Alpha Pyrenees, the investment company focused on commercial property in France, saw its net asset value improve in the first half of the year as the French economy continued to grow.

Adjusted net asset value per share rose from 31.9p at the end of 2009 to 34.9p at the end of June 2010. This value reflects the fair value mark-to-market revaluation of the interest component of the trust's currency swap, interest rate swap derivatives and deferred tax provisions. On an unadjusted basis the net asset value per share rose fell to 12.7p from 16.5p at the end of 2009.

Net rental income in the first half of the year was marginally lower than the corresponding period of 2009, at £9.77m (2009: £10.38m).

Profit before tax was £0.13m, versus a loss of £20.52m the year before, reflecting a much smaller loss on the net change in the valuation of properties; this year the loss was £2.14m whereas last year in the first half of the year it was £22.86m.

The trust's earnings have been constrained by substantial cash reserves of £16.3m which are earning an unusually low rate of return at present. The reserves have been retained in order to maximise the trust's future flexibility, including the ability to take advantage of attractive investment opportunities now that market conditions have stabilised.

"The effects of the credit crunch and recession have resulted in a more challenging leasing environment for the trust characterised by higher vacancy and generally longer re-leasing periods. Despite significant asset management initiatives, lease extensions and new leasing in the period, the trust currently has vacant space with an estimated annual rental value of approximately £2.2 million (€2.7 million) and predicting the timing and level of re-leasing that will be achieved remains challenging," the company said.

The dividend for the second quarter has been left unchanged from the first quarter at 0.9p.

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