Annual report 2020 - Alpha Real Trust Limited...Alpha Real Trust Limited : Annual report 2020 1 • NAV per ordinary share 213.7p as at 31 March 2020 (31 March 2019: 204.3p). • Basic

Annual reportFor the year ended 31 March 2020 2020

Alp

ha Real Trust Lim

itedFo

r the year ended

31 March 2020

Annual rep

ort and

financial statements

1 Highlights

2 Trust summary and objective

4 Chairman’s statement

8 Investment review

20 Directors

21 Directors’ and corporate governance report

26 Directors’ statement pursuant to the Disclosure and Transparency Rules

27 Independent auditors’ report

32 Consolidated statement of comprehensive income

33 Consolidated balance sheet

34 Consolidated cash flow statement

35 Consolidated statement of changes in equity

36 Notes to the financial statements

67 Directors and Company information

68 Shareholder information

68 Financial calendar

Contents

www.alpharealtrustlimited.com

Alpha Real Trust Limited : Annual report 2020 1

• NAVperordinaryshare213.7pasat31 March 2020(31 March2019:204.3p).

• Basicearningsfortheyearended31 March 2020of5.8pperordinaryshare(31 March2019:33.1pperordinaryshareand 33.5pperAshare).

• Adjustedearningsfortheyearended31 March 2020of6.4pperordinaryshare(31 March2019:3.9pperordinaryandAshare)*.

• Declarationofaquarterlydividendof1.0pperordinaryshareexpectedtobepaidon17 July 2020.

• Postyearend,thesaleoftheUnityandArmouriessiteinBirminghamcompletedat the £4.5 millionbookvalue.

*Thebasisoftheadjustedearningspershareisprovidedinnote9

• Robust financial position:acautiousapproachtonewinvestmentisbeingtakenandcashconserveduntiltheCovid‑19situationunfolds.

• Diversified portfolio of secured senior and secured mezzanine loan investments;asat31 March2020,thesizeofART’ssecuredloanportfoliowas£39.9 million,representing31.9%oftheinvestmentportfolio.TheportfoliohasanaverageLoantoValue(‘LTV’)of55.7%(with averageapprovedLTVbetween58%and76%formezzaninewhilethehighestapprovedLTVforsenioris73.1%).

• Galaxia update:TheSupremeCourtofIndiaruledinfavourofART’sdisputeregardingitsGalaxiainvestment.InupholdingthearbitrationawardinfavourofARTanddismissingLogix’sappeal,thecourthasestablishedasettlementpathwaytoconcludethelegalprocess.

• UK industrial portfolio:phasedsaleoftheUKindustrialportfoliohassuccessfullyadvancedwiththesaleofthepenultimateassetcompleted.

Alpha Real Trust Limited targets investment, development, financing and other opportunities in real estate, real estate operating companies and securities, real estate services, infrastructure, infrastructure services, other asset-backed businesses and related operations and services businesses that offer attractive risk-adjusted total returns.

Highlights

Alpha Real Trust Limited : Annual report 20202

Trust summary and objective

Strategy

AlphaRealTrustLimited(‘theCompany’or‘ART’or‘the Group’)targetsinvestment,development,financingandotheropportunitiesinrealestate,realestateoperatingcompaniesandsecurities,realestateservices,infrastructure,infrastructureservices,otherasset‑backedbusinessesandrelatedoperationsandservicesbusinessesthatofferattractiverisk‑adjustedtotal returns.

ARTcurrentlyfocussesonasset‑backedlending,debtinvestmentsandhighreturnpropertyinvestmentsinWestern Europethatarecapableofdeliveringstrongriskadjustedcash flows.

Theportfoliomixat31 March2020,excludingsundryassets/liabilities,wasasfollows:

31 March 2020 31 March 2019

Highreturndebt: 31.9% 26.3%

Highreturnequityinproperty investments:

26.1% 25.1%

Otherinvestments: 6.2% 6.3%

Cash: 35.8% 42.3%

TheCompanycurrentlyplanstoinvestthemajorityofitscashintosecuredseniororsecuredmezzaninedebtinduecourseandsubjecttohowtheCovid‑19situationunfolds.

Hig

h re

turn

equity in

pro

per

ty in

vestments High return

debt

Oth

er

Cash

UK Industrial Portfolio 3.4%(previously AURE)

Secured mezzanine debt 16.4%

Secured senior debt 15.5%

Galaxia 2.0%

Cash 35.8%

Other 0.1%Realhousingco 0.5%

Cambourne 1.4%

Hamburg 5.7%

Unity & Armouries 3.6%

H2O 15.6%

26.1%

6.2%

35.8%

31.9%

Company’s asset allocation by sector and investment (by percentage of Group’s NAV, based on the balance sheet carrying values, excluding the Company’s sundry assets/ liabilities) at 31 March 2020 (seepage8forfurtherdetails).


Trust summary and objective (continued)

Financialhighlights

12 months ended 31 March 2020

6 months ended 30 September 2019

12 months ended 31 March 2019

Net asset value (£’000) 127,627 126,440 136,673

Net asset value per ordinary and A share 213.7p 213.5p 204.3p

Earnings per ordinary share (basicanddiluted)(adjusted)* 6.4p 3.0p 3.9p

Earnings per A share (basicanddiluted)(adjusted)* - - 3.9p

Total earnings per ordinary and A share (basicanddiluted)(adjusted)* 6.4p 3.0p 3.9p

Earnings per ordinary share (basicanddiluted) 5.8p 2.7p 33.1p

Earnings per A share (basicanddiluted)** - - 33.5p

Total earnings per ordinary and A share (basicanddiluted) 5.8p 2.7p 33.2p

Dividend per share (paidduringtheperiod) 3.6p 1.6p 2.4p

* Theadjustedearningspershareincludesadjustmentsfortheeffectofthefairvaluerevaluationofinvestmentpropertyandindirectpropertyinvestments,capitalelementonInvestmentManager’sfees,thefairvaluemovementsonfinancialassetsanddeferredtaxprovisions:fullanalysisisprovidedinnote9totheaccounts.

** ThedifferenceinbasicanddilutedEPSbetweenordinaryandAshareswasduetotheRomulusinvestment,whichwasexclusivelyforthebenefitofARTAshareholders(note9).

3.6p Dividends per share paid and declared

6.4p Adjusted earnings per share of 6.4p

213.7p NAV per share 213.7p

Dividends

ThecurrentintentionoftheDirectorsistopayadividendandofferascripdividendalternativequarterlytoallshareholders.

Listing

TheCompany’ssharesaretradedontheSpecialistFundSegment(‘SFS’)oftheLondonStockExchange(‘LSE’),tickerARTL:LSE.

Management

TheCompany’sInvestmentManagerisAlphaRealCapitalLLP(‘ARC’),whoseteamofinvestmentandassetmanagementprofessionalsfocusonthepotentialtoenhanceearningsinadditiontoaddingvaluetotheunderlyingassets,andalsofocusontheriskprofileofeachinvestmentwithinthecapitalstructuretobestdeliverattractiveriskadjustedreturns.

ControloftheCompanyrestswiththenon‑executiveGuernseybasedBoardofDirectors.


IampleasedtopresenttheCompany’sannualreportandaccountsfortheyearended31 March2020.

Giventheextraordinaryeventsofthepastfewmonths,thehealthandwellbeingofART’sstakeholdersisforemostinourminds.Covid‑19andtheunprecedentedactionsofGovernmentstolock‑downtheircitizensandshut‑downtheireconomieshasseverelyaffectedtheeconomicbackdropinwhichtheCompanyoperates.ART’sinvestmentportfoliobenefitsfromdiversificationacrossgeographies,sectorsandassettypes.Overthepastyear,theCompanyhasfocusedonrecyclingcapitalintoassetbackedlendingwhilereducingexposuretodevelopmentrisk.Inthistimeofheighteneduncertainty,theCompanyisbenefitingfromthatstrategyandit hasplacedtheCompanyonarobustfinancialfooting.

Wearetakingacautiousapproachtonewinvestment,including newlending,asweseehowCovid‑19unfolds.

Diversified secured lending investment

Overthepastyear,theCompany’sportfolioofsecuredseniorandmezzanineloaninvestmentshasincreasedinscaleanddiversity.Theloansaretypicallysecuredonrealestateinvestmentanddevelopmentassetswithattractiveriskadjustedincomereturns.Asat31 March2020,ARThadcommitted£47.2 millionacrossfortyloans,ofwhichonewascompletedduringthequarterto31 March2020andofwhich£39.9 millionwasdrawn.

Overthepasttwelvemonthstheloanportfoliohasincreasedby10.4%,with£3.7 millionofinvestments,netofrepayments,intothesecuredloanportfoliocompletingand£1.0 milliondrawnpostyearendfrompreviouslycommittedloans.Thelargestindividualloanintheportfolioasat31 March2020isaseniorloanof£3.4 millionwhichrepresents7.2%ofcommittedcapitaland2.7%oftheCompany’sNAV.

PortfolioloansareunderwrittenagainstvalueforinvestmentloansorgrossdevelopmentvaluefordevelopmentloansasrelevantandcollectivelyreferredtoasLTVinthisreport.TheportfoliohasanaverageLTVof55.7%(withanaverageapprovedLTVbetween58%and76%formezzanineloanswhilstthehighestapprovedLTVforseniorloansis73.1%).

Asat31 March2020,48.6%oftheCompany’sloaninvestmentswereseniorloansand51.4%weremezzanineloans,withaweightedaverageLTVratioof55.7%basedoncommitments,i.e.includingamountsavailablefordrawing.Theunderlyingassetsintheloanportfolioasat31 March2020hadgeographicdiversificationwithaLondonandSouthEastfocus.TheSouthofEngland(includingLondon)accountedfor62%,ofwhichLondonaccountedfor32%,ofthecommittedcapitalwithintheloaninvestmentportfolio.

TodatetheCompanyhasexperiencednodefaultsbuttheunderlyingloanportfoliocontinuestobecloselymonitoredespeciallyinlightoftheCovid‑19pandemic;whereitisconsideredappropriate,onacasebycasebasis,underlyingloantermsmaybeextended.

David Jeffreys

Chairman

Chairman’s statement

Over the past year, the Company has focused on recycling capital into asset backed lending while reducing exposure to development risk. In this time of heightened uncertainty, the Company is benefiting from that strategy and it has placed the Company on a robust financial footing.


Capital recycling

ThephasedsaleoftheAlphaUKPropertyFundAssetCompany(No.2)Limited(‘Alpha2’)portfolioofUKindustrialassetshassuccessfullyadvancedandnearscompletionwiththesaleofthepenultimateassetcompletingduringtheyear.

InDecember2019,theGroupexchangedcontractsforthesaleoftheUnityandArmouriesassetinBirmingham(UK)at£4.5 million:thesalecompletedon11June2020.

H2O, Madrid

ARThasa30%stakeinjointventurewithCBREGlobalInvestorsintheH2OshoppingcentreinMadrid.OverthepastyearH2Ohascontinuedtobenefitfromongoingassetmanagementinitiatives,attractingrecordvisitornumbersduringthe2019calendaryear,increasing5.2%above2018.During2019,9,000squaremetresofbuildingrightsweretransferredtotheH2OplotfromasmallvacantsitelocatedinthesameplanningzoneandheldaspartoftheH2Oinvestment.Constructionofanew1,100squaremetreretailparkunitlocatedonpartofthecentre’ssurfacecarparkareahasrecentlybeencompleted.

TheGovernmentofSpainrequiredallnon‑essentialstorestocloseatshoppingcentresinSpainduringtheperiodmid‑Marchto23May2020aspartofastateofemergency.InthecaseofH2O,thesupermarketandpharmacywereopenduringtheentireperiodalongwithsomeotherservicessuchasmobilephoneshops.Shopswithexternalaccessandlessthan400 squaremetreshavenowbeenallowedtore‑openonaphasedbasis.Apracticalapproachisbeingtakenwithtenantstomanageanyrentarrearswhilstseekingtoprotectthelong‑termvalueofthecentre.RecognisingtheimpactthatCovid‑19ishavingonthecentre’slocalcommunity,re‑openingeventsarebeingundertakentosupportlocalcharitiesandalsopromotespendingwithinthecentreviaspend‑and‑winlotteriesthathelpbothH2O’scustomersandretailers.Covid‑19islikelytohaveasignificantimpactontheearningsofH2Oforthecurrentyear.

Galaxia, India

AsannouncedinFebruary2020,theSupremeCourtofIndiaruledinfavourofART’sdisputeregardingitsGalaxiainvestment,a50:50jointventurewithLogixGroup(‘Logix’)thatownsan11.2acredevelopmentsitelocatedinNOIDA,the NationalCapitalRegion,India.TheSupremeCourtrejectedLogix’schallengeofapreviousICCArbitrationawardinfavourofART,consistentwithpreviousrulingsbytheDelhiHighCourtandaDivisionBenchoftheDelhiHighCourt.

InupholdingthearbitrationawardinfavourofARTanddismissingLogix’sappeal,theSupremeCourtorderedLogixtopayARTatotalofINR 860 million(£9.2 million)within8monthsfrom18February2020:todate,INR 360 million(£3.8 million)hasbeendepositedwiththecourt.ThisamountisinadditiontoINR 215 million(£2.3 million)Logixhaddepositedwiththecourt,whichhassubsequentlybeenrecoveredbyART(INR 100 million(£1.1 million)wasreceivedinMay2018andafurtherINR 115 million(£1.2 million)inDecember2019).LogixisnowrequiredtodepositanamountofINR 33 millionby21 July 2020andtheremainderoftheliabilityundertheAwardofINR 467 millionby18August2020.ThecourtpermittedLogixtoselltheGalaxiasite,whichwaspreviouslychargedinfavourofART,inordertoraisecapital.ThesiteiscurrentlyunderofferforINR 568 million(£6.1 million)andthesesaleproceedswillbedepositedwiththeSupremeCourttowardsthesettlementamount.FailurebyLogixtomakepaymentwouldresultinhigherinterestratesapplicableunderthearbitration award.

WhilstARTcontinuestoactivelypursueitsclaim,theCompanycarriedthejointventureinarbitrationinitsaccountsasat31 March2020atINR 235 million(£2.5 million),whichisinlinewithART’sinitialinvestmentlessamountsrecoveredtodate;thisdoesnotincludetheadditionalcompensationawardedbythecourtsduetouncertaintyovertimingandfinalvalueofthe award.

Chairman’s statement (continued)



Results and dividends

Share buybacks

Underthegeneralauthority,approvedbyShareholderson8January2019,theCompanyannouncedatenderofferon14June2019forupto16,666,771ordinarysharesataprice(beforeexpenses)of175.0pencepershare.Intotal13,065,348ordinaryshareswerevalidlytenderedunderthetenderoffer.Allpurchasedordinaryshareswerecancelled.

TheCompanyadditionallypurchased62,124sharesinthemarketattheaveragepriceof£1.55pershareduringthetwelvemonthperiodended31 March2020:thesesharesareheldin treasury.

Asatthedateofthisannouncement,theordinarysharecapitaloftheCompanyis61,840,870(including1,940,797ordinarysharesheldintreasury)andthetotalvotingrightsintheCompanyare59,900,073.

Dividends

Adjustedearningsfortheyearended31 March2020are£3.9 million(6.4penceperordinaryshare,seenote9ofthefinancialstatements).Thiscompareswithadjustedearningsperordinaryshareof3.9penceforthepreviousyear.

TheBoardannouncesadividendof1.0penceperordinarysharewhichisexpectedtobepaidon17July2020(ex‑dividenddate25June2020andrecorddate26June2020).

Thedividendspaidanddeclaredinrespectoftheyearended31 March2020totalled4.0penceperordinarysharerepresentinganannualdividendyieldof2.3%p.a.byreferencetotheaverageclosingsharepriceoverthe12monthsto31 March2020.

Thenetassetvalueperordinaryshareat31 March2020is213.7pencepershare(31 March2019:204.3penceperordinaryshare)(seenote10ofthefinancialstatements).

Scrip dividend alternative

ShareholdersoftheCompanyhavetheoptiontoreceivesharesintheCompanyinlieuofacashdividend,attheabsolutediscretionoftheDirectors,fromtimetotime.

ThenumberofordinarysharesthatanOrdinaryShareholderwillreceiveundertheScripDividendAlternativewillbecalculatedusingtheaverageoftheclosingmiddlemarketquotationsofanordinaryshareforfiveconsecutivedealingdaysafterthedayonwhichtheordinarysharesarefirstquoted‘ex’therelevant dividend.

TheBoardhaselectedtoofferthescripdividendalternativetoShareholdersforthedividendforthequarterended31 March 2020.ShareholderswhoreturnedtheScripMandateFormandelectedtoreceivethescripdividendalternativewillreceivesharesinlieuofthenextdividend.ShareholderswhohavenotpreviouslyelectedtoreceivescripmaycompleteaScripMandateForm(thiscanbeobtainedfromtheregistrar:contactComputershare(detailsbelow)),whichmustbereturnedby3 July2020tobenefitfromthescripdividendalternativeforthenextdividend.

Financing

Asat31 March2020theGrouphasonedirectbankloanof€9.5 million(£8.4 million),anon‑recoursefacility,withnofinancialcovenanttests,toanSPVusedtofinancetheacquisitionoftheHamburgproperty.

Furtherdetailsofindividualassetfinancingcanbefoundundertheindividualinvestmentreviewsectionslaterinthisreport.

Brexit

InJanuary2020,theUKformallylefttheEuropeanUnion(‘EU’)andhasnowenteredatransitionperioduntiltheendof2020andmustnegotiateitsfuturetradingrelationshipwiththeEU.Whilstthesedevelopmentshaveprovidedsomeclarity,thereremainssignificantuncertaintyoverthefutureimpactofBrexit.TheabsoluteimpactwillbedependentonthetermsoftheUK’srelationshipwiththeEU.

WhiletheUKParliamenthasdemonstrateditswishtoavoida‘no‑dealBrexit’,thereappearslittleconsensusaboutwhatformanyfuturearrangementwiththeEUshouldtake.NomaterialadverseimpactshavebeennotedwithintheCompany’sportfoliotodateandrisksaremitigatedbytheCompany’sinvestmentsheldinEurope.However,theBoardcontinuestomonitorthesituationforpotentialriskstotheCompany’sinvestments.Theeconomicbackdropishighlydynamic,andthespreadofpossibleoutcomesiswide.Inthiscontext,ARTiswellplacedtobothweathermarketvolatilityandtakeadvantageofanydislocationshoulditarise.



Covid-19 pandemic

TheCompanyisnotisolatedfromtheimpactoftheCovid‑19pandemiconglobaleconomies.TheCompany’slongtermstrategyremainsresilientanditsshorttermmovetocashconservationandmaintainingacautiousapproachincommitmentstonewinvestmentsatthistime,whilepotentiallyreducingincomereturns,issupportingarobustbalancesheetpositionduringtheseuncertaintimes.AsnotedabovetheCompanyholdsapproximately36%ofitsassetscurrentlyincashwithnocurrentcontractualcapitalcommitments.WhilethereisexternalfinancingintheGroup’sinvestmentinterests,thisislimitedandnon‑recoursetotheCompany;theborrowingsinthesespecialpurposevehiclesarecompliantwiththeirbankingcovenants.WhiletheBoard’sdividendpolicyintentionisunchangedtheCompanycontinuestoactivelymonitoritsinvestmentsandtheimpactoftheseunusualeconomiccircumstancesonearningsanddividends.Seetheinvestmentreviewsectionformoredetailsonthepandemic’simpactonrelevantinvestments.

BearinginmindthenatureoftheGroup’sbusinessandassets,aftermakingenquiriesandconsideringtheabove,theDirectorsconsiderthattheGrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Forthisreason,theycontinuetoadoptthegoingconcernbasisinpreparingthefinancialstatements.

Foreign currency

TheCompanymonitorsforeignexchangeexposuresandconsidershedgingwhereappropriate.Foreigncurrencybalanceshavebeentranslatedattheperiodendratesof£1:€1.130or£1:INR93.539,asappropriate.

Strategy and outlook

Giventheextraordinaryeventsofthepastfewmonths,thehealthandwellbeingofART’sstakeholdersisforemostinourminds.Covid‑19andtheunprecedentedactionsofGovernmentstolock‑downtheircitizensandshut‑downtheireconomieshasseverelyaffectedtheeconomicbackdropinwhichtheCompanyoperates.ART’sinvestmentportfoliobenefitsfromdiversificationacrossgeographies,sectorsandassettypes.Overthepastyear,theCompanyhasfocusedonrecyclingcapitalintoassetbackedlendingwhilereducingexposuretodevelopmentrisk.Inthistimeofheighteneduncertainty,theCompanyisbenefitingfromthatstrategyandithasplacedtheCompanyonarobustfinancialfooting.

ARTiscommittedtoitsdisciplinedstrategyandinvestmentprincipleswhichfocusonopportunitiesthatcandeliverhighriskadjustedreturns,whileseekingtomanageriskthroughacombinationofoperationalcontrols,diversificationanddefensivereturnstructures.

Wearetakingacautiousapproachtonewinvestment,includingnewlending,asweseehowCovid‑19unfolds.Thiscautiousapproach,whileconservingcash,islikelytosignificantlyreduceearningsinthecurrentyear.

David Jeffreys Chairman 11June2020

ART is committed to its disciplined strategy and investment principles which focus on opportunities that can deliver high risk adjusted returns.


Investment review

Portfoliooverview31March2020

Investment Carrying value

Income return p.a.

Investment location

Property type / underlying security

Investment notes % of portfolio 1

Note*

High return debt (31.9%)

Secured senior finance

Seniorsecuredloans(excludingcommittedbutundrawnfacilitiesof£7.3m)

£19.4m2 9.0%3 UK Diversifiedloanportfoliofocussedonrealestateinvestmentsanddevelopments

Seniorsecureddebt(duringtheperiodtheaverageseniorfacilitiescommitmentswere£31.1m)

15.5% 17

Secured mezzanine finance

Secondchargemezzanineloans

£20.5m2 14.2%3 UK Diversifiedloanportfoliofocussedonrealestateinvestmentsanddevelopments

Securedmezzaninedebtand subordinateddebt(duringtheperiodtheaveragemezzaninefacilitiescommitmentswere£17.8m)

16.4% 17

High return equity in property investments (26.1%)

H2O shopping centre

Indirectproperty £19.5m(€22.0m)

6.2%4 Spain DominantMadridshoppingcentreandseparatedevelopmentsite

30%shareholding;mediumtermmoderatelygearedbankfinancefacility

15.6% 12

Long leased industrial facility, Hamburg

Directproperty £7.2m5(€8.1m)

7.2%4 Germany LongleasedindustrialcomplexinmajorEuropeanindustrialandlogisticshub

Longtermmoderatelygearedbankfinancefacility

5.7% 13

Alpha UK Property Fund Asset Company (No 2) (‘Alpha2’)

Directproperty £4.3m 10.3%6 UK High‑yieldcommercialUKproperty

100%shareholding;noexternalgearing 3.4% 12‑14

Cambourne Business Park

Indirectproperty £1.7m 9.8%4 UK High‑yieldbusinessparklocatedinCambridge

Mediumtermmoderatelygearedbankfinancefacility

1.4% 12

Other investments (6.2%)

Unity and Armouries, Birmingham

Development,Site heldforsale

£4.5m n/a UK CentralBirminghamresidential Planningconsentfor90,000squarefeet/162unitspluscommercial.Exchangedcontractsforsaleat£4.5minDec2019;completionon11June2020.

3.6% 14

Galaxia

Jointventureinarbitration

£2.5m(INR 235m)

n/a India DevelopmentsitelocatedinNOIDA,Delhi,NCR

Legalprocessunderwaytorecoverinvestmentbyenforcingarbitrationaward

2.0% 15

Realhousingco

ResidentialInvestment

£0.6m n/a UK High‑yieldresidentialUK portfolio

100%shareholding;noexternalgearing 0.5% 13

Healthcare & Leisure Property Limited

Indirectproperty £0.1m n/a UK Leisurepropertyfund Noexternalgearing 0.1% 16

Cash and short-term investments (35.8%)

Cash7 £44.8m 0.1%8 UK ‘Oncall’andcurrentaccounts 35.8%

* Seenotestothefinancialstatements1 PercentageshareshownbasedonNAVexcludingthecompany’ssundryassets/liabilities2 Includingaccruedinterest/couponatthebalancesheetdate3 Theincomereturnsforhighreturndebtaretheannualisedactualfinanceincomereturnover

theperiodshownasapercentageoftheaveragecommittedcapitalovertheperiod

4 Yieldonequityover12monthsto31 March20205 Propertyvalueincludingsundryassets/liabilitiesandcash,netofassociateddebt6 Annualisedincomereturn,posttax7 Groupcashof£46.1mexcludingcashheldwiththeHamburgandAlpha2holdingcompanies8 Weightedaverageinterestearnedoncallaccounts


Highreturndebt

ARThasaportfolioofsecuredloaninvestmentswhichcontributeadiversifiedreturntotheCompany’searningsposition.Theportfoliocompriseshighreturnsenior(first charge)loansandmezzanine(secondcharge)loanssecuredonrealestateassetsanddevelopments.ARTloanunderwritingissupportedbytheInvestmentManager’sasset‑backedlendingexperienceandknowledgeoftheunderlyingassetsandsectors,inadditiontotheGroup’spartnershipswithspecialistdebtproviders.

Investment review (continued)

Brad Bauman

Joint fund managerGordon Smith

Joint fund manager

Sector Secured finance

Underlying assets Diversified loan portfolio focussed on real estate investments and developments

Description The portfolio comprises high return senior (first charge) loans and mezzanine (second charge) loans secured on real estate assets and developments


High return debt Diversifiedloanportfolio



Secured finance

Investment Investment type Carrying value Income return p.a. Property type / underlying security

Investment notes

Securedseniorfinance Firstchargesecuredloans

£19.4m* 9.0%** Diversifiedloanportfoliofocussedonrealestateinvestmentsanddevelopments

Secureddebt

Securedmezzaninefinance Secondchargesecuredloans

£20.5m* 14.2%** Diversifiedloanportfoliofocussedonrealestateinvestmentsanddevelopments

Secondchargesecureddebtandsubordinateddebt

* Includingaccruedinterest /couponatthebalancesheetdate**Theincomereturnsforhighreturndebtaretheannualisedactualfinanceincomereturnovertheperiodshownasapercentageoftheaveragecommittedcapitalovertheperiod

ARTportfolioofsecuredseniorandmezzanineloaninvestmentshaveincreasedinscaleanddiversityoverthepastyear.Theseloansaretypicallysecuredonrealestateinvestmentanddevelopmentassetswithattractiverisk‑adjustedincomereturnsfromeithercurrentorcapitalisedinterestorcoupon.

Asat31 March2020,ARThadinvestedatotalamountof£39.9 millionacrossfortyloans.Overthepasttwelvemonthstheloanportfoliohasincreasedby10.4%,with£3.7 millionofinvestments,netofrepayments,intothesecuredloanportfoliocompletingand£1.0 milliondrawnpostyearendfrompreviouslycommittedloans.

Duringtheyearended31 March2020,nineloanswerefullyrepaidandtenloanswerepartlyrepaidfortotalreceiptsof£25.1 million(includingaccruedinterestandexitfees).Post yearend,loanrepaymentsof£4.4 millionwerereceived(includingaccruedinterestandexitfees).

Eachloanwilltypicallyhaveatermofuptotwoyears,amaximum75%loantogrossdevelopmentvalueratioandbetargetedtogenerateattractiverisk‑adjustedincomereturns.Asat31 March2020,theportfoliohadanaverageLTVof55.7%(withaverageapprovedLTVbetween58%and76%formezzaninewhilethehighestapprovedLTVforsenioris 73.1%).

ConsideringtheCovid‑19impactonthecurrenteconomicenvironment,theGrouphascarriedoutastresstestofitstotalExpectedCreditLoss(‘ECL’)analysisand,inconsiderationofthemainqualitiesofitssecuredloanportfolio,theunderlyingloans’LTVs,thenumberofloanswheredevelopmentisadvancedandthenumberofseasonedfacilities,theresultingtotalECLwasimmaterial(see note2(b)(c)).

Loan portfolio by geography

7%

6%5%

18%

13%

13%

7%

31%

London

Regional - South East

Regional - North West

Regional - South West

Regional - Multiple

Regional - Scotland

Regional - East

Regional - Midlands

Loan portfolio by asset class (%ofapprovedprincipal)

83%

2%

4%

1%

4%

7% Care Home

Mixed - Residential & Commercial

Mixed - Residential & Office

Mixed - Student accomodation& Commercial

Residential

Commercial

Sector Retail

Asset Shopping centre

Tenants include Nike, Zara, Mango, Cortefiel, H&M, C&A and Massimo Dutti

Area 52,425 square metres

Description The property is located in the Rivas-Vaciamadrid district of Madrid.

H2O has a primary catchment area of 166,000 people but the location, due to the concentration of complementary retail, has a total catchment of 2.2 million people.

The weighted average lease length as at 31 March 2020 is 8.6 years to expiry and 2.2 years to next break.


H2O Madrid‑Spain

Top ten tenants (31 March 2020)

13%

10%

10%10%

9%

8%

7%

7%5%

21%

n Inditex Group

n Grupo Zena Alsea

n C&A

n Yelmo

n Cortefiel Group

n Mercadona

n Nike

n H&M

n Sfera - Sportown

n Ozone



Highreturnequityinpropertyinvestments

ARTcontinuestoremainfocusedoninvestmentsthatofferthepotentialtodeliverattractiverisk‑adjustedreturnsbywayofvalueenhancementthroughactiveassetmanagement,improvementofincome,selectivedeploymentofcapitalexpenditureandtheabilitytoundertakestrategicsaleswhentheachievablepriceisaccretivetoreturns.

H2O Shopping Centre, Madrid

Investment Investment type Carrying value Income return Property type / underlying security

Investment notes

H2O Indirectproperty £19.5m(€22.0m) 6.2%* High‑yield,dominantMadridshoppingcentreandseparatedevelopmentsite

30%shareholding;6‑yeartermbankfinancefacility

* Yieldonequityovertwelvemonthsto31 March2020

H2Oshoppingcentrewasopenedin2007andbuilttoahighstandardprovidingshopping,restaurantsandleisurearoundacentralthemeoflandscapedgardensandanartificiallake.H2Ohasagrosslettableareaofapproximately52,425squaremetrescomprising123retailunits.Inadditiontoamultiplexcinema,supermarket(lettoleadingSpanishsupermarketoperatorMercadona)andrestaurants,ithasalargefashionretailerbase,includingsomeofthestrongestinternationalfashionbrands,suchasNike,Zara,Mango,Cortefiel,H&M,C&AandMassimo Dutti.

ARThasa30%stakeinajointventurewithCBREGlobalInvestors.ThecontinuedequityinterestallowsARTtoparticipateinthefuturegrowthofthecentre.ARC,theinvestmentmanagerofART,continuestomanagetheshoppingcentre.

Thejointventurehasa€65.0 millionbankloanwhichmaturesin2024,securedontheshoppingcentre.Asat31 March2020,theborrowingswerecompliantwiththeloan’scovenanttermsandaresecuredontheunderlyingassetandarenon‑recoursetotheGroup’sotherinvestments.

TheGovernmentofSpainrequiredallnon‑essentialstorestocloseatshoppingcentresinSpainduringtheperiodmid‑Marchto23May2020aspartofastateofemergency.InthecaseofH2O,thesupermarketandpharmacywereopenduringtheentireperiodalongwithsomeotherservicessuchasmobilephoneshops.Shopswithexternalaccessandlessthan400 squaremetreshavebeenallowedopenonaphasedbasis.Apracticalapproachisbeingtakenwithtenantstomanageanyrentarrearswhilstseekingtoprotectthelong‑termvalueofthe centre.

RecognisingtheimpactthatCovid‑19ishavingonthecentre’slocalcommunity,re‑openingeventsarebeingundertakentosupportlocalcharitiesandalsopromotespendingwithinthecentreviaspend‑and‑winlotteriesthathelpbothH2O’scustomersandretailers.Covid‑19islikelytohaveasignificantimpactontheearningsofH2Oforthecurrentyear.

Theassetmanagementhighlightsareasfollows:

● Valuation:€130.6 million(£115.5 million)asat31 March2020(31 March2019:€131.5 million(£113.2 million)).

● Centre occupancy:93.8%byareaasat31 March2020(97.6%byrentalvalue,excludingpotentialnewbuildleasable area).

● Weighted average lease length to next break:2.2yearsand8.6yearstoexpiry(31 March2020).

● Footfall:recordvisitornumberstotheshoppingcentrehavebeenrecordedin2019,Covid‑19hasresultedina‑16.1%decreaseoverthe3‑monthperiodto31 March2020.

● Building rights: theH2OinvestmentincludesasmallvacantsitelocatedinthesameplanningzoneasH2Ofromwhich9,000squaremetresofbuildinghavebeentransferredtotheH2Oplotwhich,subjecttoobtainingbuildinglicences,createspotentialforthefutureexpansionoftheshoppingcentre.

● New leasable area:anew1,100squaremetreretailparkunithasrecentlybeencompleted.Theunitislocatedonpartofthecentre’ssurfacecarparkarea,asenvisagedwithinarecentlycompletedmasterplandesignfortheshoppingcentre.

Sector Industrial

Underlying assets Industrial facility in Hamburg Germany

Tenant Veolia Umweltservice Nord GmbH, part of the Veolia group

Description Long leased investment with moderately geared, long term, bank finance facility.


Long leased industrial facility Hamburg


UK industrial portfolio


Investment notes

AlphaUKPropertyFundAssetCompany(No2)Limited

Directproperty £4.3m 10.3%* High‑yieldcommercialUKportfolio

100%ofthetotalordinarysharesinthe company

* Annualisedincomereturn;posttax

InSeptember2019,theCompanyannouncedthatitpurchased66.4%ofthesharesinAlphaUKPropertyFundAssetCompany(No2)Limited(‘Alpha2’).TheacquisitionincreasedART’sownershipinterestinAlpha2to100%(seenote2onpage 36forfurtherdetails).

ThephasedsaleoftheAlpha2portfolioofUKindustrialassetshassuccessfullyadvancedandnearscompletion.

Thepenultimateasset(apropertylocatedinWarrington)wassoldinOctober2019for£5.2 million.Theremainingasset,anindustrialpropertylocatedinWolverhampton,isheldforsale.

Asat31 March2020,Alpha2hadanetassetvalueof£4.3 million.

Long leased industrial facility, Hamburg


Investment notes

Industrialfacility,Werner‑Siemens‑StraßeHamburg,Germany

Directproperty £7.2m*(€8.1m) 7.2%** HighreturnindustrialfacilityinHamburgGermany

Longleasedinvestmentwithmoderatelygeared,longterm,bank finance facility

* Propertyvalueincludingsundryassets/ liabilitiesandcash,netofassociateddebt**Yieldonequityovertwelvemonthsto31 March2020

ARThasaninvestmentof€8.1 million(£7.2 million)inanindustrialfacilityleasedtoaleadinginternationalgroup.

Thepropertyisheldfreeholdandoccupiesasiteof11.8acresinBillbrook,awell‑establishedandwell‑connectedindustrialarealocatedapproximately8kilometressouth‑eastofHamburgcentre.HamburgisoneofthemainindustrialandlogisticsmarketsinGermany.

ThepropertyisleasedtoVeoliaUmweltserviceNordGmbH,partoftheVeoliagroup,aninternationalindustrialspecialistinwater,wasteandenergymanagement,witha23‑yearunexpiredleaseterm.Undertheoperatinglease,thetenantisresponsibleforbuildingmaintenanceandtherenthasperiodicinflationlinkedadjustments.

TheHamburgassetisfundedbywayofa€9.5 million(£8.4 million)non‑recourse,fixedrate,bankdebtfacilitywhichmaturesin2028.Thefacilitycarriesnofinancialcovenanttests.

Thisinvestmentoffersthepotentialtobenefitfromalongtermsecureandpredictableinflation‑linkedincomestreamwhichisforecasttogeneratestablehighsingledigitincomereturns.Inaddition,theinvestmentoffersthepotentialforassociatedcapitalgrowthfromanindustriallocationinamajorGermanlogisticsandinfrastructurehub.


Sector Business parks

Underlying assets Office

Tenants Netcracker Technology EMEA Ltd, Cambridge Cambourne Centre Ltd (previously called ‘Regus (Cambridge Cambourne) Ltd’) and Carl Zeiss Microscopy Ltd & Carl Zeiss Ltd

Area 9,767 square metres

Description The asset consists of three Grade A specification modern office buildings located in the town of Cambourne.

Phase 1000 is situated at the front of the business park. It is an institutional quality asset with Open B1 Business user planning.


Cambourne Business Park Cambridge


Cambourne Business Park, Phase 1000, Cambridge


Investment notes

CambourneBusinessPark Indirectproperty £1.7m 9.8%* High‑yieldbusinessparklocatedinCambridge

Mediumtermmoderatelygearedbank financefacility

* Yieldonequityovertwelvemonthsto31 March2020

TheCompanyhasaninvestmentof£1.7 millioninajointventurethatownsPhase1000ofCambourneBusinessPark.ThepropertyconsistsofthreeGradeAspecificationmodernofficebuildingsconstructedin1999andlocatedinthetownofCambourne,approximately8mileswestofCambridgecitycentre.Thepropertycomprises9,767squaremetresoflettablearea,isself‑containedandhas475carparkingspaces.Phase 1000issituatedatthefrontofthebusinessparkwithgoodaccessandvisibility.

Phase1000isahigh‑qualityasset,fullylettoNetcrackerTechnologyEMEALtd,CambridgeCambourneCentreLtd(previouslycalled‘Regus(CambridgeCambourne)Ltd’)andCarlZeissMicroscopyLtd&CarlZeissLtd.ThepropertyhasopenB1Businessuserplanningpermissionandhaspotentialvalue‑addopportunities.

Phase1000waspurchasedinajointventurepartnershipwithamajoroverseasinvestor.ART’sequityinterestis10.0%ofthetotalequityinvestedintoajointventureentity,asubsidiaryofwhichholdstheproperty.

TheCambourneassetisfundedbywayofa£13.2 million(asat 31 March2020)non‑recoursebankdebtfacilitywhichmaturesin2023.

ARCistheinvestmentmanagertothejointventureowningtheCambournepropertyandcontinuestopursueopportunitiestoaddvaluetotheinvestment.


ART has a diversified portfolio focussed on asset-backed lending and high return property investments in Western Europe that are capable of delivering strong risk adjusted returns. Over the past year, the Company has focused on recycling capital into asset backed lending while reducing exposure to development risk.



Cashbalances


Investment notes

Cashbalance* Cash £44.8m 0.1%** ‘Oncall’andcurrentaccounts

n/a

* Groupcashof£46.1mexcludingcashheldwiththeHamburgandAlpha2holdingcompanies**weightedaverageinterestearnedoncallaccounts

Asat31 March2020,theGrouphadcashbalancesof£46.1 million,excludingcashheldwiththeHamburgandAlpha2holdingcompanies(£1.3 million).

TheGroup’scashisheldwithestablishedbankswithstrongcreditratings.

Otherinvestments

Unity and Armouries, Birmingham


Investment notes

UnityandArmouries,Birmingham

PRSdevelopment,heldforsale

£4.5m n/a CentralBirminghamresidentialbuild‑to‑rent

Planningconsentfor90,000squarefeet/162unitspluscommercial

ARTownsUnityandArmouries,adevelopmentsitelocatedincentralBirminghamwithplanningconsentfor90,000squarefeetofnetsaleablespacecomprising162residentialapartmentswithgroundfloorcommercialareas.

DetailedplanningconsentforART’sproposedprojecthasbeengranted.TherearenooutstandingSection106/CommunityInfrastructureLevyrequirementsandthesitehasanaffordableunitdesignationfornineflats.Theapprovedprojectincludes162residentialunitswithgroundfloorcommercial(3,700squarefeet)andcarparkingspaces.

InDecember2019,theGroupexchangedcontractsforthesaleoftheUnityandArmouriesassetinBirmingham(UK)at£4.5 millionandthesalecompletedon11June2020:theDirectorsthereforeconsider£4.5 milliontorepresentfairvalueoftheUnityandArmouriespropertyatthebalancesheetdate.On14April2020,theGroupreceiveda20%non‑refundabledepositinrelationtothisdisposalamountingto£0.9 millionplusVATand£3.6 millionplusVATwerereceivedon11June2020.

Unity and Armouries, Birmingham (concept)Unity and Armouries, Birmingham (concept)



Galaxia, National Capital Region, NOIDA, India


Investment notes

Galaxia Jointventurein arbitration

£2.5m(INR 235m) n/a DevelopmentsitelocatedinNOIDA,Delhi, NCR

Legalprocessunderwaytorecoverinvestmentbyenforcingarbitration award

AsannouncedinFebruary2020,theSupremeCourtofIndiaruledinfavourofART’sdisputeregardingitsGalaxiainvestment,a50:50jointventurewithLogixGroup(‘Logix’)thatownsan11.2acredevelopmentsitelocatedinNOIDA,theNationalCapitalRegion,India.TheSupremeCourtrejectedLogix’schallengeofapreviousICCArbitrationawardinfavourofART,consistentwithpreviousrulingsbytheDelhiHighCourtandaDivisionBenchoftheDelhiHighCourt.

InupholdingthearbitrationawardinfavourofARTanddismissingLogix’sappeal,theSupremeCourtorderedLogixtopayARTatotalofINR 860 million(£9.2 million)within8 monthsfrom18February2020:todate,INR 360 million(£3.8 million)hasbeendepositedwiththecourt.ThisamountisinadditiontoINR 215 million(£2.3 million)Logixhaddepositedwiththecourt,whichhassubsequentlybeenrecoveredbyART(INR 100 million(£1.1 million)wasreceivedinMay2018andafurtherINR 115 million(£1.2 million)inDecember2019).

Logix is nowrequiredtodepositanamountofINR 33 millionby21July2020andtheremainderoftheliabilityundertheAwardofINR 467 millionby18August2020.ThecourtpermittedLogixtoselltheGalaxiasite,whichwaspreviouslychargedinfavourofART,inordertoraisecapital.ThesiteiscurrentlyunderofferforINR 568 million(£6.1 million)andthesesaleproceedswillbedepositedwiththeSupremeCourttowardsthesettlementamount.FailurebyLogixtomakepaymentwouldresultinhigherinterestratesapplicableunderthearbitration award.

WhilstARTcontinuestoactivelypursueitsclaim,theCompanycarriedthejointventureinarbitrationinitsaccountsasat31 March2020atINR 235 million(£2.5 million),whichisinlinewithART’sinitialinvestmentlessamountsrecoveredtodate;thisdoesnotincludetheadditionalcompensationawardedbythecourtsduetouncertaintyovertimingandfinalvalueofthe award.

SummaryARThasadiversifiedportfoliofocussedonasset‑backedlendingandhighreturnpropertyinvestmentsinWesternEuropethatarecapableofdeliveringstrongriskadjustedreturns.

Overthepastyear,theCompanyhasfocusedonrecyclingcapitalintoassetbackedlendingwhilereducingexposuretodevelopmentrisk.Inthistimeofheighteneduncertainty,theCompanyisbenefitingfromthatstrategyandithasplacedtheCompanyonarobustfinancialfooting.

Brad Bauman and Gordon Smith For and on behalf of the Investment Manager 11June2020


David Jeffreys

Chairman

Aged 60

DavidJeffreysqualifiedasaCharteredAccountantwithDeloitte HaskinsandSellsin1985.Heworksasanindependentnon‑executivedirectortoanumberofGuernseybasedinvestmentfundcompaniesandmanagersandisaGuernseyresident.

From2007until2009DavidwastheManagingDirectorofEQT FundsManagementLimited,theGuernseymanagementofficeoftheEQTgroupofprivateequityfunds.HewaspreviouslytheManagingDirectorofAbacusFundManagers(Guernsey)Limitedbetween1993and2004,athirdpartyadministrationserviceprovidertoprimarilycorporateandfundclients.

Phillip Rose

Director

Aged 60

PhillipRoseisaFellowoftheSecuritiesInstituteandholdsaMasterofLawdegree.Hehasover30years’experienceintherealestate,fundsmanagementandbankingindustriesinEurope,theUSAandAustralasia.HehasbeentheHeadofRealEstateforABN AMROBank,ChiefOperatingOfficerofEuropeanshoppingcentreinvestoranddeveloperTrizecHahnEurope,ManagingDirectorofretailandcommercialpropertydeveloperandinvestorLendLeaseGlobalInvestmentandExecutiveManageroflistedfundGeneral Property Trust.

PhillipiscurrentlyCEOofAlphaRealCapitalLLPandhasbeenamemberoftheManagementCommitteeforHermesPropertyUnitTrustanditsAuditCommittee,andhasbeenaNon‑ExecutiveDirectorofGreatPortlandEstatesplc.

William Simpson

Director

Aged 64

WilliamSimpsonhasover30years’experienceasalawyerinfinancialservices,28oftheminGuernsey.Hisfocushasbeenonregulatedandunregulatedinvestmentvehicles,encompassingbanking,finance,corporate,investment,trustandregulatorywork.

WilliamstudiedlawatLeedsUniversityandpractisedattheBarinEnglandbeforemovingtotheCaymanIslandsandthentheBritishVirginIslands.WilliamwasapartneratOzannes,nowMourant,andthenmanagingpartnerofOgierGuernsey,duringwhichtimehealsoservedontheOgierGroupboard.

In2017WilliambecameanindependentlegalconsultantandremainsadirectorofanumberofGuernseybasedfinancialservicescompanies.WilliamisamemberoftheEnglish,VirginIslandsandGuernseyBarsandisalsoamemberofTheSocietyofTrustandEstatePractitioners.

Jeff Chowdhry

Director

Aged 59

Jeffhasover35yearsofinvestmentexperience,thelast25ofwhichhavebeeninEmergingMarkets,focusingonkeycountriesinAsia,LatinAmericaandEMEA.

Jeffbeganhiscareerin1982andhasheldportfoliomanagementpositionsatRoyalInsuranceplcandBZWInvestmentManagementwherehelaunchedandmanagedoneoftheveryfirstIndiafundsavailabletoforeigninvestors.

HehasheldanumberofseniorpositionsatF&CAssetManagement(nowBMO)includingHeadofEmergingMarketEquities,leadingateamof12investmentprofessionalsresponsibleforover$5billioninAUM.

Currently,JeffisChairmanofRLCVentures.HehasanMBAfromKingstonBusinessSchoolandaBSc(Hons)inEconomicsfromBrunelUniversity,London.

Mel Torode

Director

Aged 40

MelisManagingDirectorofOcorianAdministration(Guernsey)Limited(‘Ocorian’)inGuernsey.SheoverseestheGuernseyteam,leadsthefinancial,businessdevelopmentandstrategicobjectivesofthebusinessandalsoretainsstrategicoversightofaportfolioof clients.

Melhasmorethan20years’experienceinthefundadministrationindustryinGuernsey,specificallyinprivateequity,propertyandmezzaninedebt.PriortofoundingMorganSharpeinApril2008(afundadministrationcompanysoldtoOcorian*in2017),MelwastheCompanySecretaryofAssuraAdministration,overseeingtheadministrationoflistedpropertyfunds.MelbeganhercareeratGuernseyInternationalFundManagers(nowNorthernTrust),workingonlargeprivateequityfundsandEuropeanholdingcompanies,movingtoMourantInternationalFinanceAdministration(nowStateStreet)whereshespentmorethantwoyearsconcentratingprimarilyonlistedpropertyfunds.

MelisanexperiencedNon‑ExecutiveDirectorwithaportfolioconsistingoffunds,generalpartnersandassociatedGuernseyandEuropeanholdingcompanies.

*EsteraAdministration(Guernsey)LimitedpriortoitsmergerwithOcorianinearly2020.

Directors


TheDirectorspresenttheirreportandfinancialstatementsoftheAlphaRealTrustLimitedgroup(‘theGroup’)fortheyearended31 March2020.

Principal activities and status

Duringtheyear,theCompany,anauthorisedclosed‑endedGuernseyregisteredinvestmentcompany,carriedonbusinessasaninvestmentcompany,investingindirectproperty,development,financingandotheropportunitiesinrealestate,realestateoperatingcompaniesandsecurities,realestateservices,infrastructure,infrastructureservices,otherasset‑backedbusinessesandrelatedoperationsandservices businesses.

TheCompany’ssharesaretradedontheSpecialistFundSegment(‘SFS’)oftheLondonStockExchange(‘LSE’).

Business review, results and dividend

AreviewofthebusinessduringtheyeariscontainedintheChairman’sStatementonpages4to7.

Theresultsfortheyearto31 March2020aresetoutinthefinancialstatements.

On28February2020,theCompanydeclaredadividendof1.0p pershare,whichwaspaidtoshareholderson9April2020.TheintentionoftheCompanyistopayadividendquarterly.

Share buybacks

Underthegeneralauthority,approvedbyShareholderson8January2019,theCompanyannouncedatenderofferon14June2019forupto16,666,771ordinarysharesataprice(beforeexpenses)of175.0pencepershare.Intotal13,065,348ordinaryshareswerevalidlytenderedunderthetenderoffer.Allpurchasedordinaryshareswerecancelled.

TheCompanyadditionallypurchased62,124sharesinthemarketduringtheyearended31 March2020:thesesharesareheldintreasury.

Asatthedateofthisannouncement,theordinarysharecapitaloftheCompanyis61,840,870(including1,940,797ordinarysharesheldintreasury)andthetotalvotingrightsintheCompanyare59,900,073.

Scrip dividend alternative

Inthecircularpublishedon18December2018,theCompanysoughtshareholders’approvaltoenableascripdividendalternativetobeofferedtoordinaryshareholderswherebytheycouldelecttoreceiveadditionalordinarysharesinlieuofacashdividend,attheabsolutediscretionoftheDirectors,fromtimetotime.Thiswasapprovedbyshareholdersattheextraordinarygeneralmeetingon8January2019.

Thenumberofordinarysharesthatanordinaryshareholderwillreceiveunderthescripdividendalternativewillbecalculatedusingtheaverageoftheclosingmiddlemarketquotationsofanordinaryshareforfiveconsecutivedealingdaysafterthedayonwhichtheordinarysharesarefirstquoted‘ex’therelevant dividend.

TheBoardelectedtoofferthescripdividendalternativetoshareholdersforthedividendforthequarterended31 December2019:forthisperiod,scripdividendalternativeelectionswerereceivedinrespectof29,972,146sharesoftheCompany,whichhasresultedintheissueof186,628newordinarysharesinApril2020.

Furtherdetailsondividendsaregiveninnote8ofthefinancialstatements.

Corporate governance

AsaGuernseyregisteredcompanytradedonSFS,theCompanyisnotrequiredtocomplywiththeUKCorporateGovernanceCode(‘UKCode’).However,asacompanyauthorisedbytheGuernseyFinancialServicesCommission(‘GFSC’),itisrequiredtofollowtheprinciplesandguidancesetoutintheFinanceSectorCodeofCorporateGovernanceissuedbytheGFSCandeffectivefrom1January2012(re‑issuedin2016,effectivefrom1April2016yearendsonwards)(‘GuernseyCode’).CompliancewiththeGuernseyCodeandgeneralprinciplesofgoodcorporategovernancearereviewedbytheBoardatleastannuallyand,atthedateofsigningthesefinancialstatements,theBoardissatisfiedthattheCompanyisfullycompliantwiththeGuernseyCode.TheGuernseyCodeisavailableforconsultationontheGFSCwebsite:www.gfsc.gg.

Directors’ and corporate governance report


The Board

BiographiesoftheDirectorsaresetoutonpage20.

TheDirectors’interestsinthesharesoftheCompanyasat31 March2020aresetoutbelow:

Number of ordinary shares 31 March 2020

Number of ordinary shares 31 March 2019

DavidJeffreys 15,082 15,000

PhillipRose 908,691 892,220

JeffChowdhry 5,000 10,000

MelanieTorode ‑ ‑

WilliamSimpson 18,000 ‑

Postyearend,PhillipRoseincreasedhisshareholdinginARTto918,726ordinaryshares.

Non‑executivedirectorsarenotappointedforspecifiedterms;appointmentsofBoardmemberscanbeterminatedatanytimewithoutpenaltyandtheCompany’sArticlesofAssociation(‘Articles’)requireeachDirectortoretireandsubmithimself/herselftore‑electionbytheshareholdersateverythirdyear.Inaddition,theBoardbelievesthatcontinuityandexperienceaddtoitsstrength.

TheAnnualGeneralMeetingoftheCompanywilltakeplaceon7August2020.Atthismeeting,PhillipRoseandJeffChowdhrywillretireandsubmitthemselvesforre‑election.TheremainderoftheBoardrecommendtheirre‑appointment.

IndividualDirectorsmayseekindependentlegaladviceinrelationtotheirdutiesonbehalfoftheCompany.

Operations of the Board

TheBoardhasdeterminedthatitsroleistoconsideranddeterminethefollowingprincipalmatterswhichitconsidersareofstrategicimportancetotheCompany:

1) ReviewtheoverallobjectivesfortheCompanyandsettheCompany’sstrategyforfulfillingthoseobjectiveswithinanappropriateriskframework

2) Consideranyshiftsinstrategythatitconsidersmaybeappropriateinlightofmarketconditions

3) ReviewthecapitalstructureoftheCompanyincludingconsiderationofanyappropriateuseofgearingbothfortheCompanyandinanyjointventuresinwhichtheCompanymayinvestfromtimetotime

4) AppointtheInvestmentManager,Administratorandotherappropriatelyskilledserviceprovidersandmonitortheireffectivenessthroughregularreportsandmeetings

5) ReviewkeyelementsoftheCompany’sperformanceincludingNetAssetValueandpaymentofdividends.

AtBoardmeetings,theBoardensuresthatallthestrategicmattersareconsideredandresolvedbytheBoard.CertainissuesassociatedwithimplementingtheCompany’sstrategyaredelegatedeithertotheInvestmentManagerortheAdministrator.SuchdelegationisoverminorincidentalmattersandtheBoardcontinuallymonitorstheservicesprovidedbytheseindependentagents.TheBoardconsidersmattersthataresignificantenoughtobeofstrategicimportanceandarethereforereservedsolelyfortheBoard(e.g.allacquisitions,alldisposals,significantcapitalexpenditure,leasinganddecisionsaffectingtheCompany’sfinancialgearing).

TheBoardmeetsatleastquarterlyandasrequiredfromtimetotimetoconsiderspecificissuesreservedfordecisionbytheBoard,asnotedabove.

AttheBoard’squarterlymeetingsitconsiderspaperscirculatedinadvanceincludingreportsprovidedbytheInvestmentManagerandtheAdministrator.TheInvestmentManager’sreportcommentson:

● ThepropertyanddebtmarketsoftheUK,EuropeandIndiaincludingrecommendationsforanychangesinstrategythattheInvestmentManagerconsidersmaybeappropriate

● PerformanceoftheGroup’sportfolioandkeyassetmanagementinitiatives

● Transactionalorlendingactivityundertakenoverthepreviousquarterandbeingcontemplatedforthefuture

● TheGroup’sfinancialpositionincludingrelationshipswithbankers,borrowersandlenders.

ThesereportsenabletheBoardtoassessthesuccesswithwhichtheGroup’sinvestmentstrategyandotherassociatedmattersarebeingimplementedandalsoconsideranyrelevantrisksandtoconsiderhowtheyshouldbeproperlymanaged.

TheCompany’sserviceprovidersissuereportsontheirowninternalcontrolsandthesereportsareconsideredbytheBoard periodically.

Inbetweenitsregularquarterlymeetings,theBoardhasalsometonanumberofoccasionsduringtheyeartoapprovespecifictransactionsandforothermatters.

Board and Directors’ appraisals

TheBoardcarriesoutanannualreviewofitscompositionandperformance(includingtheperformanceofindividualDirectors)andthatofitsstandingcommittees.SuchappraisalincludesreviewingtheperformanceandcompositionoftheBoard(andwhetherithasanappropriatemixofknowledge,skillsandexperience),therelationshipsbetweentheBoardandtheInvestmentManagerandAdministrator,theprocessesinplaceandtheinformationprovidedtotheBoardandcommunicationbetweenBoardmembers.

Directors’ and corporate governance report (continued)


Board Meeting attendance

ThetablebelowshowstheattendanceatBoardmeetingsduringtheyearto31 March2020:

Director No of meetings attended

DavidJeffreys 18

PhillipRose 5

JeffChowdhry 10

MelanieTorode 19

WilliamSimpson 14

No. of meetings during the year 22

Directors’ and officers’ insurance

AnappropriatelevelofDirectors’andofficers’insuranceismaintainedwherebyDirectorsareindemnifiedagainstliabilitiestothirdpartiestotheextentpermittedbyGuernseycompanylaw.

Board Committees

TheBoardhasestablishedthreestandingcommittees,allofwhichoperateunderdetailedtermsofreference,copiesofwhichareavailableonrequestfromtheCompanySecretary.

Audit and Risk Committee

TheAuditandRiskCommitteeconsistsofDavidJeffreys(Chairman),JeffChowdhryandWilliamSimpson.TheBoardissatisfiedthatDavidJeffreyscontinuestohavetherequisiterecentandrelevantfinancialexperiencetofulfilhisroleasChairmanoftheAuditandRiskCommittee.

Role of the Committee

TheroleoftheAuditandRiskCommittee,whichmeetsatleasttwiceayear,includes:

● Theengagement,reviewoftheworkcarriedoutbyandtheperformanceoftheGroup’sexternalauditor

● Tomonitorandreviewtheindependence,objectivityandeffectivenessoftheexternalauditor

● Todevelopandapplyapolicyfortheengagementoftheexternalauditfirmtoprovidenon‑auditservices

● ToassisttheBoardindischargingitsdutytoensurethatfinancialstatementscomplywithalllegalrequirements

● ToreviewtheGroup’sfinancialreportingandinternalcontrolpoliciesandtoensurethattheproceduresfortheidentification,assessmentandreportingofrisksare adequate

● Toreviewregularlytheneedforaninternalauditfunction

● TomonitortheintegrityoftheGroup’sfinancialstatements,includingitsannualandhalf‑yearreportsandannouncementsrelatingtoitsfinancialperformance,reviewingthesignificantfinancialreportingissuesandjudgementswhichtheycontain

● Toreviewtheconsistencyofaccountingpoliciesandpractices

● ToreviewandchallengewherenecessarythefinancialresultsoftheGroupbeforesubmissiontotheBoard.

TheAuditandRiskCommitteemakesrecommendationstotheBoardwhicharewithinitstermsofreferenceandconsidersanyothermattersastheBoardmayfromtimetotimerefertoit.

MembersoftheAuditandRiskCommitteemayalso,fromtimetotime,meetwiththeGroup’sindependentpropertyvaluerstodiscussthescopeandconclusionsoftheirwork.

Committee meeting attendance

Director No of meetings attended

DavidJeffreys 4

WilliamSimpson 4

JeffChowdhry 4

No. of meetings during the year 4

Policy for non audit services

TheCommitteehasadoptedapolicyfortheprovisionofnon‑auditservicesbytheCompany’sexternalauditor,BDOLimited,andreviewsandapprovesallmaterialnon‑auditrelatedservicesinaccordancewiththeneedtoensuretheindependenceandobjectivityoftheexternalauditor.Noservices,otherthanaudit‑relatedones,werecarriedoutbyBDOLimitedduringtheyear.

Internal audit

TheBoardreliesuponthesystemsandproceduresemployedbytheInvestmentManagerandtheAdministratorwhichareregularlyreviewedandareconsideredtobesufficienttoprovideitwiththerequireddegreeofcomfort.Therefore,theBoardcontinuestobelievethatthereisnoneedforaninternalauditfunction,althoughtheAuditandRiskCommitteeconsidersthisannually,reportingitsfindingstotheBoard.



Nomination Committee and attendance

TheNominationCommitteeconsistsofDavidJeffreys(Chairman),PhillipRoseandMelanieTorode.

TheCommittee’sprincipaltaskistoreviewthestructure,sizeandcompositionoftheBoardinrelationtoitssizeandpositioninthemarketandtomakerecommendationstofillBoardvacanciesastheyariseanditmeetsatleastannually.ItmetonceduringtheyearandallCommitteememberswerepresent.

Remuneration Committee and attendance

TheRemunerationCommitteeconsistsofMelanieTorode(Chairman),JeffChowdhryandDavidJeffreys.

TheBoardhasapprovedformaltermsofreferencefortheCommitteeandacopyoftheseisavailableonrequestfromthe CompanySecretary.

AstheCompanycomprisesonlynon‑executivedirectors,theCommittee’smainroleistodeterminetheirremunerationwithinthecapsetoutintheCompany’sArticles.ItmetonceduringtheyearandallCommitteememberswerepresent.

Remuneration report

TheaggregatefeespayabletotheDirectorsarelimitedto£200,000perannumundertheCompany’sArticlesandtheannualfeespayabletoeachDirectorhavebeenincreasedbyonly10%(Chairman)and15%(otherDirectors)sincetheCompany’sshareswerelistedin2006.ThefeespayabletotheDirectorsareexpectedtoreflecttheirexpertise,responsibilitiesandtimespentonthebusinessoftheGroup,takingintoaccountmarketequivalents,theactivities,thesizeoftheGroupandmarketconditions.Undertheirrespectiveappointmentletters,eachDirectorisentitledtoanannualfeetogetherwithaprovisionforreimbursementforanyreasonableoutofpocket expenses.

DuringtheyeartheDirectorsreceivedthefollowingemolumentsintheformoffeesfromGroupcompanies:

Year ended 31 March 2020

£


£

DavidJeffreys 36,000 33,000


SerenaTremlett* ‑ 18,950

JeffChowdhry 25,000 23,000

WilliamSimpson 25,000 11,063

MelanieTorode 50,375 32,453

Total 161,375 141,466

* resignedon8October2018

Internal control and risk management

TheBoardunderstandsitsresponsibilityforensuringthattherearesufficient,appropriateandeffectivesystems,procedures,policiesandprocessesforinternalcontroloffinancial,operational,complianceandriskmanagementmattersinplaceinordertomanagetheriskswhichareaninherentpartofbusiness.SuchrisksaremanagedratherthaneliminatedinordertopermittheCompanytomeetitsfinancialandotherobjectives.

TheBoardreviewstheinternalproceduresofbothitsInvestmentManageranditsAdministratoruponwhichitisreliant.TheInvestmentManagerhasascheduleofmatterswhichhavebeendelegatedtoitbytheBoardanduponwhichitreportstotheBoardonaquarterlybasis.Thesemattersincludequarterlymanagementaccountsandreportingbothagainstkeyfinancialperformanceindicatorsanditspeergroup.Further,acompliancereportisproducedbytheAdministratorfortheBoardonaquarterlybasis.

TheCompanymaintainsariskmanagementframeworkwhichconsidersthenon‑financialaswellasfinancialrisksandthisisreviewedbytheAuditandRiskCommitteepriortosubmissiontotheBoard.

Investment management agreement

TheCompanyhasanagreementwiththeInvestmentManager.ThissetsouttheInvestmentManager’skeyresponsibilities,whichincludeproposingapropertyinvestmentstrategytotheBoard,identifyingpropertyinvestmentstorecommendforacquisitionandarrangingappropriatelendingfacilities.TheInvestmentManagerisalsoresponsibletotheBoardforallissuesrelatingtopropertyassetmanagement.

Substantial shareholding

Shareholderswithholdingsofmorethan3percentofthevotingrightsoftheCompanyasat20May2020wereasfollows:

Name of investor No. of voting rights % held

AlphaGlobalPropertySecuritiesFundPte.Ltd 23,162,181 38.67%

AntlerInvestmentHoldings 17,968,851 30.00%

MitonGlobalOpportunities 2,842,084 4.75%

RockmountVenturesLtd 2,318,863 3.87%

Shareholder relations

TheBoardplaceshighimportanceonitsrelationshipwithitsshareholders,withmembersoftheInvestmentManager’sInvestmentCommitteemakingthemselvesavailableformeetingswithkeyshareholdersandsectoranalysts.ReportingofthesemeetingsandmarketcommentaryisreceivedbytheBoardonaquarterlybasistoensurethatshareholdercommunicationfulfilstheneedsofbeinguseful,timelyandeffective.OneormoremembersoftheBoardandtheInvestmentManagerwillbeavailableattheAnnualGeneralMeetingtoansweranyquestionsthatshareholdersattendingmaywishtoraise.



Directors’ Responsibilities Statement

TheDirectorsareresponsibleforpreparingtheannualreportandthefinancialstatementsinaccordancewiththeapplicablelawandregulations.

CompanylawrequirestheDirectorstopreparefinancialstatementsforeachfinancialyear,whichgiveatrueandfairviewofthestateofaffairsoftheGroupattheendoftheyearandoftheprofitorlossoftheGroupforthatyear.

Inpreparingthosefinancialstatements,theDirectorsarerequired to:

1) selectsuitableaccountingpoliciesandthenapplythemconsistently;

2) makejudgementsandestimatesthatarereasonableandprudent;

3) statewhetherapplicableaccountingstandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and

4) preparethefinancialstatementsonthegoingconcernbasisunlessitisappropriatetoassumethattheGroupwillnotcontinueinbusiness.

SofaraseachoftheDirectorsisaware,thereisnorelevantinformationofwhichtheGroup’sauditorisunaware,andtheyhavetakenallthestepstheyoughttohavetakenasDirectorstomakethemselvesawareofanyrelevantinformationandtoestablishthattheGroup’sauditorisawareofthatinformation.

TheDirectorsareresponsibleforkeepingproperaccountingrecordswhichdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheGroupandwhichenablethemtoensurethatthefinancialstatementscomplywiththeCompanies(Guernsey)Law,2008.TheyarealsoresponsibleforsafeguardingtheassetsoftheGroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

TheDirectorsconfirmthattheyhavecompliedwiththeaboverequirementsinpreparingthefinancialstatements.

Going concern and Covid-19 pandemic

TheCompanyisnotisolatedfromtheimpactoftheCovid‑19pandemiconglobaleconomies.TheCompany’slongtermstrategyremainsresilientanditsshorttermmovetocashconservationandmaintainingacautiousapproachincommitmentstonewinvestmentsatthistime,whilepotentiallyreducingincomereturns,issupportingarobustbalancesheetpositionduringtheseuncertaintimes.AsnotedabovetheCompanyholdsapproximately36%ofitsassetscurrentlyincashwithnocurrentcontractualcapitalcommitments.WhilethereisexternalfinancingintheGroup’sinvestmentinterests,thisislimitedandnon‑recoursetotheCompany;theborrowingsinthesespecialpurposevehiclesarecompliantwiththeirbankingcovenants.WhiletheBoard’sdividendpolicyintentionisunchangedtheCompanycontinuestoactivelymonitoritsinvestmentsandtheimpactoftheseunusualeconomiccircumstancesonearningsanddividends.Seetheinvestmentreviewsectionformoredetailsonthepandemic’simpactonrelevantinvestments.


Annual General Meeting

TheAGMoftheCompanywillbeheldinGuernseyat9.00amon7August2020atFloor2,TrafalgarCourt,LesBanques,St PeterPort,Guernsey.ThemeetingwillbeheldtoreceivetheAnnualReportandFinancialStatements,re‑electDirectorsandproposethereappointmentoftheauditorandthattheDirectorsbeauthorisedtodeterminetheauditor’sremuneration.

Independent Auditor

BDOLimitedhasexpresseditswillingnesstocontinueinofficeas auditor.

David Jeffreys

DirectorMelanie Torode Director

ByorderoftheBoard,

11June2020



EachoftheDirectors,whosenamesandfunctionsarelistedintheDirectors’andcorporategovernancereportconfirmthat,tothebestofeachperson’sknowledgeandbelief:

● Thefinancialstatements,preparedinaccordancewithIFRSsasadoptedbytheEU,giveatrueandfairviewoftheassets,liabilities,financialpositionandprofitoftheGroup,and

● TheChairman’sstatementandtheinvestmentreviewincludeafairreviewofthedevelopmentandperformanceofthebusinessandthepositionoftheGroupandnote26tothefinancialstatementsprovidesadescriptionoftheprincipalrisksanduncertaintiesthattheGroupfaces.BrexitandtheCovid‑19pandemicarealsoconsideredtobeasignificantriskanduncertaintyfortheGroup(pages6and7)thattheBoardwillcontinuetomonitor.

David Jeffreys


ByorderoftheBoard,

13June2020

Directors’ statement pursuant to the Disclosure and Transparency Rules


Opinion

WehaveauditedtheconsolidatedfinancialstatementsofAlpha Real TrustLimited(‘theparentcompany’)anditssubsidiaries(the‘group’)fortheyearended31 March2020whichcomprisetheConsolidatedStatementofComprehensiveIncome,theConsolidatedBalanceSheet,theConsolidatedCashFlowStatement,theConsolidatedStatementofChangesinEquityandnotestothefinancialstatements,includingasummaryofsignificantaccountingpolicies.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion.

Inouropinion,thefinancialstatements:

● giveatrueandfairviewofthestateofthegroup’saffairsasat31 March2020andofthegroup’sprofitfortheyearthenended;

● havebeenproperlypreparedinaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion;and

● havebeenproperlypreparedinaccordancewiththerequirementsoftheCompanies(Guernsey)Law,2008.

Basis for opinion

WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UK)(‘ISAs(UK)’)andapplicablelaw.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor’sresponsibilitiesfortheauditofthefinancialstatementssectionofourreport.WeareindependentofthethegroupinaccordancewiththeethicalrequirementsrelevanttoourauditoffinancialstatementsintheUK,includingtheFRC’sEthicalStandardasappliedtolistedentities,andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

Emphasis of Matter – property valuations

WedrawattentiontoNote2(a)ofthefinancialstatements,whichdetailstheadditionaluncertaintyinrelationtopropertyvaluationsasaresultofCovid‑19whichhasresultedintheindependentvaluersincluding‘MaterialUncertainty’paragraphsinrelationtothevaluationsandCovid‑19withintheirvaluationreports.Ouropinionisnotmodifiedinrespectofthismatter.

Conclusions relating to going concern

WehavenothingtoreportinrespectofthefollowingmattersinrelationtowhichtheISAs(UK)requireustoreporttoyouwhere:

● theDirectors’useofthegoingconcernbasisofaccountinginthepreparationofthefinancialstatementsisnotappropriate;

or

● theDirectorshavenotdisclosedinthefinancialstatementsanyidentifiedmaterialuncertaintiesthatmaycastsignificantdoubtaboutthegroup’sabilitytocontinuetoadoptthegoingconcernbasisofaccountingforaperiodofatleasttwelvemonthsfromthedatewhenthefinancialstatementsareauthorisedforissue.

Key audit matters

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentperiodandincludethemostsignificantassessedrisksofmaterialmisstatement(whetherornotduetofraud)weidentified,includingthosewhichhadthegreatesteffecton:theoverallauditstrategy,theallocationofresourcesintheaudit;anddirectingtheeffortsoftheengagementteam.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.

Independent auditors’ reportTo the Members of Alpha Real Trust Limited


Independent auditors’ report (continued)

Key audit matter Audit response

Property valuations (notes2(a),12,13,14and27)

Thegroupholdsseveralinvestmentpropertieswithinitssubsidiariesandjointventurestructures.

Allpropertieshavebeenvaluedusingeither:

● anindependentRICSvaluationperformedbyindependentvaluers.Thisisthecasefor£14.8 million(96%)oftheinvestmentproperties,£3.6 million(45%)oftheassetsheldforsaleand£34.7 million(92%)oftheshareofpropertieswithinjointventurestructures;or

● directors’valuation.Thisisthecasefor£0.6 million(4%)oftheinvestmentproperties,£4.5 million(55%)oftheassetsheldforsaleand£3 million(8%)oftheshareofpropertieswithinjointventure structures.

Suchpropertyvaluationsareahighlysubjectiveareaasthevaluerswillmakejudgementsastopropertyyields,qualityoftenants,developmentcostsandothervariablestoarriveatthecurrentopenmarketvalueoftheproperty.

SuchsubjectivityandjudgementsaregreaterthisyearduetotheCovid‑19pandemicandwewereexpectingvaluerstoinclude‘MaterialUncertainty’paragraphswithintheirvaluation reports.

Anyinputinaccuraciesorunreasonablebasesusedinthevaluationjudgements(suchasinrespectofestimatedrentalvalueandyieldprofileapplied)couldresultinamaterialmisstatementoftheConsolidatedStatementofComprehensiveIncomeandtheConsolidatedBalanceSheet.

Independent valuations

Forallindependentpropertyvaluations,weevaluatedthecompetenceoftheexternalvaluers,whichincludedconsiderationoftheirqualificationsandexpertise.Wereadthetermsofengagementwiththegrouptodeterminewhethertherewereanymattersthatmighthaveaffectedtheirobjectivityormayhaveimposedscopelimitationsupontheir work.

Wehavereadthevaluationreportsfortheproperties,notedthematerialuncertaintyclausesinsertedasresultoftheimpactofCovid‑19onthepropertymarkets,discussedthebasisofthepropertyvaluations,includingtheCovid‑19impact,withthevaluerstounderstandtheprocessundertakenbythemandconfirmedthatthevaluationswerepreparedinaccordancewithprofessionalvaluationstandardsandIFRS.

Wehaveconsideredthereasonableness,andwhereappropriateagreedthroughtosupportingdocumentation(forexamplerentalincome)oftheinputsusedbythevaluersinthevaluations,suchasthetermsofvoidperiods,rentfreeperiodsandotherassumptionsthatimpactthevalue.

Directors’ valuations

Forthedirectors’valuationsweobtainedthedirectors’valuationoftheseassetsandnotedthatthevaluationwasheldatthatoftheprioryearorrecentacquisitioncosts.WechallengedwhetherCovid‑19wouldhavecreatedadecreaseinvalueandtheDirectorshaveconcludedthat,whilstthisisfeasible,anydecreasewouldnotbematerial,giventhequantumoftheassetsatdirectors’valuation.

Fortheassetheldforsaleatdirectors’valuation,weobtainedthedirectors’valuationandnotedthatthiswasbasedonanexchanged,butnotcompleted,contract.Weobtainedthecontract,togetherwiththeamendedversionshortlyaftertheyearend,whichfullysupportedthecarryingvalue.Wechallengedwhethertherecouldbeadefaultbythebuyerand,giventhelargenon‑refundabledeposit,managementandtheDirectorsconsiderthistobeunlikely.

Disclosures

Wereviewedandchallengethedisclosuresinrelationtopropertyvaluationswithinnote2(a),12,13,14andinparticularnote27(sensitivities)giventhe‘MaterialUncertainty’paragraphswithinthevaluationsreports.

Key observations

Basedontheproceduresperformed,wedidnotidentifyanyindicationstosuggestthatthepropertyvaluationsweremateriallymisstated.

GivenCovid‑19’simpactonthevaluationsandthevaluersinclusionofa‘MaterialUncertainty’paragraphwithintheirvaluationreports,wehaveconcludedthatitisappropriateforthisauditreporttocontainan‘EmphasisofMatter’paragraph,assetoutabove,inrelationtothepropertyvaluations.



Key audit matter Audit response

Loans advanced and IFRS 9(note17)

Thegroup’sactivitiesincludeadvancingseniorloansandmezzanineloanssecuredoverrealestateassets.TheamountsadvancedrepresentamaterialbalanceinthefinancialstatementsandIFRS9requireslossestoberecognisedonanexpected,forwardlookingbasis,reflectingthegroup’sviewofpotentialfutureeconomicevents.

Asaresult,thegroup’sIFRS9methodologyincorporatesanumberofestimatestodeterminetheexpectedcreditloss provisions.

ThejudgementandfocusaroundthishaveincreasedfollowingtheCovid‑19pandemic,whichwillneedtobefactoredintotheforwardlookinginformation.

Analysiswasobtainedfrommanagementinrelationtotheloansandtheexpectedcreditlossmethodologyapplied.ThisincludedupdatestotheexistingmethodologyforchangesrequiredduetotheCovid‑19pandemic,forexampleincreasingtheprobabilityofdefaultandalsotheconsequential loss.

Throughchallenge,discussionandreviewofexamplescenarios,wegainedadetailedunderstandingof,andevaluated,theexpectedcreditlossmethodologyapplied.Thiswasundertakenwithreferencetoaccountingstandardsandindustrypractice.

Wethentestedthemethodologyusedindeterminingtheamortisedcostamountandrecognitionofanyimpairmentloss.Ourtestingincluded:

● updatingourunderstandingoftheexpectedcreditlossmethodologyusedunderIFRS9;

● conductingareviewofthemethodology,includingkeyassumptionsandparameters,toensureitisinlinewithIFRS9andappropriate,givenourunderstandingoftheloansadvanced;

● challengingthemethodologyfortheforward‑lookingimpactofCovid‑19,togetherwiththeadjustmentsmadebymanagementforincreasedprobabilityofdefaultandconsequentialloss;

● testingthemethodologyonasamplebasis;

● assessingtheappropriatenessofstagingcriteriaassumptionsandadherencetoIFRS9requirements;

● evaluatingthereasonablenessofeconomicscenariosapplied;

● testingonasamplebasistheintegrityofthedatausedinthemodels;

● testingthecollateralcoverageofthebalancesheetloansandreviewingloancovenants;

● challengingmanagement’sexpectedcreditlossoutputinlightoftheCovid‑19pandemiconindividualloansandwhethermanualadjustmentswererequiredoverthemechanicalmodel.

Disclosures

Wehavechallengedthedisclosuresmadeinrelationtotheexpectedcreditlossassessmentwithinnote2tothefinancialstatementsandconsiderthesetobeappropriategiventhatexpectedcreditlossesarenotmaterialtothefinancialstatements.

Key observations

Basedontheproceduresperformed,wedidnotidentifyanyindicationstosuggestthattheexpectedcreditlossesweremateriallymisstated.



Our application of materiality

Weapplytheconceptofmaterialitybothinplanningandperformingouraudit,andinevaluatingtheeffectofmisstatements.Weconsidermaterialitytobethemagnitudebywhichmisstatements,includingomissions,couldinfluencetheeconomicdecisionsofreasonableusersthataretakenonthebasisofthefinancialstatements.Importantly,misstatementsbelowtheselevelswillnotnecessarilybeevaluatedasimmaterialaswealsotakeaccountofthenatureofidentifiedmisstatements,andtheparticularcircumstancesoftheiroccurrence,whenevaluatingtheireffectonthefinancialstatementsasawhole.

Basedonourprofessionaljudgment,wedeterminedmaterialityforthefinancialstatementsasawholetobe£2,060,000(2019: £2,250,000),whichisbasedonalevelof1.5%(2019: 1.5%)oftotalassets.Weconsideredtotalassetstobethemostappropriatebenchmarkduetothegroupbeinganinvestmentfundwiththeobjectiveoflong‑termcapitalgrowth.

Performancematerialityforthegrouphasbeensetat£1,545,000(2019:£1,688,000)whichis75%(2019:75%)ofmateriality.Thishasbeensetbaseduponthecontrolenvironmentinplace,theDirectors’assessmentofriskandour pastexperienceofadjustments.

InternationalStandardsonAuditing(UK)alsoallowtheauditortosetalowermaterialityforparticularclassesoftransaction,balancesordisclosuresforwhichmisstatementsoflesseramountsthanmaterialityforthefinancialstatementsasawholecouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthefinancialstatements.Inthiscontext,wesetalowerlevelofmaterialitytoapplytosensitivefeesincluding:managementfees,performancefees,legalfees,directors’feesandauditfees.Wedeterminedmaterialityfortheseareastobe£206,000(2019: £225,000).

Componentmaterialityhasbeensetforthecomponentwhichissignificanttothegroupfinancialstatements.Materialityforthiscomponentwassetat£1,018,250(2019:£1,125,000).

WeagreedwiththeAuditandriskCommitteethatwewouldreporttothecommitteeallindividualauditdifferencesidentifiedduringthecourseofourauditinexcessof£61,000(2019:£68,000).Wealsoagreedtoreportdifferencesbelowthesethresholdsthat,inourview,warrantedreportingonqualitative grounds.

An overview of the scope of our audit

Wetailoredthescopeofouraudittakingintoaccountthenatureofthegroup’sinvestments,involvementoftheInvestmentManager,theaccountingandreportingenvironmentandtheindustryinwhichthegroupoperates.

Thisassessmenttookintoaccountthelikelihood,natureandpotentialmagnitudeofanymisstatement.Aspartofthisriskassessment,weconsideredthegroup’sinteractionwiththeInvestmentManager.Weassessedthecontrolenvironmentinplacewithinthegrouptotheextentthatitwasrelevanttoouraudit.Followingthisassessment,weappliedprofessionaljudgementtodeterminetheextentoftestingrequiredovereachbalanceinthefinancialstatements.

Thegroupconsistsoftheparentcompany,numeroussubsidiariesand,asattheyearend,twojointventureentities.Weconcludedthatthemosteffectiveauditapproachtothegroup,withtheexceptionofthejointventurestructures,wastoaudittheconsolidatedfinancialstatementsasiftheywereoneentity,duringwhichwehaveperformedauditproceduresonallkeyriskareas.Thematerialityappliedwasthatcalculatedabove,whichhadbeenbasedontheconsolidatedfinancial information.

FortheH2Ojointventureentity,weassessedthemainpropertyholdingcompanywithinthisstructuretobeasignificantcomponent.Thiscomponentwassubjecttoafullscopeauditandwascompletedbythecomponentauditor.Weissuedgroupinstructionstothecomponentauditorandreviewedthekeyriskareasoftheirwork.Inadditiontotheworkperformedbythecomponentauditor,wehavealsoperformedourownauditproceduresonthepropertyvaluation.

Fortheremainingjointventureentity,weconcludedthatitwassignificantduetorisksidentifiedonlyandnotduetosize.Thiscomponentwasnotsubjecttoafullscopeauditbutinsteadweperformedauditproceduresoveralloftheriskareasidentified.



Other information

TheDirectorsareresponsiblefortheotherinformation.Theotherinformationcomprisestheinformationincludedintheannualreport,otherthanthefinancialstatementsandourauditor’sreportthereon.Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationand,excepttotheextentotherwiseexplicitlystatedinourreport,wedonotexpressanyformofassuranceconclusionthereon.

Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.Ifweidentifysuchmaterialinconsistenciesorapparentmaterialmisstatements,wearerequiredtodeterminewhetherthereisamaterialmisstatementinthefinancialstatementsoramaterialmisstatementoftheotherinformation.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.

Wehavenothingtoreportinthisregard.

Matters on which we are required to report by exception

WehavenothingtoreportinrespectofthefollowingmatterswheretheCompanies(Guernsey)Law,2008requiresustoreporttoyouif,inouropinion:

● properaccountingrecordshavenotbeenkeptbytheparentcompany;or

● thefinancialstatementsarenotinagreementwiththeaccountingrecords;or

● wehavefailedtoobtainalltheinformationandexplanationswhich,tothebestofourknowledgeandbelief,arenecessaryforthepurposesofouraudit.

Responsibilities of Directors

AsexplainedmorefullyintheDirectors’andCorporateGovernanceReport,theDirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairviewandforsuchinternalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialstatements,theDirectorsareresponsibleforassessingthegroup’sandparentcompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlesstheDirectorseitherintendtoliquidatethegrouportoceaseoperations,orhavenorealisticalternativebuttodoso.

Auditor’s responsibilities for the audit of the financial statements

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.ReasonableassuranceisahighlevelofassurancebutisnotaguaranteethatanauditconductedinaccordancewithISAs(UK)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.

AfurtherdescriptionofourresponsibilitiesfortheauditofthefinancialstatementsislocatedattheFinancialReportingCouncil’swebsiteat:www.frc.org.uk /auditorsresponsibilities.Thisdescriptionformspartofourauditor’sreport.

Use of our report

Thisreportismadesolelytotheparentcompany’smembers,asabody,inaccordancewithSection262oftheCompanies(Guernsey)Law,2008.Ourauditworkhasbeenundertakensothatwemightstatetotheparentcompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheparentcompanyandtheparentcompany’smembers,asabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Justin Marc Hallett FCA For and on behalf of BDO LimitedCharteredAccountantsandRecognisedAuditorPlaceduPré,RueduPré,StPeterPort,GuernseyDate:11June2020


For the year ended 31 March 2020 For the year ended 31 March 2019

Notes

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Income

Revenue 3 6,119 ‑ 6,119 3,237 ‑ 3,237

Changeintherevaluationofinvestmentpropertyand assetsheldforsale

13‑14 ‑ 1,194 1,194 ‑ 1,316 1,316

Gains/(losses)onfinancialassetsandliabilitiesheldatfairvaluethroughprofitorloss

26 393 (204) 189 1,451 689 2,140

(Loss)/profitoninvestmentpropertydisposal 13 ‑ (167) (167) ‑ 18,061 18,061

Total income 6,512 823 7,335 4,688 20,066 24,754

Expenses

Propertyoperatingexpenses 3 (74) ‑ (74) (96) ‑ (96)

InvestmentManager’sfee 25 (2,335) ‑ (2,335) (2,236) (771) (3,007)

Otheradministrationcosts 4 (1,647) ‑ (1,647) (1,217) ‑ (1,217)

Total operating expenses (4,056) - (4,056) (3,549) (771) (4,320)

Operating profit 2,456 823 3,279 1,139 19,295 20,434

Shareofprofit /(loss)ofjointventuresandassociates 12 1,579 (1,107) 472 1,678 1,917 3,595

Financeincome 5 118 ‑ 118 31 734 765

Financecosts 6 (204) (55) (259) (123) ‑ (123)

Profit /(loss) before taxation 3,949 (339) 3,610 2,725 21,946 24,671

Taxation 7 (93) ‑ (93) (57) (2,123) (2,180)

Profit /(loss) for the year 3,856 (339) 3,517 2,668 19,823 22,491

Other comprehensive income/(expense) for the year

Items that may be classified to profit and loss in subsequent periods

Exchangedifferencesarisingontranslationofforeign operations

‑ 610 610 ‑ (392) (392)

Other comprehensive income/(expense) for the year - 610 610 - (392) (392)

Total comprehensive income for the year 3,856 271 4,127 2,668 19,431 22,099

Earnings per ordinary share (basic & diluted) 9 5.8p 33.1p

Earnings per A share (basic & diluted) 9 n/a 33.5p

Total earnings per ordinary and A share (basic & diluted)

9 5.8p 33.2p

Adjusted earnings per ordinary and A share (basic & diluted)

9 6.4p 3.9p

ThetotalcolumnofthisstatementrepresentstheGroup’sstatementofcomprehensiveincome,preparedinaccordancewithIFRS.The revenueandcapitalcolumnsaresuppliedassupplementaryinformationpermittedunderIFRS(seepage37).Allitemsintheabovestatementderivefromcontinuingoperations.

Theaccompanyingnotesonpages36to66formanintegralpartofthefinancialstatements.

Consolidated statement of comprehensive income


Notes

31 March 2020

£’000

31 March 2019

£’000

Non-current assets

Investmentproperty 13 15,389 13,764

Jointventureinarbitration 15 2,510 3,882

Investmentsheldatfairvalue 16 139 390

Investmentinjointventuresandassociates 12 21,227 28,535

Loansadvanced 17 8,631 15,036

Tradeandotherreceivables 19 ‑ 1,929

47,896 63,536

Current assets

Assetheldforsale 14 8,065 4,500

Derivativesheldatfairvaluethroughprofitorloss 27 203 514

Loansadvanced 17 31,253 21,100

Collateraldeposit 18 1,364 1,302

Tradeandotherreceivables 19 2,427 353

Cashandcashequivalents 46,068 58,181

89,380 85,950

Total assets 137,276 149,486

Current liabilities

Tradeandotherpayables 20 (1,291) (2,097)

Corporationtax 7 (51) (2,647)

Bankborrowings 21 (32) (30)

(1,374) (4,774)

Total assets less current liabilities 135,902 144,712

Non-current liabilities

Bankborrowings 21 (8,275) (8,039)

Deferredtax 7 ‑ ‑

(8,275) (8,039)

Total liabilities (9,649) (12,813)

Net assets 127,627 136,673

Equity

Sharecapital 22 ‑ ‑

Specialreserve 23 65,118 76,032

Translationreserve 23 28 (582)

Capitalreserve 23 40,350 40,689

Revenuereserve 23 22,131 20,534

Total equity 127,627 136,673

Net asset value per ordinary share 10 213.7p 204.3p

ThefinancialstatementswereapprovedbytheBoardofDirectorsandauthorisedforissueon11June2020.

TheyweresignedonitsbehalfbyDavidJeffreysandMelanie Torode.

Theaccompanyingnotesonpages36to66formanintegralpart ofthefinancialstatements.

Consolidated balance sheet

David Jeffreys



For the year ended 31 March 2020

£’000


£’000

Operating activities Profitfortheyearaftertaxation 3,517 22,491Adjustments for:Changeinrevaluationofinvestmentpropertyandassetsheldforsale (1,194) (1,316)Netgainsonfinancialassetsandliabilitiesheldatfairvaluethroughprofitorloss (189) (2,140)Loss/(profit)onsubsidiaryandinvestmentpropertydisposals 167 (18,061)Taxation 93 2,180Shareofprofitofjointventuresandassociates (472) (3,595)Interestreceivableonloanstothirdparties (4,952) (2,709)Financeincome (118) (765)Financecosts 259 123Operating cash flows before movements in working capital (2,889) (3,792)

Movements in working capital:Movementintradeandotherreceivables 2,311 2,416

Movementintradeandotherpayables (1,141) 457Cash flows used in operations (1,719) (919)

Interestreceived 118 31Interestpaid (188) (93)Taxpaid (2,761) (82)Cash flows used in operating activities (4,550) (1,063)

Investing activitiesAcquisitionofinvestmentproperty (610) (14,795)Proceedsondisposalofinvestmentproperty 5,058 52,474Redemptionofinvestments ‑ 34,065Redemptiononpreferenceshares’investment 193 343CashrecognisedonAlpha2transaction(note2) 5,787 ‑Capitalexpenditureoninvestmentproperty ‑ (5,203)Loaninterestreceived 2,099 1,061Loansgrantedtothirdparties (24,483) (32,586)Loansrepaidbythirdparties 23,982 11,465Dividendincomefromjointventuresandassociates 2,805 385Dividendincomefromotherinvestments ‑ 805Capitaldistributionfromotherinvestments ‑ 14Capitalreturnfromjointventureinarbitration 1,232 1,107Collateraldepositincrease (62) (452)Cash flows from investing activities 16,001 48,683

Financing activitiesBankloanadvanced ‑ 8,377Bankloancosts ‑ (151)Sharebuyback (22,960) (2,200)Sharebuybackcosts (72) (29)Shareissuecosts (102) ‑Cashreceived/(paid)onmaturityofforeignexchangeforward 165 (118)Ordinarydividendspaid (673) (1,634)SpecialdividendpaidtoAshareholders ‑ (14)Cash flows (used in)/from financing activities (23,642) 4,231

Net (decrease)/increase in cash and cash equivalents (12,191) 51,851

Cash and cash equivalents at beginning of year 58,181 6,273Exchangetranslationmovement 78 57Cash and cash equivalents at end of year 46,068 58,181


Consolidated cash flow statement



Special reserve

£’000

Translation reserve

£’000

Capital reserve

£’000

Revenue reserve

£’000

Total equity

£’000

At 1 April 2018 78,261 (190) 20,880 19,500 118,451

Total comprehensive income for the year

Profitfortheyear ‑ ‑ 19,823 2,668 22,491

Othercomprehensiveexpensefortheyear ‑ (392) ‑ ‑ (392)

Total comprehensive (expense)/income for the year - (392) 19,823 2,668 22,099

Transactions with owners

Dividends ‑ ‑ (14) (1,634) (1,648)

Sharebuyback (2,200) ‑ ‑ ‑ (2,200)

Sharebuybackcosts (29) ‑ ‑ ‑ (29)

Total transactions with owners (2,229) - (14) (1,634) (3,877)

At 31 March 2019 76,032 (582) 40,689 20,534 136,673

Notes22,23


Special reserve

£’000

Translation reserve

£’000

Capital reserve

£’000

Revenue reserve

£’000

Total equity

£’000

At 1 April 2019 76,032 (582) 40,689 20,534 136,673

Total comprehensive income for the year

(Loss)/profitfortheyear ‑ ‑ (339) 3,856 3,517

Othercomprehensiveincomefortheyear ‑ 610 ‑ ‑ 610

Total comprehensive income/(expense) for the year - 610 (339) 3,856 4,127

Transactions with owners

Cashdividends ‑ ‑ ‑ (673) (673)

Scripdividends 1,586 ‑ ‑ (1,586) ‑

Shareissueforacquisition(note2) 10,634 ‑ ‑ ‑ 10,634

Shareissuecosts (102) ‑ ‑ ‑ (102)

Sharebuyback (22,960) ‑ ‑ ‑ (22,960)

Sharebuybackcosts (72) ‑ ‑ ‑ (72)

Total transactions with owners (10,606) - - (2,567) (13,173)

At 31 March 2020 65,118 28 40,350 22,131 127,627

Notes22,23


Consolidated statement of changes in equity


1. General informationTheCompanyisalimitedliability,closed‑endedinvestmentcompanyincorporatedinGuernsey.Theaddressoftheregisteredofficeisgivenonpage57.ThenatureoftheGroup’soperationsanditsprincipalactivitiesaresetoutintheChairman’sStatementonpages4to7.Thefinancialstatementswereapprovedandauthorisedforissueon11June2020andsignedbyDavidJeffreysandMelanieTorodeonbehalfoftheBoard.

2. (a) Significant accounting policiesAsummaryoftheprincipalaccountingpoliciesissetoutbelow.Thepolicieshavebeenconsistentlyappliedforallperiodspresentedunlessotherwisestated.

ThepreparationoffinancialstatementsinconformitywithIFRS,asadoptedbytheEU,requirestheuseofcertaincriticalaccountingestimates.Italsorequiresmanagementtoexerciseitsjudgementintheprocessofapplyingtheaccountingpolicies.Theareasinvolvingahighdegreeofjudgementorcomplexity,orareaswheretheassumptionsandestimatesaresignificanttothefinancialstatementsaredisclosedinthisnote.

Basis of preparationThesefinancialstatementshavebeenpreparedinaccordancewithIFRS,whichcomprisestandardsandinterpretationsapprovedbytheInternationalAccountingStandardsBoard(‘IASB’),andInternationalAccountingStandardsandStandardsInterpretationsCommittee’sinterpretationsapprovedbytheInternationalAccountingStandardsCommittee(‘IASC’)thatremainineffect,andtotheextentthattheyhavebeenadoptedbytheEuropeanUnion.

Alpha2 acquisitionInSeptember2019,theCompanyannouncedthatitacquired66.4%ofthesharesinAlpha2.TheacquisitionincreasedART’sownershipinterestinAlpha2to100%.TheacquisitionwasforAlpha2netassetvalueand,duetothisinvestmentbeingpreviouslyequityaccounted,nogainorlossontheacquisitionwasgenerated.TheAlpha2portfolioconsistedoftwounleveragedindustrialassetslocatedinEnglandandhadatotalnetassetvalueof£16.2 millionasat30September2019.

Asfrom18September2019,inaccordancewithIFRS3(Businesscombinations),theGrouphasthereforeconsolidatedits100%investmentinAlpha2.

ThesharesinAlpha2werepurchasedfromAntlerInvestmentHoldingsLimited,arelatedpartytotheCompany.ThesharesinAlpha2werepurchasedatitsadjustednetassetvalueof£10.6 millionwithitsportfolioindependentlyvaluedasat31August2019.ThepurchaseconsiderationfortheincreasedAlpha2shareholdingwassatisfiedbythere‑issuefromtreasuryof5,030,284ordinarysharesinARTatanissuepriceequivalenttoART’sestimatedadjustednetassetvalueof211.4ppershare(£10.6 million):thiswasasharebasedtransactioninaccordancewithIFRS2.Giventhenatureofthetransactionandtheunderlyingassets,theCompanyhasaccountedforthetransactionasapropertyacquisitionasopposedtoabusinesscombination.Asaresult,thesharesissuedasconsiderationfortheacquisitionhavebeenrecognisedatthefairvalueoftheassetsreceivedasopposedtothetradedpriceonthedayofissue.

Uptothe18September2019,theGroupaccountedforits33.6%investmentinAlpha2asanassociatebytheequitymethod,inaccordancewithIFRS11.Asfrom18September2019,incomeandexpensesrelatedtotheAlpha2investmenthavebeenrecognisedinthestatementofcomprehensiveincome.

Going concern and Covid-19 pandemicTheCompanyisnotisolatedfromtheimpactoftheCovid‑19pandemiconglobaleconomies.TheCompany’slongtermstrategyremainsresilientanditsshorttermmovetocashconservationandmaintainingacautiousapproachincommitmentstonewinvestmentsatthistime,whilepotentiallyreducingincomereturns,issupportingarobustbalancesheetpositionduringtheseuncertaintimes.AsnotedabovetheCompanyholdsapproximately36%ofitsassetscurrentlyincashwithnocurrentcontractualcapitalcommitments.WhilethereisexternalfinancingintheGroup’sinvestmentinterests,thisislimitedandnon‑recoursetotheCompany;theborrowingsinthesespecialpurposevehiclesarecompliantwiththeirbankingcovenants.WhiletheBoard’sdividendpolicyintentionisunchangedtheCompanycontinuestoactivelymonitoritsinvestmentsandtheimpactoftheseunusualeconomiccircumstancesonearningsanddividends.Seetheinvestmentreviewsectionformoredetailsonthepandemic’simpactonrelevantinvestments.


(a) Adoption of new and revised StandardsThefollowingnewstandardsorinterpretations,whichwereeffectiveforthefirsttimeforperiodsbeginningonorafter1January2019,impactedtheGroup’saccountingpolicies:

IFRS 16: LeasesTheGrouphasadoptedIFRS16(Leases),whichwasdueforaccountingperiodscommencingonorafter1January2019.

IFRS16substantiallycarriesforwardthelessoraccountingrequirementsofIAS17.Accordingly,alessorwillcontinuetoclassifyitsleasesasfinanceleasesoroperatingleases,andaccountforthosetwotypesofleasesdifferently.TheadoptionofIFRS16hasnothadamaterialimpactonthefinancialstatements.

Notes to the financial statementsFor the year ended 31 March 2020


Notes to the financial statements (continued)For the year ended 31 March 2020

(b) Standards and Interpretations in issue and not yet effectiveAtthedateofauthorisationofthesefinancialstatements,thereareanumberofstandardsandinterpretations,whichhavenotbeenappliedinthesefinancialstatementsthatwereinissuebutnotyeteffective.TheDirectorsanticipatethattheadoptionofthesestandardsandinterpretationswillnothaveamaterialimpactonthefinancialstatementsoftheGroup.

Basis of consolidation

(a) SubsidiariesTheconsolidatedfinancialstatementsincorporatethefinancialstatementsoftheCompanyandthesubsidiaryundertakingscontrolledbytheCompany,madeupto31 Marcheachyear.ControlisachievedwheretheCompanyhaspowerovertheinvestee,exposureorrights,tovariablereturnsfromitsinvolvementwiththeinvesteeandtheabilitytouseitspowertoaffecttheamountoftheinvestor’sreturns.

Theresultsofsubsidiaryundertakingsacquiredordisposedofduringtheyearareincludedintheconsolidatedstatementofcomprehensiveincomefromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposalasappropriate.

Whennecessary,adjustmentsaremadetothefinancialstatementsofsubsidiaryundertakingstobringtheaccountingpoliciesusedintolinewiththoseusedbytheGroup.

Allintra‑grouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.

ARTholdsanumberofdirectpropertyinvestmentsthroughsubsidiaryundertakings.TheGroupisactivelyinvolvedinthemanagementofthesepropertyinvestmentsanditsinvestmentplansdonotincludespecifiedexitstrategiesfortheseinvestments.Asaresult,ARTplanstoholdthesepropertyinvestmentsindefinitely.ARTreportsitsinvestmentpropertiesatfairvalueinitsfinancialstatementsbutthisisnottheprimarymeasurementattributeusedbymanagementtoevaluatetheperformanceoftheseinvestments.Inaddition,ARTholdsanumberofloansthroughsubsidiaryundertakingsandmanagementdonotmeasuretheperformanceoftheseonafairvaluebasis.Inconsequence,managementhaveconcludedthatARTdoesnotmeetthedefinitionofaninvestmententityandthesubsidiarieshavebeenconsolidatedintotheGroup’sbalancesheet,ratherthanbeingcarriedatfairvalue.

Whenapartialdisposalofasubsidiaryoccurswhichcausestheentitytonolongerbecontrolledandhencenolongerasubsidiary,theCompanyderecognisesthesubsidiaryandrecognisestheretainedinterestinitiallyatfairvalue.

WhencalculatingtheprofitorlossondisposaltheCompanymeasurestheretainedinterestatfairvalueandincludesthisinthefairvalueoftheconsiderationreceived.Theprofitorlossondisposalisthedifferencebetweenthefairvalueoftheconsiderationreceivedandthecarryingvalueoftheassetsandliabilitiesdisposedof,asreducedbytransactionscostsincurredandanyforeigncurrencygainsorlossesrecycledondisposalaspertheforeigncurrencyaccountingpolicyinrespectofgroupcompanies.

(b) Joint ventures and associatesTheGroupappliesIFRS11toitsjointarrangement.UnderIFRS11investmentsinjointarrangementsareclassifiedaseitherjointoperationsorjointventuresdependingonthecontractualrightsandobligationsofeachinvestor.TheGrouphasassessedthenatureofitsjointarrangementsanddeterminedthemtobejointventures.Jointventuresareaccountedforusingtheequitymethod.

TheGroupalsoappliesIAS28:thisstandarddefinesanassociateasanentityoverwhichaninvestorexercisessignificantinfluence.UnderIAS28significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontrolofthosepoliciesand,whereanentityholds20%ormoreofthevotingpower(directlyorthroughsubsidiaries)ofaninvestee,itispresumedthattheinvestorhassignificantinfluenceunlessitcanbeclearlydemonstratedthatthisisnotthecase.Associatesareaccountedforusingtheequitymethod.

Undertheequitymethodofaccounting,interestsinjointventuresandassociatesareinitiallyrecognisedatcostandadjustedthereaftertorecognisetheGroup’sshareofthepost‑acquisitionprofitsorlossesandmovementsinothercomprehensiveincome.WhentheGroup’sshareoflossesinajointventureorassociateequalsorexceedsitsinterestsinthejointventureorassociate(whichincludesanylong‑termintereststhat,insubstance,formpartoftheGroup’snetinvestmentinthejointventureorassociate)theGroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfofthejointventureorassociate.

UnrealisedgainsontransactionsbetweentheGroupanditsjointventuresorassociatesareeliminatedtotheextentoftheGroup’sinterestinthejointventuresorassociates.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.

TheGalaxiajointventureisclassifiedasjointventureinarbitrationandhasbeenincludedwithinthefinancialstatementsbasedonthecurrentestimateofrealisablevaluetotheGroup.

Presentation of statement of comprehensive incomeInordertobetterreflecttheactivitiesofaninvestmentcompanyandinaccordancewithguidanceissuedbytheAssociationofInvestmentCompanies(‘AIC’),supplementaryinformation,whichanalysesthestatementofcomprehensiveincomebetweenitemsofarevenueandcapitalnature,hasbeenpresentedalongsidethestatementofcomprehensiveincome(seenote23).

2. (a) Significant accounting policies (continued)



Revenue recognitionRentalincomeandservicechargeincomefrominvestmentpropertyleasedoutunderanoperatingleasearerecognisedinthestatementofcomprehensiveincomeonastraightlinebasisoverthetermofthelease.Leaseincentivesgrantedarerecognisedasanintegralpartofthenetconsiderationfortheuseofthepropertyandarethereforealsorecognisedonthesamestraightlinebasis.Rentalrevenuesareaccountedforonanaccrualsbasis.Therefore,deferredrevenuegenerallyrepresentsadvancepaymentsfromtenants.RevenueisrecognisedwhenitisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheGroupandtheamountofrevenuecanbemeasuredreliably.Uponearlyterminationofaleasebythelessee,thereceiptofasurrenderpremium,netofdilapidationsandnon‑recoverableoutgoingsrelatingtotheleaseconcerned,isimmediatelyrecognisedasrevenue.

Interestincomeisaccruedonatimebasis,byreferencetotheprincipaloutstandingandtheeffectiveinterestrateapplicable.

Otherincomeisrecognisedwhenreceived.

Leasing

(a) Company as a lessorLeasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.

(b) Company as a lesseeUnderIFRS16,allleasesarerecordedonthebalancesheetasliabilities,atthepresentvalueofthefutureleasepayments,alongwithanassetreflectingtherighttousetheassetovertheleaseterm.

TheoneleaseholdpropertyownedbytheCompanydoesnotgiverisetoamaterialleaseobligation.

Foreign currencies

(a) Functional and presentation currencyItemsincludedinthefinancialstatementsofeachoftheGroupentitiesaremeasuredinthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(the‘functionalcurrency’).TheconsolidatedfinancialstatementsarepresentedinSterling,whichistheCompany’sfunctionalandpresentationcurrency.

(b) Transactions and balancesTransactionsincurrenciesotherthanthefunctionalcurrencyarerecordedattheratesofexchangeprevailingonthedatesofthetransactions.Ateachbalancesheetdate,monetaryassetsandliabilitiesthataredenominatedinforeigncurrenciesareretranslatedattheratesprevailingonthebalancesheetdate.Gainsandlossesarisingonretranslationareincludedinprofitorlossfortheyear.

(c) Group companiesTheresultsandfinancialpositionofalltheGroupentitiesthathaveafunctionalcurrencywhichdiffersfromthepresentationcurrencyaretranslatedintothepresentationcurrencyasfollows:

(i) assetsandliabilitiesforeachbalancesheetpresentedaretranslatedattheclosingrateatthebalancesheetdate;

(ii) incomeandexpensesforeachstatementofcomprehensiveincomearetranslatedattheaverageexchangerateprevailingintheperiod;and

(iii) allresultingexchangedifferencesarerecognisedasaseparatecomponentofequity.

Onconsolidation,theexchangedifferencesarisingfromthetranslationofthenetinvestmentinforeignentitiesaretakentoequity.Whenaforeignoperationissold,suchexchangedifferencesarerecognisedinthestatementofcomprehensiveincomeaspartofthegainorlossonsale.

ForEurobasedbalancestheyearendexchangerateusedis£1:€1.130(2019:£1:€1.161)andtheaverageratefortheyearusedis£1:€1.144(2019:£1:€1.134).Theyear‑endexchangerateusedforIndianrupee(INR)balancesis£1:INR93.539(2019:£1:INR90.155)andtheaverageratefortheyearusedis£1:INR90.127(2019:£1:INR91.777).

ExpensesAllexpensesareaccountedforonanaccrualsbasisandincludefeesandotherexpensespaidtotheAdministrators,theInvestmentManagerandtheDirectors.Inrespectoftheanalysisbetweenrevenueandcapitalitems,presentedwithinthestatementofcomprehensiveincome,allexpenseshavebeenpresentedasrevenueitemsexceptexpenseswhichareincidentaltotheacquisitionofaninvestmentpropertywhichareincludedwithinthecostofthatinvestmentproperty.TheInvestmentManager’sperformancefeeischargedtothecapitalcolumninthestatementofcomprehensiveincomeinordertoreflectthatthefeeisdueprimarilytothecapitalperformanceofthe Group.




TaxationTheCompanyisexemptfromGuernseytaxationonincomederivedoutsideofGuernseyandbankinterestearnedinGuernsey.Afixedannualfeeof£1,200waspayabletotheStatesofGuernseyinrespectofthisexemptionfortheyear.NochargetoGuernseytaxationarisesoncapitalgains.TheGroupisliabletoforeigntaxarisingonactivitiesintheoverseassubsidiaries.TheGrouphassubsidiaryoperationsinCyprusandIndia.TheGroupalsoholdsinvestmentsinSpain,ownedthroughinvestmententitiesinLuxembourgandtheNetherlands,inGermany,ownedthroughalimitedpartnershipincorporatedinGermanywithcorporatepartnersincorporatedinLuxembourg,intheUnitedKingdomeitherdirectlyorownedthroughinvestmententitiesincorporatedinJersey(CambourneandWolverhampton)orownedthroughlimitedpartnershipsincorporatedintheUK(PRSinvestment).TheGroupmaythereforebeliabletotaxationintheseoverseasjurisdictions.

Thetaxexpenserepresentsthesumofthetaxcurrentlypayableanddeferredtax.

Thetaxcurrentlypayableisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromnetprofitasreportedinthestatementofcomprehensiveincomebecauseitexcludesitemsofincomeandexpensethataretaxableordeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeensubstantivelyenactedatthebalancesheetdate.

Deferredtaxisthetaxexpectedtobepayableorrecoverableondifferencesbetweenthecarryingamountofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbasesusedinthecomputationoftaxableprofitandisaccountedforusingthebalancesheetliabilitymethod.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichdeductibletimingdifferencescanbeutilised.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.Deferredtaxiscalculatedatthetaxratesthatareexpectedtoapplyintheyearwhentheliabilityissettledortheassetrealised.Deferredtaxischargedorcreditedinthestatementofcomprehensiveincome,exceptwhenitrelatestoitemschargedorcrediteddirectlytoequity,inwhichcasethedeferredtaxisalsodealtwithinequity.

DividendsDividendsarerecognisedasaliabilityintheGroup’sfinancialstatementsintheperiodinwhichtheybecomeobligationsoftheGroup.

Investment propertyInvestmentproperty,whichispropertyheldtoearnrentalsand/orforcapitalappreciation,isinitiallyrecognisedatcostbeingthefairvalueofconsiderationgivenincludingrelatedtransactioncosts.

Afterinitialrecognitionatcostand/oruponcommencementofconstruction,investmentpropertyiscarriedatitsfairvaluebasedonhalfyearlyprofessionalvaluationsmadebyindependentvaluersorbasedonDirectors’valuations.Theindependentvaluers’valuationsareinaccordancewithstandardscomplyingwiththeRoyalInstitutionofCharteredSurveyorsAppraisalandValuationmanualandtheInternationalValuationStandardsCommittee.

Gainsorlossesarisingfromchangesinfairvalueofinvestmentpropertyareincludedinthestatementofcomprehensiveincomeintheperiodinwhichtheyarise.InvestmentpropertyistreatedasacquiredwhentheGroupassumesthesignificantrisksandreturnsofownershipandasdisposedofwhenthesearetransferredtothebuyer.

Allcostsdirectlyassociatedwiththepurchaseofaninvestmentpropertyandallsubsequentexpendituresqualifyingasacquisitioncostsarecapitalised.

Assets held for saleAssetsareclassifiedasheldforsaleiftheircarryingamountwillberecoveredbysaleratherthanbycontinuinguseinthebusiness.Forthistobethecase,theassetmustbeavailableforimmediatesaleinitspresentcondition,managementmustbecommittedtoandhaveinitiatedaplantoselltheassetwhich,wheninitiated,wasexpectedtoresultinacompletedsalewithintwelvemonths.PropertyassetsthatareclassifiedasheldforsalearemeasuredatfairvalueinaccordancewithIAS40InvestmentProperty.

Segmental reportingOperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecision‑maker.Thechiefoperatingdecision‑maker,whichisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments,hasbeenidentifiedastheBoardofDirectorsoftheCompany.

TheinvestingpolicymeanstheGroupmayinvestinrealestateopportunitiesunconstrainedbygeography,butwithaparticularfocusontheUK,EuropeandAsia.Atpresent,formanagementpurposes,theGroupisorganisedintoonemainoperatingsegmentbeingEurope.

TheGroup’srevenuehasbeengeneratedintheUKfor£5,287,000andinGermanyfor£832,000(Yearended31 March2019:£2,721,000intheUKand£516,000inGermany).




TheGroup’snon‑currentassetsarelocatedinthefollowingcountries:

Country 2020

£’000

2019

£’000

UK 11,121 24,527

Germany 14,779 15,693

Spain 19,486 19,434

India 2,510 3,882

Total 47,896 63,536

Financial instrumentsFinancialassetsandfinancialliabilitiesarerecognisedontheGroup’sbalancesheetwhentheGroupbecomesapartytothecontractualprovisionsoftheinstrument.TheGroupshalloffsetfinancialassetsandfinancialliabilitiesiftheGrouphasalegallyenforceablerighttosetofftherecognisedamountsandinterestsandintendstosettleonanetbasis.

(a) Financial assetsUnderIFRS9,oninitialrecognition,afinancialassetisclassifiedasmeasuredat:

● Amortisedcost;

● Fairvaluethroughothercomprehensiveincome(‘FVOCI’)–debtinvestment;

● FVOCI–equityinvestment;or

● Fairvaluethroughprofitorloss(‘FVTPL’).

TheclassificationoffinancialassetsunderIFRS9isgenerallybasedonthebusinessmodelinwhichafinancialassetismanagedanditscontractualcashflowcharacteristics.

TheGrouponlyhasfinancialassetsthatareclassifiedasamortisedcostorFVTPL.

(a) (i) Financial assets held at amortised costAfinancialassetismeasuredatamortisedcostifitmeetsbothofthefollowingconditionsandisnotdesignatedasatFVTPL:

● itisheldwithinabusinessmodelwhoseobjectiveistoholdassetstocollectcontractualcashflows;and

● itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.

Financialassetsatamortisedcostareinitiallymeasuredatfairvalueplustransactioncoststhataredirectlyattributedtoitsacquisition,unlessitisatradereceivablewithoutasignificantfinancingcomponentwhichisinitiallymeasuredatitstransactionprice.

Theseassetsaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.Theamortisedcostisreducedbyimpairmentlossesasdetailedin(b)below.Loansadvanced,tradeandotherreceivablesthatwereclassifiedasloansandreceivablesunderIAS39arenowclassifiedatamortisedcost.

Cashdepositswithbanksthatcannotbeaccessedwithinaperiodofthreemonthsarenotconsideredtobecashandcashequivalents.

(a) (ii) FVTPLAllfinancialassetsnotclassifiedasmeasuredatamortisedcostorFVOCIaremeasuredatFVTPLwhichincludesderivativefinancialassets.FinancialassetsatFVTPLareinitiallyandsubsequentlymeasuredatfairvalue.

Fair value measurementTheGroupmeasurescertainfinancialinstrumentssuchasderivativesandnon‑financialassetssuchasinvestmentproperty,atfairvalueattheendofeachreportingperiod,usingrecognisedvaluationtechniquesandfollowingtheprinciplesofIFRS13.Inaddition,fairvaluesoffinancialinstrumentsmeasuredatamortisedcostaredisclosedinthefinancialstatements.

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Thefairvaluemeasurementisbasedonthepresumptionthatthetransactiontoselltheassetortransfertheliabilitytakesplaceeither:

● intheprincipalmarketfortheassetorliability

or

● intheabsenceofaprincipalmarket,inthemostadvantageousmarketfortheassetorliability.




TheGroupmustbeabletoaccesstheprincipalorthemostadvantageousmarketatthemeasurementdate.Thefairvalueofanassetoraliabilityismeasuredusingtheassumptionsthatmarketparticipantswouldusewhenpricingtheassetorliability,assumingthatmarketparticipantsactintheireconomicbestinterest.

Afairvaluemeasurementofanon‑financialassettakesintoaccountamarketparticipant’sabilitytogenerateeconomicbenefitsbyusingtheassetinitshighestandbestuseorbysellingittoanothermarketparticipantthatwouldusetheassetinitshighestandbestuse.

TheGroupusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataareavailabletomeasurefairvalue,maximisingtheuseofrelevantobservableinputsandminimisingtheuseofunobservableinputssignificanttothefairvaluemeasurementasawhole:

● Level1—Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsorliabilities.

● Level2—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisdirectlyorindirectly observable.

● Level3—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisunobservable.

Forassetsandliabilitiesthatarerecognisedinthefinancialstatementsonarecurringbasis,theGroupdetermineswhethertransfershaveoccurredbetweenlevelsinthehierarchybyre‑assessingcategorisation(basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.

(a) (iii) Impairment of financial assetsIFRS9hasintroducedtheExpectedCreditLoss(‘ECL’)modelwhichbringsforwardthetimingofimpairments.

(i) Trade receivables

UnderIFRS9fortradereceivables,includingleasereceivables,theGrouphaselectedtoapplythesimplifiedmodelasthetradereceivablesallhaveamaturityoflessthanoneyearanddonotcontainasignificantfinancingcomponent.UnderthesimplifiedapproachtherequirementistoalwaysrecogniselifetimeECL.UnderthesimplifiedapproachpracticalexpedientsareavailabletomeasurelifetimeECLbutforwardlookinginformationmuststillbeincorporated.UnderthesimplifiedapproachthereisnoneedtomonitorsignificantincreasesincreditriskandentitieswillberequiredtomeasurelifetimeECLsatalltimes.

ThedirectorshaveconcludedthatanyECLontradereceivableswouldbehighlyimmaterialtothefinancialstatementsduetothelowcreditriskoftherelevanttenants.

(ii) Other receivables

ThedirectorshaveconcludedthatanyECLonotherreceivableswouldbehighlyimmaterialtothefinancialstatementsdueto:

● collateralbeingheldintheformofasecuritydepositfortheGroup’shedgingstrategywhichcanbecalledbackatanytimewithnocapitallossshouldtheGroupdecidetoterminateitsforeignexchangecontractsbeforetheircontractualmaturity;

● Thecreditriskoftheunderlyingbankswhichareutilisedbythelawfirmsbywhomcashonescrowiskeptbeforecompletionofagivenseniorormezzanineloan.

TheremainingotherreceivablesareimmaterialtothefinancialstatementsandthereforenoassessmentoftheECLhasbeencompleted.

(iii) Loans advanced

Despitetheloanshavingasetrepaymentterm,allbutoneoftheloanshavearepayableondemandfeaturesotheGroupmaycallforanearlyrepaymentoftheirprincipal,interestandapplicablefeesatanytime.

Consideringthe‘ondemand’clause,theGroupconcludedthattheloansareinstage3oftheIFRS9modelasshouldtheloansbecalledondemandtheborrowerswouldtechnicallybeindefaultasrepaymentwouldonlybepossibleondemandifthepropertyhadalreadybeen sold.

TheoneloanthathasarepaymenttermhasanimmateriallifetimeECLandhencenodetailedanalysisofwhethertheloanhassufferedasignificantincreaseincreditriskhasbeenperformed.

(b) Financial liabilities TheGroupclassifiesitsfinancialliabilitiesintooneoftwocategories,dependingonthepurposeforwhichtheliabilitywasissuedanditscharacteristics.AlthoughtheGroupusesderivativefinancialinstrumentsineconomichedgesofcurrencyandinterestraterisk,itdoesnothedgeaccountforthesetransactions.

Unlessotherwiseindicated,thecarryingamountsoftheGroup’sfinancialliabilitiesareareasonableapproximationoftheirfairvalues.

(b) (i) Derivatives at fair value through profit or lossThiscategorycomprisesonly‘out‑of‑the‑money’financialderivatives.Theyarecarriedinthebalancesheetatfairvaluewithchangesinfairvaluerecognisedinthestatementofcomprehensiveincome.Otherthanderivativefinancialinstruments,theGroupdoesnothaveanyliabilitiesheldfortradingnorhasitdesignatedanyotherfinancialliabilitiesasbeingatfairvaluethroughprofitorloss.

ThefairvalueoftheGroup’sderivativesisbasedonthevaluationsasdescribedinnote27.




(b) (ii) Financial liabilities measured at amortised costOtherfinancialliabilitiesincludethefollowingitems:

● Tradepayablesandothershort‑termmonetaryliabilities,whichareinitiallyrecognisedatfairvalueandsubsequentlycarriedatamortisedcostusingtheeffectiveinterestmethod;

● Bankborrowingswhichareinitiallyrecognisedatfairvaluenetofattributabletransactioncostsincurred.Suchinterestbearingliabilitiesaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.

(b) (iii) Derecognition of financial liabilitiesAfinancialliability(inwholeorinpart)isderecognisedwhentheCompanyorGrouphasextinguisheditscontractualobligations,itexpiresoriscancelled.Anygainorlossonderecognitionistakentothestatementofcomprehensiveincome.

(c) Share capitalFinancialinstrumentsissuedbytheGrouparetreatedasequityonlytotheextentthattheydonotmeetthedefinitionofafinancialliability.TheCompany’sordinarysharesandclassAsharesareclassifiedasequityinstruments.Forthepurposesofthedisclosuresgiveninnote22theGroupconsidersallitssharecapital,sharepremiumandallotherreservesasequity.TheGroupisnotsubjecttoanyexternallyimposedcapitalrequirements.

(d) Effective interest rate methodTheeffectiveinterestratemethodisamethodofcalculatingtheamortisedcostofafinancialassetorliabilityandofallocatinginterestincomeorexpenseovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashreceiptsorpayments(includingallfeesonpointspaidorreceivedthatformanintegralpartoftheeffectiveinterestrate,transactioncostsandotherpremiumsordiscounts)throughtheexpectedlifeofthefinancialassetorliability,or,whereappropriate,ashorterperiod.

2. (b) Significant accounting estimates and judgementsTheGroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,seldomequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.

Estimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.

(a) Investment propertyTheGroupusesthevaluationscarriedoutbyitsindependentvaluersasthefairvalueofitsinvestmentproperties,wheneverpossible.Thevaluationsarebaseduponassumptionsincludingfuturerentalincome,anticipatedmaintenancecosts,futuredevelopmentcostsandtheappropriatediscountrate.Thevaluersalsomakereferencetomarketevidenceoftransactionpricesforsimilarproperties.InvestmentpropertywhichisinthecourseofconstructioniscarriedatcostplusassociatedcostsandthishasbeenconsideredbytheDirectorstorepresentfairvalueatthebalancesheetdate:uponcommencementofconstruction,valuationswillbecarriedoutbyindependentvaluers.

Asattheyearended31 March2020,thefollowingvaluationshavebeencarriedout:

(a) (i) Independent valuationsIndependentvaluationswerecarriedoutforthefollowinginvestmentproperties:

● ThedirectlyownedpropertieslocatedinHamburg(Germany)andWolverhampton(UK)(notes13,14and27);

● AnindirectlyownedpropertylocatedinMadrid(Spain),heldthroughCBREH2ORivasHoldingNV(note12and27)

Thevaluationsreportsreceivedfromtheindependentvaluersincludeda‘MaterialValuationUncertainty’paragraphinrelationtothemarketriskslinkedtotheCovid‑19pandemic:thisparagraphexplainsthatvaluershaveattachedlessweighttopreviousmarketevidenceforcomparisonpurposestoachieveaninformedopiniononvalue.Valuersthereforerecommendthatahigherdegreeofcautionshouldbeattachedtothesevaluationscomparedtovaluationscarriedoutundernormalcircumstances.




(a) (ii) Directors’ valuationsDirectors’valuationswerecarriedoutforthefollowinginvestmentproperties:

● ThedirectlyownedpropertieslocatedinBirminghamandLiverpool(UK)(notes13,14and27);

● AnindirectlyownedpropertylocatedinCambridge(UK),heldthroughScholarPropertyHoldingsLimited(note12and27)

InDecember2019,theGroupexchangedcontractsforthesaleoftheUnityandArmouriesassetinBirmingham(UK)at£4.5 millionandthesalecompletedon11June2020:theDirectorsthereforeconsider£4.5 milliontorepresentfairvalueofthepropertyatthebalancesheet date.

On22November2019,theGroupcompletedtheacquisitionofaresidentialpropertylocatedinLiverpool,UKfor£0.6 million:giventherecenttimingoftheacquisition,theDirectorsconsider£0.6 milliontorepresentfairvalueofthepropertyatthebalancesheetdate.

WiththemarketuncertaintycausedbytheCovid‑19pandemicandasnotedbyexternalvaluersabove,atthepresenttime,ahigherdegreeofcautionshouldbeattachedtovaluations.

(b) Estimate of fair value of joint venture in arbitration – Galaxia TheGalaxiajointventureisclassifiedasajointventureinarbitrationandhasbeenincludedwithinthefinancialstatementsbasedonthecurrentestimateofrealisablevaluetotheGroup(seenote15).

TheDirectors,takingintoconsiderationlegaladvicereceivedthroughoutthelegalprocess,consideritappropriatetocarrythisjointventureintheCompany’saccountsatINR 235.0 million,whichistheamountinvestedlesstheINR 215 million(£2.3 million)depositrecoverydescribedinnote15.TheamountrecognisedintheaccountsexcludestheadditionalcompensationawardedbythecourtsduetouncertaintyovertimingoftheAward:thiscouldamounttofurtherproceedsofINR 860 million(£9.2 million).

(c) Loans advanced – ECLs TheGrouphascalculatedthelifetimeECLsoftheloansadvancedusingthefollowingthreescenarios:

1. Creditcriteriaunchangedorstrengthenedsinceinceptionandexpectationofrepaymentinfull;

2. Creditcriteriaweakenedsinceinceptionbutexpectationoffullrecovery;

3. Creditcriteriasignificantlyweakenedandpotentialforrepaymenttonotbefullyachieved.

Thecriteriareferredtoaboveincorporatethefollowing:

● Progressofdevelopmentagainstplan;

● Borrower’sfinancialposition;

● Propertymarketdata.

Incalculatingtherecoverableamountsunderthethreescenarios,theDirectorshavetakenintoaccounttheavailablecollateralundertheloanagreementsincludingchargesoverpropertyandotherguarantees.

BasedontheaboveprocesstheDirectorshaveconcludedthatECLsonloansadvancedareimmaterialtothefinancialstatements.

ConsideringtheCovid‑19impactonthecurrenteconomicenvironment,theGrouphascarriedoutastresstestofitstotalExpectedCredit Loss(‘ECL’)analysisand,inconsiderationofthemainqualitiesofitssecuredloanportfolio,theunderlyingloans’LTVs,thenumberofloanswheredevelopmentisadvancedandthenumberofseasonedfacilities,theresultingtotalECLwasimmaterial.

2. (b) Significant accounting estimates and judgements (continued)



3. Revenue


£’000


£’000

Rentalincome 1,075 486

Servicechargeincome 90 42

Rental revenue 1,165 528

Interestreceivableonloanstothirdparties(note17) 4,952 2,709

Interest revenue 4,952 2,709

Otherincome 2 ‑

Other revenue 2 -

Total 6,119 3,237

At31 March2020,theGrouprecognisednonrecoverablepropertyoperatingexpenditureasfollows:


£’000


£’000

Servicechargeincome 90 42

Propertyoperatingexpenditure (74) (96)

Non recoverable property operating income/(expenditure) 16 (54)

TheGrouprecognisesrevenuefromitsinvestmentintwocommercialproperties:alongleasedindustrialfacilityinHamburg,GermanyandanindustrialpropertyinWolverhampton,UK.

TheGroupalsoownsaresidentialpropertylocatedinLiverpool,UK.

TheHamburgpropertyisleasedtoVeoliaUmweltserviceNordGmbH,partoftheVeoliagroup,aninternationalindustrialspecialistinwater,wasteandenergymanagement,witha24‑yearunexpiredleaseterm.Undertheoperatinglease,thetenantisresponsibleforbuildingmaintenanceandtherenthasperiodicinflationlinkedadjustments.

TheWolverhamptonproperty,whichisbeingactivelymarketedforsale,isleasedtoBritishSteelLtd,acompanycurrentlyinliquidation.

TheLiverpoolresidentialpropertyiscomprisedofsevenunits,fiveofwhichareinoccupationbyprivateindividualswithasixmonthterm contract.

At31 March2020,theGrouphadcontractedwithitstenantsforthefollowingfutureminimumleasepayments:


£’000


£’000

Withinoneyear 1,389 754

Inthesecondtofifthyearsinclusive 3,404 3,018

Afterfiveyears 13,663 13,393

Total 18,456 17,165



4. Other administration costs


£’000


£’000

Auditors’remunerationforauditservices 106 94

Accountingandadministrativefees 537 443

Non‑executivedirectors’fees 161 141

Otherprofessionalfees 843 539

Total 1,647 1,217

5. Finance income


£’000


£’000

Bankinterestreceivable 118 31

Foreignexchangegain ‑ 734

Total 118 765

6. Finance costs


£’000


£’000

Interestonbankborrowings 204 123

Foreignexchangeloss 55 ‑

Total 259 123

Theabovefinancecostsariseonfinancialliabilitiesmeasuredatamortisedcostusingtheeffectiveinterestratemethod.Nootherlosseshavebeenrecognisedinrespectoffinancialliabilitiesatamortisedcostotherthanthosedisclosedabove.



7. Taxation

(a) Parent CompanyTheParentCompanyisexemptfromGuernseytaxationonincomederivedoutsideofGuernseyandbankinterestearnedinGuernsey.Afixedannualfeeof£1,200(31 March2019:£1,200)waspayabletotheStatesofGuernseyinrespectofthisexemptionfortheyear.No chargetoGuernseytaxationarisesoncapitalgains.TheGroupisliabletoforeigntaxarisingonactivitiesinitsoverseassubsidiaries.TheCompanyhasinvestments,subsidiariesandjointventureoperationsinLuxembourg,theUnitedKingdom,Germany,theNetherlands,Spain,Cyprus,JerseyandIndia.

(b) GroupTheGroup’staxexpensefortheyearcomprises:


£’000


£’000

Deferredtax ‑ (526)

Currenttax 93 2,706

Tax Expense 93 2,180

Thechargefortheyearcanbereconciledtotheprofitpertheconsolidatedstatementofcomprehensiveincomeasfollows:


£’000


£’000

Tax expense reconciliation

Profitbeforetaxation 3,610 24,671

Less:incomenottaxable (12,163) (18,586)

Add:expenditurenotdeductible 8,029 7,468

Un‑provideddeferredtaxassetmovement 757 184

Total 233 13,737


£’000


£’000

Analysed as arising from

Cyprusentities 148 114

Dutchentity 127 176

Indiaentity ‑ ‑

Luxembourgentities ‑ ‑

Germaninvestments (42) 13,447

UKinvestment ‑ ‑

Total 233 13,737

Taxatdomesticratesapplicabletoprofitsinthecountriesconcernedisasfollows:


£’000


£’000

Cypriottaxationat12.50% 19 14

Dutchtaxationat20% 25 35

Indiataxationat22.66% ‑ ‑

Luxembourgentitiesatanaveragerateof29.22%* 55 3

Germantaxationat15.825% (6) 2,128

UKtaxationat20% ‑ ‑

Total 93 2,180

*ThetaxationincurredinLuxembourgrelatestothenetwealthtaxcharge



(c) Deferred taxationThefollowingisthedeferredtaxrecognisedbytheGroupandmovementsthereon:

Revaluation of Investment Property

£’000

Accelerated tax depreciation

£’000

Tax Losses

£’000

Other temporary differences

£’000

Total

£’000

At 31 March 2018 526 - (119) 119 526

Releasetoincome (526) ‑ (61) 61 (526)

At 31 March 2019 - - (180) 180 -

Releasetoincome ‑ ‑ (277) 277 ‑

At 31 March 2020 - - (457) 457 -

Certaindeferredtaxassetsandliabilitieshavebeenoffset.Thefollowingistheanalysisofthedeferredtaxbalances(afteroffset)forfinancialreportingpurposesavailableforoffsetagainstfutureprofits.

2020

£’000

2019

£’000

Deferredtaxliabilities 457 180

Deferredtaxassets (457) (180)

Total - -

AtthebalancesheetdatetheGrouphasunusedtaxlossesof£1.5 million(2019:£0.6 million).Duetotheunpredictabilityoffuturetaxableprofits,theDirectorsbelieveitisnotprudenttorecogniseadeferredtaxassetfortheunusedtaxlossesattheyearend.

UnusedtaxlossesinLuxembourg,Spain,GermanyandtheUnitedKingdomcanbecarriedforwardindefinitely.UnusedtaxlossesintheNetherlandscanbecarriedforwardfornineyears.UnusedtaxlossesinCypruscanbecarriedforwardforfiveyears.

8. Dividends

Dividend reference period Shares

’000

Dividend

pershare

Paid

£

Date of payment

Quarterended31 December2018 23,259 0.8p 186,069 26April2019

Quarterended31 March2019 23,117 0.8p 184,933 19July2019

Quarterended30June2019 17,602 1.0p 176,019 18October2019

Quarterended30September2019 12,583 1.0p 125,833 10January2020

Total 672,854

On9April2020,theCompanypaidadividendforthequarterended31 December2019of297,417(1.0ppershare).

TheCompanywillpayadividendforthequarterended31 March2020on17July2020.

InaccordancewithIAS10,thedividendsforquartersended31 December2019and31 March2020havenotbeenincludedinthesefinancialstatementsasthedividendsweredeclaredorpaidaftertheyearend.ThecurrentintentionoftheDirectorsistopayadividendquarterly.

Scrip dividend alternativeInthecircularpublishedon18December2018,theCompanysoughtshareholders’approvaltoenableascripdividendalternativetobeofferedtoordinaryshareholderswherebytheycouldelecttoreceiveadditionalordinarysharesinlieuofacashdividend,attheabsolutediscretionoftheDirectors,fromtimetotime.Thiswasapprovedbyshareholdersattheextraordinarygeneralmeetingon8January2019.

Thenumberofordinarysharesthatanordinaryshareholderwillreceiveunderthescripdividendalternativewillbecalculatedusingtheaverageoftheclosingmiddlemarketquotationsofanordinaryshareforfiveconsecutivedealingdaysafterthedayonwhichtheordinarysharesarefirstquoted‘ex’therelevantdividend.

Duringtheyear,theBoardelectedtoofferthescripdividendalternativetoshareholdersforeveryquarterlydividend,whichresultedintheissueof908,291newordinaryshares.ThesesharesarerankparipassuinallrespectswiththeCompany’sexistingissuedordinaryshares.

TheBoardalsoelectedtoofferthescripdividendalternativetoshareholdersforthedividendforthequarterended31 December2019:electionswerereceivedinrespectof29,972,146shares,whichresultedintheissueof186,628newordinaryshares.Theseshareshavebeenissuedatapriceof160.6penceeachandwererankparipassuinallrespectswiththeCompany’sexistingissuedordinaryshares.ThesenewshareshavebeenadmittedtotradingontheSFSoftheLSEon9April2020.

7. Taxation (continued)



9. Earnings per shareThecalculationofthebasicanddilutedearningspershareisbasedonthefollowingdata:


Ordinaryshare


Ordinaryshare


Ashare


Total

Earningsperstatementofcomprehensiveincome(£’000) 3,517 21,181 1,310 22,491

Basic and diluted earnings pence per share 5.8 33.1 33.5 33.2

Earningsperstatementofcomprehensiveincome(£’000) 3,517 21,181 1,310 22,491

Netchangeintherevaluationofinvestmentpropertiesandassetsheldforsale (1,194) (1,240) (76) (1,316)

Loss/(profit)oninvestmentpropertydisposal 167 (17,020) (1,041) (18,061)

Movementinfairvalueofinvestments 58 (260) (17) (277)

Loss/(profit)onforeignexchangeforward 146 (375) (23) (398)

Netchangeintherevaluationofthejointventures’andassociates’investmentpropertyandinterestrateswaption

1,107 (1,807) (110) (1,917)

InvestmentManager'sfees(performancefee) ‑ 726 45 771

Taxanddeferredtax ‑ 2,000 123 2,123

Romuluscapitalreturn ‑ ‑ (14) (14)

Foreignexchangeloss/(gain) 55 (692) (42) (734)

Adjusted earnings 3,856 2,513 155 2,668

Adjusted earnings per share 6.4 3.9 3.9 3.9

Weighted average number of shares (‘000s) 60,381 63,905 3,907 67,812

TheadjustedearningsarepresentedtoprovidewhattheBoardbelievesisamoreappropriateassessmentoftheoperationalincomeaccruingtotheGroup’sactivities.Hence,theGroupadjustsbasicearningsforincomeandcostswhicharenotofarecurrentnatureorwhichmaybemoreofacapitalnature.

10. Net asset value per share

31 March 2020 31 March 2019

Netassetvalue(£’000) 127,627 136,673

Net asset value per ordinary share 213.7p 204.3p

Total number of shares (‘000s) 59,713 66,902



11. Investment in subsidiary undertakingsAlistofthesignificantinvestmentsinsubsidiariesasat31 March2020,includingthename,countryofincorporationandtheproportionofownershipinterestisgivenbelow.

Name of subsidiary undertaking Class of share % of class held with voting rights

Country of incorporation

Principal activity

AlphaTigerCyprusHoldingsLimited Ordinaryshares 100 Cyprus HoldingCompany

AlphaTigerCyprusInvestmentsNo.2Limited Ordinaryshares 100 Cyprus HoldingCompany

AlphaTigerCyprusInvestmentsNo.3Limited Ordinaryshares 100 Cyprus HoldingCompany

Luxco111SARL Ordinaryshares 100 Luxembourg HoldingCompany

SkyredInternationalSARL Ordinaryshares 100 Luxembourg HoldingCompany

IronBridgeFinanceLuxembourgSARL Ordinaryshares 100 Luxembourg HoldingCompany

SixteenRockRoseSARL Ordinaryshares 100 Luxembourg HoldingCompany

SixteenRockRose2SARL Ordinaryshares 100 Luxembourg HoldingCompany

SixteenGuavaSARL Ordinaryshares 100 Luxembourg HoldingCompany

KMSHoldingNV Ordinaryshares 100 Netherlands HoldingCompany

AlphaTigerGuernseyHoldingsNo.1Ltd Ordinaryshares 100 Guernsey HoldingCompany

ARTGermany1Ltd Ordinaryshares 100 Guernsey PropertyCompany

AlphaUKPropertyFundAssetCompany(‘No.2’)Limited Ordinaryshares 100 Jersey PropertyCompany

RealhousingcoLtd Ordinaryshares 100 UnitedKingdom PropertyCompany

TheGroupalsoownsonelimitedpartnershipinGermany(SixteenRockRoseSàrl&CoVermögensverwaltungsKG),whichhelditsFrankfurtdatacentreinvestment,soldon13February2019.

12. Investment in joint ventures and associates ThemovementintheGroup’sshareofnetassetsofthejointventuresandassociatescanbesummarisedasfollows:

Alpha2

31 March 2020

£’000

H2O

31 March 2020

£’000

SPHL

31 March 2020

£’000

Total

31 March 2020

£’000

Alpha2

31 March 2019

£’000

H2O

31 March 2019

£’000

SPHL

31 March 2019

£’000

Total

31 March 2019

£’000

As at 1 April 7,403 19,434 1,698 28,535 - 17,653 1,679 19,332

Additions ‑ ‑ ‑ ‑ 6,347 ‑ ‑ 6,347

Group’sshareofjointventureandassociateprofitsbeforefairvaluemovementsand dividends

117 1,318 144 1,579 196 1,355 127 1,678

Fairvalueadjustmentforinterestrateswaption ‑ (3) ‑ (3) ‑ (63) ‑ (63)

Fairvalueadjustmentforinvestmentproperty (421) (650) (33) (1,104) 860 843 277 1,980

DividendspaidbyjointventureandassociatetotheGroup

(1,597) (1,141) (68) (2,806) ‑ ‑ (385) (385)

Foreignexchangemovements ‑ 528 ‑ 528 ‑ (354) ‑ (354)

Transferoftheassociate’sassetsandliabilitiesforconsolidation(note2)

(5,502) ‑ ‑ (5,502) ‑ ‑ ‑ ‑

As at 31 March - 19,486 1,741 21,227 7,403 19,434 1,698 28,535

TheGroup’sinvestmentsinjointventuresandassociatescanbesummarisedasfollows:

● JointventureinvestmentintheH2OshoppingcentreinMadrid,Spain:theGroupholdsa30%equityinvestmentinCBREH2ORivasHoldingNV(‘CBREH2O’),acompanybasedintheNetherlands,whichinturnowns100%oftheSpanishentitiesthatareownersofH2O.CBREH2OisaEurodenominatedcompanyhencetheGrouptranslatesitsshareofthisinvestmentattherelevantyearendexchangeratewithmovementsintheperiodtranslatedattheaverageratefortheperiod.Asat31 March2020,thecarryingvalueofART’sinvestmentinCBREH2Owas£19.5 million(€22.0 million)(31 March2019:£19.4 million(€22.5 million)).

● JointventureinvestmentinthePhase1000ofCambourneBusinessPark,Cambridge,UK:theGroupholdsa10%equityinvestmentintheScholarPropertyHoldingsLimited(‘SPHL’)group,owneroftheproperty.Asat31 March2020,thecarryingvalueofART’sinvestmentinScholarPropertyHoldingsLimitedwas£1.7 million(31 March2019:£1.7 million).

● AssociateinvestmentinaportfolioofinvestmentpropertiesintheUKindustrialsector:until18September2019,theGrouphelda33.6%equityinvestmentinAlpha2,owneroftwoindustrialassetsintheUnitedKingdom.On18September2019,theGroupacquiredtheremaining66.4%oftheAlpha2sharesfromAntlerInvestmentHoldingsLimited,arelatedpartytotheGroup.Asfrom18September2019,theGrouphasthereforeconsolidatedits100%investmentinAlpha2.



Foreignexchangemovementisrecognisedinothercomprehensiveincome.

TheinvestmentsinCBREH2OandAlpha2aredeemedtobesignificantandmaterialfortheGroup;theCBREH2OandAlpha2financialinformationcanthereforebesummarisedasfollows:

Statement of comprehensive income Alpha2

Period ended 18 September 2019

£’000

H2O


£’000

Alpha2


£’000

H2O


£’000

Revenue 732 11,749 906 11,313

Changeintherevaluationofinvestmentproperty (628) (2,167) 2,557 2,810

Lossoninvestmentpropertydisposal (625) ‑ ‑ ‑

Total (expense)/income (521) 9,582 3,463 14,123

Operatingexpenses (385) (5,428) (323) (5,055)

Operating (loss)/profit (906) 4,154 3,140 9,068

Financecosts ‑ (1,310) ‑ (1,522)

(Loss)/profit before taxation (906) 2,844 3,140 7,546

Taxation ‑ (629) ‑ (960)

(Loss)/profit for the period (906) 2,215 3,140 6,586

Othercomprehensiveincome/(expense) ‑ ‑ ‑ ‑

Total comprehensive (expense)/income (906) 2,215 3,140 6,586

Balance sheet H2O

31 March 2020

£’000

Alpha2

31 March 2019

£’000

H2O

31 March 2019

£’000

Investmentproperty 115,531 20,375 113,243

Derivativesheldatfairvaluethroughprofitorloss ‑ ‑ 10

Non-current assets 115,531 20,375 113,253

Tradedebtors 2,003 234 1,449

Otherdebtors 209 448 449

Cash 7,230 1,794 7,623

Current assets 9,442 2,476 9,521

Tradeandotherpayables (3,266) (834) (2,967)

Bankborrowings (130) ‑ (123)

Current liabilities (3,396) (834) (3,090)

Bankborrowings (56,626) ‑ (54,903)

Non-current liabilities (56,626) - (54,903)

Net assets 64,951 22,017 64,781

Equity 51,728 40,883 51,728

Translationreserve ‑ ‑ (892)

Capitalandrevenuereserve 13,223 (18,866) 13,945

Total equity 64,951 22,017 64,781

ThefairvalueoftheH2OpropertyinMadrid(Spain)of€130.6 million(£115.5 million)(31 March2019:€131.5 million(£113.2 million))hasbeenarrivedatonthebasisofanindependentvaluationcarriedoutatthebalancesheetdatebySavillsAguirreNewmanValoracionesyTasacionesS.A.(‘SavillsAguirre’),anindependentvaluernotconnectedtotheGroup.TheSavillsAguirre’svaluationasat31 March2020includedaMaterialUncertaintyclauseduetosignificantmarketriskslinkedtotheCovid‑19pandemic(seenote2(b)(a)(i)formoredetails).

ThevaluationbasisusedisfairvalueasdefinedbytheRoyalInstitutionofCharteredSurveyorsAppraisalandValuationsStandards(‘RICS’).TheapprovedRICSdefinitionoffairvalueis“thepricethatwouldbereceivedtosellanasset,orpaidtotransferaliability,inanorderlytransactionbetweenmarketparticipantsatthemeasurementdate”.

12. Investment in joint ventures and associates (continued)



ThefairvalueoftheH2OandWolverhamptonpropertiesarebasedonunobservableinputs.Thefollowingmethods,assumptionsandinputswereusedtoestimatefairvaluesoftheinvestmentproperties:

31 March 2020 – H2O Shopping centre, Madrid (Spain)

Class of investment property Carrying amount / fair value

’000

Area

(squaremeters)

Valuation technique Significant unobservable inputs Weighted average / Value

Europe £115,531(€130,550) 51,825 Discountedcashflow GrossEstimatedRentalValue(‘ERV’)persqmp.a.

€189.4

Discountrate 12.21%

Sensitivityanalysisforthe31 March2020valuationoftheH2Oshoppingcentre:

Significant unobservable inputs Change applied Fair value change

€’000

Change applied Fair value change

€’000

ERVpersqmp.a. ‑10% €121,280 +10% €136,458

Discountrate ‑1% €138,260 +1% €120,309

31 March 2019 – H2O Shopping centre, Madrid (Spain)


’000

Area

(squaremeters)


Europe £113,243(€131,475) 51,825 Discountedcashflow GrossEstimatedRentalValue(‘ERV’)persqmp.a.

€170.6

Discountrate 12.90%

31 March 2019 – Wolverhampton, UK


’000

Area

(squaremeters)


UK £5,675 16,355 Comparabletransactionsanalysis

Comparableevidence Notapplicable

ThefairvalueofPhase1000ofCambourneBusinessPark,Cambridge(UK)of£30.5 million(31 March2019:£30.5 million(independentvaluationbyAvisonYoung))hasbeenarrivedatonthebasisofaDirectors’valuationcarriedoutatthebalancesheetdate(seenote2(b)(a)(ii)formoredetails).

TheCBREH2Ogroupbankborrowingsrepresentthe€65.0 millionprovidedbyAarealBanktoAlphaTigerSpain1,SLUlessthebalanceofunamortiseddeferredfinancecostsof€1.0 million.Thisloanhasa1.887%fixedcoupon,matureson18May2024andissecuredbyafirstchargemortgageagainsttheSpanishproperty.Theborrowingsarenon‑recoursetotheGroup’sotherinvestments.

TheScholarPropertyHoldingsLimitedgroupbankborrowings’balanceasat31 March2020is£13.2 million:thisisaloanprovidedbyNatwestPLCtoScholarPropertyInvestmentsLimited,whichissecuredbyafirstchargemortgageagainsttheUKproperty.Thisloanhasa2.0%marginover3monthLIBORandmatureson6September2023.

Alpha2hasnobankborrowings.

12. Investment in joint ventures and associates (continued)



13. Investment property

31 March 2020

£’000

31 March 2019

£’000

Fair value of investment property at 1 April 13,764 33,021

Additions 610 14,795

Subsequentcapitalexpenditureafteracquisition ‑ 5,203

Disposals ‑ (35,864)

Fairvalueadjustmentintheyear 629 1,316

Foreignexchangemovement 386 (207)

Transfertoassetheldforsale ‑ (4,500)

Fair value of investment property at 31 March 15,389 13,764

InvestmentpropertyisrepresentedbyapropertylocatedinHamburg(Werner‑Siemens‑Straße),GermanyandapropertylocatedinLiverpool,UK.

ThefairvalueoftheHamburgpropertyof€16.7 million(£14.8 million)(31 March2019:€16.0 million(£13.8 million))hasbeenarrivedatonthebasisofanindependentvaluationcarriedoutatthebalancesheetdatebyCushman&Wakefield(‘C&W’)(note27).

C&WareindependentvaluersandarenotconnectedtotheGroup.


On22November2019,theGroupcompletedtheacquisitionofaresidentialpropertylocatedinLiverpool,UKfor£0.6 million.ThefairvalueofthispropertyhasbeenarrivedatonthebasisofaDirectors’valuation.


14. Asset held for sale

31 March 2020

£’000

31 March 2019

£’000

Fair value at 1 April 4,500 -

Additions 8,225 ‑

Disposals (5,225) ‑

Fairvalueadjustmentintheyear 565 ‑

Transferfrominvestmentproperty ‑ 4,500

Fair value at 31 March 8,065 4,500

AssetsheldforsalearerepresentedbytheUnityandArmouriespropertyinBirmingham(UK),soldpostyearend,andapropertylocatedinWolverhampton(UK),whichisactivelymarketedfordisposal.

Thedisposalof£5.2 millionrepresentsthesaleoftheWarringtonproperty,acquiredinSeptember2019aspartoftheAlpha2transaction(seepage 36).

InDecember2019,theGroupexchangedcontractsforthesaleoftheUnityandArmouriesassetinBirmingham(UK)at£4.5 millionandthesalecompletedon11June2020:theDirectorsthereforeconsider£4.5 milliontorepresentfairvalueoftheUnityandArmouriespropertyatthebalancesheetdate(31 March2019:£4.5 millionasperGVA’svaluation)(seenote2(b)(a)(ii)formoredetails).

ThefairvalueoftheWolverhamptonpropertyintheUKof£3.6 million(31 March2019:£5.7 million)hasbeenarrivedatonthebasisofanindependentvaluationcarriedoutatthebalancesheetdatebyCBRE(note27).TheCBRE’svaluationasat31 March2020includedaMaterialUncertaintyclauseduetosignificantmarketriskslinkedtotheCovid‑19pandemic(seenote2(b)(a)(i)formoredetails).

CBREareindependentvaluersandarenotconnectedtotheGroup.




15. Joint venture in arbitration

31 March 2020

£’000

31 March 2019

£’000

As at 1 April 3,882 4,921

Capitalreturn (1,232) (1,106)

Foreignexchangemovement (140) 67

As at 31 March 2,510 3,882

TheGalaxiainvestmentiscarriedatINR 235.0 million(£2.5 million)(31 March2018:INR 350.0 million,£3.9 million),adjustedtoreflecttherecoverybytheCompanyofINR 115 million(£1.2 million)duringtheyear.

In2007theGroupenteredintoajointventureagreementwithLogixGroup.ShortlyafterenteringintotheagreementbothpartiesenteredintoaSettlementAgreementtosellthelandanddistributetheproceeds.LogixdidnotcompletetheirresponsibilitiesundertheSettlementAgreementandtheGrouptheninitiatedarbitrationagainstLogix.

InJanuary2015,theInternationalChamberofCommerce(‘ICC’)ArbitrationconcludeditsarbitrationproceedingsanddeclaredinfavouroftheGroup’sclaimsagainstLogixGroup,whichwasfoundtohavebreachedtheTermsoftheShareholdersAgreementwiththeGroup.TheICCawardedtheGroupthereturnofitsentirecapitalinvestedofINR 450.0 million,withinterestat18%p.a.from31January2011to20January2015,andtherefundofallcostsincurredtowardstheArbitration.Thetotalawardamountedto£9.2 millionbasedonexchangeratesatthetime.Additionally,afurther15%p.a.interestonallsumswasawardedtotheGroupfrom20January2015untiltheactualdateofpaymentbyLogixoftheAward.

LogixappealedtheICCdecisionattheDelhiHighCourtbutthecourtruledintheGroup’sfavour.LogixcontinuedtoappealattheSupremeCourtofIndiauntilFebruary2020whentheSupremeCourtofIndiaupheldtheAwardanddismissedtheSpecialLeavePetitionfiledbytheLogixGroupanditsPromoterschallengingthesaidAward:thisrepresentstheendofthelegalprocesssincetheAwardcannotbechallengedanymoreinanyforuminIndia.Asaresultofthisprocess,theSupremeCourtorderedLogixtopaytotheCompanyafinalAward(the‘Award’)amountofINR 1,075.0 million(£11.5 millionattheyearendexchangerate).Previously,theSupremeCourthadalreadyorderedLogixtodepositINR 200 millionwiththecourtandpermittedtheCompanytounconditionallywithdrawINR 100 million(£1.1 million)inMay2018andINR 100 millionplusINR 15 millionofinterestaccrued(£1.2 million,includinginterestaccrued)inDecember2019.AfurtherINR 360 millioniscurrentlyondepositwiththeSupremeCourthowevertheSupremeCourtmaydirectthesefundstowardspaymentofoutstandingliabilitieswithlocalauthoritieswherethepropertyislocated.LogixGroupisnowrequiredtodepositanamountofINR 33 millionby21July2020andtheremainderoftheliabilityundertheAwardofINR 467 millionby18August2020.ARTcontinuestoactivelypursueLogixanditsdirectorsfortherecoveryoftheAward.

TheDirectors,takingintoconsiderationlegaladvicereceivedthroughoutthelegalprocess,consideritappropriatetocarrythisjointventureintheCompany’saccountsatINR 235.0 million,whichistheamountinvestedlesstheINR 215 million(£2.3 million)depositrecoverydescribedabove.TheamountrecognisedintheaccountsexcludestheadditionalcompensationawardedbythecourtsduetouncertaintyovertimingoftheAward.


16. Investments held at fair value

31 March 2020

£’000

31 March 2019

£’000

Non-current

As at 1 April 390 6,798

Disposals ‑ (6,347)

Redemptionsduringtheyear (193) (343)

Movementinfairvalueofinvestments (58) 282

As at 31 March 139 390

Theinvestments,whicharedisclosedasnon‑currentinvestmentsheldatfairvalue,areasfollows:

● Europip(participatingredeemablepreferenceshares):duringtheyear,ARTreceived£0.2 millionasreturnofcapitalfromEuropip,whichiscurrentlyintheprocessofbeingvoluntarilywoundup;ART’sresidualvalueoftheinvestmentasat31 March2020wasapproximately£30,000(31 March2019:£0.2 million).

● HLP(participatingredeemablepreferenceshares):HLPprovidesquarterlyvaluationsofthenetassetvalueofitsshares;thenetassetvalueoftheinvestmentasat31 March2020was£0.1 million(31 March2019:£0.2 million).

TheBoardconsidersthattheinvestmentsinEuropip(duetotimingforcompletionofthewindingupprocedures)andHLPwillbeheldforthelongtermandhasthereforedisclosedthemasnon‑currentassets.



17. Loans advanced

31 March 2020

£’000

31 March 2019

£’000

Non-current

Loansgrantedtothirdparties 8,523 14,983

Interestreceivablefromloansgrantedtothirdparties 108 53

Total loans at amortised cost 8,631 15,036

Loansatfairvaluethroughprofitorloss ‑ ‑

Total non-current loans 8,631 15,036

Current

Loansgrantedtothirdparties 28,569 16,363

Interestreceivablefromloansgrantedtothirdparties 1,421 1,026

Total loans at amortised cost 29,990 17,389

Loansatfairvaluethroughprofitorloss 1,263 3,711

Total current loans 31,253 21,100

Asat31 March2020,theGrouphadgrantedatotalof£38.4 million(31 March2019:£35.1 million)ofseniorandmezzanineloanstothirdparties.ThesecomprisedfortyloanstoUKentities,whichassistedwiththepurchaseofpropertydevelopments,predominantlyresidential,intheUK.Thesefacilitiestypicallyrangefroma6to36monthtermandentitletheGrouptoaweightedaverageoverallreturnontheinvestmentof14.2%formezzanineloansand9.0%forseniorloans.

AllseniorandmezzanineloansgrantedbytheGrouparesecuredassetbackedrealestateloans.Seniorloanshaveafirstchargesecurityandmezzanineloanshaveasecondchargesecurityonthepropertydevelopments.

Loansatfairvaluethroughprofitorlossrepresentsloansthatfailedthe‘solelypaymentofprincipalandinterest’criteriaofIFRS9tobemeasuredatamortisedcost:thisisduetoaloanfacilityagreement’sclausethatlinksthoseloanstoareturnotherthaninterest.

Loansmaturityofthetotal£38.4 millionloansgrantedbytheGroupatyearend,canbeanalysedasfollows:

Less than 6 months

£m

6 to 12 months

£m

12 to 24 months

£m

Over 24 months

£m

Total

£m

Non‑current ‑ ‑ 5,023 3,500 8,523

Current 17,372 12,460 ‑ ‑ 29,832

Asat31 March2020,noloansareoverdueforpayment.

Postyearend,furtherloanstotalling£1.0 millionhavebeenfundedandloanrepaymentsof£4.4 millionwerereceived(includingaccruedinterestandexitfees).

DespitealloftheloanshavingasetrepaymenttermallbutoneoftheloanshavearepayableondemandfeaturesotheGroupmaycallforanearlyrepaymentoftheirprincipal,interestandapplicablefeesatanytime.

Consideringthe‘ondemand’clause,theGroupconcludedthattheloansareinstage3oftheIFRS9modelasshouldtheloansbecalledondemandtheborrowerswouldtechnicallybeindefaultasrepaymentwouldonlybepossibleondemandifthepropertyhadalreadybeen sold.

Theloanwithoutarepayableondemandclauseamountsto£3.5 million,hasrepaymenttermof4July2022andremainsinstage1oftheIFRS9model.

TheGrouphascalculatedthelifetimeECLsoftheloansadvanced(seenote2(b)(c)):basedonthisprocesstheDirectorshaveconcludedthatECLsonloansadvancedareimmaterialtothefinancialstatements.



18. Collateral deposit

31 March 2020

£’000

31 March 2019

£’000

Collateraldeposit 1,364 1,302

Thecollateraldepositof£1.4 million(31 March2019:£1.3 million)isacashdepositwithBarclaysBankPLC(‘Barclays’)inGuernseyinrelationtotheforeignexchangeforwardcontractenteredintobytheGroupatyearend:thiscashhasbeenplacedondeposittomatchthematurityofthecontract.

19. Trade and other receivables

31 March 2020

£’000

31 March 2019

£’000

Non-current

Otherdebtors ‑ 1,929

Total - 1,929

Current

Tradedebtors 189 28

VAT 4 28

Otherdebtors 2,234 297

Total 2,427 353

Aspartofotherdebtors,anamountof£2.0 million(€2.2 million)(31 March2019:£1.9 million(€2.2 million))representaresidualreceivableoftheinvestmentpropertiesdisposedofintheprioryear.

TheDirectorsconsiderthatthecarryingamountoftradeandotherreceivablesapproximatestotheirfairvalue.Seenote2(a)(a)(iii)‘financialinstruments’formoredetails.

20. Trade and other payables

31 March 2020

£’000

31 March 2019

£’000

Tradecreditors 205 356

Deferredrevenue 143 ‑

InvestmentManager’sfeepayable 561 1,439

Accruals 342 289

Othercreditors 40 13

Total 1,291 2,097

Tradecreditorsandaccrualsprimarilycompriseamountsoutstandingfortradepurchasesandongoingcosts.TheGrouphasfinancialmanagementpoliciesinplacetoensurethatallpayablesarepaidwithinthecredittimeframe.

TheDirectorsconsiderthatthecarryingamountoftradeandotherpayablesapproximatestotheirfairvalue.



21. Bank borrowings

31 March 2020

£’000

31 March 2019

£’000

Currentliabilities:interestpayable 32 30

Currentliabilities:bankborrowings ‑ ‑

Total current liabilities 32 30

Non‑currentliabilities:bankborrowings 8,275 8,039

Total liabilities 8,307 8,069

The borrowings are repayable as follows:

Interestpayable 32 30

Ondemandorwithinoneyear ‑ ‑

Inthesecondtofifthyearsinclusive ‑ ‑

Afterfiveyears 8,275 8,039

Total 8,307 8,069

MovementsintheGroup’sbankborrowingsareanalysedasfollows:

31 March 2020

£’000

31 March 2019

£’000

As at 1 April 8,039 -

Borrowings,additions ‑ 8,377

Deferredfinancecosts,additions ‑ (151)

Amortisationofdeferredfinancecosts 16 4

Foreignexchangemovement 220 (191)

As at 31 March 8,275 8,039

Asat31 March2020,bankborrowingsrepresenttheNordLB(aGermanbank)loanfor€9.5 million(£8.3 million)(31 March2019:€9.5 million(£8.2 million)),whichwasusedtopartlyfundtheacquisitionoftheinvestmentpropertyinHamburg(Werner‑Siemens‑Straße),Germany.Thisloaniscomposedoftwotranchesof€4.9 millionand€4.6 million,whichbeara1.85%and2.7%fixedraterespectivelyandthatareduetomatureinAugust2028.

Theborrowingsarenon‑recoursetoARTandthefacilitycarriesnofinancialcovenanttests.

Thefairvalueofbankborrowingsatthebalancesheetdateis€9.5 million(£8.3 million).

Foreignexchangemovementisrecognisedinothercomprehensiveincome/(expense).

Thetablesbelowsetoutananalysisofnetdebtandthemovementsinnetdebtfortheyearended31 March2020andprioryear.

Other assets Derivatives Liabilities from financing activities

Cash

£’000

Foreign exchange forward

£’000

Interest payable

£’000

Borrowings

£’000

Total

£’000

Net asset /(debt) as at 1 April 2019 58,181 514 (30) (8,039) 50,626

Cashmovements (12,356) (165) 188 ‑ (12,333)

Non cash movements

Foreignexchangeadjustments 243 ‑ (2) (220) 21

Unrealisedlossonforeignexchangeforward contract

‑ (146) ‑ ‑ (146)

Loanfeeamortisationandothercosts ‑ ‑ ‑ (16) (16)

Interestcharge ‑ ‑ (188) ‑ (188)

Net asset /(debt) as at 31 March 2020 46,068 203 (32) (8,275) 37,964



Other assets Derivatives Liabilities from financing activities

Cash

£’000

Foreign exchange forward

£’000

Interest payable

£’000

Borrowings

£’000

Total

£’000

Net asset /(debt) as at 1 April 2018 6,273 100 - - 6,373

Cashmovements 51,951 17 93 (8,226) 43,835

Non cash movements

Foreignexchangeadjustments (43) ‑ ‑ 191 148

Unrealisedgainonforeignexchangeforward contract

‑ 397 ‑ ‑ 397

Loanfeeamortisationandothercosts ‑ ‑ (8) (4) (12)

Interestcharge ‑ ‑ (115) ‑ (115)

Net asset /(debt) as at 31 March 2019 58,181 514 (30) (8,039) 50,626

22. Share capital

Number of shares

Authorised

Ordinarysharesofnoparvalue Unlimited

Issued and fully paid Ordinary treasury

Ordinary external

Ordinary total

A shares external

Total shares

At 1 April 2018 6,702,586 63,462,102 70,164,688 5,034,804 75,199,492

Shareconversion ‑ 5,034,804 5,034,804 (5,034,804) ‑

Sharescancelledfollowingbuyback ‑ (1,388,193) (1,388,193) ‑ (1,388,193)

Sharesboughtback 206,371 (206,371) ‑ ‑ ‑

At 1 April 2019 6,908,957 66,902,342 73,811,299 - 73,811,299

Shareissueforscripdividend ‑ 908,291 908,291 ‑ 908,291

Shareissuefromtreasury(note2) (5,030,284) 5,030,284 ‑ ‑ ‑

Sharesboughtback 62,124 (62,124) ‑ ‑ ‑

Sharescancelledfollowingbuyback ‑ (13,065,348) (13,065,348) ‑ (13,065,348)

At 31 March 2020 1,940,797 59,713,445 61,654,242 - 61,654,242

TheCompanyhasoneclassofordinaryshares.TheCompanyhastherighttoreissueorcanceltheremainingtreasurysharesatalater date.

Inprioryears,theCompanyalsohadclassAshares,whichcarriedthesamerightsasordinarysharessavethatclassAsharescarriedtheadditionalrighttoparticipationintheCompany’sinvestmentinRomulusandtherighttoconvertintoordinarysharesonaoneforonebasis.Duringthequarterended31 December2018,ARTreceivedthefinalliquidationproceedsfromitsRomulus,whichgenerated£13,686forARTAshareholders:thisamountwasthereforepaidtoARTAshareholdersasaspecialdividendon4January2019.Consequently,on24January2019,alloutstandingAsharesweremandatorilyconvertedintoordinaryshares.

Underthegeneralauthority,approvedbyShareholderson8January2019,theCompanyannouncedatenderofferon14June2019forupto16,666,771ordinarysharesataprice(beforeexpenses)of175.0pencepershare.Intotal13,065,348ordinaryshareswerevalidlytenderedunderthetenderofferforatotalcostof£22.9 million.Allpurchasedordinaryshareswerecancelled.

Duringtheyear,theCompanyadditionallypurchased62,124sharesinthemarketattheweightedaveragepricepershareof155p(totalcostof£0.1 million)and,inSeptember2019,ARTre‑issuedfromtreasury5,030,284ordinarysharesasconsiderationforAlpha2.The5,030,284ordinaryshareswereissuedatanissuepriceequivalenttoART’sestimatedadjustednetassetvalueof211.4ppersharebasedupontheCompany’snetassetvalueasat30June2019withadjustmentsmadefordividendspaidandsharebuybackscompleted,includingtheCompany’stenderoffer,followingthisdate.Thetotalconsiderationwastherefore£10.6 millionandhasbeenaccountedforasasharebasedpaymentinaccordancewithIFRS2.

Asat31 March2020,theordinarysharecapitaloftheCompanywas61,654,242(including1,940,797ordinarysharesheldintreasury)andthetotalvotingrightsintheCompanyis59,713,445.

21. Bank borrowings (continued)



Scrip dividend alternativeInthecircularpublishedon18December2018,theCompanysoughtshareholders’approvaltoenableascripdividendalternativetobeofferedtoordinaryshareholderswherebytheycouldelecttoreceiveadditionalordinarysharesinlieuofacashdividend,attheabsolutediscretionoftheDirectors,fromtimetotime.Thiswasapprovedbyshareholdersattheextraordinarygeneralmeetingon8January2019.

Thenumberofordinarysharesthatanordinaryshareholderwillreceiveunderthescripdividendalternativewillbecalculatedusingtheaverageoftheclosingmiddlemarketquotationsofanordinaryshareforfiveconsecutivedealingdaysafterthedayonwhichtheordinarysharesarefirstquoted‘ex’therelevantdividend.

Duringtheyear,theBoardelectedtoofferthescripdividendalternativetoshareholdersforeveryquarterlydividend,whichresultedintheissueof908,291newordinaryshares.ThesesharesarerankparipassuinallrespectswiththeCompany’sexistingissuedordinaryshares.

TheBoardalsoelectedtoofferthescripdividendalternativetoshareholdersforthedividendforthequarterended31 December2019:electionswerereceivedinrespectof29,972,146shares,whichresultedintheissueof186,628newordinaryshares.Theseshareshavebeenissuedatapriceof160.6penceeachandwererankparipassuinallrespectswiththeCompany’sexistingissuedordinaryshares.ThesenewshareshavebeenadmittedtotradingontheSFSoftheLSEon9April2020.

Atthedateofsigningthesefinancialstatements,theordinarysharecapitaloftheCompanywas61,840,870(including1,940,797ordinarysharesheldintreasury)andthetotalvotingrightsintheCompanyis59,900,073.

23. ReservesThemovementsinthereservesfortheGroupareshownonpage35.

Special reserveThespecialreserveisadistributablereservetobeusedforallpurposespermittedunderGuernseycompanylaw,includingthebuy‑backofsharesandpaymentofdividends.

Translation reserveThetranslationreservecontainsexchangedifferencesarisingonconsolidationoftheGroup’soverseasoperations.Theseamountsmaybesubsequentlyreclassifiedtoprofitorloss.

Capital reserveThecapitalreservecontainsincreasesanddecreasesinthefairvalueoftheGroup’sinvestmentproperty,gainsandlossesonthedisposalofproperty,gainsandlossesarisingfromindirectpropertyinvestmentatfairvaluetogetherwithexpensesallocatedtocapital.

Revenue reserveAnysurplusarisingfromnetprofitaftertaxistakentothisreserve,whichmaybeutilisedforthebuy‑backofsharesandpaymentof dividends.

24. Events after the balance sheet dateBetweenAprilandJune2020,furtherloanstotalling£1.0 millionhavebeenfundedandloanrepaymentsof£4.4 millionwerereceived(includingaccruedinterestandexitfees).

InApril2020,scripdividendalternativeelectionswerereceivedinrespectof29,972,146sharesoftheCompany,whichhasresultedintheissueof186,628newordinaryshares.

On9April2020,theCompanypaidadividendforthequarterended31 December2019of£297,417(1.0ppershare).

On14April2020,theGroupreceiveda20%non‑refundabledepositinrelationtotheexchangeofcontractsfortheUnityandArmouriesassetdisposalamountingto£0.9 millionplusVATand£3.6 millionplusVATwerereceivedatcompletion,on11June2020(note14).

22. Share capital (continued)



25. Related party transactionsPartiesareconsideredtoberelatedifonepartyhastheabilitytocontroltheotherpartyorexercisesignificantinfluenceovertheotherpartyinmakingfinancialoroperationaldecisions.ARCistheInvestmentManagertotheCompanyunderthetermsoftheInvestmentManagerAgreementandisthusconsideredarelatedpartyoftheCompany.ThecurrentmanagementagreementwiththeInvestmentManagerwillexpireon21December2022.

TheInvestmentManagerisentitledtoreceiveafeefromtheCompanyatanannualrateof2percentofthenetassetsoftheCompany,payablequarterlyinarrears.Duringtheyearatotalof£2.3 million(31 March2019:£2.2 million),netofrebates,wasbilledbyARCtoART.Asat31 March2020,atotalof£0.6 million(31 March2019:£0.6 million)wasoutstanding.

TheInvestmentManagerisalsoentitledtoreceiveanannualperformancefeecalculatedwithreferencetototalshareholderreturn(‘TSR’),wherebythefeeis20percentofanyexcessoveranannualisedTSRof15percentsubjecttoarolling3yearhighwatermark.Asat31 March2020,noperformancefeewasduetoARC(31 March2019:£0.8 million).

Priortothe70%disposaloftheH2Oproperty,ARChadamanagementagreementdirectlywiththeH2Opropertycompany,AlphaTigerSpain1,SLU(‘ATS1’)underwhichitearnedafeeof0.9%perannumbaseduponthegrossassetsofATS1.Inordertoavoiddoublecountingoffees,ARCprovidedarebatetotheCompanyofaproportionofitsfeeequivalenttothevalueoftheGroup’snetassetvalueattributabletotheH2Oinvestment.SubsequenttothesaleofATS1toCBREH2ORivasHoldingNV(‘CBREH2O’),ARChasbeenappointedasAssetManagertoATS1andInvestmentManagertoCBREH2O.ARChasagreedtorebatetoARTallofthefeeschargedbyARCdirectlytoCBREH2OandATS1thatrelatetotheCompany’s30%shareinCBREH2O.

TheCompanyinvestsinAlpha2,whereARCistheInvestmentManager.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinAlpha2.

InSeptember2019,theCompanyannouncedthatitacquired66.4%ofthesharesinAlpha2.TheacquisitionincreasedART’sownershipinterestinAlpha2to100%(note2).ThesharesinAlpha2werepurchasedfromAntlerInvestmentHoldingsLimited,arelatedpartytotheCompany.

TheCompanyhasinvestedinEuropip,whereARPIA,asubsidiaryofARC,istheInvestmentAdviser.ARCrebatesfeesearnedinrelationtotheCompany’sinvestmentinEuropip.

TheCompanyhasinvestedinPhase1000,CambourneBusinessPark,Cambridge,andARCwasappointedasAssetandPropertyManagerofthejointventureentity.ARCrebatestoARTtherelevantproportionoffeesearnedbyARC,whichapplytotheCompany’sinvestment.

Totalrebatesfortheyearwere£0.6 million(31 March2019:£0.7 million).

DetailsoftheInvestmentManager’sfeesfortheyeararedisclosedonthefaceoftheconsolidatedstatementofcomprehensiveincomeandthebalancepayableat31 March2020isprovidedinnote20.

AlphaGlobalPropertySecuritiesFundPte.Ltd,acompanyregisteredinSingapore,owneddirectlybythepartnersofARC,held23,018,851sharesintheCompanyat31 March2020(31 March2019:22,550,000).

ARCdidnotholdanysharesintheCompanyat31 March2020(31 March2019:nil).

Thefollowing,beingpartnersofARC,haveinterestsinthefollowingsharesoftheCompanyat31 March2020:

31 March 2020

Numberofsharesheld

31 March 2019

Numberofsharesheld

RockmountVenturesLimited* 2,304,512 2,257,575

BrianFrith 1,148,390 1,125,000


BradBauman 55,613 55,006

*ceasedtobeapartnerofARCon5February2020

DetailsoftheDirectors’feesandshareinterestsintheCompanyareincludedintheDirectorsReport.

KarlDevon‑Lowe,apartnerofARC,receivedfeesof£7,200(31 March2019:£5,100)inrelationtodirectorialresponsibilitiesonanumberoftheCompany’ssubsidiarycompanies.

MelanieTorodeistheOperationsDirectorofOcorianAdministration(Guernsey)Limited(‘Ocorian’;previouslyEsteraAdministration(Guernsey)Limited),theCompany’sadministratorandsecretary.DuringtheperiodtheCompanypaidOcorianfeesof£95,600(31 March2019:£96,500)andnoamountwasoutstandingatyearend.



26. Financial instruments risk exposure and managementTherehavebeennosubstantivechangesintheGroup’sexposuretofinancialinstrumentrisks,itsobjectives,policiesandprocessesformanagingthoserisksorthemethodsusedtomeasurethemfrompreviousperiodsunlessotherwisestatedinthisnote.

Principal financial instrumentsTheprincipalfinancialinstrumentsusedbytheGroupfromwhichfinancialinstrumentriskarises,areasfollows:

Financial assets and liabilities carrying value 31 March 2020

£’000

31 March 2019

£’000

Financial assets at fair value through profit or loss

Investmentsheldatfairvalue 139 390

Foreignexchangeforwardcontract 203 514

Loansadvanced 1,263 3,711

Total financial assets at fair value through profit or loss 1,605 4,615

Financial assets at amortised cost

Loansadvanced 38,621 32,425

Collateraldeposit 1,364 1,302

Tradeandotherreceivables 2,427 2,282

Cashandcashequivalents 46,068 58,181

Total loans and receivables 88,480 94,190

Total financial assets 90,085 98,805

Financial liabilities at amortised cost

Tradeandotherpayables (1,291) (2,097)

Bankborrowings (8,307) (8,069)

Total financial liabilities (9,598) (10,166)

Netchangesinrealisedandunrealisedgainsorlossesonfinancialinstrumentsatfairvaluethroughprofitorlosscanbesummarisedas follows:

31 March 2020

£’000

31 March 2019

£’000

Unrealised gains and losses on financial assets and liabilities held at fair value through profit or loss

Unrealisedgainonforeignexchangeforwardcontract 203 514

Movementinfairvalueofinvestments (58) 297

Movementinfairvalueofloansadvanced 393 267

Realised gains and losses on financial assets and liabilities held at fair value through profit or loss

Realisedlossonforeignexchangeforwardcontract (349) (116)

Dividendreceivedfrominvestmentsheldatfairvalue ‑ 1

Distributedinvestmentincome ‑ 1,177

Net gains on financial assets and liabilities held at fair value through profit or loss 189 2,140

Netinterestincomecanbesummarisedasfollows

31 March 2020

£’000

31 March 2019

£’000

Bankinterestreceivable 118 31

Interestreceivableonloansgrantedtothirdparties 4,952 2,709

Interestonbankborrowings (204) (123)

Net interest income 4,866 2,617



General objectives, policies and processesTheBoardhasoverallresponsibilityforthedeterminationoftheGroup’sriskmanagementobjectivesandpoliciesand,whilstretainingultimateresponsibilityforthem,ithasdelegatedtheauthorityfordesigningandoperatingprocessesthatensuretheeffectiveimplementationoftheobjectivesandpoliciestotheGroup’sfinancefunction.

TheoverallobjectiveoftheBoardistosetpolicesthatseektoreduceriskasfaraspossiblewithoutundulyaffectingtheGroup’scompetitivenessandflexibility.Furtherdetailsregardingthesepoliciesaresetoutbelow.

Project monitoringProjectsaremonitoredthroughregularProjectControlMeetingsheldwithdevelopmentpartnerstodiscussprogressandmonitorrisks.TheInvestmentManagerattendsthesemeetingsandreportstotheBoardonaquarterlybasis.

Credit riskCreditriskariseswhenafailurebycounterpartiestodischargetheirobligationscouldreducetheamountoffuturecashinflowsfromfinancialassetsonhandatthebalancesheetdate.

At31 March2020,tradeandotherreceivablespastduebutnotimpairedamountedtonil(31 March2019:nil).

Thecarryingamountoffinancialassetsrecordedinthefinancialstatements,whichisnetofimpairmentlosses,representstheGroup’smaximumexposuretocreditrisk.

TheGrouppolicyistomaintainitscashandcashequivalentbalanceswithanumberoffinancialinstitutionsasameansofdiversifyingcreditrisk.TheGroupmonitorstheplacementofcashbalancesonanongoingbasisandhaspoliciestolimittheamountofcreditexposuretoanyfinancialinstitution.TheGroup’scashisheldwithestablishedbankswithstrongcreditratings.

Withregardstotheinvestmentpropertybusiness,apropertyadvisormonitorsthetenantsinordertoanticipateandminimisetheimpactofdefaultbyoccupationaltenants.Wherepossible,tenants’riskismitigatedthroughrentalguarantees.TheGroupmeetswithtenantsfrequentlyandmonitorstheirfinancialperformanceclosely.

TheGroupownsaportfolioofsecuredrealestateloansandmezzanineloaninvestments.Theseloansaretypicallysecuredonrealestateinvestmentanddevelopmentassetswithattractiverisk‑adjustedincomereturns.TheGroupreceivesmonthlyupdatesfromitsinvestmentadvisorsregardingthecreditworthinessoftheborrowersandvaluesoftherealestateinvestmentanddevelopmentassets,whichtheloansaresecuredon,andassessestherecoverabilityofeachloaninvestment.

TheCompanyannouncedon28May2010thatithadenteredintoaSettlementAgreementwithLogixGroupunderwhichithassolditsinterestinitsTechnovainvestmentandhasagreedafloorpricemechanismforthesaleoftheGalaxiaproject.TheSettlementAgreementlapsedon28May2011returningthepartiestothepre‑existingagreement.Thetermsofthepre‑existingagreementprovideforaminimumreturnofINR 450.0 millionandanadditionalpreferredreturnandprofit.Asdetailedinnote15,inJanuary2015,theICCArbitrationconcludeditsarbitrationproceedingsanddeclaredinfavouroftheGroup’sclaimsagainstLogixGroup.TheawardgrantedbytheICCtotheGroupamountedto£9.2 millionbasedonexchangeratesatthetime.Additionally,afurther15%p.a.interestonallsumswasawardedtotheGroupfrom20January2015untiltheactualdateofpaymentbyLogixoftheaward.LogixappealedtotheSupremeCourtofIndia,whichadmittedtheappealandorderedLogixtodeposit£2.2 million(INR 200 million)withthecourt:subsequently,theSupremeCourtofIndiapermittedtheGrouptounconditionallywithdrawINR 100 million(£1.1 million)inMay2018andINR 100 millionplusINR 15 millionofinterestaccrued(£1.2 million,includinginterestaccrued)inDecember2019.

LogixcontinuedtoappealattheSupremeCourtofIndiauntilFebruary2020whentheSupremeCourtofIndiaupheldtheawardanddismissedtheSpecialLeavePetitionfiledbytheLogixGroupanditsPromoterschallengingthesaidaward:thisrepresentstheendofthelegalprocesssincetheawardcannotbechallengedanymoreinanyforuminIndia.Asaresultofthisprocess,theSupremeCourtorderedLogixtopaytotheCompanyafinalaward(the‘Award’)amountofINR 1,075.0 million(£11.5 millionattheyearendexchangerate).

TheDirectors,takingintoconsiderationlegaladvicereceivedthroughoutthelegalprocess,consideritappropriatetocarrythisjointventureintheCompany’saccountsatINR 235.0 million,whichistheamountinvestedlesstheINR 215 million(£2.3 million)depositrecoverydescribedabove.TheamountrecognisedintheaccountsexcludestheadditionalcompensationawardedbythecourtsduetouncertaintyovertimingoftheAward.

Withregardstoitsotherinvestments,theGroupreceivesregularupdatesfromtherelevantInvestmentManagerastotheperformanceoftheunderlyinginvestmentsandassessescreditriskasaresult.

Liquidity riskLiquidityriskistheriskthatariseswhenthematurityofassetsandliabilitiesdoesnotmatch.Anunmatchedpositionpotentiallyenhancesprofitabilitybutcanalsoincreasetheriskoflosses.TheGrouphasprocedureswiththeobjectofminimisingtheseriskssuchasmaintainingsufficientcashandotherhighlyliquidcurrentassets.CashandcashequivalentsareplacedwithfinancialinstitutionsonashorttermbasisreflectingtheGroup’sdesiretomaintainahighlevelofliquidityinordertoenabletimelycompletionofinvestmenttransactions.

26. Financial instruments risk exposure and management (continued)



ThefollowingtableillustratesthecontractualmaturityanalysisoftheGroup’sfinancialliabilities.

31 March 2020 Within 1 year

£’000

1-2 years

£’000

2-5 years

£’000

Over 5 years

£’000

Total

£’000

Total carrying amount

£’000

Tradeandotherpayables 1,291 ‑ ‑ ‑ 1,291 1,291

Interestpayableonbankborrowings 190 190 570 635 1,585 32

Bankborrowings ‑ ‑ ‑ 8,275 8,275 8,275

Total 1,481 190 570 8,910 11,151 9,598

31 March 2019 Within 1 year

£’000

1-2 years

£’000

2-5 years

£’000

Over 5 years

£’000

Total

£’000

Total carrying amount

£’000

Tradeandotherpayables 2,097 ‑ ‑ ‑ 2,097 2,097

Interestpayableonbankborrowings 185 185 555 804 1,729 30

Bankborrowings ‑ ‑ ‑ 8,039 8,039 8,039

Total 2,282 185 555 8,843 11,865 10,166

Market risk

(a) Foreign exchange riskTheGroupoperatesinIndia,GermanyandSpainandisexposedtoforeignexchangeriskarisingfromcurrencyexposureswithrespecttoIndianRupeesandEuros.Foreignexchangeriskarisesfromrecognisedmonetaryassetsandliabilities.

TheGroup’spolicyis,wherepossible,toallowGroupentitiestosettleliabilitiesdenominatedintheirfunctionalcurrencywiththecashgeneratedfromtheirownoperationsinthatcurrency.

Duringtheyear,theGroupenteredintoaoneyearcontracttohedge€15.0 millionofitsEuroexposureinthebalancesheet;thiscontractwillterminateon5October2020.

TheBoardmonitorstheGroup’sexposuretoforeigncurrenciesonaquarterlybasisaspartofitsRiskManagementreview.

AstrengtheningoftheRupeeby10%againstSterling(representingmanagement’sassessmentofareasonablypossiblechange)wouldincreasethenetassetsby£279,000(2019:£431,000).AweakeningoftheRupeeby10%woulddecreasenetassetsby£228,000(2019:£353,000).AstrengtheningoftheEuroby5centswouldincreasethenetassetsby£1,235,000(2019:£1,142,000).AweakeningoftheEuroby5centswoulddecreasenetassetsby£1,130,000(2019:£1,048,000).

(b) Cash flow and fair value interest rate riskTheGroup’sinterestrateriskaroseprimarilyfrombankborrowings.TheGroupisnotdirectlyexposedtointerestrateriskrelatedtobankborrowings:thebankdebtofARTGermany1Ltd,owneroftheHamburginvestmentpropertyinGermany,bearsafixedcouponuntilmaturityin2028(note21).

TheGroupholdssignificantcashbalancesandloanassetswhichaccrueinterestbasedonvariableinterestrates.

TheGroup’scashflowisperiodicallymonitoredbytheBoard.

Thesensitivityanalysisbelowisbasedonachangeinanassumptionwhileholdingallotherassumptionsconstant.Inpractice,thisisunlikelytooccur,andchangesinsomeoftheassumptionsmaybecorrelated–forexample,changesininterestrateandchangesinmarket value.

FortheGroup,adecreaseof25basispointsininterestrateswouldresultina£0.1 milliondecreaseinpost‑taxprofits(2019:£0.2 milliondecrease).Anincreaseof25basispointsininterestrateswouldresultina£0.1 millionincreaseinpost‑taxprofits(2019:£0.2 millionincrease).

(c) Price riskTheGrouphasinvestedinparticipatingredeemablepreferencesharesinEuropipandHLP;thevalueofthesesharesisassessedregularlyandissubjecttofluctuation:EuropipprovidepricingquarterlyandHLPhalfyearly.

Ifthepriceoftheaggregatedinvestmentsinordinaryandparticipatingredeemablepreferenceshareshadincreasedby5%,withallothervariablesheldconstant,thiswouldhaveincreasedthenetassetsvalueoftheGroupby£7,000(31 March2019:£20,000).Conversely,ifthepriceoftheaggregatedinvestmentsinordinaryandparticipatingredeemablepreferenceshareshaddecreasedby5%thiswouldhavedecreasedthenetassetsvalueoftheGroupby£7,000(31 March2019:£20,000).




(d) Fair valuesThefollowingmethodsandassumptionswereusedtoestimatefairvalues:

● Cashandshort‑termdeposits,tradereceivables,tradepayables,andothercurrentliabilitiesapproximatetheircarryingamountsduetotheshort‑termmaturitiesoftheseinstruments.

● Thefairvalueoftheforeignexchangeforwardcontractisdeterminedbyreferencetotheyearendforwardmarketrateandbasedonobservableinputs;thisinvestmentisthereforedeemedtobealevel2financialasset(seenote27).

● ThefairvalueoftheHLPinvestmentisbaseduponthepriceprovidedbytheissuerfortherelevantshareclassowned:thisiscalculatedbyreferencetothenetassetvalueoftheinvestmentandprincipallydrivenbythefairvalueofHLP’sunderlyingpropertyinvestments.Thisnetassetvalueisthereforemainlybasedonunobservableinputsandisdeemedtobelevel3financialassets(seenote27).

● ThefairvalueoftheEuropipinvestmentisbaseduponthepriceprovidedbytheissuerfortherelevantshareclassowned:thisiscalculatedbyreferencetothenetassetvalueoftheinvestmentandprincipallydrivenbythefairvalueofEuropip’sunderlyingpropertyinvestments.Thisnetassetvalueisthereforemainlybasedonunobservableinputsandisdeemedtobelevel3financialassets(seenote27).Europip’saccountsareauditedannually.Asat31 March2020,Europipholdsnoinvestmentpropertyandispreparingtodistributeitsfinalliquidationproceedstoshareholders.

● Theloansatfairvaluehavebeenvaluedbasedonthediscountedcashflowoftherespectiveinstruments.Duetotheshorttimesinceinceptionandtomaturitytherehasnotbeenamaterialmovementindiscountratesorcashflows.

● ThefairvalueofbankborrowingshasbeencalculatedbasedonthediscountedcashflowsoftheNordLBbankloanuptomaturitydateinJuly2028;thefairvalueofbankborrowingsatthebalancesheetdateis€9.5 million(£8.3 million).

Asaresultthecarryingvalueslessimpairmentprovisionofloansandreceivablesandfinancialliabilitiesmeasuredatamortisedcostareapproximatetotheirfairvalues.

Capital risk managementTheBoard’sobjectiveswhenmanagingcapitalaretosafeguardtheGroup’sabilitytocontinueasagoingconcerninordertoprovidereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.

Inordertomaintainoradjustthecapitalstructure,theGroupmayadjusttheamountofdividendspaidtoshareholders,returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.

TheBoardregularlyreviewstheadequacyoftheGroup’slevelofborrowingsbymonitoringitscompliancewiththerelevantbankcovenants.

27. Fair value measurementIFRS13requiresdisclosureofthefairvaluemeasurementoftheGroup’sassetsandliabilities,therelatedvaluationtechniques,thevaluations’recurrenceandtheinputsusedtoassessanddevelopthosemeasurements.

TheGroupdisclosesfairvaluemeasurementsbylevelofthefollowingfairvaluemeasurementhierarchy:

● Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities(level1).

● Inputsotherthanquotedpricesincludedwithinlevel1thatareobservablefortheassetorliability,eitherdirectly(thatis,asprices)orindirectly(thatis,derivedfromprices)(level2).

● Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(thatis,unobservableinputs)(level3).

Thelevelinthefairvaluehierarchywithinwhichtheassetorliabilityiscategorisedisdeterminedonthebasisofthelowestinputthatissignificanttothefairvaluemeasurement.Assetsandliabilitiesareclassifiedintheirentiretyintooneofthethreelevels.

Investmentpropertyisvaluedonarecurringbasis:halfyearly.

TheGroup’svaluersderivethefairvalueoftheinvestmentpropertybyapplyingthemethodologyandvaluationguidelinesassetoutbytheRoyalInstitutionofCharteredSurveyorsintheUnitedKingdom.

Thevaluationapproachadoptedbyvaluersdiffersbetweeninvestmentpropertyavailabletorent(H2O,CambourneandWolverhampton)andinvestmentpropertyunderdevelopment(UnityandArmouries).Fortheyearended31 March2020,thefairvalueoftheCambourneandUnityandArmouriespropertiesreflectDirectors’valuations.

Thevaluationapproachforinvestmentpropertyavailabletorentisbasedondiscountingthefuturenetincomereceivablefrompropertiestoarriveatthenetpresentvalueofthatfutureincomestream.Futurenetincomecomprisestherentsecuredunderexistingleases,lessanyknownorexpectednon‑recoverablecostsandthecurrentmarketrentattributabletovacantunits.Theconsiderationbasisforthiscalculationexcludestheeffectsofanytaxesonthenetincome.Thediscountfactorsusedtocalculatefairvalueareconsistentwiththoseusedtovaluesimilarproperties,withcomparableleasesineachoftherespectivemarkets.Adecreaseinthenetrentalincomeoranincreaseinthediscountratewilldecreasethefairvalueoftheinvestmentproperty.

Thevaluationapproachforinvestmentpropertyunderdevelopmentisbasedontheresidualdevelopmentappraisal,whichassessestheamountadevelopercanaffordtospendforanundevelopedsiteandproject,consideringthepotentialincomefromsaleofthesiteandtotalcostforitsfullconstruction.Thepotentialsalepriceisbasedontheincomecapitalisationapproachwherebytheestimatedrentalvaluefor




theinvestmentpropertyhasbeencapitalisedinperpetuity.Thevaluationalsoconsiderscomparableevidenceforlandtransactionswithsimilarparametersandmarketlocations.

Theinvestmentsandloansadvancedheldatfairvalueandderivativecontractsarevaluedonarecurringbasisasindicatedinnote27.

Thefollowingtableshowsananalysisofthefairvaluesofassetsandliabilitiesrecognisedinthebalancesheetbylevelofthefairvaluehierarchydescribedabove:

31 March 2020

Assets measured at fair value Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Non-current

Investmentproperty(note13,14) ‑ ‑ 15,389 15,389

Investmentsheldatfairvalue(note16) ‑ ‑ 139 139

Loansadvanced ‑ ‑ 1,263 1,263

Current

Foreignexchangeforwardcontract(note26) ‑ 203 ‑ 203

31 March 2019

Assets measured at fair value Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Non-current

Investmentproperty(note13,14) ‑ ‑ 18,264 18,264

Investmentsheldatfairvalue(note16) ‑ ‑ 390 390

Loansadvanced ‑ ‑ 3,711 3,711

Current

Foreignexchangeforwardcontract(note26) ‑ 514 ‑ 514

ThecarryingamountsoftheGroup’sfinancialliabilitiesandassetsnotcarriedatfairvaluethroughprofitorlossareareasonableapproximationoftheirfairvaluesduetoeithertheirshorttermnatureorshortperiodoftimesincetheywereacquired.

TheGroupdetermineswhethertransfershaveoccurredbetweenlevelsinthehierarchybyre‑assessingcategorisation(basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.

Movementsinlevel3ofthefairvaluemeasurements,duringtheyearended31 March2020andprioryear,canbesummarisedasfollows:

Loans advanced

£’000

Investment property and asset

held for sale

£’000

Investments held at fair value

£’000

Total

£’000

At 1 April 2019 3,711 18,264 390 22,365

Additions 386 8,835 ‑ 9,221

Subsequentcapitalexpenditureafteracquisition ‑ ‑ ‑ ‑

Disposals ‑ (5,225) ‑ (5,225)

Redemptions (3,227) ‑ (193) (3,420)

Fairvalueadjustment 393 1,194 (58) 1,529

Effectofforeignexchange ‑ 386 ‑ 386

At 31 March 2020 1,263 23,454 139 24,856

27. Fair value measurement (continued)



Loans advanced

£’000

Investment property and asset

held for sale

£’000

Investments held at fair value

£’000

Total

£’000

At 1 April 2018 - 33,021 6,091 39,112

Additions 3,444 14,795 ‑ 18,239

Subsequentcapitalexpenditureafteracquisition ‑ 5,203 ‑ 5,203

Disposals ‑ (33,441) (5,336) (38,777)

Redemptions ‑ ‑ (343) (343)

Fairvalueadjustment 267 (1,107) (22) (862)

Effectofforeignexchange ‑ (207) ‑ (207)

At 31 March 2019 3,711 18,264 390 22,365

Therewerenotransfersbetweenlevel1andlevel2fairvaluemeasurementsandnotransfersintooroutoflevel3fairvaluemeasurementsduringtheyearended31 March2020andprioryear.

Thefairvalueofinvestmentpropertyisbasedonunobservableinputsanditisthereforedisclosedaslevel3.

Thevaluationsreportsreceivedfromtheindependentvaluersincludeda‘MaterialValuationUncertainty’paragraphinrelationtothemarketriskslinkedtotheCovid‑19pandemic(seenote2(b)(a)(i)formoredetails).

InDecember2019,theGroupexchangedcontractsforthesaleoftheUnityandArmouriesassetinBirmingham(UK)at£4.5 millionandthesalecompletedon11June2020:theDirectorsthereforeconsider£4.5 milliontorepresentfairvalueoftheUnityandArmouriespropertyatthebalancesheetdate.On14April2020,theGroupreceiveda20%non‑refundabledepositinrelationtothisdisposalamountingto£0.9 millionplusVATand£3.6 millionplusVATwerereceivedatcompletion,on11June2020.

Thefollowingmethods,assumptionsandinputswereusedtoestimatefairvaluesofinvestmentproperty:

31 March 2020 - Unity and Armouries, Birmingham (UK)


’000

Area

(squaremeters)

Valuation technique Significant unobservable inputs Range/Value

Europe £4,465 90,000netdevelopablesquarefeet

Directors’valuation:saleat£4.5 millioncompletedon11June2020.

Notapplicable Notapplicable




31 March 2019 - Unity and Armouries, Birmingham (UK)


’000

Area

(squaremeters)


Europe £4,500 90,000netdevelopablesquarefeet

Incomecapitalisationandresidualdevelopmentappraisal

Investmentyield 4.3%

Marketrent £925/£1,200permonth

Developmentcosts £209persquarefoot

Developer’sprofits 18%/19%




31 March 2020 - Hamburg (Werner-Siemens-Straße), Germany


’000

Area

(squaremeters)


Europe €15,980(£13,764) 11.8 Discountedcashflow GrossEstimatedRentalValue(‘ERV’)persqmp.a.

€60

Discountrate 5.00%

Sensitivityanalysisforthe31 March2020valuationoftheHamburginvestmentproperty:

Significant unobservable inputs Change applied Fair value change

€’000

Change applied Fair value change

€’000

ERVpersqmp.a. ‑10% €15,100 +10% €18,400

Discountrate ‑1% €18,100 +1% €15,500

31 March 2019 - Hamburg (Werner-Siemens-Straße), Germany


’000

Area

(squaremeters)


Europe €15,980(£13,764) 11.8 Discountedcashflow GrossEstimatedRentalValue(‘ERV’)persqmp.a.

€60

Discountrate 5.00%

31 March 2020 – Wolverhampton, UK


’000

Area

(squaremeters)


UK £3,600 16,355 Comparabletransactionsanalysis

Comparableevidence Notapplicable

31 March 2020 – Liverpool, UK


’000

Area

(squaremeters)


UK £610 475 Directors’valuation:acquisitionrecentlycompleted(on 22 November2019)for£0.6 million.




DirectorsDavidJeffreys(Chairman)JeffChowdhryMelanieTorodePhillipRoseWilliamSimpson

Registered officeFloor2,TrafalgarCourtLesBanquesStPeterPortGuernseyGY14LY

Investment ManagerAlphaRealCapitalLLPLevel6,338EustonRoadLondonNW13BG

Administrator and secretaryOcorianAdministration(Guernsey)Limited(previously Estera Administration (Guernsey) Limited)Floor2TrafalgarCourtLesBanquesStPeterPortGuernseyGY14LY

BrokerPanmureGordon(UK)LimitedOneNewChangeLondonEC4M9AF

Independent valuers in the UKGVA3BrindleyplaceBirminghamB12JB

SavillsGroundFloor,CityPoint12KingStreetLeedsLS12HL

CBRELimitedHenriettaHouseHenriettaPlaceLondonW1G0NB

Independent valuers in IndiaColliersInternational(Hong Kong)LimitedSuite5701CentralPlaza18HarbourRoadWanchai,HongKong

Independent valuers in SpainSavillsAguirreNewmanPaseodelaCastellana,81Madrid,28046Spain

Independent valuers in GermanyCushman&WakefieldRathenauplatz,1Frankfurt,60313Germany

Independent AuditorBDOLimitedPlaceduPré,RueduPréStPeterPortGuernseyGY13LL

Tax advisors in EuropeKPMGLLP15CanadaSquareLondonE145GL

GrantThorntonUKLLP30FinsburySquareLondonEC2A1AG

Legal advisors in GuernseyCareyOlsenPOBox98,CareyHouseLesBanquesStPeterPortGuernseyGY14BZ

Legal advisors in the UKNortonRose3MoreLondonRiversideLondonSE12AQ

Legal advisors in IndiaAZB&PartnersPlotA‑8Sector4NOIDA201301India

Legal advisors in SpainAshurstLLPAlcalá,44Madrid,28014Spain

RegistrarComputershareInvestorServices(Jersey)LimitedQueenswayHouseHilgroveStreetStHelierJerseyJE11ES

Directors and Company information


FurtherinformationontheCompany,compliantwiththeSFS regulations,canbefoundattheCompany’swebsite:www.alpharealtrustlimited.com

Change of address

Communicationswithshareholdersaremailedtotheaddressesheldontheshareregister.Intheeventofachangeofaddressorotheramendment,pleasenotifytheCompany’sRegistrarunderthesignatureoftheregisteredholder.

Share price

TheCompany’sOrdinarySharesarelistedontheSFSoftheLSE.

Investment Manager

TheCompanyisadvisedbyAlphaRealCapitalLLPwhichisauthorisedandregulatedbytheFinancialConductAuthorityintheUnitedKingdom.

Financial calendar

Financial reporting Reporting/ Meeting dates

Dividend period

Ex-dividend date

Record date

Last date for election to scrip dividend (if applicable)

Share certificates posted (if applicable)

Payment date

Annual report published and dividend announcement 26Jun2020 Quarterended

31Mar2020 25Jun2020 26Jun2020 3Jul2020 16Jul2020 17Jul2020

Annual General Meeting 7Aug2020

Trading update statement (Quarter 1) 18Sep2020 Quarterending

30Jun2020 1Oct2020 2Oct2020 9Oct2020 22Oct2020 23Oct2020

Half year report 27Nov2020 Quarterending30Sep2020 10Dec2020 11Dec2020 18Dec2020 7Jan2021 8Jan2021

Shareholder information

Des

ign:O

ttleyDes

ignCom

pan

y,Lon

don

.020

719

379

50w

ww.ottleyd

esign.co

.uk

www.alpharealtrustlimited.com

Documents

Annual report 2020 - Alpha Real Trust Limited...Alpha Real Trust Limited : Annual report 2020 1 • NAV per ordinary share 213.7p as at 31 March 2020 (31 March 2019: 204.3p). • Basic