Annual Financial Report

8 April 2011

ALPHA UK MULTI PROPERTY TRUST PLC(THE "COMPANY" OR THE "GROUP" )

ALPHA UK MULTI PROPERTY TRUST PLC POSTS RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010:

NET ASSET VALUE PER SHARE 33.5 PENCE; EARNINGS PER SHARE 4 PENCE

PORTFOLIO VALUATION HAS INCREASED YEAR-ON-YEAR

Alpha UK Multi Property Trust PLC, the property company investing primarily in commercial real estate in the UK, today posts its results for the year from 1 January to 31 December 2010.

The Company announced earnings of £3.4 million for the year and earnings per share of 4 pence.

Key achievements in 2010:

·; New management - Alpha Real Capital LLP ("Alpha Real") has been appointed Property Investment Adviser ("PIA") and has increased the management resources available to the Group, including a new fund manager.

·; New capital - the Group has raised £4.75 million, increasing the ability to invest in its property portfolio, particularly to target new and retain existing tenants through selective capital expenditure.

·; Borrowings extended - successful Bank of Scotland loan refinancing with an extension to the term (now expiring April 2013).

·; Gearing reduced - group borrowings reduced by £1.7 million to £82.0 million; loan to value ('LTV') ratio on secured debt reduced from 75.9% to 73.1%.

·; Portfolio review - Alpha Real is undertaking an extensive review of the property portfolio to identify value enhancement opportunities - over 70 new lettings.

·; Improved NAV - NAV increased by 14.8% to 33.5 pence per share. Property portfolio increase of 1.7% in value - from £110.3 million to £112.1 million.

·; Increased earnings - earnings per share 4 pence (previous year loss of 18.2 pence per share) - consolidated profit of the Group for the year of £3.4 million.

Key performance objectives for 2011:

·; Increase earnings and cash flow - increase occupancy in the portfolio and reduce expenses.

·; Protect and enhance asset values - prudent investment in selected properties.

·; Strengthen the balance sheet - reduce borrowings progressively, consistent with the investment programme for the property portfolio.

Jonathan Clague, Chairman of Alpha UK Multi Property Trust PLC, commented:

"The Company has successfully weathered the downturn experienced by UK commercial property in the last few years. Against this background, since its lowest point in June 2009, the Group's property portfolio has increased in value by 3.5%. The Board believes that, with the Group's loan facilities now successfully refinanced and with the life of the Company extended until at least 2013, together with the funding raised from Alpha Tiger Property Trust Limited and the appointment of Alpha Real as the new Property Investment Adviser, that the Company has a strong platform from which to rebuild shareholder value over the medium term."

Tom Pissarro, Fund Manager, Alpha Real Capital LLP, commented:

'The Company's asset's predominantly comprises a well diversified portfolio of 64 UK multi let, light industrial and office properties with 758 leasable units. The Company is focused on providing tenants with good quality accommodation on flexible lease terms. Following the recent capital raising the Company is in a much improved position to deploy capital expenditure when 'value-added' initiatives are identified. The Company is focused on maximising occupancy both through maintaining existing tenants and attracting new ones. This strategy offers real opportunities to generate strong cash flow in the future which will further strengthen the balance sheet going forward.

Contact:

Jonathan ClagueChairman, Alpha UK Multi Property Trust PLCTom PissarroFund Manager, Alpha Real Capital LLP 020 7268 0300

For more information on the Company please visit www.alphaukmultipropertytrust.com.

For more information on the Company's Property Investment Adviser please visit www.alpharealcapital.com.

FORWARD-LOOKING STATEMENTS

These results contain forward-looking statements which are inherently subject to risks and uncertainties because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements are based on the Board's current view and information known to them at the date of this statement. The Board does not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Nothing in these results should be construed as a profit forecast.

ALPHA UK MULTI PROPERTY TRUST PLCAUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

CHAIRMAN'S STATEMENT

I am pleased to present the Annual Report and Consolidated Financial Statements of Alpha UK Multi Property Trust PLC, formerly called Close High Income Properties PLC ("the Company") and its subsidiaries, (together "the Group") for the year ended 31 December 2010 ("the Year").

Continuation vote and changes approved by shareholders

During the Year the Company held the Annual General Meeting ("AGM") and Extraordinary General Meeting ("EGM") on 9 August 2010 at which the resolutions proposed to shareholders were overwhelmingly approved, by over 98% of those voting, with the total shareholder turnout being in excess of 39%.

The principal resolutions passed by shareholders were as follows;

·; The continuation of the Company, and amendment of the Articles to require shareholders to vote at the 2013 AGM called to approve the accounts for the year ending 31 December 2012 on the continuation of the investment activities of the Company for a further three years, and if passed, at every third subsequent AGM;

·; The appointment of Alpha Real Capital LLP ("Alpha Real") as the new Property Investment Adviser with property management retained by Berkshire Asset Management;

·; The issue of Convertible Unsecured Loan Stock instrument to Alpha Tiger Property Trust Limited ("Alpha Tiger") at a coupon rate of 4.75% per annum, convertible into Ordinary Shares at 31 pence per Ordinary Share;

·; The issue of an option to Alpha Tiger enabling the purchase of an additional 4,000,000 Ordinary Shares at 50 pence per share;

·; The appointment of Phillip Rose as a non-executive Director;

·; The change of the name of the Company to Alpha UK Multi Property Trust PLC;

·; The reduction in the fee payable to the Property Investment Adviser from 1.5% of Gross Asset Value ("GAV") to 1.25% of GAV (with the exception of CHIP (Six) Limited which was 1.125% of GAV.)

These proposals provide:

·; additional capital to the Company to allow capital expenditure in the portfolios which otherwise would be constrained by the cash sweeps and tight capital expenditure limits put in place by the Company's lending banks;

·; working capital to allow the portfolio to withstand fluctuations in income without placing an undue strain on the limited cash resources of the Company;

·; capital on terms which are not materially dilutive to NAV per share;

·; additional management resource at fund manager level; and

·; capital to provide additional headroom for future banking negotiations.

Following these changes Alpha Real has sought to focus on active asset management within the existing portfolio with particular emphasis on the retention of tenants, the extension of lease terms and the letting of vacant units to maintain and, where possible, improve the Group's income profile.

Net asset value and earnings

The consolidated profit of the Group for the Year was £3.4 million with earnings per ordinary share of 4.0 pence.

This profit included an unrealised gain on revaluation of investment properties of £1.0 million and an unrealised gain on interest rate swaps of £1.9 million.

The Group's profit this Year represents the Company's first annual profit since December 2006. I am pleased to advise that the Company's Net Asset Value per ordinary share has increased during the year by 14.8% from 29.2 pence to 33.5 pence.

Property performance

During the year the Group's property portfolio increased in value by £1.8 million or 1.7% from £110.3 million to £112.1 million. This increase is the Group's first annual rise in the value of its property portfolio since December 2006.

This improvement is largely attributable to improved sentiment in the investment market. Record low interest rates and high yield premiums, combined with an improvement in economic sentiment have helped to increase demand for higher risk asset classes, including commercial property.

The Group has continued its progress in actively managing the properties in challenging circumstances in particular a market characterised by high void levels (22.8% at the end of 2010).

No acquisitions or disposals were made during the year. However, on 23 February 2011 the Group sold two units at Shadsworth Industrial Park, Blackburn for £0.7 million, reflecting a surplus above their prevailing value at 31 December 2010 of £0.6 million. The proceeds received on the sale will be applied to reduce debt.

Debt facilities

During the year the Group achieved the following improvements to the position of the Group's borrowings;

·; The successful extension of the Group's loan facility with Bank of Scotland for a term to April 2013. Similar to the Company's successful refinancing of its two loan facilities with Nationwide Building Society ("Nationwide") in October 2009, the loan facility with Bank of Scotland places restrictions over the term of the facility on the amount of capital expenditure improvements that can be funded from surplus rental income. Additionally these loan facilities restrict the distribution of income from the Company's subsidiaries to the Company, thereby restricting the payment of dividends to the Company's shareholders.

·; The repayment of borrowings to secured lenders totalling £1.7 million, thereby reducing Group borrowings from £83.7 million to £82.0 million and reducing the loan to value ("LTV") ratio on secured borrowings from 75.9% to 73.1%.

·; The successful re-hedging of the Group's interest rate swaps with Bank of Scotland on £47 million of borrowings which will reduce the Group interest costs going forward.

Further details on the Group's borrowings are provided in Note 15 to the financial statements.

Outlook

The Company has successfully weathered the downturn experienced by the UK commercial property market in the last few years. While the value of investments in prime, well-let property has recovered, investor demand for non-prime assets remains subdued and occupier demand remains more subdued but is likely to improve as economic conditions get better and as more banks enter the financing market for this type of asset.

Against this background, it is encouraging that since its lowest point in June 2009, the Group's property portfolio has increased in value by 3.5%. This has resulted in the net asset value per ordinary share of the Company increasing by nearly 20% from its low point in June 2009 of 27.9 pence per share to 33.5 pence per share as at 31 December 2010.

The Board believes that, with the Group's loan facilities now successfully refinanced and with the life of the Company extended until at least 2013, together with the funding raised from Alpha Tiger and the appointment of Alpha Real as the new Property Investment Adviser, that the Company has a strong platform from which to rebuild shareholder value over the medium term.

Jonathan Clague

Chairman

8 April 2011

PROPERTY INVESTMENT ADVISER'S REPORT

Portfolio overview

The portfolio predominantly comprises a well diversified portfolio of 64 UK multi let, light industrial and office properties with 758 leasable units. The total floor area is 193,000 square metres (2.08 million square feet) and the portfolio has a broad sector split by value, of approximately 56% light industrial, 34% offices, 9% industrial and office properties, and 1% retail. The properties offer good value accommodation for local and regional occupiers. Historically occupiers have favoured shorter term flexible leases and the weighted average lease length is 3.2 years to expiry and 2.2 years to the next tenant break.

The challenging occupational market during the review period has been reflected in the void level which, based on the estimated rental value, stood at 22.8% as at 31 December 2010. Occupancy is showing strong signs of stabilising with void levels at 22.7% as at 1 March 2011. During 2010 significant progress was made in letting up the vacant units (72 new lettings). Timely rent collection remains a high priority and the percentage of rent collected three weeks after the quarter day steadily improved during the review period from 78.7% (March 2010 quarter) to 85.0% (December 2010 quarter).

*Final achievable annual rent including stepped rents.

The valuation of the portfolio, as at 31st December 2010 was £112.1 million compared to £110.3 million, as at 31 December 2009, an increase of £1.8 million (1.7%) over the year. The average capital value of the portfolio is £580 per square metre (£54 per square foot). The overall LTV (loan to value) ratio for bank borrowing has improved to 73.1% at the year-end (LTV as at 31 December 2009 was 75.9%).

The loan facility with Bank of Scotland has been successfully refinanced. Terms have been agreed to resolve the breach of covenant with Nationwide in respect of CHIP (Six) Limited. Having raised further funds via the issue of the Convertible Unsecured Loan Stock, the Company's capital reserves are in a much stronger position to withstand the short-term income risks and capital is available to undertake targeted income and value enhancement asset management initiatives.

Asset management review

The Property Investment Adviser's strategy to deliver shareholder value will continue to focus on the following:-

1. To enhance net rental income - The marketing strategy for all vacant units will focus on meeting tenant requirements for good quality affordable accommodation on flexible lease terms.

2. To deploy capital expenditure when 'value add' opportunities are identified - a rolling programme of redecoration will continue to be undertaken however priority will be given to refurbishments where a property can be significantly enhanced to meet real tenant demand. We are also looking to identify opportunities to extend leases and or remove tenant breaks where appropriate value can be unlocked.

3. To undertake limited strategic sales - a disposal will be considered where it is believed that the price likely to be achieved to be accretive to shareholder returns having considered the current yield and the future realisable capital value. Units C & D, Shadsworth, Blackburn, a vacant light industrial property, were sold to an owner occupier in February 2011 at £0.7 million, £0.1 million above the 31 December 2010 valuation.

4. To amortise borrowings through rental surplus and to reduce the LTV ratio - both the Bank of Scotland and Nationwide facilities require all rental surplus to be used to pay down the respective loans. Subject to achieving improved occupancy levels and higher market value the LTV ratios can be significantly improved in the medium term.

The strategy to concentrate on active asset management initiatives within the portfolio offers real opportunities to generate strong cash flow in the future.

Economic overview

It has now been just over a year since the UK Economy emerged from one of the deepest recessions in decades, which was driven by a global banking crisis. Despite a surprise contraction in Q4 2010, the UK economy is expected to continue to recover in 2011.

The Purchasing Managers Indices ("PMI") surveys indicate a rebound in activity at the start of 2011, especially for the services sector (a key competent of UK output). However, sharp increases in inflation and reduced Government expenditure suggest that the pace of the recovery may begin to slow down.

In December 2010, despite significant Government led austerity measures, inflation reached 3.7% with the prospect of the increase in VAT to 20% in early January 2011 further compounding the issue. This, coupled with concerns over stability in the key Middle Eastern economies, has led to escalating oil prices of well over $100 a barrel, and could indicate that inflation will remain stubbornly high for the foreseeable future.

Commercial property overview

Since the trough of the market in June 2009, commercial property returns have improved with IPD indices showing a total return of 13.4 % in the year to January 2011.The UK's historically low base rate of 0.5%, accompanied with average gilt yields at 3.3%, supports the view that commercial property offers a significant return premium for its risk profile.

However, the property recovery has not been evenly spread. The 'prime' property market came to the fore in 2010 due primarily to large levels of equity capital chasing low levels of stock. Whilst this increase in capital values for prime property is welcome, it has led to a divergence in returns between prime and other asset classes and created a two-tier market. As in previous recoveries, compression of prime yields has often been a precursor to increased investor sentiment towards other non-prime property such as the Company's.

An important positive factor is that there are very few new developments coming to market. Consequently, the medium term prospects do not signal the emergence of significant oversupply and with continued economic recovery, this situation should, in time, lead to an increased level of take up as more tenants compete for a steady stock of available space.

Tom Pissarro

Alpha Real Capital LLP

Property Investment Adviser

8 April 2011

DIRECTORS' REPORT

The Directors present herewith the Annual Report and Consolidated Financial Statements of the Company and its subsidiaries (together "the Group") for the year ended 31 December 2010.

The Company

The Company is an Isle of Man closed-ended investment company and was incorporated on 10 June 2002. Its principal activity is that of investment in UK commercial property. The Company's shares are traded on the London Stock Exchange.

The Directors confirm that:

·; no single property represents more than 15% of the gross assets of the Group;

·; income receivable from any one tenant, or tenants within the same group, in any one financial year does not exceed 20% of the total rental income of the Group; and

·; the proportion of the Group's property portfolio which is unoccupied or not producing income or which is in the course of substantial redevelopment or refurbishment does not exceed 25% of the value of the portfolio.

Results and dividends

The consolidated profit after taxation of the Group for the year ended 31 December 2010 amounted to £3.4 million (2009: loss of £15.3 million) which has been transferred to reserves. This profit includes an unrealised gain on revaluation of investment properties of £1.0 million (2009: unrealised loss of £13.6 million) and an unrealised gain on the revaluation of interest rate hedging instruments of £1.9 million (2009: unrealised loss of £3.1 million).

Commentary on the net asset value and performance is given in the Chairman's Statement and Property Investment Adviser's Report.

The Company paid no dividends during the year and no dividend is proposed.

Directors

The Directors of the Company who served during the period and their interests in the share capital of the Company are shown below:

Directors' fees were increased effective from 10 August 2010.

Events after Balance Sheet Date

On 23 February 2011 the Group sold two units at Shadsworth Industrial Park, Blackburn for £0.7 million, reflecting an increase of £0.1 million above their prevailing value at 31 December 2010 of £0.6 million. The proceeds received on the sale will be applied to reduce the debt to the secured lender, Bank of Scotland in April 2011.

Shareholder Analysis as at 31 December 2010

Audit Committee

During the year, the Board established an Audit Committee. The Audit Committee consists of Philip Scales (Chairman), Donald Lake and Geoffrey Black.

Role of the Committee

The role of the Audit Committee, which meets at least twice a year, includes:

·; The engagement, review of the work carried out by and the performance of the Company's external auditors

·; To monitor and review the independence, objectivity and effectiveness of the external auditors

·; To oversee the appointment of external valuers

·; To develop and apply a policy for the engagement of the external audit firm to provide non-audit services

·; To assist the Board in discharging its duty to ensure that financial statements comply with all legal requirements

·; To review the Company's financial reporting and internal control policies and to ensure that the procedures for the identification, assessment and reporting of risks are adequate

·; To review regularly the need for an internal audit function

·; To monitor the integrity of the Company's financial statements, including its annual and half-yearly reports and announcements relating to its financial performance, reviewing the significant financial reporting issues and judgments which they contain

·; To review the consistency of accounting policies and practices

·; To review and challenge where necessary the financial results of the Company before submission to the Board

The Audit Committee makes recommendations to the Board which are within its terms of reference and considers any other matters as the Board may from time to time refer to it.

Policy for Non Audit Services

The Committee has adopted a policy for the provision of non-audit services and reviews and approves all material non-audit related services in accordance with the need to ensure the independence and objectivity of the external auditors. No non-audit related services were performed by Ernst & Young LLC in the current year.

Internal Audit

The Group has no employees and therefore the Board is reliant upon the systems and procedures employed by the Property Investment Adviser and the Administrator which are regularly reviewed and are considered to be sufficient to provide it with the required degree of comfort. Resulting from this, the Board continues to believe that there is no need for an internal audit function, although it continues to monitor such need annually.

Company Secretary

Martin Katz served as Secretary throughout the year.

Going concern

The Directors confirm that the Group continues to be a going concern.

Jonathan Clague

Chairman

8 April 2011

STATEMENT OF DIRECTORS' RESPONSIBILITIES

Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for that year. In preparing those financial statements, the Directors are required to:

·; select suitable accounting policies and then apply them consistently;

·; make judgements and estimates that are reasonable and prudent;

·; state whether all applicable accounting standards have been followed; and

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and enable them to ensure that the financial statements comply with the Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

CORPORATE GOVERNANCE STATEMENT

In December 1992, the Committee on the Financial Aspects of Corporate Governance ("the Cadbury Committee") published a Code of Best Practice. This was updated by the issue of The Combined Code: Principles of Good Governance and Code of Best Practice and the further issue of the UK Corporate Governance Code in 2010 ("the Combined Code"). The Combined Code contains recommendations as to best practice, focusing on the control and reporting functions of boards of directors.

The Board of Alpha UK Multi Property Trust PLC, whilst not being under a formal obligation to report to the shareholders regarding the extent to which the Company complies with the Combined Code, monitors the Company's established procedures. The Board believes that the Company complies with the provisions of the Code to the extent which is appropriate to the Company's nature and scale of operations.

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF ALPHA UK MULTI PROPERTY TRUST PLCFor the year ended 31 December 2010

We have audited the financial statements of Alpha UK Multi Property Trust PLC for the year ended 31 December 2010 which comprise the consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of cash flows, consolidated statement of changes in equity, company balance sheet, company statement of cash flows, company statement of changes in equity and the related notes 1 to 23. The financial reporting framework that has been applied in their preparation is applicable law and appropriate accounting standards.

This report is made solely to the company's members, as a body, pursuant to Section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body for our audit work, for this report or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities set out below, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of; whether the accounting policies are appropriate to the group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion the financial statements:

§ give a true and fair view of the state of the company's and the group's affairs as at 31 December 2010 and of the Group's profit for the year then ended;

§ have been properly prepared in accordance with International Financial Reporting Standards (as endorsed by the EU); and

§ have been prepared in accordance with the requirements of the Companies Acts 1931 to 2004.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Acts 1931 to 2004 requires us to report to you if, in our opinion:

§ adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

§ the financial statements are not in agreement with the accounting records and returns; or

§ certain disclosures of directors' remuneration specified by law are not made; or

§ we have not received all the information and explanations we require for our audit.

Ernst & Young LLC

Chartered Accountants

Isle of Man

8 April 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2010

There are no other items that require disclosure in the Consolidated Statement of Comprehensive Income.

CONSOLIDATED BALANCE SHEET

As at 31 December 2010

These financial statements were approved by the Board of Directors on 8 April 2011 and signed on its behalf by:

J D Clague

D Lake

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2010

The capital reserve includes the distributable capital reserve for the Ordinary Share Class.

COMPANY BALANCE SHEET

As at 31 December 2010

This financial statement was approved by the Board of Directors on 8 April 2011 and signed on its behalf by:

J D Clague

D Lake

COMPANY STATEMENT OF CASH FLOWS

For the year ended 31 December 2010

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2010

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2010

1. Operations

The Company was incorporated in the Isle of Man on 10 June 2002. It is a closed-ended investment company and was formed primarily for investment in UK commercial property. The aim of the Company and its subsidiaries (together "the Group") is to seek to improve income, reduce debt and provide the prospect of long-term capital growth. The Group has no employees. During the year the Company changed its name from Close High Income Properties PLC to Alpha UK Multi Property Trust PLC on 10 August 2010.

Going concern

The annual report and consolidated financial statements have been prepared on the going concern basis. During the year the Company received additional funding in the form of convertible unsecured loan stock of £4.75 million from Alpha Tiger Property Trust Limited and approval from shareholders to continue the Company until the 2013 AGM. During the year the Group has successfully refinanced its loan facilities with its secured lender, Bank of Scotland to April 2013. At 31 December 2010 and up to the date of the signing of these financial statements the Group remained in breach of the loan to value and forward interest cover covenant on its loan facility with Nationwide in CHIP (Six). The Board remains confident that an agreement with Nationwide will be satisfactorily concluded to remedy this breach. In the event that Nationwide enforced its rights under the facility both the Company and the Group would continue to be a going concern. See Note 15 for further information on the Group's borrowing arrangements.

2. Summary of significant accounting policies

Basis of preparation

The consolidated financial statements of the Company and the Group have been prepared on a historical cost basis, except for investment property and derivative financial instruments that have been measured at fair value.

The consolidated financial statements are presented in pounds sterling and rounded to the nearest thousand unless otherwise stated. The functional and presentational currency of the Group and Company is pound sterling and there are no foreign exchange transactions.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (as endorsed by the European Union).

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December each year. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Company statement of comprehensive income

In accordance with section 3(5) (b)(ii) of the Companies Act 1982, the Company is exempt from the requirement to present its own Statement of Comprehensive Income. Of the profit on ordinary activities after taxation, a profit of £3.4 million (2009: loss of £10.3 million) has been made by the Company.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received, excluding discounts, rebates and sales taxes and duty. Specific income is recognised as follows:

·; Rental income receivable under operating leases is recognised on a straight-line basis over the term of the lease, except for contingent rental income which is recognised when it arises.

·; Interest income is recognised as it accrues using the effective interest rate method.

·; Income arising from expenses recharged to tenants is recognised in the period in which the expense can be contractually recovered. Service charges and other such receipts are included gross of the related costs in revenue as the directors consider that the Group acts as principal in this respect.

·; A property is regarded as sold when the significant risks and returns have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.

Expenses

All expenses are calculated on an accruals basis. The Group's policy is to expense all property investment advisory fees. Up until 30 June 2010, the Company capitalised 60% of property investment advisory fees, being representative of a proportion of such costs attributable to the enhancement in value of the property investments of the Group. All other expenses are charged to the Statement of Comprehensive Income Statement.

Taxation

The Group is a resident in the Isle of Man for income tax purposes. The standard rate of tax on company profits in the Isle of Man is 0% except where profits are derived from Isle of Man land and property or banking business, where the standard rate is 10%. The Group is subject to Isle of Man Income Tax at a rate of 0% on its profits.CHIP (One) Limited, CHIP (Two) Limited, CHIP (Three) Limited, CHIP (Four) Limited, CHIP (Five) Limited and CHIP (Six) Limited are subject to UK non-resident landlord tax at a rate of 20% on their rental profits.

Investment properties

Investment property is measured initially at cost including transaction costs. Transaction costs include stamp duty, professional fees and legal services incurred to bring the property to the condition necessary for it to be capable of operating.

Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in fair values are included in the Consolidated Statement of Comprehensive Income in the year in which they arise.

Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement of disposal of investment property are recognised in the Comprehensive Statement of Income in the year of retirement or disposal.

Gains or losses on the disposal of investment property are determined as the difference between net disposal proceeds received and the total cost of the investment property.

Depreciation and amortisation

In accordance with IAS 40 "Investment Property", no depreciation or amortisation is provided in respect of investment properties.

Convertibles unsecured loan stock ("CULS")

Convertible loan notes are assessed in accordance with IAS 32 Financial Instruments: Presentation to determine whether the conversion element meets the fixed-for-fixed criterion. Where this is met, the instrument is accounted for as a compound financial instrument with appropriate presentation of the liability and equity components. Where the fixed-for-fixed criterion is not met, the conversion element is accounted for separately as an embedded derivative which is measured at fair value through profit or loss. In the Consolidated Balance Sheet, this is presented separately as a derivative instrument. Fees incurred in relation to issuing convertible loan notes are initially capitalised and amortised over the term of the loan notes.

Rent and other receivables

Rent and other receivables are recognised and carried at the lower of their original invoiced value and recoverable amount. Where the time value of money is material, receivables are carried at amortised cost. Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.

Cash and cash equivalents

Cash and short term deposits in the Consolidated Balance Sheet comprise cash at bank and short term deposits with an original maturity of three months or less. For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short term deposits as defined above, net of outstanding bank overdrafts.

Interest bearing loans and borrowings

All loans and borrowings are initially recognised at fair value, in accordance with the investment strategy, less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Bank arrangement fees incurred are initially capitalised and are then amortised over the term of the loan.

Tenant deposits

Tenant deposit liabilities are initially recognised at fair value and subsequently measured at amortised cost where material. Any difference between the initial fair value and the nominal amount in included as a component of operating lease income and recognised on a straight line basis over the lease term.

Investment in subsidiaries

The Company's investments in its subsidiaries are designated at fair value through profit or loss. These investments are stated at fair value, derived from the net assets of the subsidiary companies at the reporting date, with any surplus or deficit arising on revaluation being recognised in the Statement of Comprehensive Income of the Company.

Segmental reporting

The Directors are of the opinion that the Group is engaged in four operating segments which are carried out in eight geographical locations, as detailed in note 5.

Derivatives and hedging

The Group may use interest rate swap and interest rate cap instruments to hedge its risks associated with interest rates. It is not the Group's policy to trade in derivative financial instruments. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The Directors have elected not to apply hedge accounting rules under IAS 39 on the new hedging arrangements. Any gains or losses in the value of these derivatives are recognised immediately in the Consolidated Statement of Comprehensive Income.

Deferred taxation

Deferred tax is provided for using the liability method on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductable temporary differences, carried forward tax credits or tax losses can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the balance sheet date.

3. Significant accounting judgements, estimates and assumptions

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected.

The key assumptions concerning the future and other key sources or estimation of uncertainty at the date of the Balance Sheet, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Valuation of investment property

The fair value of investment property is determined by independent real estate experts using recognised valuation techniques. These techniques comprise both the Yield Method and the Discounted Cash Flow Method. In some cases, the fair values are determined based on recent real estate transactions with similar characteristics and location to those held by the Group.

The determination of the fair value of investment property requires the uses of estimates such as future cash flows from the assets (such as lettings, tenant's profiles, future revenue streams, capital values of fixtures and fittings, plant and machinery, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those assets. These estimates are based on local market conditions existing at the reporting date.

Volatility in the global financial system is reflected in commercial real estate markets. There was a significant reduction in transaction volumes in 2009 and, to a lesser extent in 2010. Therefore, in arriving at their fair value estimates of market values as at 31 December 2009 and 31 December 2010, the valuers used their market knowledge and professional judgement and did not rely solely on historic transactional comparables. In these circumstances, there was a greater degree of uncertainty than would exist in a more active market in estimating the market values of investment property. As a result of the level of judgement used in the valuations, the amounts ultimately realised in respect of any given property may differ from the valuations in the Consolidated Balance Sheet.

The significant methods and assumptions used by the valuers in estimating the fair value of investment property are set out in note 11.

Incentive fees

Incentive fees are provided for when it is deemed likely a fee will become payable based on the likelihood of the Company achieving the target level of return. Further details can be found in Note 13.

Operating leases

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangement, that it retains all of the risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

Convertible unsecured loan stock ("CULS")

The liability element of the CULS was measured by determining the net present value of all the future cash flows under the instrument, discounted at the market rate at the time of issue. The discount rate of 13 per cent was determined by reference to similar mezzanine lending transactions at that time.

4. Changes and future changes in accounting standards

The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended IFRS and IFRIC interpretations adopted in the year commencing 1 January 2010:

·; IFRS 2 Share-based Payment: Group Cash-settled Share-based Payment Transactions

·; IFRS 3 Business Combinations (Revised)

·; IAS 27 Consolidated and Separate Financial Statements (Amended)

·; IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items

·; IFRIC 17 Distributions of Non-cash Assets to Owners

·; Improvements to IFRS (May 2008)

·; Improvements to IFRS (April 2009)

When the adoption of the standard or interpretation may have an impact on the financial statements or performance of the Group, its impact is described below:

IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items

The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. Adoption of the standard has had no impact on the financial position or performance of the Group as it has not entered into any such hedging arrangements.

IFRIC 17 Distributions of Non-cash Assets to Owners

This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. The interpretation has no effect on either the financial position or the performance of the Group.

Improvements to IFRS

In May 2008 and April 2009 the IASB issued omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. Adoption of the amendments has had no impact on the accounting policies, financial position or performance of the Group.

The following standards, amendments and interpretations have been issued but are not yet effective and would have no material impact on the financial position or performance of the Group. Dates given are for the start of the effective period:

·; IAS 24 Related Party Disclosures (Amendment) - January 2011

·; IAS 32 Financial Instruments: Presentation - Clarification of Rights Issues - February 2010

·; IFRS 9 Financial Instruments: Classification and Measurement - January 2013

·; IFRIC 14 Prepayments of a minimum funding requirement (Amendment) - January 2011

·; IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments - July 2010

·; Improvements to IFRS (May 2010) -January 2011

·; IFRS 3 Business Combinations

·; IFRS 7 Financial Instruments: Disclosures

·; IAS 1 Presentation of Financial Statements

·; IAS 27 Consolidated and Separate Financial Statements

·; IFRIC 13 Customer Loyalty Programmes

The directors anticipate minimal impact from the adoption of the May 2010 amendments with only the adoption of amendments to IFRS 7 expected to have a limited impact on credit risk disclosure.

5. Segmental Analysis

5a. Rental income - segmental analysis

5b Property valuation - segmental analysis

The Board considers the sector and region analysis above to be the significant segmental basis for the Group. The information disclosed in this note has changed from prior year in order to present more clearly to shareholders the key segmental information.

Expenses are reviewed on a total basis split between property expenses and other expenses. The Board of Directors do not believe it is cost beneficial to the Group to consider the allocation of these costs between the operating segments mentioned above.

Trade and other receivables and trade and other payables are reviewed on a total basis. Bank loans are reviewed on a facility basis as per note 15. The Board of Directors do not believe it is cost effective to the Group to consider the allocation of these assets and liabilities between the operating segments mentioned above.

6. Other income

Other income relates to insurance commission rebates negotiated by the Property Investment Adviser on behalf of the Group. These commission rebates continue to be shared between the Group and the Property Investment Adviser and the rent collection agent.

7. Property expenses

Other expenses

The Property Investment Adviser's fees charged during the year were £1.5 million (2009: £1.5 million). The Group has allocated these fees since 30 June 2010 fully against revenue expenses and charged to the Consolidated Statement of Comprehensive Income. Prior to 30 June 2010 the Group has allocated these fees at 40% to revenue expenses and charged to the Consolidated Statement of Comprehensive Income and 60% capital expenditure charged against the capital costs of the properties.

8. Taxation

Current taxation

The Group is a resident in the Isle of Man for income tax purposes. The standard rate of tax on company profits in the Isle of Man is 0% except where profits are derived from Isle of Man land and property or banking business, where the standard rate is 10%. The Group is subject to Isle of Man Income Tax at a rate of 0% on its profits.CHIP (One) Limited, CHIP (Two) Limited, CHIP (Three) Limited, CHIP (Four) Limited, CHIP (Five) Limited and CHIP (Six) Limited are subject to UK non-resident landlord tax at a rate of 20% on their rental profits. The taxation charge for the year to £0.1 million relates to CHIP (Two) Limited. The Group calculates its tax in respect of UK non residential landlord tax on a subsidiary basis for which group reliefs are not available.

Deferred taxation

The Company has not recognised a deferred tax asset in relation to the losses carried forward due to the uncertain nature of future taxable profits.

As at 31 December 2010 the Group had unused tax losses and capital allowances of £11.0 million (2009: £11.0 million). During the year capital allowances of £21,030 were used by the Group.

9. Dividends

The Company paid no dividends during the year having suspended its dividends in January 2009.

10. Earnings per share

The earnings per share is based on the net profit for the year in the sum of £3.4 million and on 84,095,065 Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. The comparative figure for 31 December 2009 is based on the net loss for the year in the sum of £15.3 million and on 84,095,065 shares being the total number of shares that were in issue during the year.

The issue of CULS in August 2010 (see note 14) with the potential future conversion into ordinary shares does not result in any material dilution in the earnings per share.

11. Investment properties

All properties were independently valued as at 31 December 2010 by the Company's valuers DTZ Debenham Tie Leung. DTZ Debenham Tie Leung is an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the location and category of the investment properties being valued. All properties were valued on the basis of market value and valuation techniques as disclosed in note 3. The properties were valued individually.

All valuations were carried out in accordance with the RICS Appraisal and Valuation Standards (6th Edition). Under the guidance, Note 5 of the RICS Valuation Standard, the valuers are of the opinion that "abnormal" market conditions prevail and there is likely to be a greater than usual degree of uncertainty in respect of the valuation figures reported. Until the number and consistency of comparable transactions increases, this situation is likely to remain.

The table below presents the sensitivity of the valuation to changes in the most significant assumptions underlying the valuation on completed investment property.

12. Trade and other receivables

Payment terms for rental debtors are typically quarterly in advance. There is no fixed date for the repayment of the inter-company loans and interest arising.

As at 31 December 2010, receivables with a value of £0.1 million (2009: £0.1 million) were impaired and fully provided for. £0.1 million has been utilised during the year (2009: nil) and a provision of £0.1 million (2009: £0.1 million) has been made as at the year end.

As at 31 December 2010 the analysis of rental income receivables that were past due but not impaired is set out below:

The Group holds no collateral in respect of its trade receivables. There is no fixed date for the repayment of inter-company loans and interest arising.

The Company impairs its intercompany balances receivable where its subsidiaries have net liabilities. As at the 31 December 2010, intercompany balances receivable with a value of £65.3 million (2009: £67.1 million) were impaired and fully provided for. During 2010, £1.8 million (2009: impairment of £12.4 million) was written back in the year.

13. Provision for incentive fee

An incentive arrangement will come into effect either upon the Shareholders voting to continue or wind up the Group at a meeting of the Company to be held on or after 30 June 2013. At that time if the annual rate of return has been 15 per cent or more for the period from 10 August 2010 until 30 June 2013, then Alpha Real will be entitled to 20 per cent of the excess above that target level of return.

No incentive fee is provided for at 31 December 2010 (31 December 2009: £nil) as the target level of return to Shareholders was not achieved.

On 10 August 2010, the Company issued £4.75 million of convertible unsecured loan stock ("CULS") to Alpha Tiger Property Trust Limited ("Alpha Tiger") pursuant to an agreement between the Company and Alpha Tiger.

In addition upon execution of the CULS Instrument, the Company issued 15,322,581 preference shares to Alpha Tiger which shall be attached or "stapled" to the CULS. One preference share will be stapled to each £0.31 nominal amount of CULS issued.

The CULS bears interest at the rate of 4.75 per cent per annum payable quarterly, in arrears, on a compounded basis on 1 January, 1 April, 1 July and 1 October. The first date for payment of interest was 1 October 2010. The Company may, at its sole discretion, choose to satisfy any interest payment in cash or by the issue of further CULS.

The CULS can be converted to ordinary shares at any time on or before 30 June 2013 at a price of £0.31 per share.

If the CULS are not converted the Company shall redeem any outstanding CULS (together with any CULS issued in satisfaction of interest payments) on 30 June 2013 in full at par plus a payment of a premium of 18 per cent.

The Company accounts for CULS as a compound financial instrument, which comprises a liability and equity component. The liability component is presented within the non-current liabilities section and the equity component is included within the equity section of the Consolidated Balance Sheet and Company Balance Sheet.

The liability element of the CULS was measured by determining the net present value of all the future cash flows under the instrument, discounted at the market rate at the time of issue. The discount rate of 13 per cent was determined by reference to similar mezzanine lending transactions at that time.

The below table shows the initial issue of CULS including associated issue costs, followed by the subsequent issue of CULS in satisfaction of interests payments, the accrual for the 18 per cent premium and the amortisation of the associated issue costs.

As at 31 December 2010

As at 31 December 2009

A Nationwide Building Society loans

A facility agreement has been entered into between the Nationwide Building Society ("Nationwide") and Chip (Two) Limited whereby Nationwide has made available a term loan facility for up to £9.8 million. Of this total loan £8.0 million has been fixed at the rate of 2.79% plus a margin of 2.5% per annum; the balance is subject to interest at LIBOR plus a margin of 2.5% per annum. The facility is repayable on 23 October 2012. An event of default (as defined in the facility agreement) is triggered if, inter alia, the amount of the loan facility exceeds 75% before 31 March 2011 and 65% thereafter of the value of the properties over which Nationwide has security. In addition, the ratio of gross rental income to interest shall not be less than 160%. The facility is secured by a legal charge and debenture over the property assets of Chip (Two) Limited. As at 31 December 2010 the LTV stood at 63.52%. The facility requires Chip (Two) Limited to use surplus rents to reduce the outstanding debt on a quarterly basis. Surplus rent of £0.3 million has been used to repay the facility during the year.

A facility agreement has been entered into between Nationwide Building Society and Chip (Six) Limited whereby Nationwide Building Society has made available a term loan facility for up to £18.9 million. Of this loan balance £18.0 million has been fixed at the rate of 2.79% plus a margin of 3.5% per annum. The balance is subject to interest at LIBOR plus a margin of 3.5% per annum. The facility is repayable on 1 March 2013. An event of default (as defined in the facility agreement) is triggered if, inter alia, the amount of the loan facility exceeds 90% before 31 March 2012 and 85% thereafter of the value of the properties over which Nationwide has security. In addition, the ratio of net rental income to interest shall not be less than 110% for any test period. The facility requires Chip (Six) Limited to use surplus rents to reduce the outstanding debt on a quarterly basis. The facility is secured by a legal charge and debenture over the property assets of Chip (Six) Limited.

Following the DTZ valuations of the properties as at 31 December 2010 the LTV ratio of CHIP (Six) Limited stands at 90.85% against a covenant of 90.00%. The directors continue to be in discussion with Nationwide and are confident they shall reach an agreement to redress the breach. This does not impact on the going concern status of the Group or Company.

In addition Chip (Two) Limited and Chip (Six) Limited were required to deposit £0.2 million and £0.3 million respectively in a blocked account over which Nationwide has sole signing rights. Withdrawals from these blocked accounts will be permitted only at Nationwide's sole discretion. The funds placed in these blocked deposit accounts have been included in "Cash and Cash Equivalents" in the Consolidated Balance Sheet.

On 10 January 2011 the Group paid £0.2 million to Nationwide in respect of the quarterly repayment of debt from surplus rent for its subsidiaries, CHIP (Two) Limited and CHIP (Six) Limited. These repayments reduced the outstanding debt under the loan facility to £9.3 million and £18.8 million respectively.

B Bank of Scotland loans

The Group had entered into two separate loan facility agreements with the Bank of Scotland; the first with Chip (One) Limited and Chip (Three) Limited for an amount up to £31.7 million, and the second with Chip (Four) Limited and Chip (Five) Limited for an amount up to £50.0 million.

The terms and conditions for each facility were the same. Interest was payable at a rate equal to LIBOR, plus the mandatory costs of Bank of Scotland, plus a margin of 1.1% per annum if the level of debt did not exceed 50% of the value of the relevant properties; the margin increased by 0.075% per annum if the level of debt rose above 50% but not above 55%, and increased by 0.15% per annum if the level of debt rose above 55%. Each facility was repayable on the business day immediately prior to the tenth anniversary of the first draw down under the facility although, if an event of default (as defined in the facility agreement) was triggered, it would be repayable on first demand by Bank of Scotland. The facility agreements contained standard events of default and covenants for bank facilities of this nature. An event of default (as defined in the facility agreement) would be triggered if, inter alia, the amount of the loan facility exceeded 60% but was less than 75% of the value of the underlying security for a period of in excess of 180 days. Each facility was secured by a legal charge and debenture over the property assets of the respective companies i.e. Chip (One) Limited, Chip (Three) Limited, Chip (Four) Limited and Chip (Five) Limited.

The Group successfully completed the refinancing of the loan facility agreements with Bank of Scotland on 19 April 2010. The new facility is between the Bank and the Company and its subsidiaries, Chip (One) Limited, Chip (Three) Limited, Chip (Four) Limited and Chip (Five) Limited for an amount up to £54.1 million.

Interest is payable at a rate equal to LIBOR, plus the mandatory costs of Bank of Scotland, plus a margin of 2.6% per annum. The facility is repayable on 31 October 2012 although, if an event of default (as defined in the facility agreement) were triggered, it would be repayable on first demand by Bank of Scotland. The facility agreement contains standard events of default and covenants for bank facilities of this nature. An event of default (as defined in the facility agreement) will be triggered if, inter alia, the amount of the loan facility exceeds 90% of the value of the underlying security. The facility is secured by a legal charge and debenture over the property assets of the relevant subsidiaries. As at 31 December 2010 the LTV stands at 69.62%

Other financial covenants require that the net rental income of the secured properties shall not be lower than 125% of interest for any test period The Company is required make quarterly loan repayments of £0.2 million.

Should any of these covenants be breached then the margin of the new funding will increase by a further 2.6% per annum and will remain at this rate until such a time the breach is remedied.

On 16 January 2011 the Group paid £0.2 million to Bank of Scotland as its quarterly repayment of debt under the loan facility. This repayment reduced the outstanding debt under the loan facility to £53.5 million.

The interest rate hedging arrangements are detailed in note 20.

16. Trade and other payables

Trade payables are non-interest bearing and are settled within normal business terms.

17. Share capital and related reserves

An option has been granted to Alpha Tiger enabling it to purchase 4 million Ordinary Shares at £0.50 per share. The current fair value of this option is deemed to be insignificant due to the fact the current quoted price and NAV per share is below the option value of £0.50 per share.