Final Results

ALPHA UK MULTI PROPERTY TRUST PLC

(the "Company" or together with its subsidiaries the "Group")

ANNUAL RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2013

Highlights

· Adjusted earnings per ordinary share increased - 12.6 pence for the year ending 31 December 2013 (6.8 pence for the year ending 31 December 2012).

· Net asset value ("NAV") per ordinary share - 224 pence as at 31 December 2013 (248 pence at 31 December 2012).

· Loans refinanced - on 5 December 2013 the Group refinanced its borrowings, entering into new five year loan facilities.

· Five property sales completed above valuation - five properties were sold during the year at a total price of £3.82 million before sales costs; 17% above their most recent valuation.

· New lettings achieved - 81 new lettings and 25 lease renewals achieved during 2013 (representing 13.7% of the estimated rental value ("ERV") of the total portfolio, based on the final achievable annual rent including stepped rent).

· Additional contracted rent attained- £0.3 million per annum of additional passing rent is contracted to start during 2014, directly benefiting cash flow.

· Occupancy improved - the occupancy level measured by ERV stood at 84.6% as at 31 December 2013 compared with 80.8% as at 31 December 2012.

12.6p

Adjusted earnings per share ("EPS") of 12.6 pence.

84.6%

Occupancy rate increased during the year.

224p

NAV of 224 pence per share.

81

81 new lettings during the year.

£3.82 million

Five properties sold at a total of 17% above their most recent valuation.

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.alphamultipropertytrust.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.

Company summary and objectives

Objectives

Alpha UK Multi Property Trust plc ("the Company") was incorporated in the Isle of Man on 10 June 2002 as a closed-ended investment company. The Company and its subsidiaries (together "the Group") invest 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 (2012: £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 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

¹The 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. Further detail can be seen in note 16.

Chairman's statement

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 2013.

Property performance

The active asset management initiatives within the portfolio have assisted in the retention of tenants and the letting of vacant units. The Group has achieved 81 new lettings and 25 lease renewals increasing the occupancy level across the Group by 3.8%, to 84.6% (by ERV) as at 31 December 2013 compared with 80.8% as at 31 December 2012, enhancing the Group's income. Further detail on asset management progress appears in the Investment Adviser and Manager's report.

The Group has made a number of strategic sales during the year including the sale of the Group's only retail asset. In total, properties were sold for a combined price of £3.82 million, which was 17% ahead of the properties' valuation at the time of the sale. Excluding the properties sold during the year, on a like-for-like basis the valuation of the portfolio decreased by £3.4 million (4.1%) from £80.9 million at 31 December 2012 to £77.5 million at 31 December 2013.

Financial performance

Adjusted earnings per share for the year are 12.4 pence (2012: 6.8 pence per share). This improvement in earnings is a result of the increased occupancy level within the Group, the continued active strategy to control expenditure and void costs and the reduction in financing costs during the year.

The adjusted NAV per ordinary share at 31 December 2013 is 224.1 pence (2012: 248.5 pence). This fall is primarily attributable to the revaluation of investment properties during the year mitigated by positive adjusted earnings in the year.

Bank borrowings and financing

On 5 December 2013 the Group entered into new financing arrangements with The Royal Bank of Scotland plc ("RBS"), Europa Mezzanine Finance Sárl ("Europa") and Alpha Real Trust Limited ("ART"); repaying the Group's borrowings with Bank of Scotland, Nationwide and ART's short term loan. These new loan facilities are for a period of five years expiring in December 2018.

During the year, the Group's overall borrowings were reduced by £1.6 million to £64.5 million at 31 December 2013 (2012: £66.1 million). Further details on the Group's long term borrowings are provided in note 26 and within the Investment Adviser and Manager's report.

Convertible Unsecured Loan Securities ("CULS")

In accordance with the subscription agreement with ART of 13 July 2010, the Company has fully redeemed all the outstanding CULS (together with any CULS issued in satisfaction of interest payments and premium) on the redemption date of 30 June 2013.

The preference shares stapled to the CULS were automatically redeemed and the associated options expired without being exercised.

In order to finance the redemption of the CULS the Company entered into a short term loan agreement by which ART provided an unsecured loan to the Company. This loan facility was repaid on 5 December 2013, and a new loan with ART was agreed as part of the Group's refinancing.

Further details on the CULS and the ART loan are provided in notes 25 and 26 to the consolidated financial statements.

Continuation vote

A continuation vote was put to shareholders at the extraordinary general meeting, which was held on 18 November 2013. The shareholders voted for the continuation of the business for the next five years. 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 2019.

Outlook

Alpha UK Multi Property Trust plc enters into a new financial year with continued focus on making further progress in preserving and improving the profile of income from its property portfolio.

With the new long term financing arrangements in place the Board believes that the Group's strategy provides a strong platform from which to rebuild shareholder value over the medium to long term, however the new financing arrangements shall result in increased finance costs. The Board is confident that the Group will be able to service its debt going forward and, with an improving secondary commercial property market, the Group and therefore the shareholders may eventually see an improvement in the net asset value in the medium to long term.

The Board therefore has 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 2013 have been prepared on the going concern basis. Further detail on the basis of preparation of the consolidated financial statements is provided in note 2.

Jonathan Clague

Chairman

6 March 2014

Investment Adviser and Manager's report

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 maintenance 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 Investment Adviser and Manager is also looking to identify opportunities to extend leases and or remove tenant breaks where appropriate value can be unlocked.

· To reduce borrowings through rental surplus and to reduce the LTV ratio through limited strategic sales - disposals may be considered where it is believed that the price net of costs, likely to be achieved, will benefit shareholder returns.

The strategy to concentrate on active asset management initiatives within the portfolio offers tangible opportunities to generate strong positive cash flow and enhanced NAV per share in the future.

Portfolio overview

The portfolio predominantly comprises a well-diversified portfolio of fifty three multi let properties offering 507 leasable units with a total floor area of approximately 163,800 square metres (approximately 1.8 million square feet) all of which are located in the UK. The properties offer attractively priced accommodation for local and regional occupiers.

Of the total portfolio, approximately 84% is invested in light industrial property and 16% is invested in offices.

Tenants have continued to favour shorter term flexible leases and against this background the weighted average lease length is 3.5 years to expiry and 2.2 years to the earlier of the next tenant break or expiry.

Asset management review

There are signs that the occupational market is beginning to improve, and the Group's flexible approach to meeting tenant demand has been successful in reducing the number of vacant units: 81 new lettings and 25 lease renewals were completed during the period, with a further 6 units under offer as at 31 December 2013. Many of the leases incorporate stepped increases in rents and there is an additional £0.3 million per annum of contracted rent due to start during the next twelve months which will benefit the cash flow.

The number of new lettings and tenant retention is encouraging and accordingly notable progress has been made in increasing occupancy. Based on ERV, the occupancy level stood at 84.6% on 31 December 2013 compared to 80.8% as at 31 December 2012.

Tenant insolvency has reduced with 8 tenants, accounting for 1.3% of ERV, becoming insolvent compared with 14 tenants (2.0% of ERV) in the same period last year.

*Final achievable annual rent including stepped rents.

Based on the current total portfolio ERV, there is also the potential for additional rent of £2.0 million per annum assuming the portfolio were to become fully let and income producing.

Property Sales

In keeping with the Board's strategy to undertake limited strategic sales, three light industrial units, which formed part of larger multi-let estates, a part vacant multi-let office and the only retail property owned by the Fund were sold during the year. The investments, with a combined sale price of £3.82 million, sold at 17% above their most recent valuation.

Valuation

The Group's property portfolio was valued at 31 December 2013 by DTZ Debenham Tie Leung Limited at £77.5 million. Properties were sold during the year (as per above) therefore, excluding the properties sold, on a like-for-like basis the valuation of the portfolio decreased by £3.4 million (4.2%) from £80.9 million at 31 December 2012 to £77.5 million at 31 December 2013. The decrease in value occurred during the first three quarters of the year and reflected the current market and occupational conditions. The average capital value of the portfolio is £473 per square metre (£44 per square foot). Following the refinancing, the overall LTV ratio on total borrowings was 83.2% as at 31 December 2013 (78.4 % on total borrowings as at 31 December 2012).

Financing

The Group entered into new financing agreements on the 5 December 2013 as follows:

· A £33.5 million senior loan facility with a five-year term expiring in December 2018 and an initial margin of 3% per annum over LIBOR, with RBS.

· A £20.0 million mezzanine loan facility with a five-year term expiring in December 2018 and a coupon of 11% per annum, with Europa.

· A new £11.5 million unsecured sub-ordinated loan facility with a five-year term expiring in December 2018 and a coupon of 15% per annum with ART.

The proceeds of the new senior, mezzanine and sub-ordinated loans have been applied to fully repay the facilities formerly provided by Bank of Scotland, Nationwide and ART, and to provide for the Company's working capital requirements.

UK Economy

The economic recovery maintained momentum throughout 2013 as the UK economy expanded consistently. Estimates from the Office for National Statistics report an increase in gross domestic product ("GDP") of 0.7% in Q4 2013, taking GDP growth for the year to 2.8%. Compared with GDP growth of 0.3% in 2012, the 2.8% growth during 2013 was a significant improvement and indicates an increasing robustness in the UK economic recovery. The expansion during 2013 was largely driven by household spending however, improvements seen in business activity and exports suggest the emergence of a broader based recovery.

The labour market also continued to improve throughout the year with the unemployment rate falling to 7.1% in November, down from 7.7% at the same time twelve months earlier. The improved employment figures raised the possibility of an interest rate increase should the trend continue. However in January 2014 UK inflation fell below the Bank of England's Monetary Policy Committee's ("MPC") 2% target for the first time in more than four years, supporting the MPC's case for keeping interest rates low.

The consumer prices index fell to 1.9% in January 2014 from 2.0% in December 2013, according to the Office for National Statistics.

Property Commentary

High levels of transactions, particularly in the latter half of the year, helped to drive capital value growth in the UK commercial property market during 2013, however the main focus of investor appetite was concentrated at the prime end of the market with some overflow into good secondary stock.

Robust investor appetite saw transaction levels increase significantly on an annual basis. Total investments in the UK were over £53.5 billion in 2013, an increase of 60% on the previous year, in which investments totalled £33.5 billion.

The significant yield gap between prime and secondary properties which has emerged since 2008, began to narrow in the latter half of the year due to a clear contraction in secondary yields. The gap between prime and secondary yields has reduced marginally but still remains at historically wide levels.

During the year ahead it is believed that the supply of good quality investment stock will remain constrained and continue to lead investors to purchase properties further up the risk curve. This trend and the anticipated volume of transactions could create further falls in yields for good quality secondary property.

Conclusion

There are signs that valuations of secondary commercial property, similar to those owned by the Group, are beginning to improve. The increased occupancy across the portfolio and the improved adjusted earnings are also encouraging. The successful refinancing has provided the Group with the necessary loan stability to start rebuilding shareholder value. However the new mezzanine and sub-ordinated loan facilities carry a higher interest cost than the previous facilities. The Investment Adviser and Manager's goal continues to be to increase the level of rent and occupancy throughout the Portfolio and to build on the asset management success delivered during 2013.

Tom Pissarro

Alpha Real Capital LLP

Investment Adviser and Manager

6 March 2014

Directors

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 and previously, was a non-executive director of Diamond Circle Capital Plc, 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 the 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.

Mark Rattigan, Director - appointed as Director on 17 April 2013

Mark holds a Bachelor of Civil Engineering (Honours) from the University of Sydney and an Investment Management Certificate from the UK Society of Investment Professionals.

He has previously been Chief Operating Officer and Director - Finance and Operations at RREEF (Deutsche Bank's real estate funds management group) based in London. He has over 25 years' experience in real estate, funds management and investment banking. His experience includes 13 years in real estate investment banking with Deutsche Bank, HSBC Investment Bank and Macquarie Bank in both London and Sydney and 5 years as a property development manager at Lend Lease.

Mark is currently Chief Operating Officer of the Company's Investment Adviser and Manager, Alpha Real Capital LLP.

Directors' report

The Directors present herewith the Annual Report and Consolidated Financial Statements of the Group for the year ended 31 December 2013. 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. Its shares are listed on the Official List of the UK Listing Authority and have been traded on the London Stock Exchange since their listing on 4 April 2003.

In accordance with the Listing Rules of the UK Listing Authority, 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.

Business review

A review of the business during the year is contained in the Chairman's statement above.

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. (2012: nil)

Corporate governance

The information fulfilling the requirements of the Corporate Governance Statement can be found in this Directors' report and below, which are 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:

Financial instruments

Information about the use of financial instruments by the Group is given in note 22 to the consolidated financial statements.

Post balance sheet events

Details of significant events since the balance sheet date are contained in note 31 to the consolidated financial statements.

Substantial shareholdings

During the period between 31 December 2013 and 6 March 2014 the Company did not receive any notifications under chapter 5 of the Disclosure and Transparency Rules.

Directors' indemnities

On 4 October 2013, 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.

Company Secretary

Martin Katz served as Secretary throughout the year.

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 2013 have been prepared on the going concern basis. Further detail on the basis of preparation of the financial statements is provided in note 2.

Continuation vote

Shareholders voted for the Group to continue in existence for the next five years as a closed ended investment company at an extraordinary general meeting ("EGM") which was held on 18 November 2013. The continuation vote was proposed as a special resolution and accordingly a majority of 75% of the votes cast at the EGM was required.

Jonathan Clague

Chairman

6 March 2014

Corporate governance statement

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 2013:-

· 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 and in 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, Administrator 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, earnings per share, adjusted net asset value per share, adjusted earnings per share 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 disposals, significant capital expenditure and leasing matters and decisions relating to the Company's financial gearing, the purpose of which is to ensure the long-term success of the Company for its shareholders.

Certain matters relating to the implementation of the Company's strategy are delegated either to the Investment Adviser and Manager or the Administrator but the performance of such delegation by these independent agents is regularly monitored by the Board.

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 Administrator provides a quarterly compliance, company secretarial and regulatory report.

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 to consider any relevant risks as well as 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 the Board and meetings during the year to 31 December 2013:

Messrs Clague, Black, Lake and Scales are non-executive directors and are considered to be independent. Mr Rattigan is a non-executive director of the Company but is also Chief Operating 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. Evaluation of the Board considers the balance of skills, experience, independence and knowledge of the company on the Board, its diversity, including gender, how the Board works together as a unit, and other factors relevant to its effectiveness. 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 applicable accounting standards have been followed subject to any material departures disclosed and explained in the Group's financial statements; 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 understands its responsibility for ensuring that there are sufficient, appropriate and effective systems, procedures, policies and processes for internal control of financial, operational, compliance and risk management matters in place in order to manage the risks which are an inherent part of the business. The process for significant risks is in accordance with Turnbull Guidance.

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

During 2013, the exposures to risk, including the changing environments with the property sector and potential adverse consequences of the global economic downturn, and refinancing risks 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.

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 accountable 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:

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 2013 have been prepared on the going concern basis. Further detail on the basis of preparation of the consolidated financial statements is provided in note 2.

Jonathan Clague

Chairman

6 March 2014

Audit Committee Report

This report details the key activities of the Committee during the year, alongside our principal responsibilities.

Composition of the Committee

The Committee consists of a Chairman (Philip Scales) and other Non-Executive Directors (Geoffrey Black and Donald Lake). All are independent directors with significant financial experience, as detailed in the biographies above. Meetings of the Audit Committee are attended by members of the Investment Adviser and Manager's finance team and the external auditors, Ernst & Young LLC.

The Committee meets regularly during the year in alignment with the financial reporting timetable and during the financial year ended 31 December 2013 they met on four occasions as detailed below.

Role and responsibilities

The purpose of the Committee is to assist the Board in its responsibilities for monitoring the integrity of the Group's financial statements, assessing the effectiveness of the Group's system of internal controls and monitoring the effectiveness, independence, and objectivity of the external auditors.

While the Board as a whole has a duty to act in the best interests of the Company, the Committee has a particular role, acting independently of management, to ensure that the interests of the shareholders are properly protected in relation to financial reporting and the effectiveness of the Group's systems of financial internal controls. The key responsibilities of the Committee are to:

· Monitor the integrity of the Group's financial statements and formal announcements on the Group's financial performance;

· Report to the board on the appropriateness of accounting policies and practices;

· Assess the effectiveness of the Group's system of internal controls and risk-management systems, including reviewing the process for identifying, assessing and reporting all key risks

· Review the scope, effectiveness, independence and objectivity of the audit process;

· Make recommendations to the Board on the appointment, reappointment, remuneration and terms of engagement of the external auditor;

· 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;

· Report to the board on how it has discharged its responsibilities; and

· Oversee the whistleblowing provisions of the Group and to ensure they are operating effectively.

Activities of the committee

Key areas formally discussed and reviewed by the Committee during 2013 include:

· Annual, half yearly and quarterly results, including the related formal announcements.

· Key accounting policies and issues, including property valuation.

· Impact of future financial reporting standards and changes to Corporate Governance Code, Disclosure and Transparency Rules and Listing Rules.

· Review of significant accounting, reporting and judgement matters.

· Internal controls and risk management process.

· Half yearly and annual auditor reports on planning and final opinion containing observations leading to recommendations for control or financial reporting improvement.

· Reviewed the Group's whistleblowing policy and satisfy themselves that this has met FCA rules and good standards of corporate governance.

Significant areas

Valuation of investment properties

In conjunction with the Investment Adviser and Manager the Committee has reviewed the independent valuation report and underlying assumptions and is satisfied that the valuations are appropriate and in accordance with RICS Appraisal and Valuation Standards (8th Edition - March 2012).

Revenue Recognition

The Committee considered the risk of fraud within revenue recognition and was satisfied that there were no issues arising.

Going concern - compliance with long term loan facilities

The Group has entered into new long term loan facilities and the Committee has considered whether the Group could service this debt. The Committee alongside the external auditor has reviewed a five year forecast and is satisfied that the terms of the loan facilities can be satisfied.

Related party transactions outside the normal course of business

The Group entered in a long term loan facility with Alpha Real Trust Limited during the year. The Committee has reviewed the agreement and the terms of the loan and is satisfied that the agreement has been properly documented, authorised and that the terms are commercially applicable.

External audit

The Group's external auditor is Ernst & Young LLC. The Committee is responsible for reviewing the independence and objectivity of the external auditors, and ensuring this is safeguarded notwithstanding any provision of any other services to the Group.

The Board recognises the importance of safeguarding auditor objectivity and has taken the following steps to ensure that auditor independence is not compromised.

· The Committee annually evaluates the external auditor as to its complete independence from the Group and relevant officers of the Group in all material respects and that it is adequately resourced and technically capable to deliver an objective audit to shareholders. Based on this review the Committee recommends to the Board each year the continuation, or removal and replacement, of the external auditor;

· The external auditors provide audit related services such as regulatory and statutory reporting as well as formalities relating to shareholders and other circulars;

· The Committee regularly reviews all fees paid for audit, and all consultancy fees, with a view to assessing reasonableness of fees, value of delivery, and any independence issues that may have arisen or may potentially arise in the future;

· The external auditors' report to the directors and the Committee confirming their independence in accordance with auditing standards. In addition to the steps taken by the Board to safeguard auditor objectivity, Ernst & Young LLC rotates audit partners every five years.

In addition, the Committee will oversee the tender of the external audit within the next year in line with The Code requirements. The successful firm shall perform the external audit for the year ending 31 December 2014.

The appointment of the external auditor is subject to shareholder approval each year at the Annual General Meeting, giving shareholders the opportunity to accept or reject the Board's recommendation.

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, at the regular Committee meetings

As shown in note 8 to the financial statements, total fees payable to Ernst & Young LLC in the current financial year amounted to £111,000, of which £43,000 was for non-audit related services and £68,000 was for audit services.

Directors' statement pursuant to the Disclosure and Transparency Rules

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 Group and Company financial statements, which have been prepared, in accordance with IFRSs, 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,

Jonathan Clague Phillip Scales

Director Director

Independent auditor's report

We have audited the Group financial statements of Alpha UK Multi Property Trust PLC for the year ended 31 December 2013 which comprise the consolidated statement of comprehensive income, consolidated balance sheet, consolidated and Company statement of changes in equity, consolidated statement of cash flows, Company balance sheet, Company statement of cash flows and the related notes 1 to 31. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards.

This report, including our opinions is made solely to the Company's members, as a body, in accordance with 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 on pages 12 and 13, 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 and the Company'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 Annual Report and Consolidated Financial Statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. 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 Group's and the Company's affairs as at 31 December 2013 and of the Group's loss for the year then end 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 1931-2004.

Our assessment of risks of material misstatement

We identified the following risks of material misstatement which had the greatest effect on the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team:

§ Valuation of investment properties

§ Revenue recognition

§ Going concern - compliance with terms and conditions of newly implemented loan facilities

In prior years the Group has had going concern issues due to the expiry of the long term loan facilities and the impending continuation votes. The Group has now implemented new long term loan facilities and the shareholders have voted to extend the life of the Company until at least December 2018. If the Group fails to adhere to the terms and conditions of these new loan facilities or breaches loan covenants, there is the risk that the Group may be forced to sell the properties to repay the loans or lose control of the properties.

§ Related party transactions outside the normal course of business.

The Company entered into a loan transaction with a related party during the year.

Our application of materiality

When establishing our overall audit strategy, we determined a magnitude of uncorrected misstatements that we judged would be material for the financial statements as a whole. We determined materiality for the Group to be £184,000, which is approximately 1% of net assets. This provided the basis for determining the nature, timing and extent of our audit procedures, and identifying and assessing the risk of material misstatement.

On the basis of our risk assessments, together with our assessment of the Group's overall control environment, our judgement was that overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Group should be 50% of materiality, namely £92,000. Our objective in adopting this approach was to ensure that the total uncorrected and undetected audit differences did not exceed our materiality of £184,000 for the financial statements as a whole.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £9,000 as well as differences below that threshold that, in our view warranted reporting on qualitative grounds.

An overview of the scope of our audit

In assessing the risk of material misstatement to the Group financial statements, our Group audit scope focused on parent Company as well as the active property holding subsidiaries which all operate from one location in the Isle of Man.

Our response to the risks of material misstatement identified above included the following procedures:

Valuation of investment properties

How the scope of our audit addressed this area of focus:

§ we have agreed all the year end property valuations to the valuation reports provided by the appointed external valuer. For a sample of properties we identified and challenged those assumptions that had the greatest impact on property valuations and re performed calculations made by the directors and external valuers in arriving at the year end valuations recorded in the financial statements. We assessed the competence and capability of the external experts engaged by the Company.

§ we have ensured that the valuation disclosures regarding investment properties have been adequately made.

Revenue recognition

How the scope of our audit addressed this area of focus:

§ we have read all the Directors' meeting minutes which discuss rental income, carried out yield analysis on all properties owned, read all property manager meeting minutes and agreed rent receivable and rent received in advance to the property manager reports together with agreeing a sample of new rental amounts to underlying lease agreements;

§ we have audited the recoverability of the year end debtors position and the impairment provisions made during the year together with carrying out cut off testing; and

§ we have agreed the accounting treatment of lease incentives to ensure that all rental income has been recognised on an appropriate basis.

Going concern - compliance with terms and conditions of newly implemented loan facilities

How the scope of our audit addressed this area of focus:

§ we have agreed the drawdown of the new loan facilities to the signed loan agreements in place and the arrangement fees incurred, to supporting documentation;

§ we have ensured the full repayment of the previous loans;

§ we have identified the loan covenants in place as per the new loan agreements and then recalculated these covenants to ensure no breaches have occurred.

§ we have obtained a copy of the cash flow forecasts and ensured that the directors' assumptions used in their preparation are appropriate, valid and reasonable as well as to demonstrate that the Group can service the new loans and adhere to the terms and conditions there of (including sensitivity assessment of these cash flows on the loan covenants):

§ we have obtained a copy of the directors' assessment of the Group's and the Company's ability to continues as a going concern and reviewed the assumptions made in reaching the conclusion; and

§ we have obtained confirmation that the shareholders have voted to extend the life of the Company to at least December 2018.

Related party transactions outside the normal course of business

Our audit addressed the risk arising from the loan transaction with a related party as follows;

§ we have obtained signed copies of the related party loans between the Company and the related party and have read correspondence between these entities;

§ we have read correspondence between the related party and the directors/investment manager;

§ we have obtained evidence that the loans received have been appropriately authorised by the Board of Directors; and

§ we have ensured that these transactions have been adequately disclosed in the financial statements as related party transactions in accordance with IAS 24.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:

§ materially inconsistent with the information in the audited financial statements; or

§ apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or

§ is otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed.

Under the Companies Act 1931-2004 we are required 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.

Under the Listing Rules we are required to review:

§ the directors' statement, set out on page 10, in relation to going concern; and

§ 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.

Alan Thomas Lloyd-Jones (Responsible Individual)

for and on behalf of Ernst & Young LLC, Statutory Auditor

Isle of Man

6 March 2014

Consolidated statement of comprehensive income

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

The accompanying notes below are an integral part of this statement.

Consolidated balance sheet

These financial statements were approved by the Board of Directors on 6 March 2014 and signed on its behalf by:

The accompanying notes below are an integral part of this statement.

Consolidated and Company statement of changes in equity

The accompanying notes below are an integral part of this statement.

Consolidated statement of cash flows

The accompanying notes below are an integral part of this statement

*31 December 2012 cash flow statement has been re-presented as if CHIP (Six) Ltd has been discontinued from the start of the comparative period.

Company balance sheet

These financial statements were approved by the Board of Directors on 6 March 2014 and signed on its behalf by:

The accompanying notes below are an integral part of this statement.

Company statement of cash flows

The accompanying notes below are an integral part of this statement.

Notes to the financial statements

For the year ended 31 December 2013

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.

Balance sheet presentation

The format of the consolidated balance sheet has continued to be presented on the same basis as the last annual consolidated financial statements.

Adjusted earnings per share and adjusted net asset value

The adjusted earnings per share and adjusted net asset value are presented in the annual financial statements to provide what the Company believes is a more relevant assessment of the Group's earnings and net asset value 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 Group's financial performance does not suffer materially from seasonal fluctuations.

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.

The Company redeemed all the outstanding CULS (together with any CULS issued in satisfaction of interest payments) on the redemption date of 30 June 2013 in full at par plus the payment of the premium. In order to finance the redemption of the CULS the Company entered into a loan agreement in which Alpha Real Trust Limited ("ART") provided an unsecured loan to the Company. This loan facility was repaid on 5 December 2013, and a new loan with ART was agreed as part of the Group's refinancing.

The Bank of Scotland and the Nationwide loan facilities were repaid on 5 December 2013. The Company and Group have entered into new financing agreements as follows:

· a £33.5 million senior loan facility with a five-year term expiring in December 2018 at an initial margin of 3% per annum over LIBOR, with Royal Bank of Scotland PLC ("RBS"); and

· a £20.0 million mezzanine loan facility with a five-year term expiring in December 2018 at a coupon of 11% per annum, with Europa Mezzanine Finance SaRL ("Europa").

· a £11.5 million unsecured loan facility with a five-year term expiring in December 2018 at a coupon of 15% per annum, with ART.

On 27 January 2014, the Group entered into an interest rate swap agreement whereby interest on £25.1 million of the debt would be fixed at 2.0225% until 5 December 2018.

The Company believes this refinancing will establish the Group on a stable footing to continue the asset management initiatives. It is hoped this will lead to the commencement of the recovery of shareholder value in the Company.

In forming their view on whether it is appropriate to adopt the going concern basis in preparing the consolidated financial statements, the Board have reviewed cash flow projections to December 2018 to assess whether they continue to be able to meet its liabilities as they fall due and also meet the covenant terms of its loans. The projections include the following key assumptions:

· rental income based on contracted rental income from tenants secured as at 31 December 2013.

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

· void costs and non recoverable costs based on the expected occupancy rate.

· default rates based on expected and historic patterns.

· interest charges and arrangement fees have been based on new loan terms.

· current property valuations apply, and there is no valuation change assumed from occupancy or market movement.

The assessment of the cash flow projections shows that the Group is able to meet its liabilities as they fall due and comply with the covenants of its loan facilities.

Along with the above assessment of the cash flow projections, the refinancing of the loan facilities for five years, plus the approval by shareholders of the continuation of the Company for another five years, the Board considers it appropriate to prepare the Group and Company financial statements on a going concern basis.

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, £2.1 million loss (2012: £4.4 million loss) 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. All other expenses are charged to the consolidated statement of comprehensive income.

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 and CHIP (Five) 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.

Convertible unsecured loan stock ("CULS")

Convertible unsecured loan stock was assessed in accordance with IAS 32 Financial Instruments: Presentation to determine whether the conversion element met the fixed-for-fixed criterion. Where this was met, the instrument was accounted for as a compound financial instrument with appropriate presentation of the liability and equity components. Where the fixed-for-fixed criterion was not met, the conversion element was accounted for separately as an embedded derivative which was measured at fair value through profit or loss. In the consolidated and Company balance sheets, this was 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 three operating segments which are carried out in eight geographical locations, as detailed in note 6.

Derivatives and hedging

The Group may use interest rate hedging 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 of estimation or 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

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Group ensures the use of suitable qualified external valuers to value the investment properties and determine their fair value.

Investment property is initially recognised at purchase cost plus directly attributable acquisition expenses. Investment properties are carried at a revalued amount which is stated at its fair value as determined on an open market basis as at the reporting date. The fair value of investment property is based on valuation by an independent valuer who holds a recognised and relevant professional qualification and who has recent experience of the location and category of the investment property being valued.

The fair value of investment property generally involves consideration of:

· Market evidence on comparable transactions for similar properties;

· The actual current market for that type of property in that type of location at the reporting

date and current market expectations;

· Rental income from leases and market expectations regarding possible future lease terms;

· Hypothetical sellers and buyers, who are reasonably informed about the current market

and who are motivated, but not compelled, to transact in that market on an arm's length

basis; and

· Investor expectations on matters such as future enhancement of rental income or market

conditions.

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 24.

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 IFRS and IFRIC as of 1 January 2013. The nature and the impact of each new standards and amendments are described below.

Other amendments to certain standards apply for the first time in 2013. However, they do not impact the annual consolidated financial statements of the Group.

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. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 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 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary

Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using

proportionate consolidation. Instead, joint arrangements that meet the definition of a Joint Venture are now

accounted for using the equity method. Otherwise joint arrangements are accounted for by recognizing the

group's share of the arrangements assets and liabilities.

IFRS 12 Disclosure of Interests in 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. These

disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities.

A number of new disclosures are also required including:

- a requirement to disclose judgements made in determining if the Group controls, has joint control or significant influence over an entity

- a requirement to disclose judgements made in determining the type of joint arrangement in which the Group has an interest

These standards become effective for annual periods beginning on or after 1 January 2013. As expected the adoption of IFRS 10, IFS 11 & IFRS 12 did not have material impact on the Group's financial statements in the year.

IFRS 13 - Fair Value Measurement

The standard requires additional disclosures about the definition of fair value. IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. IFRS 13 seeks to increase consistency and comparability in fair value measurements and related disclosures through a 'fair value hierarchy'. The hierarchy categorises the inputs used in valuation techniques into three levels. The hierarchy gives the highest priority to (unadjusted) quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure fair value are categorised into different levels of the fair value hierarchy, the fair value measurement is categorised in its entirety in the level of the lowest level input that is significant to the entire measurement (based on the application of judgement). The adoption of IFRS 13 did have an impact on the disclosures of investment properties as noted in note 19. The Group has considered the specific requirements relating to highest and best use, valuation premise, and principal (or most advantageous) market. The resulting calculation under IFRS13 affected the principles that the Group uses to assess the fair value, but the assessment of fair value under IFRS13 has not materially changed the fair values recognised but has increased the disclosure of assumptions used in the valuation process as set out in note 19.

(b) Standards 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 are those that the Group reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the IASB's work on the replacement of IAS 39 and applies to the classification and measurement of financial assets and liabilities as defined in IAS 39 and the application of hedge accounting. The standard was initially effective for annual periods beginning on or after 1 January 2013 but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. This date has now been removed to provide sufficient time for preparers of financial statements to make the transition to the new requirements and a new effective date will be announced upon completion of the IFRS 9 project. During 2013 the IASB issued an updated version of IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (IFRS 9 (2013)), which includes new hedge accounting requirements and some related amendments to IFRS 7 Financial Instruments: Disclosures. The IASB still has to complete the impairment phase of the project. The Group will assess the impact of IFRS 9 when the final standard including all phases is issued.

5 Discontinued operations

A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale and:

- represents a separate major line of business or geographical area of operations; or

- is a part of a single-coordinated plan to dispose of a separate major line of business or geographical area of operations.

Prior year profit or loss from discontinued operations is presented in a single amount in the consolidated of comprehensive income. This amount comprises the post tax profit or loss of discontinued operations (see note 21). The relevant notes for the prior period have been re-stated to assist comparison.

The gain on deemed disposal is calculated as the difference between proceeds received (£nil) and the net liabilities of CHIP (Six) Limited at the date of the deemed disposal.

6 Segmental analysis

Rental income - segmental analysis*

* The rental information presented to the Board is in the form of the annual rent passing at the year 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. The Board believes that the information is presented more clearly to investors in respect of 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 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. Long term borrowings are reviewed on a facility basis as per note 26. 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.

7 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.

8 Expenditure

9 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.

10 Net gains and losses on loans and receivables

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

12 Finance costs

The above interest costs on borrowings 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.

13 Total interest income and total interest expense on financial assets and financial liabilities not at fair

value through profit and loss

14 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 2013, the Group had unused tax losses and capital allowances of £8.9 million

(31 December 2012: £9.5 million).

As reported in the annual report and consolidated financial statements for the year ended 31 December 2012, the Group was in discussion with HMRC over certain claims of intergroup interest as deductible expense. HMRC has completed its enquiries into the Group subsidiaries for the tax years ending 5 April 2011. These years are now closed with no amendments.

 15 Dividends

The Company paid no dividends during the year. (2012: £nil)

16 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 had issued CULS (see note 25) that could have potentially diluted the earnings per share in the future, but were not included in the calculation of diluted earnings per share because they are anti-dilutive for the period presented. The preference shares attached with the CULS have automatically been redeemed.

The CULS matured on 30 June 2013 and were repaid in full on that date.

16 17 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.

16 18 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 2013 and 2012 had net liabilities, therefore the original cost of the investment held in the parent company has been fully impaired.

As at 31 December 2013, the Company's subsidiaries are CHIP (one) Limited, CHIP (Two) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited.

18 19 Investment properties

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of the Group's investment property at 31 December 2013 and 31 December 2012 has been arrived at on the basis of 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 Royal Institution of Chartered Surveyors ("The Red Book") Appraisal and Valuation Standards (8th Edition 31 March 2012), was arrived at by reference to market evidence of transaction prices for similar properties, together with valuation techniques consistent with those used in the 31 December 2012 valuation. The valuation model is based on comparable market evidence derived from observable market data, derived from an active and transparent market adjusted with certain unobservable inputs as disclosed below. The properties were valued individually. These valuation models are consistent with the principles in IFRS 13.

Valuations are based on what is determined to be the highest and best use. When considering the highest and best use a valuer will consider, on a property by property basis, the highest value which will include its actual and potential uses given current market conditions. Where the highest and best use differs from the existing use, the valuer will consider the cost and the likelihood of achieving and implementing this change in arriving at its valuation.

Fair value methodology

Under IFRS 13, companies now must disclose fair values according to a "fair value hierarchy," which

categorises the inputs used in valuation techniques into three levels. The hierarchy gives the highest priority

(Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to

unobservable inputs.

The different levels of the fair value hierarchy are explained below:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date.

Level 2 - Use of a model with inputs (other than quoted prices included within Level 1) that are directly or indirectly observable market data.

Level 3 - Use of a model with inputs that are not based on observable data.

£'000 Level 1 Level 2 Level 3

Total investment property - - 77,525

There are no transfers between the hierarchy levels during the year.

The Group has pledged investment properties valued at £77.5 million at 31 December 2013 to secure borrowings (note 26).

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