Final Results - Part 1

Quintain Estates & Development PLC
04 June 2003

4 June 2003


                      QUINTAIN ESTATES AND DEVELOPMENT PLC

                       ('Quintain' / 'Company' / 'Group')


                      PRELIMINARY ANNOUNCEMENT OF RESULTS

                        FOR THE YEAR ENDED 31 MARCH 2003





Highlights



•        Turnover up 14.2% to £57.6m (2002: £50.4m)

•        Net asset value per share up 13.4% to 348p (2002: 307p)

•        Profit before tax of £14.0m (2002: £16.9m)

•        Total dividend for the year increased by 6.7% to 8.0p (2002: 7.5p)

•        Following the year end, London Borough of Greenwich unanimously
         resolved to grant planning consent for 14.1 million sq ft of mixed use
         development on the Greenwich Peninsula

•        Ownership of 55 acres at Wembley secured through the acquisitions of
         Wembley (London) Limited and the Palace of Industries site

•        Combined, the Wembley and Greenwich projects represent one of the
         largest urban regeneration programmes in any major city worldwide

•        Strong performance by well financed, reversionary portfolio, including
         a revaluation surplus of £19.1m from the high-yielding retail portfolio 
         acquired from Chesterfield.



Nigel Ellis, Chairman of Quintain, commented:



'This has been a year of significant achievement for Quintain.  We continued to
benefit from the income from our core portfolio of assets and have also created
an exceptional pipeline of Special Projects, including the regeneration of the
Greenwich Peninsula and Wembley.  With these exciting opportunities and a
committed and entrepreneurial team, I am confident that the Company faces a
future of ongoing growth and success.'



For further information:



Quintain Estates and Development

Adrian Wyatt / Rebecca Worthington

020 7495 8968



Financial Dynamics

Stephanie Highett / Dido Laurimore

020 7831 3113





FINANCIAL HIGHLIGHTS FOR THE YEAR TO 31 MARCH 2003





Profit and Loss Account


                                                            31 March           31 March
                                                                2003               2002           Change
                                                                               Restated

Turnover (£000)                                               57,605             50,430            14.2%

Profit before tax (£000)                                      13,968             16,942          (17.5%)

Earnings per share (pence)                                      9.4p              11.5p          (18.3%)

Dividends per share (pence)

Final                                                          5.25p              4.75p            10.5%

Total for year                                                 8.00p               7.5p             6.7%






Balance Sheet


                                                             31 March           31 March
                                                                 2003               2002           Change
                                                                                Restated

Net asset value per share (pence)                                348p               307p            13.4%

Diluted net asset value per share (pence)                        342p               302p            13.2%

Gearing (%)                                                       63%                59%                -

Total return (%)                                                16.0%              13.1%                -









Chairman's Statement





I am pleased to report that Quintain has had another successful year, in which
we have achieved a total return of 16%, or 13% net of inflation.  This
comfortably exceeded our internal targets of 10% total return net of inflation -
a performance I am glad to say we have consistently achieved every year since
flotation.



We have also significantly outperformed the property market as measured by the
industry benchmark, IPD.  Quintain's total ungeared return for the UK over the
reporting period was 12%, compared with IPD's average of 8.7%, which puts us
comfortably in the first quartile.  In the year to 31 March 2003, the undiluted
net asset value ('NAV') rose 13% to 348p per share from last year's 307p and by
13% to 342p from 302p on a diluted basis.



The main driver of this uplift was the surplus on the portfolio revaluations.
The most significant contributions arose from our Meridian Delta project, our
investment in Wembley and also from our retail holdings acquired as part of the
Chesterfield corporate deal.  Details of these projects and a full review of our
operations follow in the Chief Executive's Review.



The nature of the Company's business causes earnings to be volatile,
particularly because of the major, long-term special projects which tend to be
initially very low yielding.  In recognition of this, we measure our performance
based on total return and look to the other parts of the Group to provide cash
flow.  Following this strategy, during the year, the Company sold a further £88
million of higher yielding properties, where value had been extracted, to fund
new opportunities particularly the Wembley Complex.  Bearing this strategy in
mind and as anticipated, earnings per share fell by 18% in the period from 11.5p
per share to 9.4p per share, with a reduction in underlying profits per share of
19% to 8.8p per share (2002: 10.9p).   Further explanation is provided in the
Financial Review below.



During the year, we were pleased to see that the share price outperformed the
FTSE All Share by 18% and the FTSE Real Estate Index by 19%. We believe this is
attributable to a number of factors including a re-rating in the market of the
potential of the Company's portfolio and strategy and the purchase of 2.7
million of our own shares during the reporting period at an average price of
225p.  Whilst our shares continue to stand at a discount to NAV, we will
regularly consider further share purchases.  However, these will, as always, be
constrained by gearing levels, by the amount of available distributable reserves
(which, in such a young Company, can be a limiting factor) and other potential
uses for these reserves which may secure enhanced shareholder returns.



Dividend

As a result of this year's strong performance in terms of total returns, but
allowing for the cash requirements of the business and in line with the
Company's preference for a progressive dividend policy, the Board is
recommending a final dividend of 5.25p per share.  With the interim dividend of
2.75p per share, this makes a total distribution for the year of 8.0p per share
as compared with 7.5p in the previous year, an uplift of 7%.  It is intended
that the final dividend will be paid on 5 September 2003 to shareholders on the
register as at 15 August 2003.  The aim to deliver strong dividend growth has
been upheld since Quintain was listed in 1996 and we anticipate maintaining this
policy for as long as it remains in the best interests of the Company and its
shareholders.



Board Changes

We were delighted to welcome two new directors to the board during the year to
31 March 2003.  James Hamilton Stubber was appointed as Chief Operating Officer
in September 2002 and John Plender joined the Company as a non-executive
director and a member of the Audit and Remuneration Committees in July.  During
the year, we also announced the resignations of two executive directors, Edward
Dugdale and Michael Riley and one non-executive director, John Evans.  Over the
next few years the Company will progress significantly. I have been asked by the
Board to oversee this process and am pleased to report that I shall continue as
Chairman.



I would also like to take this opportunity to welcome the Wembley staff to
Quintain and stress my gratitude to everyone working for the Company including
my fellow directors, for their continuing hard work and flow of ideas which have
enabled our Company to continue to perform so well.



Outlook

This has been a year of significant achievement for Quintain.  We continued to
benefit from the income from our core portfolio of assets and have also created
an exceptional pipeline of Special Projects, including the regeneration of the
Greenwich Peninsula and Wembley.  With these exciting opportunities and a
committed and entrepreneurial team, I am confident that the Company faces a
future of ongoing growth and success.







Nigel Ellis

Chairman



4 June 2003







Chief Executive's Review





Last year was a landmark in the history of your Company. We reached significant
milestones in our major projects whilst remaining committed to acquiring
properties for their financial characteristics.  We thereby achieved a total
return ungeared in the UK of 12.2% which compared favourably with the IPD
benchmark of 8.7% and further consolidated our record of outperformance.



The fundamentals of the Company remain robust: we have a well financed
reversionary portfolio with an average lease length of 15 years and upside
potential from rent reviews, planning gain, development and marriage value. The
defensive nature of the portfolio is reliant neither on rental growth nor
positive yield shift.



The business remains focused on three areas, namely Special Projects, the
Investment Portfolio and Structured Finance.



Special projects

Highlights for special projects included the purchase of 55 acres of land
adjoining Wembley Stadium and the resolution to grant planning consent on the
Greenwich Peninsula.



Following the year end, the London Borough of Greenwich unanimously resolved to
grant consent for 14.1 million sq ft of mixed use development, including 10,000
homes. Reaching this milestone within four months of the application's
submission was a significant achievement.



At this stage we anticipate commencing development in Spring 2004. The joint
venture (Meridian Delta Limited) with Lend Lease is working well and we are
pleased with this association.



In August 2002 we acquired Wembley (London) Limited which owns 44 acres of land
including the Arena, Conference Centre and Exhibition businesses. In March 2003,
we acquired the 11 acre Palace of Industry site, with a passing rent of £1.1
million per annum at an initial yield of 9.1%. This acquisition reflected our
strategy of acquiring assets with income for their development potential,
coupled with the prospect of securing a key adjoining landholding. We are now
working closely with the London Borough of Brent, with considerable additional
help from the London Development Agency. It is our intention to submit a
planning application in the autumn with a view to securing an appropriate
setting for the national stadium in 2005, as part of a major new mixed use
community for London.



Wembley and Greenwich combined represent one of the largest urban regeneration
programmes in any major city involving the development of circa 20 million sq ft
on 250 acres, creating over 30,000 jobs and more than 14,000 homes.



During the year, we completed our 250,000 sq ft retail High Street scheme in
Scunthorpe, which is now over 90% let and has generated a considerable valuation
surplus.



At Deansgate, Manchester, we anticipate submitting a planning application for
155,000 sq ft of residential and 55,000 sq ft of retail within the calendar
year.



In anticipation of a decline in the City of London market we sold most of our
City office holdings with the result that our exposure now stands at less than
3% of our portfolio by value. We only own two adjoining buildings in Gracechurch
Street, which we have retained because of their 120,000 sq ft development
consent. One of them is let to Standard Chartered for a further 14 years.  The
other has been refurbished and is being marketed.



Incorporated within the Bristol local plan, our 65 acre site at Emersons Green,
forms part of a larger 300 acre site, which is allocated for 2,250 homes and 1
million sq ft of employment use, which is due for review at the local planning
inquiry this Autumn.



Investment portfolio

With a return of 12.2%, our investment portfolio remains at the core of our
business.  We maximise our returns to shareholders by stock-picking assets for
their financial characteristics and will dispose of assets when appropriate.
Overseas assets continued to make a positive contribution to total return.



One of the major contributors to the outperformance was the high-yielding,
retail portfolio acquired from Chesterfield, which delivered a revaluation
surplus of £19.1 million.   We took an opportunity to dispose of our 127,000 sq
ft Wheatsheaf shopping centre in Rochdale and will recycle the capital to
acquire other assets with higher prospective total rates of return.



We continue to balance income with opportunity in our major holdings at St
David's House, Cardiff, Anglia Square, Norwich and Queensway, Birmingham,
(adjoining the Bull Ring).  These properties offer safe and secure medium term
income with the prospect of significant land assembly and regeneration
opportunities.



Excluding Wembley, we purchased £65 million of properties yielding 8.1%, the two
largest being a freehold office building in central Manchester (£9.3 million)
and a district retail centre in Erdington, near Birmingham (£8.3 million).



Structured finance

We have over £260 million of funds under management co-invested with leading UK
institutions including  Morley Asset Management, Hermes and Bank of Scotland.
We are confident that we have the ability to grow this business considerably as
appetite for specialist collective investment vehicles gathers pace amongst the
investment community.



Fund management activities bring secure fee income, enhanced returns and an
efficient way of recycling capital. With this in mind, our current focus is on
non-traditional, specialised, high-yielding real estate assets, particularly
those where there are high barriers to entry or restructuring opportunities.



We calculate that the inclusion of UK and overseas joint ventures increases the
Portfolio's return to 12.6%.



Outlook

A progressive dividend is a strong indicator of sound financial prospects and
management and I am pleased that we have been able to increase our dividend
again this year.  We have deliberately strengthened our team in the areas of
project management, housing and planning.  With a strong balance sheet, we are
well positioned both in terms of our skills and finances to capitalise on the
many opportunities ahead. Our limited development exposure is underpinned by the
income from our investment portfolio and we look to the future with great
confidence.





Adrian Wyatt

Chief Executive



4 June 2003







Financial Review





Returns on shareholders' equity

Quintain's total return, as measured by dividend plus increase in net asset
value, was 16% for the year to 31 March 2003 (2002: 13.1%). The largest
contributor to this increase was the surplus arising from revaluation of the
portfolios of 38.6p per share. Retained profits added 1.5p and share buy backs
contributed 2.5p.



Profit and loss account

Reported profit before tax for the year was £14.0 million (2002: £16.9 million).
Turnover was up £7.2 million at £57.6 million. This was a result of higher
levels of trading property sales, up £9.5 million at £12.1 million. In addition,
£6 million of income from leisure operations at Wembley was included for the
first time.



On 6 August 2002, the Company acquired the whole of the issued share capital of
Wembley (London) Limited. The operational business has been consolidated in the
profit and loss account. This has caused distortions in comparisons with prior
years so, in analysing the profit and loss account, amounts in relation to
Wembley will be identified separately.



In the year to 31 March 2003, gross rental income fell by £7.8 million, as a
result of sales during the year raising proceeds of £87.6 million, with
associated annual rents of £7.0 million, and sales in the prior year of £109.7
million providing £9.8 million of rent annually. Rents passing at 31 March 2003
were £38.5 million, compared with £36 million at 31 March 2002 and £46 million
at 31 March 2001. The estimated rental value of the current portfolio is £52.2
million.



Voids have fallen during the year and now stand at 2.6% of ERV (2002: 5.6%).
This reduction has come about not only from lettings but also the sale of vacant
properties, the largest of which was the disposal of Chaucer House, SE1. This
property had an ERV of £0.7 million (1.4%). We also have development properties
where we have taken leases back from tenants. As at 31 March 2003 these
properties made up 5.7% of ERV (2002: 5.9%), the largest of which was at 36
Gracechurch Street, EC3 (2.4%).



The average unexpired lease term is 15 years. Armageddon, which is when rent
equals interest assuming no tenants renew and all breaks are exercised, is 2020.



Property outgoings increased from £7.2 million to £8.2 million. In particular,
Wembley added £0.6 million.  We also suffered a loss of £1.0 million on a
portfolio of public houses. As disclosed at the half-year, Albion Pub
Contractors Limited, a tenant in 23 of our pubs, went into liquidation. The
majority of these pubs have now been let and sold, but we are still operating
seven pubs and anticipate a small loss on these in the next six months. £0.1
million of bad debts were written off in the year compared with £0.5 million in
the previous year.



Profit from the sale of trading properties increased by £1.8 million to £2.5
million. Sales were significantly higher at £12.1 million (2002: £2.6 million).
The main contributors in terms of profit were Livesey Street, Sheffield (£1.1
million), Park Lane, Croydon (£0.8 million) and Woodlands Court, Silvergrove,
Bristol (£0.6 million).  Other income fell a net £0.5 million to £2.2 million.
Surrender premiums were £0.5 million (2002 : £1.7 million). This was partially
offset by first time management fees of £0.5 million relating to Quercus and
Quart.



Administration expenses of £10.4 million were made up of £2.4 million in
relation to Wembley and £8.0 million from continuing operations (2002: £8.5
million). This includes an exceptional receipt of £0.8 million included within
legal and professional fees. It is anticipated that administration expenses will
increase next year, both from the incorporation of a full year's cost from
Wembley and the requirement for additional resources to support some of our
significant projects.



Administration expenses include £0.5 million payable to our auditors for
non-audit work. The majority of this relates to taxation. We believe that using
the same firm for audit and tax work brings substantial benefits to the company
both in cost savings and added value. Where these benefits do not accrue, we use
other accountancy firms, to whom fees of £0.4 million were paid in the year.



Wembley contributed £1.2 million towards operating profit. Of this, the Arena
generated receipts of £1.4 million, the Conference and Exhibition businesses
£1.1 million and the Sunday market £0.6 million, before overheads.



Net interest payable in the year amounted to £17.8 million compared with £21.1
million in the prior year. The fall reflects both a reduction in the average
cost of debt and a lower average level of debt during the year. Interest
capitalised in the year was £2.3 million (2002: £1.7 million), of which £0.9
million related to The Parishes, Scunthorpe, £0.7 million to Meridian Delta and
£0.6 million to development sites at the Wembley complex. Interest receivable in
the year was £0.7 million compared with £1.2 million in the previous year.



Taxation

The Company has maintained a low effective tax rate of 11.8% (2002 : 12.0%) as a
result of capital allowances on properties disposed of, tax losses mainly
inherited from corporate acquisitions and certain other capitalised costs
deductible for tax purposes. A full reconciliation of the current tax charge is
shown in Note 7 to the accounts.



Assuming all properties are sold at the revalued amounts without any tax
mitigation, the Company has an estimated potential capital gains tax liability
of £42.4 million (2002: £29.6 million). This equates to 33.4p per share.



Earnings and Dividend

Earnings per share were 9.4p (2002: 11.5p). In line with our progressive
dividend policy, the recommended final dividend of 5.25p per share would give
rise to a total dividend of 8p, an increase of 6.7 % compared with the 7.5p
dividend for the year to 31 March 2002.



Balance Sheet

At 31 March 2003, the investment portfolio was valued at £722.5 million,
compared with £608.2 million at the previous year-end. The movement in the value
of the portfolio reflected purchases of £135.9 million including £66 million in
relation to Wembley, capital expenditure of £19.1 million, disposals of £86.9
million and a revaluation uplift of £48.2 million. Valuations are net of
purchasers' costs including stamp duty. Following on from the Statement of
Practice on disadvantaged areas, from 10 April 2003 no stamp duty is payable on
property transactions in areas classified as 'disadvantaged'. Quintain has £178
million of properties in these areas. The year-end valuation has not taken
account of any reduction in purchase costs arising from this.



Major revaluation movements included an uplift of £17.9 million on the Wembley
complex, where significant progress has been made towards submission of a
planning application as well as marriage value from the acquisition of the 11
acre Palace of Industries site and greater certainty surrounding the
redevelopment of the Wembley Stadium.



The Meridian Delta joint venture for the redevelopment of the Greenwich
Peninsula increased in value by £10.6 million. During the year we agreed terms
with English Partnerships and then submitted a planning application. We have
subsequently obtained a resolution to grant permission for 14.1 million sq ft of
mixed use development. An additional factor in the uplift is the consolidation
of land holdings.



The basic net asset value per share as at 31 March 2003 was 348p, an uplift of
13.4% from the 307p restated for the prior year. The restatement of 0.4p per
share arose as a result of the accounting policy change set out in note 1(n) to
the accounts and is discussed in more detail under 'Financial reporting'. On a
diluted basis, the net asset value per share rose 13.2% from 302p to 342p.  The
triple net asset value per share was 295p after taking into account 13.4p for
marking market to debt and 33.4p for capital gains tax not provided for.



Joint ventures

At 31 March 2003, Quintain had a net investment in joint ventures of £30.5
million. Of this, £28.3 million was invested in Quercus, a joint venture with
Morley Asset Management, the asset management arm of Aviva.



Debt

Gearing at 31 March 2003 was 63% (2002: 59%). Compared with a target level of
100%, this gives ample scope for funding of existing projects and new deals. At
the year-end there were £75.5 million of committed facilities undrawn. As at 31
March 2003, Quintain was fully hedged with a mixture of fixed and capped rates.
Company policy is to be between two thirds and fully hedged as, given the nature
of its income, it seeks to match the revenue profile with certainty in relation
to financing costs. The weighted average rate of interest of the Company's debt
at the year-end was 6.2% (2002: 6.4%) and the weighted average maturity of
borrowing was approximately 5 years.



Virtually all debt is repayable between two and six years. Of this, the largest
facility of £200 million is repayable in 2009.



The fair value deficit on fixed rate debt and interest rate hedging instruments
as disclosed in accordance with FRS 13 was £17.1 million, equivalent to a
reduction in the Company's net asset value per share of 13p, compared with 3p at
the previous year-end. After taking into account tax relief, these figures would
be 9p and 2p respectively. This movement reflects the fall in the interest rate
yield curve.



Interest cover for the year ended 31 March 2003 was 1.6 times (2002 : 1.7
times).



Pensions

Quintain operates a defined contribution scheme and has no liabilities arising
under FRS 17 Retirement Benefits.



Financial reporting

For the year ended 31 March 2003 there has been a change in accounting policy
arising from UITF 34, Pre-contract costs. This means that costs arising on a
transaction will be charged to the profit and loss account until a contract is
virtually certain. Results for the year ended 31 March 2002 have been restated
by £0.3 million to reflect expenditure incurred prior to obtaining preferred
bidder status from English Partnerships in relation to the Millennium Dome and
the redevelopment of the rest of the Greenwich Peninsula. Further details are
set out in Note 1(n) to the accounts.



For the year ended 31 March 2006, the Company will be required to prepare
consolidated financial statements under International Financial Reporting
Standards (IFRS). The standards are still in the process of being refined and
the implications for Quintain are being kept under active review.


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