The Glanmore Property Fund Limited

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Apex House, BirminghamAcquisition date – November 2006Rent:Tenant:£1.114m p.a. approxNational LotteryCharities BoardDuring the six months to 30 June 2012 theasset management of the retained portfoliohas produced the following results:• 4 properties were sold during the period,generating sale proceeds of £37.2m.• 16 rent reviews have been concluded,achieving an aggregate rental increase of£238k on the previous passing rents, anincrease of 4.33%.• 17 new lettings have been completed,securing annual rental income of £468k.• Voids as at 30 June 2012 were 7.54%.• 3.25% of the rental income was derived fromcentral and local government, 79.30% frommajor public companies, 0.52% from banks,building societies and insurance companiesand 16.93% from private companies andprofessional practices.• 17.76% of income was derived from leaseswith over 10 years unexpired, 27.29% fromleases between 5 and 10 years unexpired andthe remaining 54.95% from leases with lessthan 5 years unexpired.• 19 lease renewals have been concluded,securing £464k in annual rents.Tilney Asset Management International Limited20 December 2012CBRE Limited20 December 2012CBRE were appointed as Property Manager by TAMIL for Glanmore Property Fund Limited on 29June 2012 and have been responsible for the property management since that date.6

The Glanmore Property Fund LimitedPROPERTY PORTFOLIOas at 30 June 2012By regionOpenMarketValue% ofGrossAssetsOpenMarketValue% ofGrossAssets30 June 30 June 30 June 30 June2012 2012 2011 2011C £'000 £'000West Midlands 122,050 29.29 192,185 28.93South East 68,250 16.38 132,610 19.95Scotland 38,175 9.16 62,750 9.44South West 37,700 9.05 53,580 8.06East Midlands 29,850 7.16 38,680 5.82Wales 20,000 4.80 28,970 4.36Yorkshire & Humberside 20,750 4.98 28,045 4.22North East 7,700 1.85 27,320 4.11London 22,000 5.28 43,950 6.61North West 14,875 3.57 15,245 2.29381,350 91.52 623,335 93.79By sectorIndustrial warehouse 86,150 20.68 104,615 15.74Leisure 14,775 3.55 17,060 2.57Offices 128,550 30.84 259,510 39.05Retail warehouse 47,300 11.35 66,815 10.05Shopping centres 84,750 20.34 152,830 22.99Standard retail 19,825 4.76 22,505 3.39381,350 91.52 623,335 93.7930 June2012£'00030 June2012%30 June2011£'00030 June2011%Total value of investments 381,350 91.52 623,335 93.79Other assets 35,327 8.48 41,298 6.21Gross assets 416,677 100.00 664,633 100.009

The Glanmore Property Fund LimitedCONSOLIDATED STATEMENT OF TOTAL RETURNfor the 6 months ended 30 June 2012Year ended6 months ended 30 June 31 December20122011 2011Note £'000 £'000 £'000Net losses on investment properties (160,303) (37,317) (66,530)Other gains 2,554 2,607 5,822Income 24,985 28,697 59,036Expenses (6,781) (9,652) (17,020)Finance costs: interest (9,896) (10,375) (20,310)Net income before taxation 8,308 8,670 21,706Taxation (930) (934) (1,151)Net income after taxation 7,378 7,736 20,555Total return before distributions (150,371) (26,974) (40,153)Finance costs: other 2 - 2 2Change in net assets attributable to holders ofparticipating redeemable preference shares(150,371) (26,972) (40,151)Loss per share £(9.88) £(1.77) £(2.64)CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TOHOLDERS OF PARTICIPATING REDEEMABLE PREFERENCE SHARESfor the 6 months ended 30 June 2012Year ended6 months ended 30 June 31 December20122011 2011£'000 £'000 £'000Net assets at the start of the period189,311 229,359 229,359Movement due to issues / redemptions of sharesNet amounts received on issue of shares2 96 103Changes in net assets attributable to holders ofparticipating redeemable preference shares(see Statement of Total Return) (150,371) (26,972) (40,151)Net assets at the end of the period38,942 202,483 189,31110

The Glanmore Property Fund LimitedCONSOLIDATED BALANCE SHEETas at 30 June 201230 June 30 June 31 December2012 2011 2011AssetsNote £'000 £'000 £'000Fixed assetsInvestment properties 379,069 623,335 576,032Current assetsDebtors 8,099 7,063 5,817Bank balances BANK 29,510 34,235 35,31537,608 41,298 41,132Total assets 416,677 664,633 617,164LiabilitiesCreditors: amounts falling due within one year:Short term bank loans 1 347,499 330,363 391,602Derivative liabilities - 6,163 2,496Creditors29,02729,027 32,04936,58532,56235,058376,526 368,575 426,660Creditors: amounts falling due after more than one year:Loans 1 - 92,403 -Deferred tax liability 1,209 1,172 1,1931,209 93,575 1,193Total liabilities excluding net assets attributable to holdersof participating redeemable preference sharesNet assets attributable to holders of participatingredeemable preference shares377,735 462,150 427,85338,942 202,483 189,311Number of participating redeemable preference A shares 6,995,002 6,994,319 6,994,804Number of participating redeemable preference B shares 8,225,108 8,225,108 8,225,10815,220,110 15,219,427 15,219,912Net asset value per share £2.559 £13.304 £12.438The unaudited half-yearly financial statements on pages 10 to 18 were approved by the Board of Directors onand are signed on its behalf by:Angus BodmanRichard BabbéDirectorDirector20 December 2012 20 December 201211

The Glanmore Property Fund LimitedCONSOLIDATED CASH FLOW STATEMENTfor the 6 months ended 30 June 2012Year ended6 months ended 30 June 31 December2012 2011 2011Note £'000 £'000 £'000Net cash inflow from operating activities 3 15,005 24,080 47,366Return on investments and servicing of finance (10,972) (10,997) (21,261)Taxation (1,440) (1,058) 1,498Capital expenditure and financial investment 36,745 54,278 71,67339,338 66,303 99,276Financing (45,144) (63,125) (95,018)(Decrease) / increase in cash (5,805) 3,178 4,258RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBTYear ended6 months ended 30 June 31 December2012 2011 2011£'000 £'000 £'000(Decrease) / increase in cash (5,805) 3,178 4,258Cash outflow from changes in loans and overdrafts 44,103 62,401 93,566Change in net debt resulting from cash flows 38,298 65,579 97,824Net debt at start of period (356,287) (454,111) (454,111)Net debt at end of period (317,989) (388,532) (356,287)ANALYSIS OF NET DEBTYear ended6 months ended 30 June 31 December2012 2011 2011£'000 £'000 £'000Cash at bank and in hand 29,510 34,235 35,315Debt due within one year (347,499) (330,364) (391,602)Debt due after one year - (92,403) -Net debt at end of period (317,989) (388,532) (356,287)12

The Glanmore Property Fund LimitedNOTES TO THE UNAUDITED HALF-YEARLY FINANCIAL STATEMENTS1 PRINCIPAL ACCOUNTING POLICIESThe following accounting policies have been applied consistently in dealing with items which are considered materialin relation to the Fund's annual financial statements.Basis of accountingThe half-yearly financial statements have been prepared in accordance with the Statement on Half-Yearly FinancialReports as issued by the ASB. They have been prepared under the historical cost convention, modified by therevaluation of investment properties and interest rate derivatives, and in accordance with applicable United KingdomAccounting Standards and the Statement of Recommended Practice “Financial Statements of Authorised Funds”issued by the Investment Management Association in October 2010, using accounting policies consistent with thoseapplied in the annual financial statements.Going ConcernAs at 30 June 2012, the Fund had classified £347.5m of bank loans, net of associated finance costs, as "creditors:amounts falling due within one year". Loan repayment requirements were £299.1m by April 2012 and £92.5m byAugust 2012. The Fund did not repay these loans on the due dates as the Board was in the process of negotiatingfurther loan agreements and standstill agreements were put in place. The Board of directors negotiated a revisedcredit facility with Canada Life on 19 October 2012 and signed a termsheet for a revised facility with RBS on 10December 2012. The revised Canada Life loan terms are for a principal sum of £60.9m with debt reductionmilestones to £35.0m in the first half of 2013, to £20.0m in the second half of 2013 and to £11.0m in the first half of2014 with the facility expiring at the end of 2014. The revised RBS loan terms are for a principal sum of £238.4m withaggregate debt reduction milestones of £7.5m in the first half of 2013 and £50m each subsequent half-year with thefinal repayment made by the end of October 2015.Following the negotiation of refinancing agreements with both RBS and Canada Life, the Fund Board has agreed astrategic plan. The forecast future cash flows are continually monitored by the Board to ensure that the Fund meetsits liabilities as and when they fall due, and the Board consider the Fund to be a going concern for the foreseeablefuture. However the secondary commercial property market continues to be volatile with the lack of available lendingand reduced appetite for secondary assets being causes for concern. Valuation falls and sales below expectationpose a risk to the Fund in meeting repayment targets as set by the lenders. This could result in the Fund’s lenderstaking enforcement action. The Fund has developed a good relationship with its lending banks over the years.Should the Fund breach or default on the terms of the revised credit facilities the Board considers its good trackrecord will help to minimise the risk of enforcement action being taken by the Fund’s lenders without first enteringinto negotiations with the Fund.Basis of consolidationThe financial statements consolidate the results of the Fund and its subsidiaries drawn up to the relevant period enddate. The subsidiaries have been included in the Group financial statements using the acquisition method ofaccounting. Accordingly the Consolidated Statement of Total Return and the Consolidated Cash Flow Statementinclude the results of the subsidiaries.Participating redeemable preference sharesParticipating Redeemable preference shares are classified as a financial liability, as the shares are redeemable atthe request of the shareholder. As a consequence, the participating redeemable preference shares have beendisclosed as a liability on the balance sheet and dividends paid and equalisation have been described as financecosts in the Consolidated Statement of Total Return.13

The Glanmore Property Fund LimitedNOTES TO THE UNAUDITED HALF-YEARLY FINANCIAL STATEMENTS (CONTINUED)1 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)IncomeRental income and deposit interest are included on an accruals basis. Rental income from investment propertiesleased out under operating leases is recognised in the Consolidated Statement of Total Return on a straight linebasis and shown gross of any UK income tax. Rental incentives are recognised as an integral part of the total rentalExpensesAll of the Group’s expenses are accounted for on an accruals basis. Transaction costs directly applicable to thepurchase of investment properties are included within the initial cost of the property.Investment propertiesThe valuation of investment property has been prepared on an open market basis as defined by the current editionof The Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors. The open market valuemeans an opinion of the best price at which the sale of an interest in property would have been completedunconditionally for cash consideration on the date of valuation, assuming:(i)(ii)(iii)(iv)(v)a willing seller;that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of theand the state of the market) for proper marketing of the interest, for the agreement of price and terms, andcompletion of the sale;that the state of the market, level of values and other circumstances were, on any earlierassumed date of exchange of contracts, the same as on the date of the valuation;that no account is taken of any additional bid by a prospective purchaser with special interest; andthat both parties to the transaction had acted knowledgeably, prudently and without compulsion.Investment properties held under finance leases and leased out under operating leases are classified as investmentproperty and stated at fair value.Realised and unrealised gains and losses on investment propertiesIn accordance with FRS 3 “Reporting Financial Performance” profits and losses on properties sold during the periodare calculated by comparing net sales proceeds with book values. Realised surpluses and deficits on properties heldin previous years are accounted for as a transfer between the revaluation reserve and the profit and loss reserve.Unrealised gains and losses on the revaluation of the property portfolio are recognised in the ConsolidatedStatement of Total Return.Financial instrumentsFinancial assets and liabilities are recognised on the Group balance sheet when the Group becomes a party to thecontractual provisions of the instrument.Debtors – the Group’s principal debtors do not carry interest and are stated at their nominal value as reduced byappropriate allowances for estimated irrecoverable amounts.Financial liabilities and equity – financial liabilities and equity instruments are classified according to the substance ofthe contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest inthe assets of the Group after deducting all of its liabilities.14

The Glanmore Property Fund LimitedNOTES TO THE UNAUDITED HALF-YEARLY FINANCIAL STATEMENTS (CONTINUED)1 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)Bank borrowings – interest bearing bank loans and overdrafts are initially recorded at cost, being the fair value of theconsideration received. After initial recognition, all interest bearing bank loans and overdrafts are subsequentlymeasured at amortised cost. Directly attributable transaction costs incurred in establishing the Group’s creditfacilities are deducted from borrowings on initial recognition and amortised over the lifetime of the facilities throughthe Consolidated Statement of Total Return.Trade and other creditors – trade and other creditors are not interest bearing and are recorded at their nominalvalue.Derivative financial instruments - the Group uses derivative financial instruments to manage its risk associated withinterest rate fluctuations on its bank loans and overdrafts.Derivatives are valued on the balance sheet at latest available market rates or at break cost. Any resulting gain orloss is included in other gains and losses in the Consolidated Statement of Total Return.TaxationThe Fund and its subsidiaries are liable to United Kingdom income tax on its net rental income.The Fund and its Guernsey-registered subsidiaries are exempt from Guernsey income tax under the Income Tax(Exempt Bodies) (Guernsey) Ordinances 1989 and each such company has been charged an annual exemption feeof £600 for the year 2012 (2011: £600).The charge for taxation is accrued on a monthly basis, based on the profit for each month. This will be adjusted atthe year end to take into account taxation deferred because of timing differences between the treatment of certainitems for taxation and accounting purposes. Deferred taxation is provided using the liability method on all timingdifferences, calculated at the rate at which it is anticipated the timing difference will reverse.EqualisationEqualisation is the amount included in the purchase price of shares which represents their proportion of the netincome of the Group already accrued up to the date of purchase. If this charge were not made, the income whichexisting shareholders could expect to receive would be diluted every time new shares were created. This amount isrefunded to shareholders as part of their first distribution after the purchase of shares, except where the equalisationexceeds the distribution, in which case the difference is carried forward in an Equalisation Reserve.DistributionsThe Fund will distribute what it considers appropriate in the future with consideration being given to entering into theUK Reporting Fund regime in due course.15

The Glanmore Property Fund LimitedNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)2 FINANCE COSTS: OTHERYear ended316 months ended 30 June December2012 2011 2011£'000 £'000 £'000Interim distribution (June) - - -Final proposed distribution - - -Equalisation on shares issued - (2) (2)Net distribution for the period / year - (2) (2)3RECONCILIATION OF NET INCOME BEFORE TAXATION TO NET CASH INFLOW FROM OPERATINGACTIVITIESYear ended316 months ended 30 June December2012 2011 2011£'000 £'000 £'000Net income before taxation 8,308 8,670 21,706Interest receivable (43) (38) (149)Interest payable 9,896 10,375 20,310Refinance costs - non cash movements 1,042 941 1,677(Increase) / decrease in operating debtors (2,561) 2,628 2,616(Decrease) / increase in operating creditors (1,636) 1,504 1,206Net cash inflow from operating activities 15,005 24,080 47,3664 RELATED PARTY TRANSACTIONSFees Payable to the ManagerThe Manager is Tilney Asset Management International Limited and Deutsche Bank AG as its ultimate parent.The management fee was charged at 0.75% p.a. of aggregate assets of the Group plus direct recharges with effectfrom 1 January 2012 previously 1.5% p.a. of aggregate assets. In addition, the Manager shall be entitled to receive afront-end fee not exceeding 5% of the subscription price.On 26 June 2012 the management agreement between the Fund and the Manager, Tilney Asset ManagementInternational Limited ("Tamil") was amended to a management fee of 0.75% p.a. of the aggregate assets of the Groupwith the fund agreeing to pay direct costs (including the trail commission, valuers' fees, administrator and custodianfees) previously paid by Tamil. In addition 0.25% p.a. of the aggregate of all loan facilities being re-financed by theFund with any lender or banking institution; andFees charged during the period by the Manager were £1,580,000 (6 months to 30 June 2011: £4,884,000) (net ofVAT), of which £8,079,000 (30 June 2011: £7,298,000) remained unpaid at 30 June 2012.16

RELATED PARTY TRANSACTIONS (CONTINUED)Fees payable to the Property ManagerThe Property Manager and Adviser of the Fund until 29 June 2012 was Cardales UK Limited and Deutsche Bank AGas its ultimate parent.Cardales UK Limited (trading as Deutsche PWM Global Real Estate) received, in accordance with the propertymanagement agreement, the following fees:1.5% of the price paid on acquisition of the properties.1.5% of the disposal proceeds received on the sale of the properties.Specific fees such as survey work in connection with repairs and improvements, professional fees for handling rentreviews and new leasing negotiations were charged as and when required, usually on the basis of time spent.During the period there were no fees paid or due to the Property Manager and Adviser in respect of new purchases (6months to 30 June 2011, £nil) and £558,000 (6 months to 30 June 2011, £829,500) has been incurred in respect ofdisposals.On 29 June 2012 CBRE Limited was appointed as property manager and adviser replacing Cardales UK Limited ;CBRE Limited receives, in accordance with the property management agreement, the following fees:1.25% of the price paid on acquisition of the properties.1.20% of the disposal proceeds received on the sale of the properties if sales price is less than 10% above valuation.1.35% of the disposal proceeds received on the sale of the properties if sales price is 10-30% above valuation.1.50% of the disposal proceeds received on the sale of the properties if sales price is 30% or more above valuation.Specific fees such as survey work in connection with repairs and improvements, professional fees for handling rentreviews and new leasing negotiations will be charged as and when required, usually on the basis of time spent.During the period there were no fees paid or due to the CBRE in respect of new purchases or disposals (2011 nil).5 SIGNIFICANT EVENTS DURING THE PERIODDuring the period the Fund sold four properties and repaid loans of £44.1m.6 POST BALANCE SHEET EVENTSSince the balance sheet date events have occurred as follows:In July 2012 a property which was valued at £4.0m as at 30 June 2012 was sold generating proceeds of £4.3m. InOctober 2012 a property which was valued at £8.8m as at 30 June 2012 was sold generating proceeds of £8.9m. InDecember 2012 a property which was valued at £25.3m as at 30 June 2012 was sold generating proceeds of £25.6m.The independent valuations of the investment properties reduced between 30 June and 30 September 2012 on a likefor like basis, excluding disposals, by £11.3m to £370m equating to a reduction of 2.98%.Following the disposal of properties and change in valuations, the share price has decreased from £2.559 at 30 June2012 to £2.235 at 30 September 2012, a decrease of 12.66%.To 20 December 2012 loan repayments of £42.6m were made to The Royal Bank of Scotland plc and £7.3m weremade to Canada Life.On 18 September 2012 at an EGM of the Fund, shareholders passed a special resolution giving the Directors power toextend the postponement of redemptions by a further 24 months to a maximum of 72 months. The Directors haveresolved to exercise their powers to extend the redemption postponement period on a rolling basis until final debtfacility agreements are in place.17

The value of unpaid redemption requests received by the Fund was £5.4m at 30 September 2012, based on thecurrent month valuation of the Fund.As at 30 June 2012, the Fund had classified £347.5m of bank loans, net of associated finance costs, as "creditors:amounts falling due within one year". Loan repayment requirements were £299.1m by April 2012 and £92.5m byAugust 2012. The Fund did not repay these loans on the due dates as the Board was in the process of negotiatingfurther loan agreements and standstill agreements were put in place. The Board of directors negotiated a revisedcredit facility with Canada Life on 19 October 2012 and signed a termsheet for a revised facility with RBS on 10December 2012. The revised Canada Life loan terms are for a principal sum of £60.9m with debt reduction milestonesto £35.0m in the first half of 2013, to £20.0m in the second half of 2013 and to £11.0m in the first half of 2014 with thefacility expiring at the end of 2014. The revised RBS loan terms are for a principal sum of £238.4m with aggregate debtreduction milestones of £7.5m in the first half of 2013 and £50m each subsequent half-year with the final repaymentmade by the end of October 2015.Following the negotiation of refinancing agreements with both RBS and Canada Life, the Fund Board has agreed astrategic plan. The forecast future cash flows are continually monitored by the Board to ensure that the Fund meets itsliabilities as and when they fall due, and the Board consider the Fund to be a going concern for the foreseeable future.However the secondary commercial property market continues to be volatile with the lack of available lending andreduced appetite for secondary assets being causes for concern. Valuation falls and sales below expectation pose arisk to the Fund in meeting repayment targets as set by the lenders. This could result in the Fund’s lenders takingenforcement action. The Fund has developed a good relationship with its lending banks over the years. Should theFund breach or default on the terms of the revised credit facilities the Board considers its good track record will help tominimise the risk of enforcement action being taken by the Fund’s lenders without first entering into negotiations withthe Fund.7 CONTINGENT LIABILITY - REDEMPTIONSOn 18th September 2012 at an EGM of the Fund, shareholders passed a special resolution giving the Directors powerto extend the postponement of redemptions by a further 24 month to a maximum of 72 months.At the period end, postponed redemption requests totalled £5.26m based on net asset value of the Fund as at 30 June2012.18

The Glanmore Property Fund LimitedSUMMARY OF MATERIAL PORTFOLIO CHANGESfor the 6 months ended 30 June 2012SALESPropertyProceeds£'000London, St Matthews House, Shepherdess Walk 10,850Newcastle upon Tyne, Unit 12, Cobalt Business Park 10,550Rugby, Plot D, Valley Park 8,143London, St Marks House, Shepherdess Walk 7,650#####37,19319

The Glanmore Property Fund LimitedCONSOLIDATED TOTAL EXPENSE RATIOas at 30 June 20126 months ended 6 months ended30 June30 JuneEXPENSES2012 2011£'000£'000Payable to the Manager and the DirectorsManager's fees 1,580 4,883Directors' fees 93 78Other expensesGround rent 61 54Legal and professional fees 561 251Audit fees 34 34Property expenses 2,529 1,476Trail fees 416 1,735Operating expenses 343 198Bad and doubtful debts 121 -Finance expenses 1,043 942TOTAL EXPENSES 6,781 9,651Less finance expensesFinance expenses (1,043) (942)TOTAL OPERATING EXPENSES EXCLUDING FINANCE COSTS 5,738 8,709AVERAGE OF TOTAL NET ASSETS 132,354 232,388TOTAL EXPENSES RATIO (pro-rata 6 month / 12 month) 8.67% 7.50%Average of total net assets represents the average of the net asset value of the Fund at each valuation dateduring the year.20

Administrator and SecretaryNorthern Trust International Fund Administration Services (Guernsey) LimitedP.O. Box 255Trafalgar CourtLes BanquesSt Peter PortGuernseyChannels IslandsGY1 3QL+44 (0) 1481 745001ManagerTilney Asset Management International LimitedP.O. Box 424Lefebvre CourtLefebvre StreetSt Peter PortGuernseyGY1 3WT+44 (0) 20 7541 3493 or 0800 085 5775 (UK only)bev.gardner@db.com