Half Yearly Report

RNS Number : 4589T

Alpha UK Multi Property Trust PLC

28 September 2010

 

28 September 2010

 

Alpha UK Multi Property Trust Plc ("AUMP")

 

Half Year Report

For the six months ended 30 June 2010

 

Alpha UK Multi Property Trust Plc (formerly Close High Income Properties Plc) announces today its results for the six months ended 30 June 2010.

 

Highlights

 

·; Ordinary Share net asset value improved from 29.19 pence per share to 32.15 pence per share as at 30 June 2010, an increase of 10.14%, reflecting the increase of £1.98 million in the value of the property portfolio to £112.25 million.

 

·; Successful refinancing of the Company's loan facility with Bank of Scotland in April 2010.

 

·; Successful issue in August 2010 of £4.75 million of Convertible Unsecured Loan Stock.

 

·; Extension of Company life by a further three years.

 

·; Alpha Real Capital LLP appointed as the new Property Investment Adviser

 

 

Jonathan Clague, Chairman, commented

 

 "With the Group's loan facilities now successfully refinanced and with the life of the Company extended by a further three years together with the funding raised from Alpha Tiger and the appointment of Alpha Real as the new Property Investment Adviser, this creates a strong platform from which to rebuild shareholder value over the medium term."

 

Contact:

 

Jonathan Clague - Chairman , Alpha UK Multi Property Trust Plc

 

Tom Pissarro - Fund Manager, Alpha Real Capital LLP - 020 7268 0300

 

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

 

Alpha Real Capital LLP is regulated by the Financial Services Authority.

 

 

Half Year Report

For the six months ended 30 June 2010

 

CHAIRMAN'S STATEMENT

 

I am pleased to present the Half year Report and Consolidated Financial Statements of Alpha UK Multi Property Trust PLC, formerly called Close High Income Properties PLC ("the Company") and its subsidiaries (together "the Group") for the six months ended 30 June 2010 ("the Period").

 

Introduction

The Company has experienced another challenging period. Whilst commercial property continued to recover from its low point in July 2009, this recovery has mainly centred on prime commercial property; typically let on long leases to financially strong tenants. According to Investment Property Databank ("IPD"), a cross sector survey centred on prime property, in the six month period to 30 June 2010 commercial property increased in value by 5.8%. By contrast, secondary commercial property, in which the Group is principally invested, has recovered but at a slower rate, reflecting the impact of the recession on the occupier market. As a result, rental values remain under pressure as a result of weak occupier demand and a high level of business failure.

 

CHAIRMAN'S STATEMENT (Continued)

 

In spite of this background the capital value of the Group's investment properties increased by £1.98 million or 1.8% from £110.27 million to £112.25 million in the six months to 30 June 2010.

 

During the Period the Company has successfully completed the refinancing of the Group's loan agreement with its largest lender; Bank of Scotland Plc ("Bank of Scotland") in April 2010, having successfully refinanced its loan agreements with its other lender, Nationwide Building Society ("Nationwide") in October 2009. Further detail on the Group's banking arrangements is set out below and in Note 8 to the Financial Statements.

 

As previously advised in February 2010 the Company received expressions of interest from two parties seeking to make offers for the Company. A strategic review was undertaken by the Board's appointed adviser PricewaterhouseCoopers ("PwC") and as part of the strategic review, the Company also considered a proposal put forward by Alpha Real Capital LLP ("Alpha Real") through which the Company would raise additional capital from Alpha Tiger Property Trust Limited ("Alpha Tiger") and appoint Alpha Real as the new Property Investment Adviser. The Board having taken into account the former Property Investment Adviser's assessment of the projected performance of the Company's portfolio, determined that Alpha Group's proposal represented superior value for shareholders. These proposals were approved by shareholders at the Company's annual and extraordinary general meetings in August 2010 as detailed below.

 

The Board believes that the continuation of the Company for a further three years, combined with the fund raising from Alpha Tiger and the management changes in favour of Alpha Real represents the best alternative available for the Company to generate additional shareholder value. This allows the portfolio to benefit from the anticipated recovery in occupier and investment demand for secondary industrial property, and to benefit from active asset management initiatives to be pursued by the new Property Investment Adviser. Together these factors should have a positive effect on the Net Asset Value ("NAV") of the Company. By contrast a wind up or sale of the Company would only have been likely to realise the Company's current NAV at best.

 

Results of the Annual General Meeting ("AGM") and Extraordinary General Meeting ("EGM")

The Board is pleased to advise that the resolutions proposed to shareholders at the AGM and EGM held on 9 August 2010 were overwhelmingly approved by over 98% of those voting with the total shareholder turnout being in excess of 39%.

 

The principal effects of the resolutions passed by shareholders are as follows;

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

§ The appointment of Alpha Real as the new Property Investment Adviser; with property management and fund administrative services retained by Berkshire Asset Management and Close Investments Limited;

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

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

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

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

§ Reduction in the fee payable to the Property Investment Adviser from 1.5% of Gross Asset Value ("GAV") (with the exception of Chip (Six) Limited which was 1.125% of GAV) to 1.25% of GAV.

 

The Board believes that these proposals:

 

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

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

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

·; bring in additional management resource at fund manager level; and

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

 

 

 

 

CHAIRMAN'S STATEMENT (Continued)

 

Investment Performance

During the Period the Group's property portfolio increased in value by £1.98 million or 1.8% from £110.27 million to £112.25 million. The NAV of the Company's Ordinary Shares increased over the Period by 10.14% from 29.19 pence per share to 32.15 pence per share.

 

Since 30 September 2009 the Group has experienced three successive quarterly valuation uplifts of the property portfolio. The uplifts in the valuation of the property portfolio was £2.6 million or 2.4% for the quarter to 31 December 2009, £1.5 million or 1.3% for the quarter to 31 March 2010 and £0.5 million or 0.5% for the quarter to 30 June 2010. These capital uplifts can largely be attributed to improved sentiment in the investment market.

 

The Group has continued its progress in actively managing the properties in challenging circumstances. During the Period void levels increased marginally in the first quarter of 2010 to 18.3% and again in the second quarter of 2010 to 19.2%. However the new Property Investment Adviser believes that voids have reached a level at which they will now stabilise and begin to reduce.

 

No acquisitions or disposals were made during the Period. The Board, in conjunction with the new Property Investment Adviser, will continue to monitor the portfolio for properties which could be sold. However, the Board is mindful that the investment market for the Group's assets remains thin and is likely to remain so while concerns relating to the outlook for the occupier market persist and investors struggle to secure bank debt on non-prime assets. Any demand for the Group's assets that does exist would likely focus on its better let properties; the sale of which could compromise the Group's ability to comply with its banking covenants and therefore the Board's ability to increase shareholder value over the medium term. All potential disposals will therefore be considered in the wider context of the impact they would have on the performance of the portfolio in aggregate over the medium rather than short term. However the Board may make selective disposals when considered to be in the interests of shareholders.

 

Debt and banking facilities

On 19 April 2010 the Company successfully completed the refinancing of the Group's loan facility with Bank of Scotland. The new loan facility provided for an initial loan repayment of £1.01 million with quarterly loan repayments of £0.2 million required to be paid. Similar to the Company's successful refinancing of its two loan facilities with Nationwide in October 2009, the loan facility with Bank of Scotland places restrictions over the term of the facility on the amount of capital expenditure improvements that can be funded from surplus rental income. Additionally these loan facilities restrict the distribution of income from the Company's subsidiaries to the Company, thereby restricting the payment of dividends to the Company's shareholders.

 

Further details on the Group's loan facilities are provided in Note 8 to the financial statements, including the waivers received from Nationwide in respect of the breach of its loan to value ("LTV") and forward interest cover covenants on CHIP (Six) Limited, which have occurred since 1 April 2010 and for which waivers have been granted until 16 October 2010.

 

Result and Dividends

The consolidated profit of the Group for the Period ended 30 June 2010 was £2,495,247 (30 June 2009: loss of £13,442,737). This profit includes an unrealised gain on revaluation of investment properties of £1,142,293 (30 June 2009: loss of £14,630,153).

 

The NAV of the Ordinary Shares increased by 10.14% over the Period from 29.19 pence per share to 32.15 pence per share.

 

The Company paid no dividends during the Period. The Board is aware of the importance of the dividend to shareholders and is focused on its attempts to reinstate distributions. However, for the foreseeable future the Board's priority must be to ensure that the Group complies fully with its refinanced loan agreements. As such, surplus income is likely to be held in reserve or used to reduce the Group's overall debt and therefore it is unlikely that the dividend will be reinstated in the short to medium term.

 

Outlook

In the period from June 2007 until July 2009 UK commercial property suffered its most serious correction in capital values in 20 years. While the investment in prime, well-let property has recovered, investor demand for non-prime assets remains weak and banks remain reluctant to lend against such assets. In addition, occupier demand remains weak and pressure on rental income continues.

 

 

CHAIRMAN'S STATEMENT (Continued)

 

However, since its lowest point in June 2009, the Group's property portfolio has increased in value by £4.08 million or 3.8% to £112.25 million to 30 June 2010. This has resulted in the NAV per Ordinary share of the Company increasing by 15.23% from its low point in June 2009 of 27.90 pence per share to 32.15 pence per share to 30 June 2010.

 

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

 

 

Jonathan Clague

Chairman

28 September 2010

 

DIRECTORS' REPORT

 

The Directors present herewith the Half year Report and Consolidated Financial Statements of the Company and its subsidiaries for the period ended 30 June 2010.

 

The Company

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

 

The Directors confirm that:

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

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

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

 

Results and dividends

The consolidated profit after taxation of the Group for the period ended 30 June 2010 amounted to £2,495,247 (31 December 2009: loss of £15,266,135; 30 June 2009: loss of £13,442,737). This profit includes an unrealised gain on revaluation of investment properties of £1,142,293 (31 December 2009: loss of £13,645,291; June 2009: loss of £14,630,153).

 

The Company paid no dividends during the period.

 

Directors

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

 

	Ordinary Shares at 30 June 2010	Ordinary Shares at 30 June 2009	Ordinary Shares at 31 December 2009
Jonathan David Clague	30,000	30,000	30,000
Geoffrey Paul Raineri Black	20,000	20,000	20,000
Donald Lake	49,000	49,000	49,000
Philip Peter Scales	-	-	-
Phillip Rose (appointed 9 August 2010)	-	-	-

 

Events after Balance Sheet Date

Two repayments of debt have been made since the period end, under the terms of the facility agreements with Nationwide and Bank of Scotland; £42,835 was paid to Nationwide, reducing the loan balance to £9.56 million, and £200,000 was paid to Bank of Scotland, reducing the loan balance to £53.9 million. An interest rate swap for the amount of £47 million has been entered into with Bank of Scotland in order to fix the Group's interest rate on certain borrowings from 29 December 2010.

 

DIRECTORS' REPORT (Continued)

 

The interest rate swap will run until 31 October 2012 at a rate of 2.25% (pre margin). In addition, the Group has also purchased a forward starting interest rate cap from 31 October 2012, running until 31 October 2015 which caps the interest rate payable to no more than 5%.

 

On 9 August 2010, the Company held an AGM and EGM to consider, inter alia, the Proposals and the Panel Waiver, as set out in the Circular dated 13 July 2010. The Board is pleased to advise that the resolutions proposed to shareholders were passed with an overwhelming majority of in excess of 98% of those voting, with shareholder turnout being over 39%. The principal effects are as follows:

§ The continuation of the investment activities of the Company for at least a further three year period until the shareholder vote at the AGM held to approve the 2012 accounts;

§ The appointment of Alpha Real as the new Property Investment Adviser;

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

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

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

§ Reduction in the fee payable to the Property Investment Adviser from 1.5% of Gross Asset Value ("GAV") (with the exception of Chip (Six) Limited which was 1.125% of GAV) to 1.25% of GAV.

 

Company Secretary

 

Martin Katz served as Secretary throughout the period.

 

Going concern

 

The Directors confirm that the Group continues to be a going concern as the resolution for the investment activities of the Company to be extended was approved by shareholders at the AGM of the Company held on 9 August 2010 as disclosed in note 1.

 

 

Jonathan Clague

Chairman

28 September 2010

CORPORATE GOVERNANCE STATEMENT

 

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

 

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

 

 

 

 

 

 

 

PROPERTY INVESTMENT ADVISER'S REPORT

 

Introduction

The first two quarters of 2010 saw the Portfolio value increase from £110.27 million to £112.25 million however it continued to be a difficult period for the secondary property sector. The occupational market remained volatile and highly competitive with potential tenants increasingly reluctant to pay asking terms and commit to long inflexible leases.

 

Given the underlying state of the UK economy and systemic weakness in the letting market void levels increased throughout the secondary sector as a whole. The Group was not immune from this weakness and voids increased from 17.9% to 19.2%.

 

Nationwide has extended their breach of covenant waiver until 16 October 2010 in respect of CHIP 6 and discussions continue to explore all the available options to best preserve shareholder value of the Group.

 

The loan facility with Bank of Scotland was successfully refinanced in April and coupled with the additional finances raised from Alpha Tiger the Group is now in a stronger position to withstand the short term income risks. In addition capital is available to undertake a targeted strategy of value/income enhancement going forward.

 

The table below summarises some of the property portfolio's key statistics as at 30 June 2010.

 

	Portfolio	Portfolio
	30 June 2010	31 December 2009
Average annual rental per tenant	£19,288	£19,945
Average length of lease remaining	2.5 years	2.5 years
Average rental per square metre	£58.11	£63.13
Largest tenant by rental value	Scotts Limited	Scotts Limited

 

UK Economic Review

According to the Office for National Statistics, the UK economy grew at a faster pace than expected at 1.2% in Q2 2010, a significant improvement on the anaemic 0.3% growth in the previous quarter. The rise represents the fastest rate of quarterly expansion recorded since the first quarter of 2001. Growth was dominated by the construction industry although the services sector also exceeded expectations.

 

The future prospects are however far from certain and although the Government is cautiously optimistic about the path for the economy, there remains significant uncertainty, with the Bank of England (the "Bank") itself recently stating that the recovery is likely to be 'choppy'. In its latest Inflation Report, the Bank announced that it expects the UK economy to grow by between 2.5-3.0% in 2011, lower than its previous forecast of close to 3.5%. This revision is primarily driven by the acknowledgement of the challenges the UK economy faces to ensure a sustained recovery especially given the persistent tight credit conditions. It is clear the realignment away from private and public consumption towards exports and private investment will be a tough balancing act.

 

Despite the recent downward revisions to the growth forecast, many commentators and analysts still believe the estimate to be too optimistic. In particular the focus on export led growth is of concern given the weak demand expected across the Eurozone, the UK's main export market, as many governments simultaneously adopt austerity measures.

 

In the meantime, the Bank has stated that inflation is now likely to stay higher for longer than previously expected. Although inflation fell for the third consecutive month in July 2010 to 3.1%, the rise in VAT scheduled for January 2011 is expected to push some prices higher. The Bank currently forecasts inflation will remain above the 2% target until the end of 2011 with a drop below target by 2012. What happens over the short-medium term to inflation is the single biggest determinant of the direction of the UK base rate which remains at an historic low of 0.5%. If inflation does not fall quick enough, pressure will be imposed upon the Bank to raise interest rates; a move which would contradict the government's stated economic strategy and put the economy at risk of a "double-dip".

 

 

 

 

 

 

PROPERTY INVESTMENT ADVISER'S REPORT (continued)

 

UK Commercial Property Review

The recovery in UK commercial property values has continued throughout the first half of 2010. However, the recovery must be placed into context; capital values remain 35.7% below their peak of June 2007 and the recovery has been heavily skewed towards prime property. Secondary assets have not seen such a recovery and only recently have values in this sector stabilised. This has primarily been driven by the shortage of prime stock on the market forcing investors to consider more 'riskier' opportunities.

 

The fundamentals of secondary property remain different from prime property. Typically let on shorter leases or to tenants considered to be weaker financially, capital values of secondary properties are more closely aligned to the immediate health of the occupier market than those of prime properties. As a result of the recession, tenant demand for commercial property declined and the level of void space rose following a higher rate of tenant failure and new, speculative schemes coming onto the market.

 

In the future, the performance of the UK commercial property market will be closely linked to the performance of the UK economy and the actions lenders take in relation to existing property loans which have breached banking covenants, expiring loans and new commercial lending.

 

Investors' interest in secondary property is unlikely to increase in the short term unless there is a sustained improvement in the occupier market. Similarly, with prime yields having now fallen back below their long term averages, significant further capital appreciation is unlikely in the absence of rental growth.

 

Although the UK economy has emerged from recession, the outlook for the economy is mixed. The significant fiscal tightening announced by the new coalition Government in its emergency budget will restrict economic growth as Government spending is cut and the tax burden on households increases. However, if the actions taken by the Government reassure financial markets and help to maintain low interest rates, assisting households by keeping down mortgage payments and assisting investment by firms, they may prove to be justified over the longer term. In addition to increased investment spending by private sector firms, the UK will be relying on the depreciation in the value of sterling to boost the contribution exports makes to growth. To date this has failed to materialise, in part reflecting the weakness of the Eurozone which is the UK's principal trading partner.

 

How lenders deal with defaulting and maturing loans will also have a major bearing on the future direction of the market going forward. To date, lenders have largely been focused on not incurring further losses to their loan books and, as such, have not attempted to fire sell assets but have renegotiated terms and extended loans. This however will not be able to continue in perpetuity; it is likely there will be a "debt shortfall" in the next few years with existing lenders having neither the capacity nor the desire to refinance the £120bn of UK commercial property debt set to mature before 2012. This will most likely result in increased volumes of property coming onto the market, which may dampen values in certain sectors.

 

Future Prospects

The Secondary investment market is likely to remain challenging over the medium term but we are confident that a strategy of intensive micro management, flexible lease marketing, targeted capital expenditure and limited strategic sales will deliver value to the shareholders over the longer term.

 

Of the £53.9 million debt with the Bank of Scotland, £47 million was hedged at 2.25% (plus margin) in August 2010 for the period from 29 December 2010 to 31 October 2012, providing further stability to the portfolio cost base, and we will be looking to resolve the uncertainty regarding the CHIP (Six) Limited loan facility with Nationwide in the best interest of the Group.

 

Notwithstanding the current state of the UK economy we are cautiously optimistic that the portfolio characteristics offer real opportunities to generate strong cash flow in the future which continues to be our primary focus.

 

 

Tom Pissarro

Alpha Real Capital LLP

Property Investment Adviser

28 September 2010

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF ALPHA UK MULTI PROPERTY TRUST PLC

For the six-month period ended 30 June 2010

 

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half year financial report for the six months ended 30 June 2010 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flow and the related notes 1 to 15. 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 guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

The half year financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half year financial report in accordance with the rules of the London Stock Exchange.

 

As disclosed in note 2, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half year financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half year financial report based on our review.

 

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 United Kingdom. A review consists of making enquiries of persons responsible for financial reporting 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 during 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 year financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

 

 

Ernst & Young LLC

Chartered accountants

Douglas

Isle of Man

28 September 2010

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six month period from 1 January to 30 June 2010

 

							(Unaudited)	(Unaudited)	(Audited)
						Notes	30 June  2010	30 June  2009	31 December 2009
							£	£	£
INCOME
Rental income from investment properties						3	5,124,519	5,544,088	10,767,120
Other income							13,712	10,500	72,185
							5,138,231	5,554,588	10,839,305
EXPENDITURE
Property Investment Adviser's management fee							(299,955)	(309,183)	(617,695)
Property expenses							(495,910)	(1,272,243)	(2,275,709)
Other expenses							(436,076)	(110,570)	(236,821)
							(1,231,941)	(1,691,996)	(3,130,225)
Gains/(Losses) from investments
Unrealised gain/(loss) on revaluation of investment properties							1,142,293	(14,630,153)	(13,645,291)
							1,142,293	(14,630,153)	(13,645,291)
Net operating profit/(loss) for the period before finance costs							5,048,583	(10,767,561)	(5,936,211)
Unrealised gains/(losses) on interest rate swaps							646,906	393,632	(3,117,771)
Interest receivable							4,820	7,847	14,359
Interest payable and similar charges							(3,161,087)	(3,076,655)	(6,226,512)
							(2,509,361)	(2,675,176)	(9,329,924)
Net profit/(loss) from ordinary activities before taxation							2,539,222	(13,442,737)	(15,266,135)
Taxation on ordinary activities						4	(43,975)	-	-
Net profit/(loss) from ordinary activities after taxation attributable to members							2,495,247	(13,442,737)	(15,266,135)
Other comprehensive income/(losses)
Cash flow hedges							-	549,603	-
Total comprehensive income/(losses) for the period/(year) attributable to members							2,495,247	(12,893,134)	(15,266,135)
Earnings per share (shown in pence) Basic income/ (loss) for the period/ year attributable to ordinary equity holders of the parent							2.97	(15.33)	(18.15)

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2010

 

					(Unaudited)	(Unaudited)	(Audited)
				Notes	30 June 2010	30 June  2009	31 December 2009
ASSETS					£	£	£
Non-current assets
Investment properties				5	112,250,000	108,175,000	110,270,000
					112,250,000	108,175,000	110,270,000
Current assets
Trade and other receivables				6	2,204,324	2,004,396	1,978,011
Cash and cash equivalents					2,026,492	3,379,856	3,183,803
					4,230,816	5,384,252	5,161,814
Total assets					116,480,816	113,559,252	115,431,814
EQUITY AND LIABILITIES
Non-current liabilities
Bank loans				8	81,645,124	-	28,448,065
					81,645,124	-	28,448,065
Current liabilities
Interest rate swap contracts					2,470,865	4,000,108	3,117,771
Trade and other payables				9	4,653,656	3,816,133	4,224,105
Bank loans				8	672,051	83,769,480	55,098,000
					7,796,572	91,585,721	62,439,876
Total liabilities					89,441,696	91,585,721	90,887,941
CAPITAL AND RESERVES
Share capital	- Ordinary			10	840,951	747,259	840,951
	- "D" Ordinary			10	-	257,651	-
	- Deferred shares			10	214,095	50,136	214,095
Distributable capital reserve	- Ordinary				93,622,536	70,188,239	93,622,536
	- "D" Ordinary				-	23,434,297	-
Capital redemption reserve	- Ordinary				39,925	39,925	39,925
Revenue reserves					(67,678,387)	(68,350,236)	(70,173,634)
Hedge reserves					-	(4,393,740)	-
					27,039,120	21,973,531	24,543,873
					116,480,816	113,559,252	115,431,814

 

 

These financial statements were approved by the Board of Directors on 28 September 2010 and signed on its behalf by:

 

J D Clague

 

 

P P Scales

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six month period from 1 January to 30 June 2010

 

	Share Capital	Capital Reserve	Capital Redemption Reserve	Hedge Reserve	Revenue Reserve	Total
As at 1 January 2009	1,055,046	93,622,536	39,925	(4,943,343)	(54,907,499)	34,866,665
Net loss for the period	-	-	-	-	(13,442,737)	(13,442,737)
Movement on unrealised losses on interest rate swaps	-	-	-	549,603	-	549,603
As at 30 June 2009	1,055,046	93,622,536	39,925	(4,393,740)	(68,350,236)	21,973,531
	Share Capital	Capital Reserve	Capital Redemption Reserve	Hedge Reserve	Revenue Reserve	Total
As at 1 January 2010	1,055,046	93,622,536	39,925	-	(70,173,634)	24,543,873
Net profit for the period	-	-	-	-	2,495,247	2,495,247
As at 30 June 2010	1,055,046	93,622,536	39,925	-	(67,678,387)	27,039,120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASHFLOW

For the six month period from 1 January to 30 June 2010

 

		(Unaudited)	(Unaudited)	(Audited)
		30 June 2010	30 June 2009	31 December 2009
		£	£	£
Operating activities
Profit/(Loss) before tax		2,539,222	(13,442,737)	(15,266,135)
Adjustment to reconcile profit before tax to net cash flows
(Increase)/decrease in value of investment properties		(1,142,293)	14,630,153	13,645,291
Unrealised (gain)/loss on interest rate		(646,906)	(393,632)	3,117,771
Finance income		(4,820)	(7,847)	(14,359)
Finance expense		3,085,105	3,076,655	6,226,512
Amortised arrangement fees		76,269	13,069	304,630
(Increase)/decrease in debtors		(226,313)	1,568,752	1,612,787
Decrease in creditors		(38,352)	(123,822)	(164,080)
Net deposits received/(repaid)		20,102	(256)	2,309
Net cash flows from operating activities		3,662,014	5,320,335	9,464,726
Investing activities
Interest received		4,820	7,847	14,359
Payment for purchase of properties/ capital expenditure		(827,873)	(755,153)	(1,620,663)
Net cash flows from investing activities		(823,053)	(747,306)	(1,606,304)
Financing activities
Interest paid		(2,691,113)	(3,293,796)	(6,260,266)
Bank loans repaid		(1,124,867)	(95,000)	(439,137)
Bank arrangement fee paid		(180,292)	-	(170,839)
Net cash flows from financing activities		(3,996,272)	(3,388,796)	(6,870,242)
Net (decrease)/increase in cash		(1,157,311)	1,184,233	988,180
Cash at 1 January		3,183,803	2,195,623	2,195,623
Cash at 30 June/31 December		2,026,492	3,379,856	3,183,803

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS

For the six-month period from 1 January to 30 June 2010

 

1. Operations

The Company was incorporated in the Isle of Man on 10 June 2002. It is a closed-ended investment company and was formed primarily for investment in UK commercial property. The aim of the Company and its subsidiaries (together "the Group") is to seek to improve income, reduce debt and provide the prospect of long-term capital growth. The Group has no employees.

 

Going concern

The half year consolidated financial statements have been prepared on the going concern basis; an ordinary resolution extending the Company's investment activities for a further 3 years was passed at the AGM held on 9 August 2010 along with an extraordinary resolution at the EGM, approving the injection of £4.75 million of Convertible Unsecured Loan Stock from Alpha Tiger.

 

2. Summary of significant accounting policies

 

Basis of preparation

The half year condensed financial statements for the six months to 30 June 2010 have been prepared in accordance with IAS 34: Interim Financial Reporting.

 

The half year condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2009.

 

The accounting policies adopted in the preparation of the half year condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2009, except for the adoption of new standards and interpretations as of 1 January 2010, noted below:

 

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

The amendment addresses the designation of a one-sided risk in a hedged item, and the designation of inflation as a hedged risk or portion in particular situations. The amendment had no effect on the financial position or performance of the Company.

 

Improvements to IFRSs (issued May 2008)

In May 2008, the Board issued its first omnibus of amendments to its standards. All amendments issued are effective for the Company as at 30 June 2010.

 

Improvements to IFRSs (issued April 2009)

In April 2009 the Board issued its second omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard.

 

 

IFRS 8 Operating Segment Information:

Clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker. The amendment had no effect on the financial position or performance of the Company.

 

IAS 7 Statement of Cash Flows:

Explicitly states that only expenditure that results in recognising an asset can be classified as a cash flow from investing activities. The amendment had no effect on the financial position or performance of the Company.

 

Other amendments resulting from Improvements to IFRSs to the standards did not have any impact on the accounting policies, financial position or performance of the Group. The Group has not adopted any other standard, interpretation or amendment that was issued but is not yet effective.

 

 

 

 

 

 

 

 

3 Segmental Analysis

 3a. Rental income- segmental analysis

 

 

Property	30 June 2010 £	30 June 2009 £	31 December 2009 £
1A-A2 Goodridge Avenue, Gloucester	24,646	10,203	23,540
4-5 Elizabethan Way, Lutterworth	29,738	35,675	62,899
6 Walker Riverside, Newcastle upon Tyne	-	386	-
Anglia Way, Mansfield	22,702	30,499	76,075
Ashmead Industrial Estate, Keynsham	61,942	78,965	192,418
Bartlett Park, Somerset, Yeovil	68,204	67,994	127,440
Bellway Industrial Estate, Newcastle upon Tyne	-	-	3,212
Bumpers Way, Chippenham	16,249	33,420	57,575
Clarendon Court, Warrington	103,535	87,990	167,690
Connaught Business Centre, Mitcham	36,653	45,083	83,448
Engineer Park, Deeside	-	-	13,169
Falcon Business Centre, Burton-upon-Trent	60,171	46,985	104,056
Farrington Place, Burnley	96,535	86,829	172,203
Farthing Road Industrial Estate, Ipswich	191,540	209,468	380,218
Gainsford Drive, Halesowen	27,532	33,445	66,324
Glove Industrial Estate, Washington	27,382	39,311	69,901
Groundwell Farm Industrial Estate, Swindon	224,756	189,487	398,873
Haines Park Industrial Estate, Leeds	38,664	28,071	72,929
Henwood Business Centre, Ashford	-	-	15,854
Ikon Trading Estate, Hartlebury	262,266	286,241	508,497
Kirkleatham Industrial Estate, Redcar	6,156	-	(14,676)
Links Estate, Weymouth	51,045	55,385	116,441
Lowmoor Industrial Estate, Bradford	33,695	24,972	52,189
Malmesbury Road, Cheltenham	30,891	35,067	81,486
New England Industrial Estate, Hoddesdon	40,736	54,027	103,402
Nightingale Road, Horsham	63,450	70,937	129,926
North Seaton Industrial Estate, Ashington	42,113	39,835	87,123
Oakhill Trading Estate, Leicester	16,782	-	16,868
Peartree Industrial Park, Dudley	29,978	34,100	79,676
Portland Business Park, Sheffield	90,037	137,382	260,980
Roseville Business Park, Leeds	59,203	57,375	161,283
Shadsworth Industrial Park, Blackburn	101,902	77,825	179,065
Sheiling Court, Corby	44,645	25,523	57,508
Smead Dean Centre, Sittingbourne	94,636	68,263	158,652
St. James Mill Business Park, Northampton	146,772	153,883	271,320
Stadium Industrial Estate, Luton	108,122	111,295	210,796
Stukeley Meadow Industrial Estate, Huntingdon	75,647	88,735	161,821
Tewkesbury Business Park, Gloucestershire	50,246	74,945	169,438
Torrington Avenue, Coventry	-	-	7,420
Trinity Court, Warrington	41,946	61,057	78,662
Units 16-25 Malmesbury Road, Cheltenham	59,756	56,122	106,415
Units 20-25, Maxwell Road Industrial Estate, Peterborough	68,218	48,575	118,177
Units 5-7, Maxwell Road Industrial Estate, Peterborough	87,795	88,433	213,547
Wern Industrial Estate, Newport	43,203	23,410	22,861
Wren Industrial Estate, Maidstone	46,019	40,509	94,909
Wyther Lane, Leeds	47,755	35,888	75,750
Yale Business Park, Ipswich	79,230	71,404	145,074
Rental income derived from industrial properties	2,852,493	2,844,999	5,742,434

 

 

 

 

 

 

 

 

3a. Rental income- segmental analysis (continued)

 

Property	30 June 2010   £	30 June 2009 £	31 December 2009 £
Cleton Business Park, Tipton	95,212	92,573	164,023
Rossendale Industrial Estate, Burnley	80,405	70,752	119,381
Ryan and Leanne Business Park, Wareham	114,757	136,743	234,909
Webb Ellis Industrial Business Park, Rugby	168,194	220,147	448,112
Rental income derived from industrial & office properties	458,568	520,215	966,425

 

Appleton Court, Wakefield	127,504	145,245	270,301
Ascroft Court, Oldham	35,605	50,912	87,596
Barshaw Business Park, Leicester	53,111	66,074	115,938
Basset Court, Northampton	113,856	150,558	239,505
Churchfield Court, Barnsley	145,984	187,404	317,047
Dalton Court, Blackburn	93,038	110,701	190,401
Faraday Court, Burton-upon-Trent	165,685	154,486	288,308
Kendal House, Burgess Hill	66,554	97,308	209,207
Marlborough House, Swindon	17,550	10,125	30,680
Minerva Business Park, Peterborough	128,294	126,835	222,797
Newton Court, Wolverhampton	112,447	120,118	230,961
Oak Tree Park, Redditch	45,460	60,507	129,981
Preston Technology Centre, Preston	-	-	(9,192)
Priestly Court, Stafford	36,214	62,549	123,800
Quays Reach, Salford	73,421	49,414	137,381
Rutherford Court, Stafford	104,169	90,005	189,790
Stephenson Court, Bedford	167,390	257,308	521,264
Warwick House, Solihull	72,390	166,688	240,890
Watermark Way, Hertford	157,808	133,319	275,986
Whitworth Court, Runcorn	71,698	111,492	196,914
Rental income derived from office properties	1,788,178	2,151,048	4,009,555

 

56-58 Terminus Road, Eastbourne	25,280	27,826	48,706
Rental income derived from retail properties	25,280	27,826	48,706
Total rental income	5,124,519	5,544,088	10,767,120

 

 

 

3b. Property valuation- segmental analysis

 

Property	Region	30 June 2010 £			31 December 2009 £
1A-A2 Goodridge Avenue, Gloucester	South West	350,000			350,000
4-5 Elizabethan Way, Lutterworth	Midlands	620,000			600,000
Anglia Way, Mansfield	Midlands	825,000			825,000
Ashmead Industrial Estate, Keynsham	South West	1,715,000			1,680,000
Bartlett Park, Somerset, Yeovil	South West	1,225,000			1,180,000
Bumpers Way, Chippenham	South West	590,000			570,000
Clarendon Court, Warrington	North West	2,220,000			2,140,000
Connaught Business Centre, Mitcham	South East	980,000			990,000
Falcon Business Centre, Burton-upon-Trent	Midlands	1,200,000			1,100,000
3b. Property valuation- segmental analysis (continued)
3a. Property	Region	30 June 2010 £			31 December 2009 £
Farrington Place, Burnley	North West	1,600,000			1,590,000
Farthing Road Industrial Estate, Ipswich	East	4,350,000			4,250,000
Gainsford Drive, Halesowen	Midlands	575,000			575,000
Glove Industrial Estate, Washington	North East	900,000			900,000
Groundwell Farm Industrial Estate, Swindon	South West	4,380,000			4,260,000
Haines Park Industrial Estate, Leeds	Yorkshire & Humberside	900,000			875,000
Ikon Trading Estate, Hartlebury	Midlands	5,290,000			5,050,000
Links Estate, Weymouth	South West	1,340,000			1,280,000
Lowmoor Industrial Estate, Bradford	Yorkshire & Humberside	830,000			840,000
Malmesbury Road, Cheltenham	South West	850,000			800,000
New England Industrial Estate, Hoddesdon	South East	1,100,000			1,065,000
Nightingale Road, Horsham	South East	1,240,000			1,230,000
North Seaton Industrial Estate, Ashington	North East	850,000			820,000
Peartree Industrial Park, Dudley	Midlands	840,000			800,000
Portland Business Park, Sheffield	Yorkshire & Humberside	2,500,000			2,500,000
Roseville Business Park, Leeds	Yorkshire & Humberside	1,530,000			1,465,000
Shadsworth Industrial Park, Blackburn	North West	1,550,000			1,590,000
Sheiling Court, Corby	Midlands	930,000			940,000
Smead Dean Centre, Sittingbourne	South East	1,705,000			1,600,000
St. James Mill Business Park, Northampton	Midlands	3,010,000			2,970,000
Stadium Industrial Estate, Luton	East	2,590,000			2,530,000
Stukeley Meadow Industrial Estate, Huntingdon	East	1,800,000			1,760,000
Tewkesbury Business Park, Gloucestershire	South West	1,930,000			1,960,000
Trinity Court, Warrington	North West	1,490,000			1,490,000
Units 16-25 Malmesbury Road, Cheltenham	South West	1,180,000			1,160,000
Units 20-25, Maxwell Road Industrial Estate, Peterborough	East	1,800,000			1,790,000
Units 5-7, Maxwell Road Industrial Estate, Peterborough	East	2,140,000			2,080,000
Wern Industrial Estate, Newport	Wales	825,000			800,000
Wren Industrial Estate, Maidstone	South East	1,000,000			1,010,000
Wyther Lane, Leeds	Yorkshire & Humberside	830,000			810,000
Yale Business Park, Ipswich	East	1,450,000			1,390,000
Total value of industrial properties		63,030,000			61,615,000
Cleton Business Park, Tipton	Midlands		1,680,000	1,560,000
Rossendale Industrial Estate, Burnley	North West		1,330,000	1,295,000
Ryan and Leanne Business Park, Wareham	South West		2,060,000	2,050,000
Webb Ellis Industrial Business Park, Rugby	Midlands		5,000,000	5,000,000
Total value of industrial & office properties			10,070,000	9,905,000

 

Appleton Court, Wakefield	Yorkshire & Humberside	2,220,000	2,160,000
Ascroft Court, Oldham	North West	930,000	910,000
Barshaw Business Park, Leicester	Midlands	1,810,000	1,725,000
Basset Court, Northampton	Midlands	1,970,000	1,970,000
Churchfield Court, Barnsley	Yorkshire & Humberside	3,370,000	3,370,000
Dalton Court, Blackburn	North West	2,000,000	2,000,000
Faraday Court, Burton-upon-Trent	Midlands	2,700,000	2,680,000
Kendal House, Burgess Hill	South East	2,060,000	2,000,000
Marlborough House, Swindon	South West	475,000	475,000
Minerva Business Park, Peterborough	East	2,120,000	2,170,000
3a. 3b. 3b. Property valuation- segmental analysis (continued)   Property	Region	30 June 2010 £	31 December 2009 £
Newton Court, Wolverhampton	Midlands	2,020,000	2,020,000
Oak Tree Park, Redditch	Midlands	1,230,000	1,200,000
Priestly Court, Stafford	Midlands	975,000	955,000
Quays Reach, Salford	North West	1,270,000	1,270,000
Rutherford Court, Stafford	Midlands	1,530,000	1,490,000
Stephenson Court, Bedford	East	4,920,000	4,880,000
Warwick House, Solihull	Midlands	2,520,000	2,530,000
Watermark Way, Hertford	East	2,645,000	2,570,000
Whitworth Court, Runcorn	North West	1,860,000	1,880,000
Total value of office properties		38,625,000	38,255,000

 

56-58 Terminus Road, Eastbourne	South East	525,000	495,000
Total value of retail properties		525,000	495,000
Total property valuation		112,250,000	110,270,000

 

 

Property classification by sector as at 30 June 2010

 

Classification by Sector	Total as a percentage of Market Value	Total as a percentage of Market Value
	30 June 2010	31 December 2009
Industrial	56	56
Industrial & Office	9	9
Offices	34	34
Retail	1	1
Total	100	100

 

Property classification by region as at 30 June 2010

 

Region	Total as a percentage of Market Value	Total as a percentage of Market Value
	30 June 2010	31 December 2009
Midlands	30	30
East of England	21	21
North East	2	2
North West	13	13
South East	8	8
South West	14	14
Wales	1	1
Yorkshire & Humberside	11	11
Total	100	100

 

Expenses are reviewed on a total basis split between property expenses and other expenses.

Trade and other receivables, trade and other payables and bank loans are reviewed on a total basis.

The Board does not believe it is cost beneficial to the Group to split the costs, assets and liabilities between the operating segments mentioned above.

 

For an analysis of properties held on an entity basis please see note 15.

4. Taxation

Liability to UK non-resident land tax for each subsidiary within the Group is calculated on net rental income after taking into account losses brought forward and deductible capital allowances, if applicable.

	30 June 2010	30 June 2009	31 December 2009
	£	£	£
Charge for the period	43,975	-	-

 

 

5. Investment properties

All properties were valued as at 30 June 2010 by qualified professional valuers working for the company of DTZ Debenham Tie Leung, Chartered Surveyors, acting in the capacity of external valuers. All properties were valued on the basis of market value. The market value of the properties was primarily derived using comparable recent market transactions on arm's length terms. The properties were valued individually.

 

However, due to a reduction in transaction volumes the valuers have increasingly used their market knowledge and professional judgement and not simply relied on historical transactions for comparison. As a result of the level of judgement used in the valuations, the amounts ultimately realised in respect of any given property may differ from the valuations in the consolidated statement of financial position.

 

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

 

Fixed Investment Properties	30 June 2010	30 June 2009	31 December 2009
	£	£	£
Cost of properties on hand at start of period	165,552,462	163,687,172	163,687,171
Cost of properties purchased and acquisition costs	837,707	755,153	1,865,291
Cost of properties on hand at period end	166,390,169	164,442,325	165,552,462
Unrealised loss on revaluation of investment properties	(54,140,169)	(56,267,325)	(55,282,462)
Market value of properties on hand at period end	112,250,000	108,175,000	110,270,000

 

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

Fixed Investment Properties	30 June 2010	30 June 2009	31 December 2009
		£	£
Increase in yield of 25bps	(2,991,564)	(2,575,541)	(2,752,807)
Decrease in rental rates of 5%	(5,612,500)	(5,408,750)	(5,513,500)

 

This level of change is considered reasonably possible based on observation of current market conditions.

 

6. Trade and other receivables

 

Group

	30 June 2010	30 June 2009	31 December 2009
	£	£	£
Rental income receivable	1,842,512	1,645,358	1,386,712
Other debtors	361,812	359,038	591,299
	2,204,324	2,004,396	1,978,011

 

 

 

 

6. Trade and other receivables (continued)

 

Movements on the provision for impairment of receivables was as follows:

 

	30 June 2010	30 June 2009	31 December 2009
	£	£	£
At start of period/ year	114,600	-	-
Charge for period/ year	154,685	-	114,600
Utilised in period/ year	(269,285)	-	-
	-	-	114,600

 

7. Provision for incentive fee

No incentive fee is due at 30 June 2010 (30 June 2009: nil, 31 December 2009: nil).

 

However, following the approval of the proposals at the Company's Annual General Meeting and Extraordinary General Meeting on 9 August 2010, an incentive arrangement will come into effect either upon the shareholders voting to continue or Wind Up the Group at a meeting of the Company to be held on or after 30 June 2013. At that time, if the annual rate of return to the Company has been 15% or more, then Alpha Real, the new Property Investment Adviser, will be entitled to 20% of the excess above that target level of return.

 

8. Bank Loans

As at 30 June 2010 the outstanding loans and related arrangement fees were as follows:

 

			Initial loan	Arrangement fees	Amortisation of arrangement fees	30 June 2010
			£	£	£	£
A	Nationwide loan		9,601,217	(29,277)	7,704	9,579,644
A	Nationwide loan		18,875,000	(141,563)	45,043	18,778,480
B	Bank of Scotland loan		53,287,000	-	-	53,287,000
Amount due after more than one year			81,763,217	(170,840)	52,747	81,645,124
B		Bank of Scotland loan	800,000	(540,870)	412,921	672,051
Amount due within one year			800,000	(540,870)	412,921	672,051
Total			82,563,217	(711,710)	465,668	82,317,175

 

As at 31 December 2009 the outstanding loans and related arrangement fees were as follows:

 

			Initial loan	Arrangement fees	Amortisation of arrangement fees	31 December 2009
			£	£	£	£
A	Nationwide loan		9,715,084	(29,277)	3,082	9,688,889
A	Nationwide loan		18,875,000	(141,563)	25,739	18,759,889
Amount due after more than one year			28,590,084	(170,840)	28,821	28,448,065
B		Bank of Scotland loan	20,063,000	(325,669)	325,669	20,063,000
B		Bank of Scotland loan	35,035,000	(226,291)	226,291	35,035,000
Amount due within one year			55,098,000	(551,960)	551,960	55,098,000
Total			83,688,084	(722,800)	580,781	83,546,065

 

 

 

8. Bank Loans (continued)

 

A Nationwide Building Society loans

Chip (Two) Limited successfully completed the refinancing of its loan facility with Nationwide Building Society on 8 October 2009. Of the total loan of £9.6 million, £8.0 million has been fixed at the rate of 2.79% plus a margin of 2.5% per annum. The remaining loan amount of £1.6 million is subject to interest at LIBOR plus a margin of 2.5% per annum. The facility is repayable on 23 October 2012. The LTV covenant was waived until 16 October 2010 after which an event of default (as defined in the facility agreement) is triggered if, inter alia, the amount of the loan facility exceeds 75% before 31 March 2011 and 65% thereafter of the value of the properties over which Nationwide has security. The facility is secured by a legal charge and debenture over the property assets of Chip (Two) Limited. As at 30 June 2010 the LTV stood at 64.52% (taking into account £0.2 million held as security in a blocked bank account).

 

Chip (Six) Limited successfully completed the refinancing of its loan facility with Nationwide Building Society on 13 October 2009. Of the total loan of £18.9 million, £18.0 million has been fixed at the rate of 2.79% plus a margin of 3.5% per annum. The remaining loan amount of £0.9 million is subject to interest at LIBOR plus a margin of 3.5% per annum. The facility is repayable on 1 March 2013. The LTV covenant has been waived (along with the forward interest rate cover covenant) until 16 October 2010 after which an event of default (as defined in the facility agreement) is triggered if, inter alia, the amount of the loan facility exceeds 90% before 31 March 2012 and 85% thereafter of the value of the properties over which Nationwide has security. The facility is secured by a legal charge and debenture over the property assets of Chip (Six) Limited. As at 30 June 2010 the LTV stood at 90.90% (taking into account £0.25 million held as security in a blocked bank account). However Chip (Six) Limited has obtained a waiver from Nationwide until 16 October 2010 in respect of its LTV covenant breach.

 

Both revised Nationwide facilities require Chip (Two) Limited and Chip (Six) Limited to use surplus rents to reduce part of the outstanding debt on a quarterly basis and that the Interest Cover Ratio shall not be less than 160% (gross) and 110% (net) respectively.

 

In addition Chip (Two) Limited and Chip (Six) Limited were required to deposit £200,000 and £250,000 respectively in a blocked account over which Nationwide has sole signing rights. Withdrawals from these blocked accounts will be permitted only at Nationwide's sole discretion. The funds placed in these blocked deposit accounts have been included in "Cash and Cash Equivalents" in the consolidated statement of financial position.

 

Chip (Two) Limited and Chip (Six) Limited are each limited to capital expenditure of £10,000 per quarter under their loan facility agreements.

 

The swap arrangements in place have been disclosed in note 11.

 

B Bank of Scotland loans

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

 

Interest is payable at a rate equal to LIBOR, plus the mandatory costs of Bank of Scotland, plus a margin of 2.6% per annum. The facility is repayable on 31 October 2012 although, if an event of default (as defined in the facility agreement) were triggered, it would be repayable on first demand by Bank of Scotland. The facility agreements contain standard events of default and covenants for bank facilities of this nature. An event of default (as defined in the facility agreement) will be triggered if, inter alia, the amount of the loan facility exceeds 90% of the value of the underlying security. The facility is secured by a legal charge and debenture over the property assets of the respective companies i.e. Chip (One) Limited, Chip (Three) Limited, Chip (Four) Limited and Chip (Five) Limited. As at 30 June 2010 the LTV stands at 70.06%.

 

Other financial covenants dictate that the Net Rental Income of the secured properties shall not be less than 1.25% of interest for any test period, that combined rent for each calendar year shall not be less than £6.4 million and that the Company shall make quarterly loan repayments of £0.2 million.

 

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

 

The swap arrangements in place have been disclosed in note 11.

 

 

 

9. Trade and other payables

 

Group

	30 June 2010	30 June 2009	31 December 2009
	£	£	£
Rental income in advance	2,105,416	2,259,173	2,187,784
Creditors and accruals	2,548,240	1,556,960	2,036,321
	4,653,656	3,816,133	4,224,105

 

10. Share Capital

 

Authorised Share Capital:		30 June 2010	30 June 2009	31 December 2009
		£	£	£
114,000,000 Ordinary Shares of £0.01 each		1,140,000	1,140,000	1,140,000
60,000,000 "D" Ordinary Shares of £0.01 each		-	600,000	-
660,000,000 Deferred Shares of £0.001 each		660,000	60,000	660,000
		1,800,000	1,800,000	1,800,000

 

Issued Share Capital:		30 June 2010	30 June 2009	31 December 2009
		£	£	£
84,095,207 Ordinary Shares of £0.01 each, fully paid (4 April 2003: 30,000,000, 16 May 2003: 84,452 and 30 June 2003: 3,008,445, 5 February 2007: 138,463 shares bought back, 11 June 2007: "C" Ordinary Shares converted into Ordinary Shares at a ratio of 9 Ordinary Shares for every 10 "C" Ordinary Shares held, 16 July 2007: 1,100,000 shares bought back, 17 October 2007: 2,250,000 shares bought back). "D" Ordinary Shares converted into Ordinary Shares at a ratio of 4 Ordinary Shares for every 11 "D" Ordinary Shares held, 30 December 2009, issuing 9,369,128 shares).		840,951	747,259	840,951
"D" Ordinary Shares of £0.01 each, fully paid (24 February 2006: 5,093,779, 27 February 2006: 445,871, 31 March 2006: 3,046,613, 6 April 2006: 3,183,929, 7 April 2006: 21,420, 28 April 2006: 2,601,537, 31 May 2006: 2,167,963, 30 June 2006: 8,007,836, 9 August 2006: 1,699,641, 17 October 2007: 503,487 shares bought back. 30 December 2009: 25,765,102 shares cancelled).		-	257,651	-
214,095,457 Deferred Shares of £0.001 each fully paid (11 June 2007: 50,135,717, 30 December 2009: 163,959,740).		214,095	50,136	214,095
		1,055,046	1,055,046	1,055,046

 

Voting and other rights

Holders of Ordinary Shares are entitled to one vote for each share held. Deferred shares carry no voting rights.

 

Dividends

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

 

 

 

10. Share Capital (continued)

 

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 members in proportion to the capital paid up on the shares held at the commencement of the winding-up. Deferred shares holders will be entitled to an amount equal to their nominal holding.

 

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 Isle of Man Companies Act 1931 and arises on cancellation of issued share capital.

 

11. Financial Instruments and Associated Risk

The aim of the Group is to seek to improve income, reduce debt and provide the prospect of long-term capital growth.

 

Consistent with that objective, the Group's financial instruments comprise UK commercial property investments. In addition, the Group holds cash as well as having debtors and creditors that arise directly from its operations. The Group has not entered into any new derivative transactions during the period under review. However in August 2010 Chip (Four) Limited entered into a new Swap agreement with Bank of Scotland in order to fix the Group's exposure on certain borrowings from 29 December 2012. The interest rate Swap will run until 31 October 2012 at a rate of 2.25%. A forward starting Cap has also been purchased, which will cap the interest rate payable to no more than 5% from 31 October 2012 until 31 October 2015. The interest rate swap contracts entered into in the previous year still remain in place. These interest rate swap contracts hedge the interest rate exposure on the bank borrowings and it is the Group's policy that no trading in derivative instruments shall be undertaken.

 

The Group is exposed to market risk, credit risk and liquidity risk. Market risk includes interest rate risk and foreign currency risk.

 

The Board reviews and agrees policies for managing its risk exposure. These policies are summarised below and have remained unchanged for the period under review.

 

11.1  Interest rate risk

The Group's exposure to interest rate risk relates primarily to the Group's long-term debt obligations. The Group's policy is to manage its interest cost using interest rate swaps, in which the Group has agreed to exchange the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principle amount. The swaps are designed to fix the interest payable on the loan.

 

The interest rate profile of the Group at 30 June 2010 was as follows:

Financial Assets	Total £	Fixed rate £	Variable rate £	Non interest bearing £	Weighted average  interest rate %
Cash & cash equivalents	2,026,492	-	2,026,492	-	0.12
Trade & other receivables	2,204,324	-	-	2,204,324	-
	4,230,816	-	2,026,492	2,204,396	0.12

 

 

 

 

 

 

 

 

 

 

11.1  Interest rate risk (continued)

 

Financial Liabilities	Total £	Fixed rate £	Variable rate £	Non interest bearing £	Weighted average interest rate %	Weighted period Years
Trade & other payables	4,653,656	-	-	4,653,656	-	-
Unrealised loss on interest rate swap	2,470,865	-	-	2,470,865	-	-
Bank loan	82,563,217	79,973,133	2,590,084	-	7.08	2.87
	89,687,738	79,973,133	2,590,084	7,124,521	7.08	2.87

 

The interest rate profile on the Group at 30 June 2009 was as follows.

 

Financial Assets	Total £	Fixed rate £	Variable rate £	Non interest bearing £	Weighted average  interest rate %
Cash and cash equivalents	3,379,856	-	3,379,856	-	0.30
Trade & other receivables	2,004,396	-	-	2,004,396	-
	5,384,252	-	3,379,856	2,004,396	0.30

 

 

Financial Liabilities	Total £	Fixed rate £	Variable rate £	Non interest bearing £	Weighted average interest rate %	Weighted period Years
Trade & other payables	3,816,133	-	-	3,816,133	-	-
Unrealised loss on interest rate swap	4,000,108	-	-	4,000,108
Bank loan	84,032,221	73,193,000	10,839,221	-	7.02	0.17
	91,848,462	73,193,000	10,839,221	7,816,241	7.02	0.17

 

The interest rate profile of the Group at 31 December 2009 was as follows:

 

Financial Assets	Total £	Fixed rate £	Variable rate £	Non interest bearing £	Weighted average  interest rate %
Cash & cash equivalents	3,183,803	-	3,183,803	-	0.24
Trade & other receivables	1,978,011	-	-	1,978,011	-
	5,161,814	-	3,183,803	1,978,011	0.24

 

 

 

 

 

 

 

 

 

 

 

 

11.1  Interest rate risk (continued)

 

 

Financial Liabilities	Total as per consolidated statement of financial position £	Fixed rate £	Variable rate £	Non interest bearing £	Weighted average interest rate %	Weighted period Years
Trade & other payables	4,224,105	-	-	4,224,105	-	-
Unrealised loss on interest rate swap	3,117,771			3,117,771	-	-
Bank loans	83,546,065	80,955,981	2,590,084	-	6.72	2.69
	90,887,941	80,955,981	2,590,084	7,341,876	6.72	2.69

 

11.2 Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or tenant contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for rental income receivable and recoverable costs from occupational tenants) and from its financing activities, including deposits with banks and other financial instruments.

 

Credit risks related to receivables: Credit risk in relation to occupational tenants is managed by Berkshire Asset Management. Credit limits are established for all tenants based on internal rating criteria and outstanding tenant receivables are regularly monitored. At 30 June 2010, the Group's ten largest debtors totalled £261,758 and accounted for approximately 12% of all receivables owing. There were eleven tenants with balances greater than £20,000 accounting for just under 15% of total amounts receivable. The maximum exposure to credit risk at the reporting date is the carrying value of financial assets mentioned in the table below.

 

In the event of default by an occupational tenant, the Group will suffer a rental shortfall and incur additional costs including legal expenses, in maintaining, insuring and re-letting the property until it is re-let. The Board monitors the credit risk by reviewing regular reports it receives on the concentration of risk and any tenants in arrears. The Group holds collateral as security. Credit risk related to financial instruments and cash deposits: Credit risk from balances with banks and financial institutions are managed in accordance with the Group's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty.

 

Counterparty credit limits are reviewed by the Group's Board of Directors on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty failure. To this extent the surplus funds are held at the same banks that have lent to the Group. The Group's maximum exposure to credit risk for the components of the consolidated statement of financial position at 30 June 2010 and 31 December 2009 is the carrying amounts as illustrated below except for financial guarantees and financial derivative instruments.

 

In summary, compared to the amounts included in the consolidated statement of financial position, the maximum exposure to credit risk at 30 June/31 December was as follows:

 

	30 June 2010 statement of financial position	Maximum exposure	31 December 2009 statement of financial position	Maximum exposure
Cash & cash equivalents	2,026,492	2,026,492	3,183,803	3,183,803
Trade & other receivables	2,204,324	2,204,324	1,978,011	1,978,011
	4,230,816	4,230,816	5,161,814	5,161,814

 

11.3 Liquidity risk

Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments. In certain circumstances, the terms of the Group's bank loan entitle the lender to require early repayment (note 8 Bank Loans) and in such circumstances the Group's ability to maintain the net asset value attributable to the ordinary shares could be adversely affected.

 

The Directors and Property Investment Adviser continue to monitor the financial covenants of each of the loan facilities to ensure that no further breaches occur.

 

 

11.3 Liquidity risk (continued)

The following table illustrates the sensitivity of the loan to value ratio for the year end to an increase or decrease of 10% in the market value of the investment properties. This level of change is considered reasonably possible based on observation of current market conditions.

 

	30 June 2010 Increase in fair value	30 June 2010 Decrease in fair value	31 December 2009 Increase in fair value	31 December 2009 Decrease in fair value
Loan to property valuation ("LTV")	66.67%	81.48%	68.78%	84.07%

 

The remaining contractual maturities of the financial liabilities at 30 June/ 31 December, based on the earliest date on which payment can be required was as follows:

 

As at 30 June 2010

Financial Liabilities	Due within 3 months	Due between 3 and 12 months	Due between 1 and 5 years	Due> 5 years	Total
Trade & other payables	4,653,656	-	-	-	4,653,656
Interest rate swaps	-	1,558,265	912,600	-	2,470,865
Bank loans	200,000	600,000	81,763,217	-	82,563,217
Total Liabilities	4,853,656	2,158,265	82,675,817	-	89,687,738

 

As at 30 June 2009

Financial Liabilities	Due within 3 months	Due between 3 and 12 months	Due between 1 and 5 years	Due> 5 years	Total
Trade & other payables	3,816,133	-	-	-	3,816,133
Interest rate swaps	-	-	4,000,108	-	4,000,108
Bank loans	84,032,221	-	-	-	84,032,221
Total Liabilities	87,848,354	-	4,000,108	-	91,848,462

 

As at 31 December 2009

Financial Liabilities	Due within 3 months	Due between 3 and 12 months	Due between 1 and 5 years	Due> 5 years	Total
Trade & other payables	4,224,105	-	-	-	4,224,105
Interest rate swaps	-	2,943,771	174,000	-	3,117,771
Bank loans	55,495,688	1,215,157	31,928,831	-	88,639,676
Total Liabilities	59,719,793	4,158,928	32,102,831	-	95,981,552

 

11.4 Market risk

The Group's exposure to market risk is comprised mainly of movements in the value of the Group's investments in property. The Group's investment portfolio is managed within the investment parameters disclosed in its prospectus.

 

The following table illustrates the sensitivity of the profit/ (loss) after taxation for the period/ year end and the net asset value to an increase or decrease of 10% in the market value of the investment properties. This level of change is considered reasonably possible based on observation of current market conditions.

 

	30 June 2010 Increase in fair value	30 June 2010  Decrease in fair value	31 December 2009 Increase in fair value	31 December 2009  Decrease in fair value
Statement of comprehensive income - profit/ (loss) after taxation
Total profit/ (loss) after taxation for the period	11,225,000	(11,225,000)	11,027,000	(11,027,000)
Net asset value at 30 June/31 December	41.45%	(41.45%)	44.87%	(44.87%)

 

 

 

 

11.5 Foreign currency risk

There is no foreign currency risk as assets and liabilities of the Group are maintained in sterling.

 

11.6 Fair values

The carrying amount of the financial assets and liabilities in the Financial Statements are equal to their fair values. The fair value of the financial assets and liabilities are included at an estimate of the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

 

·; Cash and short-term deposits, trade receivables, trade payables, and other current liabilities approximate their carrying amounts due to the short-term maturities of these instruments.

 

·; The fair value of floating rate borrowings is estimated by discounting future cash flows using rates currently available for debt or similar terms and remaining maturities. The fair value approximates their carrying values gross of unamortised transaction costs.

 

·; The fair value of the derivative interest rate swap contracts are estimated by discounting expected future cash flows using current market interest rates and yield curve over the remaining term of the instrument.

 

 

The following table shows an analysis of the fair values of financial instruments recognised in the consolidated statement of financial position by level of the fair value hierarchy.

 

As at 30 June 2010, the Group held the following financial instruments measured at fair value:

 

	Level 1	Level 2	Level 3	Total fair value
Interest rate swap	-	2,470,865	-	2,470,865

 

As at 31 December 2009, the Group held the following financial instruments measured at fair value:

 

	Level 1	Level 2	Level 3	Total fair value
Interest rate swap	-	3,117,771	-	3,117,771

 

As at 30 June 2009, the Company held the following financial instruments measured at fair value:

 

	Level 1	Level 2	Level 3	Total fair value
Interest rate swap	-	4,000,108	-	4,000,108

 

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

 

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

 

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

 

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

 

11.7 Hedging activities and derivatives

The exposure of the Group to movements in interest rates has been mitigated by Chip (One) Limited, Chip (Two) Limited and Chip (Six) Limited each entering into interest rate swaps.

 

Bank of Scotland

The interest rate swap for the amount of £63,500,000 (2009: £63,500,000) entered into by Chip (One) Limited has the effect of fixing the Group's exposure on certain borrowings from 27 June 2008. This interest rate swap runs until 29 December 2010 and fixes the rate at 5.56% before the margin and mandatory costs. As at 30 June 2010 the market value of this interest rate swap was a liability of £1,558,265 (2009: £2,943,771).

 

The Group has entered into a new interest rate Swap and Cap arrangement starting in December 2010 as detailed in note 14.

 

 

 

 

11.7 Hedging activities and derivatives (continued)

 

Nationwide

The interest rate swap for the amount of £8,000,000 entered into by Chip (Two) Limited has the effect of fixing the Group's exposure on certain borrowings from 15 October 2009. The interest rate swap runs until 23 October 2012 and fixes the rate at 2.79% before the margin and mandatory costs. As at 30 June 2010 the market value of this interest rate swap was a liability of £267,600 (2009: £72,000).

 

The interest rate swap for the amount of £18,000,000 entered into by Chip (Six) Limited has the effect of fixing the Group's exposure on certain borrowings from 12 October 2009. The interest rate swap runs until 1 March 2013 and fixes the rate at 2.79% before the margin and mandatory costs. As at 30 June 2010 the market value of this swap was a liability of £645,000 (2009:£102,000).

 

12. Capital management

The objective of the Group's capital management is to maintain capital ratios in order to support its business and maximise shareholder value. The Group monitors capital using a gearing ratio commercially in line with the banking covenants, which is defined as bank debt (less any cash held to the bank's order), excluding any arrangement fees, divided by investment properties.

 

The following gearing ratios are calculated as net debt divided by total capital plus net debt:

 

Investments in subsidiaries:	30 June 2010 £	31 December 2009 £
Interest bearing loans and borrowings	82,563,217	83,688,084
Trade and other payables	7,124,521	7,341,876
Less cash and short term deposits	(2,026,492)	(3,183,803)
Net debt	87,661,246	87,846,157
Total capital	27,039,120	24,543,873
Capital and net debt	114,700,366	112,390,030
Gearing ratio	76.4%	78.2%

 

The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents. Capital includes equity attributable to the equity holders of the parent.

 

13. Related Party Transactions

Mr Philip Scales, director of the Company, is also a director and an employee of the administrator IOMA Fund and Investment Management Limited. During the period fees of £50,615 (30 June 2009: £50,309, 31 December 2009: £100,696) were payable to IOMA Fund and Investment Management Limited. As at 30 June 2010 a total amount of £25,329 (30 June 2009: £24,786, 31 December 2009: £25,513) was outstanding.

 

14. Events after Balance Sheet Date

 

Debt Facilities

On 13 July 2010 as part of a quarterly net rental income cash sweep the sum of £42,835 was paid by Chip (Two) Limited to Nationwide Building Society, reducing the loan balance to £9.56 million.

 

On 15 July 2010, the first quarterly loan repayment of £200,000 was paid by the Group to Bank of Scotland, reducing the loan balance to £53.9 million.

 

An interest rate Swap for the amount of £47 million has been entered into with Bank of Scotland by Chip (Four) Limited in order to fix the Group's exposure on certain borrowings from 29 December 2010. The interest rate Swap will run until 31 October 2012 at a rate of 2.25% (pre margin). In addition the Group has also purchased a forward starting Cap rate from 31 October 2012, running until 31 October 2015 which caps the interest rate payable to no more than a rate of 5%.

 

Results of AGM and EGM

On 9 August 2010, the Company held an AGM and EGM to consider, inter alia, the Proposals and Panel Waiver as set out in the circular dated 13 July 2010. The AGM and EGM Resolutions were all passed by the necessary majorities of shareholders voting.

 

14. Events after Balance Sheet Date (continued)

 

The principal resolutions passed by shareholders were as follows:

 

Continuation Vote

The approval of the continuation of the investment activities of the Company for at least a further three year period until the shareholder vote at the AGM held to approve the 31 December 2012 accounts.

 

Amendment to Articles to increase frequency of Continuation Vote

A resolution to amend the existing Articles to replace the existing Article 160 with the following new Article 160: "The Directors shall put an ordinary resolution to the annual general meeting of the Company to approve the accounts for the year ending 31 December 2012 and, if passed, to every third subsequent annual general meeting, proposing that the Company should continue its investment activities for a further three year period. If any such resolution is not passed, the Directors shall arrange for the properties and assets of the Company and its subsidiaries to be realised in an orderly fashion in anticipation of a return of capital to investors."

 

Change of name

In conjunction with the Proposals, in particular the appointment of the new Property Investment Adviser, the Board proposes that the name of the Company is changed to Alpha UK Multi Property Trust PLC.

 

Increase in share capital

At the issue of the Convertible Unsecured Loan Stock ("CULS"), the Company shall also issue to Alpha Tiger Preference Shares which are stapled to the CULS. This will require a change in the authorised share capital of the Company to create the new Preference Shares. The number of Ordinary Shares available for issue was consequently increased to 106,792,380.

 

As part of the proposals approved by the shareholders at the Company's AGM and EGM, Alpha Real was appointed as the Property Investment Adviser. A new Property Investment Adviser agreement has been entered into, one of the terms of which is a reduction in the fee payable by the Group to the Property Investment Adviser to 1.25% of Gross Asset Value ("GAV") (previously 1.5% of GAV with the exception of Chip (Six) Limited which was 1.125% of GAV). Based on the GAV of the Group at 9 August 2010 this reduction in fees represents a saving to the Group of approximately £255,000 per annum.

 

In addition, Alpha Tiger subscribed for £4.75 million of CULS at a coupon rate of 4.75% per annum, convertible into Ordinary Shares at a conversion price of 31 pence per Ordinary Share. The Company shall redeem any outstanding CULS (together with any CULS issued in satisfaction of interest payments) on 30 June 2013 in full at par plus a payment of a premium of 18%. The Company also granted Alpha Tiger an option to subscribe for 4 million Ordinary Shares at 50 pence each. This option must be exercised by 30 June 2013.

 

15. Schedule of Investment Properties

 

Chip (One) Limited	Value at 30 June 2010 £	Value at 30 June 2009 £	Value at 31 December 2009 £
ASHINGTON, North Seaton Industrial Estate, Northumberland	850,000	800,000	820,000
BARNSLEY, Churchfield Court, Churchfield Road, South Yorkshire	3,370,000	3,350,000	3,370,000
HUNTINGDON, Stukeley Meadow Industrial Estate, St Margaret's Way, Cambridgeshire	1,800,000	1,700,000	1,760,000
KEYNSHAM, Ashmead Industrial Estate, Ashmead Road, Bristol	1,715,000	1,600,000	1,680,000
LEICESTER, Barshaw Business Park, Leicestershire	1,810,000	1,700,000	1,725,000
RUGBY, Webb Ellis Industrial Business Park, Woodside Park, Warwickshire	5,000,000	5,080,000	5,000,000
TEWKESBURY, Tewkesbury Business Park, Delta Drive, Gloucestershire	1,930,000	2,000,000	1,960,000
WAREHAM, Ryan and Leanne Business Park, Sandford Lane, Dorset	2,060,000	2,070,000	2,050,000
WARRINGTON, Trinity Court, Cheshire	1,490,000	1,450,000	1,490,000
WEYMOUTH, Links Estate, Surrey Close, Granby Industrial Estate, Dorset	1,340,000	1,210,000	1,280,000
	21,365,000	20,960,000	21,135,000

 

15. Schedule of Investment Properties

Chip (Two) Limited		Value at 30 June 2010 £		Value at 30 June 2009 £		Value at 31 December 2009 £
BRADFORD, Lowmoor Industrial Estate, West Yorkshire		830,000		820,000		840,000
BURTON-UPON-TRENT, Falcon Business Centre, Staffordshire		1,200,000		1,030,000		1,100,000
EASTBOURNE, 56-58 Terminus Road, East Sussex		525,000		465,000		495,000
GLOUCESTER, 1A-A2 Goodridge Avenue, Gloucestershire		350,000		250,000		350,000
HARTLEBURY, Ikon Trading Estate, Worcestershire		5,290,000		4,920,000		5,050,000
LEEDS, Hains Park Industrial Estate, Grant Avenue, West Yorkshire		900,000		825,000		875,000
LEEDS, Roseville Business Park, Roseville Road, West Yorkshire		1,530,000		1,410,000		1,465,000
LUTTERWORTH, 4-5 Elizabethan Way, Leicestershire		620,000		570,000		600,000
MANSFIELD, Anglia Way, Southwell Road, Nottinghamshire		825,000		800,000		825,000
SHEFFIELD, Portland Business Park, Handsworth, South Yorkshire		2,500,000		2,500,000		2,500,000
		14,570,000		13,590,000		14,100,000
Chip (Three) Limited	Value at 30 June 2010 £		Value at 30 June 2009 £		Value at 31 December 2009 £
BLACKBURN, Shadsworth Industrial Park, Sett End Road West, Lancashire	1,550,000		1,550,000		1,590,000
IPSWICH, Farthing Road Industrial Estate, Farthing Road, Suffolk	4,350,000		4,000,000		4,250,000
	5,900,000		5,550,000		5,840,000

 

Chip (Four) Limited	Value at 30 June 2010 £	Value at 30 June 2009 £	Value at 31 December 2009 £
BURNLEY, Farrington Place, Lancashire	1,600,000	1,550,000	1,590,000
BURNLEY, Rossendale Industrial Estate, Lancashire	1,330,000	1,250,000	1,295,000
CHELTENHAM, Malmesbury Road, Gloucestershire	850,000	765,000	800,000
CHELTENHAM , Units 16-25 Malmesbury Road, Gloucestershire	1,180,000	980,000	1,160,000
CHIPPENHAM, Bumpers Way, Bumpers Farm Industrial Estate, Wiltshire	590,000	570,000	570,000
HALESOWEN, Gainsford Drive	575,000	560,000	575,000
HODDESDON, New England Industrial Estate, Hertfordshire	1,100,000	1,000,000	1,065,000
HORSHAM, Nightingale Road, West Sussex	1,240,000	1,200,000	1,230,000
IPSWICH, Yale Business Park, Suffolk	1,450,000	1,380,000	1,390,000
LEEDS, Wyther Lane, West Yorkshire	830,000	760,000	810,000
LUTON, Stadium Industrial Estate, Cradock Road, Bedfordshire	2,590,000	2,500,000	2,530,000
MAIDSTONE, Wren Industrial Estate, Kent	1,000,000	1,000,000	1,010,000
MITCHAM, Connaught Business Centre, Surrey	980,000	990,000	990,000
NEWPORT, Wern Industrial Estate, Monmouthshire	825,000	700,000	800,000
PETERBOROUGH, Units 5-7, Maxwell Road Industrial Estate, Cambridgeshire	2,140,000	2,050,000	2,080,000
PETERBOROUGH, Units 20-25, Maxwell Road Industrial Estate, Cambridgeshire	1,800,000	1,770,000	1,790,000
SWINDON, Groundwell Farm Industrial Estate, Wiltshire	4,380,000	4,100,000	4,260,000
YEOVIL, Bartlett Park, Somerset	1,225,000	1,180,000	1,180,000
	25,685,000	24,305,000	25,125,000

 

 

 

 

 

 

 

15. Schedule of Investment Properties

 

 

Chip (Five) Limited	Value at 30 June 2010 £	Value at 30 June 2009 £	Value at 31 December 2009 £
BURGESS HILL, Kendal House, West Sussex	2,060,000	1,900,000	2,000,000
CORBY, Sheiling Court, Northamptonshire	930,000	870,000	940,000
DUDLEY, Peartree Industrial Park, Peartree Lane, West Midlands	840,000	740,000	800,000
HERTFORD, Watermark Way, Hertfordshire	2,645,000	2,520,000	2,570,000
NORTHAMPTON, St. James Mill Business Park, Millbrook Close, Northamptonshire	3,010,000	2,810,000	2,970,000
OLDHAM, Ascroft Court, Lancashire	930,000	865,000	910,000
PETERBOROUGH, Minerva Business Park, Cambridgeshire	2,120,000	2,170,000	2,170,000
REDDITCH, Oak Tree Park, West Midlands	1,230,000	1,150,000	1,200,000
SITTINGBOURNE, Smead Dean Centre, Kent	1,705,000	1,550,000	1,600,000
SOLIHULL, Warwick House, West Midlands	2,520,000	2,700,000	2,530,000
STAFFORD, Priestly Court, Staffordshire Technology Park, Staffordshire	975,000	915,000	955,000
SWINDON, Marlborough House, Wiltshire	475,000	400,000	475,000
TIPTON, Cleton Business Park, West Midlands	1,680,000	1,520,000	1,560,000
WARRINGTON, Clarendon Court, Cheshire	2,220,000	2,050,000	2,140,000
WASHINGTON, Glove Industrial Estate, Spire Road, Tyne and Wear	900,000	830,000	900,000
	24,240,000	22,990,000	23,720,000

 

 

 

Chip (Six) Limited		Value at 30 June 2010 £	Value at 30 June 2009 £		Value at 31 December 2009 £
BEDFORD, Stephenson Court, Bedfordshire		4,920,000	4,970,000		4,880,000
BLACKBURN, Dalton Court, Lancashire		2,000,000	2,120,000		2,000,000
BURTON-UPON-TRENT, Faraday Court, Staffordshire		2,700,000	2,550,000		2,680,000
NORTHAMPTON, Basset Court, Northamptonshire		1,970,000	1,940,000		1,970,000
RUNCORN, Whitworth Court, Cheshire		1,860,000	1,840,000		1,880,000
SALFORD, Quays Reach, Greater Manchester		1,270,000	1,350,000		1,270,000
STAFFORD, Rutherford Court, Staffordshire		1,530,000	1,400,000		1,490,000
WAKEFIELD, Appleton Court, West Yorkshire		2,220,000	2,650,000		2,160,000
WOLVERHAMPTON, Newton Court, Staffordshire		2,020,000	1,960,000		2,020,000
		20,490,000	20,780,000		20,350,000
Total	112,250,000			108,175,000	110,270,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADDITIONAL INFORMATION

 

Shareholder Analysis as at 30 June 2010

 

	Ordinary
Number of shares held	Number of shareholders	Total Shares Held
Up to 1,000	16	5,772
1,001 - 2,000	39	65,813
2,001 - 5,000	200	794,103
5,001 - 10,000	267	2,140,043
10,001 - 50,000	464	11,663,756
50,001 - 100,000	101	8,046,757
Over 100,000	69	61,378,963
	1,156	84,095,207