TIDMALPH
RNS Number : 2911W
Alpha Pyrenees Trust Limited
18 August 2015
18 August 2015
ALPHA PYRENEES TRUST LIMITED
("ALPHA PYRENEES TRUST" OR THE "TRUST" OR THE "COMPANY")
ALPHA PYRENEES TRUST POSTS RESULTS FOR THE SIX MONTHS ENDED 30
JUNE 2015:
9,835 SQUARE METRES OF NEW LEASES AND LEASE EXTENSIONS
NET ASSET VALUE 2.4p PER SHARE (ADJUSTED); NET ASSET VALUE 0.0p
PER SHARE
Alpha Pyrenees Trust Limited, the property company investing
primarily in commercial real estate in France, today posts its
results for the period from 1 January to 30 June 2015.
The Trust announced an adjusted loss of GBP2.2 million for the
period, representing an adjusted loss per share of 1.9p. The Trust
does not propose to pay dividends.
Dick Kingston, Chairman of Alpha Pyrenees Trust, commented:
"Given the current economic environment and the maturation of
the Group's bank borrowings on 15 October 2015, the Board has
agreed with its lender to pursue a consensual and orderly
realisation of its investment property. Results for the period show
an adjusted loss of GBP2.2 million representing 1.9 pence loss per
share. The Group's results have been impacted by the loss of
revenue from properties disposed of during the prior year, the
proceeds from which have been used to fund capital expenditure,
primarily on the Alcatel property, rather than repaying
borrowings."
Paul Cable, Fund Manager, Alpha Real Capital LLP, commented:
"The Investment Manager has been focused on agreeing the
operational framework with Barclays to achieve an orderly
realisation of the Trust's investment property and formal marketing
of the majority of the Trust's properties has commenced with the
aim of applying the proceeds from asset sales to support the
settlement of the bank borrowings. As part of this process, a sale
of the retail centre at Cordoba, was achieved, at valuation,
shortly after the period end. To further the realisation process
and with the aim to maximise proceeds, the Investment Manager will
also continue to concentrate on active asset management and
property management and most notable within the 9,835 square metres
of new leases and lease extensions in the period was a new 9 year
lease with the existing tenant on 5,230 square metres at the
Trust's Fresnes property."
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 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 ended Year ended Half year ended
30 June 2015 31 December 2014 30 June 2014
------------------------------------------------- ---------------- ------------------ ----------------
Net asset value (adjusted) (GBP'000)* 2,873 7,018 14,089
------------------------------------------------- ---------------- ------------------ ----------------
Net asset value per ordinary share (adjusted)* 2.4p 6.0p 12.0p
------------------------------------------------- ---------------- ------------------ ----------------
Net asset value per ordinary share 0.0p 2.5p 5.3p
------------------------------------------------- ---------------- ------------------ ----------------
Losses per share (adjusted - basic & diluted)** (1.9)p (3.3)p (1.3)p
------------------------------------------------- ---------------- ------------------ ----------------
Losses per share (basic & diluted) (2.4)p (9.8)p (8.5)p
*The net asset value and net asset value per ordinary share have
been adjusted for the fair value movement on revaluation of the
interest rate swap derivatives (up to maturity in February 2015)
and 50% of the deferred tax provisions; full analysis is given in
note 9 to the accounts.
**The adjusted losses per share include adjustments for the
effect of the fair value mark-to-market revaluation of the
properties, gains and losses on disposal of investment properties
and investment properties held for sale, interest rate swap
derivatives (up to maturity in February 2015), deferred tax
provisions, capital element of investment manager's fee and foreign
exchange gains and losses. A full analysis is given in note 8 to
the accounts.
Chairman's Statement
The Investment Manager is focused on achieving an orderly
realisation of the Trust's investment property in a consensual
manner in accordance with the operational framework that has been
agreed with Barclays Bank PLC ("Barclays") and on applying asset
sales proceeds to support the settlement of the bank borrowings
which now mature on 15 October 2015. To this end, a unit was sold
to one of the tenants at the Trust's Ecija property and a sale of
the retail centre at Cordoba, Spain was achieved shortly after the
period end. To further this process 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. The Board is pleased to note the
further progress achieved on this front. Since 1 January 2015 new
leases or lease extensions have been achieved on a total of 9,835
square metres within the portfolio. Further detail on asset
management progress appears in the Property Review section.
Results and dividend
Results for the period show an adjusted loss of GBP2.2 million
representing 1.9 pence loss per share (six months to 30 June 2014:
adjusted loss of GBP1.6 million representing 1.3 pence loss per
share) (note 8). The Group's results have been impacted by the loss
of revenue from properties disposed of during the prior year, the
proceeds from which have been used to fund capital expenditure,
primarily on the Alcatel property, rather than repaying
borrowings.
The challenging business climate has created an environment
where the corporate decision making process has been extended in
general 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 GBP3.4 million (EUR4.8 million) and against this
backdrop it remains difficult to predict the timing and level of
re-leasing that will be achieved.
The Trust does not propose to pay dividends.
Revaluation and Net Asset Value
Investment properties are included in the balance sheet at an
independent valuation of GBP190.1 million (EUR269.4 million)
providing an average gross valuation yield across the portfolio of
8.3% as at 30 June 2015. The portfolio valuation has decreased by
0.6% compared to 31 December 2014 on a like-for-like basis taking
into account the asset sales that completed in the period. The next
revaluation will take place as at 31 December 2015.
As at 30 June 2015 the portfolio totalled approximately 249,930
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,
Etanco, Furnotel, Klöckner Group, La Poste, OCP and Vinci Group.
Grade A tenants also include government or quasi-government bodies
and, together, the rent from such tenants accounts for 88% of the
Trust's rental income.
The weighted average lease length within the portfolio at 30
June 2015 is 10.1 years to expiry and 6.5 years to the next
break.
As at 30 June 2015, the adjusted net asset value per ordinary
share is 2.4p (31 December 2014: 6.0p per share) (note 9). The
decrease in the period is primarily due to the revaluation of
investment properties combined with the loss incurred in the period
and adverse foreign exchange effects.
Going concern
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Given the current economic environment and the maturation of the
Group's bank borrowings on 15 October 2015, the Board has agreed
with the Group's lender to pursue a consensual and orderly
realisation of the Group's investment properties. Hence, at this
time, the condensed financial statements are not prepared on a
going concern basis. The Directors do not consider any adjustments
are required as a result of this basis of preparation on the
expectation of an orderly disposal of the Group's investment
properties.
Finance
It was announced on 8 May 2015 that the Trust's loan facilities
with Barclays had been extended to 15 October 2015. The current
interest rates will continue to apply to the facilities during the
extension period.
As at 30 June 2015, the Trust had total borrowings of GBP191.6
million (EUR271.5 million) under its facilities with Barclays:
-- GBP170.1 million (EUR241.1 million) have interest rates that
are fixed to maturity at a weighted average rate of 5.26% per
annum.
-- GBP20.5 million (EUR29.0 million) have interest rates charged
at a margin of 10% above three month Euribor.
-- GBP1.0 million (EUR1.4 million) have interest rates charged
at a margin of 2.65% above three month Euribor.
-- 2% arrangement fees (per annum pro-rated), charged on all
borrowings from 10 February 2015, are deferred to the new maturity
date and will be payable to the extent that the Trust has
sufficient cash funds at that time. As at June 2015, the Board
consider it probable, based on cash flow forecasts, that there will
be insufficient cash funds to settle this amount and hence this
represents a contingent liability of EUR2.1 million (GBP1.5
million).
There is no loan to value ("LTV") covenant test on any of the
Trust's properties. 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 2015 was 136%.
As at 30 June 2015, the Trust holds cash of GBP9.9 million.
The Trust has the support of its lender for an orderly
realisation of its investment property. To further this endeavour,
the Trust has entered into a formal agreement with Barclays under
which the operational framework has been developed to achieve this
realisation in a consensual manner and formal marketing of the
majority of the Trust's properties has commenced. The Trust will
also continue to consider refinancing options including the
potential refinancing of assets by third party lenders. Further
updates on progress will be made in due course.
Market outlook
-- Overall leasing activity in the French and Spanish markets
has been subdued over the period reflecting economic conditions and
against this backdrop the Trust has achieved lease extensions and
new leases on 9,835 square metres since 1 January 2015.
-- 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 84% 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 broadly stable but are vulnerable
for properties that have substantial vacancy.
Summary
-- The Trust owns a diversified freehold portfolio of properties
totalling GBP190.1 million (EUR269.4 million) with an average gross
valuation yield of 8.3% at the June valuation.
-- 88% 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
10.1 years to expiry and 6.5 years to the next break.
-- The Trust will continue to seek the support of its lender in
an orderly realisation of its investment property. The Trust will
provide further updates in due course.
Dick Kingston
Chairman
17 August 2015
Property review
Portfolio overview
As at 30 June 2015, the Trust owned a portfolio of thirteen
properties in France and four properties in Spain totalling
approximately 249,930 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% was invested in
France and 8% in Spain in terms of capital value.
The valuation of the portfolio as at 30 June 2015 was
approximately GBP190.1 million (EUR269.4 million) based on an
average valuation yield of 8.3% with the French portfolio having an
average valuation yield of 8.2% and the Spanish portfolio 9.1%
respectively. Taking into account the sale of one of the units at
Ecija the portfolio as a whole showed a valuation decrease of 0.6%
on a Euro like-for-like basis compared to 31 December 2014. This
consisted of a decrease of 0.6% in the French portfolio and a
decrease of 0.9% in the Spanish portfolio. The average capital
value of the portfolio is approximately GBP761 (EUR1,078) per
square metre (equivalent to GBP71 per square foot) and the average
rental value is approximately GBP67 (EUR95) per square metre per
annum (equivalent to GBP6.2 per square foot). Of the overall
portfolio, 84% 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 GBP214 million (EUR303 million)
representing approximately 112% of current value.
As at 30 June 2015, the Trust's portfolio is diversified across
business sectors with 70% in offices and business park property,
22% in warehouses and 8% in retail.
The portfolio benefits from strong credit tenants with 88% 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 80%
measured by rental income as a percentage of potential total income
with vacancy representing 20%.
The weighted average lease length within the portfolio is 10.1
years to expiry and 6.5 years to the next break.
Property sales
The Investment Manager has been focused on agreeing the
operational framework with Barclays to achieve an orderly
realisation of the Trust's investment property in a consensual
manner and formal marketing of the majority of the Trust's
properties has commenced with the aim of realising equity in asset
sales to support the settlement of the bank borrowings as they
mature.
We are pleased to report the following progress in this
regard:
Ecija - Existing tenant, Burger King, have purchased their 245
square metre restaurant unit for EUR187,500.
Cordoba - After the end of the half year, the Trust has sold the
Connecta Retail Park investment in Córdoba for EUR15.3 million
which represents its 30 June 2015 valuation. The property totals
approximately 16,880 square metres and is located on the Avenida de
Cadiz, the main access route from the A4 motorway to the city
centre. Tenants on the Connecta Retail Park include MediaMarkt,
Sprinter, Dia, Norauto, McDonalds and VisionLab. The purchaser is a
private investment company. The sale forms part of the orderly
realisation process and the net proceeds from this sale have been
used to reduce the Trust's borrowings with Barclays.
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
achievements since 1 January 2015 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 ensure service
charges are controlled, the annual level of property costs is
closely monitored and additional sources of income are
identified.
Since 1 January 2015, new leases and lease extensions totalling
approximately 9,835 square metres have been achieved representing
4% of the Trust's current portfolio by area as detailed below.
FRANCE
Goussainville - A new 3/6/9 year lease from January 2015 was
signed with JAG Diffusion, a cleaning company, on 180 square metres
of office space; and BCS extended their lease on 640 square metre
of office space until November 2018.
Fresnes - A new fixed 9 year lease from June 2015 was signed
with existing tenant DPD (formerly known as Exapaq) on the 5,230
square metre warehouse unit; a new 3/6/9 year lease from April 2015
was signed with existing tenant, Anteos on 730 square metres of
warehouse space; and a new 3/6/9 year lease from April 2015 was
signed with LBF CREA, a public relations and exhibition company, on
245 square metres of vacant office and warehouse space.
Mulhouse - A new fixed 9 year lease from October 2015 was signed
with Credit Mutuel, a major French bank, on 215 square metres of
vacant ground floor space for a branch unit; and a 3 year lease
extension to August 2018 was signed with existing tenant UFCV on
315 square metres of office space.
SPAIN
Cordoba - Juguetilandia extended their lease on a 1,030 square
metre retail unit until January 2016; and Dia extended their lease
on a 1,200 square metre supermarket unit until September 2016.
Ecija - A new 1 year lease from March 2015 was signed with
Daniela Pistol on a 50 square metre retail unit.
Market overview
France
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The French economy grew only marginally in 2014 with gross
domestic product increasing by 0.4% for the year however, in the
first quarter of 2015 the growth in GDP had increased to 0.6%. In
May 2015, manufacturing output was 1.4% higher year-on-year and the
unemployment rate for mainland France in the first quarter of 2015
stood at 10.0%. In May 2015, household spending had increased by
1.8% year-on-year and inflation increased with the growth rate of
the Consumer Prices Index standing at 0.3% per annum at the end of
June 2015.
Due to the lack of large deals closed in the period, the
property investment market has witnessed a slowdown in investment
volumes in the first six months of 2015. Approximately EUR7.0
billion was invested in commercial real estate in the period in
France meaning that volumes have reduced by 40% year-on-year
compared to the same period in 2014. However, there is a good
demand for property investment and a substantial pipeline of
transactions being negotiated in France, leading to an expectation
that volumes will increase significantly in the second half of
2015. Traditional French investors represented approximately 53% by
volume of the market, with the next largest group being North
American investors (16%) followed by Middle Eastern investors (8%).
Office investment remained the highest volume sector and accounted
for EUR4.9 billion representing 72% of the total investment in
France. Logistics and industrial investment totalled EUR0.4 billion
and retail investment reached EUR1.5 billion.
Of the Trust's total property portfolio, 92% is in France, 84%
is in the Ile-de-France and 64% is in Ile-de-France office and
business park space as at 30 June 2015.
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 conurbations 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 return to modest economic growth has not resulted in a
simultaneous increase in office take-up and occupiers remain
cautious and negotiations with tenants tend to be long and drawn
out. 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. In the first half of
2015, office take-up in the Ile-de-France reached 0.9 million
square metres down 22% year-on-year compared to 2014. The average
office rent in Ile-de-France has remained broadly stable at EUR296
per square metre per annum and the office vacancy rate for the
Paris region has remained at 7.2%. National take-up in the
logistics sector in the period reached approximately 1.5 million
square metres, which was 22% higher than the level for 2014 and the
best performance since 2008.
Spain
There have been eight consecutive quarters of growth in the
Spanish economy and this has resulted in an increase in gross
domestic product of 3.1% year-on-year at the end of June 2015. The
increase in economic activity combined with the government's
efforts to reform the labour market have resulted in a 2.1%
decrease in unemployment at the end of the second quarter 2015
compared to a year earlier and the unemployment rate now stands at
22.4%. The near term outlook for the Spanish economy shows
continuing signs of improvement.
Rental indexation
On an annual basis, the INSEE Construction Cost Index,
applicable to the Trust's leases in France, turned negative and
stood at -0.97% for Q1 2015, the latest published annual indexation
base. The Spanish Consumer Price Index, applicable to the Trust's
leases in Spain, was running at an annualised rate of 0.1% at the
end of June 2015 having been -1.4% as at the end of January
2015.
Paul Cable
For and on behalf of the Investment Manager
17 August 2015
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 15 October 2015. In order to enable repayment of
the bank borrowings and protect shareholder value the Group has
agreed with its lender to pursue an orderly realisation of its
investment property. Hence, at this time, the accounts are not
prepared on a going concern basis.
-- 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 half year report meets the requirements of an interim
management report, 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
17 August 2015
Independent review report
To 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 2015 which comprise the condensed consolidated
statement of comprehensive income, condensed consolidated balance
sheet, condensed consolidated cash flow statement, condensed
consolidated statement of changes in equity and related notes 1 to
19. 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 International Financial
Reporting Standards 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
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Our responsibility is to express to the Company a conclusion on
the condensed consolidated 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. No person is
entitled to rely on this report unless such a person is entitled to
rely on this report by virtue of and for the purpose of our terms
of engagement or has been expressly authorised to do so by prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
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 consolidated set of
financial statements in the half year financial report for the six
months to 30 June 2015 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 on the half year financial report,
which is not qualified, we have considered the adequacy of the
disclosure made in notes 2 and 15 to the financial statements which
explain that the financial statements have not been prepared on a
going concern basis. As it is the intention of the Board to effect
an orderly disposal of the Group's investment properties, seeking
the continued support of its lender whilst doing so, the condensed
consolidated financial statements have not been prepared on a going
concern basis. The directors do not consider any adjustments are
required as a result of this basis of preparation on the
expectation of an orderly disposal of the group's investment
properties.
BDO Limited
Chartered Accountants
Place du Pré
Rue du Pré
St Peter Port
Guernsey
17 August 2015
Condensed consolidated statement of comprehensive income
For the six months For the six months
ended 30 June 2015 ended 30 June 2014
(unaudited) (unaudited)
------------------------------------ ------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Income
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Revenue 3 8,426 - 8,426 9,908 - 9,908
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Property operating
expenses (2,944) - (2,944) (2,905) - (2,905)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Net rental income 5,482 - 5,482 7,003 - 7,003
--------------------------- ------- --------- --------- --------- --------- --------- ---------
(Loss)/gain on disposal
of investment properties - (21) (21) - 300 300
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Expenses
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Losses on revaluation 10,
of investment properties 11 - (1,002) (1,002) - (10,298) (10,298)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Investment Manager's
fee (771) (331) (1,102) (862) (369) (1,231)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other administration
costs (597) - (597) (660) - (660)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Operating profit/(loss) 4,114 (1,354) 2,760 5,481 (10,367) (4,886)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance income 4 2 888 890 3 3,715 3,718
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance costs 5 (6,326) (157) (6,483) (7,035) (1,612) (8,647)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Loss before taxation (2,210) (623) (2,833) (1,551) (8,264) (9,815)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Taxation 7 - (11) (11) - (194) (194)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Loss for the period (2,210) (634) (2,844) (1,551) (8,458) (10,009)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
income
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Items that may be
reclassified to profit
or loss in subsequent
periods:
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Foreign exchange
(losses)/gains on
translation of foreign
operations (translation
reserve) - (53) (53) - 1,267 1,267
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
(expense)/income
for the period - (53) (53) - 1,267 1,267
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Total comprehensive
expense for the period (2,210) (687) (2,897) (1,551) (7,191) (8,742)
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Loss per share
- basic & diluted 8 (2.4)p (8.5)p
--------------------------- ------- --------- --------- --------- --------- --------- ---------
Adjusted loss per
share
- basic & diluted 8 (1.9)p (1.3)p
All items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of the financial
statements.
Condensed consolidated balance sheet
Notes 30 June 2015 31 December
2014 (audited)
(unaudited) GBP'000
GBP'000
--------------------------------------- ------ ------------- ----------------
Non-current assets
--------------------------------------- ------ ------------- ----------------
Investment properties 10 21,821 89,543
--------------------------------------- ------ ------------- ----------------
Current assets
--------------------------------------- ------ ------------- ----------------
Investment properties held for
sale 11 168,282 122,637
--------------------------------------- ------ ------------- ----------------
Trade and other receivables 12 3,784 6,100
--------------------------------------- ------ ------------- ----------------
Cash and cash equivalents 14 9,884 12,425
--------------------------------------- ------ ------------- ----------------
181,950 141,162
--------------------------------------- ------ ------------- ----------------
Total assets 203,771 230,705
--------------------------------------- ------ ------------- ----------------
Current liabilities
--------------------------------------- ------ ------------- ----------------
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Trade and other payables 13 (3,815) (6,032)
--------------------------------------- ------ ------------- ----------------
Financial liabilities at fair value
through profit or loss 16 - (948)
--------------------------------------- ------ ------------- ----------------
Bank borrowings 15 (192,928) (212,858)
--------------------------------------- ------ ------------- ----------------
Rent deposits (730) (730)
--------------------------------------- ------ ------------- ----------------
(197,473) (220,568)
--------------------------------------- ------ ------------- ----------------
Total assets less current liabilities 6,298 10,137
--------------------------------------- ------ ------------- ----------------
Non-current liabilities
--------------------------------------- ------ ------------- ----------------
Rent deposits (610) (952)
--------------------------------------- ------ ------------- ----------------
Deferred taxation 7 (5,630) (6,230)
--------------------------------------- ------ ------------- ----------------
(6,240) (7,182)
--------------------------------------- ------ ------------- ----------------
Total liabilities (203,713) (227,750)
--------------------------------------- ------ ------------- ----------------
Net assets 58 2,955
--------------------------------------- ------ ------------- ----------------
Equity
--------------------------------------- ------ ------------- ----------------
Share capital 17 - -
--------------------------------------- ------ ------------- ----------------
Special reserve 113,131 113,131
--------------------------------------- ------ ------------- ----------------
Translation reserve 22,219 22,272
--------------------------------------- ------ ------------- ----------------
Capital reserve (130,505) (129,871)
--------------------------------------- ------ ------------- ----------------
Revenue reserve (4,787) (2,577)
--------------------------------------- ------ ------------- ----------------
Total equity 58 2,955
--------------------------------------- ------ ------------- ----------------
Net asset value per share 9 0.0p 2.5p
--------------------------------------- ------ ------------- ----------------
Net asset value per share (adjusted) 9 2.4p 6.0p
The interim condensed financial statements were approved by the
Board of Directors and authorised for issue on 17 August 2015.
David Jeffreys Serena Tremlett
Director Director
The accompanying notes are an integral part of the financial
statements.
Condensed consolidated cash flow statement
For the six For the six
months ended months ended
30 June 2015 30 June 2014
(unaudited) (unaudited)
GBP'000 GBP'000
------------------------------------------ -------------- --------------
Operating activities
------------------------------------------ -------------- --------------
Loss for the period (2,844) (10,009)
------------------------------------------ -------------- --------------
Adjustments for :
------------------------------------------ -------------- --------------
Loss/(gain) on disposal of investment
properties 21 (300)
------------------------------------------ -------------- --------------
Losses on revaluation of investment
properties 1,002 10,298
------------------------------------------ -------------- --------------
Deferred taxation 11 194
------------------------------------------ -------------- --------------
Finance income (890) (3,718)
------------------------------------------ -------------- --------------
Finance costs 6,483 8,647
------------------------------------------ -------------- --------------
Operating cash flows before movements
in working capital 3,783 5,112
------------------------------------------ -------------- --------------
Movements in working capital:
------------------------------------------ -------------- --------------
Increase in operating trade and other
receivables 2,118 (923)
------------------------------------------ -------------- --------------
Increase in operating trade and other
payables (1,871) 1,844
------------------------------------------ -------------- --------------
Cash generated from operations 4,030 6,033
------------------------------------------ -------------- --------------
Interest received 2 7
------------------------------------------ -------------- --------------
Cash flows from operating activities 4,032 6,040
------------------------------------------ -------------- --------------
Investing activities
------------------------------------------ -------------- --------------
Proceeds from disposal of investment
properties 123 5,752
------------------------------------------ -------------- --------------
Capital expenditure (168) (119)
------------------------------------------ -------------- --------------
Transfer from cash pooling account 1,213 -
------------------------------------------ -------------- --------------
Cash flows from investing activities 1,168 5,633
------------------------------------------ -------------- --------------
Financing activities
------------------------------------------ -------------- --------------
Loan arrangement costs - (119)
------------------------------------------ -------------- --------------
Bank loan interest paid and costs (5,354) (5,301)
------------------------------------------ -------------- --------------
Cash flows used in financing activities (5,354) (5,420)
------------------------------------------ -------------- --------------
(Decrease)/increase in cash and cash
equivalents (154) 6,253
------------------------------------------ -------------- --------------
Cash and cash equivalents at beginning
of period 4,659 5,923
------------------------------------------ -------------- --------------
Exchange translation movement (1,174) (333)
------------------------------------------ -------------- --------------
Cash and cash equivalents at end
of period (note 14) 3,331 11,843
The accompanying notes are an integral part of the financial
statements.
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 - - 1,267 - - 1,267
--------------------- ---------- --------- ------------ ---------- --------- ----------
Total comprehensive
income/(expense)
for the period - - 1,267 (8,458) (1,551) (8,742)
--------------------- ---------- --------- ------------ ---------- --------- ----------
At 30 June 2014 - 113,131 23,995 (130,604) (290) 6,232
--------------------- ---------- --------- ------------ ---------- --------- ----------
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For the six months Share Special Translation Capital Revenue Total
ended 30 June 2015 capital reserve reserve reserve reserve reserves
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------
At 1 January 2015 - 113,131 22,272 (129,871) (2,577) 2,955
------------------------- ---------- --------- ------------ ---------- --------- ----------
Loss for the period - - - (634) (2,210) (2,844)
------------------------- ---------- --------- ------------ ---------- --------- ----------
Other comprehensive
expense - - (53) - - (53)
------------------------- ---------- --------- ------------ ---------- --------- ----------
Total comprehensive
expense for the period - - (53) (634) (2,210) (2,897)
------------------------- ---------- --------- ------------ ---------- --------- ----------
At 30 June 2015 - 113,131 22,219 (130,505) (4,787) 58
------------------------- ---------- --------- ------------ ---------- --------- ----------
The accompanying notes are an integral part of the financial
statements.
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 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 presentation currency
of the Group is Sterling. The period-end exchange rate used is
GBP1:EUR1.417 (December 2014: GBP1:EUR1.278) and the average rate
for the period used is GBP1:EUR1.364 (June 2014:
GBP1:EUR1.217).
2. Significant accounting policies
The unaudited condensed financial statements included in the
half year report for the six months ended 30 June 2015, have been
prepared in accordance with the Disclosure and Transparency Rules
of the United Kingdom's Financial Conduct Authority and
International Accounting Standard (IAS) 34, 'Interim Financial
Reporting' 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 2014, 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
2014.
The Directors considered all relevant new standards, amendments
and interpretations to existing standards effective for the half
year report for the six months ended 30 June 2015 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
Given the current economic environment and the maturation of the
Group's bank borrowings on 15 October 2015, the Board has agreed
with the Group's lender to pursue a consensual and orderly
realisation of the Group's investment properties. Hence, at this
time, the condensed financial statements are not prepared on a
going concern basis. The Directors do not consider any adjustments
are required as a result of this basis of preparation on the
expectation of an orderly disposal of the Group's investment
properties.
3. Revenue
1 January 1 January
2015 to 2014 to
30 June 30 June
2015 2014
GBP'000 GBP'000
----------------------- ---------- ----------
Rental income 6,510 7,960
----------------------- ---------- ----------
Service charge income 1,916 1,948
----------------------- ---------- ----------
Total 8,426 9,908
4. Finance income
1 January 1 January
2015 to 2014 to
30 June 30 June
2015 2014
GBP'000 GBP'000
---------------------------------------- ---------- ----------
Bank interest income 2 3
---------------------------------------- ---------- ----------
Gains on financial liabilities at fair
value through profit or loss (note 6) 888 3,715
Total 890 3,718
5. Finance costs
1 January 1 January
2015 to 2014 to
30 June 30 June
2015 2014
GBP'000 GBP'000
----------------------------- ---------- ----------
Interest on bank borrowings 5,975 6,339
----------------------------- ---------- ----------
Loan fee amortisation 334 673
----------------------------- ---------- ----------
Foreign exchange loss 157 1,612
----------------------------- ---------- ----------
Other charges 17 23
----------------------------- ---------- ----------
Total 6,483 8,647
6. Gains and losses on financial assets and liabilities at fair
value through profit or loss
1 January 1 January
2015 to 2014 to
30 June 30 June
2015 2014
GBP'000 GBP'000
-------------------------------------------- ---------- ----------
Change in unrealised gains and losses
on financial assets and liabilities held
at fair value through profit or loss
-------------------------------------------- ---------- ----------
Interest rate swap 888 3,715
---------- ----------
Gains on financial assets and liabilities
held at fair value through profit or loss 888 3,715
---------- ----------
Disclosed as:
---------- ----------
Finance income (note 4) 888 3,715
---------- ----------
Gains on financial assets and liabilities
held at fair value through profit or loss 888 3,715
---------- ----------
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 GBP1,200 is payable to the States of Guernsey in
respect of this exemption. No charge to Guernsey taxation arises on
capital gains.
Deferred taxation is applicable since 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. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
1 January 1 January
2015 to 2014 to
30 June 30 June
2015 2014
------------------------------------------------- ---------- ----------
Losses after tax per statement of comprehensive
income (GBP'000) (2,844) (10,009)
------------------------------------------------- ---------- ----------
Basic and diluted losses per share (2.4)p (8.5)p
------------------------------------------------- ---------- ----------
Losses after tax per statement of comprehensive
income (GBP'000) (2,844) (10,009)
------------------------------------------------- ---------- ----------
Losses/(gains) on disposal of investment
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properties 21 (300)
------------------------------------------------- ---------- ----------
Revaluation losses on investment properties 1,002 10,298
------------------------------------------------- ---------- ----------
Mark to market of interest rate swaps (888) (3,715)
------------------------------------------------- ---------- ----------
Investment Manager's fee (capital) 331 369
------------------------------------------------- ---------- ----------
Deferred taxation 11 194
------------------------------------------------- ---------- ----------
Foreign exchange losses 157 1,612
------------------------------------------------- ---------- ----------
Adjusted losses (GBP'000) (2,210) (1,551)
------------------------------------------------- ---------- ----------
Adjusted losses per share (1.9)p (1.3)p
------------------------------------------------- ---------- ----------
Weighted average number of ordinary shares
(000's) 117,627 117,627
The adjusted earnings are presented to provide what the
Directors believe is a more appropriate assessment of the
operational income accruing to the Group's activities. Hence, the
Group adjusts basic earnings for income and costs which are not of
a recurrent nature or which may be more of a capital nature.
9. Net asset value per share
30 June 2015 31 December
2014
-------------------------------------- ------------- ------------
Net asset value (GBP'000) 58 2,955
-------------------------------------- ------------- ------------
Net asset value per share 0.0p 2.5p
-------------------------------------- ------------- ------------
Net asset value (GBP'000) 58 2,955
-------------------------------------- ------------- ------------
Interest rate swaps - 948
-------------------------------------- ------------- ------------
Deferred taxation* 2,815 3,115
-------------------------------------- ------------- ------------
Adjusted net asset value 2,873 7,018
-------------------------------------- ------------- ------------
Net asset value per share (adjusted) 2.4p 6.0p
-------------------------------------- ------------- ------------
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.
10. Investment properties
30 June 2015 31 December
GBP'000 2014
GBP'000
------------------------------------------ ------------- ------------
Fair value of investment properties
at 1 January 89,543 236,920
------------------------------------------ ------------- ------------
Subsequent capital expenditure after
acquisition 28 244
------------------------------------------ ------------- ------------
Disposals (144) (8,484)
------------------------------------------ ------------- ------------
Movement in rent incentives/initial
costs (34) 3,927
------------------------------------------ ------------- ------------
Fair value adjustment in the period/year (1,074) (11,771)
------------------------------------------ ------------- ------------
Effect of foreign exchange (8,739) (14,352)
------------------------------------------ ------------- ------------
Transfer to investment properties held
for sale (57,759) (116,941)
------------------------------------------ ------------- ------------
Fair value of investment properties
at 30 June/31 December 21,821 89,543
The fair value of the Group's investment properties at 31
December 2014 and 30 June 2015 has 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 ("RICS") Appraisal and
Valuations Standards.
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 Burger King unit at
Ecija in Spain for GBP0.1 million (EUR0.2 million).
At 30 June 2015, the Group had un-provided contractual
obligations for future repairs and maintenance of GBPnil (December
2014: GBPnil) and GBPnil (December 2014: GBPnil) of future capital
requirements.
11. Investment properties held for sale
30 June 2015 31 December
GBP'000 2014
GBP'000
------------------------------------------ ------------- ------------
Fair value of investment properties
held for sale at 1 January 122,637 11,194
------------------------------------------ ------------- ------------
Subsequent capital expenditure after 8 -
acquisition
------------------------------------------ ------------- ------------
Disposals - (4,269)
------------------------------------------ ------------- ------------
Movement in rent incentives/initial
costs (168) (29)
------------------------------------------ ------------- ------------
Fair value adjustment in the period/year 72 (645)
------------------------------------------ ------------- ------------
Effect of foreign exchange (12,026) (555)
------------------------------------------ ------------- ------------
Transfer from investment properties 57,759 116,941
------------------------------------------ ------------- ------------
Fair value of investment properties
held for sale at 30 June/31 December 168,282 122,637
Investment properties held for sale represent the fair value of
properties that have been actively marketed for disposal at the
balance sheet date.
No provision is made for potential disposal costs as these will
be contingent upon ultimate realisation values and specific
arrangements that may be agreed.
12. Trade and other receivables
30 June 2015 31 December
GBP'000 2014
GBP'000
------------------------------------------- ------------- ------------
Trade receivables 1,379 3,911
------------------------------------------- ------------- ------------
Amounts receivable from Property Managing
Agents 1,299 1,359
------------------------------------------- ------------- ------------
Prepayments 657 377
------------------------------------------- ------------- ------------
Other receivables 449 453
------------------------------------------- ------------- ------------
Total 3,784 6,100
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
13. Trade and other payables
30 June 2015 31 December
GBP'000 2014
GBP'000
---------------------------------- ------------- ------------
Trade payables 1,175 351
---------------------------------- ------------- ------------
Deferred income 1,479 3,704
---------------------------------- ------------- ------------
Investment Manager's fee payable 490 585
---------------------------------- ------------- ------------
VAT payable 235 698
---------------------------------- ------------- ------------
Accruals 436 694
---------------------------------- ------------- ------------
Total 3,815 6,032
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Trade payables 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.
14. Cash and cash equivalents
Cash and cash equivalents included in the cash flow statement
comprise the following balance sheet amounts:
30 June 2015 31 December
GBP'000 2014
GBP'000
--------------------------------------- ------------- ------------
Cash at bank in the balance sheet 9,884 12,425
--------------------------------------- ------------- ------------
Cash balance held on the cash pooling
account (6,553) (7,766)
--------------------------------------- ------------- ------------
Cash and cash equivalents 3,331 4,659
The cash balance held on the cash pooling account is subject to
certain restrictions; accordingly this balance has not been
classified as cash and cash equivalents for the purposes of the
cash flow statement.
In November 2013, the Group entered into a cash pooling
arrangement with Barclays Bank PLC over the Group's cash-flows from
the whole property portfolio in order to provide further security
to Barclays Bank PLC but which provides the Group and the Company
with working capital for their operations. The resulting cash
pooling account is controlled by Barclays Bank PLC and a cash
release mechanism is in place whereby cash is released by Barclays
Bank PLC following review of the Group's working capital budget,
which is updated quarterly.
15. Bank borrowings
30 June 2015 31 December
GBP'000 2014
GBP'000
--------------------------- ------------- ------------
Bank borrowing 191,574 211,297
--------------------------- ------------- ------------
Deferred finance costs (183) (162)
--------------------------- ------------- ------------
Interest payable 1,537 1,723
--------------------------- ------------- ------------
Total current liabilities 192,928 212,858
Movement in the Group's bank borrowings is analysed as
follows:
1 January 1 January
2015 to 2014 to 31
30 June 2015 December 2014
GBP'000 GBP'000
------------------------------------- -------------- ---------------
Opening balance 211,135 221,745
------------------------------------- -------------- ---------------
Loan advanced 1,004 2,064
------------------------------------- -------------- ---------------
Deferred finance costs (590) (173)
------------------------------------- -------------- ---------------
Amortisation of finance costs 576 1,426
------------------------------------- -------------- ---------------
Exchange differences on translation
of foreign currencies (20,734) (13,927)
------------------------------------- -------------- ---------------
Total 191,391 211,135
The repayment date of all borrowings, originally due on 10
February 2015 and subsequently extended to 11 May 2015, has been
reset to 15 October 2015, following agreement with Barclays Bank
PLC.
The current interest rates will continue to apply to the
facilities during the extension period.
Arrangement fees of 2% (per annum pro-rated) are charged on all
borrowings from 10 February 2015: these are deferred to the new
maturity date and will be payable to the extent that the Group has
sufficient cash funds at that time. As at 30 June 2015, the Board
consider it probable, based on cash flow forecasts, that there will
be insufficient cash funds to settle this amount and hence this
represents a contingent liability of EUR2.1 million (GBP1.5
million).
16. Financial liabilities at fair value through profit or
loss
31 December
30 June 2015 2014
GBP'000 GBP'000
--------------------- -------------- ------------
Current liabilities
--------------------- -------------- ------------
Interest rate swaps - (948)
Interest rate swap
The Group was required under the financing agreements with
Barclays Bank PLC to fix the rate at which it borrowed over the
duration of each loan. The Directors had agreed a fixed interest
rate with Barclays Bank PLC at each loan draw-down. The requirement
to fix the borrowing rate did not apply to the additional loan
provided by Barclays Bank PLC in November 2013, currently
outstanding for GBP20.5 million (EUR29.0 million), on which
interest is charged at a margin of 10% above three month Euribor
and is rolled up throughout the term.
The bank had undertaken a variable to fixed rate swap with a
third party. The Company was not party to the swap agreement but,
via the financing agreement, the Company had all the risks and
rewards of the swap as, had the loan been repaid early, the Company
would had been 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 interest rate swaps contracts terminated on 10 February 2015
and were not renewed or replaced.
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
was determined by reference to the mid-point of the yield curves
prevailing on the reporting date and represented the net present
value of the differences between the contracted rate and the
valuation rate when applied to the projected balances in the period
from the reporting date to the contracted expiry date.
The interest rate swaps were valued on a recurring basis
(quarterly) and classified as level 2.
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 (December 2014: 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; from 1 July 2015, 0.3% is accrued and
payable upon assets' realisation. 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 13.
The Directors of the Company received total fees as follows:
Six months Six months
ended ended
30 June 2015 30 June 2014
GBP GBP
------------------ -------------- --------------
Dick Kingston 15,000 15,000
------------------ -------------- --------------
David Jeffreys 11,500 11,500
------------------ -------------- --------------
Phillip Rose 10,000 10,000
------------------ -------------- --------------
David Rowlinson* 10,000 10,000
------------------ -------------- --------------
Serena Tremlett 10,000 10,000
------------------ -------------- --------------
Total 56,500 56,500
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