 

Total comprehensive income/(expense) for the period







Loss/(profit) for the period


-

-

(1,725)

1,946

221

Other comprehensive income for the period


-

1,478

-

-

1,478

Total comprehensive income/(expense) for the period

 

-

1,478

(1,725)

1,946

1,699








Transactions with owners







Cash dividends

7

-

-

-

(250)

(250)

Scrip dividends

7

987

-

-

(987)

-

Share issue costs


(78)

-

-

-

(78)

Share buyback

21

(9,553)

-

-

-

(9,553)

Share buyback costs


(49)

-

-

-

(49)

Total transactions with owners

 

(8,693)

-

-

(1,237)

(9,930)








At 30 September 2022

 

59,550

677

42,292

22,506

125,025

 

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

 

 


Notes to the condensed consolidated financial statements for the period ended 30 September 2023

 

1. General information

The Company is a limited liability, closed-ended investment company incorporated in Guernsey. The Group comprises the Company and its subsidiaries. The condensed consolidated financial statements are presented in pounds Sterling as this is the currency in which the funds are raised and in which investors are seeking a return. The Company's functional currency is Sterling and the subsidiaries' currencies are Euro and Sterling. The presentation currency of the Group is Sterling. For Euro based transactions the period end exchange rate used is £1:€1.154 (31 March 2023: £1:€1.137) and the average rate for the period used is £1:€1.157 (30 September 2022: £1:€1.174).

The address of the registered office is given below. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement. The half year report was approved and authorised for issue on 23 November 2023 and signed by William Simpson on behalf of the Board.

2. Significant accounting policies

Basis of preparation

The unaudited condensed consolidated financial statements in the half year report for the six months ended 30 September 2023 have been prepared in accordance with International Accounting Standard (IAS) 34, 'Interim Financial Reporting' as adopted by the European Union. This half year report and condensed consolidated financial statements should be read in conjunction with the Group's annual report and consolidated financial statements for the year ended 31 March 2023, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and are available at the Company's website (www.alpharealtrustlimited.com).

The accounting policies adopted and methods of computation followed in the condensed consolidated financial statements are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 March 2023 and are expected to be applied to the Group's annual consolidated financial statements for the year ending 31 March 2024.

The Group continues to only have one operating segment.

3. Revenue

 

For the six months ended

30 September 2023

£'000

For the six months ended

30 September 2022

£'000

Rental income

768

552

Service charges

26

26

Rental revenue

794

578




Interest receivable on loans to third parties

3,398

2,394

Interest revenue

3,398

2,394




Other income

26

5

Other revenue

26

5




Total

4,218

2,977

4. Finance income

 

For the six months ended

30 September 2023

£'000

For the six months ended

30 September 2022

£'000

Bank interest receivable

131

44

Income from UK Treasury Bonds and Bills

317

-

Income from Morgan Stanley GBP Liquidity Fund

33

-

Foreign exchange gain

4

-

Total

485

44

 

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

 

For the six months ended

30 September 2023

£'000

For the six months ended

30 September 2022

£'000

Unrealised gains and losses on financial assets and financial liabilities held at fair value through profit or loss



Movement in fair value of loans

(314)

-

Movement in fair value of investments

(260)

(943)

Movement in fair value of foreign exchange forward contract

414

(463)

Undistributed investment income

-

57




Realised gains and losses on financial assets and financial liabilities held at fair value through profit or loss



Movement in fair value of loans

65

37

Dividends received from investments held at fair value

187

178

Realised loss on foreign exchange forward contract

(202)

-

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

(110)

(1,134)

6. Taxation

 

For the six months ended

30 September 2023

£'000

For the six months ended

30 September 2022

£'000

Current tax

18

66

Deferred tax

(23)

112

Tax expense

5

178

 

The Company is exempt from Guernsey taxation on income derived outside of Guernsey and bank interest earned in Guernsey. A fixed annual fee of £1,200 is payable to the States of Guernsey in respect of this exemption. No charge to Guernsey taxation arises on capital gains. The Group is liable to foreign tax arising on activities in the overseas subsidiaries. The Company has investments, subsidiaries and joint venture operations in Luxembourg, United Kingdom, the Netherlands, Spain, Germany and Cyprus.

The current tax charge is due in Cyprus (where all Company's subsidiaries are in the liquidation process and all local taxes have been settled), Luxembourg and the Netherlands.

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

A deferred tax liability has been provided for in relation to the Hamburg investment property in Germany and its movement can be analysed as follows:

 

30 September 2023

£'000

31 March 2023

£'000

Opening balance

349

265

Movement for the period

(23)

74

Foreign exchange movements

(5)

10

Closing balance

321

349

7. Dividends

Dividend reference period

Shares

Dividend

Paid

Date of payment

'000

per share

£

 

Quarter ended 31 December 2022

5,299

1.0p

52,990

6 April 2023

Quarter ended 31 March 2023

5,257

1.0p

52,570

28 July 2023

Total paid in the period



105,560


Quarter ended 30 June 2023

5,037

1.0p

50,368

27 October 2023

Total

 

 

155,928

 

 

The Company will pay a dividend of 1.0p per share for the quarter ended 30 September 2023 on 24 January 2024.

In accordance with IAS 10, the dividends for quarters ended 30 June 2023 and 30 September 2023 have not been included in these financial statements as the dividends were declared or paid after the period end. The current intention of the Directors is to pay a dividend quarterly.

Dividends paid and payable after the balance sheet date have not been included as a liability in the half year report.

Scrip dividend alternative

In the circular published on 18 December 2018, the Company sought shareholders' approval to enable a scrip dividend alternative to be offered to ordinary shareholders whereby they could elect to receive additional ordinary shares in lieu of a cash dividend, at the absolute discretion of the Directors, from time to time. This was approved by shareholders at the extraordinary general meeting on 8 January 2019.

The number of ordinary shares that an ordinary shareholder will receive under the scrip dividend alternative will be the average of the closing middle market quotations of an ordinary share for five consecutive dealing days after the day on which the ordinary shares are first quoted "ex" the relevant dividend.

The Board elected to offer the scrip dividend alternative to shareholders for all quarterly dividends from the quarter ended 31 December 2018 onwards. These issued shares are ranked pari passu in all respects with the Company's existing issued ordinary shares.

During the six month period ended 30 September 2023, the Company issued 791,549 ordinary shares: on 6 April 2023, 401,545 were issued at the price of £1.31 and, on 28 July 2023, 390,004 were issued at the price of £1.36.

8. Earnings per share

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

 

For the

six months ended 30 September 2023

Year

ended

31 March

2023

For the

six months ended 30 September 2022

 

Ordinary share

Ordinary share

Ordinary share

Earnings per statement of comprehensive income (£'000)

875

631

221

Basic and diluted earnings (pence per share)

1.5

1.1

0.4





Earnings per statement of comprehensive income (£'000)

875

631

221

Net change in the revaluation of investment properties

867

548

(143)

Movement in fair value of investments

260

1,338

943

Movement in fair value of foreign exchange forward contract

(212)

259

463

Net change in the revaluation of the joint ventures' investment property

120

569

(324)

Expected credit losses

779

881

608

Foreign exchange (gain)/loss

(4)

201

66

Deferred tax

(23)

74

112

Adjusted earnings

2,662

4,501

1,946

Adjusted earnings (pence per share)

4.6

7.7

3.3

 

 

 

 

Weighted average number of shares ('000s)

57,879

58,606

59,778

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

9. Net asset value per share

 

At 30 September 2023

£'000

At 31 March 2023

£'000

At 30 September 2022

£'000

Net asset value (£'000)

125,354

125,067

125,025

Net asset value per ordinary share

214.3p

216.8p

219.6p





Number of ordinary shares ('000s)

58,493

57,701

56,937

 



 

10. Investment property

 

30 September 2023

£'000

31 March 2023

£'000

Fair value of investment property at 1 April

23,496

15,984

Additions

5,118

7,407

Fair value adjustment in the period/year

(867)

(548)

Foreign exchange movements

(241)

653

Fair value of investment property at 30 September / 31 March

27,506

23,496

 

Investment property is represented by a property located in Hamburg (Werner-Siemens-Straße), Germany, a residential property located in Liverpool, UK and three hotels located in the UK.

The fair value of the Hamburg property of €18.2 million (£15.8 million) (31 March 2023: €18.5 million (£16.3 million)) has been arrived at on the basis of an independent valuation carried out at the balance sheet date by Cushman & Wakefield ('C&W').

On 23 August 2023, the Group acquired a further UK hotel located in Yardley, Birmingham, leased to Travelodge Hotels Limited, the United Kingdom's largest independent hotel brand, for £4.8 million plus acquisition costs of £0.3 million. This hotel is carried in the balance sheet at its cost of £4.8 million.

The fair values of the two UK hotels of £3.6 million (31 March 2023: £3.8 million; located in Wadebridge) and £2.7 million (31 March 2023: £2.8 million; located in Lowestoft) have been arrived at on the basis of an independent valuation carried out at the balance sheet date by C&W.

The fair value of the Liverpool residential property of £0.6 million (31 March 2023: £0.6 million) has been arrived at on the basis of an independent valuation carried out at the balance sheet date by ASL Chartered Surveyors & Valuers ('ASL').

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

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

Foreign exchange movement is recognised in other comprehensive income.

11. Investments held at fair value

 

 

30 September 2023

£'000

31 March 2023

£'000

Current

 

 

As at 1 April

18,310

10,990

Additions

13,140

13,948

Redemptions

(14,130)

(5,290)

Accrued income on UK Treasury Bonds and Bills

154

-

Movement in fair value of investments

(260)

(1,338)

As at 30 September / 31 March

17,214

18,310

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

·      Sequoia Economic Infrastructure Income Fund Limited ('SEQI'), a listed fund: the market value of SEQI as at 30 September 2023 was £2.3 million (31 March 2023: £2.2 million).

·      GCP Infrastructure Investments Limited ('GCP') a listed fund: the market value of GCP as at 30 September 2023 was £0.9 million (31 March 2023: £1.1 million).

·      GCP Asset Backed Income Fund Limited ('GABI'): the market value of GABI as at 30 September 2023 was £0.9 million (31 March 2023: £1.0 million).

·      In June 2023, ART invested £6.0 million in UK Treasury Bonds earning a coupon of 2.75% and with maturity in September 2024: the market value of this investment as at 30 September 2023 was £6.0 million.

·      In September 2023, ART invested £7.0 million in UK Treasury Bills: the market value of this investment as at 30 September 2023 was £7.1 million.

·      HLP (participating redeemable preference shares): HLP provides quarterly valuations of the net asset value of its shares; the net asset value of the investment as at 30 September 2023 was nil (31 March 2023: nil).

During the period, one investment in UK Treasury Bonds and one investment in UK Treasury Bills came to maturity and generated proceeds for ART of £7.0 and £7.1 million, respectively.

ART also received payments of coupon interests on UK Treasury Bonds amounting to £0.2 million.

12. Investment in joint ventures and associates

The movement in the Group's share of net assets of the joint ventures and associates can be summarised as follows:

 

H2O

H2O

SPHL

Total

 

30 Sep 2023

£'000

31 March 2023

£'000

31 March 2023

£'000

31 March 2023

£'000

As at 1 April

17,654

17,075

118

17,193

Group's share of joint ventures' profits before fair value movements and dividends

167

1,012

-

1,012

Fair value adjustment for investment property and interest rate cap

(119)

(569)

-

(569)

Dividends paid by joint venture and associate to the Group

-

(582)

-

(582)

Capital return

-

-

(118)

(118)

Foreign exchange movements

(261)

718

-

718

As at 30 September / 31 March

17,441

17,654

-

17,654

The Group's investments in joint ventures can be summarised as follows:

·      Joint venture investment in the H2O shopping centre in Madrid, Spain: the Group holds a 30% equity investment in CBRE H2O Rivas Holding NV ('CBRE H2O'), a company based in the Netherlands, which in turn owns 100% of the Spanish entities that are owners of H2O. CBRE H2O is a Euro denominated company hence the Group translates its share of this investment at the relevant year end exchange rate with movements in the period translated at the average rate for the period. As at 30 September 2023, the carrying value of ART's investment in CBRE H2O was £17.4 million (€20.1 million) (31 March 2023: £17.7 million (€20.1 million)).

Foreign exchange movement is recognised in other comprehensive income.

The fair value of the H2O property in Madrid (Spain) of €120.0 million (£103.9 million) (31 March 2023: €119.3 million (£104.9 million)) has been arrived at on the basis of an independent valuation carried out at the balance sheet date by Savills Aguirre Newman Valoraciones y Tasaciones S.A., an independent valuer not connected to the Group.

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

The CBRE H2O group bank borrowings' balance as at 30 September 2023 is €62.2 million (£53.9 million): this loan is provided by Aareal Bank, carries an interest rate of EURIBOR plus 190 basis points and matures on 18 May 2024. During the period, the CBRE H2O group entered into an interest rate cap contract with Nomura Financial Products Europe Gmbh to cap EURIBOR  at the strike rate of 2.5%. The bank loan is secured by a first charge mortgage against the Spanish property.

The above borrowings are non-recourse to the Group's other investments.



 

13. Loans advanced

 

30 September 2023

£'000

31 March 2023

£'000

Non-current



Loans granted to third parties

10,296

15,530

Interest receivable from loans granted to third parties

-

521

Total loans at amortised cost

10,296

16,051

Loans at fair value through profit or loss

-

-

Total non-current loans

10,296

16,051

 



Current



Loans granted to third parties

48,454

40,187

Interest receivable from loans granted to third parties

3,516

2,279

Total loans at amortised cost

51,970

42,466

Loans at fair value through profit or loss

354

604

Expected credit losses

(4,741)

(3,685)

Total current loans

47,583

39,385

 

As at 30 September 2023, the Group had granted a total of £57.9 million (31 March 2023: £55.4 million) of secured senior and secured mezzanine loans to third parties. These comprised eighteen loans to UK entities, which assisted with the purchase of property developments, predominantly residential, in the UK. These facilities typically range from a 6 to 36 month term and entitle the Group to a weighted average overall return on the investment of 18.6% for mezzanine loans and 9.8% for senior loans.

All senior and mezzanine loans granted by the Group are secured asset backed real estate loans. Senior loans have a first charge security and mezzanine loans have a second charge security on the property developments.

Loans at fair value through profit or loss represents loans that failed the 'solely payment of principal and interest' criteria of IFRS 9 to be measured at amortised cost: this is due to a loan facility agreement's clause that links those loans to a return other than interest. 

Movement in expected credit losses can be summarised as follows:

 

30 September 2023

£'000

31 March 2023

£'000

Opening balance of ECL

(3,685)

(2,572)

Movement for the period (revenue)

(277)

(232)

Movement for the period (capital)

(779)

(881)

Closing balance of ECL

(4,741)

(3,685)

 

As at 30 September 2023 four loans in the portfolio are in receivership: ART is closely working with stakeholders to maximise their capital recovery. The Company has considered the security on these loans (which are a combination of a first charge and a second charge over the respective assets and personal guarantees) and have impaired one loan, which is accounted for at fair value, by £0.3 million; the Group also calculated an ECL on the other three loans of approximately £3.3 million and provided for an ECL on the remainder of the loans' portfolio for an additional £1.4 million: in total, the Group have provided for an ECL of £4.7 million in its consolidated accounts.

Loans maturity of the total £57.9 million loans granted by the Group at year end, can be analysed as follows:

 

Less than 6 months

£'m

Between 6 to 12 months

£'m

Between 12 to 24 months £'m

Over 24 months

£'m

Total

£'m

Non-current

-

-

10,296

-

10,296

Current

41,418

6,165

-

-

47,583

 

Post period end, £1.5 million of drawdowns were made on existing loans, one loan was fully repaid for £1.5 million (including accrued interest and applicable fees) and part payments were received amounting to £4.5 million (including accrued interest).

Despite all of the loans having a set repayment term all but two of the loans have a repayable on demand feature so the Group may call for an early repayment of their principal, interest and applicable fees at any time.

Considering the 'on demand' clause, the Group concluded that the loans are in stage 3 of the IFRS 9 model as should the loans be called on demand the borrowers would technically be in default as repayment would only be possible on demand if the property had already been sold. One of the loans without a repayable on demand clause amounts to £3.8 million and matures on 31 December 2025, the second loan without a repayable on demand clause amounts to £9.5 million and matures on 1 April 2025; both loans remain in stage 1 of the IFRS 9 model.

14. Collateral deposit

 

30 September 2023

£'000

31 March 2023

£'000

Collateral deposit

1,131

1,143

The collateral deposit of £1.1 million (31 March 2023: £1.1 million) is a cash deposit with Barclays Bank PLC ('Barclays') in Guernsey in relation to the foreign exchange forward contract entered into by the Group at period end: this cash has been placed on deposit.

15. Trade and other receivables

 

30 September 2023

£'000

31 March 2023

£'000

Current



Trade debtors

330

295

VAT

-

-

Other debtors

141

119

Total

471

414

 

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

16. Cash and cash equivalents

 

30 September 2023

£'000

31 March 2023

£'000

Morgan Stanley Sterling Liquidity Fund

5,990

-

Cash at bank

7,102

18,455

Total

13,092

18,455

 

During period, the Company invested £6.0 million in the Morgan Stanley Sterling Liquidity Fund, which invests in high quality short-term money market instruments denominated in sterling, offers same day liquidity and earns an annualised return, net of Morgan Stanley's fees, of 5.3%.

17. Trade and other payables

 

30 September 2023

£'000

31 March 2023

£'000

Trade creditors

36

51

Deferred revenue

218

106

Investment Manager's fee payable

584

589

Accruals

207

229

VAT

20

5

Other creditors

23

6

Total

1,088

986

Trade and other payables primarily comprise amounts outstanding for trade purchases and ongoing costs. The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame. The Directors consider that the carrying amount of trade and other payables approximates their fair value.



 

18. Bank borrowings

 

30 September 2023

£'000

31 March 2023

£'000

Current liabilities: interest payable

31

30

Total current liabilities

31

30

Non-current liabilities: bank borrowings

8,157

8,271

Total liabilities

8,188

8,301




The borrowings are repayable as follows:



Interest payable

31

30

On demand or within one year

-

-

In the second to fifth years inclusive

8,157

-

After five years

-

8,271

Total

8,188

8,301

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

 

30 September 2023

£'000

31 March 2023

£'000

As at 1 April

8,271

7,921

Amortisation of deferred finance costs

8

15

Exchange differences on translation of foreign currencies

(122)

335

As at 30 September / 31 March

8,157

8,271

As at 30 September 2023, bank borrowings represent the Nord LB (a German bank) loan principal for €9.5 million (£8.2 million), excluding deferred finance costs, which was used to partly fund the acquisition of the investment property in Hamburg (Werner-Siemens-Straße), Germany. This loan is composed of two tranches of €4.9 million (£4.2 million) and €4.6 million (£4.0 million), which bear a 1.85% and 2.7% fixed rate respectively and that are due to mature in August 2028.

The borrowings are secured over the Hamburg property and have no recourse to the other assets of the Group and the facility carries no financial covenant tests. The fair value of bank borrowings at the balance sheet date is €9.5 million (£8.2 million).

The table below sets out an analysis of net debt and the movements in net debt for the period ended 30 September 2023.

 

Other assets

Derivatives

Liabilities from

financing activities

 

 

Cash

£'000

Foreign exchange forward

                       £'000

Interest payable

£'000

Borrowings

£'000

Total

£'000

Net asset/(debt) as at 1 April 2023

18,455

(171)

(30)

(8,271)

9,983

Cash movements

(11,287)

202

93

-

(10,992)

Non cash movements






Foreign exchange adjustments

(66)

-

8

122

64

Unrealised gain on foreign exchange forward contract

-

212

-


212

Loan fee amortisation and other costs

-

-

-

(8)

(8)

Interest charge

-

-

(102)

-

(102)

Net asset/(debt) as at 30 September 2023

7,102

243

(31)

(8,157)

(843)

 

 

Other assets

Derivatives

Liabilities from

financing activities

 

 

Cash

£'000

Foreign exchange forward

                       £'000

Interest payable

£'000

Borrowings

£'000

Total

£'000

Net asset/(debt) as at 1 April 2022

41,250

88

(29)

(7,921)

33,388

Cash movements

(3,444)

-

91

-

(3,353)

Non cash movements






Foreign exchange adjustments

128

-

6

(400)

(266)

Unrealised gain on foreign exchange forward contract

-

(463)

-


(463)

Loan fee amortisation and other costs

-

-

-

(8)

(8)

Interest charge

-

-

(100)

-

(100)

Net asset/(debt) as at 30 September 2022

37,934

(375)

(32)

(8,329)

29,198

 



 

19. Share capital

 

 

 

Number of shares

Authorised




Ordinary shares of no par value



Unlimited





 

Ordinary

Ordinary

Ordinary

Issued and fully paid

treasury

external

total

At 1 April 2023

7,717,581

57,701,049

65,418,630

Share issue for scrip dividend

-

791,549

791,549

Shares bought back

-

-

-

Shares cancelled following buyback

-

-

-

At 30 September 2023

7,717,581

58,492,598

66,210,179

 

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

Following the Annual General Meeting held on 7 September 2023 the Company has the authority to buy back 14.99% of its share capital (assessed on 29 June 2023) for a total of 8,709,579 shares. No shares have been yet bought back under this authority.

During the period, the Company did not purchase any shares in the market.

As at 30 September 2023, the ordinary share capital of the Company was 66,210,179 (including 7,717,581 ordinary shares held in treasury) and the total voting rights in the Company was 58,492,598.

Scrip dividend alternative

In the circular published on 18 December 2018, the Company sought shareholders' approval to enable a scrip dividend alternative to be offered to ordinary shareholders whereby they could elect to receive additional ordinary shares in lieu of a cash dividend, at the absolute discretion of the Directors, from time to time. This was approved by shareholders at the extraordinary general meeting on 8 January 2019.

The number of ordinary shares that an ordinary shareholder will receive under the scrip dividend alternative will be the average of the closing middle market quotations of an ordinary share for five consecutive dealing days after the day on which the ordinary shares are first quoted "ex" the relevant dividend.

The Board elected to offer the scrip dividend alternative to shareholders for all quarterly dividends from the quarter ended 31 December 2018 onwards. These issued shares are ranked pari passu in all respects with the Company's existing issued ordinary shares.

During the six month period ended 30 September 2023, the Company issued 791,549 ordinary shares: on 6 April 2023, 401,545 were issued at the price of £1.31 and, on 28 July 2023, 390,004 were issued at the price of £1.36.

All transaction amounts in relation to the issue and buyback of shares in the period are recognised within the Special Reserve and shown in the Statement of Changes in Equity.

Post period end, the Company made no share buybacks.

On 27 October 2023, as a result of the scrip dividend elections related to the dividend of the quarter ended 30 June 2023, the Company issued 419,593 ordinary shares at the price of £1.27.

As at the date of this announcement, the ordinary share capital of the Company is 66,629,772 (including 7,717,581 ordinary shares held in treasury) and the total voting rights in the Company is 58,912,191.

20. Events after the balance sheet date

Post period end, £1.5 million of drawdowns were made on existing loans, one loan was fully repaid for £1.5 million (including accrued interest and applicable fees) and part payments were received amounting to £4.5 million (including accrued interest).

In October 2023, ART invested a further £6.0 million in UK Treasury Bonds earning a coupon of 3.5% and with maturity in October 2025.

On 27 October 2023, as a result of the scrip dividend elections related to the dividend of the quarter ended 30 June 2023, the Company issued 419,593 ordinary shares at the price of £1.27 (note 19).

As at the date of this announcement, the Company declares a quarterly dividend of 1.0p per ordinary share, which is expected to be paid on 24 January 2024.



 

21. Related party transactions

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

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

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

Details of the Investment Manager's fees for the current period are disclosed on the face of the condensed consolidated statement of comprehensive income and the balance payable at 30 September 2023 is provided in note 17.

The Directors of the Company received total fees as follows:

 

For the six months ended

30 September 2023

For the six months ended

30 September 2022

Phillip Rose

13,750

Jeff Chowdhry

13,750

Melanie Torode

27,811

William Simpson

19,750

Peter Griffin

13,750

Total

85,000

88,811

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

 

30 September 2023

Number of ordinary shares held

31 March 2023

Number of ordinary shares held

Phillip Rose

978,999

Brad Bauman

60,092

Jeff Chowdhry

-

Melanie Torode

-

William Simpson

-

Peter Griffin

-

-

Post period end, following the October 2023 scrip issue by the Company, Phillip Rose and Brad Bauman increased their shareholdings in ART to 999,159 and 61,478 ordinary shares, respectively.

Alpha Global Property Securities Fund Pte. Ltd, a company registered in Singapore, owned directly by the partners of ARC, held 25,491,369 shares in the Company at 30 September 2023 (31 March 2023: 25,060,728).

ARC did not hold any shares in the Company at 30 September 2023 (31 March 2023: nil). The following, being partners of the Investment Manager, hold direct interests in the following shares of the Company:  

 

30 September 2023

Number of ordinary shares held

31 March 2023

Number of ordinary shares held

Brian Frith

-

-

Phillip Rose

992,195

978,999

Brad Bauman

61,000

60,092

 

Karl Devon-Lowe, a partner of ARC, received fees of £3,750 (31 March 2023: £5,000) in relation to directorial responsibilities on a number of the Company's subsidiary companies.

During the period the Company paid Ocorian fees of £31,200 (31 March 2023: £96,300) and an amount of £14,200 was outstanding at period end.



 

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

 


Financial assets and liabilities carrying value

 


30 September 2023

£'000

31 March 2023

£'000

Financial assets at fair value through profit or loss

 

 

 

Investments held at fair value


17,214

18,310

Foreign exchange forward contract


243

-

Loans advanced


354

604

Total financial assets at fair value through profit or loss


17,811

18,914

 


 

 

Financial liabilities at fair value through profit or loss


 

 

Foreign exchange forward contract


-

(171)

Fair value measurement

The Group discloses fair value measurements by level of the following fair value measurement hierarchy:

·      Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

·      Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)

·      Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the lowest input that is significant to the fair value measurement. Financial instruments are classified in their entirety into one of the three levels.

The following methods and assumptions are used to estimate fair values:

Level 1

·      The fair values of the ART's investments in the SEQI, GCP and GABI shares, which are traded daily on the LSE, are based upon the market value of the shares at the balance sheet date.

·      The fair value of the investments in UK Treasury Bonds which are traded on the LSE, is based upon the market price of those instruments at the balance sheet date.

·      The fair value of the investments in UK Treasury Bills, is based upon the market valuation of those instruments provided by Barclays Bank PLC at the balance sheet date.

Level 2

·      The fair value of the foreign exchange forward contract is determined by reference to the quarter end applicable forward market rate provided by the contractual counter party.

Level 3

·      The fair value of the HLP investment is based upon the price provided by the issuer for the relevant share class owned: this is calculated by reference to the net asset value of the investment and principally driven by the fair value of HLP's underlying property investments. This net asset value is therefore mainly based on unobservable inputs and is deemed to be a level 3 financial asset. HLP's accounts are audited annually. HLP's underlying investment properties are fair valued as per RICS definition and the ART Board considers that any reasonable possible movement in the valuation of HLP's individual properties would not be material to the value of ART's investment.

Financial assets and financial liabilities held at fair value are valued on a recurring basis as indicated above. There have been no changes to the valuation methods applied from the Group's annual report and accounts for the year ended 31 March 2023.

The Board determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.



 

The following table shows an analysis of the fair values of financial instruments recognised in the balance sheet by level of the fair value hierarchy described above:

 

 

30 September 2023

Assets and liabilities measured at fair value

Level 1

Level 2

Level 3

Total

£'000

£'000

£'000

£'000

Assets measured at fair value

 

 

 

 

Non-current

 

 

 

 

Investment property

-

-

27,506

27,506

Loans advanced

-

-

354

354

Current




 

Investments held at fair value

17,214

-

-

17,214

Foreign exchange forward contract

-

243

-

243

 

 

31 March 2023

Assets and liabilities measured at fair value

Level 1

Level 2

Level 1

Total

£'000

£'000

£'000

£'000

Assets measured at fair value

 

 

 

 

Non-current

 

 

 

 

Investment property (note 13)

-

-

23,496

23,496

Loans advanced

-

-

604

604

Current




 

Investments held at fair value (note 15)

18,310

-

-

18,310





 

Liabilities measured at fair value




 

Current




 

Foreign exchange forward contract

-

(171)

-

(171)

 

There were no transfers between level 1 and level 2 fair value measurements and no transfers into or out of level 3 fair value measurements during the six month period ended 30 September 2023.


Directors and Company information

Directors

William Simpson (Chairman)
Jeff Chowdhry
Peter Griffin
Phillip Rose
Melanie Torode

 

Independent valuers in the UK

Cushman & Wakefield

No 1 Colmore Square

Birmingham B4 6AJ

 

Legal advisors in Guernsey

Carey Olsen

PO Box 98, Carey House

Les Banques

St Peter Port

Guernsey GY1 4BZ

Registered office

Floor 2, Trafalgar Court

Les Banques

St Peter Port

Guernsey GY1 4LY

 

Independent valuers in Spain

Savills Aguirre Newman

Paseo de la Castellana, 81

Madrid, 28046

Spain

Legal advisors in the UK

Norton Rose

3 More London Riverside

London SE1 2AQ

Investment Manager

Alpha Real Capital LLP
Level 6, 338 Euston Road

London NW1 3BG

 

Independent valuers in Germany

Cushman & Wakefield

Rathenauplatz, 1

Frankfurt, 60313

Germany

 

Legal advisors in Spain

Ashurst LLP

Alcalá, 44

Madrid, 28014

Spain

Administrator and secretary

Ocorian Administration (Guernsey) Limited

Floor 2, Trafalgar Court

Les Banques, St Peter Port

Guernsey GY1 4LY

Independent Auditor

BDO Limited
Place du Pré, Rue du Pré
St Peter Port
Guernsey GY1 3LL

 

Registrar

Computershare Investor Services (Jersey) Limited

13 Castle Street
St Helier
Jersey JE1 1ES

Broker

Panmure Gordon (UK) Limited

One New Change

London  EC4M 9AF

 

Tax advisors in Europe

KPMG LLP
15 Canada Square

London E14 5GL

 

Ernst & Young LLP

1 More London Riverside

London SE1 2AF

 


 

Shareholder information

 

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

www.alpharealtrustlimited.com

 

Dividends

Ordinary dividends are declared and paid quarterly. Shareholders who wish to have dividends paid directly into a bank account rather than by cheque to their registered address can complete a mandate form for this purpose. Mandates may be obtained from the Company's Registrar. Where dividends are paid directly to shareholders' bank accounts, dividend vouchers are sent directly to shareholders' registered addresses.

Share price

The Company's Ordinary Shares are listed on the SFS of the LSE.

Change of address

Communications with shareholders are mailed to the addresses held on the share register. In the event of a change of address or other amendment, please notify the Company's Registrar under the signature of the registered holder.

Investment Manager

The Company is advised by Alpha Real Capital LLP, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

Financial calendar

Financial reporting

Reporting/

Meeting dates

Dividend period

Ex-dividend date

Record date

Last date for election to scrip dividend

(if applicable)

Share certificates posted

(if applicable)

Payment date

Half year report and dividend announcement

24

November

2023

Quarter ending

30 September 2023

7

December 2023

8

December 2023

9

January

2024

23

January

2024

24

January

2024

Trading update

(Qtr 3)

1

March

2024

Quarter ending 31 December 2023

14

March

2024

15

March

2024

26

March

2024

11

April

2024

12

April

2024

Annual report and dividend announcement

21

June

2024

Quarter ending 31 March

2024

4

July

2024

5

July

2024

11

July

2024

25

July

2024

26

July

2024

Annual report published

5

July

2024







Annual General Meeting

5

September 2024







 

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