TIDMALPH
RNS Number : 2014P
Alpha Pyrenees Trust Limited
15 August 2014
15 August 2014
ALPHA PYRENEES TRUST LIMITED
("ALPHA PYRENEES TRUST" OR THE "TRUST" OR THE "COMPANY")
ALPHA PYRENEES TRUST POSTS RESULTS FOR THE HALF YEAR ENDED 30
JUNE 2014:
STRATEGIC DISPOSAL OF TWO PROPERTIES AT OR ABOVE BOOK VALUE
15,920 SQUARE METRES OF NEW LEASES AND LEASE EXTENSIONS
NET ASSET VALUE 12.0p PER SHARE (ADJUSTED)
Alpha Pyrenees Trust Limited, the property company investing
primarily in commercial real estate in France, today posts its
results for the half year from 1 January to 30 June 2014.
The Trust announced an adjusted loss of GBP1.6 million for the
half year, representing an adjusted loss per share of 1.3p. The
Trust does not currently propose to pay dividends.
Key points for the half year to 30 June 2014 include:
-- Strategic disposal of two properties sold at or above book
value for total proceeds of EUR7 million
-- New leases and lease extensions covering 15,920 square metres
(6% of the Trust's portfolio by area) achieved since 1 January
2014
-- Weighted average lease length of 7.8 years to expiry and 4.0
years to next break following lease extensions
-- 84% of rental income derives from Grade A tenants
-- 92% of the Trust's portfolio by value is in France; 83% is in the Paris region
-- NAV (adjusted) of 12.0p per share as at 30 June 2014 (31 December 2013: 22.8p)
-- Adjusted loss of GBP1.6 million for the six months to 30 June
2014 (adjusted loss per share of 1.3p)
Dick Kingston, Chairman of Alpha Pyrenees Trust, commented:
"The Trust's existing borrowing facilities terminate on 10
February 2015 and the Board continues to pursue alternative
financing options in the run up to the maturing of the bank
borrowings. During the half year, the Investment Manager has
continued to focus on active asset management within the portfolio
with particular emphasis on the extension of lease terms and the
letting of vacant units to secure the Trust's income. The Board is
pleased to note the important progress achieved on this front in
the face of a challenging business climate and the achievement of
the strategic disposal of two of the Trust's properties at or above
book value. The Trust's earnings are impacted by the interest
payable on the loan facility agreed in November 2013 to finance the
settlement of the net currency hedge"
Paul Cable, Fund Manager, Alpha Real Capital LLP, commented:
"The Trust owns a diversified portfolio of properties focused
primarily on the French property market which represents 92% of the
total portfolio by value with 83% by value located in the
Ile-de-France region which remains one of Europe's most
economically important and stable markets. Despite the challenging
business environment, since 1 January 2014 new leases or lease
extensions were achieved on 15,920 square metres representing
around 6% of the portfolio by area. Of the Trust's current rent
roll, 84%is secured by leases to Grade A tenants. The Investment
Manager will continue to concentrate on active asset management and
property management initiatives to secure the Trust's income and to
investigate selective opportunities to add value within the Trust's
portfolio."
Contact:
Dick Kingston
Chairman, Alpha Pyrenees Trust Limited
01481 231100
Paul Cable
Fund Manager, Alpha Real Capital LLP
020 7391 4700
For more information on the Trust please visit
www.alphapyreneestrust.com.
For more information on the Trust's Investment Manager please
visit www.alpharealcapital.com.
FORWARD-LOOKING STATEMENTS
These results contain forward-looking statements which are
inherently subject to risks and uncertainties because they relate
to events and depend upon circumstances that will occur in the
future. There are a number of factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements. Forward-looking statements are
based on the Board's current view and information known to them at
the date of this statement. The Board does not make any undertaking
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Nothing in
these results should be construed as a profit forecast.
About the Trust
Alpha Pyrenees Trust Limited ("the Trust" or "the Company")
primarily invests in higher-yielding properties in France,
particularly in the Ile-de-France region around Paris, focusing on
commercial property in the office, industrial, logistics and retail
sectors let to tenants with strong covenants.
The Trust seeks to diversify risk by investing in a portfolio of
properties spread across different property sectors with a variety
of tenants.
Dividends
The Trust does not currently propose to pay dividends.
Listing
The Trust is a closed-ended Guernsey registered investment
company which has been declared under the relevant legislation to
be an Authorised Closed-Ended Collective Investment Scheme. Its
shares are listed on the Official List of the UK Listing Authority
and traded on the London Stock Exchange.
Management
The Trust's Investment Manager is Alpha Real Capital LLP ("the
Investment Manager"). Control of the Trust rests with the
non-executive Guernsey-based Board of Directors.
ISA/SIPP status
The Trust's shares are eligible for Individual Savings Accounts
(ISAs) and Self Invested Personal Pensions (SIPPs).
Website
www.alphapyreneestrust.com
Financial highlights
Half year ending Year ending Half year ending
30 June 2014 31 December 2013 30 June 2013
--------------------------------------------------- ----------------- ------------------ -----------------
Net asset value (adjusted) (GBP'000)* 14,089 26,834 33,509
--------------------------------------------------- ----------------- ------------------ -----------------
Net asset value per ordinary share (adjusted)* 12.0p 22.8p 28.5p
--------------------------------------------------- ----------------- ------------------ -----------------
Net asset value per ordinary share 5.3p 12.7p 14.7p
--------------------------------------------------- ----------------- ------------------ -----------------
Earnings per share (adjusted - basic & diluted)** (1.3)p 0.1p 0.2p
--------------------------------------------------- ----------------- ------------------ -----------------
Earnings per share (basic & diluted) (8.5)p (4.7)p (2.3)p
--------------------------------------------------- ----------------- ------------------ -----------------
Dividend per share (paid during the period)*** 0.0p 0.6p 0.6p
*The net asset value and net asset value per ordinary share have
been adjusted for the fair value movement on revaluation of the
interest component of the currency swap (up to maturity in October
2013 at which point this element unwound), the interest rate swap
derivatives and 50% of the deferred tax provisions; full analysis
is given in note 10 to the accounts.
**The adjusted earnings per share includes adjustments for the
effect of the fair value mark-to-market revaluation of the
properties, gains and losses on disposal of investment properties
and assets held for sale, currency swap (settled in October 2013)
and interest rate swap derivatives, deferred tax provisions,
capital element of investment manager's fee, rental guarantee
income and foreign exchange gains and losses. A full analysis is
given in note 9 to the accounts.
*** This includes dividends paid in relation to prior
periods.
Chairman's Statement
The Investment Manager has continued to focus on active asset
management within the existing portfolio with particular emphasis
on the extension of lease terms and the letting of vacant units to
secure the Trust's income. The Board is pleased to note the
important progress achieved on this front. Since 1 January 2014 new
leases or lease extensions were achieved on a total of 15,920
square metres representing around 6% of the portfolio by area.
Further detail on asset management progress appears in the Property
Review section. The Investment Manager is also investigating
selective opportunities to add value within the Trust's
portfolio.
Results and dividend
Results for the half year show adjusted losses of GBP1.6 million
and adjusted losses per share of 1.3p (note 9). Earnings are
impacted by the interest payable on the loan facility agreed in
November 2013 to finance the settlement of the net currency hedge;
as noted in the Finance section below, interest on this facility is
rolled up into the loan quarterly.
The challenging business climate has created an environment
where generally the corporate decision making process has been
extended and hence the leasing environment is characterised by
longer periods to complete new leasing agreements. The Trust
currently has vacant space with an estimated annual rental value of
approximately GBP3.0 million (EUR3.7 million) and against this
backdrop it is difficult to predict the timing and level of
re-leasing that will be achieved.
The Trust does not currently propose to pay dividends.
Revaluation and Net Asset Value
Investment properties are included in the balance sheet at an
independent valuation of GBP222.8 million (EUR278.0 million)
providing an average valuation yield across the portfolio of 8.2%
as at 30 June 2014. The portfolio valuation has decreased by 4.3%
compared to 31 December 2013 on a like for like basis taking into
account the asset sales that have completed in the period. The next
revaluation will take place as at 31 December 2014.
The portfolio totals approximately 249,990 square metres
(approximately 2.7 million square feet) and many of the tenants are
well known companies belonging to large groups with strong
covenants such as: Alcatel-Lucent, Aviva, BNP Paribas, Dia, Etanco,
Furnotel, Husqvarna, Klöckner Group, La Poste, MediaMarkt,
McDonalds, Norauto, OCP and Vinci Group. Grade A tenants also
include government or quasi-government bodies and together the rent
from such tenants accounts for 84% of the Trust's rental
income.
The weighted average lease length within the portfolio is
currently 7.8 years to expiry and 4.0 years to the next break.
As at 30 June 2014, the adjusted net asset value per ordinary
share is 12.0p (31 December 2013: 22.8p per share) (note 10). The
decrease in the period is primarily due to the revaluation of
investment properties combined with the loss incurred in the
period.
Portfolio Summary
Country Property Sqm Description Valuation Valuation
GBPm EURm
--------- ------------------- -------- ---------------------- ---------- ----------
France Villarceaux-Nozay 78,800 Business park 103.9 129.7
--------- ------------------- -------- ---------------------- ---------- ----------
France Aubervilliers 8,750 Offices 16.1 20.1
--------- ------------------- -------- ---------------------- ---------- ----------
Warehouse and
France Goussainville 20,500 offices 10.5 13.1
--------- ------------------- -------- ---------------------- ---------- ----------
France Aubergenville 27,700 Logistics 9.4 11.7
--------- ------------------- -------- ---------------------- ---------- ----------
Champs sur
France Marne 5,930 Offices 8.9 11.1
--------- ------------------- -------- ---------------------- ---------- ----------
Logistics with
France Athis Mons 23,280 offices 8.5 10.6
--------- ------------------- -------- ---------------------- ---------- ----------
France Mulhouse 5,250 Offices 7.3 9.1
--------- ------------------- -------- ---------------------- ---------- ----------
France St Cyr L'Ecole 6,340 Offices 7.2 9.0
--------- ------------------- -------- ---------------------- ---------- ----------
France Roissy-en-France 7,800 Offices and warehouse 6.7 8.3
--------- ------------------- -------- ---------------------- ---------- ----------
Logistics with
France Evreux 14,130 offices 6.3 7.9
--------- ------------------- -------- ---------------------- ---------- ----------
France Nîmes 3,100 Offices and retail 6.1 7.6
--------- ------------------- -------- ---------------------- ---------- ----------
Offices with
France Gennevilliers 3,330 light industrial 6.0 7.5
--------- ------------------- -------- ---------------------- ---------- ----------
Warehouse and
France Ivry-sur-Seine 7,420 offices 4.5 5.6
--------- ------------------- -------- ---------------------- ---------- ----------
Warehouse and
France Fresnes 6,540 offices 4.3 5.3
--------- ------------------- -------- ---------------------- ---------- ----------
Spain Córdoba 16,880 Retail park 12.4 15.5
--------- ------------------- -------- ---------------------- ---------- ----------
Alcalá
Spain de Guadaíra 5,700 Shopping centre 2.3 2.9
--------- ------------------- -------- ---------------------- ---------- ----------
Spain Écija 5,950 Shopping centre 2.0 2.5
--------- ------------------- -------- ---------------------- ---------- ----------
Spain Zaragoza 2,590 Warehouse 0.4 0.5
--------- ------------------- -------- ---------------------- ---------- ----------
Total 249,990 222.8 278.0
------------------------------ -------- ---------------------- ---------- ----------
Finance
The Trust's existing borrowing facilities with Barclays Bank PLC
terminate on 10 February 2015. The Board continues to pursue
alternative financing options in order to support the settlement of
the bank borrowings as they mature, including a combination of
realising equity through selective asset sales as well as
consideration of a potential debt and equity refinancing, and other
corporate finance solutions.
As at 30 June 2014, the Trust has total borrowings of GBP215.5
million (EUR269.0 million) under its facilities with Barclays which
are repayable as at 10 February 2015. As at 30 June 2014, the Trust
holds cash of GBP11.8 million.
The key features of the Trust's borrowings are:
-- No loan to value ("LTV") covenant test until maturity on any of the Trust's properties.
-- 90% of borrowings have interest rates that are fixed to
maturity at a weighted average rate of 5.26% per annum.
-- 9% of borrowings have interest rates charged at a margin of 10% above three month Euribor.
-- 1% of borrowings have interest rates charged at a margin of
2.65% above three month Euribor.
-- Interest cover ratio ("ICR") covenant on the senior
borrowings is set at 115% - the Trust's weighted average ICR over
the six months to 30 June 2014 was 142%.
The facility to finance the settlement of the net currency hedge
liability is provided in the form of a Euro denominated loan,
including rolled up interest, of EUR26.6 million; interest is
charged quarterly at a margin of 10% above three month Euribor and
will be rolled up throughout the term. The Trust is permitted to
repay the loan at any time after repayment of the senior secured
borrowings (EUR242.4 million). Barclays has a charge over the
Trust's Nîmes property and there is a cash-pooling arrangement over
the Trust's cash flows from the whole property portfolio to provide
further security to the loan but still providing the Trust with
working capital for its operations.
Going forward the Trust does not currently propose to hedge its
equity for movements in foreign currency. The Trust has a
substantial natural hedge through the fact that its borrowings are
denominated in the same currency as the majority of its assets.
Market outlook
-- Overall leasing activity in the French and Spanish markets
has been subdued over the period reflecting economic conditions but
despite this backdrop the Trust has achieved lease extensions and
new leases on 15,920 square metres (6% of its portfolio) since 1
January 2014.
-- Take-up in our principal occupational markets has been
adversely affected by the difficult business climate. However, in
the Paris region (Ile-de-France), where 83% of the Trust's
portfolio is situated, office vacancy remains at relatively low
levels and significant oversupply appears unlikely in the medium
term.
-- Valuation yields have been stable and investment confidence
in our principal market continues.
Summary
-- The Trust owns a diversified freehold portfolio of properties
totalling GBP222.8 million (EUR278.0 million) with an average
valuation yield of 8.2% at the June valuation.
-- 84% of the Trust's rental income derives from Grade A tenants
with a strong capacity to pay.
-- The weighted average lease length within the portfolio is 7.8
years to expiry and 4.0 years to the next break.
-- The Board continues to pursue alternative financing options
in the run up to the maturing of the existing bank borrowings in
February 2015.
Dick Kingston
Chairman
14 August 2014
Property review
Portfolio overview
The Trust owns a portfolio of fourteen properties in France and
four properties in Spain totalling approximately 249,990 square
metres (approximately 2.7 million square feet) of commercial real
estate. The properties are generally well let, well located and
offer good value accommodation to occupiers. Of the total property
portfolio, 92% is invested in France and 8% in Spain in terms of
capital value.
The valuation of the portfolio as at 30 June 2014 was
approximately GBP222.8 million (EUR278.0 million) giving an average
valuation yield of 8.2% with the French portfolio producing an
average valuation yield of 8.1% and the Spanish portfolio 9.0%
respectively. The portfolio as a whole showed a valuation decrease
of 4.3% on a Euro like-for-like basis compared to 31 December 2013.
This consisted of a decrease of 4.2% in the French portfolio and a
decrease of 5.75% in the Spanish portfolio. The average capital
value of the portfolio is approximately GBP891 (EUR1,112) per
square metre (equivalent to GBP83 per square foot) and the average
rental value is approximately GBP77 (EUR96) per square metre per
annum (equivalent to GBP7.2 per square foot). Of the overall
portfolio, 83% by value is located within the Ile-de-France region
around Paris. The portfolio has 70% exposure to the French office
and business park sector of which 64% of the total portfolio is in
the Ile-de-France region. The reinstatement cost of the portfolio
buildings has been assessed
at GBP241 million (EUR300 million) representing approximately
108% of current value.
As at 30 June 2014, the Trust's portfolio is diversified across
business sectors with 70% in offices and business park property,
23% in warehouses and 7% in retail.
The portfolio benefits from strong credit tenants with 84% of
its current rent roll secured by leases to Grade A tenants (large
international/national companies or public sector). Examples of
those categorised as Grade A are given in the Chairman's
Statement.
The portfolio has an overall level of average occupancy of 85%
measured by rental income as a percentage of potential total income
with vacancy representing 15%.
The weighted average lease length within the portfolio is 7.8
years to expiry and 4.0 years to the next break.
Asset management review
The Investment Manager maintains close contact with the Trust's
tenants to understand their needs and wherever possible to produce
solutions which deliver value to both the tenants and investors. We
constantly seek to maintain and, where possible, improve the income
from each of the Trust's assets and look for opportunities to
create income through value-adding refurbishment, extension and
reconfiguration.
Over the period we have continued to concentrate on active asset
management and property management initiatives to secure the
Trust's income and we are pleased to report a number of important
achievements since 1 January 2014 in the following areas:
-- extending the lease maturity profile of the property portfolio through lease extensions and
-- letting of vacant units.
The Investment Manager remains vigilant to ensuring service
charges are controlled, the annual level of property costs is
closely monitored and additional sources of income are
identified.
Since 1 January 2014, new leases and lease extensions covering
approximately 15,920 square metres (6% of the Trust's portfolio by
area) have been achieved. Of this total, 5,150 square metres were
previously detailed in the annual report and new leases and lease
extensions covering approximately 10,770 square metres have been
completed since the annual report was published as detailed
below.
FRANCE
Gennevilliers - in line with the asset management strategy to
extend lease maturity, the Trust has signed a new 6/9 year lease
with Husqvarna France from April 2014. Husqvarna France occupy the
whole of the office and light industrial building totalling 3,410
square metres and the previous lease had a break option at
September 2014.
Goussainville - A new 3/6/9 year lease starting in April 2014
was signed with Fly Aviation, an aeronautical services company, on
285 square metres of vacant office space and a new 3/6/9 year lease
starting in July 2014 was signed with Hitec, an interior fitting
and fire protection company, on a 1,475 square metre vacant
warehouse unit. Existing tenants, Hurco, extended their lease on a
900 square metre warehouse unit to May 2017 and G3 Worldwide
extended their lease on 210 square metres of offices until November
2017.
SPAIN
Cordoba - Dia extended their lease on a 1,200 square metre
retail unit until September 2015 and UCC extended their lease on a
3,000 square metre cinema until June 2015.
Ecija - Burger King have re-geared their lease on a 250 square
metre retail unit until August 2023 and Mis Tacones extended their
lease on a 40 square metre retail unit until July 2015.
The Investment Manager is also focused on realising equity in
selective asset sales to support the settlement of the bank
borrowings as they mature and we are pleased to report the
following progress in this regard:
PROPERTY SALES
During the period the Trust sold a multi-let warehouse and
office investment located at Vitry-sur-Seine for EUR5.7 million
which was 7.5% above its book value. The property totalled 5,180
square metres arranged in 13 units let to a variety of tenants and
is located in an industrial zone to the north east of
Vitry-sur-Seine in the southern inner suburbs of the Ile-de-France.
The purchaser was a private French investment company.
The Trust also sold the larger of the two vacant warehouse units
located in Zaragoza, Spain for EUR1.3 million representing book
value. The unit represented 73% by area of the Trust's property
holding in Zaragoza. The purchaser was a private Spanish company
that will occupy the warehouse.
The proceeds from these sales will be held within the cash
pooling arrangement established with the Trust's lenders, Barclays
Bank PLC, to provide security for its loans and working capital for
the Trust's operations.
Market overview
France
The French economy remained broadly flat in 2013 and after a
small increase in the fourth quarter, gross domestic product has
remained level in the first quarter of 2014. In May 2014,
manufacturing output was 0.7% lower year-on-year but the
unemployment rate for mainland France in the first quarter of 2014
showed a slight improvement to stand at 9.7%. Linked to the wider
economic context, household spending remains muted and inflation
has moderated further with the growth rate of the Consumer Prices
Index standing at 0.5% per annum at the end of June 2014. The
economy is expected to remain generally subdued for the remainder
of 2014.
Against this challenging economic background, the investment
market remained robust with approximately EUR10.7 billion invested
in commercial real estate in France in the first two quarters of
2014 a 73% increase compared to the same period in 2013 and the
highest investment volume for the first half of the year since
2007. This volume was boosted by a number of large, prime asset
transactions being concluded which represented 57% of the total
volume. Traditional French investors represented approximately 54%
of the market with the next largest group being North American
investors whose volume increased to 21% followed by Middle Eastern
investors whose volume increased to 12%. Office investment remained
the highest volume sector and accounted for EUR6.4 billion
representing 60% of the total investment in France and an increase
of 57% in volume compared to the same period in 2013. Logistics and
industrial investment increased slightly over the same period in
2013 to total EUR0.9 billion.
Of the Trust's total property portfolio, 92% is in France, 83%
is in the Ile-de-France and 64% is in Ile-de-France office and
business park space.
The Economy of Ile-de-France
Paris and the surrounding region, better known as Ile-de-France,
accounts for about a fifth of the French population but contributes
nearly one third of French GDP. It is one of the main players in
the global economy and is the largest European region by GDP. By
population the Ile-de-France metropolis ranks twentieth globally,
but ranked by GDP it is the fifth major metropolis in the world
after the metropolitan areas of Tokyo, Greater New York, Los
Angeles and Osaka.
In Europe, the only city that can compare to Paris is London and
taking the wider metropolitan areas these two regions can be
considered broadly similar in GDP terms. However it should be noted
that the GDP of these two metropolitan areas far exceeds those of
all other European cities, whether considering the Dutch Randstad,
the conurbation Rhine-Ruhr and Rhine-Main, Brussels or Berlin.
With over 5.3 million jobs, Ile-de-France holds a prominent
place in the national economy and many national and international
companies have their headquarters in the region because of its high
quality as a business location. The Ile-de-France has the world's
third largest concentration of Fortune 500 head offices.
The Ile-de-France economy remains extremely diverse compared to
other cities of its size with a large industrial base and one of
the most important agricultural areas in France as well as being a
pre-eminent global tourist destination.
Its economy is more diversified than London (with its emphasis
on financial markets) or Los Angeles (film and entertainment) and
Paris is not overly dependent on any one sector. Even categorizing
Ile-de-France as predominantly a services-based economy, its
industrial base which accounts for 16% of the region's GDP, remains
very important as the region is a major European production centre,
which has preserved its competitiveness by increasing its
proportion of investment in research and development where it ranks
as Europe's number one region for R&D expenditure and
personnel. All of these activities are supported by an integrated
freight and transport network.
The lack of economic growth at present, combined with the
unclear business outlook means that occupiers remain cautious and
negotiations with tenants tend to be long and drawn out. In this
environment some companies have been reluctant to commit to new
premises and many have postponed plans to move, instead opting to
renegotiate leases with existing landlords. Nevertheless, in the
first half of 2014, take-up of offices reached an encouraging level
of 1.1 million square metres, an increase of about 24% over the
same period in 2013 which had experienced a particularly weak first
half performance. The most active business sectors were the
industrial sector (38% of take-up by volume), the finance and
insurance sector (14%) and the public sector (12%) together
accounting for 64% of the total take-up in the first half of
2014.
The average office rent in Ile-de-France has remained stable at
EUR294 per square metre per annum and the office vacancy rate for
the Paris region also remained stable at 7%. On the supply side
there is little speculative development due to the difficulty in
finding finance and the risks associated with the current market
conditions which have made developers cautious of undertaking new
schemes without pre-lettings in place.
National take-up in the logistics sector in the first half of
2014 reached approximately 1.1 million square metres, which was 16%
below the level for the same period in 2013. The largest share of
transaction volume took place in Ile-de-France with take-up of 0.4
million square metres, a doubling of volume compared to 2013.
Spain
In recent quarters there have been more encouraging signs of
growth in the Spanish economy. In Q3 and Q4 2013 gross domestic
product showed quarter-on-quarter growth rates of 0.1% and 0.2%
respectively and these represented the first quarterly growth rates
since Q1 2011. The quarterly growth rate for Q1 2014 was 0.4% and
the year-on-year rate had turned positive to 0.5% from -0.2% the
previous quarter. The government's efforts to reform the labour
market continue to have an effect with the unemployment rate having
decreased from 26% in the fourth quarter of 2013 to 24.5% in the
second quarter of 2014. The near term outlook for the Spanish
economy remains subdued.
Rental indexation
On an annual basis, the INSEE Construction Cost Index,
applicable to the Trust's leases in France, remained negative as at
Q3 2013 (-1.46%) and following a quarter-on-quarter rise of 2.04%
the annual indexation base as at Q1 2014 turned positive and stood
at 0.12%. The Spanish Consumer Price Index, applicable to the
Trust's leases in Spain, was running at an annualised rate of
increase of 0.1% as at the end of June 2014.
Paul Cable
For and on behalf of the Investment Manager
14 August 2014
Principal risks and uncertainties
The principal risks and uncertainties facing the Group can be
outlined as follows:
-- The Group's existing borrowing facilities with Barclays Bank
PLC terminate on 10 February 2015. This creates a material
uncertainty that casts significant doubt about the Group's ability
to continue as a going concern.
-- Rental income and the fair value of investment properties are
affected, together with other factors, by general economic
conditions and/or by the political and economic climate of the
jurisdictions in which the Group's investment properties are
located.
-- Although the Trust has a substantial natural hedge through
the fact that its borrowings are denominated in the same currency
as the majority of its assets, the net assets of the Group are
exposed to movements in the euro exchange rate.
The Board believes that the above principal risks and
uncertainties would be equally applicable to the remaining six
month period of the current financial year.
Statement of Directors' Responsibilities
The Directors confirm that to the best of their knowledge:
-- the condensed financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union; and
-- the condensed financial statements meet the requirements of
an interim management report (as defined below), and includes a
fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six month period of the financial year; and their impact on the
interim condensed financial statements; and a description of the
principal risks and uncertainties of the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
month period of the current financial year and that have materially
affected the financial position or performance of the Company
during the period.
The Directors of Alpha Pyrenees Trust Limited are listed below
and have been Directors throughout the period.
By order of the Board
Dick Kingston
Chairman
14 August 2014
Independent review report
To the members of Alpha Pyrenees Trust Limited
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half year report for the six months
ended 30 June 2014 which comprises the consolidated statement of
comprehensive income, consolidated balance sheet, consolidated cash
flow statement, consolidated statement of changes in equity and
related notes. We have read the other information contained in the
half year financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half year financial report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the half year financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half year financial report have been prepared in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half year report
based on our review. This report, including the conclusion, has
been prepared for, and only for, the Company for the purpose of the
Disclosure and Transparency Rules of the Financial Conduct
Authority and for no other purpose. We do not, in producing this
report, accept or assume responsibility for any other person to
whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half year financial report for the six months to 30 June
2014 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Emphasis of matter - going concern
In forming our conclusion of the half year financial report,
which is not qualified, we have considered the adequacy of the
disclosure made in note 2 to the financial statements concerning
the Group's ability to continue as a going concern. As disclosed in
note 2 the Group's borrowings are due for repayment on 10 February
2015. Should the strategy of realising equity in selective asset
sales, combined with the potential availability of alternative
financing options not be completed as planned, the Group would
require continued financing facilities beyond that date. This
indicates the existence of a material uncertainty which may cast
doubt about the Group's ability to continue as a going concern. The
condensed financial statements do not include the adjustments that
would result if the Group were unable to continue as a going
concern.
BDO Limited
Chartered Accountants
Place du Pré
Rue du Pré
St Peter Port
Guernsey
14 August 2014
Condensed consolidated statement of comprehensive income
For the six months For the six months
ended 30 June 2014 ended 30 June 2013
(unaudited) (unaudited)
------------------------------------ ------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Income
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Revenue 3 9,908 - 9,908 11,096 - 11,096
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Property operating
expenses (2,905) - (2,905) (3,000) - (3,000)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Net rental income 7,003 - 7,003 8,096 - 8,096
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Gain on disposal
of investment properties
and assets held for
sale - 300 300 - - -
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Expenses
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Losses on revaluation
of investment properties
and assets held for 11,
sale 12 - (10,298) (10,298) - (1,025) (1,025)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Investment Manager's
fee (862) (369) (1,231) (991) (425) (1,416)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other administration
costs (660) - (660) (667) - (667)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Operating profit/(loss) 5,481 (10,367) (4,886) 6,438 (1,450) 4,988
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance income 4 3 3,715 3,718 25 6,245 6,270
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance costs 5 (7,035) (1,612) (8,647) (6,213) (6,987) (13,200)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
(Loss)/profit before
taxation (1,551) (8,264) (9,815) 250 (2,192) (1,942)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Taxation 7 - (194) (194) - (730) (730)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
(Loss)/profit for
the period (1,551) (8,458) (10,009) 250 (2,922) (2,672)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
income
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Items that may be
reclassified to profit
or loss in subsequent
periods:
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Foreign exchange
gains on translation
of foreign operations
(translation reserve) - 1,267 1,267 - 149 149
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
income for the period - 1,267 1,267 - 149 149
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Total comprehensive
(expense)/income
for the period (1,551) (7,191) (8,742) 250 (2,773) (2,523)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Loss per share
- basic & diluted 9 (8.5)p (2.3)p
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Adjusted (loss)/earnings
per share
- basic & diluted 9 (1.3)p 0.2p
All items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of this
statement.
Condensed consolidated balance sheet
Notes 30 June 2014 31 December
2013 (audited)
(unaudited) GBP'000
GBP'000
--------------------------------------- ------ ------------- ----------------
Non-current assets
--------------------------------------- ------ ------------- ----------------
Investment properties 11 210,674 236,920
--------------------------------------- ------ ------------- ----------------
Current assets
--------------------------------------- ------ ------------- ----------------
Assets held for sale 12 12,107 11,194
--------------------------------------- ------ ------------- ----------------
Trade and other receivables 13 5,123 4,244
--------------------------------------- ------ ------------- ----------------
Cash and cash equivalents 11,843 5,923
--------------------------------------- ------ ------------- ----------------
29,073 21,361
--------------------------------------- ------ ------------- ----------------
Total assets 239,747 258,281
--------------------------------------- ------ ------------- ----------------
Current liabilities
--------------------------------------- ------ ------------- ----------------
Trade and other payables 14 (4,672) (2,810)
--------------------------------------- ------ ------------- ----------------
Financial liabilities at fair value
through profit or loss 16 (4,849) -
--------------------------------------- ------ ------------- ----------------
Bank borrowings 15 (216,092) (1,707)
--------------------------------------- ------ ------------- ----------------
Rent deposits (885) (1,057)
--------------------------------------- ------ ------------- ----------------
(226,498) (5,574)
--------------------------------------- ------ ------------- ----------------
Total assets less current liabilities 13,249 252,707
--------------------------------------- ------ ------------- ----------------
Non-current liabilities
--------------------------------------- ------ ------------- ----------------
Financial liabilities at fair value
through profit or loss 16 - (8,825)
--------------------------------------- ------ ------------- ----------------
Bank borrowings 15 - (221,745)
--------------------------------------- ------ ------------- ----------------
Rent deposits (1,002) (1,094)
--------------------------------------- ------ ------------- ----------------
Deferred taxation 7 (6,015) (6,069)
--------------------------------------- ------ ------------- ----------------
(7,017) (237,733)
--------------------------------------- ------ ------------- ----------------
Total liabilities (233,515) (243,307)
--------------------------------------- ------ ------------- ----------------
Net assets 6,232 14,974
--------------------------------------- ------ ------------- ----------------
Equity
--------------------------------------- ------ ------------- ----------------
Share capital 17 - -
--------------------------------------- ------ ------------- ----------------
Special reserve 113,131 113,131
--------------------------------------- ------ ------------- ----------------
Translation reserve 23,995 22,728
--------------------------------------- ------ ------------- ----------------
Capital reserve (130,604) (122,146)
--------------------------------------- ------ ------------- ----------------
Revenue reserve (290) 1,261
--------------------------------------- ------ ------------- ----------------
Total equity 6,232 14,974
--------------------------------------- ------ ------------- ----------------
Net asset value per share 10 5.3p 12.7p
--------------------------------------- ------ ------------- ----------------
Net asset value per share (adjusted) 10 12.0p 22.8p
The half-year financial statements were approved by the Board of
Directors and authorised for issue on 14 August 2014.
David Jeffreys Serena Tremlett
Director Director
The accompanying notes are an integral part of this
statement.
Condensed consolidated cash flow statement
For the six For the six
months ended months ended
30 June 2014 30 June 2013
(unaudited) (unaudited)
GBP'000 GBP'000
---------------------------------------------- -------------- --------------
Operating activities
---------------------------------------------- -------------- --------------
Loss for the period (10,009) (2,672)
---------------------------------------------- -------------- --------------
Adjustments for :
---------------------------------------------- -------------- --------------
Gain on disposal of investment properties (300) -
---------------------------------------------- -------------- --------------
Losses on revaluation of investment
properties and assets held for sale 10,298 1,025
---------------------------------------------- -------------- --------------
Deferred taxation 194 730
---------------------------------------------- -------------- --------------
Finance income (3,718) (6,270)
---------------------------------------------- -------------- --------------
Finance costs 8,647 13,200
---------------------------------------------- -------------- --------------
Operating cash flows before movements
in working capital 5,112 6,013
---------------------------------------------- -------------- --------------
Movements in working capital:
---------------------------------------------- -------------- --------------
Increase in operating trade and other
receivables (923) (1,582)
---------------------------------------------- -------------- --------------
Increase in operating trade and other
payables 1,844 1,873
---------------------------------------------- -------------- --------------
Cash generated from operations 6,033 6,304
---------------------------------------------- -------------- --------------
Interest received 7 19
---------------------------------------------- -------------- --------------
Currency swap interest paid - (466)
---------------------------------------------- -------------- --------------
Cash flows from operating activities 6,040 5,857
---------------------------------------------- -------------- --------------
Investing activities
---------------------------------------------- -------------- --------------
Proceeds from disposal of investment 5,752 -
properties
---------------------------------------------- -------------- --------------
Capital expenditure (119) (527)
---------------------------------------------- -------------- --------------
Cash flows from/(used in) investing
activities 5,633 (527)
---------------------------------------------- -------------- --------------
Financing activities
---------------------------------------------- -------------- --------------
Currency swap collateral (paid)/received - (1,146)
---------------------------------------------- -------------- --------------
Loan arrangement costs (119) -
---------------------------------------------- -------------- --------------
Repayment of borrowings - (138)
---------------------------------------------- -------------- --------------
Bank loan interest paid and costs (5,301) (5,396)
---------------------------------------------- -------------- --------------
Dividends paid - (706)
---------------------------------------------- -------------- --------------
Cash flows used in financing activities (5,420) (7,386)
---------------------------------------------- -------------- --------------
Increase/(decrease) in cash and cash
equivalents 6,253 (2,056)
---------------------------------------------- -------------- --------------
Cash and cash equivalents at beginning
of period 5,923 8,400
---------------------------------------------- -------------- --------------
Exchange translation movement (333) 110
---------------------------------------------- -------------- --------------
Cash and cash equivalents at end
of period 11,843 6,454
The accompanying notes are an integral part of this
statement.
Condensed consolidated statement of changes in equity
For the six months Share Special Translation Capital Revenue Total
ended 30 June 2014 capital reserve reserve reserve reserve reserves
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- --------- ------------ ---------- --------- ----------
At 1 January 2014 - 113,131 22,728 (122,146) 1,261 14,974
------------------------ ---------- --------- ------------ ---------- --------- ----------
Loss for the period - - - (8,458) (1,551) (10,009)
------------------------ ---------- --------- ------------ ---------- --------- ----------
Other comprehensive
income for the period - - 1,267 - - 1,267
------------------------ ---------- --------- ------------ ---------- --------- ----------
Dividends - - - - - -
------------------------ ---------- --------- ------------ ---------- --------- ----------
At 30 June 2014 - 113,131 23,995 (130,604) (290) 6,232
------------------------ ---------- --------- ------------ ---------- --------- ----------
For the six months Share Special Translation Capital Revenue Total
ended 30 June 2013 capital reserve reserve reserve reserve reserves
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- --------- ------------ ---------- --------- ----------
At 1 January 2013 - 113,131 22,048 (116,445) 1,842 20,576
------------------------ ---------- --------- ------------ ---------- --------- ----------
(Loss)/profit for
the period - - - (2,922) 250 (2,672)
------------------------ ---------- --------- ------------ ---------- --------- ----------
Other comprehensive
income for the period - - 149 - - 149
------------------------ ---------- --------- ------------ ---------- --------- ----------
Dividends - - - - (706) (706)
------------------------ ---------- --------- ------------ ---------- --------- ----------
At 30 June 2013 - 113,131 22,197 (119,367) 1,386 17,347
------------------------ ---------- --------- ------------ ---------- --------- ----------
The accompanying notes are an integral part of this
statement.
Notes to the condensed financial statements
1. General information
The Company is a limited liability, closed-ended investment
company incorporated in Guernsey, which has been declared under the
relevant legislation to be an Authorised Closed-Ended Collective
Investment Scheme. The Group comprises the Company and its
subsidiaries. The Group invests in commercial property in France
and Spain with inflation-indexed rents that can provide an income
return to investors as well as potential for capital growth. These
financial statements are presented in pounds Sterling as this is
the currency in which the funds are raised and in which the
investors are seeking a return. The Company's functional currency
is Sterling and the subsidiaries' currency is Euros. The
presentational currency of the Group is Sterling. The period-end
exchange rate used is GBP1:EUR1.248 (December 2013: GBP1:EUR1.198)
and the average rate for the period used is GBP1:EUR1.217 (June
2013: GBP1:EUR1.176).
2. Significant accounting policies
The unaudited condensed financial statements included in the
half year report for the six months ended 30 June 2014, have been
prepared in accordance with the Disclosure and Transparency Rules
of the United Kingdom's Financial Conduct Authority and
International Accounting Standard (IAS) 34, 'Interim Financial
Reporting' as adopted by the European Union. The condensed
financial statements should be read in conjunction with the Group's
annual report and financial statements for the year ended 31
December 2013, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union and are available on the Company's website
(www.alphapyreneestrust.com).
The accounting policies adopted and methods of computation
followed in these condensed financial statements are consistent
with those applied in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2013.
The directors considered all relevant new standards, amendments
and interpretations to existing standards effective for the half
year report for the six months ended 30 June 2014 and determined
that they have no impact on the annual consolidated financial
statements of the Group or the interim condensed financial
statements of the Group.
The preparation of the interim condensed financial statements
requires Directors to make estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities,
and the disclosure of contingent liabilities at the date of the
interim condensed financial statements. If in the future such
estimates and assumptions, which are based on the Directors' best
judgement at the date of the interim condensed financial
statements, deviate from actual circumstances, the original
estimates and assumptions will be modified as appropriate in the
period in which the circumstances change.
Going concern
The Group's existing borrowing facilities with Barclays Bank PLC
terminate on 10 February 2015. This creates a material uncertainty
that casts significant doubt about the Group's ability to continue
as a going concern. Whilst recognising this uncertainty, the Board
has a reasonable expectation that a combination of realising equity
in selective asset sales, combined with the potential availability
of alternative financing options, including potential debt
refinancing, equity fundraising and other corporate finance
solutions, can support the settlement of the bank borrowings as
they mature and the Board will continue to pursue all avenues
available to the Group to secure the refinancing of its borrowings.
Therefore, the Board believes it is appropriate to continue to
prepare the Group condensed financial statements on a going concern
basis.
3. Revenue
1 January 1 January
2014 to 2013 to
30 June 30 June
2014 2013
GBP'000 GBP'000
----------------------- ---------- ----------
Rental income 7,960 9,048
----------------------- ---------- ----------
Service charge income 1,948 2,048
----------------------- ---------- ----------
Total 9,908 11,096
4. Finance income
1 January 1 January
2014 to 2013 to
30 June 30 June
2014 2013
GBP'000 GBP'000
---------------------------------------- ---------- ----------
Bank interest income 3 25
---------------------------------------- ---------- ----------
Foreign exchange gain - 1,622
---------------------------------------- ---------- ----------
Gains on financial liabilities at fair
value through profit or loss (note 6) 3,715 4,623
Total 3,718 6,270
5. Finance costs
1 January 1 January
2014 to 2013 to
30 June 30 June
2014 2013
GBP'000 GBP'000
----------------------------------------- ---------- ----------
Interest on bank borrowings 6,339 5,439
----------------------------------------- ---------- ----------
Loan fee amortisation 673 293
----------------------------------------- ---------- ----------
Foreign exchange loss 1,612 -
----------------------------------------- ---------- ----------
Losses on financial liabilities at fair
value through profit or loss (note 6) - 7,452
----------------------------------------- ---------- ----------
Other charges 23 16
----------------------------------------- ---------- ----------
Total 8,647 13,200
6. Gains and losses on financial assets and liabilities at fair
value through profit or loss
1 January 1 January
2014 to 2013 to
30 June 30 June
2014 2013
GBP'000 GBP'000
------------------------------------------------- ---------- ----------
Change in unrealised gains and losses
on financial assets and liabilities held
at fair value through profit or loss
------------------------------------------------- ---------- ----------
Currency swaps - (6,987)
------------------------------------------------- ---------- ----------
Interest rate swap 3,715 4,623
------------------------------------------------- ---------- ----------
Realised gains and losses on financial
assets and liabilities held at fair value
through profit or loss
------------------------------------------------- ---------- ----------
Currency swaps - interest received - 4,315
------------------------------------------------- ---------- ----------
Currency swaps - interest paid - (4,780)
------------------------------------------------- ---------- ----------
Expense from currency swaps - (465)
------------------------------------------------- ---------- ----------
Gain/(loss) on financial assets and liabilities
held at fair value through profit or loss 3,715 (2,829)
------------------------------------------------- ---------- ----------
Disclosed as:
------------------------------------------------- ---------- ----------
Finance costs (note 5) - (7,452)
------------------------------------------------- ---------- ----------
Finance income (note 4) 3,715 4,623
------------------------------------------------- ---------- ----------
Gain/(loss) on financial assets and liabilities
held at fair value through profit or loss 3,715 (2,829)
------------------------------------------------- ---------- ----------
7. Taxation
The Company is exempt from Guernsey taxation on income derived
outside Guernsey and bank interest earned in Guernsey. A fixed
annual fee of GBP600 is payable to the States of Guernsey in
respect of this exemption. No charge to Guernsey taxation arises on
capital gains.
Deferred taxation has been calculated in accordance with IFRS.
The Group is currently liable to French income tax at 33.33% and
Spanish income tax at 30% arising on the activities of the Group's
operations in France and Spain.
8. Dividends
During the period, the Trust did not pay any dividend and does
not currently propose to pay dividends.
9. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
1 January 2014 1 January 2013 1 January 2013
to to to
30 June 2014 31 December 30 June 2013
2013
--------------------------------- --------------- --------------- ---------------
Losses after tax per
income statement (GBP'000) (10,009) (5,576) (2,672)
--------------------------------- --------------- --------------- ---------------
Basic and diluted earnings
per share (8.5)p (4.7)p (2.3)p
--------------------------------- --------------- --------------- ---------------
Losses after tax per
income statement (GBP'000) (10,009) (5,576) (2,672)
--------------------------------- --------------- --------------- ---------------
Gain on disposal of investment (300) - -
properties and assets
held for sale
--------------------------------- --------------- --------------- ---------------
Revaluation losses in
investment properties 10,298 6,934 1,025
--------------------------------- --------------- --------------- ---------------
Mark to market of currency
swaps - 5,444 6,987
--------------------------------- --------------- --------------- ---------------
Mark to market of interest
rate swaps (3,715) (8,331) (4,623)
--------------------------------- --------------- --------------- ---------------
Investment Manager's
fee (capital) 369 828 425
--------------------------------- --------------- --------------- ---------------
Deferred taxation 194 1,273 730
--------------------------------- --------------- --------------- ---------------
Foreign exchange losses/(gains) 1,612 (447) (1,622)
--------------------------------- --------------- --------------- ---------------
Adjusted (losses)/earnings
(GBP'000) (1,551) 125 250
--------------------------------- --------------- --------------- ---------------
Adjusted (losses)/earnings
per share (1.3)p 0.1p 0.2p
--------------------------------- --------------- --------------- ---------------
Weighted average number
of ordinary shares (000's) 117,627 117,627 117,627
The adjusted earnings are presented to provide what the Company
believes is a more appropriate assessment of the operational income
accruing to the Group's activities. Hence, the Company adjusts
basic earnings for income and costs which are not of a recurrent
nature or which may be more of a capital nature.
10. Net asset value per share
30 June 2014 31 December
2013
--------------------------------------- ------------- ------------
Net asset value (GBP'000) 6,232 14,974
--------------------------------------- ------------- ------------
Net asset value per share 5.3p 12.7p
--------------------------------------- ------------- ------------
Net asset value (GBP'000) 6,232 14,974
--------------------------------------- ------------- ------------
Mark to market of interest rate swaps 4,849 8,825
--------------------------------------- ------------- ------------
Deferred taxation* 3,008 3,035
--------------------------------------- ------------- ------------
Adjusted net asset value 14,089 26,834
--------------------------------------- ------------- ------------
Net asset value per share (adjusted) 12.0p 22.8p
--------------------------------------- ------------- ------------
Number of ordinary shares (000's) 117,627 117,627
*The net asset value and net asset value per ordinary share have
been adjusted by 50% of the deferred tax provision. An asset
realisation could potentially include the sale of an SPV with
latent deferred tax liabilities for which a potential purchaser
would expect some form of discount from the purchase price of the
related property.
The adjusted net assets are presented to provide what the
Directors believe is a more relevant assessment of the Group's net
asset position. The Directors have determined that certain fair
value and accounting adjustments may not be realisable in the
longer term.
11. Investment properties
30 June 2014 31 December 2013
GBP'000 GBP'000
------------------------------------- ------------- -----------------
Fair value of investment properties
at 1 January 236,920 249,043
------------------------------------- ------------- -----------------
Subsequent capital expenditure
after acquisition 119 945
------------------------------------- ------------- -----------------
Disposals (1,068) -
------------------------------------- ------------- -----------------
Rent incentive movement (158) (30)
------------------------------------- ------------- -----------------
Fair value adjustment in the
period/year (9,911) (6,934)
------------------------------------- ------------- -----------------
Effect of foreign exchange (9,218) 5,090
------------------------------------- ------------- -----------------
Transfer to assets held for sale (6,010) (11,194)
------------------------------------- ------------- -----------------
Fair value of investment properties
at 30 June/31 December 210,674 236,920
The fair value of the Group's investment properties at 31
December 2013 and 30 June 2014 have been arrived at on the basis of
valuations carried out at that date by Knight Frank LLP,
independent valuers not connected to the Group. The portfolio has
been valued on a fair value basis as defined by the Royal
Institution of Chartered Surveyors Appraisal and Valuations
Standards ("RICS").
The approved RICS definition of fair value is "the price that
would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants at
the measurement date".
During the period, the Group disposed of its main warehouse at
Zaragoza in Spain for GBP1.1 million (EUR1.3 million). A further
disposal is described in note 12.
At 30 June 2014, the Group had un-provided contractual
obligations for future repairs and maintenance of GBPnil (December
2013: GBPnil) and GBPnil (December 2013: nil) of future capital
requirements.
12. Assets held for sale
30 June 2014 31 December 2013
GBP'000 GBP'000
------------------------------------- ------------- -----------------
Assets held for sale at 1 January 11,194 -
------------------------------------- ------------- -----------------
Disposals (4,349) -
------------------------------------- ------------- -----------------
Rent incentive movement (31) -
------------------------------------- ------------- -----------------
Fair value adjustment in the (387) -
period/year
------------------------------------- ------------- -----------------
Effect of foreign exchange (330) -
------------------------------------- ------------- -----------------
Transfer from investment properties 6,010 11,194
------------------------------------- ------------- -----------------
Assets held for sale at 30 June/31
December 12,107 11,194
Assets held for sale represent the fair value of properties that
have been actively marketed for disposal at the balance sheet
date.
During the period, the Group disposed of its Vitry-sur-Seine
property in France for GBP4.7 million (EUR5.7 million), which was
disclosed as an asset held for sale at the year ended 31 December
2013.
13. Trade and other receivables
30 June 2014 31 December 2013
GBP'000 GBP'000
---------------------------------- ------------- -----------------
Trade receivables 1,849 1,311
---------------------------------- ------------- -----------------
Amounts receivable from Property
Managing Agents 1,359 1,442
---------------------------------- ------------- -----------------
Prepayments 1,492 1,032
---------------------------------- ------------- -----------------
Other debtors 423 459
---------------------------------- ------------- -----------------
Total 5,123 4,244
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
14. Trade and other payables
30 June 2014 31 December 2013
GBP'000 GBP'000
---------------------------------- ------------- -----------------
Trade creditors 1,491 310
---------------------------------- ------------- -----------------
Deferred income 1,919 695
---------------------------------- ------------- -----------------
Investment Manager's fee payable 690 680
---------------------------------- ------------- -----------------
VAT payable 229 332
---------------------------------- ------------- -----------------
Accruals 343 793
---------------------------------- ------------- -----------------
Total 4,672 2,810
Trade creditors and accruals primarily comprise amounts
outstanding for trade purchases and ongoing costs. The Group has
financial risk management policies in place to ensure that all
payables are paid within the credit time frame.
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
15. Bank borrowings
30 June 2014 31 December 2013
GBP'000 GBP'000
------------------------------- ------------- -----------------
Current liabilities: interest
payable and bank borrowing 216,092 1,707
------------------------------- ------------- -----------------
Non-current liabilities: bank
borrowing - 221,745
------------------------------- ------------- -----------------
Total liabilities 216,092 223,452
------------------------------- ------------- -----------------
The borrowings are repayable
as follows:
------------------------------- ------------- -----------------
Interest payable 1,688 1,707
------------------------------- ------------- -----------------
On demand or within one year 214,404 -
------------------------------- ------------- -----------------
In the second to fifth years
inclusive - 221,745
------------------------------- ------------- -----------------
After five years - -
------------------------------- ------------- -----------------
216,092 223,452
Movement in the Group's bank borrowings is analysed as
follows:
1 January 2014 1 January 2013
to to 31 December
30 June 2014 2013
GBP'000 GBP'000
------------------------------------- --------------- ----------------
Opening balance 221,745 197,393
------------------------------------- --------------- ----------------
Loan advance/capitalised interest 1,009 20,829
------------------------------------- --------------- ----------------
Deferred finance costs (119) (898)
------------------------------------- --------------- ----------------
Amortisation of finance costs 673 678
------------------------------------- --------------- ----------------
Repayment of loan - (208)
------------------------------------- --------------- ----------------
Exchange differences on translation
of foreign currencies (8,904) 3,951
------------------------------------- --------------- ----------------
Total 214,404 221,745
16. Financial assets and financial liabilities at fair value
through profit or loss
30 June 2014 31 December 2013
GBP'000 GBP'000
------------------------- ------------- -----------------
Current liabilities
------------------------- ------------- -----------------
Interest rate swaps (4,849) -
------------------------- ------------- -----------------
Non-current liabilities
------------------------- ------------- -----------------
Interest rate swaps - (8,825)
------------------------- ------------- -----------------
Total (4,849) (8,825)
Interest rate swap
The Company is required under the financing agreements with
Barclays Bank PLC to fix the rate at which it borrows over the
duration of each loan. The Company has agreed a fixed interest rate
with Barclays Bank PLC at each loan draw-down. The requirement to
fix the borrowing rate does not apply to the additional loan
provided by Barclays Bank PLC in November 2013, for GBP20.8
million, which interest is charged at a margin of 10% above three
month Euribor and is rolled up throughout the term.
The bank has undertaken a variable to fixed rate swap with a
third party. The Company is not party to the swap agreement but via
the financing agreement the Company has all the risks and rewards
of the swap as, should the loan be repaid early, the Company would
be required to pay the swap break costs or, alternatively accrue a
swap benefit as a repayment reduction depending on the value of the
underlying swap at that point in time.
The fair value of the interest rate swaps is determined by
reference to an applicable valuation model.
Fair value measurement
The Group discloses fair value measurements by level of the
following fair value measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The level in the fair value hierarchy within which the financial
asset or financial liability is categorised is determined on the
basis of the lowest input that is significant to the fair value
measurement. Financial instruments are classified in their entirety
into one of the three levels.
The fair value of the derivative interest rate swap contracts is
determined by reference to the mid-point of the yield curves
prevailing on the reporting date and represent the net present
value of the differences between the contracted rate and the
valuation rate when applied to the projected balances to the period
from the reporting date to the contracted expiry date.
The interest rate swaps are valued on a recurring basis
(quarterly).
The Group determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation (based on
the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
The following table shows an analysis of the fair values of
financial instruments recognised in the balance sheet by level of
the fair value hierarchy described above:
Level 1 Level 2 Level 3 Total
----------------------- --------- -------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- -------- -------- --------
Financial liabilities
----------------------- --------- -------- -------- --------
Interest rate swap - (4,849) - (4,849)
----------------------- --------- -------- -------- --------
There were no transfers between level 1 and level 2 fair value
measurements and no transfers into or out of level 3 fair value
measurements during the six month period ended 30 June 2014.
17. Share capital
The authorised share capital is unlimited. The Company has one
class of shares which carry no right to fixed income. All ordinary
shares have a nil par value. The number of shares in issue is 117.6
million.
There have been no share cancellations during the period.
18. Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions. Alpha Real Capital LLP is the Investment Manager to the
Company under the terms of the Investment Manager Agreement and is
thus considered a related party of the Company.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
The Investment Manager is entitled to receive a fee from the
Group at an annual rate of 1% of the gross assets of the Group,
payable quarterly in arrears. The Investment Manager is also
entitled to receive an annual performance fee calculated with
reference to total shareholder return ("TSR"), whereby the fee is
20% of any excess over an annualised TSR of 12% and then a further
15% of any excess over 20%; the performance fee is subject to a
three year high watermark with a minimum threshold of 100 pence.
Details of the investment management fees for the current
accounting period are shown on the face of the statement of
comprehensive income and any balances outstanding are disclosed
separately in note 14.
The Directors of the Company received total fees as follows:
Six months ending Year ending
30 June 2014 31 December 2013
GBP GBP
------------------ ------------------ ------------------
Dick Kingston 15,000 30,000
------------------ ------------------ ------------------
David Jeffreys 11,500 23,000
------------------ ------------------ ------------------
Phillip Rose 10,000 20,000
------------------ ------------------ ------------------
David Rowlinson* 10,000 20,000
------------------ ------------------ ------------------
Serena Tremlett 10,000 20,000
------------------ ------------------ ------------------
Total 56,500 113,000
The Directors' interests in the shares of the Company are
detailed below:
30 June 2014 31 December 2013
shares held shares held
------------------ ------------- -----------------
Dick Kingston 710,616 710,616
------------------ ------------- -----------------
David Jeffreys 250,000 250,000
------------------ ------------- -----------------
Phillip Rose 1,290,079 1,290,079
------------------ ------------- -----------------
David Rowlinson* - -
------------------ ------------- -----------------
Serena Tremlett 121,472 121,472
*David Rowlinson is a director of Antler Investment Holdings
Limited ("Antler") and the managing director of Liberation
Management Limited, which is a trustee of the Rockmount Purpose
Trust that indirectly owns 75.3% of Alpha Real Capital LLP.
The following, being partners of the Investment Manager held the
following shares in the Company:
30 June 2014 31 December 2013
shares held shares held
-------------------- ------------- -----------------
Rockmount Ventures
Limited and ARRCO
Limited** 21,437,393 21,437,393
-------------------- ------------- -----------------
Phillip Rose*** 1,290,079 1,290,079
-------------------- ------------- -----------------
Bradley Bauman 544,809 544,809
-------------------- ------------- -----------------
Brian Frith 229,078 229,078
-------------------- ------------- -----------------
Karl Devon-Lowe 108,650 108,650
-------------------- ------------- -----------------
Ronnie Armist 7,450 7,450
**Rockmount Ventures Limited is the parent company of ARRCO
Limited. The interest attributed to the two corporate partners
represents 21,437,393 shares held by a fellow group company,
Antler.
***Phillip Rose is the CEO and a partner of the Investment
Manager.
Alpha Real Capital LLP, the Investment Manager of the Company,
holds 9,400,000 (31 December 2013: 9,400,000) shares in Alpha
Pyrenees Trust Limited.
Paul Cable, being the Investment Manager's Fund Manager
responsible for the Trust's investments, holds 84,918 (31 December
2013: 84,918) shares in Alpha Pyrenees Trust Limited.
Serena Tremlett is also the Managing Director and a major
shareholder of Morgan Sharpe Administration Limited, the Company's
administrator and secretary. During the period the Company paid
Morgan Sharpe Administration Limited fees of GBP40,500 (31 December
2013: GBP81,000).
19. Events after the balance sheet date
There are no material events after the balance sheet date.
Directors and Trust information
Directors:
Dick Kingston (Chairman)
David Jeffreys
Phillip Rose David Rowlinson
Serena Tremlett
Registered office:
Old Bank Chambers
La Grande Rue
St Martin's
Guernsey GY4 6RT
Investment Manager:
Alpha Real Capital LLP
Level 6, 338 Euston Road
London NW1 3BG
Administrator and secretary:
Morgan Sharpe
Administration Limited
Old Bank Chambers
La Grande Rue
St Martin's
Guernsey GY4 6RT
Brokers:
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
Independent valuers:
Knight Frank LLP
55 Baker Street
London W1U 8AN
Auditor:
BDO Limited
Place du Pré
Rue du Pré
St Peter Port
Guernsey GY1 3LL
Tax advisors:
BDO LLP
55 Baker Street
London W1U 7EU
Deloitte LLP
Hill House
1 Little New Street
London EC4A 3TR
Legal advisors in Guernsey:
Carey Olsen
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Legal advisors in the UK:
Norton Rose
3 More London Riverside
London SE1 2AQ
Registrar:
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey JE1 1ES
Shareholder information
Dividends
Ordinary dividends, if declared, are paid quarterly.
Shareholders who wish to have dividends paid directly into a bank
account rather than by cheque to their registered address can
complete a mandate form for this purpose. Mandates may be obtained
from the Company's Registrar. Where dividends are paid directly to
shareholders' bank accounts, dividend vouchers are sent directly to
shareholders' registered addresses.
Share Price
The Company's Ordinary Shares are listed on the London Stock
Exchange.
Change of address
Communications with shareholders are mailed to the addresses
held on the share register. In the event of a change of address or
other amendment, please notify the Company's Registrar under the
signature of the registered holder.
Investment Manager
The Company is advised by Alpha Real Capital LLP which is
authorised and regulated by the Financial Conduct Authority in the
United Kingdom.
Financial Calendar
Financial reporting Reporting/Meeting dates
---------------------------------------- ------------------------
Half year report 15 August 2014
---------------------------------------- ------------------------
Interim Management Statement (Q3) 14 November 2014
---------------------------------------- ------------------------
Annual report and accounts announcement 13 March 2015
---------------------------------------- ------------------------
Annual report published 3 April 2015
---------------------------------------- ------------------------
Annual General Meeting 24 April 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUCCRUPCGAC
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