Half Yearly Report

Highlights

· Adjusted net asset value ("NAV") per ordinary share - 237 pence as at 30 June 2015 (220 pence at 31 December 2014).

· Adjusted earnings per ordinary share ("EPS") - loss of 7.9 pence for the six months to 30 June 2015 (loss of 7.7 pence for the six months to 30 June 2014 restated).

· New lettings - 37 new lettings and 30 lease renewals achieved during the six months to 30 June 2015, (represents 15.1% of the estimated rental value ("ERV") of the total portfolio based on the final achievable annual rent including stepped rent).

· Additional contracted rent - £0.5 million per annum of additional passing rent is contracted to start during the twelve months to 30 June 2016, benefitting cash flow.

· Occupancy improved - the occupancy level by estimated rental value stood at 88.4% as at 30 June 2015 compared with 86.5% as at 31 December 2014.

· Four office buildings were sold above valuation - Four buildings were sold at £1.55 million before sales costs; 48% above the most recent valuation.

· Portfolio valuation increased - the Group's property portfolio was valued at £80.5 million as at 30 June 2015 (£79.9 million as at 31 December 2014), an increase of £0.6 million (0.9%) during the six month period (+2.2% on a like for like basis).

37

37 new lettings completed

88.4%

Occupancy rate increased to 88.4%

237p

Adjusted NAV of 237 pence per share

£1.55 million

One sale (comprising four office buildings) at 48% above the most recent valuation

£80.5 million

Portfolio valuation increase to £80.5 million. 

Company summary and objectives

Objectives

Industrial Multi Property Trust plc (the "Company" or together with its subsidiaries the "Group") was incorporated in the Isle of Man on 10 June 2002 as a closed-ended investment company. The Company and its subsidiaries invest in higher yielding UK commercial property.

The key objectives of the Company 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, through rental surplus consistent with the investment programme for the property portfolio and refinance the portfolio in Q4 2016.

Dividends

The Company paid no dividends during the period and no dividends are currently proposed (2014: £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. Since 27 October 2014, its shares have been traded on the Specialist Fund Market of the London Stock Exchange, an EU regulated market. The shares have been traded on the London Stock Exchange since 4 April 2003.

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.industrialmultipropertytrust.com

Financial highlights

1. 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 (see note 14).

2. The adjusted earnings are presented to provide what the Board believes is a more appropriate assessment of the operational income accruing to the Group's activities. Hence the Board adjusts basic earnings for income and costs which are not of a recurrent nature or which may be more of a capital nature (see note 13).

Chairman's statement

I am pleased to present the half year report and the condensed consolidated financial statements of Industrial Multi Property Trust plc for the six months ended 30 June 2015.

Property performance

The active asset management initiatives within the portfolio have continued to assist in the retention of tenants and the letting of vacant units. The Group has achieved 37 new lettings and 30 lease renewals increasing the occupancy level across the Group by 1.9%, to 88.4% (by ERV) as at 30 June 2015 compared with 86.5% as at 31 December 2014, enhancing the Group's income. Further detail on asset management progress appears in the Investment Adviser and Manager's report.

On a like for like basis, adjusting for sales, the portfolio valuation increased by £1.7 million during the six month period to £80.5 million at 30 June 2015, a 2.2% increase. An evaluation of the Group's property portfolio performance can be found in the Investment Adviser and Manager's report.

Financial performance

The adjusted NAV per ordinary share at 30 June 2015 is 237.0 pence (31 December 2014: 219.9 pence). This increase is mainly due to an increase in the fair value of investment properties and a gain on the sale of investment properties which are partly offset by an operating loss due to finance costs. The results for the period show an adjusted EPS loss of 7.9 pence (30 June 2014 restated: loss of 7.7 pence). The continuing losses are due to the Group's fixed high finance costs.

Bank borrowings and financing

As previously reported, the Group entered into financing agreements on 5 December 2013. These loan facilities are for a period of five years expiring in December 2018. A hedging arrangement was entered into on 27 January 2014, which has the effect of fixing the Group's interest rate exposure on £25.1 million of debt until 5 December 2018. Further details can be found in note 17 and 20. During the period the Group was compliant with the bank borrowings covenants.

Going concern

The Board has concluded that the Company and the Group is considered to be a going concern and as a result of this the condensed consolidated financial statements for the six month period ended 30 June 2015 have been prepared on a going concern basis. Further detail on the basis of preparation is provided in note 2 to the financial statements.

Prior year restatement

Following the restatement within the 31 December 2014 financial statements, it has been necessary to restate certain comparative 2014 statement of comprehensive income and cashflow items within these condensed financial statements. For further information, see note 2.

Outlook

Industrial Multi Property Trust plc continues to focus on making further progress in preserving and improving the income generated by its property portfolio and enhancing its asset value.

With the current 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, recognising that the current financing arrangements have resulted in increased finance costs. The Board is confident that the Group will be able to service its debt, and with an improving secondary commercial property market, the Group and therefore the shareholders may see an improvement in the net asset value in the medium to long term.

As announced on 10 August 2015, the Board will target a refinancing of the portfolio in Q4 2016 and if a refinancing is not possible will continue to review alternative ways to improve shareholder value including a managed winding up of the Company. This will be done with the assistance of Westhouse Securities Limited who has been appointed as Financial Adviser and Broker to work alongside our existing Investment Adviser and Manager, Alpha Real Capital LLP.

Jonathan Clague

Chairman

Date: 21 August 2015

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 loan to value ("LTV") ratio. Limited strategic sales or disposals will be considered where it is believed that the price net of costs, likely to be achieved, will benefit shareholder returns.

· To actively review the potential refinancing options, at an optimum time to mitigate the effects of the loan facilities early repayment penalties, see note 20 for further details.

· To actively review the potential to resume payment of dividends.

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

Property Portfolio overview

The portfolio comprises a well-diversified portfolio of 53 multi-let properties offering 500 leasable units with a total floor area of approximately 160,562 square metres (approximately 1.7 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 (by area), approximately 86% is invested in light industrial property and 14% in offices.

Tenants have continued to favour shorter term flexible leases and against this background the weighted average lease length is 3.6 years to expiry and 2.0 years to the next tenant break.

Asset management review

The occupational market is continuing to improve, and the Group's flexible approach to meeting tenant demand has been successful in reducing the number of vacant units: 37 new lettings and 30 lease renewals were completed during the period, with a further 11 units under offer for new leases as at 30 June 2015. Many of the leases incorporate stepped increases in rents and there is an additional £0.5 million per annum of contracted rent due to start during the next twelve months which will benefit the Group's 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 88.4% on 30 June 2015 compared to 86.5% as at 31 December 2014.

Tenant insolvency has stabilised with 2 tenants, accounting for 0.4% of ERV, becoming insolvent compared with 3 tenants (0.7% 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 £1.6 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, the portfolio continues to be reviewed to identify potential disposals where it is believed that the net sales proceeds will benefit shareholder returns. One sale completed during the six months ending 30 June 2015. The four office buildings were sold at a combined sale price of £1.55 million, before sales costs, 48% above the most recent valuation.

Valuation

The Group's property portfolio was valued as at 30 June 2015 by DTZ Debenham Tie Leung Limited at £80.6 million (£79.9 million as at 31 December 2014) an increase of £0.7 million (0.9%) during the six month period. The average capital value of the portfolio is £502 per square metre (£47 per square foot). Four office buildings were sold in Q2 2015, therefore excluding this sale, on a like-for-like basis, the valuation of the portfolio increased by £1.7m (+2.2%).

Financing

As previously reported the Group entered into new financing agreements on 5 December 2013 as follows:

· A £33.5 million senior facility with a five-year term expiring in December 2018 and an initial margin of 3% per annum over 3 month LIBOR, with Royal Bank of Scotland ("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 Mezzanine Finance Sarl ("Europa").

· A £11.5 million unsecured subordinated loan facility with a five-year term expiring in December 2018 and a coupon of 15% per annum with Alpha Real Trust Limited ("ART").

The overall LTV ratio on total borrowings was 79.1% as at 30 June 2015 (82.8% on total borrowings as at 31 December 2014).

On 27 January 2014, the Group entered into an interest rate swap for the amount of £25.1 million with RBS. The interest rate swap has the effect of fixing the Group's interest rate exposure on £25.1 million of these borrowings from 27 January 2014 until 5 December 2018 at 2.0225% per annum, before the margin of 3% per annum.

UK economy

Economic Commentary - Half Year to 30 June 2015 

Stable economic growth continued in the first quarter of 2015 with gross domestic product (GDP) increasing by 0.3% on a quarterly basis and 2.9% on an annual basis.

A low inflation environment continued with the Consumer Price Index (CPI) unchanged at 0.0% growth reported for the 12 months to June 2015. Inflation throughout the period remained considerably below the Monetary Policy Committee target of 2%, which should allow the policy of quantitative easing to continue until the first increase in base rate, which is widely expected to occur in mid-2016.

The labour market strengthened further during the period with the number of job vacancies per unemployed person rising to its highest level since 2008. The national unemployment rate declined from 5.7% in Q4 2014 to 5.6% in Q2 2015 and despite a small rise from 5.5% in Q1 2015, it is drawing closer to the assumed long-term sustainable level of 5%.

Property Commentary

The underlying fundamentals of the UK commercial property market strengthened further in Q2 2015, reflecting healthy consumer and business confidence in the UK economy.

High levels of investment activity continued throughout the first half of the year with investors actively targeting prime and, increasingly, secondary opportunities across London and regional markets. Overseas investor appetite remains robust and UK institutions have experienced high levels of inflows from retail investors.

A modest availability of stock in all prime sectors has led to property investors targeting a wide range of regional markets in the search for higher yields and greater opportunities. Prime yields have largely stabilised whilst their secondary counterparts continue to trend downwards.

Conclusion

The 8% increase in adjusted net asset value for the six months to 30 June 2015 is encouraging. This increase has been achieved through a combination of improved valuations, a property sale at a 48% premium to the most recent valuation, increased occupancy and reducing void costs. Following the refinancing in December 2013 the new mezzanine and sub-ordinated loan facilities carry a comparatively high interest charge which continues to have a negative impact on current earnings. The Investment Adviser and Manager and the Board will continue to review the optimum time to refinance the Portfolio. On a property level the 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 the previous six months.

Tom Pissarro

Alpha Real Capital LLP

Investment Adviser and Manager

Date: 21 August 2015

Statement of Directors' Responsibilities

Statement of Directors' Responsibilities in Respect of the Directors' Report and the Financial Statements

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. In addition, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards.

The financial statements are required to give a true and fair view of the state of affairs and of the statement of comprehensive income of the Group for that period.

In preparing these 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 they have been prepared in accordance with International Financial Reporting Standards; 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 that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time its financial position. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Each of the Directors confirms that to the best of each person's knowledge and belief:

(a) the condensed consolidated financial statements comprising the condensed statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed statement of cash flows and related notes which have been prepared in accordance with IAS 34 Interim Financial Reporting, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.

(b) the interim management commentary includes a fair review of the information required by:

(i) DTR 4.2.7R the Disclosure & Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year;

(ii) DTR 4.2.8R of the Disclosure & Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during the period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board,

J D Clague P P Scales

Chairman Director

Date: 21 August 2015 Date: 21 August 2015

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this 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 for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the DTR of the UK FCA.

KPMG Audit LLC

Chartered Accountants

Douglas, Isle of Man

21 August 2015

Condensed consolidated statement of comprehensive income

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

The Directors consider all activities to be continuing.

The accompanying notes on pages 14 to 33 are an integral part of this statement.

*The financial information is restated and details are contained in note 2.

Condensed consolidated statement of financial position

The accompanying notes on pages 14 to 33 are an integral part of this statement

These financial statements were approved by the Board of Directors on 21 August 2015 and signed on its behalf by:

Condensed consolidated statement of changes in equity

The accompanying notes on pages 14 to 33 are an integral part of this statement.

*The financial information is restated and details are contained in note 2.

The accompanying notes on pages 14 to 33 are an integral part of this statement.

\* The financial information is restated and details are contained in note 2.

Notes to the financial statements

For the six months ended 30 June 2015

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 assets are presented in half year financial statements to provide what the Board 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 unaudited condensed consolidated financial statements included in the half year report for the six months ended 30 June 2015, have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority and International Accounting Standard (IAS) 34, 'Interim Financial Reporting'. The half year report should be read in conjunction with the Group's annual report and consolidated financial statements for the year ended 31 December 2014, which have been prepared in accordance with International Financial Reporting Standards (IFRS) and Isle of Man law.

The same accounting policies and methods of computation are followed in these condensed financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2014, which are available on the Company's website (www.industrialmultipropertytrust.com). The Group's financial performance does not suffer materially from seasonal fluctuations.

The condensed consolidated financial statements are made up from 1 January 2015 to 30 June 2015, and have been prepared under the historical cost convention except for investment property and derivative instruments that have been measured at fair value.

The condensed 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 pound sterling and there are no foreign exchange transactions.

The Directors considered all relevant new standards, amendments and interpretations to existing standards effective for the half year report for the six months ended 30 June 2015.

The adoption of the amendments and improvements to the standards and interpretations has had no effect on the accounting policies, financial position or performance of the Group.

The preparation of the condensed consolidated financial statements requires directors 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 date of the condensed consolidated financial statements. If in future such estimates and assumptions, which were based on the Directors' best judgement at the date of the condensed consolidated financial statements, deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.

Prior year financial information has been represented to conform with current year presentation where applicable.

Going concern

The Group's borrowing facilities with Royal Bank of Scotland, Europa Mezzanine Finance SaRL and Alpha Real Trust Limited terminate on 5 December 2018. Based on the assumption, current occupancy and the removal of shareholders' continuation vote, the Board is confident that the loan covenants will be met up to the maturity of the existing long term borrowings.

These long-term borrowings have given the Group the time to continue the asset management initiative which shall hopefully lead to recovery of shareholder value of the Company.

The fair value of investment property generally involves consideration of:

· Market evidence on comparable transaction for similar properties;

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

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. This is supported by the covenant tests carried out during the period which shows the Group is in compliance.

The Board therefore considers it is appropriate to prepare the condensed financial statements on a going concern basis.

Basis of consolidation

The condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June each period. 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.

Investment properties

Investment properties are 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. Lease incentive receivables are treated as a component of the investment property carrying value.

Subsequent to initial recognition, investment properties are 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 properties are 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 or disposal of investment properties are recognised in the consolidated statement of comprehensive income in the year of retirement or disposal.

Gains or losses on the disposal of investment properties are determined as the difference between net disposal proceeds received and the latest valuation of the investment properties.

Cash and cash equivalents

Cash and short-term deposits in the condensed consolidated balance sheet comprises cash at bank and short term deposits with an original maturity of three months or less. For the purposes of the condensed consolidated statement of cash flows, cash and cash equivalents consist of cash and short term deposits as defined above, net of outstanding bank overdrafts.

Restricted Cash

Where cash is in the Group's bank accounts, but not under the Group's sole control at the balance sheet date, these amounts are disclosed as restricted cash.

Prior year restatement

Within the 31 December 2014 financial statements there was a re-evaluation of the accounting approach to lease incentive receivables; these are now solely incorporated as a component of the carrying value of investment properties, consistent with our clarified accounting policy. Previously lease incentive receivables had been carried within trade and other receivables as well as indirectly within the valuation of investment properties. The lease incentive receivables at 30 June 2014 stood at £1,537,000 (31 December 2013: £1,456,000).

This re-evaluation required an adjustment to the fair value movement of investment properties and receivables hence there was a restatement within the 31 December 2014 financial statements of the Company's prior year's balance sheet and income statements. This has an impact on the current six months financial statement comparative income statement.

Consequently the loss for the period to 30 June 2014 is restated and now shows a 2.7 pence loss per share (previously 1.8 pence loss per share), following an increase to the loss for the prior period of £81,000, with a loss of £1,456,000 having been restated through the 31 December 2013 financial year's opening retained earnings. The restatement has had no impact on prior period's adjusted earnings per share. Although not a cash transaction, the cash flow is also restated to reflect the changes.

3 Segmental analysis

Rental income - segmental analysis*

* The rental information presented by the Investment Adviser and Manager to the Board is in the form of the annual rent passing at the period end rather than being the rent spread on a straight line basis over the term of the lease in the way prescribed by IAS 17. Consequently the rent passing information presented by the Investment Adviser and Manager to the Board is adjusted here to agree with the rental income in the condensed 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 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 20. 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.

4 Income

The Group leases out all of its investment property under operating leases. Leases are typically for terms of 3 to 5 years.

5 Expenditure

6 Finance Income

The above interest income arises from cash and cash equivalents.

7 Net gains and losses on loans and receivables

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

9 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.

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

value through profit and loss

11 Taxation

The Group's tax expense for the year comprises:

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 30 June 2015 the Group had unused tax losses and capital allowances of £10.3 million

(31 December 2014: £10.1 million).

12 Dividends

The Company paid no dividend during the six month period (2014: £nil).

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

14 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.

15 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 properties at 30 June 2015 and 31 December 2014 have been arrived at on the basis of the 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 (9th Edition 31 January 2014), 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 2014 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 methods 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.

Property pledged as security

The Group has pledged investment properties valued at £80.5 million as at 30 June 2015 (31 December 2014; £79.9 million) to secure borrowings (note 20).

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

Market value is based on active market information, adjusted for any difference related to the nature, location and condition of the specific asset. Where 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 of previous quarters. These valuations are regularly compared to actual market yield data and actual transactions by the Group and those reported by the market. The valuer looks at each property on its merits. The valuation reports produced by the valuers are based on information provided by the Group such as current rents, terms and conditions of lease agreements, service charges and capital expenditure. In addition, the valuation reports are based on assumptions and valuation methods used by the valuers. The assumptions are typically market related, such as yields and discount rates, and are based on their professional judgement and market observation.

Valuation process

The Investment Adviser and Manager verifies all major inputs to the valuation reports, assesses the individual property valuation changes from the prior valuation report and holds discussions with the valuers.

When this process is complete, the valuation report is communicated to the Board, which considers it as part of its overall responsibilities.

The valuers hold meetings with the Committee to discuss the valuation processes and outcome at each year end and half year end.

In categorising which level of the fair value hierarchy applies to the Group's investment properties, consideration is given to the inputs used by the Group's valuer in determining the fair value. As mentioned above observable market data such as transactions involving similar properties and the information provided by the Group is used in determining the fair value. In addition there are also a number of unobservable inputs including the estimated rental value, net initial yield, net reversionary yield, state and condition, void periods and the related void rate charges, letting incentives and related letting charges such as marketing and legal costs which are considered by the valuer.

Impact on fair value to changes in significant unobservable inputs

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of the Group's property portfolio, together with the impact of significant movements in these inputs on the fair value measurement, are shown below:

The table below shows the observable inputs of weighted average passing rent per square foot and weighted average lease length plus the quantifiable unobservable inputs of weighted average estimated rental value per square foot, weighted average net initial yield and weighted average reversionary yield which have been split based on the appropriate sector and region:

16 Trade and other receivables

Payment terms for rental debtors are typically quarterly in advance.

As at 30 June 2015, receivables with a value of £0.2 million (31 December 2014: £0.2 million) were impaired and fully provided. During 2015, £0.1 million was provided for in the period (31 December 2014: £0.1 million).

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

17 Interest rate derivative instruments

The Group uses interest rate hedging arrangements to mitigate its exposure to interest rate changes.

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 condensed consolidated statement of comprehensive income.

The exposure of the Group to movements in interest rates was mitigated by the Group's subsidiaries entering into an interest rate swap as detailed below.

The Royal Bank of Scotland

On 27 January 2014, CHIP (One) Limited (on behalf of CHIP (Two) Limited, CHIP (Three) Limited and its subsidiaries, CHIP (Four) Limited and CHIP (Five) Limited) entered into an interest rate swap for the amount of £25.1 million with the Royal Bank of Scotland. The interest rate swap has the effect of fixing the Group's exposure on these borrowings from 27 January 2014 until 5 December 2018 at 2.0225%, per annum, before the margin of 3.0% per annum.

18 Trade and other payables

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

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

19 Investment Adviser and Manager's incentive fee

No incentive arrangement is currently in place and therefore no incentive fee is provided for at 30 June 2015 (31 December 2014: £nil) .

20 Long term borrowings

*Loan repayments were made from the net proceeds of the property sale in the period.

The Directors consider that the carrying amount of long term borrowings approximates to their fair value.

(a) Royal Bank of Scotland loan

This facility is between the bank and subsidiaries, CHIP (One) Limited, CHIP (Two) Limited, CHIP (Three) Limited (and its subsidiaries), CHIP (Four) Limited and CHIP (Five) Limited for an amount of £33,500,000.

Interest is payable at a rate equal to 3 month LIBOR plus a margin of 3.00% per annum. The facility is repayable on 5 December 2018. An event of default (as defined in the facility agreement) is triggered, if, inter alia, the amount of the loan facility exceeds 65% before 5 December 2016 and 60% thereafter of the value of the properties over which RBS has security by reference to the bank's own valuation, performed at the time of financing. For the purpose of the test the valuation, which at the bank's discretion can be requested annually at the Group's cost or at any time at the bank's expense and will explicitly exclude the Wareham property and any properties subsequently sold.

Additional covenants dictate that: the minimum net rent should not be less than £4,500,000 per annum and the net rental income of the secured properties shall not be lower than 225% of the interest for any test period, net rental income from any single tenant shall not exceed 12.5% of the total net rental income of all properties and at no time shall a single property constitute more than 20% of the aggregate market value of the properties.

Should any of the covenants be breached then the default margin would increase by a further 2.0% per annum and will remain at this rate until such time that the breach is remedied.

During the period the Group was compliant with these covenants.

An early repayment greater than £5,000,000 of the initial RBS facility of £33,500,000, would incur for the Group a variable penalty depending on when the repayment is made. The penalty rates are as follows: if a repayment is made 12-24 months after facility agreement date (December 2013), 1.0%; 24-36 months, 0.75%; 36-48 months, 0.5%. At 30 June 2015 the penalty would have been £285,000 (31 December 2014: £285,000). This liability has not been included in balance sheet, under IFRS this can only be accrued if there is an intention to incur this penalty.

The facility is secured by a debenture over all the assets and legal charge over the property assets of CHIP (One) Limited, CHIP (Two) Limited, CHIP (Three) Limited (and its subsidiaries), CHIP (Four) Limited and CHIP (Five) Limited. In addition CHIP (One) Limited, CHIP (Two) Limited, CHIP (Three) Limited (and its subsidiaries), CHIP (Four) Limited and CHIP (Five) Limited were required to open a rent account with The Royal Bank of Scotland. The cash paid into the rent accounts is restricted until the periodic interest payment date. At 30 June 2015 £1,300,000 million was held within the rent account, which was released at the subsequent interest payment date (31 December 2014: £1,300,000 million).

(b) Europa Mezzanine Finance Sàrl loan

This facility is between Europa and subsidiaries, CHIP (One) Limited, CHIP (Two) Limited, CHIP (Three) Limited (and its subsidiaries), CHIP (Four) Limited and CHIP (Five) Limited for an amount of £20,000,000. Interest is payable at a rate equal to 10.0% interest plus 1.0% that may be cash paid or accrued. The facility is repayable on 5 December 2018. An event of default (as defined in the facility agreement) is triggered, if, inter alia, the amount of RBS and Europa loan facilities exceeds 85% of the value of the properties (based currently on the same valuation used by RBS in the covenant referred to previously). For the purpose of the test Europa, at their discretion, can request a valuation annually at the Group's cost or at any time at Europa's expense. At the time of finance Europa and RBS used the same valuer and valuations.

Other financial covenants require that the net rental income of the secured properties shall not be lower than 110% of the interest (being the total interest charged by RBS and Europa) for any test period. In addition, net rental income from any single tenant shall not exceed 12.5% of the total net rental income of all properties and at no time shall a single property constitute more than 20% of the aggregate market value of the properties.

In addition, Europa required the Group to deposit £500,000 in a covenant cure account over which Europa has sole signing rights. The funds placed in this account has been included under "trade and other receivables" in the Consolidated Balance Sheet.

During the period the Group was compliant with these covenants.

Any early loan repayments by the Group greater than £2,000,000 of the original principal, within the first three years of the facility will incur a break penalty equal to the interest which would have been earned on the principal from that early repayment date to the third year anniversary of the facility. If all of the outstanding Europa principal loan amount had been repaid at 30 June 2015, this would have incurred a break penalty for the Group of £2,843,000 (31 December 2014: £3,824,000). This liability has not been included in balance sheet, as under IFRS this can only be accrued if there is an intention to incur this penalty. There is no current intention to incur this penalty.

(c) Alpha Real Trust Limited loan

On 5 December 2013, the Company entered into a new loan agreement in which Alpha Real Trust Limited provided an unsecured loan to the Company for £11,500,000 for a period of five years to 4 December 2018. The coupon of the loan agreement is 15% per annum, compounded quarterly. No covenant tests apply and Alpha Real Trust Limited has no security over the assets of the Company or the Group.

An exit fee of £230,000 is payable on repayment of the loan amount, this amount is being accrued over the five year life of the loan. Included in the balance sheet is accrued exit fee of £70,000 as at 30 June 2015 (31 December 2014: £47,000).

Additionally any early loan repayments by the Group greater than £2,000,000 of the original principal, within the first three years of the facility will incur a break penalty equal to the interest which would have been earned on the principal from that early repayment date to the third year anniversary of the facility. If the entire outstanding Alpha Real Trust Limited principal loan amount had been repaid at 30 June 2015, this would have incurred a break penalty of £2,046,000 (31 December 2014: £2,752,000). This liability has not been included in balance sheet, under IFRS this can only be accrued if there is an intention to incur this penalty. There is no current intention to incur this penalty.

21 Share capital and related reserves

Voting and other rights

Holders of Ordinary shares are entitled to one vote for each share held.

Dividends

Holders of Ordinary shares are entitled to receive dividends as and when declared by the Company.

Winding up

On a winding-up, the surplus assets remaining after payment of all creditors, including payment of bank borrowings shall be divided pari passu among the holders of ordinary shares in proportion to the capital paid up on the shares held at the commencement of the winding-up.

Distributable capital reserve

This is a distributable reserve out of which distributions can be made to the shareholders and arose on the cancellation of the share premium account.

Capital redemption reserve

This is a non-distributable reserve that is required under the Isle of Man Companies Act 1931 and arises on cancellation of issued share capital.

22 Related party transactions

Mr Philip Scales, a director of the Company, is also a director and an employee of IOMA Fund and Investment Management Limited (the Administrator and Registrar). During the period net fees of £0.04 million (30 June 2014: £0.04 million) were payable to IOMA Fund and Investment Management Limited. As at 30 June 2015 a total amount of £21,214 (31 December 2014: £22,003) was outstanding. Following the period end, it was announced that Mr Philip Scales was leading a management buyout of IOMA Fund and Investment Management Limited and the business has been renamed FIM Capital Limited. Mr Philip Scales remains a director of the Company and FIM Capital Limited is the Administrator and Registrar of the Company.

Mr Mark Rattigan, a director of the Company, is also Chief Operating Officer and a Member of Alpha Real Capital LLP (the Investment Adviser and Manager). During the period net fees of £0.5 million (30 June 2014: £0.5 million) were payable to Alpha Real Capital LLP. As at 30 June 2015 a total amount of £0.3.million, (31 December 2014: £0.3 million) was outstanding.

Under IAS 24, Alpha Real Trust Limited is considered a related party. Alpha Real Capital LLP (the Investment Adviser and Manager of the Group) is also the Investment Adviser and Manager of Alpha Real Trust Limited. On 5 December 2013, the Group entered into a new related party loan facility agreement in which Alpha Real Trust Limited provided an unsecured loan to the Company for £11.5 million. During the period, interest costs of £0.9 million were charged (31 December 2014: £1.7 million). As at 30 June 2015, a total amount of £0.31 million was outstanding. The Company opted to defer the interest due at the July 2015 interest payment date (£0.45 million).

Similarly, Antler Investment Holdings Limited ("AIH") being a partner of Alpha Real Capital LLP (the Investment Adviser and Manager) is considered a related party. At 30 June 2015 AIH held 465,568 shares (31 December 2014: 317,068). At the report date AIH held 531,568 shares.

The Directors of the Company received total fees as follows:

Six months ended Six months ended

30 June 2015 30 June 2014

Jonathan David Clague £10,000 £10,000

Geoffrey Paul Raineri Black £7,500 £7,500

Donald Lake* £9,000 £4,500

Peter Philip Scales £7,500 £7,500

Mark Rattigan £7,500 £7,500

*fees are inclusive of VAT

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

30 June 2015 31 Dec 2014

shares held shares held

Jonathan David Clague 15,500 15,500

Geoffrey Paul Raineri Black 7,000 7,000

Donald Lake 32,900 32,900

Peter Philip Scales - -

Mark Rattigan - -

23 Events after balance sheet date

There were no significant events after the balance sheet date.

Financial calendar