Final Results

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 2012:

Highlights

·;      Adjusted earnings per ordinary share from continuing activities - 6.8 pence for the year ending 31 December 2012 (0.4 pence for the year ending 31 December 2011*).

·; New lettings - 80 new lettings and 35 lease renewals achieved during the twelve months to 31 December 2012, (represents 16.9% of the estimated rental value of the total portfolio, based on the final achievable annual rent including stepped rent).

·; Additional contracted rent - £0.6 million per annum of additional passing rent is contracted to start during the twelve months to 31 December 2013, benefiting cash flow.

·; Occupancy improved - the occupancy level by estimated rental value ("ERV") stood at 80.8% as at 31 December 2012 (78.9% as at 31 December 2011*).

·; Adjusted net asset value per ordinary share - 248 pence as at 31 December 2012 (311 pence at 31 December 2011).

·; Borrowings reduced - bank borrowings reduced by £1.2 million during the twelve months to 31 December 2012. The Group is currently in active negotiations to refinance its loan facilities within the current bank granted extensions to 31 March 2013 and 30 April 2013.

·; Loan to value ("LTV") - loan to value ratio on secured borrowings of 71.3% as at 31 December 2012 (68.1% as at 31 December 2011*).

6.8p

Adjusted earnings per share ("EPS") of 6.8 pence

80

80 new lettings during the year

80.8%

Occupancy rate increased during the year

£1.2m

Bank borrowings reduced by £1.2 million over the year

*All references within the Highlights (unless otherwise stated) exclude CHIP (Six) Limited, a subsidiary of Alpha UK Multi Property Trust Plc. In compliance with IFRS5, the 2011 Group comparatives have been restated, as CHIP (Six) Limited's discontinued operations have been removed from continuing activities.

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.

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. (2011: £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.

* In compliance with IFRS5, the 2011 Group comparatives have been restated as Chip (Six) Limited's discontinued operations have been removed from continuing operations.

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 2012.

Property performance

Focus throughout the year has remained on active asset management within the portfolio with particular emphasis on the retention of tenants and the letting of vacant units to enhance the Group's income. In this challenging market the Group has achieved 80 new lettings and 35 lease renewals increasing occupancy levels by ERV across the Group by 1.9% to 80.8% as at 31 December 2012 compared with 78.9% as at 31 December 2011. Further detail on asset management progress appears in the Investment Adviser and Manager's report.

In the context of a challenging market environment, the portfolio valuation on a like for like basis fell by £5.4 million (6.1%) to £84.3 million at 31 December 2012. A full evaluation of the Group's property portfolio performance can be found in the Investment Adviser and Manager's report.

Financial performance

Adjusted earnings per share were 6.8 pence during the year (Dec 2011*: 0.4 pence per share). This significant improvement in earnings is a result of the increase in the occupancy level within the Group and continued active strategy to control expenditure and void costs.

The adjusted NAV per ordinary share at 31 December 2012 is 248.5 pence (2011: 311 pence). This fall is attributable to the revaluation of investment properties during the year.

Bank borrowings and financing

The Group is currently in discussions with existing lenders, Bank of Scotland and Nationwide Building Society, and alternative banks and providers of capital regarding the refinancing of the Group's loan facilities. While negotiations continue, the Group's facility with Nationwide in respect of the Company's wholly owned subsidiary, CHIP (Two) Limited has been extended to 31 March 2013 and the Group's facility with Bank of Scotland in respect of the Company's wholly owned subsidiaries, CHIP (One) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited has been extended to 30 April 2013.

During the year Group debt was reduced by £1.2 million to £60.1 million at 31 December 2012 (December 2011*: £61.3 million). Further details on the Group's bank borrowings are provided in note 26 and within the Investment and Adviser and Manager's report.

Convertible Unsecured Loan Securities ("CULS")

The CULS are due to mature on 30 June 2013, and based on the current share price are not expected to be converted into equity, hence would be due for repayment. Although there are currently insufficient cash reserves to repay the CULS, the Board has reasonable expectations that suitable re-financing arrangements will be implemented within the remaining period to maturity. Further details on the CULS are provided in note 25 to the financial statements.

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.

CHIP (Six) Limited

There have been no further developments since the interim management statement on 10 May 2012 when the appointment of Mazars LLP as liquidator was reported. 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. CHIP (Six) Limited investment properties are expected to be liquidated in the first half of 2013.

*In compliance with IFRS5, the 2011 Group comparatives have been restated as CHIP (Six) Limited's

 discontinued operations have been removed from continuing operations

The Board

I would like to welcome Mark Rattigan, who joined the board in May 2012, as an alternate director to Phillip Rose. Mark is the Chief Operating Officer of Alpha Real Capital LLP, the Investment Adviser and Manager, and brings a wealth of commercial experience which will be of great value to the Group. His biography is outlined later in the annual report.

Outlook

Alpha UK Multi Property Trust Plc enters into a new financial year clear on its priorities. Our aim is to secure refinancing of its loan facilities and make further progress in preserving and improving the profile of income from its property portfolio.

Subject to the satisfactory conclusion of the refinancing negotiations, the Board believes that the Group's strategy shall provide a strong platform from which to rebuild shareholder value over the medium term.

Jonathan Clague

Chairman

6 March 2013

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 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 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 undertake limited strategic sales - disposals may be considered where it is believed that the price likely to be achieved will benefit shareholder returns.

·; To reduce borrowings through rental surplus and to reduce the LTV ratio.

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

Portfolio overview

*In compliance with IFRS5, the 2011 Group comparatives have been restated as CHIP (Six) Limited´s

 discontinued operations have been removed from continuing operations.

The portfolio predominantly comprises a well diversified portfolio of 55 multi let properties offering 531 leasable units with a total floor area of approximately 169,700 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 79% is invested in light industrial property, 20% in offices and 1% retail in terms of capital value.

Tenants have continued to favour shorter term flexible leases and against this background the weighted average lease length is 3.7 years to expiry and 2.3 years to the next tenant break or lease expiry.

Asset management review

The occupational market has continued to be challenging, however, the Group's flexible approach to meeting tenant demand has been successful in reducing the number of vacant units: 80 new lettings and 35 lease renewals were completed during the year, with a further 11 units under offer as at 31 December 2012. Many of the leases incorporate stepped increases in rents and there is an additional £0.6 million per annum of contracted rent due to start during the next 12 months which will benefit cash flow.

In addition tenant retention has improved with 52 tenants (6.7% of ERV) exercising a lease break or vacating at lease end, compared with 61 tenants (8.0% of ERV) during the same period last year. 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 80.8% as at 31 December 2012 compared to 78.9% as at 31 December 2011.

Tenant insolvency has stabilised with a similar number of tenants, 14 (2.0% of "ERV"), becoming insolvent as in the same period last year.

Based on the current total portfolio ERV, there is also a potential additional rent of £2.6 million per annum assuming the portfolio were to become fully let and income producing

*Final achievable annual rent including stepped rents.

Valuation

On a like for like basis, the independent valuation of the portfolio, by DTZ as at 31 December 2012, has decreased by £5.4 million (6.1%) to £84.3 million, reflecting current market and occupational conditions. The average capital value of the portfolio is £497 per square metre (£46 per square foot). The overall LTV ratio on secured bank borrowing was 71.3% as at 31 December 2012 (68.1% 31 December 2011*)

Financing

CHIP (Two) Limited

The loan facility of £8.65 million provided by Nationwide Building Society in respect of the Company's wholly owned subsidiary, CHIP (Two) Limited which was due to expire on 23 January 2013 has been extended to 31 March 2013. The facility is non-recourse to the Company. Discussions with Nationwide Building Society and alternative banks and providers of capital are continuing in order to pursue a further extension to, or refinancing of, this loan facility.

*In compliance with IFRS5, the 2011 Group comparatives have been restated as CHIP (Six) Limited´s

 discontinued operations have been removed from continuing operations.

CHIP (One) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited

The loan facility of £51.4 million provided by Bank of Scotland in respect of the Company's wholly owned subsidiaries, CHIP (One) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited expired on 31 January 2013. The loan facility with Bank of Scotland has been extended to 30 April 2013. The facility is non-recourse to the Company. Discussions with the Bank of Scotland and alternative banks and providers of capital are continuing in order to pursue a further extension to, or refinancing of, this loan facility.

The Investment Adviser and Manager continues to pursue a refinancing package on behalf of the Group in order to provide a stable financing platform from which the strategy to deliver shareholder value can be executed.

UK Economy

A gradual recovery in GDP growth is expected during 2013 with Oxford Economics anticipating UK GDP output to expand by 1% during the year ahead, with further growth of 2.1% predicted for 2014. Positive contributions from temporary factors such as the Olympic and Paralympic Games helped boost growth for the UK economy during 2012, with the UK exiting technical recession with 0.9% growth between the second and third quarter of 2012. However, following the dissipation of these short-lived positive effects GDP output contracted by 0.3% during the fourth quarter of the year.

UK consumer spending staged a modest recovery in 2012 as the rate of inflation declined and employment growth improved. Consumer spending is anticipated to rally in the year ahead as the combined benefits of low inflation and a resilient labour market help boost purchasing power.

Commercial property overview

Capital values for prime property assets stabilised during the twelve months ending 31 December 2012. By contrast secondary (which best categorises the Group's property portfolio) values have continued to weaken during the year.

Investment volumes were subdued throughout 2012. Limited investor appetite for property assets outside Central London continued as investors remained cautious and focused on prime buildings in relatively liquid transaction markets. Activity in the secondary sector remained at a low ebb with vendors reluctant to sell to investors typically applying significant discounts for the perceived increase in risk.

Occupational demand within the broader light industrial sector improved during the latter part of 2012 as occupiers sought to take advantage of current market conditions and pushed take-up levels of industrial space to their highest level since Q2 2010. Industrial rents have remained broadly stable during the previous twelve months however they are forecast to grow, on average, by 1.3% per annum until 2017, as limited supply and pipeline stock meet increased occupier demand.

Whilst subdued domestic growth continues it is anticipated that investors will continue to favour low risk assets during 2013. It remains to be seen whether parts of the secondary market, with the potential for active asset management, hold increased appeal for investors in the year ahead.

Conclusion

Despite the current challenging market conditions, good progress continues to be made in retaining tenants and letting up the vacant properties. Accordingly, both overall occupancy levels and adjusted earnings per share have improved. Not withstanding this, the investment market for the type of secondary assets owned by the Group remains subdued and there is a risk of further downward pressure on valuations.

The immediate goal remains to conclude the refinancing programme for the Group, and continue to build on the asset management success delivered during the previous twelve months.

Tom Pissarro

Alpha Real Capital LLP

Investment Adviser and Manager

7 March 2013

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, 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 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.

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, and. is also a member of the Management Committee of the Hermes Property Unit Trust and its Audit Committee.

Mark Rattigan, Alternate Director to Phillip Rose (Appointed as Alternate Director on 3 May 2012)

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 Capital LLP.

Directors' report

The Directors present herewith the Annual Report and Consolidated Financial Statements of the Group for the year ended 31 December 2012. The Corporate Governance Statement stated later in this announcement 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. The Company's shares are traded on the London Stock Exchange.

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 on later in this announcement.

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. (2011: nil)

Corporate governance

The information fulfilling the requirements of the Corporate Governance Statement can be found in this

Directors' report and later in this announcement, 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 later in this announcement. 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 financial statements.

Post balance sheet events

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

Substantial shareholdings

During the period between 31 December 2012 and 7 March 2013 the Company did not receive any notifications under chapter 5 of the Disclosure and Transparency Rules. Property Investment Portfolio plc has completed the sale of the majority of its assets on 3 December 2012 to Alpha Real Trust Limited (ART).

Substantial shareholdings

Directors' indemnities

On 4 October 2012, 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 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 2012 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.

Continuation vote

Shareholders will be given the opportunity to vote for the Group to continue in existence for the next three years as a closed ended investment company at the annual general meeting ("AGM") which is expected to be held in 2013. The continuation vote shall be proposed as an ordinary resolution and accordingly will require a simple majority of votes casts at the AGM to be passed.

Jonathan Clague

Chairman

7 March 2013

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 2012:-

·; 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, 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 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 2012:

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 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 2012, 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.

Audit Committee report

The Audit Committee members are Philip Scales (Chairman of the Audit Committee), Donald Lake and Geoffrey Black. The Audit Committee meets not less than three times 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, at the regular Audit Committee meetings. Ernst & Young has provided consultancy services in respect of refinancing the loan facilities. The Company was charged £43k for this service.

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 a regular dialogue 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 2012 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, and the continuation vote will be approved by shareholders. Further detail on the accounts preparation basis is provided in note 2 to the financial statements.

Jonathan Clague

Chairman

7 March 2013

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 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,

Independent auditor's report

We were engaged to audit the financial statements of Alpha UK Multi Property Trust PLC for the year ended 31 December 2012 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 31. 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 later in this announcement, 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 consolidated 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. Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

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 annual report and consolidated financial statements 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.

Basis for disclaimer of opinion on financial statements

The evidence available to us to confirm the appropriateness of preparing the financial statements on the going concern basis was limited for the reasons explained below. The assumptions made by the directors in forming their conclusions on going concern are set out in note 2, basis of preparation, to the financial statements. In relation to those assumptions, we have been unable to obtain sufficient appropriate evidence that the company and the group are able to:

a) refinance long term loan facilities that will mature within the next two months and refinance the convertible unsecured loan stock that will be due for repayment on 30 June 2013; and

b) achieve a successful outcome of the continuation vote scheduled for mid 2013.

As a result of this we have been unable to obtain sufficient appropriate audit evidence concerning the ability of the company and the group to continue as a going concern.

Disclaimer of opinion in the financial statements

Because of the significance of the matter described in the Basis for Disclaimer of Opinion on Financial Statements paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly we do not express an opinion on the financial statements.

Matters on which we are required to report by exceptionArising from the limitation of our work referred to above:

·; We have not obtained all the information and explanations that we considered necessary for the purpose of our audit.

We have nothing to report in respect of the following;

Under the Companies Acts 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.

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.

Alan Thomas Lloyd-Jones

For and on behalf of

Ernst & Young LLC

Chartered Accountants

Douglas

Isle of Man

7 March 2013

Consolidated statement of comprehensive income

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

The accompanying notes are outlined later in this announcement are an integral part of this statement.

* Restated to reclassify the results of CHIP (Six) Limited from continuing operations to discontinued operations.

Consolidated balance sheet

These financial statements were approved by the Board of Directors on 7 March 2013 and signed on its behalf by:

The accompanying notes later in this announcement are an integral part of this statement.

Consolidated and Company statement of changes in equity

Consolidated statement of cash flows

The accompanying notes later in this announcement are an integral part of this statement.

*31 Dec 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 7 March 2013 and signed on its behalf by:

Company statement of cash flows

Notes to the financial statements

For the year ended 31 December 2012

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 restated in order to present discontinued and continuing operations.

Balance sheet presentation

The format of the consolidated balance sheet has continued to be presented on the same basis as the last annual financial statements in order to present the Net Asset Value of the Group more clearly to investors.

Adjusted earnings per share and Adjusted Net asset value

The adjusted earnings per share and adjusted net assets 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 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. As previously announced in the 2011 annual report and accounts, 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 a result, CHIP (Six) Limited has been recognised to have left the Group for consolidation purposes. The comparative consolidated statement of comprehensive income for the year ended 31 December 2011 has been restated to show the results of the continuing and discontinued operations.

The CULS are due for repayment on 30 June 2013, and based on the current share price are not expected to be converted into equity. Cash flow forecasts have been prepared on the assumption that the CULS will renegotiated with Alpha Real Trust Limited (formerly Alpha Tiger Property Trust Limited). The Board is of opinion that a successful solution will be implemented within the three month period remaining to maturity, although no formal discussions have been conducted.

As mentioned in the Investment Adviser and Manager's report the Bank of Scotland loan facility and the Nationwide loan facility expired in October 2012, and therefore need refinancing. The Group's facility with Nationwide in respect of the Company's wholly owned subsidiary, CHIP (Two) Limited has been extended to 31 March 2013 and the Group's facility with Bank of Scotland in respect of Company wholly owned subsidiaries, CHIP (One) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited has been extended to 30 April 2013. Negotiations are currently ongoing with Bank of Scotland, Nationwide and a number of other banks. Indicative terms have been received from one bank to cover part of the loan but these 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 consolidated financial statements, the Board have reviewed cash flow projections to December 2016 to assess whether they are able to meet the covenant terms included in the indicative terms received from the banks. The projections include the following key assumptions:

·; new financing will be put in place based on the indicative terms received to date and for the remaining finance required, on the expected terms

·; rental income based on contracted rental income from tenants secured as at 31 December 2012

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

·; void costs and non recoverable costs changing based on expected occupancy rate

·; 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 negotiations

·; property valuations remain at the 31 December 2012 valuation

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 Board has reasonable expectation of meeting the funding requirements of the Group and on that basis, a continuation vote shall be put to shareholders at the annual general meeting to be held in 2013.

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. Whilst recognising these uncertainties, however the Board has a reasonable expectation that new facilities will be successfully completed. Following their refinance process the Board believes shareholders will approve the continuation of the Group and therefore it is appropriate to prepare the consolidated 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, £4.4 million loss (2011: £2.9 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 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.

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 reporting

The 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 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 systems is reflected on commercial real estate markets. There was a significant reduction in transactions in 2011 and, to a lesser extent in 2012. Therefore, in arriving at their estimates of market values as at 31 December 2012 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 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 2012:

IAS 12 Income Taxes - Recovery of Underlying Assets

The amendment clarified the determination of deferred tax on investment property measured at fair value and 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. It implies the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 always be measured on a sale basis of the asset. The amendment becomes effective for annual periods on or after 1 January 2012, but will not have any effect in the entity's performance or in its disclosures because the tax rate for these assets in the jurisdictions in which they are located does not differ if they are recovered by sale or use.

IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements

The amendment requires additional disclosures about financial assets that have been transferred but not derecognised to enable the user of the Group's financial statements to understand the relationship with those assets that have been derecognised and their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, any risks associated with, the entity's accounting involvement in those derecognised assets. The amendment becomes effective for annual periods beginning on or after 1 July 2011. The entity did not have any assets with these characteristics, so there has not been any effect in the presentation of its financial statements

(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.

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

The amendment to IAS 1 change the grouping of items presented in Other Comprehensive Income. Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment will have no impact on the Group's financial position. The amendment becomes effective for annual periods beginning on or after 1 July 2012.

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 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. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. 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 not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

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 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 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 must be 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 11 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. 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

The Group will disclose its judgement in respect of the entity currently excluded from the consolidated financial statements that will be included due to the existence of potential voting rights held within the Group.

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 on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance, but based on the preliminary analyses, no material impact is expected. This standard becomes effective for annual periods beginning on or after 1 January 2013.

5 Discontinued operations

A discontinued operation is a composition 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;

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

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.

The information disclosed in this note has changed from the prior year. The category of "industrial and office" has been discarded and the properties, which made up this category, have been reallocated to either office or light industrial. This is due to a change in the way the underlying information is presented to the Board. The Board believes that the information is now presented more clearly to investors in respect of the key segmental information.

Property valuation - segmental analysis

The Board considers the sector and region analysis above to be the significant segmental basis for the Group. The information disclosed in this note has changed from the prior year. The category of "industrial and office" has been discarded and the properties, which made up this category, have been reallocated to either office or light industrial. This is due to a change in the way the underlying information is presented to the Board. The Board believes that the information is now 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. Bank loans 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.

*Restated to reclassify the property valuation segmental and region analysis of CHIP (Six) Limited from continuing operations to discontinued operations.

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

Investment Adviser and Manager's fee

The Group pays a fee of 1.25% of gross asset value to the Investment Adviser and Manager. The total fee paid for the year to 31 December 2012 was £1.2 million (31 December 2011* £1.2 million).

*Restated to reclassify the rental income and expenditure of CHIP (Six) Limited from continuing operations to discontinued operations.

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

* Restated to reclassify the finance income, net gains and losses on loans and receivables and gains and losses on financial assets and liabilities at fair value through profit and loss of CHIP (Six) Limited from continuing to discontinued operations

12 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.

*Restated to reclassify the finance costs of CHIP (Six) Limited from continuing to discontinued operations

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

value through profit and loss

*Restated to reclassify total interest income and interest expenses on financial assets and financial liabilities not at fair value of CHIP (Six) Limited from continuing operations to discontinued operations

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 2012, the Group had unused tax losses and capital allowances of £9.5 million

(31 December 2011: £8.2 million).

Following HMRC compliance checks, a contingent liability has arisen due to a challenge by HMRC over certain claims of intergroup interest as a deductible tax expense. The claims have been made from 2004 to date. A successful challenge by HMRC could result in additional tax charges for each period from 2004. HMRC shall also consider the availability of capital allowance to offset against any additional charges. Discussions are continuing and it is not known if there shall be a resulting liability, therefore as per IAS 37 no provision has been recognised but this contingent liability has been disclosed.

*Restated to reclassify unused tax losses of CHIP (Six) Limited from continuing operations to discontinued operations

15 Dividends

The Company paid no dividends during the year. (2011: £nil)

15 16 Earnings per share

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

*Restated to reclassify the earnings per share of (CHIP Six) Limited from continuing operations to discontinued operations.

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 25) 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 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 2012 and 2011 had net liabilities, therefore the original cost of the investment held in the parent company has been fully impaired.

18 19 Investment properties

The fair value of the Group's investment property at the 31 December 2012 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 Royal Instituition of Chartered Surveyors ("RICS") ("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 the valuation techniques set out in note 3. The properties were valued individually. The valuers have used their market judgement and not only relied on historical transactional comparables.

The approved RICS definition of fair 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 £84.3 million 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 property.

Market value is based on active market information, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, alternative valuation methods are used, such as recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices, or discounted cash flow projections. The principal assumptions underlying the estimation of market value are those related to the receipt of contracted rental income, expected future market rental income, void periods, lease incentives, maintenance requirements and appropriate yields/discount rates. These valuations are regularly compared to actual market yield data and actual transactions by the Group and those reported by the market.

19 20 Trade and other receivables

Payment terms for rental debtors are typically quarterly in advance.

As at 31 December 2012 receivables of £0.1 million (2011 £0.1 million) were impaired and fully provided. During 2012, £0.08 million was provided in the year (2011: £0.1 million provided).

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value. Note 28 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 2012, intercompany balances receivable with a value of £49.7 million (2011: £69.3 million) were impaired and fully provided for. During 2012, £24.5 million was written off and £19.5 million of provisions were written back to the Consolidated income statement (2011: £3.9 million written back). There is no fixed date for the repayment of inter-company loans and interest arising.

21 Discontinued operations & net gain on disposal of CHIP (Six) Limited

As previously announced, CHIP (Six) Limited is no longer controlled by the Group and has been deconsolidated as a consequence with effect from 28 February 2012. The results of CHIP (Six) Limited for the year ended 31 December 2011 and the period to 28 February 2012 are included in discontinued operations in the Group's consolidated statement of comprehensive income. A single amount is shown on the face of the consolidated statement of comprehensive income comprising the post-tax result of discontinued operations. As a result, the income and expenses of CHIP (Six) Limited are reported separately from the continuing operations of the Group. The table below provides further details of the amount shown on the consolidated statement of comprehensive income for the year ended 31 December 2011 and 31 December 2012 in accordance with IFRS 5.

During the year ended 31 December 2011, discontinued operations contributed to a net inflow of £1 million to the Group's net operating cash flows, zero to the Group's net investing activities and a net outflow of £1.4 million to the Group's net financing activities.

During the year ended 31 December 2012, discontinued operations to the 28 February 2012 contributed to a net outflow of £0.07 million to the Group's net operating cash flows and zero to the Group's net financing and investing activities. Those flows, together with the deconsolidation of the cash held by CHIP (Six) Limited at 28 February 2012 (below) are shown as a single cash flow on the consolidated cash flow.

Nationwide has utilised CHIP (Six) Limited blocked cash of £0.25 million to settle the interest payment that was due in January 2012.

Net gain on disposal of CHIP (Six) Limited

The difference between proceeds received (£nil) and the negative net asset value of CHIP (Six) Limited of £86k at 28 February 2012 is reflected as a gain on the deemed disposal of CHIP (Six) Limited in the consolidated statement of comprehensive income.

22 Interest rate hedging instruments

The Group uses interest rate hedging arrangements to mitigate its exposure to interest rate changes. The interest rate hedging facility expired in October 2012. There is no current intention to enter in a further swap arrangement during the bank loan extension period.

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 was mitigated by the Group's subsidiaries entering into interest rate swaps and an interest rate cap as detailed below.

2012- 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) had the effect of fixing the Group's exposure on certain borrowings from 29 December 2010. The interest rate swap fixed the rate at 2.25% before the margin and mandatory costs. The interest rate swap expired on 31 October 2012 and therefore had no value as at 31 December 2012 (31 December 2011: £0.5 million).