Alpha Real Regulatory News (ARTL)

21 June 2013

ALPHA REAL TRUST LIMITED ("Alpha real trust", "ART" OR THE "COMPANY")

ALPHA REAL TRUST ANNOUNCES ITS annual results for the year ended 31 March 2013.

Highlights include: 

·; NAV per share 107.6p (106.8p: 31 March 2012)

·; Adjusted earnings per share of 5.0p for the twelve months to 31 March 2013

·; Commencement of dividends; 1.05p paid 3 May 2013

·; Completion of the Property Investment Portfolio PLC investment portfolio acquisition

·; Europip: refinancing of the £59.7 million (NOK 532.8 million) portfolio of Norwegian commercial real estate with a senior debt facility of £38.1 million (NOK 340 million)

·; Europip: strategic sales in Norway and France enabled part repayment of bank debt and a reduction in the mezzanine loan facilities

·; Europip: Norwegian portfolio occupancy rate increased to 98% at 31 March 2013 from 92% at 31 December 2012

·; H2O: Nike opened its new destination outlet store at the H2O shopping centre; market beating visitor footfall increases recorded in 2012; weighted average lease length to next break maintained over the year

·; AURE: extension of the term for £32.5 million of senior debt finance on its portfolio of UK commercial real estate until 31 December 2013

·; 92% of the Company's investment portfolio is in income producing investments in the UK and Europe

David Jeffreys, Chairman of Alpha Real Trust, commented:

"The Company has had an active year and, despite difficult economic conditions, has reached an important milestone with the payment of its first dividend. The dividend is supported by ART´s strategy of recycling capital into investments with higher risk adjusted returns and/or preferred capital positions. As at 31 March 2013, 92% of ART´s investment portfolio is in income producing investments in the UK and Europe.

ART has continued its dual strategy of investing in high yielding equity in property assets and high yielding property debt (typically in mezzanine positions). Investments are predominantly backed by properties with strong underlying cash flows.

Active asset management, debt refinancing, strategic asset sales and capital recycling have all played a part in further consolidating ART´s existing investments and those acquired during the year.

The Company continues to see encouraging performance in its underlying investments. ART continues to pursue further investment opportunities and is well positioned to take advantage of these as they are identified."

The Investment Manager of Alpha Real Trust is Alpha Real Capital LLP.

For further information please contact:

Alpha Real Trust Limited

David Jeffreys, Chairman, Alpha Real Trust +44 (0) 1481 231 100

Gordon Smith, Joint Fund Manager, Alpha Real Trust +44 (0) 20 7268 0300

Panmure Gordon, Broker to the Company

Richard Gray / Andrew Potts +44 (0) 20 7886 2500

Notes to editors:

About Alpha Real Trust

Alpha Real Trust is a closed-ended investment company incorporated in Guernsey that targets investment and development opportunities in real estate, including real estate operating companies, securities, services and other related businesses that offer high total returns.

Further information on the Company can be found on the Company's website: www.alpharealtrustlimited.com.

About Alpha Real Capital LLP

Alpha Real Capital is a value-adding international property fund management group.

Alpha Real Capital is the Investment Manager to ART. Brad Bauman and Gordon Smith of

Alpha Real Capital are joint Fund Managers to ART. Both have experience in the real estate

and finance industries throughout the UK, Europe and Asia.

For more information on Alpha Real Capital please visit www.alpharealcapital.com.

Trust summary and objective

Strategy

Alpha Real Trust Limited ("the Company" or "ART") targets investment opportunities across the real estate spectrum, including real estate operating companies, securities, services and other related businesses that offer high risk adjusted total returns.

Dividends

The current intention of the Company is to pay a dividend semi-annually.

Listing

The Company's shares are traded on the Specialist Fund Market ("SFM") of the London Stock Exchange ("LSE").

Management

The Company's Investment Manager is Alpha Real Capital LLP ("the Investment Manager" or "ARC"). Control of the Company rests with the non-executive Guernsey based Board of Directors.

Financial highlights

* The adjusted earnings per share include adjustments for the effect of the fair value revaluation of investment properties and indirect property investments, the fair value movements on financial assets and deferred tax provisions: full analysis is provided in note 9 to the accounts.

Chairman's statement

I am pleased to present the Company's annual results for the year ended 31 March 2013.

It has been an active period for ART both from an acquisition and an active management perspective. The Company has also reached a significant milestone, announcing the payment of its first dividend in May 2013, which, in the context of continued macroeconomic pressures and challenging property market conditions, makes this particularly pleasing to report.

I would like to take this opportunity to welcome the Company's new shareholders following the acquisition of Property Investment Portfolio PLC ("PIP"). The commencement of a dividend combined with active management of the Company's capital base, as illustrated by recent buybacks, will hopefully reinforce for all our shareholders the Board's continued focus on maximising shareholder value.

The PIP acquisition was completed in December 2012. The PIP investment, which had a combined NAV of £26.4 million as at 30 June 2012, provides a diversified exposure to the UK and European commercial property markets through a range of specialist fund investment vehicles, in some of which ART was already an investor. The acquisition was structured on a NAV-for-NAV basis with consideration by way of a new unlisted class of ART A shares ("A Shares"), with the holders having the option to convert A Shares one-for-one into listed ART ordinary shares. Accordingly, 23,914,323 new Class A Shares have been issued to PIP for issuance to its shareholders. The acquisition provided the Company with greater diversification by spread of investments, by geography and currency, including exposure to the northern European market by way of a portfolio located in the strong Norwegian economy. The quantum of earnings generated within the combined investment portfolio was one of the factors that enabled the Company to pay its first dividend.

The Company's investments have benefited from an active management approach with successes evident in both the Company's direct and indirectly held investments. There has been continued leasing success in the Company´s Alpha UK Real Estate Fund plc ("AURE") and Alpha UK Multi Property Trust plc ("AUMP") investments in the UK and also in the H2O shopping centre in Spain where a new brand was added almost every month over the past year, including one of the largest Nike stores in Spain. Aided by the asset management initiatives implemented by ART, H2O recorded market beating footfall increases of 2.3% in 2012 compared to 2011 (Spain´s national footfall index decreased by 3.9% over the same period).

Fund restructuring was completed in the Company´s Freehold Income Authorised Fund ("FIAF", the renamed Freehold Income Trust) investment, converting into a tax efficient fund authorised by the Financial Conduct Authority as a Qualifying Investor Scheme. In tandem, HM Revenue and Customs approved FIAF to enter the Property Authorised Investment Fund ("PAIF") tax regime. This conversion was completed on 3 April 2013. The tax advantages of a PAIF are similar to those of a Real Estate Investment Trust, including favourable capital gains tax treatment.

It has also been an active year for financing. The European Property Investment Portfolio PLC ("Europip") £59.7 million (NOK 532.8 million) portfolio of Norwegian commercial real estate was refinanced with a senior debt facility of £38.1 million (NOK 340 million). In April 2013, following strategic asset sales and scheduled amortisation, the loan balance has been reduced to £34.4 million (NOK 307 million).

A combination of the strategic sales of one of the Europip Norwegian assets outside the secured bank facility pool, the decommission of committed but uncalled capital from the Europip Mosaic investment and the sale of Europip´s investment property in Paris has helped to fund a reduction of the mezzanine facility owed to ART by Europip from £9.1 million to £8.8 million at year end (and to £5.5 million in May 2013).

In AURE, the term of the £32.5 million senior loan on its portfolio of UK commercial real estate has been extended until 31 December 2013.

In AUMP, discussions with its lenders, alternative banks and providers of capital are continuing in order to pursue a further extension to, or refinancing of, the current loan facilities.

ART is committed to its disciplined strategy and investment principles which focus on opportunities that can deliver high risk adjusted total returns, while seeking to manage risk through a combination of operational controls, diversification and preferred capital positions. ART remains in a strong position to capitalise on further opportunistic investments.

The Company´s current focus is on investments with strong cash-flows and/or managed risk profiles.

A detailed summary of the Company´s investments are contained within the investment review section.

Results and dividends

Adjusted earnings for the year show a profit after interest and tax of £2.9 million and adjusted earnings per share of 5.0 pence (see note 9 of the financial statements). This compares with adjusted earnings per share of 2.6 pence for the previous year. The increase is a result of the incremental income received from the Company's investments in FIAF, AURE and the PIP portfolio.

As previously announced, the Board has declared a dividend of 1.05p per share to all shareholders out of earnings, which was paid on 3 May 2013. The current intention of the Company is to pay a dividend semi-annually.

The net asset value per share at 31 March 2013 is 107.6 pence (31 March 2012: 106.8 pence) (see note 10 of the financial statements).

Financing

Some of ART's underlying investments are subject to gearing through external bank debt.

The H2O bank borrowings now stand at €73.4 million (£61.9 million), which represents a reduction of €1.6 million from the initial €75.0 million borrowed. The bank borrowings do not have any loan to value covenants and there continues to be a substantial surplus of rental income in excess of finance charges.

Europip has refinanced the £59.7 million (NOK 532.8 million) portfolio of Norwegian commercial real estate with a senior debt facility which stood at £38.1 million (NOK 340 million) as at 31 March 2013. Post year end this has been reduced to £34.4 million (NOK 307 million) through strategic asset sales and scheduled amortisation.

Further details of individual asset financing can be found under the investment review section in this report.

Foreign currency

The Company monitors foreign exchange exposures and considers hedging where appropriate. All foreign currency balances have been translated at the year-end rates of £1:€1.185, £1:NOK8.923 and £1:INR82.561.

Share buyback

At the Extraordinary General Meeting on 7 March 2013, consistent with the Company's commitment to shareholder value, the Company's shareholders approved a general authority allowing the Company to acquire up to 24.99% of the Voting Share Capital during the period expiring on the earlier of (i) the conclusion of the annual general meeting of the Company in 2014 and (ii) 6 September 2014. A waiver conditionally granted by the Takeover Panel of any obligation on ARC and/or its concert parties to make a general offer to all shareholders, was also approved.

Details of the share buybacks executed under this authority are given in Note 19 of these financial statements.

Summary

The Company has had an active year and, despite difficult economic conditions, has reached an important milestone with the payment of its first dividend. The dividend is supported by ART´s strategy of recycling capital into investments with higher risk adjusted returns and/or preferred capital positions. As at 31 March 2013, 92% of ART´s assets are in income producing investments in the UK and Europe.

Active asset management, debt refinancing, strategic asset sales and capital recycling have all played a part in further consolidating ART´s existing investments and those acquired during the year.

The Company continues to see encouraging performance in its underlying investments. ART continues to pursue further investment opportunities and is well positioned to take advantage of these as they are identified.

David JeffreysChairman

20 June 2013

Investment review

Portfolio Summary

1 Based on coupon plus redemption premium annualised

2 Over 12 months to 31 March 2013, post tax

3 Annualised 6 monthly return

4 Annualised earnings yield, based on latest quarter information

5 Position as at 31 March 2013; post year end, the loan has been repaid down to £5.5 million

UK

Economic outlook

There are some grounds for optimism that improving foundations are being laid for sustainable economic growth. Inflation remains relatively muted, interest rates remained unchanged following the Bank of England´s latest meeting in April and UK gilt yields have edged downwards in 2013. Whilst such indicators support the view that economic recovery is taking hold, it is still too early to rule out continued uncertainty on the road to recovery during the year ahead.

A bright spot in economic data was the level of employment in office-based sectors which increased by 2.2% in the year to December 2012. The combined benefits of low inflation and a resilient labour market should assist purchasing power and provide more general support to UK consumer spending and occupier demand in the real estate sector.

Property market outlook

Real estate investment transaction volumes remain relatively muted. Demand continues to be greatest for prime assets in prime sectors and markets, partly supported by interest from overseas investors who perceive the UK market to offer a relative safe haven.

There are signs that a scarcity of prime assets at attractive prices is prompting investors to gradually move up the risk curve to consider opportunities where the concentration of demand is lower and where supply is greater. Increased interest has been noted in parts of the secondary market in London and the South East during the first part of 2013 as investors seek to take advantage of well-priced assets, especially those where potential exists to add value through active asset management.

Investment review

Alpha UK Real Estate Fund plc

1 Based on coupon plus redemption premium annualised

The Company has invested £7.5 million in AURE by way of a three-year convertible loan, which matures in November 2014, earns a coupon of 6% per annum and a 14% redemption premium if not converted, providing a minimum return of 10.7% per annum.

AURE is an Irish resident open ended investment company listed on the Irish Stock Exchange, which is invested in a diversified portfolio of UK commercial property (23 properties comprising industrial, office and retail properties valued at £48.8 million (as at 31 March 2013).

ART's investment has a defensive position in the capital structure with a preferred minimum return and the potential to benefit from value created through the active asset management of an income focused property portfolio.

The following highlights were included in the recent AURE half year report for the six months ending 31 March 2013, published in June 2013:

·; Bank borrowings reduced by £4.6m - outstanding debt balance reduced during the period from £36.1 million (as at 30 September 2012) to £31.5 million (as at 31 March 2013)

·; Additional debt repayment of £4.4m - after the period end, sales proceeds from Cardiff and Fulham properties further reduced borrowings to £27.1 million (as at 25 April 2013)

·; Strategic sales - Northampton, Cardiff and Fulham properties sold at prices comparable with recent valuations, totalling £5.5 million

·; New lettings - lease extensions and new leases covering approximately 200,000 square feet achieved

·; New income - lease extensions and new leases totalling approximately £1.2 million per annum of contracted rental income, after future stepped rental uplifts and rent free periods.

ARC is the investment manager of AURE. ARC is pursuing value enhancement opportunities in AURE portfolio assets to increase net income and improve the profile of this income through lease extensions, renewals and reducing unrecoverable void costs.

Alpha UK Multi Property Trust plc

1 Based on coupon plus redemption premium annualised

ART holds convertible unsecured loan stock ("CULS") and an equity investment in AUMP, a LSE listed UK property fund with a regionally diversified portfolio of over 50 properties of multi-let light industrial and office assets valued at £82.7 million (at 31 March 2013).

The Company has invested £6.3 million in CULS which mature on 30 June 2013, earn a coupon of 4.75% per annum and are convertible into ordinary share capital at any time before maturity. Should ART not elect to convert, the CULS are redeemable at a premium of 18% to their face value, providing a minimum total return of 10.8% per annum.

The CULS have a defensive position in the capital structure with a preferred minimum return and the potential to benefit from value created through the active asset management of an income focused property portfolio.

ART has also acquired 19% of AUMP's ordinary share capital as part of the PIP transaction for £0.3 million.

AUMP´s loan facility with a current outstanding balance of £48.2 million provided by Bank of Scotland in respect of the Company's wholly owned subsidiaries, CHIP (One) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited, is due to expire on 31 July 2013.

AUMP´s loan facility with a current outstanding balance of £8.6 million, provided by Nationwide in respect of the Company's wholly owned subsidiary, CHIP (Two) Limited, is due to expire on 30 August 2013.

Discussions with Bank of Scotland, Nationwide and alternative banks and providers of capital are continuing in order to pursue extensions to, or refinancing of, these borrowings.

The following highlights were included in the AUMP interim management statement for the quarter ended 31 March 2013 (published May 2013):

·; Two sales completed above valuation - two properties were sold at a total sale price of £2.93 million in March and April 2013

·; Occupancy improved - the occupancy level by estimated rental value stood at 82.1% as at 30 April 2013, compared with 80.8% as at 31 December 2012

·; Borrowings reduced - bank borrowings reduced by £0.9 million during the quarter to 31 March 2013; a further £2.3 million was repaid in April 2013

·; Loan to value ("LTV") - the combined LTV across the Group on secured borrowings was 71.5% at 31 March 2013 (71.3% at 31 December 2012); and further reduced to 70.5% as at 30 April 2013.

ARC is the investment manager of AUMP. ARC is pursuing value enhancement opportunities in AUMP portfolio assets to increase net income and improve the profile of this income through lease extensions, renewals and reducing unrecoverable void costs.

Cambourne Business Park, Phase 1000, Cambridge

2 Over 12 months to 31 March 2013, post tax

The Company has invested £1.2 million in a joint venture that owns Phase 1000 of Cambourne Business Park. The property consists of three Grade A specification modern office buildings constructed in 1999 located in the town of Cambourne, approximately 8 miles west of Cambridge city centre. The property comprises 9,654 square metres of lettable area, is self-contained and has 475 car parking spaces. Phase 1000 is situated at the front of the business park with good access and visibility.

Phase 1000 is a high quality asset, fully let to Netcracker Technology EMEA Ltd (renamed from Convergys after the $449m takeover by NEC Corporation), Citrix Systems and Regus. The property has open B1 Business user planning permission and has potential value-add opportunities.

Phase 1000 was purchased in a joint venture partnership with a major overseas investor for £23.0 million including acquisition costs. Bank finance of £10.8 million was obtained. ART´s equity contribution of £1.2 million, which represents 10% of the total equity commitment, was invested into a newly formed joint venture entity, a subsidiary of which holds the property. The property was acquired for an 8.5% net initial yield and is currently delivering an annualised income return of 12.9% as at 31 March 2013.

ARC is the investment manager to the joint venture owning the Cambourne property and continues to pursue opportunities to add value to the investment.

Freehold Income Authorised Fund ("FIAF")

2 Over 12 months to 31 March 2013, post tax

The Company has invested a total of £15.3 million as at 31 March 2013 in Freehold Income Authorised Fund ("FIAF") an open-ended fund that invests in UK freehold ground rents.

FIAF announced on 3 April 2013 the change of name from Freehold Income Trust following the fund´s restructuring, converting into a tax efficient fund authorised by the Financial Conduct Authority as a Qualifying Investor Scheme. In tandem, HM Revenue and Customs approved FIAF to enter the PAIF tax regime. The tax advantages of a PAIF are similar to those of a Real Estate Investment Trust, including favourable capital gains tax treatment.

FIAF owns a highly diversified portfolio of over 64,000 freeholds in the UK with a total fund size as at 02 April 2013 of £158.4 million and a gross annual ground rent income of £7.8 million.

FIAF offers an attractive income stream, capital growth prospects and resilient capital values with relatively low volatility and conservative gearing levels. Over its 20 year life FIAF has delivered inflation beating returns and was ranked by FE Trustnet as the best risk adjusted return fund of the decade.

The investment is expected to continue to provide a better return than currently earned on the Company's cash balances. FIAF operates a monthly dealing facility to provide liquidity.

The following highlights were reported in the FIAF fact sheet as at 02 April 2013 (published in May 2013):

·; FIAF's total return for the 12 months to 2 April 2013 stands at 7.7%, up from 6.0% in the previous year

·; FIAF exceeded its target income return by delivering a 5.3% return

·; 78% of FIAF's freeholds have a form of inflation protection through periodic uplifts linked to Retail Price Index, property values or fixed uplifts

·; The Fund had cash of £18.4 million and a further undrawn amount under its loan facility of £18 million at 2 April 2013

·; The Fund's net debt (drawn facility less cash held) stood at 1% of the Fund Size (Gross Asset Value less cash). The Fund subsequently repaid its loan facility during April 2013.

ARC is the Authorised Corporate Director and Alpha Real Property Investment Advisers LLP ("ARPIA"), a subsidiary of ARC, is the investment manager of FIAF.

Healthcare & Leisure Property Limited ("HLP")

3 Annualised 6 monthly return

Healthcare & Leisure Property Limited has invested in companies operating in the hotel, care home, house building and leisure sectors throughout the UK. HLP´s investments are predominantly un-geared.

HLP is managed by Albion Ventures LLP, a UK venture capital investor. No new investments are being made by HLP.

ART currently has £2.6 million invested in HLP as at 31 March 2013. HLP subsequently holds minority stakes in the underlying investments.

ART continues to receive income from its investment while HLP´s underlying assets are realised and ART will benefit from its share of net proceeds from any sales.

The following asset management highlights were reported for the period from acquisition until 31 March 2013:

·; A number of asset sales, including a sale of City Screen group (cinemas) to Cineworld Group plc, Wickenhall Mill (residential development) and the Bear Hotel in Hungerford completed

·; The sales resulted in ART receiving a total of £1.1 million from HLP (£0.7 million in December 2012 and £0.4 million in March 2013)

·; An income distribution of £63,000 was received in December 2012.

Business Centre Properties Limited ("BCP")

Business Centre Properties Limited is a business centre fund that owns 5 serviced office properties, each operated by Citibase PLC. BCP is an Isle of Man registered Open-Ended Investment Company providing investors with exposure to the serviced office sector both in London and provincial locations. BCP is currently in the process of realising assets and returning capital to its investors.

BCP´s net asset value is concentrated in two properties (Stratford and Mitcham) both of which are ungeared.

The following asset management highlights were reported by BCP for the six months ended 31 March 2013:

·; BCP´s value is concentrated in Stratford, an un-geared serviced office property which has been sold on a staged payment basis. A substantial first payment has been made by the purchaser but an extension of the completion timeline has been requested

·; Initiatives are being pursued to enhance the net operating income of the assets prior to sale

·; Bank of Scotland has a loan of £6.5 million granted to a wholly owned subsidiary of BCP. The facility matured on 28 February 2013. Bank of Scotland has advised that the loan has now reverted to an overdraft facility whilst the consensual sales of the three properties in the borrowing entity are pursued. Two of the assets (Bristol and Edinburgh) are now on the market for sale with the third in Reading expected to be marketed for sale later in 2013.

ARPIA, a subsidiary of ARC, is the industry advisor to BCP.

Active Commercial Estates PLC ("ACE") and The Romulus High Income Trust ("Romulus")

ART has also acquired, at an ascribed zero value, PIP investments in Active Commercial Estates PLC, a fund invested in secondary commercial UK property and The Romulus High Income Trust, a UK business centre fund. Any realised value from these investments will be passed exclusively to ART A shareholders. As at 31 March 2013, the net asset value of both ACE and Romulus remains at zero.

Europe - Norway

Economic outlook

Norway´s economy outperformed the majority of other European economies in 2012, expanding by 3.3%.

Robust domestic demand and high investment volumes in the petroleum sector are anticipated to support continued economic growth with commentators forecasting growth of approximately 3% per annum over the coming three years.

At its most recent meeting in April 2013, Norges Bank, the central bank, maintained its key policy interest rate at 1.5%. The bank´s interest rate policy continues to face much scrutiny in the face of a difficult balancing act between managing mounting inflationary pressures and the strong Norwegian Krone which is acting as a drag on the export sector.

Property market outlook

Real estate investment activity was sluggish during the first half of the year with a significant upturn in activity during the closing stages of the year. Overall, transaction volumes increased in 2012 to NOK 52.2 billion, a significant increase from NOK 33 billion in 2011, although five large transactions represented 40% of the total volume. 

Although, transaction levels have been muted at the start of 2013, the improving availability of credit to potential purchasers and continued strong domestic appetite for real estate should assist in maintaining investment activity levels during the year ahead.

Occupier demand is expected to remain broadly stable, bolstered by logistics operators seeking to expand into modern facilities, which are anticipated to remain in short supply. Commentators point to increasing construction costs potentially leading to rises in prime rents in order to justify new development projects, although in the short-term little change is anticipated.

Investment review

European Property Investment Portfolio PLC ("Europip")

4 Annualised earnings yield, based on latest quarter information

5 Position as at 31 March 2013; post year end, the loan has been repaid down to £5.5 million

As part of the PIP transaction, ART acquired a 47% stake in Europip, an Isle of Man domiciled open ended investment company. Europip invests in a directly owned commercial property portfolio in Norway and also owned an office asset in Paris, which was sold in December 2012 subsequent to ART´s investment. In addition, Europip has a minority (7%) interest in Mosaic Property CEE Limited ("Mosaic"), a Central and Eastern European focused commercial property fund. A summary of Europip investments is as follows:

Norway

A portfolio of commercial assets in Norway, concentrated around Oslo. The value of the 11 asset portfolio is NOK 532.8 million (£59.7 million) with a passing rental level of NOK 44.6 million (£5.0 million), based on the 31 December 2012 valuation. Post ART´s year end, two asset sales completed. The attributable value of the remaining 9 assets is NOK 485.9 million (£54.5 million) with a passing rental level of NOK 41.5 million (£4.6 million).

ARPIA is the investment manager for the Norway portfolio and Malling & Co. is responsible for the day to day property management.

Mosaic

Europip owns a 29% stake in Central & Eastern European Property Fund LP, which in turn holds a minority (7%) interest in Mosaic a fund which indirectly invests in 20 assets: 15 in Hungary, 4 in Poland and 1 in the Czech Republic. Mosaic Property LLP ("MPLLP") is the investment adviser for Mosaic.

ART has provided mezzanine finance to Europip in the form of two loans, one of which was acquired from PIP. The 12 month loans, maturing on 27 November 2013, pay a coupon of 9% per annum.

Investment management update

Since the date of ART´s investment in Europip, the Norwegian portfolio has been refinanced, capital has been returned from its Mosaic investment and strategic asset sales completed in Norway and France.

·; Bank refinancing

In December 2012, Europip refinanced the portfolio of Norwegian real estate with a senior debt facility of £38.1 million (NOK 340 million) arranged in two tranches:

·; Facility A: a five year facility with an initial funded amount of £31.4 million (NOK 280 million), at a 2.4% margin over NIBOR. This facility is to be amortised at £1.1 million (NOK 10.2 million) per annum from cashflows, although the amount of required amortisation will be reduced pro-rata in the event of property sales. £23.5 million (NOK 210 million) of this facility has been fixed for five years at a NIBOR rate of 2.49% p.a.

·; Facility B: a two year term facility of £6.7 million (NOK 60 million), at a 3.1% margin over NIBOR with repayment via planned asset sales.

·; Strategic asset sale of bank pool asset

Post year end, the disposal of the Enebakkveien asset, which was part of the bank facility secured pool of assets, completed on 5 April 2013. The sales proceeds and a lease surrender premium were £3.4 million (NOK 30.6 million), in line with the asset valuation at 31 December 2012.

·; Bank loan amortisation

Post year end, the net proceeds of the Enebakkveien asset sale were applied to reduce bank borrowings in line with the part-repayment obligations. The loan balance has been reduced from £38.1 million (NOK 340 million) to £34.4 million (NOK 307 million).

Following the application of the net proceeds from the sale of the Enebakkveien asset and a quarterly loan repayment made during April 2013, the LTV of the bank facility reduced from 70.8% to 68.4%.

·; Strategic asset sales, capital decommissioning and ART loan amortisation

A combination of the strategic sale of one of the Europip Norwegian assets outside the secured bank facility pool, the decommission of committed but uncalled capital from the Europip Mosaic investment and the sale of Europip´s investment property in Paris has helped to fund a reduction of the mezzanine facility owed to ART by Europip from £9.1 million to £8.8 million at year end (and to £5.5 million in May 2013).

·; Occupancy

Through a combination of new leasing and disposal of assets with higher vacancy rates, the portfolio's occupancy rate has increased from 92%, as at 31 December 2012, to 98%, as at 31 March 2013.

The weighted average lease length of the Norwegian portfolio is 4.6 years as at 31 March 2013.

Europe - Spain

Economic outlook

The significant reduction in Spanish government bond rates from a high of over 7% in July 2012 to 4.2% in April 2013 indicates an improvement in investor sentiment towards Spain´s economy.

The European Central Bank's interest rate cut of the main refinancing rate by 0.25% to a historic low of 0.50% in May 2013 is anticipated to provide liquidity support to Spain and other eurozone economies.

An anticipated continued downward pressure on retail sales resulting from austerity measures combined with falling employment levels means that the economic outlook for Spain remains challenging in the short term. However, there is a degree of optimism that growth may return in 2014 when fiscal austerity policies ease and the wider eurozone starts to recover. Export-orientated businesses should be aided by improved competitiveness resulting from labour market reforms and lower labour costs.

Property market outlook

The final quarter of 2012 registered high investment volumes with a number of large deals completed across real estate sectors. According to the RICS, the first quarter of 2013 saw investor appetite for real estate assets in Spain grow at the fastest pace compared to other countries in Europe.

The newly created state sponsored "bad bank", Sareb, is considered a positive step to improving transparency and also boosting liquidity and the available finance.

Despite the challenging trading environment, over 400,000 square metres of new shopping centre space was completed in 2012. The pipeline for 2013 is however significantly lower. The occupational market remains competitive and landlord incentives, such as fit-out contributions, remain key to securing anchor tenants. A number of major brands are seeking to take advantage of this current market dynamic to secure a broader market presence.

Investment review

H2O, Madrid

2 Over 12 months to 31 March 2013

The H2O shopping centre was acquired for €83.3 million (£70.3 million) including acquisition costs and funding was provided for a further €5.0 million (£4.2 million) for future capital improvements. The acquisition was financed with a €75.0 million (£63.3 million) seven year syndicated bank facility. ART's total investment in H2O is €16.6 million (£14.0 million).

H2O was opened in June 2007 and built to a high standard, providing shopping, restaurants and leisure around a central theme of landscaped gardens and an artificial lake. H2O has a gross lettable area of 51,825 square metres comprising 118 units. In addition to a multiplex cinema, supermarket (let to leading Spanish supermarket operator Mercadona) and restaurants it has a large fashion retailer base, including some of the strongest international fashion brands, such as Nike, Zara, Mango, Cortefiel, H&M, C&A and Massimo Dutti.

As at 31 March 2013, the centre was 88.8% occupied by rental value with a weighted average lease length of 10.6 years to expiry (2.6 years to next break).

The following asset management highlights are being implemented:

·; Nike opened their largest premium outlet store in Madrid at H2O during February 2013. The 1,430 square metre unit was previously vacant. The presence of one of the world´s leading brands is anticipated to further establish and anchor the shopping centre and attract increased visitor numbers

·; A total of 12 new brands have been signed or were under offer in the 12 months to 31 March 2013, adding to the strength of the retail and commercial mix of the centre

·; For the 2012 calendar year, footfall increases of 2.3% at H2O continued to outperform the market, over the same period the national footfall index has declined by 3.9%

·; A programme of lease re-gears continues to be implemented to stabilise occupancy, with a notable success being the re-gear of seven Inditex brands (including Zara)

·; Accessibility to the centre has been improved with two new vehicular accesses and a parking area being completed; this is expected to enhance circulation and accessibility between H2O and the adjacent retail park and sports superstore

·; Taking advantage of the new brands signed, centre signage has been improved to enhance visibility from the public highways and the adjacent retail park and sports superstore with a view to creating a more integrated "retail village" and to increase footfall

·; Innovative marketing events have been undertaken to increase footfall and dwell time including events undertaken in conjunction with the local council and tenants, including a Nike "fun run" event for families and more serious athletes

·; During the year, the Madrid region changed legislation which previously restricted Sunday and festival trading hours; as a result of the change shopping centre retailers are able to trade throughout the year

·; An active cost management exercise continues to be implemented to reduce the centre´s operating costs and improve the quality and efficiency of services.

Asia - India

Economic outlook

India's GDP growth was 4.8% for the fiscal year ended 31 March 2013 a moderation from recent years but still relatively robust compared to many Western economies The Government of India has implemented a series of market reforms including opening up of the multi-brand retail, broadcasting and aviation sectors to foreign investment in an effort to boost economic growth.

In mid-March the Reserve Bank of India ("RBI", the central bank) cut its main interest rate, the repurchase (repo) rate, by 25 basis points for the second time since the start of 2013; the rate now stands at 7.5%. After many months of double digit inflation, there are signs that the rate is moderating with 4.9% reported in April, the lowest rate since late 2009.

Property market outlook

In an effort to boost activity in the sector, the Government of India announced changes to the Special Economic Zone ("SEZ") policy in April 2013. This included replacement of minimum land requirements (previously 10 hectares) for Information Technology ("IT") related SEZs with a minimum built up area criteria. A minimum criteria of 100,000 square feet now applies to the NCR region where the Company's Galaxia Project is situated. The anticipated impact of these amendments is that many more IT companies will now be able to launch their own SEZs rather than the previous bias towards larger operators and developers.

Investment volumes and land sales transaction activity continues to remain muted. The commercial office occupier market in NOIDA continues to be focussed on occupiers seeking to consolidate into more affordable modern space. Approximately 350,000 square feet of leasing activity was reported in the NOIDA market during the first quarter of 2013.

Investment review

Galaxia, National Capital Region, NOIDA

ART invested INR 450 million (£5.5 million) in the Galaxia project, a development site extending to 11.2 acres which enjoys SEZ status with the potential to develop 1.2 million square feet. Galaxia is located in NOIDA, an established, well planned suburb of Delhi that continues to benefit from new infrastructure projects and is one of the principal office micromarkets in India. The Company has a 50% shareholding in the SPV which controls the Galaxia site. There are no bank borrowings on the asset.

On 2 February 2011, ART recommenced arbitration proceedings against its development partner Logix Group in order to protect its Galaxia investment.

Arbitration hearings have been held in January and May 2013. To date the validity of the arbitration panel has been successfully defended. Evidence has been presented and cross examination of witnesses has commenced. Further hearings have been scheduled for the third quarter 2013.

Notwithstanding the above, the Company is continuing to explore avenues for a sale of the development.

Summary

Whilst economic and financial market difficulties continue to ignite concerns, there appears to be more grounds for optimism that progress, albeit slow, is being made towards a stable recovery.

In the real estate market, there are tentative signs of a revival in the property debt market, partly assisted by new entrants to the sector. This is supporting moderate increases in investment activity. The completed strategic asset sales in ART´s directly and indirectly owned investments in the UK, France and Norway are evidence of this.

The market still remains polarized, with prime assets in prime sectors attracting the greatest demand and witnessing highest transaction volumes. However, a lack of available prime assets at attractive prices is encouraging investors to consider broader investment criteria. Assets that offer scope to add value through active asset management and / or recapitalisation of property investment vehicles, that offer scope for preferred capital positions with high risk adjusted returns, are increasingly popular.

ART continues to implement its active management policy and this has seen encouraging results in the existing portfolio and in the new assets acquired via the PIP transaction. Positive news from its underlying investments includes letting progress in AUMP, AURE, Europip Norway and at H2O in Spain.

ART remains well placed to capitalise on new investment opportunities as they emerge.

Brad Bauman and Gordon Smith

For and on behalf of the Investment Manager

20 June 2013

Directors

David Jeffreys (aged 53)

Chairman

David Jeffreys qualified as a Chartered Accountant with Deloitte Haskins and Sells in 1985. He works as an independent non-executive director to a number of Guernsey based investment fund companies and managers and is a Guernsey resident.

From 2007 until 2009 David was the Managing Director of EQT Funds Management Limited, the Guernsey management office of the EQT group of private equity funds. He was previously the Managing Director of Abacus Fund Managers (Guernsey) Limited between 1993 and 2004, a third party administration service provider to primarily corporate and fund clients.

In addition to the Company, David is a director of the following listed companies: Alpha Pyrenees Trust Limited, Ingenious Media Active Capital Limited, PFB Data Centre Fund Limited and Tetragon Financial Group Limited.

Phillip Rose (aged 53)

Phillip Rose is a Fellow of the Securities Institute and holds a Master of Law degree. He has over 30 years' experience in the real estate, funds management and banking industries in Europe, the USA and Australasia. He has been the Head of Real Estate for ABN AMRO Bank, Chief Operating Officer of European shopping centre investor and developer TrizecHahn Europe, Managing Director of retail and commercial property developer and investor Lend Lease Global Investment and Executive Manager of listed fund General Property Trust.

Phillip is currently CEO of Alpha Real Capital LLP and is a member of the Management Committee for Hermes Property Unit Trust and was formerly a non-executive director of Great Portland Estates plc.

Serena Tremlett (aged 48)

Serena has over 25 years' experience in financial services, specialising in closed-ended property and private equity funds and fund administration over the last 15 years.

She is a non-executive director on the listed company boards of Alpha Pyrenees Trust, Alpha Tiger Property Trust, Ingenious Media Active Capital and those of Stenham Property, in addition to various unlisted property and private funds and general partners. Serena was previously company secretary (and a director) of Assura Group, at that time a FTSE 250 company listed on the London Stock Exchange, investing in primary healthcare property and ran Assura's Guernsey head office.

Prior to working for Assura, Serena was head of Guernsey property funds at Mourant International Finance Administration (now State Street) for two years and worked for Guernsey International Fund Managers (now Northern Trust) for seven years where she sat on a number of listed and unlisted fund boards. Since 2008, Serena has been co-founder and managing director of Morgan Sharpe Administration, a specialist closed-ended fund administrator.

Jeff Chowdhry (aged 53)

Jeff Chowdhry is currently Head of Emerging Market Equities at F&C Asset Management plc, with overall responsibility for investments in global emerging markets. Previously, he was a director of Sun F&C Asset Management (India) Limited and also managed the Indian Investment Company SICAV, an open ended investment fund registered in Luxembourg. Prior to this, Jeff managed the India Fund Inc, a closed ended investment fund listed in New York that seeks long-term capital appreciation through investing primarily in Indian equities.

Roddy Sage (aged 60)

Roddy Sage is currently Chief Executive Officer of the AFP group of companies, providing corporate and taxation advisory services in Asia. Prior to that he spent 20 years with KPMG Hong Kong, 10 years of which were as Senior Tax Partner for Hong Kong and China. He has held Chairmanships within KPMG and outside as Chairman of the Hong Kong General Chamber of Commerce's Taxation Committee and is a non-executive director of Tai Ping Carpets International and Guoco Group Limited.

Directors' and Corporate Governance report

The Directors present their report and financial statements of the Alpha Real Trust Limited group ("the Group") for the year ended 31 March 2013.

Principal activities and status

During the year the Company, an authorised closed-ended Guernsey registered investment company, carried on business as a property investment and development company, investing in commercial property.

The Company's shares are traded on the Specialist Fund Market of the London Stock Exchange.

Business review, results and dividend

A review of the business during the year is contained in the Chairman's Statement above.

The results for the year to 31 March 2013 are set out in the financial statements.

On 13 February 2013, the Company declared a dividend of 1.05p per share, which was paid to shareholders on 3 May 2013.

In accordance with IAS 10, this dividend has not been included in these financial statements. The current intention of the Company is to pay a dividend semi-annually. 

Corporate governance

As a Guernsey registered company traded on SFM, the Company is not required to comply with The UK Corporate Governance Code ('UK Code'). However, the Directors take appropriate measures to ensure that the Company complies with the Code to the extent appropriate, taking into account the size of the Company, the nature of its business and its entirely non-executive board.

The Company is authorised by the Guernsey Financial Services Commission ('GFSC') and for this reason is required to follow the principles and guidance set out in the Finance Sector Code of Corporate Governance issued by the GFSC and effective from 1 January 2012 ('Guernsey Code'). Compliance with the Guernsey Code and consideration of matters raised by the UK Code are reviewed by the Board annually.

The Board

Biographies of the Directors are set out above. All of the Directors were appointed on 15 May 2006.

The Directors' interests in the shares of the Company as at 31 March 2013 are set out below and there have been no changes in such interests up to the current date:

The UK Code recommends that non-executive directors are appointed for specified terms. The Company has chosen not to comply with this recommendation but confirms that appointments of its members can be terminated at any time without penalty and the Company's Articles of Association ("Articles") require each Director to retire and submit himself to re-election by the shareholders at every third year. In addition, the Board believes that continuity and experience adds to its strength.

The Annual General Meeting of the Company will take place on 8 August 2013. At this meeting, David Jeffreys and Serena Tremlett will retire and submit themselves for re-election. The remainder of the Board recommend their re-appointment and confirm their independence.

Individual Directors may seek independent legal advice in relation to their duties on behalf of the Company.

Operations of the Board

The Board has determined that its role is to consider and determine the following principal matters which it considers are of strategic importance to the Company:

1) Review the overall objectives for the Company and set the Company's strategy for fulfilling those objectives within an appropriate risk framework

2) Consider any shifts in strategy that it considers may be appropriate in light of market conditions

3) Review the capital structure of the Company including consideration of any appropriate use of gearing both for the Company and in any joint ventures in which the Company may invest from time to time

4) Appoint the Investment Manager, Administrator and other appropriately skilled service providers and monitor their effectiveness through regular reports and meetings

5) Review key elements of the Company's performance including Net Asset Value and payment of dividends.

At Board meetings, the Board ensures that all the strategic matters are considered and resolved by the Board. Certain issues associated with implementing the Company's strategy are delegated either to the Investment Manager or the Administrator. Such delegation is over minor incidental matters and the Board continually monitors the services provided by these independent agents. The Board considers there are implementation matters that are significant enough to be of strategic importance and should be reserved solely for the Board (e.g. all acquisitions, all disposals, significant capital expenditure, leasing and decisions affecting the Company's financial gearing).

The Board meets at least quarterly and as required from time to time to consider specific issues reserved for decision by the Board including all potential acquisitions and investments.

At the Board's quarterly meetings it considers papers circulated in advance including reports provided by the Investment Manager and the Administrator. The Investment Manager's report comments on:

·; The property markets of India, UK and Europe including recommendations for any changes in strategy that the Investment Manager considers may be appropriate

·; Performance of the Group's portfolio and key asset management initiatives

·; Transactional activity undertaken over the previous quarter and being contemplated for the future

·; The Group's financial position including relationships with bankers and lenders.

These reports enable the Board to assess the success with which the Group's property strategy and other associated matters are being implemented and also consider any relevant risks and to consider how they should be properly managed.

The Board also considers reports provided from time to time by its various service providers reviewing their internal controls.

In between its regular quarterly meetings, the Board has also met on a number of occasions during the year to approve all transactions and for other matters.

Board and Director's appraisals

The Board carries out an annual review of its composition and performance (including the performance of individual Directors) and that of its standing committees. Such appraisal includes reviewing the performance and composition of the Board (and whether it has an appropriate mix of knowledge, skills and experience), the relationships between the Board and the Investment Manager and Administrator, the processes in place and the information provided to the Board and communication between Board members.

Board Meeting attendance

The table below shows the attendance at quarterly Board and meetings during the year to 31 March 2013:

Directors' and officers' insurance

An appropriate level of Directors' and officers' insurance is maintained whereby Directors are indemnified against liabilities to third parties to the extent permitted by Guernsey Company Law.

Board Committees

The Board has established three standing committees, all of which operate under detailed terms of reference, copies of which are available on request from the Company Secretary.

Audit Committee

The Audit Committee consists of David Jeffreys (Chairman), Roddy Sage and Serena Tremlett. The Board is satisfied that David Jeffreys continues to have the requisite recent and relevant financial experience to fulfil his role as Chairman of the Audit Committee.

Role of the Committee

The role of the Audit Committee, which meets at least twice a year, includes:

·; The engagement, review of the work carried out by and the performance of the Company's external auditors

·; To monitor and review the independence, objectivity and effectiveness of the external auditors

·; To develop and apply a policy for the engagement of the external audit firm to provide non-audit services

·; To assist the Board in discharging its duty to ensure that financial statements comply with all legal requirements

·; To review the Company's financial reporting and internal control policies and to ensure that the procedures for the identification, assessment and reporting of risks are adequate

·; To review regularly the need for an internal audit function

·; To monitor the integrity of the Company's financial statements, including its annual and half-year reports and announcements relating to its financial performance, reviewing the significant financial reporting issues and judgements which they contain

·; To review the consistency of accounting policies and practices

·; To review and challenge where necessary the financial results of the Company before submission to the Board.

The Audit Committee makes recommendations to the Board which are within its terms of reference and considers any other matters as the Board may from time to time refer to it.

Members of the Audit Committee may also, from time to time, meet with the Company's valuer to discuss the scope and conclusions of their work.

Committee meeting attendance

Policy for non audit services

The Committee has adopted a policy for the provision of non-audit services by its external auditors, BDO Limited, and reviews and approves all material non-audit related services in accordance with the need to ensure the independence and objectivity of the external auditors. No services, other than audit-related ones, were carried out by BDO Limited during the year.

Internal audit

The Board relies upon the systems and procedures employed by the Investment Manager and the Administrator which are regularly reviewed and are considered to be sufficient to provide it with the required degree of comfort. Therefore, the Board continues to believe that there is no need for an internal audit function, although the Audit Committee considers this annually, reporting its findings to the Board.

Nomination Committee and attendance

The Nomination Committee consists of Roddy Sage (Chairman), Phillip Rose and Serena Tremlett.

The Committee's principal task is to review the structure, size and composition of the Board in relation to its size and position in the market and to make recommendations to fill Board vacancies as they arise and it meets at least annually. It met once during the year and all Committee members were present.

Remuneration Committee and attendance

The Remuneration Committee consists of Serena Tremlett (Chairman), Jeff Chowdhry and David Jeffreys.

The Board has approved formal terms of reference for the Committee and a copy of these is available on request from the Company Secretary.

As the Company comprises only non-executive directors, the Committee's main role is to determine their remuneration within the cap set out in the Company's Articles. It met once during the year and all Committee members were present.

Remuneration report

The aggregate fees payable to the Directors are limited to £200,000 per annum under the Company's Articles and the annual fees payable to each Director have not materially changed since the Company's shares were listed in 2006. The fees payable to the Directors are expected to reflect their expertise, responsibilities and time spent on the business of the Company, taking into account market equivalents, the activities, the size of the Company and market conditions. Under their respective appointment letters, each director is entitled to an annual fee together with a provision for reimbursement for any reasonable out of pocket expenses.

During the year the Directors received the following emoluments in the form of fees from Group companies:

Internal control and risk management

The Board understands its responsibility for ensuring that there are sufficient, appropriate and effective systems, procedures, policies and processes for internal control of financial, operational, compliance and risk management matters in place in order to manage the risks which are an inherent part of business. Such risks are managed rather than eliminated in order to permit the Company to meet its financial and other objectives.

The Board reviews the internal procedures of both its Investment Manager and its Administrator upon which it is reliant. The Investment Manager has a schedule of matters which have been delegated to it by the Board and upon which it reports to the Board on a quarterly basis. These matters include quarterly management accounts and reporting both against key financial performance indicators and its peer group. Further, a compliance report is produced by the Administrator for the Board on a quarterly basis.

The Company maintains a risk management framework which considers the non-financial as well as financial risks and this is reviewed by the Audit Committee prior to submission to the Board.

Investment management agreement

The Company has an agreement with the Investment Manager. This sets out the Investment Manager's key responsibilities, which include proposing a property investment strategy to the Board, identifying property investments to recommend for acquisition and arranging appropriate lending facilities. The Investment Manager is also responsible to the Board for all issues relating to property asset management.

Substantial shareholding

Shareholders with holdings of more than 3 per cent of the issued ordinary shares of the Company as at 24 May 2013 were as follows:

Shareholder relations

The Board places high importance on its relationship with its shareholders, with members of the Investment Manager's Investment Committee making themselves available for meetings with key shareholders and sector analysts. Reporting of these meetings and market commentary is received by the Board on a quarterly basis to ensure that shareholder communication fulfils the needs of being useful, timely and effective. One or more members of the Board and the Investment Manager will be available at the Annual General Meeting to answer any questions that shareholders attending may wish to raise.

Directors' Responsibility Statement

Company law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and of the Group at the end of the year and of the profit or loss of the Company and the Group for that year.

In preparing those financial statements, the Directors are required to:

(1) select suitable accounting policies and then apply them consistently;

(2) make judgements and estimates that are reasonable and prudent;

(3) state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

(4) prepare the financial statements on the going concern basis unless it is appropriate to assume that the Company and Group will not continue in business.

So far as each of the Directors are aware, there is no relevant information of which the Company's auditor is unaware, and they have taken all the steps they ought to have taken as Directors to make themselves aware of any relevant information and to establish that the Company's auditor is aware of that information.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

Going concern

After making enquiries, and bearing in mind the nature of the Group's business and assets, the Directors consider that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Annual General Meeting

The AGM of the Company will be held in Guernsey at 9 am on 8 August 2013 at Old Bank Chambers, La Grande Rue, St Martin's, Guernsey. The meeting will be held to receive the Annual Report and Financial Statements, re-elect Directors and propose the reappointment of the auditor and that the Directors be authorised to determine the auditor's remuneration.

Auditor

BDO Limited has expressed its willingness to continue in office as auditor.

By order of the Board,

David Jeffreys Serena Tremlett

Director Director

20 June 2013

Independent Auditor's Report

To the Members of Alpha Real Trust Limited (formerly Alpha Tiger Property Trust Limited)

We have audited the consolidated financial statements of Alpha Real Trust Limited for the year ended 31 March 2013 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work is undertaken so that we might state to the Group's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group and the Group's members as a body, for our audit work, for this report or for the opinions we have formed.

Respective responsibilities of the directors and auditor

As explained more fully in the Directors' Responsibilities Statement within the Directors' Report, the Directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non‑financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent misstatements or inconsistencies we consider the implications for our report.

Opinion on the financial statements

In our opinion the financial statements:

·; give a true and fair view of the state of the Group's affairs as at 31 March 2013 and of Group's profit for the year then ended;

·; have been properly prepared in accordance with IFRSs as adopted by the European Union; and

·; have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

·; proper accounting records have not been kept by the Company; or

·; the financial statements are not in agreement with the accounting records; or

·; we have failed to obtain all the information and explanations, which, to the best of our knowledge and belief, are necessary for the purposes of our audit.

.......................................................

Richard Michael Searle FCA

For and on behalf of BDO Limited

Chartered Accountants and Recognised Auditor

Place du Pré

Rue du Pré

St Peter Port

Guernsey

Date: 20 June 2013