Annual Financial Report

8 March 2012

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 2011:

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 ending 31 December 2011.

Highlights

·; New lettings - 96 new lettings and 30 lease renewals achieved during the year

·; Additional contracted rent- £0.7 million per annum of additional passing rent is contracted to start during the next two years benefitting cash flow

·; Improved average lease terms- the weighted average lease length of the portfolio is 2.6 years to the next break date or 4.2 years to expiry as at 31 December 2011; up from 2.3 years and 3.6 years as at 31 December 2010

·; Sale of two units above valuation- at Shadsworth Industrial Park, Blackburn for £0.7 million, at 17% above the 31 December 2010 valuation of the two units

·; Occupancy stabilised - the vacancy level by Estimated Rental Value ('ERV') stood at 23% as at 31 December 2011, unchanged from December 2010.

·; Borrowings reduced - Group borrowings reduced by £1.9 million

·; Loan to value stable - loan to value ('LTV') ratio on secured borrowings stable at 73% as at 31 December 2011, unchanged from December 2010

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

"The Board is pleased to note the progress achieved in a challenging market environment with 96 new lettings and 30 lease renewals (accounting for a total of 13.9% of the ERV) completed since the beginning of 2011 and that the vacancy level measured by ERV across the portfolio has been stabilised at 23%."

Tom Pissarro, Investment Adviser and Manager, Alpha Real Capital LLP, commented:

"The Investment Adviser and Manager believes that the strategy of offering good quality affordable accommodation on flexible lease terms, together with prudent levels of investment in the property portfolio, will increase occupancy and revenue over the longer term."

Contact:

Jonathan Clague

Chairman, Alpha UK Multi Property Trust PLC

01624 681250

Tom Pissarro

Investment Adviser and 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 Investment Adviser and Manager 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 2011

Company summary and objectives

Objectives

Alpha UK Multi Property Trust Plc ("the Company") and its subsidiaries (together "the Group") was incorporated in the Isle of Man on 10 June 2002 as a closed-ended investment company and invests in higher yielding UK commercial property. The key objectives are:

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

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

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

Dividends

The Company paid no dividends during the year and no dividend is currently proposed. (2010: £nil)

Listing

The Company is a closed-ended Isle of Man registered investment company which has been declared under the relevant legislation to be a closed-ended Collective Investment Scheme. Its shares are listed on the Official List of the UK Listing Authority and are traded on the London Stock Exchange.

Management

The Company's Investment Adviser and Manager ("IAM") is Alpha Real Capital LLP ("Alpha"). Control of the Company rests with the non-executive Isle of Man based Board of Directors.

ISA/SIPP status

The Company's shares are eligible for Individual Savings Accounts (ISAs) and Self Invested Personal Pensions (SIPPs).

Website

www.alphaukmultipropertytrust.com

Financial highlights

1. 2010 Net asset value per ordinary share (pence), earnings per ordinary share (pence), and adjusted earnings per ordinary share (pence) restated for the 1 for 10 share consolidation effected 1 July 2011 (please see note 25) for ease of comparison.

2. 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 Board adjusts basic earnings for income and costs which are not of a recurrent nature or which may be more of a capital nature.

I am pleased to present the Annual Report and the Consolidated Financial Statements of Alpha UK Multi Property Trust Plc for the year ended 31 December 2011.

Property performance

Management emphasis during the period has continued to focus on active asset management within the existing portfolio with particular emphasis on the extension of lease terms and the letting of vacant units to secure the Group's income. The secondary property market continues to be challenging and there remain significant concerns about the UK economy. Against this backdrop the Board is pleased to note the progress achieved with 96 new lettings and 30 lease renewals (accounting for a total of 13.9% of the ERV) completed since the beginning of 2011 and that the vacancy level measured by ERV across the portfolio has been stabilised at 23%.

The Group also completed the successful sale in February 2011 of two units at Shadsworth Industrial Park, Blackburn for £0.7 million. This sale was achieved at a premium of approximately 17% to the 31 December 2010 valuation of the two units.

In the context of a challenging market environment, the portfolio valuation on a like for like basis fell by £2.2 million (2%) to £109.3 million at 31 December 2011. A full evaluation of the Group's property portfolio performance can be found in the Investment Adviser and Manager's report.

Share consolidation

At the Company's Annual General Meeting on 30 June 2011 the shareholders approved an extraordinary resolution proposing a 1 for 10 consolidation of the Company's Ordinary shares.

Financial performance

The Adjusted Net Asset Value per ordinary share at 31 December 2011 is 311 pence (2010: 349 pence). The majority of the fall is attributable to the revaluation of investment properties during the year.

The Adjusted earnings per share is a loss of 7.5 pence (2010: loss of 5.6 pence). Earnings have been significantly impacted by the effect of vacancies and of the restriction of empty rates relief during the year. Lost net rental income has been compensated to some extent by savings in finance costs.

Bank borrowings

During the year the Group has continued its progress on reducing bank borrowings and improving its financial position. Bank borrowings of £1.9 million have been repaid during the year, reducing the Group's borrowings from £82.0 million at 31 December 2010 to £80.1 million at 31 December 2011.

The Group's interest costs have reduced significantly this year as a result of the successful re-hedging of the Group's interest rate swaps with the Bank of Scotland in December 2010. Finance costs have reduced by 23% per annum when compared with 2010.

As previously reported, one of the Group's subsidiaries, CHIP (Six) Limited, one of nine subsidiaries of the Group, remains in breach of its banking covenants with the lender (Nationwide). Following appointment of Law of Property Act receivers by Nationwide, on 1 March 2012 the Directors of CHIP (Six) Limited decided to recommend to the Company, as sole shareholder of CHIP (Six) Limited, that an extraordinary general meeting of CHIP (Six) Limited should take place in order to commence a creditors' voluntary winding-up. A liquidator to CHIP (Six) Limited will be appointed to undertake an orderly disposal of CHIP (Six) Limited's assets. The Group's other banking facility agreement with Nationwide remains unaffected by this decision. In addition the Group's banking facility agreements with Bank of Scotland with four other subsidiaries of the Company remain unaffected and the CHIP (Six) Limited facility agreement is not cross collateralised with any other subsidiary of the Company, or the Company itself.

It is not expected that the liquidation of CHIP (Six) Limited will yield any surplus assets to be attributed to the Company after discharging liabilities to creditors and meeting the costs of liquidation.

It is important to note that, whilst CHIP (Six) Limited accounts for approximately 17.9% of the Group's portfolio value as at 31 December 2011, CHIP (Six) Limited's NAV is negative and forms (0.1%) or (£21,046) of the Group's NAV.

The renegotiation of the Group's other banking facilities with Bank of Scotland and Nationwide which expire in the fourth quarter of 2012, is a priority and the Group is currently in discussion with a number of lenders.

Further details on the Group's bank borrowings are provided in note 24 to the financial statements and within the Investment Adviser and Manager's report.

Continuation vote

In accordance with the articles of the Company, a continuation vote shall be put to shareholders at the annual general meeting to be held in 2013.

CULS

The CULS are due for repayment on 30 June 2013, and based on the current share price are not expected to be converted. The Board are of the opinion that a suitable refinancing package will be implemented within the fifteen month period remaining to maturity. Further details on the CULS are provided in note 23 to the financial statements.

Outlook

The Group's strategy continues to focus on preserving and improving the profile of the income from its property portfolio. This should place the Group in a stronger position to obtain acceptable refinancing terms when its principal loan facilities are due to be refinanced later this year. The continuing reduction of borrowings from cashflow going forward is a key part of this strategy.

The Board believes that the Group's strategy provides a strong platform from which to rebuild shareholder value over the medium term.

Jonathan Clague

Chairman

7 March 2012

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

·; To enhance net rental income - the marketing strategy for vacant units will aim to meet tenant requirements for good quality affordable accommodation on flexible lease terms.

·; To selectively deploy capital expenditure when 'value add' opportunities are identified - a rolling programme of redecoration will continue to be undertaken however priority will be given to refurbishments where a property can be significantly enhanced to attract additional tenant demand. The IAM is also looking to identify opportunities to extend leases and or remove tenant breaks where appropriate value can be unlocked. 

·; To undertake limited strategic sales -disposals may be considered where it is believed that the price likely to be achieved is accretive to shareholder returns having considered the current yield and the future realisable capital value. As an example, 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).  

·; To reduce borrowings through rental surplus and to reduce the LTV ratio -the banking facilities provided by the Bank of Scotland and Nationwide each 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 may 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 positive cash flow in the future.

Portfolio overview

*Region and sector split excludes properties held by CHIP (Six) Limited following the appointment of an LPA Receiver by the company's lending bank, Nationwide.

The portfolio predominantly comprises a well diversified portfolio of 64 multi let, light industrial and office properties with 728 leasable units all of which are located in the UK. The total floor area is 191,700 square metres (2.06 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 attractively priced accommodation for local and regional occupiers.  

Tenants have continued to favour shorter term flexible leases and against this background we are pleased to report that at 31 December 2011 the weighted average lease length is 4.2 years to expiry and 2.6 years to the next tenant break, which has increased from 3.6 years to expiry and 2.3 years to the next tenant break as at 31 December 2010.

Asset management review

The occupational market has continued to be challenging with a marked preference from tenants for light industrial over office accommodation. The Group's flexible approach to fulfilling tenant demand has produced progress in letting up the vacant units: 96 new lettings and 30 lease renewals were completed during the year, with a further 19 units under offer as at 31 December 2011. Many of the leases incorporate stepped rents and there is an additional £0.7 million per annum of contracted rent due to start during the next two years which will benefit cash flow. 

The number of new lettings is encouraging, and this has meant that occupancy has stabilised. The vacancy level, based on ERV, stood at 23.1% on 31 December 2011 compared to 22.8% as at 31 December 2010 (and decreased to 21.9% as at 1 March 2012). Tenant insolvency has improved significantly with only 12 tenants defaulting during the year compared to 36 during the previous year. Based on the current ERV, there is also a potential additional rent of £3.9 million per annum.

*Final achievable annual rent including stepped rents.

Valuation

On a like for like basis, excluding the two units which were sold in February, the valuation of the portfolio completed by DTZ, has decreased by £2.2 million (2.0 %) to £109.3 million, reflecting current market and occupational conditions. Of this valuation decrease £0.9 million was in respect of CHIP (Six) Limited. The average capital value of the portfolio is £570 per square metre (£53 per square foot), compared to £580 per square metre (£54 per square foot) as at 31 December 2010. The overall LTV (loan to value) ratio for bank borrowing was stable at 73.2% as at 31 December 2011 (31 December 2010: 73.1%).

Financing

The loan facilities provided by Bank of Scotland (in respect of CHIP (One) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited) and Nationwide (in respect of CHIP (Two) Limited) are due to expire on 31st October and 23rd October 2012 respectively. The Board has received a letter from Bank of Scotland to confirm that it does not currently intend to renew the current facility. Discussions are continuing with Bank of Scotland as well as a number of other banks. Indications of interest have been received from three alternative banks. The IAM will continue to pursue refinancing options available to the Group. 

The facility provided by Bank of Scotland continues to be amortised via a repayment of £ 0.2 million per quarter, and the Nationwide loan provided to CHIP (Two) Limited is being partially repaid through a ''cash sweep'' mechanism. 

The CULS are due for repayment on 30 June 2013, and based on the current share price are not expected to be converted. The IAM will continue to pursue a refinancing package within the fifteen month period remaining to maturity. 

CHIP (Six) Limited

As at 31 December 2011 the LTV ratio net of blocked cash of CHIP (Six) Limited stood at 94.9% against a covenant of 90.0%, and CHIP (Six) Limited was not compliant regarding the ratio of net rental income to interest. Subsequent to the year end, Nationwide appointed Law of Property Act receivers over the properties of CHIP (Six) Limited, and the Directors of CHIP (Six) Limited decided to recommend steps to place CHIP (Six) Limited in Creditors Voluntary Liquidation. This does not impact on the going concern status of the Group or Company.

It is not expected that the liquidation of CHIP (Six) Limited will yield any surplus assets to be attributed to the Company after discharging liabilities to creditors and meeting the costs of liquidation.

The CHIP (Six) Limited portfolio is comprised of 9 multi-let offices with a vacancy level of 31.1% by ERV as at 31 December 2011.  

The effects of the proposed liquidation of CHIP (Six) Limited, on the Group, is summarised as follows: 

·; The consolidated LTV ratio would fall from 73% to 68%

·; The Net Asset Value per share would be adjusted to 301.2 pence per share (as at 31 December 2011) - an accretion of 0.2 pence per share to that reported as at 31 December 2011 of 301.0 pence per share

·; The Group's portfolio would be refocused towards light industrial commercial property, where vacancy rates are substantially lower than the offices within the Group's portfolio and greater tenant demand is being experienced. Light industrial assets would rise from 79% to 88% by area, and from 57% to 69% by value, of the rebased aggregate property portfolio

·; Total vacancy rates (as a percentage of Estimated Rental Value), would fall from 21.9% to 19.6% across the aggregate property portfolio as at 1 March 2012

UK Economy

The UK economic recovery continued in 2011, albeit at a modest pace, with GDP growth of 0.8% reported. Reflecting a slowdown in the eurozone, UK GDP growth of 0.4% is expected in 2012.

The Bank of England's Monetary Policy Committee continued to be proactive and committed to promoting economic recovery, injecting further monetary stimulus of £75 billion into the economy during October 2011 and announcing a further £50 billion in February 2012, raising monetary stimulus to £325 billion. Interest rates remain historically low at 0.5% per annum, unchanged since March 2009. Inflation levels remain above the Bank of England target of 2%, however signs of moderation are emerging.

Commercial property overview

Capital values have remained comparatively stable over the past 18 months. Yields remain relatively high for commercial property and generally higher still for secondary commercial real estate. Historically, income returns have been the consistent and key driver behind property value and as such yields for commercial property continue to look attractive to investors and compare favourably with other asset classes.

The yield gap between prime and secondary property assets has widened significantly to levels seen in the early to mid 1990s.

Potential opportunities exist in the multi-let area of the market where a combination of high yields and attractive prices present opportunities for attractive risk-adjusted returns.

Conclusion

With a future focus on the Group excluding CHIP (Six) Limited, the portfolio will be rebalanced towards the light industrial sector. Whilst difficult market conditions are likely to persist during 2012 the Investment Adviser and Manager believes that the strategy of offering good quality affordable accommodation on flexible lease terms, together with prudent levels of investment in the property portfolio, will increase occupancy and revenue over the longer term.

Tom Pissarro

Alpha Real Capital LLP

Investment Adviser and Manager

7 March 2012

Jonathan Clague, Chairman

Jonathan Clague is a resident of the Isle of Man. He is the non-executive chairman of Heron & Brearley, a leading Manx brewer and public house operator, a non-executive director of Diamond Circle Capital Plc and, previously, was a non-executive director of Isle of Man Bank, NatWest Offshore Limited, Sun Alliance (IOM) Limited and PFI Infrastructure Company.

Geoffrey Black, Director

Geoffrey Black is a resident of the Isle of Man. He is a Fellow of the Royal Institution of Chartered Surveyors and is a senior partner of Black Grace Cowley, a leading firm of commercial property agents on the Isle of Man. Geoffrey has more than 30 years experience in both the commercial and residential property markets and has acted for major UK institutions, such as Barclays Bank Plc, and for the Isle of Man government.

Donald Lake, Director

Donald Lake is a resident of the Isle of Man. He is a Fellow of the Royal Institution of Chartered Surveyors and has many years experience of the UK commercial property market both as an adviser to investment funds and as a principal. Donald is Chairman of Unitech Corporate Parks plc an AIM listed company engaged in large-scale projects in India, a director of its subsidiaries in Mauritius and a member of its Audit Committee. He is also a director of other companies active in the UK and elsewhere, and advises private clients on Isle of Man and in the UK.

Philip Scales, Director - Chairman of the Audit Committee

Philip Scales is a resident of the Isle of Man. He is a Fellow of the Institute of Chartered Secretaries and Administrators and the managing director of the Company's Administrator, IOMA Fund and Investment Management Limited. Philip was previously the managing director of Barings (Isle of Man) Limited, which was acquired by Northern Trust in 2005. Philip has more than 34 years experience in corporate and mutual fund administration and is currently on the boards of a number of listed companies.

Phillip Rose, Director

Phillip Rose is a Fellow of the Securities Institute and holds a Master of Law degree. He has over 30 years experience in the real estate, funds management and banking industries in Europe, the USA and Australasia. He has been the Head of Real Estate for ABN AMRO Bank, Chief Operating Officer of European shopping centre investor and developer TrizecHahn Europe, Managing Director of retail and commercial property developer and investor Lend Lease Global Investment and Executive Manager of listed fund General Property Trust.

Phillip is currently Chief Executive Officer of the Company's Investment Adviser and Manager, Alpha Real Capital LLP, a non executive director of London office and retail property investor Great Portland Estates Plc and a member of its Audit Committee. He is also a member of the Management Committee of the Hermes Property Unit Trust and its Audit Committee.

The Directors present herewith the Annual Report and Consolidated Financial Statements of the Group for the year ended 31 December 2011. The Corporate Governance Statement set out below forms part of this Directors' report by reference.

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 results for the year are set out in the financial statements.

Commentary on the net asset value and performance is given in the Chairman's Statement and Investment Adviser and Manager's Report which are incorporated into this Directors' report by reference.

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

Corporate governance

The information fulfilling the requirements of the Corporate Governance Statement can be found in this Directors' report and within the Corporate Governance Statement, which is incorporated into this Directors' report by reference.

Directors

Biographical details of the Directors of the Company who served during the year are given above. Their interests in the share capital of the Company are shown below:

Shares held at 31 December 2010 are restated for the 1 for 10 share consolidation effected 1 July 2011 (please see note 25) for ease of comparison.

Financial instruments

Information about the use of financial instruments by the Group is given in note 20 to the financial statements.

Post balance sheet events

Details of significant events since the balance sheet date are contained in note 29 to the financial statements.

Substantial shareholdings

During the period between 31 December 2011 and 7 March 2012 the Company did not receive any notifications under chapter 5 of the Disclosure and Transparency Rules.

Directors' indemnities

On 4 October 2010, a third party indemnity (Director and Officer insurance) was given by the Company to the Directors in terms which comply with Company law and remains in force at the date of this report.

Essential contracts

The Group has no contractual or other arrangements which are considered essential to the business.

Company Secretary

Martin Katz served as Secretary throughout the year.

Going concernThe Board confirms that the Company and the Group continue to be a going concern as it believes it has reasonable grounds to believe that the loan facilities and the CULS will be re financed as disclosed in note 2.

Philip Scales

Director

7 March 2012

The Board of Directors is accountable to the Company's shareholders for the management and control of the Company's activities and is committed to appropriate standards of corporate governance. The statement below explains how the Company applies the principles set out in the UK Corporate Governance code (''the Code'') published by the Financial Reporting Council and contains the information required by chapter 7 of the Disclosure and Transparency Rules.

Statement of compliance

The Company has, other than where stated below, complied fully with the provisions set out in the Code during the year ended 31 December 2011:-

·; No senior independent director has been appointed.

·; As matters relating to remuneration and nominations are dealt with at regular board meetings, no separate Remuneration and Nomination committees have been established.

The Directors consider this structure to be a practical solution bearing in mind the Company's size and needs.

Further explanation of how the principles and the supporting principles have been applied is set out below, in the Directors' Remuneration report, and the Audit Committee report.

Role of the Board

The Board has determined that its role is to consider and determine the following principal matters which it considers are of strategic importance to the Company:

1) review the overall objectives for the Company and set the Company's strategy for fulfilling those objectives within an appropriate risk framework;

2) consider any shifts in strategy that it considers may be appropriate in light of market conditions;

3) review the capital structure of the Company including consideration of any appropriate use of gearing for the Company in which the Company may invest from time to time;

4) appoint the Investment Adviser and Manager and other appropriately skilled service providers and monitor their effectiveness through regular reports and meetings;

5) review key elements of the Company's performance including the Net Asset Value and payment of dividends.

The Board has adopted a schedule of matters reserved for its decisions and a schedule of matters delegated to the Investment Adviser and Manager, both of which are reviewed at least annually. The Board reserves approval for all significant or strategic decisions including property acquisitions, disposals, significant capital expenditure and financing transactions. The Directors are entitled to take independent professional advice as and when necessary. The Board ensures that all strategic matters are considered and resolved at Board Meetings.

Board Meetings

The Board meets at least quarterly and as required from time to time to consider specific issues reserved for decisions by the Board including all potential acquisitions and investments.

At the Board's quarterly meetings, it considers papers circulated in advance including reports provided by the Investment Adviser and Manager. The Investment Adviser and Manager's report comments on:

·; The UK property markets, including recommendations for any changes in strategy that the Investment Adviser and Manager considers may be appropriate

·; Performance of the Group's portfolio and key asset management initiatives

·; Transactional activity undertaken over the previous quarter and being contemplated for the future

·; The Group's financial position including relationships with bankers and lenders

The reports enable the Board to assess the success with which the Group's property strategy and other associated matters are being implemented and also consider any relevant risks and to consider how they should be properly managed.

The Board also considers reports provided from time to time by its various service providers reviewing their internal controls.

In between its regular quarterly meetings, the Board has also met on a number of occasions during the year to approve property transactions and for other matters.

The table below shows the attendance at Board and other Committee meetings during the year to 31 December 2011:

Messrs Clague, Black, Lake and Scales are non-executive directors and are considered to be independent. Mr Rose is a non-executive director of the Company but is also Chief Executive Officer of Alpha Real Capital LLP, the Investment Adviser and Manager.

The terms and conditions of appointment of non-executive Directors are available for inspection by any person at the Company's registered office and at the Annual General Meeting.

The Board has undertaken an annual evaluation of its own performance and that of its committees and Directors. All Directors are subject to an annual performance evaluation, which is an on-going exercise. As part of this evaluation, the Chairman confirms that the retiring Directors continue to demonstrate commitment to their role and responsibly fulfil their functions on the Board and its committees.

Statement of Directors' responsibility

Company law requires the Directors to prepare the annual report and 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.

Risk management and internal control

The Board recognises its ultimate responsibility for the Company's system of internal control. The Board attaches considerable importance to the Company's systems of internal control and risk management by establishing a continuous process for identifying, evaluating and managing the risks which the Company faces.

During 2011, the exposures to risk, including the changing environments with the property sector and potential adverse consequences of the global economic downturn, were closely monitored by the Directors.

The Audit Committee, along with the Board, has responsibility for monitoring the work carried out under contractual arrangements, and delegated authorities as appropriate, by the Investment Adviser and Manager, the Administrator, the Property Manager and Property Valuer. This, combined with frequent communication with the external auditors ensures that sufficient controls for managing risks are in place in line with the Code.

Risk management covers operations, security, compliance, finance, legal and strategy. The Board monitors these areas closely and matters are reviewed at meetings of the Audit Committee.

However, internal controls are designed to manage rather than eliminate the risk of failure to achieve business objectives, and the Board recognises that any system can only provide reasonable and not absolute assurance against material misstatement or loss.

Audit Committee report

The Audit Committee members are Philip Scales (Chairman), Donald Lake and Geoffrey Black. The Audit Committee meets not less than twice a year; there is one meeting to approve the audit plan and one each for the interim and final announcements. The Chairman of the Audit Committee reports back to the Board on key financial reporting judgements. The main role and responsibilities of the Audit Committee include:

·; to monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance, reviewing significant financial reporting judgements contained in them

·; to review the Company's internal financial controls and to review the Company's internal control and risk management systems

·; to make recommendations to the Board, for it to put to the shareholders for their approval in general meeting, in relation to the appointment, re-appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor

·; to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements

·; to develop and implement policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm, and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken

The terms of reference of the Audit Committee are available for inspection by any person at the Company's registered office and at the Annual General Meeting.

The Committee discharged its obligations in respect of the financial year as follows:

·; Financial reporting during the year: the Audit Committee reviewed the interim and annual financial statements. The Audit Committee received a report from the external auditors setting out accounting or judgemental issues which required its attention. The auditors' report was based on a full audit (annual report) and a high level review (interim report) respectively. The Audit Committee also advised the Board on a number of other matters.

·; Internal Audit: the Group does not have an internal audit function. It has carried out a Group risks and control review and has also carried out a review of controls in the debtors cycle.

Members of the Audit Committee may also, from time to time, meet with the Company's property valuer to discuss the scope and conclusions of their work.

Policy for non audit services

The Audit 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 Investment Adviser and Manager 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 on an annual basis.

Investment Adviser's and Management Agreement

The Company has an Investment Adviser's and Management Agreement with the Investment Adviser and Manager. This sets out the Investment Adviser and Manager's key responsibilities which include proposing a property investment strategy to the Board. The Investment Adviser and Manager is also responsible to the Board for all issues relating to property asset management.

Remuneration report

During the year the Directors received the following remuneration in the form of fees from the Company:

Shareholder relations

Shareholder communications are a high priority of the Board. Members of the Investment Adviser and Manager's Investment Committee make themselves available at all reasonable times to meet with key shareholders and sector analysts. Feedback from these sessions is provided by the Investment Adviser and Manager at the quarterly Board meetings.

In addition, the Board is also kept fully appraised of all market commentary on the Company by the Investment Adviser and Manager and other professional advisors.

Throughout this process the Board seeks to monitor investor relations and to ensure that the Company's communication programme is effective.

The Company has always encouraged regular dialogues with its shareholders at the AGM. The Chairman and the Investment Adviser and Manager will be available at the Annual General Meeting to answer any questions that shareholders attending may wish to raise.

The Company also organises roadshows in the UK and participates in sector conferences. All the Directors are accessible to all shareholders and queries received verbally or in writing are immediately addressed.

Announcements are made to the London Stock Exchange and the business media concerning business developments to provide wider dissemination of information. Registered shareholders are sent copies of both the annual report and the interim report.

Going concern

The Directors have concluded that the Company and the Group is considered to be a going concern and as a result of this the consolidated financial statements for the year ended 31 December 2011 have been prepared on the going concern basis. In concluding that it is appropriate to prepare the financial statements on a going concern basis the Board has made assumptions that the current loan facilities and the CULS will be refinanced. Further detail on the accounts preparation basis is provided in note 2 to the financial statements.

Philip Scales

Director

7 March 2012

Each of the Directors, whose names and functions are listed in the Directors' Report confirm that, to the best of each person's knowledge and belief:

·; The financial statements, prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and loss of the Group and Company, and

·; The Chairman's Statement, Investment Adviser and Manager's report and Director's report includes a fair review of the development and performance of the business and the position of the Company and Group together with a description of the principal risks and uncertainties that they face.

By order of the Board,

G P R Black D Lake

We have audited the financial statements of Alpha UK Multi Property Trust PLC for the year ended 31 December 2011 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 cash flow, company statement of changes in equity and the related notes 1 to 29. The financial reporting framework that has been applied in their preparation is applicable law and International Financial reporting 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 Statement set out above, 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. In addition we read all the financial and non-financial information in the chairman's statement, Investment Adviser and Manager's report and the Directors' report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

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 2011 and of the Group's loss for the year then ended;

§ have been properly prepared in accordance with International Financial Reporting Standards 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:

§ proper accounting records have not been kept, or proper 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.

Under the Listing Rules we are required to review:

§ the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review.

Emphasis of matter - Going concern In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 2 to the financial statements, concerning the Company's and the Group's ability to continue as a going concern. The conditions described in note 2 indicate the existence of material uncertainties which may cast significant doubt about the Company's and the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company and the Group was unable to continue as a going concern.

Ernst & Young LLC

Chartered Accountants

Isle of Man

8 March 2012

Consolidated statement of comprehensive income

There are no other items that require disclosure in the consolidated statement of comprehensive income.

Consolidated balance sheet

These financial statements were approved by the Board of Directors on 7 March 2012 and signed on its behalf by:

Consolidated and Company statement of changes in equity

The capital reserve includes the distributable capital reserve.

Consolidated statement of cash flows

Company balance sheet

These financial statements were approved by the Board of Directors on 7 March 2012 and signed on its behalf by:

Company statement of cash flows

1 General information

The Company

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 registered office of the Company is IOMA House, Hope Street, Douglas, Isle of Man, IM1 1AP. 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.

Statement of comprehensive income presentation

The format of the consolidated statement of comprehensive income has been changed from the last annual financial statements in order to present finance income and finance costs more clearly to investors.

Balance sheet presentation

The format of the consolidated balance sheet has been changed from the last annual financial statements in order to present the Net Asset Value of the Group more clearly to investors. In addition, moneys deposited on blocked accounts in connection with Bank borrowings (note 24) and subject to restriction have been reclassified from Cash and cash equivalents to Restricted cash.

Adjusted earnings per share and Adjusted Net asset value

The adjusted earnings per share and adjusted net assets are presented for the first time in these annual financial statements to provide what the Company believes is a more relevant assessment of the Group's earnings and net asset position.

2 Summary of significant accounting policies

Basis of preparation

The consolidated financial statements 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 Company is the pound sterling and there are no foreign exchange transactions.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and also to comply with relevant Isle of Man law.

At 31 December 2011 and up to the date of the signing of these financial statements CHIP (Six) Limited remained in breach of the financial covenants under its Facility Agreement with Nationwide. Subsequent to the year end, Nationwide appointed Law of Property Act receivers to manage the properties of CHIP (Six) Limited, and the Directors of CHIP (Six) Limited decided to take steps to commence a creditors' voluntary winding-up. The Group's other banking facility agreement with Nationwide remains unaffected by this event, and the Group's banking facility agreements with Bank of Scotland with four other subsidiaries of the Company also remain unaffected. The CHIP (Six) Limited facility is not cross collateralised with any other subsidiary of the Company, or the Company itself. Therefore the position of CHIP (Six) Limited does not affect the ability of the Group to continue as a going concern.

As mentioned in the Investment Adviser and Manager's report the Bank of Scotland loan facility and the Nationwide loan facility are due to expire in October 2012, and therefore need refinancing. Bank of Scotland has confirmed it does not currently intend to renew its facility with the Group. Negotiations are currently ongoing with a number of other banks and indicative terms have been received from two of these banks. The proposed terms are not yet finalised and are subject to credit committee approval. As part of the credit committee approval process the banks will undertake due diligence on the Group's cash flow projections and property portfolio and pricing will be finalised at that time.

In forming their view on whether it is appropriate to adopt the going concern basis in preparing the financial statements, the Board have reviewed cash flow projections to December 2014 to assess whether they are able to meet the covenant terms included in the indicative terms received from the banks. The projections include assumptions on the following:

·; new financing will be in place by October 2012 based on the indicative terms received to date

·; rental income based on contracted rental income from tenants secured up until the end of February 2012

·; rental income from some of the void properties becoming occupied based on historic and anticipated vacancy periods

·; void costs and non recoverable costs reducing

·; default rates based on expected and historic patterns

·; interest charges and arrangement fees have been based on existing loan terms and the indicative loan terms proposed by the banks in current negotiations

However, there is uncertainty as to whether these assumptions will be met which could impact the Group's ability to refinance or meet the covenant terms.

The CULS are due for repayment on 30 June 2013, and based on the current share price are not expected to be converted. Cash flow forecasts have been prepared on the assumption that the CULS will be either be repaid after a refinancing or rescheduled with Alpha Tiger Property Trust Limited. Although no formal discussions have been conducted with Alpha Tiger Property Trust Limited, the Board are of the opinion that a suitable solution will be implemented within the fifteen month period remaining to maturity.

The Board has concluded that the circumstances surrounding the refinancing of the bank facilities and the CULS represent material uncertainties that cast significant doubt upon the Group's and the Company's ability to continue as a going concern. However, whilst recognising these uncertainties, the Board has a reasonable expectation that new facilities will be successfully negotiated and that the group can meet the anticipated final terms and the CULS will be refinanced, therefore it is appropriate to prepare the Group and Company financial statements on a going concern basis. The consolidated financial statements do not reflect any adjustments that would have to be made should this not be the case.

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 when 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, transactions 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 loss on ordinary activities after taxation, a loss of £2.9 million (2010: profit of £3.4 million) has been made by the Company.

Revenue recognition

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.

·; Lease incentives granted are recognised as an integral part of the net consideration for the use of the property and are therefore also recognised on the same straight line basis.

·; 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.

ExpensesAll 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 Consolidated 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 consolidated statement of comprehensive 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 latest valuation of the investment property. During the year there has been a change to the methodology used in calculating realised gains and losses. In the prior year it was calculated based on the original cost of the property; there is no impact on the comparative periods as there were no disposals in 2010.

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

Convertible 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 and Company balance sheets, 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 and Company balance sheets comprise cash at bank and short term deposits with an original maturity of three months or less. For the purposes of the Consolidated and Company statements 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 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 depositsTenant 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 is included as a component of operating lease income and recognised on a straight line basis over the lease term.

Investment in subsidiariesThe 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 reportingThe 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 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, tenants' profile, 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 2010 and, to a lesser extent, into 2011. Therefore, in arriving at their estimates of market values as at 31 December 2010 and 31 December 2011, the valuers used their market

knowledge and professional judgement and did not rely solely on historical transactional comparables. In these circumstances, there was a greater degree of uncertainty than which exists in a more active market in estimating the market values of investment property.

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 22.

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% was determined by reference to similar mezzanine lending transactions at that time.

4 Changes and future changes in accounting standards

a) New standards, interpretations and amendments thereof, adopted by the Group

The accounting policies adopted are consistent with those of the previous year, except that the Group has adopted the following new and amended standards and interpretations as of 1 January 2011:

IAS 24 Related Party Transactions (Amendment)

IAS 32 Financial Instruments: Presentation (Amendment)

Improvements to IFRSs (issued May 2010)

IAS 24 Related Party Transactions (Amendment)

The IASB has issued an amendment to IAS 24 that clarifies the definitions of a related party. The new

definitions emphasise a symmetrical view of related party relationships as well as clarifying in which

circumstances persons and key management personnel affect related party relationships of an entity.

Secondly, the amendment introduces an exemption from the general related party disclosure requirements

for transactions with a government and entities that are controlled, jointly controlled or significantly

influenced by the same government as the reporting entity. The adoption of the amendment did not have

any impact on the financial position or performance of the Group but the appropriate disclosures are reflected in note 28.

IAS 32 Financial Instruments: Presentation (Amendment)

The amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights

issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are

given pro rata to all of the existing owners of the same class of an entity's non-derivative equity

instruments, to acquire a fixed number of the entity's own equity instruments for a fixed amount in any

currency. The amendment has had no effect on the financial position or performance of the Group.

Improvements to IFRSs (issued May 2010)

In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to

removing inconsistencies and clarifying wording. There are separate transitional provisions for each

standard. The adoption of the following amendments resulted in changes to accounting policies, but did not

have any impact on the financial position or performance of the Group.

IFRS 7 Financial Instruments - Disclosures: The amendment was intended to simplify the disclosures

provided by reducing the volume of disclosures around collateral held and improving disclosures by

requiring qualitative information to put the quantitative information in context. The group reflects the revised disclosure requirements in note 26.

IAS 1 Presentation of Financial Statements: The amendment clarifies that an option to present an analysis

of each component of other comprehensive income may be included either in the statement of changes in

equity or in the notes to the financial statements. The Group provides this analysis in the Consolidated statement of comprehensive income.

Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact

on the accounting policies, financial position or performance of the Group:

IFRS 3 Business Combinations: (Measurement options available for non-controlling interest (NCI))

IFRS 3 Business Combinations (Contingent consideration arising from business combination

prior to adoption of IFRS 3 (as revised in 2008))

IFRS 3 Business Combinations - (un-replaced and voluntarily replaced share-based payment awards)

IAS 27 Consolidated and Separate Financial Statements

IAS 34 Interim Financial Statements

IFRIC 13 Customer Loyalty Programmes - (determining the fair value of award credits)

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

IAS 32 Financial Instruments: Presentation (Amendment)

b) New standards, interpretations and amendments issued but not yet effective.

Standards issued but not yet effective up to the date of issuance of the Group's financial statements are

listed below. This listing is of standards and interpretations issued which the Group reasonably expects to be

applicable at a future date. The Group intends to adopt those standards when they become effective.

IAS 1 Financial Statement Presentation - Presentation of Items of Other Comprehensive Income

The amendment becomes effective for annual periods beginning on or after 1 July 2012.

IAS 12 Income Taxes - Recovery of Underlying Assets

The amendment clarified the determination of deferred tax in investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on non-depreciable assets measured using the revaluation model in IAS 16 should always be measured on the sale basis of the asset. The amendment becomes effective for annual periods beginning on or after 1 January 2012.

IAS 27 (as revised in 2011) - Subsidiaries, jointly controlled ventures and associates

The amendment becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9 as issued reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to

classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The completion of this project is expected over the course of 2011. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets, but will potentially have no impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the

accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consolidation - Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including 'special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1 January 2013. 

IFRS 12 Disclosure of Involvement with Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial

statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28 Investment in

Associates. These disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance of how to measure fair value under IFRS when fair value is required or permitted. This standard becomes effective for annual periods beginning on or after 1 January 2013.

5 Segmental analysis

Rental income - segmental analysis*

* The rental information presented to the Board is in the form of the annual rent passing at the period end rather than being the rent spread on a straight line basis over the term of the lease in the way prescribed by IAS 17. Consequently the rent passing information presented to the Board is adjusted here to agree with the rental income in the Consolidated statement of comprehensive income.

Property valuation - segmental analysis

The Board considers the sector and region analysis above to be the significant segmental basis for the Group based on property occupational type and location, and is consistent with the information presented to the Board for review.

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 for 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 24. The Board of Directors do not believe it is cost effective for the Group to consider the allocation of these assets and liabilities between the operating segments mentioned above.

6 Income

Rental Income

The Group leases out all of its investment property under operating leases. Leases are typically for terms of 3 to 5 years. At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments:

Other income

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

7 Expenditure

* Investment Adviser and Manager's fee

The Group pays a fee of 1.25% of gross asset value to the Investment Adviser and Manager's. 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. The total fee paid for the year to 31 December 2011 was £1.5 million (31 December 2010: £1.6 million).

8 Finance income

The above interest income arises from financial assets classified as loans and receivables (including cash and cash equivalents) and has been calculated using the effective interest rate method.

9 Net gains and losses on loans and receivables

10 Net gains and losses on financial assets and liabilities at fair value through profit and loss

11 Finance costs

The above interest costs arise on financial liabilities measured at amortised cost using the effective interest rate method. No other losses have been recognised in respect of financial liabilities at amortised cost other than those disclosed above.

12 Total interest income and total interest expense on financial assets and financial liabilities not at fair value through profit and loss

13 Taxation

The Group's tax expense for the year comprises:

Current taxation

The Group is 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.The Group's subsidiary companies are subject to UK non-resident landlord tax at a rate of 20% on their rental profits from UK property. The Group calculates its tax in respect of UK non resident landlord tax on a subsidiary by subsidiary basis; no group reliefs are available for non-resident landlords.

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 2011 the Group had unused tax losses and capital allowances of £12.6 million

(31 December 2010: £11.0 million). During the year no capital allowances were used by the Group.

14 Dividends

The Company paid no dividends during the year. (2010: £nil)

15 Earnings per share

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

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 Board adjusts basic earnings for income and costs which are not of a recurrent nature or which may be more of a capital nature.

The market to market movement of the interest rate hedging instruments are adjusted where the hedged facilities are currently in compliance of their banking covenants and are therefore unlikely to break prior to the expiry of the instrument.

The Group has issued CULS (see note 23) that could potentially dilute basic earnings per share in the future, but have not been included in the calculation of diluted earnings per share because they are antidilutive for the period presented.

16 Net asset value per share

The adjusted net assets are presented to provide what the Board believes is a more relevant assessment of the Group's net asset position. The Board has determined that certain fair value and accounting adjustments may not be realisable in the longer term.

17 Investments in subsidiaries

All of the subsidiary companies are incorporated in the Isle of Man, are wholly owned by Alpha UK Multi Property Trust PLC and are all property holding companies.

All the subsidiary companies as at 31 December 2011 and 2010 had net liabilities, therefore the original cost of the investment held in the parent company has been fully impaired.

18 Investment properties

The fair value of the Group's investment property at the 31 December 2011 has been arrived at on the basis of a valuation carried out at that date by DTZ Debenham Tie Leung, independent valuers not connected with the Group. The valuation, which was carried out in accordance with the RICS Appraisal and Valuation Standards (7th Edition), was arrived at by reference to market evidence of transaction prices for similar properties, together with the valuation techniques set out in note 3. The properties were valued individually.

The approved RICS definition of market value is the "estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."

The Group has pledged investment properties valued at £109.3 million to secure borrowings (note 24).

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

19 Trade and other receivables

Payment terms for rental debtors are typically quarterly in advance.

As at 31 December 2011, receivables with a value of £0.1 million (2010: £0.1 million) were impaired and fully provided. During 2011, £0.1 million was provided in the year (2010: £0.1 million provided).

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value. Note 26 provides an ageing of trade receivables along with details of the provision against receivables during the year.

The Company impairs its intercompany balances receivable where its subsidiaries have net liabilities. As at the 31 December 2011, intercompany balances receivable with a value of £69.3 million (2010: £65.3 million) were impaired and fully provided for. During 2011, £3.9 million was written off in the year (2010: £1.8 million written back). There is no fixed date for the repayment of inter-company loans and interest arising.

20 Interest rate hedging instruments

The Group uses interest rate hedging arrangements to mitigate its exposure to interest rate changes. There has been no change to the hedging arrangements during the year.

The Directors have elected not to apply hedge accounting rules under IAS 39 on the hedging arrangements. Any gains or losses in the fair value of these derivatives are recognised immediately in the Consolidated statement of comprehensive income.

The exposure of the Group to movements in interest rates has been mitigated by the Group's subsidiaries entering into interest rate swaps and an interest rate cap as detailed below.

2011 - Bank of Scotland

The interest rate swap for the amount of £47.0 million entered into by CHIP (Four) Limited (on behalf of itself, CHIP (One) Limited, CHIP (Three) Limited and CHIP (Five) Limited) has the effect of fixing the Group's exposure on certain borrowings from 29 December 2010. The interest rate swap runs until 31 October 2012 and fixes the rate at 2.25% before the margin and mandatory costs. As at 31 December 2011 the market value of this swap was a liability of £0.5 million (31 December 2011: £ 0.9 million).

The interest rate cap for the amount of £47.0 million entered into by CHIP (Four) Limited (on behalf of itself, CHIP (One) Limited, CHIP (Three) Limited and CHIP (Five) Limited) has the effect of capping the Group's exposure on certain borrowings from 31 October 2012. The interest rate cap runs until 31 October 2015 and caps the rate at 5.00% before the margin and mandatory costs. As at 31 December 2011 the market value of this cap was an asset of £0.1 million (31 December 2010 £0.5 million). Subsequent to the year end, the market for interest rate swaps suggested there was little medium term benefit in holding the interest rate cap, and the interest rate cap was sold for £ 48,000.

Nationwide

The interest rate swap for the amount of £8.0 million entered into by CHIP (Two) Limited has the effect of fixing the Group's exposure on certain borrowings from 15 October 2009. The interest rate swap runs until 23 October 2012 and fixes the rate at 2.79% before the margin and mandatory costs. As at 31 December 2011 the market value of this swap was a liability of £0.1 million (31 December 2010: £0.2 million).

The interest rate swap for the amount of £18.0 million entered into by CHIP (Six) Limited has the effect of fixing the Group's exposure on certain borrowings from 12 October 2009. The interest rate swap runs until 1 March 2013 and fixes the rate at 2.79% before the margin and mandatory costs. As at 31 December 2011 the market value of this swap was a liability of £0.4 million (31 December 2010: £0.5 million).

21 Trade and other payables

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

22 Investment Adviser and Manager's 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% or more for the period from 10 August 2010 until 30 June 2013, then the Investment Adviser and Manager will be entitled to 20% of the excess above that target level of return.

No incentive fee is provided for at 31 December 2011 (31 December 2010: £nil) as the target level of return to Shareholders was not achieved.

23 Convertible unsecured loan stock

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 and company balance sheets.

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% was determined by reference to similar mezzanine lending transactions at that time.

The table shows the opening position of the CULS including associated issue costs, followed by the subsequent issue of CULS in satisfaction of interest payments, the accrual for the 18% premium and the amortisation of the associated issue costs.

The CULS bears interest at the rate of 4.75% per annum payable quarterly, in arrears, on a compounded basis on 1 January, 1 April, 1 July and 1 October. 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 £3.10 per share (originally £0.31 per share, subsequently varied to £3.10 per share under the terms of the CULS instrument for the effect of the share consolidation 1 July 2011).

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%.

24 Bank borrowings