Interim Results
Alpha Tiger Property Trust Limited
28 September 2007
28 September 2007
ALPHA TIGER PROPERTY TRUST LIMITED
('ALPHA TIGER' OR THE 'TRUST' OR THE 'COMPANY')
ALPHA TIGER ANNOUNCES AND POSTS MAIDEN INTERIM RESULTS
Alpha Tiger, the property company established for the purposes of investing in
and developing real estate in India, today announces its maiden interim results
covering the period from incorporation to 30 June 2007. The Trust listed on AIM
on 21 December 2006, raising £75 million.
The Trust announced a profit after interest and tax of £1.05 million (EPS 1.4
pence).
Highlights of the period to 30 June 2007 include:
• NAV per ordinary share 97.5 pence up 1.8 per cent. since admission to AIM
(95.8 pence)
• Execution of a legally binding framework agreement with Xansa Plc ('Xansa')
incorporating the:
o purchase of 40 acres of development land
o sale and leaseback of Xansa's real estate interests in India
o appointment of Alpha Tiger as Xansa's preferred real estate supplier
in India
• Equity commitments (following refinancing) of £43 million representing 59%
of funds raised at flotation
• Significant expansion of pipeline opportunities - potentially
involving in excess of 3 million sq. ft. of real estate
• Establishment of key local Indian partnership relationships
David Jeffreys, Chairman of Alpha Tiger, commented:
'The Trust is delighted to have announced the landmark transaction with Xansa
which commits nearly 60% of funds raised upon AIM admission. The Xansa assets,
in addition to providing a high quality tenant, offer significant development
opportunities of up to 3.4 million square feet in prime real estate locations in
Pune and Chennai. Alpha Tiger intends to commit a total of £75 million of equity
and debt to acquire and develop these sites. Tiger will be providing a high
quality, long term solution for Xansa's occupational requirements in India,
allowing Xansa to grow with greater flexibility, speed and at lower risk. Alpha
Tiger looks forward to delivering the business parks for Xansa and other leading
international companies in India. We continue to develop our existing pipeline
together with key local Indian relationships and we are advancing a number of
new transactions.'
The Investment Manager to Alpha Tiger is Alpha Real Capital LLP.
For further information please contact:
David Jeffreys, Chairman, Alpha Tiger +44 (0) 1481 723 450
Brad Bauman, Fund Manager, Alpha Tiger +44 (20) 7591 1615 (UK)
+91 9980 00 11 22 (India)
Phillip Rose, CEO, Alpha Real Capital +44 (20) 7591 1609
Edward Orlebar, M:Communications +44 (20) 7153 1523
Notes to Editors:
About Alpha Tiger Property Trust
Alpha Tiger is a Guernsey registered closed-ended investment company investing
in and developing Indian real estate. It floated on AIM in December 2006,
raising £75 million.
Further information is available at www.alphatigerpropertytrust.com
About Alpha Real Capital LLP
Alpha Real Capital is a value-adding international property fund management
group. Alpha Real Capital was established by Phillip Rose and Sir John Beckwith.
Alpha Real Capital is the Investment Manager to Alpha Tiger. Alpha Real
Capital's Indian CEO, Brad Bauman, is Fund Manager to Alpha Tiger. He has 18
years' experience in the real estate and finance industries, and has been
responsible for Alpha Real Capital's Asian investment programme since 2005.
For more information on Alpha Real Capital please visit www.alpharealcapital.com
ALPHA TIGER PROPERTY TRUST LIMITED
INTERIM RESULTS
For the period 15 May 2006 to 30 June 2007
These are not the Company's statutory financial statements.
Trust Summary and Objective
Objective
Alpha Tiger Property Trust Limited ('the Trust' or 'Alpha Tiger' or 'the Company
') has been formed in order to invest in and develop real estate in India that
will offer high total returns. Alpha Tiger's current intention is that business
parks and business park-led mixed use projects will form the core of its
portfolio.
Capital structure
The Trust raised initial shareholder equity of £75 million before expenses and
listed on AIM (the Alternative Investment Market) on 21 December 2006. The Trust
intends to borrow in due course to optimise returns for investors.
Management
The Trust is a closed-ended Guernsey registered investment company. Control of
the Trust rests with the non-executive Guernsey-based Board of Directors. The
Trust's Investment Manager is Alpha Real Capital LLP ('the Investment Manager').
Financial Highlights
30 June 2007
Net asset value (£'000) 73,121
Net asset value per ordinary share 97.5p
Ordinary share price 99.0p
Earnings per share (basic and diluted) 1.4p
Chairman's statement
I am pleased to report the Company's results for the period from incorporation
to 30 June 2007.
Alpha Tiger was established for the purposes of investing in and developing real
estate in India. The Trust's objective is to target investment and development
opportunities in real estate in India that will offer high total returns. The
Trust's investment strategy includes both property investment and development,
focussing on business parks and business-park led mixed use properties and
township projects.
The Trust seeks to diversify risk through investments in existing real estate,
forward funding of development opportunities and development partnerships on
both a pre-committed and speculative basis. The Trust is targeting a geographic
spread of properties across India with a variety of tenants with strong
covenants.
Alpha Tiger seeks to work closely with international occupiers and local real
estate companies in order to access land and transition it, through the
development process, up the property value and quality curve. Alpha is
progressing a number of potential transactions and partnerships creating a
reasonably priced land bank to deliver a number of key benefits to stakeholders:
• higher-quality, higher-specification commercial space at competitive rents
for Alpha Tiger's tenants;
• increased development flexibility in terms of the scale, mix and timing of
development for the benefit of both tenants and the communities in which
Alpha Tiger participates; and
• strong future profitability for investors.
Investment activity
The Company has conditionally agreed to acquire from Xansa plc approximately 40
acres of development land and six investment properties in Chennai, Pune and
Noida for up to £36 million, with the capacity to develop up to 3.4 million
sq.ft. of new business park space. The Company currently intends to initially
commit up to £40 million of additional capital to build 1.7 million sq.ft. of
high-quality business park space.
Alpha Tiger will initially finance the investment properties with equity and
refinance at 50% of gross asset value with third party debt in due course. The
40 acres of development land will be financed with equity. Alpha intends to
target borrowing levels on developments at 60% of construction cost. In
aggregate, the initial commitment following refinancing will require
approximately £43 million of equity, representing over 50% of the net proceeds
raised at flotation.
The purchase price for the investment properties of approximately £19 million is
based on an initial rental yield of approximately 11% with 15% rental uplifts
every three years. The purchase price for the development land is approximately
£17 million.
The Investment Manager is evaluating additional investment with potential Indian
partners and international companies, which could involve in excess of 3 million
sq.ft. of real estate.
Results, finance and dividends
Results for the period show an adjusted profit after interest and tax of £1.051
million or 1.4p per share.
The adjusted net asset value per share was 97.5p at 30 June 2007.
During the period under review, the Trust retained the net funds raised on
deposit in Sterling.
The Trust has no existing borrowings but expects to target borrowing levels of
between 50% and 65% of gross assets in due course.
In accordance with the dividend policy set out in the Trust's Admission
Document, the Board does not propose an interim dividend. The Board will
consider the payment of a dividend as the Trust's development programme matures.
Economic outlook
India is the fourth largest economy in the world after the United States, China
and Japan as measured by purchasing power parity (PPP) with gross domestic
product (GDP) in 2006 estimated to be USD 4.0 trillion. India is also the second
fastest growing major economy in the world. Between 2004-06, GDP grew at an
average of 8.5% p.a. The growth momentum has accelerated further and is expected
to remain strong at 9.2% in 2007, making this the fastest growing year in terms
of GDP in recent Indian history. This growth is a function of India's stable
political outlook, growing foreign exchange reserves, sustained growth in
services and industrial sectors, young demographic profile and regulated
financial environment. As a result of this robust outlook, India continues to be
an attractive investment destination.
The services sector, which includes among others, the IT, construction and real
estate sectors, is the fastest growing sector in the Indian economy. In 2007,
growth in this sector is expected to be 11.2%.
Property market outlook
Investment yields have remained constant despite higher interest rates and more
conservative bank lending policies.
The Investment Manager continues to see attractive opportunities for investing
in Indian real estate, particularly business park developments. Generally, both
economic and property market conditions remain favourable with strong and
growing tenant demand keeping pace with increasing availability of stock. In
particular, there remains a significant market opportunity for higher-quality,
operationally efficient business park space that meets the international
standards of global occupiers. The Trust is focussed on this opportunity, as
demonstrated by the major commitment made to meeting Xansa's occupational
requirements in India.
Summary
Looking ahead, Alpha Tiger remains focused on completing the announced
transactions and further advancing the current pipeline.
David Jeffreys
Chairman
Property Investment Review
Investment and portfolio review
Alpha Tiger has established a very strong base for future growth. The Trust's
pipeline has been further strengthened by forging promising relationships with
leading local development partners demonstrating world-class execution and with
international investors.
The Trust announced on 29 May 2007 a framework agreement with Xansa, a leading
outsourcing and technology company, to purchase 40 acres of development land and
the sale and leaseback of Xansa's real estate interests in India. The agreement
also appoints Alpha Tiger as Xansa's preferred real estate supplier in India to
facilitate best-in-class development and management of the properties.
On 31 July 2007 Xansa announced a merger with Groupe Steria SCA and this will,
in the opinion of the Investment Manager, improve the potential opportunity for
the Trust, as a strategic real estate supplier for Xansa's continuing business
expansion in India.
Investment Properties
Noida (Delhi NCR)
The properties in Noida consist of two separately located office buildings; one
two-storey building (with ground and basement level) over 42,000 sq. ft. of
floor area; and a four storey building (with ground and two basement levels)
over 180,000 sq. ft. of floor area.
Pune
The property in Pune comprises two two-storey buildings (Phase I with basement,
ground floor, first floor, and canteen; Phase II with two basements, ground
floor, and first floor), in a campus-style setting with a combined floor area of
over 95,000 sq. ft.
Chennai (Madras)
The property in Chennai is a campus-style development with two buildings
representing a floor area of over 165,000 sq. ft.
Development Land
Chennai - 25 acres
The Chennai site is a long leasehold with development rights over 25 acres of
undeveloped land (with SEZ approval, subject to notification) providing
development potential for approximately 2.2 million sq .ft. of floor space. It
is intended that the site will be developed in four phases over four to five
years.
Pune - 15.7 acres
The Pune site is a long leasehold with development rights over approximately
15.7 acres. This site has the ability to develop up to an additional area of
approximately 1.2 million sq. ft. of floor space. The intention is to develop
this site in three phases over three to four years.
Brad Bauman
For and on behalf of the Investment Manager
Independent Review Report to Alpha Tiger Property Trust Limited
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the interim financial report for the period ended 30 June 2007
which comprises the condensed balance sheet and the related condensed statements
of income, changes in equity and cash flows. We have read the other information
contained in the interim 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 interim financial report is the responsibility of, and has been approved by,
the Directors. As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the European Union.
The condensed set of financial statements included in this interim financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Trust a conclusion on the condensed set
of financial statements in the interim financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the interim financial report
for the period 15 May 2006 to 30 June 2007 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union.
BDO Novus Limited
Chartered Accountants
Elizabeth House
St Peter Port
Guernsey GY1 3LL
27 September 2007
Condensed Company Income Statement
For the period from 15 May 2006 to 30 June 2007 Notes Revenue Capital Total
£'000 £'000 £'000
Revenue
Bank interest receivable 2,045 - 2,045
Expenses
Professional fees 43 - 43
Investment Manager's fee 758 - 758
Non-executive directors' fees 58 - 58
Administration costs 135 - 135
Total expenses 994 - 994
Net profit before taxation 1,051 - 1,051
Taxation - - -
Profit for the period 1,051 - 1,051
Earnings per share - basic and diluted 4 - - 1.4p
The total column of this statement represents the Trust's income statement,
prepared in accordance with IFRS. The revenue and capital columns are supplied
as supplementary information permitted under IFRS. All items in the above
statement derive from continuing operations.
The accompanying notes are an integral part of this statement.
Condensed Company Balance Sheet
At 30 June 2007 Notes £'000
Current Assets
Trade and other receivables 5 750
Cash and cash equivalents 72,768
Total assets 73,518
Current liabilities
Trade and other payables 6 397
Net assets 73,121
Equity
Share capital 7 -
Share premium account -
Special reserve 72,030
Warrant reserve 40
Revenue reserve 1,051
Total equity 73,121
Number of ordinary shares 75,000,000
Net asset value per ordinary share 97.5p
The financial statements were approved by the Board of Directors and authorised
for issue on 27 September 2007. They were signed on its behalf by David Jeffreys
and Serena Tremlett.
The accompanying notes are an integral part of this statement.
Condensed Company Cash Flow Statement
For the period from 15 May 2006 to 30 June 2007 £'000
Net profit before taxation 1,051
Adjustments for:
Increase in operating trade and other receivables (241)
Increase in operating trade and other payables 397
Net cash inflow from operating activities 1,207
Cash flows from investing activities
Acquisition costs - deposit paid (509)
Net cash outflow from investing activities (509)
Cash flows from financing activities
Proceeds from issue of ordinary share capital 75,000
Issue costs (2,930)
Net cash inflow from financing activities 72,070
Net increase in cash and cash equivalents 72,768
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period 72,768
The accompanying notes are an integral part of this statement.
Condensed Company Statement of Changes in Equity
For the period from Share Share Special Warrant Revenue Total
15 May 2006 to capital premium £'000 reserve reserve reserve reserves
30 June 2007 £'000 £'000 £'000 £'000 £'000
Changes in equity for the period
Profit for the period - - - - 1,051 1,051
Total recognised income and expense for the
period - - - - 1,051 1,051
Issue of share capital - 75,000 - - - 75,000
Share issue costs - (2,930) - - - (2,930)
Transfer to special reserve - (72,030) 72,030 - - -
Share based payments - (40) - 40 - -
At 30 June 2007 - - 72,030 40 1,051 73,121
The accompanying notes are an integral part of this statement.
Notes to the Interim Condensed Financial Statements
1. General information
The Trust is a limited liability, closed-ended investment company incorporated
in Guernsey on 15 May 2006. The nature of the Trust's operations and its
principal activities are set out in the Chairman's statement. The interim
financial statements were authorised for issue on 27 September 2007 by David
Jeffreys and Serena Tremlett on behalf of the Board.
These condensed interim financial statements are presented in Sterling as this
is the currency in which the funds were raised and in which investors are
seeking a return. The Company's reporting currency is Sterling.
2. Significant accounting policies
The unaudited condensed interim financial statements of the Company have been
prepared in accordance with International Accounting Standard 34 ('IAS 34'), '
Interim Financial Reporting'.
The condensed interim financial statements are made up from 15 May 2006 to 30
June 2007 and have been prepared under the historical cost convention.
The preparation of the interim condensed financial statements requires the
Directors to make estimates and assumptions that affect the reported amounts of
revenue, expense, assets and liabilities, and the disclosure of contingent
liabilities at the date of the condensed interim financial statements. If in
future such estimates and assumptions, which are based on the Directors' best
judgements at the date of the interim condensed financial statements, the
original estimates will be modified as appropriate in the period in which the
circumstances change.
The principal accounting policies adopted are set out below.
Presentation of income statement
In order to better reflect the activities of the Company and in accordance with
guidance issued by the Association of Investment Companies ('AIC'),
supplementary information which analyses the income statement between the items
of a revenue and capital nature has been presented alongside the income
statement.
Revenue recognition
Interest income is accrued on a time basis by reference to the principal
outstanding and the effective interest rate applicable.
Foreign currencies
Transactions in currencies other than pounds Sterling are recorded at the rates
of exchange prevailing on the dates of the transactions. At each Balance Sheet
date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the Balance Sheet date. Non-monetary
assets and liabilities are carried at fair value; those that are denominated in
foreign currencies are translated at the rates prevailing at the date when the
fair value was determined. Gains and losses arising on retranslation are
included in net profit or loss for the period, except for exchange differences
arising on non-monetary assets and liabilities where the changes in fair value
are recognised directly to equity.
Expenses
All expenses are accounted for on an accruals basis and include those of the
Administrators, the Investment Manager and the Directors.
Taxation
The Company is exempt from Guernsey taxation on income derived outside of
Guernsey and bank interest earned in Guernsey under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989. A fixed annual fee of £600 is payable to the
States of Guernsey in respect of this exemption. No charge to Guernsey taxation
arises on capital gains.
Dividends
Dividends are recognised as a liability in the period in which they become
obligations of the Trust.
Segmental reporting
The Directors are of the opinion that the company is engaged in a single segment
of business being property investment business. It operates in a single
geographical segment (India).
Share-based payments
The company makes equity-settled share-based payments to certain advisers and
service providers. Equity-settled share-based payments are measured at fair
value as at the date of grant. The fair value determined at grant date is
expensed on a straight line basis over the vesting period, based on the
company's estimate of the number of instruments that will eventually vest.
Trade and other receivables
Trade and other receivables do not carry any interest and are short-term in
nature and are accordingly stated at their nominal value as reduced by
appropriate allowances for estimated irrecoverable amounts.
Cash and cash equivalents
Cash in banks and short term deposits that are held to maturity are carried at
cost. Cash and cash equivalents consist of cash in hand and short term deposits
in banks with an original maturity of three months or less.
Trade and other payables
Trade payables and other payables are non interest-bearing and are stated at
their nominal value.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements to which they relate. An equity
instrument is any contract that evidences a residual interest in the asset of
the Company after deducting all of its liabilities. Financial liabilities and
equity instruments are recorded at the proceeds received, net of issue costs.
3. Dividends
In accordance with the policy set out in the Trust's AIM Admission Document, no
dividend has been declared for the period to 30 June 2007.
4. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Period 15 May Period 15 May Period 15 May
2006 2006 2006
to to to
30 June 2007 30 June 2007 30 June 2007
Revenue Capital Total
Earnings (£'000)
Earnings for the purposes of basic and diluted earnings per
share 1,051 - 1,051
Number of shares (000's)
Weighted average number of ordinary shares for
the purposes of basic earnings per share 75,000 - 75,000
Basic earnings per share 1.4p - 1.4p
5. Trade and other receivables
30 June 2007
£'000
Bank interest receivable 241
Other debtors 509
Total 750
Other debtors include the deposit paid to Xansa plc in relation to the execution
of the framework agreement (£0.5m).
6. Trade and other payables
30 June 2007
£'000
Investment Manager's fee payable 363
Accruals 34
Total 397
7. Share capital
No. £'000
Authorised
Ordinary shares of no par value Unlimited -
Issued Share Capital
At 15 May 2006 - -
Ordinary shares of no par value issued in the period 75,000,000 -
At 30 June 2007 75,000,000 -
The Trust has one class of ordinary shares which carry no right to fixed income.
8. 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 Trust under the terms of the Investment Manager Agreement and is
thus considered a related party of the Trust.
The Investment Manager is entitled to receive a fee from the Trust at an annual
rate of 2 per cent of the net assets of the Trust, payable quarterly in arrears.
The Investment Manager is also entitled to receive an annual performance fee
calculated with reference to total shareholder return ('TSR'), whereby the fee
is 20 per cent of any excess over an annualised TSR of 15 per cent subject to a
high water mark. Details of the investment management fees for the current
accounting period are given in the condensed income statement and the balance
payable at the balance sheet date is shown in note 6.
The Investment Manager has also been issued warrants over the Trust's ordinary
share capital, further details of which are provided in note 9.
The Directors of the Trust received fees for their services with a total charge
to the income statement during the period of £58,315.
The Investment Manager received payment of £300,000 in respect of time costs and
expenses incurred by the Investment Manager in connection with the initial
placing and admission to AIM.
Pacific Investments plc, a company controlled by Sir John Beckwith, who also
controls the Investment Manager, was paid £150,000 in respect of their
professional costs and expense in connection with the initial placing and
admission to AIM.
9. Share based payments
Warrants
The Trust has issued warrants to the Investment Manager pursuant to which it has
been granted the right to subscribe for 3,750,000 ordinary shares in the Trust
at an exercise price of £1 per share. Such warrants can be exercised at any time
up to and including 21 December 2011. The warrant instrument provides that the
holder of the warrant may from time to time transfer all or some of its warrants
to third parties.
The fair value of the warrants at grant date has been measured as £39,553 using
an appropriate option pricing model. In light of the immaterial amount of the
fair value the directors do not consider it worthwhile to disclose the
assumptions used in determining this fair value.
Directors and Trust information
Directors: Nominated Advisor Legal Advisors in Guernsey:
David Jeffreys (Chairman) Panmure Gordon (Broking) Limited Carey Olsen
Jeff Chowdhry Moorgate Hall 7 New Street
Roddy Sage 155 Moorgate St Peter Port
Phillip Rose London EC2M 6XB Guernsey GY1 4BZ
Serena Tremlett
Independent Valuers:
Legal Advisors in the UK:
Colliers International
(Hong Kong) Limited Norton Rose
Registered Office: Suite 5701 Central Plaza 3 More London Riverside
18 Harbour Road London SE1 2AQ
Regency Court Wanchai, Hong Kong
Glategny Esplanade
St Peter Port
Guernsey GY1 1WW Bankers in Guernsey:
Financial and Corporate Advisors:
Royal Bank of Scotland
Kinmont Limited International Limited
Investment Manager: 6 Arlington Street Royal Bank Place
London SW1A 1RE 1 Glategny Esplanade
Alpha Real Capital LLP St Peter Port
124 Sloane Street Guernsey GY1 4BQ
London SW1X 9BW
Auditors:
BDO Novus Limited Registrar:
Administrator and Secretary: Elizabeth House
Ruette Braye Computershare Investor Services
International Administration St Peter Port (Channel Islands) Limited
(Guernsey) Limited Guernsey GY1 3LL Ordnance House
Regency Court 31 Pier Road
Glategny Esplanade St Helier
St Peter Port Jersey JE4 8PW
Guernsey GY1 3RH Tax Advisors:
Ernst & Young LLP
1 More London Place
London SE1 2AF
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