Final Results part 2

Quintain Estates & Development PLC 13 June 2007 QUINTAIN ESTATES AND DEVELOPMENT PLC CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2007 2007 2006 Notes £000 £000 Revenue from continuing operations 2 43,426 42,051 Cost of sales in respect of continuing operations 2 (12,542) (15,295) Gross profit from continuing operations 30,884 26,756 Administrative expenses 4 (25,819) (22,660) Operating profit before recognition of results from non-current property asset sales and revaluation 5,065 4,096 Profit from sale of non-current property assets 11,823 14,188 Profit from sale of shares in subsidiaries 6,786 - Gain on revaluation of investment properties 12,181 23,911 Deficit on revaluation of investment properties (924) (1,777) Deficit on revaluation of development properties (182) (1,834) Reversal of deficit on revaluation of development 1,255 3,598 properties Share of profit from joint ventures 12i 23,011 32,864 Share of (loss) profit from associates 12ii (455) 393 Operating profit before net finance expenses 58,560 75,439 Interest payable (12,174) (9,041) Change in fair value of derivative financial instruments 1,493 (2,994) Finance expenses (10,681) (12,035) Finance income 3,759 1,549 Net finance expenses 5 (6,922) (10,486) Profit before tax 51,638 64,953 Current tax (8,347) (3,033) Deferred tax 1,508 (2,429) Tax charge for the year 6i (6,839) (5,462) Profit after tax but before result from discontinued operations 44,799 59,491 Loss from discontinued operations, net of tax 7 (34) (2,829) Profit for the financial year 44,765 56,662 Earnings per share from continuing operations (pence): 8i(a) basic 35.0 46.1 diluted 34.3 45.2 Earnings per share from total operations (pence): 8i(b) basic 34.9 43.9 diluted 34.3 43.0 Dividends per share (pence): 9 interim (paid) 3.50 3.25 final (proposed) 8.25 7.25 Total 11.75 10.50 In accordance with IAS 10, 'Events after the Balance Sheet Date', the Consolidated Balance Sheet reflects dividends which have been paid in the year. Proposed dividends are shown for information purposes only. QUINTAIN ESTATES AND DEVELOPMENT PLC CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 31 March 2007 2007 2006 Notes £000 £000 Foreign currency translation differences (319) 278 Gain on revaluation of development properties 179,284 100,798 Deficit on revaluation of other non-current investments (882) - Effective portion of changes in fair value of cashflow hedges, net of 7,047 (1,676) recycling Share of recognised income and expense in joint ventures, net of tax 12i 546 (102) Tax recognised on income and expense recognised directly in equity 6iii (44,328) (31,435) Net income recognised directly in equity 141,348 67,863 Profit for the financial year 44,765 56,662 Total recognised income and expense for the financial year 186,113 124,525 QUINTAIN ESTATES AND DEVELOPMENT PLC CONSOLIDATED BALANCE SHEET as at 31 March 2007 2007 2006 Notes £000 £000 Non-current assets Investment properties 10 288,938 290,088 Development properties 10 769,305 599,455 Owner-occupied properties, plant and equipment 11 1,470 942 Investment in joint ventures 12i 170,099 120,076 Investment in associates 12ii 1,222 1,677 Other non-current investments 12iii 3,044 2,716 Non-current receivables 13 45,349 - Total non-current assets 1,279,427 1,014,954 Current assets Trading properties 14 6,831 6,814 Trade and other receivables 15 73,667 72,312 Current investments 16 4 7 Cash and cash equivalents 20i 36,048 7,954 Total current assets 116,550 87,087 Total assets 1,395,977 1,102,041 Current liabilities Bank loans and other borrowings 18 (3,000) (4,432) Trade and other payables 17 (37,466) (49,104) Current tax liability (9,216) (1,521) Total current liabilities (49,682) (55,057) Non-current liabilities Bank loans and other borrowings 18 (333,924) (246,626) Deferred tax liability 6iv (149,620) (106,800) Obligations under finance leases 19 (11,734) (12,213) Other payables (4,919) (4,670) Total non-current liabilities (500,197) (370,309) Total liabilities (549,879) (425,366) Net assets 846,098 676,675 Equity Issued capital 23 32,457 32,324 Share premium account 22 50,797 47,265 Revaluation reserve 22 370,814 248,836 Other capital reserves 22 108,136 113,227 Cashflow hedge reserve 22 671 (4,808) Translation reserve 22 86 405 Retained earnings 22 292,481 242,920 Own shares held reserve 22 (9,344) (3,494) Equity shareholders' funds 846,098 676,675 Net asset value per share (pence): 8ii basic 660 526 diluted 655 516 Approved by the Board of Directors and signed on its behalf by: ADRIAN WYATT REBECCA WORTHINGTON Director Director 13 June 2007 QUINTAIN ESTATES AND DEVELOPMENT PLC CONSOLIDATED CASHFLOW STATEMENT for the year ended 31 March 2007 2007 2006 Notes £000 £000 Operating activities Profit for the financial year 44,765 56,662 Adjustments for: Short leasehold amortisation 248 408 Depreciation of plant and equipment 472 441 Cost relating to share-based payment schemes 3,718 1,180 Net finance expenses 6,922 10,486 Profit from sale of non-current property assets (11,823) (14,188) Profit from sale of shares in subsidiaries (6,786) - Gain on revaluation of investment properties (12,181) (23,911) Deficit on revaluation of investment properties 924 1,777 Deficit on revaluation of development properties 182 1,834 Reversal of deficit on revaluation of development properties (1,255) (3,598) Share of profit from joint ventures (23,011) (32,864) Share of loss (profit) from associates 455 (393) Loss from sale of plant and equipment 61 30 Impairment of other investments 69 632 Tax on continuing operations 6,839 5,462 Tax on discontinued operations (14) (1,213) 9,585 2,745 Decrease in trade and other receivables 1,870 7,830 (Decrease) increase in trade and other payables (7,061) 430 (Increase) decrease in trading properties (17) 3,313 Cash generated from operations 4,377 14,318 Interest paid (18,930) (15,395) Interest received 3,587 1,526 Tax paid (520) (231) Net cashflow from operating activities (11,486) 218 Investing activities Purchase and development of property assets (133,096) (112,058) Purchase of plant and equipment (1,010) (2,365) Proceeds from sales of non-current assets 117,595 88,390 Tax paid on sales of non-current assets (3,230) (5,486) Proceeds from sale of current investments 3 12 Proceeds from sale of shares in subsidiary companies 20,476 - Acquisition of shares in subsidiary companies - (7,335) Acquisition of investment in joint ventures (2,335) (553) Loans to joint ventures and associates (17,588) (24,474) Distributions received from joint ventures 8,400 3,002 Acquisition of other investments (54,962) (3,160) Proceeds from sale of other investments 7,851 - Net cashflow from investing activities (57,896) (64,027) Financing activities Issue of shares 1,120 247 Purchase of own shares for cancellation - (108) Investment in own shares (6,060) (1,955) Proceeds from new borrowings 315,000 281,004 Repayment of borrowings (197,432) (205,150) Payment of loan issue costs (431) (400) Payment of finance lease liabilities (873) (190) Equity dividends paid (13,744) (12,867) Net cashflow from financing activities 97,580 60,581 Net increase (decrease) in cash and cash equivalents 28,198 (3,228) Cash and cash equivalents at start of year 7,954 11,090 Effect of exchange rate fluctuations on cash held (104) 92 Cash and cash equivalents at end of year 36,048 7,954 Net cashflow from discontinued operations included in net cashflow from operating activities 7 (489) (2,374) QUINTAIN ESTATES AND DEVELOPMENT PLC NOTES TO THE ACCOUNTS for the year ended 31 March 2007 1 ACCOUNTING POLICIES i) BASIS OF PREPARATION The Group's financial statements have been prepared and approved by the Board in accordance with International Financial Reporting Standards and interpretations issued by the International Financial Reporting Interpretations Committee as adopted by the European Union ('IFRS') and those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The financial statements are presented in Sterling and have been prepared on an historical cost basis except that investment and development properties, other non-current investments and certain financial instruments as described in section xvii below have been stated at fair value. The Group has adopted the amendments to IAS 39, 'Financial Instruments: Recognition and Measurement', and IFRS 4, 'Insurance Contracts', which apply in relation to financial guarantee contracts, both of which are effective for accounting periods commencing on or after 1 January 2006. Where Group companies enter into financial guarantee contracts to guarantee the indebtedness or obligations of other companies within the Group, these are considered to be insurance arrangements and accounted for as such. In this respect, the guarantee contract is treated as a contingent liability until such time as it becomes probable that the guarantor will be required to make a payment under the guarantee. Accordingly, the amendments have not had any impact upon these financial statements. As at the date of these financial statements, IFRS 7, 'Financial Instruments: Disclosure', had been issued but was not effective and has not been adopted by the Group. On adoption, the Standard will affect only presentation and disclosure and will not result in any adjustments to the financial statements. ii) SIGNIFICANT JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of financial statements under IFRS requires the Board to make judgements, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities as at the date of the financial statements and the reported amount of revenue and expense during the reporting period. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements that are not readily apparent from other sources. However, the actual results may differ from these estimates. The measurement of fair value constitutes the main area of judgement exercised by the Board in respect of the Group's results. In relation to the Group's investment and development properties, the Board has relied upon the external valuations carried out by professionally qualified valuers in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors. Copies of the valuation reports of Savills Commercial Limited and Jones Lang LaSalle Limited, which together account for 98.5% of these categories of non-current assets, and of Christie + Co which values the investment properties within Quercus, currently the Group's principal joint venture, are contained within the annual report. In respect of derivative financial instruments, the Board has relied on the valuation carried out by JC Rathbone Associates Limited, financial risk consultants, and the basis for this exercise is referred to below in section xvii of this note and in note 21. The Board has also exercised its judgement in relation to the recognition of certain deferred tax assets, which is discussed in further detail in note 6iv, and in assessing the recoverability of trade receivables by reference to their age and the ability of debtors to pay. Other areas of judgement, risk and uncertainty which are relevant to an understanding of these results and the Group's financial position are referred to in the Operating and Financial Review. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. iii) BASIS OF CONSOLIDATION The Group's financial statements consolidate those of the Company and its subsidiaries, together referred to as the Group, and equity account the Group's interest in joint ventures and associates. The Parent Company financial statements present information about the Company as a separate entity and not about the Group. The Company has elected to prepare its parent company financial statements in accordance with UK GAAP. Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date it ceases. A joint venture is an undertaking in which the Group has a long term interest and over which it exercises joint control. An associate is an entity in which the Group has significant influence but not control over financial and operating policies. The Group equity accounts for its share of net profit after tax of joint ventures and associates, which includes its share of fair value adjustments to their investment properties, through the Income Statement. The effective portion of changes in the fair value of cashflow hedges within joint ventures less any related tax is recognised directly in equity. All other changes are recognised in the Income Statement. The Group's interest in the net assets of joint ventures and associates is included in the Consolidated Balance Sheet. iv) FOREIGN CURRENCY Assets and liabilities of foreign operations are translated into Sterling at exchange rates ruling at the Balance Sheet date. Operating income and expenses are translated at average exchange rates. The year end and average rates used for these purposes were as follows: Year end Year end Average Average 2007 2006 2007 2006 France £1= €1.47 €1.44 €1.49 €1.47 United States £1= $1.96 $1.74 $1.89 $1.79 Exchange differences arising from the translation of the net investment in foreign operations are reflected in the translation reserve and released to the Income Statement upon disposal of the foreign operation. v) REVENUE AND COST OF SALES Revenue is stated net of VAT and comprises rental income, proceeds from sales of trading properties, income from hotel operations, fees from fund management, commissions and other income. Rental income from investment and development properties leased out under operating leases is recognised in the Income Statement on a straight-line basis over the term of the lease. Contingent rents such as turnover rents and indexed rents are recognised as income in the periods in which they are earned. Rent reviews are recognised when such reviews have been agreed with tenants. Lease incentives are recognised as an integral part of the net consideration for the use of the property and amortised on a straight-line basis over the term of the lease, or the period to the first tenant break, if shorter. Property operating costs are expensed as incurred including any element of service charge expenditure not recovered from tenants. Sales of trading properties are recognised on the unconditional exchange of contracts by the Balance Sheet date. Income from hotel operations represents income receivable from the Plaza Hotel, Wembley prior to the redevelopment of the site, for which outline planning consent has been obtained. Fees from fund management relate to base and performance fees receivable in respect of asset management together with property procurement fees. Performance fees are recognised when it is likely that performance criteria have been met. Other income comprises income receivable from derivative instruments entered into by the Group, tenant lease surrender premiums, insurance commission, car parking receipts, property management fees and miscellaneous income. vi) PURCHASE AND DISPOSAL OF PROPERTIES HELD AS NON-CURRENT ASSETS Property purchases and sales are recognised in the accounts on the date of unconditional exchange or, where an exchange is conditional, on the date that conditions have been satisfied. Profits or losses arising on disposal are calculated by reference to the carrying value of the asset at the beginning of the year, adjusted for subsequent capital expenditure. vii) IMPAIRMENT The Group's assets are reviewed at each reporting date to determine whether there is any indication of impairment. If such indication becomes evident, the asset's recoverable amount is estimated and an impairment loss recognised whenever the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is the greater of its net selling price and its value-in-use. The value-in-use is determined as the net present value of the future cashflows expected to be derived from the asset, discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Any impairment of financial assets is based on the original effective interest rate attributable to the financial asset on acquisition. viii) EMPLOYEE BENEFITS Pensions Contributions to employees' personal pension plans are charged to the Income Statement as incurred. Share-based payment schemes The fair value of equity rights is estimated using the Black Scholes and binomial models at the date of grant to Directors and staff and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest rate. The fair value is then amortised through the Income Statement on a straight-line basis over the vesting period. Expected volatility is determined based on the historic share price volatility (market price) for the Company on the grant date over a period matched to the expected life of the awards. ix) CAPITALISATION OF BORROWING COSTS Net borrowing costs in respect of capital expenditure on properties under development or undergoing refurbishment are capitalised. Interest is capitalised using the Group's weighted average cost of borrowing from the commencement of development work until the date of practical completion. The capitalisation of finance costs is suspended if there are prolonged periods when development activity is interrupted. All other borrowing costs are recognised in the Income Statement in the period in which they are incurred. x) TAX Tax is included in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case the related tax is recognised in equity. Current tax is the expected tax payable on the taxable income for the year using tax rates applicable at the Balance Sheet date. Tax payable upon the realisation of revaluation gains recognised in prior periods is recorded as a current tax charge with a release of the associated deferred taxation. Deferred tax is provided on all temporary differences, except in respect of investments in subsidiaries and joint ventures where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is provided using the Balance Sheet liability method in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates applicable at the Balance Sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. xi) DISCONTINUED OPERATIONS In accordance with IFRS 5, 'Non-current Assets held for Sale and Discontinued Operations', the loss from discontinued operations is shown in the Income Statement net of tax. xii) INVESTMENT PROPERTIES Investment properties are properties owned or leased by the Group which are held either for long term rental growth or for capital appreciation or both. Investment property is initially recognised at cost including related transaction costs and valued annually by professionally qualified external valuers. Additions to investment properties consist of costs of a capital nature and in the case of investment properties under development, capitalised interest. Investment properties are independently valued annually by external valuers at market value. The valuations are prepared by considering the aggregate of the net annual rents receivable from the properties and where relevant, associated costs. A yield which reflects the specific risks inherent in the net cashflows is then applied to the net annual rentals to arrive at the property valuation. Gains or losses arising from changes in the fair value of investment property are included in the Income Statement of the period in which they arise. When the Group redevelops an existing investment property for continued future use as an investment property, the property remains an investment property and is not reclassified. xiii) DEVELOPMENT PROPERTIES Properties acquired with the intention of redevelopment are classified as development properties and stated at fair value in accordance with IAS 16, ' Property, Plant and Equipment'. Changes in fair value are recognised through equity in the revaluation reserve. However, a deficit on revaluation of a development property is recognised in the Income Statement to the extent it exceeds any surplus held in the revaluation reserve relating to a previous revaluation of that property. Similarly, a surplus on revaluation is credited to the Income Statement to the extent of a deficit previously charged. All costs directly associated with the purchase and construction of a development property are capitalised. When development properties are completed, they are reclassified as investment properties and any accumulated balance on revaluation is transferred to retained earnings. Development properties which are independently valued annually by external professional valuers are stated at estimated market value on completion less estimated costs to complete. xiv) LEASES The Group as lessor Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and rewards of ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases. The Board has exercised judgement in considering the potential transfer of risks and rewards of ownership in accordance with IAS 17, 'Leases', for all properties leased to tenants and has determined that all such leases are operating leases. Accordingly, all the Group's leasehold properties are classified as investment or development properties, as appropriate, and included in the Balance Sheet at fair value. The Group as lessee The obligation to the freeholder or superior leaseholder for the buildings element of the leasehold is included in the Balance Sheet at the present value of the minimum lease payments at inception. Payments to the Group's landlords are apportioned between a finance charge and a reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Rent reviews are charged as an expense in the period in which they are incurred. xv) OWNER-OCCUPIED PROPERTIES, PLANT AND EQUIPMENT Fixtures, fittings and equipment are carried at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the useful life of these assets estimated at between three to five years. xvi) TRADING PROPERTIES Trading properties are properties acquired or developed and held for sale and are shown at the lower of cost and net realisable value. The cost of trading properties is determined on the basis of specific identification of their individual costs. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs to completion and the estimated costs necessary to make the sale. xvii) FINANCIAL INSTRUMENTS Non-current receivables Non-current receivables are held at amortised cost. Other non-current investments Other non-current investments are non-derivative investments that are designated as available for sale. As permitted, these were previously held at cost less impairment owing to information on which to assess fair value being unavailable. At the current year end, these investments are shown at fair value. Trade and other receivables Trade and other receivables are recognised at invoiced values less provisions for impairment. A provision for impairment of trade receivables is established where there is objective evidence that the Group will not be able to collect all amounts due according to the agreed terms of the receivables concerned. Cash and cash equivalents Cash and cash equivalents consist of cash in hand, deposits with banks and other short term highly liquid investments with original maturities of three months or less. Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Borrowings are subsequently stated at amortised cost with any difference between the amount initially recognised and the redemption value being recognised in the Income Statement over the period of the borrowings on an effective interest rate basis. Trade and other payables Trade and other payables are non-interest bearing and are recognised at invoiced amount. Derivative financial instruments The Group uses interest rate swaps to help manage its interest rate risk. These derivative financial instruments are recognised initially at fair value and subsequently re-measured. The gain or loss on re-measurement to fair value is recognised immediately in the Income Statement, unless the derivatives qualify for hedge accounting as cashflow hedges, in which case the effective element of the gain or loss is recognised directly through equity in a hedging reserve. The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the Balance Sheet date, taking account of current interest rates and the current creditworthiness of the swap counterparties. The Group's interest rate swaps are shown in these accounts at fair value as derived by JC Rathbone Associates Limited, financial risk consultants, based on market prices, estimated future cashflows and forward rates as appropriate. Other derivative instruments From time to time, the Group invests in derivatives to mitigate or enhance its exposure to a particular class or a spectrum of property assets and related businesses. Such instruments are accounted for initially at fair value with subsequent adjustments to fair value being reflected through the Income Statement. xviii) OWN SHARES HELD BY ESOP TRUSTS AND TREASURY SHARES Transactions of the Group-sponsored ESOP Trusts, The Quintain Group Employee Benefit Trust and The Quintain Estates and Development Deferred Bonus Plan Trust, are included in the Group's financial statements. In particular, the Trusts' purchases of shares in the Company and shares acquired as treasury shares are debited directly to equity. 2 REVENUE, COST OF SALES AND GROSS PROFIT 2007 2007 2007 2006 2006 2006 Revenue Cost of Gross Revenue Cost of Gross sales profit sales profit £000 £000 £000 £000 £000 £000 Rental income 29,661 (6,821) 22,840 29,897 (8,210) 21,687 Income from sales of trading properties 28 - 28 4,065 (3,687) 378 Income from hotel operations 3,376 (2,019) 1,357 - - - Fees from fund management 4,650 (1,661) 2,989 3,290 (1,375) 1,915 Other income 5,711 (2,041) 3,670 4,799 (2,023) 2,776 Continuing operations 43,426 (12,542) 30,884 42,051 (15,295) 26,756 Discontinued leisure operations (note 7) 1,295 (716) 579 5,848 (6,738) (890) 44,721 (13,258) 31,463 47,899 (22,033) 25,866 The cost of sales in relation to rental income comprised: 2007 2006 £000 £000 Service charge expenditure 3,613 3,998 Service charge recovery (2,224) (2,489) Irrecoverable service charges 1,389 1,509 Rents payable 223 243 Property management fees 632 547 Legal and professional fees 883 787 Short leasehold amortisation 248 408 Other property costs 3,446 4,716 6,821 8,210 Other income was derived from: 2007 2007 2007 2006 2006 2006 Revenue Cost of Gross Revenue Cost of Gross sales profit sales profit £000 £000 £000 £000 £000 £000 Income from property derivatives 2,056 (826) 1,230 2,026 (453) 1,573 Surrender premiums 1,608 (108) 1,500 1,154 - 1,154 Management fees and commissions 1,175 (410) 765 636 - 636 Car parking income 724 (255) 469 525 (141) 384 Impairment of other non-current investments - - - - (632) (632) Abortive project costs - (325) (325) - (737) (737) Sundry income 148 (117) 31 458 (60) 398 5,711 (2,041) 3,670 4,799 (2,023) 2,776 3 SEGMENTAL ANALYSIS i) BUSINESS SEGMENTAL ANALYSIS The analysis of the Group's results by business segment, which are described in the Operating and Financial Review, was as follows: 2007 2006 2007 2006 2007 2006 2007 2006 Gross Gross Gross Gross Share of Share of Profit from Profit from revenue revenue profit profit profit from profit from sale of sale of joint joint non- non- ventures ventures current current and and assets assets associates associates £000 £000 £000 £000 £000 £000 £000 £000 Investment portfolio 16,690 23,720 12,450 17,155 - - 3,461 13,959 Special projects 19,800 13,644 13,597 6,287 (685) 542 9,356 115 Fund management 6,936 4,687 4,837 3,314 23,241 32,715 5,792 114 43,426 42,051 30,884 26,756 22,556 33,257 18,609 14,188 2007 2006 Profit Profit before before tax tax £000 £000 Investment portfolio 25,673 46,840 Special projects 23,836 10,350 Fund management 34,870 40,909 84,379 98,099 Administrative expenses (25,819) (22,660) Net finance expenses (6,922) (10,486) Profit before tax from continuing operations 51,638 64,953 Loss before tax from discontinued operations (note 7): Special projects (48) (4,042) Profit before tax from total operations 51,590 60,911 2007 2007 2007 2007 2006 2006 2006 2006 Investment Development Joint Total Investment Development Joint Total properties properties ventures revaluation properties properties ventures revaluation at at valuation and uplift at valuation at valuation and uplift valuation associates associates £000 £000 £000 £000 £000 £000 £000 £000 Investment 228,053 24,481 - 10,559 219,588 19,040 - 17,176 portfolio Special 51,150 738,524 42,758 181,938 42,100 575,415 30,409 102,259 projects Fund 9,735 6,300 128,563 26,383 28,400 5,000 91,344 35,126 management 288,938 769,305 171,321 218,880 290,088 599,455 121,753 154,561 2007 2006 Capital expenditure £000 £000 Investment portfolio 27,217 42,775 Special projects 52,445 68,468 Fund management 55,719 5,839 135,381 117,082 ii) GEOGRAPHICAL SEGMENTAL ANALYSIS The geographical split of the Group's results was as follows: 2007 2006 2007 2006 2007 2006 2007 2006 Gross Gross Gross Gross Profit Profit Profit Profit revenue revenue profit profit from sale from sale before before of of non- tax tax non-current current assets assets £000 £000 £000 £000 £000 £000 £000 £000 United Kingdom and Channel Islands 42,530 40,388 30,527 25,864 17,818 14,188 50,629 63,341 France 886 1,628 347 857 791 - 1,025 1,612 United States 10 35 10 35 - - (16) - 43,426 42,051 30,884 26,756 18,609 14,188 51,638 64,953 Loss before tax from discontinued operations (note 7): United Kingdom (48) (4,042) Profit before tax from total operations 51,590 60,911 2007 2006 2007 2006 Net assets Net assets Capital Capital expenditure expenditure £000 £000 £000 £000 United Kingdom and Channel Islands 1,150,407 906,122 135,381 116,731 France (3,433) 13,657 - 351 1,146,974 919,779 135,381 117,082 Cash and cash equivalents 36,048 7,954 Current liabilities: bank loans and other borrowings (3,000) (4,432) Non-current liabilities: bank loans and other borrowings (333,924) (246,626) 846,098 676,675 As at 31 March 2007, all investment properties, development properties, joint ventures and associates were located in the United Kingdom and Channel Islands. iii) SECTOR ANALYSIS The analysis of the Group's results by sector was as follows: 2007 2006 2007 2006 2007 2006 2007 2006 Gross Gross Gross Gross Share of Share of Profit Profit revenue revenue profit profit profits profits from sale from sale from joint from joint of non- of non- ventures ventures current current and and assets assets associates associates £000 £000 £000 £000 £000 £000 £000 £000 Healthcare 5,016 4,625 3,358 3,251 17,589 32,322 1,934 - Hotels 4,735 2,013 2,589 1,991 - - 2,307 1,978 Industrial 4,144 8,643 3,668 5,676 - - 1,679 652 Land 4,474 3,355 2,005 725 (707) 542 3,012 24 Leisure 6,172 847 6,091 497 - - 508 114 Offices 14,464 16,727 10,768 13,553 - - 5,055 8,328 Retail 1,369 3,715 918 263 - - 171 3,103 Student accommodation 1,313 - 1,028 - 6,129 - 3,833 - Other 1,739 2,126 459 800 (455) 393 110 (11) 43,426 42,051 30,884 26,756 22,556 33,257 18,609 14,188 2007 2006 Profit Profit before before tax tax £000 £000 Healthcare 22,674 39,365 Hotels 4,898 5,120 Industrial 7,917 11,670 Land 4,309 1,291 Leisure 7,117 596 Offices 24,442 36,368 Retail 1,949 2,047 Student accommodation 10,990 - Other 83 1,642 84,379 98,099 Administrative expenses (25,819) (22,660) Net finance expenses (6,922) (10,486) Profit before tax from continuing 51,638 64,953 operations Loss before tax from discontinued operations (note 7): Leisure (48) (4,042) Profit before tax from total operations 51,590 60,911 2007 2007 2007 2007 2006 2006 2006 2006 Investment Development Joint Total Investment Development Joint Total properties properties ventures revaluation properties properties ventures revaluation at at valuation and uplift at at valuation and uplift valuation associates valuation associates £000 £000 £000 £000 £000 £000 £000 £000 Healthcare 9,735 - 112,629 21,510 22,300 - 89,667 33,264 Hotels 4,700 10,580 - 2 4,698 22,742 - 7,285 Industrial 46,059 81,223 - 11,956 43,558 71,785 - 23,230 Land - 615,088 42,747 168,090 75 421,866 30,409 74,302 Leisure 43,316 - - 518 42,150 8,500 - 63 Offices 167,493 33,633 - 9,197 160,204 52,581 - 16,388 Retail 16,035 22,481 - 2,585 15,653 16,981 - (1,319) Student accommodation - - 14,723 6,199 - - - - Other 1,600 6,300 1,222 (1,177) 1,450 5,000 1,677 1,348 288,938 769,305 171,321 218,880 290,088 599,455 121,753 154,561 2007 2006 Capital expenditure £000 £000 Healthcare 4,462 151 Hotels 10,712 433 Industrial 7,168 12,265 Land 31,630 65,589 Leisure 649 22 Offices 25,978 33,685 Retail 3,546 4,735 Student accommodation 49,260 - Other 1,976 202 135,381 117,082 4 ADMINISTRATIVE EXPENSES 2007 2006 £000 £000 Directors' remuneration 4,971 4,148 Staff costs 11,967 13,857 Cost relating to employee share-based payment schemes 1,439 1,180 Total staff costs 18,377 19,185 Reorganisation provision for discontinued operations - 650 Legal and other professional fees 2,615 1,817 Office costs 3,548 2,817 Loss on sale of plant and equipment 61 30 Depreciation of plant and equipment 472 441 Operating lease payments 880 480 General expenses 493 392 Total administrative expenses 26,446 25,812 Continuing operations 25,819 22,660 Discontinued operations (note 7) 627 3,152 26,446 25,812 In addition to the depreciation charge disclosed above, short leasehold amortisation of £248,000 (2006: £408,000) is charged under cost of sales and shown in note 2. i) FEES PAID TO AUDITORS AND THEIR AFFILIATES 2007 2006 £000 £000 Fees payable to the Company's auditor for the audit of the Company's annual accounts 240 220 Fees payable to the Company's auditor and its associates for other services: The audit of the Company's subsidiaries pursuant to legislation 64 40 Other services pursuant to legislation 32 30 Tax services 8 44 Other services 40 27 Fees paid to other accountancy firms amounted to £431,000 (2006: £270,000) of which £140,000 (2006: £162,000) were capitalised. These fees related mainly to tax advisory and internal audit services. ii) STAFF COSTS Staff costs are included in both cost of sales and administrative expenses. Gross staff costs were as follows: 2007 2006 £000 £000 Wages and salaries 13,417 14,390 Cost relating to Executive Directors' Performance Share 641 566 Plan Cost relating to other share-based incentive schemes 798 614 Provision for national insurance on unexercised share options and rights 628 408 Social security costs 2,044 2,051 Pension costs 830 806 Other employment costs 778 350 19,136 19,185 Cost of sales 759 - Administrative expenses 18,377 19,185 19,136 19,185 Details of Directors' emoluments, pensions and entitlements to share options and rights are contained in the Remuneration Report. Details of Directors' interests in the share capital of the Company are contained in the Report of the Directors. iii) STAFF NUMBERS The average number of persons employed by the Group during the year was as follows: 2007 2006 Number Number Property portfolio management and 120 128 administration Leisure operations 11 55 Hotel operations 68 - 199 183 Staff are allocated between cost of sales and administrative expenses as follows: 2007 2006 Number Number Cost of sales 59 - Administrative expenses 140 183 199 183 5 NET FINANCE EXPENSES 2007 2006 £000 £000 Interest payable on bank loans and overdrafts 18,606 15,328 Interest payable on other loans 1,912 1,307 Interest on obligations under finance leases 865 230 21,383 16,865 Interest capitalised (9,209) (7,824) 12,174 9,041 Change in fair value of ineffective interest rate swaps (1,493) 2,994 Finance expenses 10,681 12,035 Finance income: interest receivable (3,759) (1,549) Net finance expenses 6,922 10,486 Of interest capitalised in the year, the amount capitalised to development properties was £8,980,000 (2006: £7,506,000) and to investment properties was £229,000 (2006: £318,000). In accordance with IAS 39, the Group has reviewed its interest rate hedges in existence as at 31 March 2007 along with those in its joint ventures. As assessed by JC Rathbone Associates Limited, movements in fair value of the elements of those viewed as effective have been recognised through equity while all other movements, including those relating to the ineffective elements of effective hedges, are reflected in the Income Statement. 6 TAX i) TAX CHARGE ON PROFIT 2007 2006 £000 £000 UK current tax at 30% (2006: 30%) 3,207 1,892 Adjustment to prior years' UK corporation tax 1,382 900 4,589 2,792 Overseas tax 3,758 241 Total current tax charge 8,347 3,033 Deferred tax: On investment properties 946 3,052 On derivative financial instruments (450) (898) On other temporary differences (2,004) 275 Total deferred tax (credit) charge (1,508) 2,429 Tax charge 6,839 5,462 ii) TAX CHARGE RECONCILIATION 2007 2006 £000 £000 Profit before tax 51,638 64,953 Tax applied at UK corporation tax rate of 30% 15,491 19,486 Locked-in capital allowances (1,984) (3,551) Use of losses and differing tax rates in respect of overseas results 83 (231) Use of tax losses (1,265) - Indexation relief on UK investment properties (2,194) (1,703) Adjustment to prior years' current and deferred tax 1,883 (534) Tax charge included in share of income from joint ventures and associates (6,643) (9,205) Other movements 1,468 1,200 Tax charge 6,839 5,462 iii) TAX RECOGNISED DIRECTLY IN EQUITY 2007 2006 £000 £000 Deferred tax charge on revaluation of development properties 42,214 31,938 Deferred tax charge (credit) on effective element of interest rate swaps 2,114 (503) 44,328 31,435 iv) DEFERRED TAX MOVEMENTS 1 April Recognised Recognised 31 March 2006 in income in equity 2007 £000 £000 £000 £000 Capital gains less capital losses 105,257 946 42,214 148,417 Capital allowances 5,776 (1,890) - 3,886 Derivative financial instruments (2,986) (450) 2,114 (1,322) Other temporary differences 1,173 (114) - 1,059 Revenue tax losses (2,420) - - (2,420) Deferred tax provision 106,800 (1,508) 44,328 149,620 Deferred tax assets estimated at £11,528,000 (2006: £21,360,000) have not been recognised due to a higher degree of uncertainty over both the amount and timing of the utilisation of the underlying tax losses and deductions. Under current tax legislation, there is no expiry date associated with the unprovided deferred tax assets. v) TOTAL TAX CHARGE The total tax charge recognised in these financial statements was as follows: 2007 2006 £000 £000 Tax charge on profit as above 6,839 5,462 Tax credit on discontinued operations (note 7) (14) (1,213) Tax charge on share of profit in joint ventures (note 12i(c)) 9,686 1,625 Tax (credit) charge on share of profit in associates (195) 57 Tax charge on income and expenses recognised directly in equity 44,328 31,435 Tax charge (credit) on share of income and expenses in joint ventures recognised directly in equity 234 (44) 60,878 37,322 7 DISCONTINUED OPERATIONS The results from the Arena, Conference Hall and Exhibition Centres at Wembley have been classified in these financial statements as discontinued. The breakdown of the numbers disclosed in the Income Statement in relation to these activities was as follows: 2007 2006 £000 £000 Revenue 1,295 5,848 Cost of sales (716) (6,738) Gross profit (loss) 579 (890) Administrative expenses (627) (3,152) Loss before tax on discontinued operations (48) (4,042) Tax credit 14 1,213 Loss after tax on discontinued operations (34) (2,829) The impact upon cashflow of discontinued operations was as follows: 2007 2006 £000 £000 Loss after tax on discontinued operations as above (34) (2,829) (Decrease) increase in provision for reorganisation costs, net of tax (455) 455 Net cashflow from discontinued operations included in net cashflow from operating (489) (2,374) activities The decision taken by the Board to cease to be involved in the business of operating the Arena as well as to terminate its conference and exhibition activities at Wembley has led to the classification of the results from these operations, which together constitute the Group's leisure activities, as discontinued. The Arena has been leased to a third party as from April 2006 with the income generated being shown as rent while the Conference Hall and Exhibition Centres, which ceased to trade by July 2006, are in the process of demolition prior to the redevelopment of the sites. The basic loss per share for discontinued operations was 0.1p (2006: 2.2p). The diluted loss per share for these operations was 0.04p (2006: 2.2p). 8 EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE i) EARNINGS PER SHARE a) From continuing operations 2007 2007 2007 2006 2006 2006 Profit after Weighted Earnings Profit after Weighted Earnings tax and average per share tax and before average per share before number discontinued number discontinued of shares operations of shares operations £000 000 pence £000 000 pence Basic 44,799 128,169 35.0 59,491 128,937 46.1 Adjustments: Interest on 8% convertible 243 2,000 235 2,000 unsecured loan stock Employee share-based payment schemes - 1,225 - 1,237 Diluted 45,042 131,394 34.3 59,726 132,174 45.2 b) From total operations 2007 2007 2007 2006 2006 2006 Profit after Weighted Earnings Profit after Weighted Earnings tax and after average per share tax and after average per share discontinued number discontinued number operations of shares operations of shares £000 000 pence £000 000 pence Basic 44,765 128,169 34.9 56,662 128,937 43.9 Adjustments: Interest on 8% convertible 243 2,000 235 2,000 unsecured loan stock Employee share-based payment schemes - 1,225 - 1,237 Diluted 45,008 131,394 34.3 56,897 132,174 43.0 ii) NET ASSET VALUE PER SHARE 2007 2007 2007 2006 2006 2006 Equity Number Net asset Equity Number Net asset shareholders' of shares value shareholders' of shares value funds per share funds per share £000 000 pence £000 000 pence Basic 846,098 128,199 660 676,675 128,635 526 Adjustments: 8% convertible unsecured - - 2,893 2,000 loan stock (note 18) Employee share-based 9,642 2,520 9,766 2,925 payment schemes Diluted 855,740 130,719 655 689,334 133,560 516 The number of shares in issue has been adjusted for the 1,627,414 (2006: 659,596) shares held by ESOP Trusts and by the Group as treasury shares. Although not required under IFRS, net asset value per share is considered a key performance indicator in the sector in which the Group operates. Entitlements under the Executive Directors' Performance Share Plan have been excluded from 8i and 8ii as the commitments relate to contingently issuable shares where at the Balance Sheet date conditions had not been met. 9 DIVIDENDS The proposed final dividend of 8.25 pence per share (2006: 7.25 pence per share) was approved by the Board on 6 June 2007 and is payable on 7 September 2007 to shareholders on the register at the close of business on 27 July 2007. The dividend has not been included as a liability as at 31 March 2007. The total dividend for the year ended 31 March 2007 amounts to 11.75 pence per share (2006: 10.50 pence per share). The dividend of £13,744,000 included in the reconciliation of equity in note 22 comprises the 2006 final dividend of £9,257,000, which was paid on 8 September 2006, together with the interim dividend of £4,487,000 paid on 18 January 2007. 10 INVESTMENT AND DEVELOPMENT PROPERTIES The movements in the year in investment and development properties were as follows: Investment Investment Investment Investment Development Development Development Development properties properties properties properties properties properties properties properties Freehold Long Short Total Freehold Long Short Total leasehold leasehold leasehold leasehold £000 £000 £000 £000 £000 £000 £000 £000 Cost or valuation: Balance 1 April 192,663 87,469 10,070 290,202 419,918 39,038 4,937 463,893 2005 Transfers between categories 47,060 (4,960) - 42,100 (39,635) (2,465) - (42,100) Foreign exchange movement 164 - - 164 - - - - Additions 31,879 11,531 - 43,410 65,414 4,831 62 70,307 Interest 318 - - 318 7,074 432 - 7,506 capitalised Disposals (91,448) (15,843) (949) (108,240) (2,305) - - (2,305) Short leasehold amortisation - - - - - - (408) (408) Revaluation surplus 10,224 10,968 942 22,134 93,871 7,353 1,338 102,562 Balance 31 March 190,860 89,165 10,063 290,088 544,337 49,189 5,929 599,455 2006 Transfers between categories 8,650 - - 8,650 (6,184) (2,466) - (8,650) Foreign exchange movement (259) - - (259) - - - - Additions 26,877 3,912 - 30,789 97,650 1,023 167 98,840 Interest 229 - - 229 8,865 115 - 8,980 capitalised Disposals (34,560) (17,256) - (51,816) (80,706) (22,875) (5,848) (109,429) Short leasehold amortisation - - - - - - (248) (248) Revaluation surplus (deficit) 6,504 4,601 152 11,257 180,862 (505) - 180,357 Balance 31 March 198,301 80,422 10,215 288,938 744,824 24,481 - 769,305 2007 Of the additions shown above, £92,388,000 (2006: £41,437,000) related to acquisitions of properties. The historical cost of the Group's investment and development properties as at 31 March 2007 was £490,676,000 (2006: £496,786,000) and included capitalised interest of £23,766,000 (2006: £16,729,000). All of the Group's properties were externally valued as at 31 March 2007 on the basis of market value by professionally qualified valuers in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors. The Group's land holding in Greenwich and the Wembley Complex have been valued by Savills Commercial Limited. The discount rates which have been applied in relation to these developments were 12% and 10% respectively. Other properties in the United Kingdom have been valued by Jones Lang LaSalle Limited and Christie + Co. Properties in the Channel Islands have been valued by Guy Gothard & Co. A reconciliation of the valuations carried out by the external valuers to the carrying values shown in the Balance Sheet was as follows: 2007 2006 £000 £000 Investment and development properties at market value as determined by valuers 1,046,962 878,295 Adjustment in respect of rent-free periods and other tenant incentives (466) (965) Adjustment in respect of minimum payments under head leases separately included as a liability in the Balance Sheet 11,747 12,213 As shown in the Balance Sheet 1,058,243 889,543 The percentage of investment and development properties valued by each valuer was as follows: 2007 2007 2007 2007 2006 Per valuers' Adjustment for Properties held Percentage Percentage reports properties as investment valued by each valued by each held in joint and valuer valuer ventures and development associates properties £000 £000 £000 % % Savills Commercial Limited 766,650 (30,242) 736,408 70.3 62.1 Jones Lang LaSalle Limited 296,245 (1,600) 294,645 28.2 36.7 Other valuers 15,909 - 15,909 1.5 1.2 1,078,804 (31,842) 1,046,962 100.0 100.0 Copies of the valuation reports of Jones Lang LaSalle Limited and Savills Commercial Limited are included within the annual report. 11 OWNER-OCCUPIED PROPERTIES, PLANT AND EQUIPMENT The movements in owner-occupied properties, plant and equipment were as follows: Long Short Fixtures, Total leasehold leasehold fittings & equipment £000 £000 £000 £000 Cost: Balance 1 April 2005 10,039 837 1,250 12,126 Additions 1,341 - 1,024 2,365 Disposals (11,380) (566) (528) (12,474) Balance 31 March 2006 - 271 1,746 2,017 Additions - - 1,010 1,010 Disposals - (271) (1,007) (1,278) Balance 31 March 2007 - - 1,749 1,749 Depreciation: Balance 1 April 2005 - (823) (887) (1,710) Charge for year - (2) (439) (441) Disposals - 554 522 1,076 Balance 31 March 2006 - (271) (804) (1,075) Charge for year - - (472) (472) Disposals - 271 997 1,268 Balance 31 March 2007 - - (279) (279) Net book value: 31 March 2007 - - 1,470 1,470 31 March 2006 - - 942 942 31 March 2005 10,039 14 363 10,416 12 NON-CURRENT INVESTMENTS i) INVESTMENT IN JOINT VENTURES a) The movements in investment in joint ventures were as follows: Share of Advances Total net assets £000 £000 £000 Balance 1 April 2005 13,195 50,910 64,105 Additions 553 - 553 Acquisition of interest in joint venture 2,812 - 2,812 Acquisition of related deferred tax liability (318) - (318) Amounts advanced - 24,474 24,474 Distributions (4,312) - (4,312) Share of profit, net of tax 32,864 - 32,864 Share of effective portion of changes in fair value of cashflow hedges, net of tax (102) - (102) Balance 31 March 2006 44,692 75,384 120,076 Additions 132 10,426 10,558 Acquisitions of interest in joint ventures 5,620 - 5,620 Amounts advanced - 18,688 18,688 Distributions (8,400) - (8,400) Share of profit, net of tax 23,011 - 23,011 Share of effective portion of changes in fair value of cashflow hedges, net of tax 546 - 546 Balance 31 March 2007 65,601 104,498 170,099 b) The Group's interest in its joint ventures was as follows: % of Country of Joint venture equity held incorporation partner Quercus Healthcare Property Unit Trust 27.96 Channel Islands Norwich Union Life & Pensions Limited Meridian Delta Limited 49.00 United Kingdom Lend Lease Europe Limited Meridan Delta Dome Limited 49.00 United Kingdom Lend Lease Europe Limited iQ Unit Trust 50.00 Channel Islands Wellcome Trust Investment Limited Partnership Quantum Unit Trust 50.00 Channel Islands CGNU Life Assurance Limited Countryside Properties 50.00 United Kingdom Countryside Properties PLC (Merton Abbey Mills) Limited Countryside Quintain Birmingham Limited 50.00 United Kingdom Countryside Properties PLC BioRegional Quintain Limited 49.90 United Kingdom BioRegional Properties Limited Quintessential Homes (Wembley) LLP 50.02 United Kingdom Geninvest Limited Family Housing Development Company Limited South East Properties (Redhill) Limited 50.00 United Kingdom South East Properties Limited c) The Group's share of the results of its joint venture operations was as follows: Quercus Meridian iQ Quantum Quintessential BioRegional Quintain Other Group Delta Homes Quintain Birmingham joint share ventures in joint ventures £000 £000 £000 £000 £000 £000 £000 £000 £000 Summarised income statements for year ended 31 March 2007 Rents 10,669 - 27 - - - - - 10,696 receivable Other income - - - - - - - (6) (6) Administrative expenses (1,608) (235) (88) (32) (85) (271) (23) 9 (2,333) Operating 9,061 (235) (61) (32) (85) (271) (23) 3 8,357 profit (loss) Share of gain on revaluation of investment properties 21,717 - 6,199 - - - - - 27,916 Profit before finance expenses and 30,778 (235) 6,138 (32) (85) (271) (23) 3 36,273 taxation Finance (3,674) (16) (9) - - (93) - (13) (3,805) expenses Finance 171 - - - 34 2 - 22 229 income Profit (loss) before taxation 27,275 (251) 6,129 (32) (51) (362) (23) 12 32,697 Taxation (7,725) - (1,833) - - - - (128) (9,686) Profit (loss) after taxation 19,550 (251) 4,296 (32) (51) (362) (23) (116) 23,011 Summarised balance sheets as at 31 March 2007 Investment properties at 203,051 - 31,600 - - - - - 234,651 valuation Other non- current assets - - - - - - - 2,812 2,812 Trading - 30,686 - - 10,470 952 1,655 102 43,865 properties Other assets 7,112 2,438 1,537 449 - 1,403 271 667 13,877 Gross assets 210,163 33,124 33,137 449 10,470 2,355 1,926 3,581 295,205 Current liabilities: - - (16,000) - - - - - (16,000) bank loans and other borrowings Current tax (1,353) - - - - - - - (1,353) liability Non-current liabilities: (76,366) - - - - - - - (76,366) bank loans and other borrowings Deferred tax (11,951) - (1,833) - - - - (318) (14,102) liability Other (7,864) (2,057) (581) (460) (4,835) (834) (66) (588) (17,285) liabilities Net external 112,629 31,067 14,723 (11) 5,635 1,521 1,860 2,675 170,099 assets Represented by: Capital 52,349 825 4,297 (11) 5,635 (332) 163 2,675 65,601 Loans 60,280 30,242 10,426 - - 1,853 1,697 - 104,498 Total 112,629 31,067 14,723 (11) 5,635 1,521 1,860 2,675 170,099 investment Quercus Meridian BioRegional Quintain Merton Other Group Delta Quintain Birmingham Abbey joint share Mills ventures in joint ventures £000 £000 £000 £000 £000 £000 £000 Summarised income statements for year ended 31 March 2006 Rents receivable 7,838 - - - - - 7,838 Profit from sale of trading properties - - - - 1,469 - 1,469 Administrative expenses (1,031) (216) (272) - (122) - (1,641) Operating profit (loss) 6,807 (216) (272) - 1,347 - 7,666 Share of gain on revaluation of investment properties 29,415 - - - - - 29,415 Loss on sale of investment properties (39) - - - - - (39) Profit (loss) before finance expenses and taxation 36,183 (216) (272) - 1,347 - 37,042 Finance expenses (2,519) (16) (20) - (21) - (2,576) Finance income - - - - 23 - 23 Profit (loss) before taxation 33,664 (232) (292) - 1,349 - 34,489 Taxation (1,342) - - - (283) - (1,625) Profit (loss) after taxation 32,322 (232) (292) - 1,066 - 32,864 Summarised balance sheets as at 31 March 2006 Investment properties at valuation 147,831 - - - - - 147,831 Other non-current assets - - - - - 2,812 2,812 Trading properties - 20,772 - - 2,513 - 23,285 Other assets 4,873 1,288 931 1,220 2,790 416 11,518 Gross assets 152,704 22,060 931 1,220 5,303 3,228 185,446 Current tax liability (1,100) - - - (115) - (1,215) Non-current liabilities: bank loans and other borrowings (51,479) - - - - - (51,479) Deferred tax liability (5,345) - - - - (318) (5,663) Other liabilities (5,113) (1,135) (422) - - (343) (7,013) Net external assets 89,667 20,925 509 1,220 5,188 2,567 120,076 Represented by: Capital 37,803 1,056 31 185 3,050 2,567 44,692 Loans 51,864 19,869 478 1,035 2,138 - 75,384 Total investment 89,667 20,925 509 1,220 5,188 2,567 120,076 Details of the floating rate debt within Quercus and iQ and of interest rate swaps entered into by the former are given in notes 20ii(f) and 21iii. The valuation of investment properties held within Quercus as at 31 March 2007 has been based on the exercise carried out by Christie + Co, Chartered Surveyors, as external valuers, on the basis of market value and in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors. The Quercus joint venture has an accounting period ending on 31 December. The Group's share of its results for the remainder of the financial year has been based on its management accounts. d) The summarised financial statements of the Group's principal joint venture operations were as follows: 2007 2006 2007 2006 2007 2007 2007 Quercus Quercus Meridian Meridian iQ Quantum Quintessential Delta Delta Homes £000 £000 £000 £000 £000 £000 £000 Income statements Income 116,433 135,750 - - 12,475 - 67 Expenses (18,039) (18,130) (511) (474) (217) (63) (169) Profit (loss) before 98,394 117,620 (511) (474) 12,258 (63) (102) taxation Balance sheets Non-current assets 726,220 522,187 - 2,628 63,201 - - Current assets 25,436 17,214 67,600 42,392 3,073 898 16,302 Total assets 751,656 539,401 67,600 45,020 66,274 898 16,302 Current liabilities (75,708) (21,946) (4,198) (2,316) (36,828) (920) (5,037) Non-current liabilities (273,126) (200,721) - - - - - Net external assets 402,822 316,734 63,402 42,704 29,446 (22) 11,265 Percentage share held by Group 27.96% 28.31% 49.00% 49.00% 50.00% 50.00% 50.02% Group share of net external assets 112,629 89,667 31,067 20,925 14,723 (11) 5,635 2007 2006 2007 2006 2007 2006 BioRegional BioRegional Quintain Quintain Merton Merton Quintain Quintain Birmingham Birmingham Abbey Mills Abbey Mills £000 £000 £000 £000 £000 £000 Income statements Income 100 - - - 32 2,938 Expenses (825) (589) (45) - (14) (240) (Loss) profit before taxation (725) (589) (45) - 18 2,698 Balance sheets Current assets 4,720 1,866 3,852 2,440 1,342 10,606 Total assets 4,720 1,866 3,852 2,440 1,342 10,606 Current liabilities (1,671) (368) (132) - (1,176) (230) Non-current liabilities - (478) - - - - 3,049 1,020 3,720 2,440 166 10,376 Percentage share held by Group 49.90% 49.90% 50.00% 50.00% 50.00% 50.00% Group share of net external 1,521 509 1,860 1,220 83 5,188 assets ii) INVESTMENT IN ASSOCIATES a) The movement in investment in associates was as follows: £000 Balance 1 April 2005 1,284 Share of profit, net of tax 393 Balance 31 March 2006 1,677 Share of loss, net of tax (455) Balance 31 March 2007 1,222 b) The Group's interest in its principal associate undertaking was as follows: % of equity held Other member Aqua Trust 50 Norwich Union Annuity Limited iii) The movement in other non-current investments, all of which have been classified as available for sale, was as follows: £000 Unquoted investments: Cost 1 April 2005 188 Additions 3,160 Impairment (632) Net book value 31 March 2006 2,716 Additions 1,248 Disposals (38) Revaluation deficit (882) Fair value 31 March 2007 3,044 During the year, the Group added to its investment in Serrastone SA, a company based in France, which is researching and developing a substitute for natural stone for building purposes. 13 NON-CURRENT RECEIVABLES During the year, the Group acquired a loan which carries a coupon of LIBOR + 2.5% and has a maximum term of 17 years. This receivable is shown in the Balance Sheet at amortised cost. 14 TRADING PROPERTIES As at 31 March 2007, two properties were held for resale and are shown at the lower of cost and net realisable value. At that date, trading properties were fair valued by the Directors at £10,300,000. 15 TRADE AND OTHER RECEIVABLES 2007 2006 £000 £000 Trade receivables 12,175 9,166 Amounts due under contracts for sale 51,275 54,635 Other receivables 7,047 5,424 Prepayments and accrued income 3,170 3,087 73,667 72,312 16 CURRENT INVESTMENTS 2007 2006 £000 £000 Treasury stock 4 7 As at 31 March 2007, the nominal value of the Treasury stock was £4,000 (2006: £7,000). 17 TRADE AND OTHER PAYABLES 2007 2006 £000 £000 Trade payables 6,751 8,802 Other payables 7,535 3,503 Accruals 18,774 23,854 Interest rate swaps 4,406 12,945 37,466 49,104 18 BANK LOANS AND OTHER BORROWINGS 2007 2006 £000 £000 Current liabilities: Bank loans (secured) - 4,432 Other loans 3,000 - 3,000 4,432 Non-current liabilities: Bank loans (secured) 329,054 238,863 8% convertible unsecured loan stock - 2,893 10% first mortgage debenture stock 2011 (secured) 4,870 4,870 333,924 246,626 Total borrowings 336,924 251,058 The loans are secured by floating charges over assets owned by subsidiary undertakings. The 8% convertible unsecured loan stock was convertible by 31 March 2007 but was not converted and was repaid post the Balance Sheet date. The 10% first mortgage debenture stock 2011 issued by Estates Property Investment Company Limited is secured by fixed and floating charges over the assets of the subsidiary undertaking and has a redemption value of £4,617,000. The premium over par arising from fair valuing the debenture on acquisition is amortised over its remaining life. 19 OBLIGATIONS UNDER FINANCE LEASES Finance lease obligations in respect of rents payable on leasehold properties were as follows: 2007 2007 2007 2006 2006 2006 Minimum Interest Present value Minimum lease Interest Present lease of minimum payments value of payments lease payments minimum lease payments £000 £000 £000 £000 £000 £000 Within one year 815 (809) 6 863 (855) 8 Between one and five years 3,277 (3,245) 32 3,452 (3,410) 42 Between five and 25 years 16,387 (16,002) 385 17,165 (16,772) 393 After 25 years 43,628 (32,317) 11,311 48,188 (36,418) 11,770 64,107 (52,373) 11,734 69,668 (57,455) 12,213 20 FINANCIAL ASSETS AND LIABILITIES i) FINANCIAL ASSETS The currencies in which the Group's cash and cash equivalents were held were as follows: 2007 2006 £000 £000 Sterling 22,364 2,539 Euros 13,439 5,119 United States dollars 245 296 36,048 7,954 Details of other financial assets are shown in the table in note 20ii(e). ii) FINANCIAL LIABILITIES The Group's policy is to finance its activities with equity and long term debt, the proportions depending on the profile of the operational and financial risks to the business. The weighted average tenure of the Group's Sterling debt is five years (2006: five years) and the weighted average cost of debt was 6.6% (2006: 6.6%). a) The maturity profile of the Group's debt was as follows: 2007 2007 2007 2006 2007 2006 Bank loans Other loans Total debts Total debts Undrawn Undrawn and overdrafts facilities facilities £000 £000 £000 £000 £000 £000 Within one year - 3,000 3,000 4,432 - - Between one and two years - - - 2,893 - - Between two and five years 329,054 4,870 333,924 238,863 164,000 254,000 After five years - - - 4,870 - - 329,054 7,870 336,924 251,058 164,000 254,000 b) After taking account of interest rate swap arrangements, the risk profile of the Group's borrowings was as follows: 2007 2007 2007 2006 2006 2006 Fixed Floating Total debt Fixed Floating Total debt £000 £000 £000 £000 £000 £000 Sterling 164,877 172,047 336,924 164,770 81,856 246,626 Euros - - - 4,432 - 4,432 164,877 172,047 336,924 169,202 81,856 251,058 c) The interest rate profile of the Group's fixed rate debt was as follows: 2007 2006 Percent £000 £000 4.0 - 5.0 - 4,432 5.0 - 6.0 157,007 157,007 7.0 - 8.0 3,000 2,893 9.0 - 10.0 4,870 4,870 164,877 169,202 d) The weighted average rate and the weighted average period of the Group's fixed rate debt were as follows: 2007 2006 2007 2006 % % years years Sterling 5.6 5.5 6 7 Euros - 4.7 - - Group 5.6 5.5 6 7 e) The fair value of the Group's financial assets and liabilities was as follows: 2007 2007 2007 2006 2006 2006 Book value Fair value Fair value Book value Fair value Fair value adjustment adjustment £000 £000 £000 £000 £000 £000 Other non-current investments 3,044 3,044 - 2,716 2,716 - Non-current receivables 45,349 45,349 - - - - Trade and other receivables 73,667 73,667 - 72,312 72,312 - Current investments 4 4 - 7 7 - Cash and cash equivalents 36,048 36,048 - 7,954 7,954 - 158,112 158,112 - 82,989 82,989 - Current liabilities: bank loans and other borrowings (3,000) (3,000) - (4,432) (4,432) - Trade and other payables (37,466) (37,466) - (49,104) (49,104) - Non-current liabilities: bank loans and other borrowings (333,924) (333,959) (35) (246,626) (246,878) (252) Obligations under finance leases (11,734) (11,734) - (12,213) (12,213) - Other payables (4,919) (4,919) - (4,670) (4,670) - Total net financial liabilities (232,931) (232,966) (35) (234,056) (234,308) (252) Fair value adjustment on a post-tax basis (25) (176) The fair values were calculated by JC Rathbone Associates Limited as at 31 March 2007 and reflect the replacement values of the financial instruments used to manage the Group's exposure as at that date. f) The maturity profile of the Group's share of floating rate debt held within its joint ventures as at 31 March 2007 was as follows: 2007 2006 £000 £000 Within one year 16,000 - Between two and five years - 51,479 Over five years 76,366 - 92,366 51,479 21 FINANCIAL INSTRUMENTS The Group is subject to interest rate, liquidity, foreign currency and credit risks. The Group does not speculate in treasury products but uses these only to limit potential interest rate fluctuations. It usually borrows at floating rates of interest and uses hedging instruments to achieve an interest rate profile where the majority of borrowings are fixed or capped. As at 31 March 2007, 54.8% (2006: 69.6%) of the Group's net debt was fixed or protected. i) EFFECTIVE CASHFLOW HEDGES The profile of the Group's interest swaps which were in existence as at 31 March 2007 and for the purpose of these financial statements were classified as effective cashflow hedges was as follows: 2007 2006 Amount Maturity date Swap rate Fair value Fair value Reflected adjustments adjustments in equity £000 % £000 £000 £000 10,000 20.07.09 5.45 62 (186) 248 20,000 20.01.11 5.79 (106) (845) 739 7,507 01.04.11 5.64 (4) (280) 276 18,000 20.01.14 5.33 159 (665) 824 11,500 20.07.14 5.34 80 (467) 547 20,000 20.07.14 5.36 121 (833) 954 20,000 20.07.14 5.45 8 (963) 971 10,000 20.01.15 5.28 93 (393) 486 20,000 20.01.15 5.29 177 (797) 974 20,000 20.01.15 5.61 (220) (1,248) 1,028 157,007 370 (6,677) 7,047 These swaps were valued as at 31 March 2007 by JC Rathbone Associates Limited. ii) INEFFECTIVE CASHFLOW HEDGES As at 31 March 2007, the Group has entered into the following forward start swaps which do not qualify as effective cashflow hedges for the purposes of IAS 39. These were also valued by JC Rathbone Associates Limited. 2007 2006 Amount Start date Maturity date Swap rate Fair value Fair value Reflected in adjustments adjustments Income Statement £000 % £000 £000 £000 10,000 20.01.15 20.01.35 5.28 (841) (1,136) 295 20,000 20.01.15 20.01.35 5.29 (1,694) (2,284) 590 20,000 20.01.15 20.01.35 5.61 (2,241) (2,849) 608 50,000 (4,776) (6,269) 1,493 iii) JOINT VENTURE FINANCIAL INSTRUMENTS As at 31 March 2007, the following interest rate swaps shown at the full amount, were held within Quercus, a joint venture in which the Group has a 27.96% interest (2006: 28.31%). 2007 2006 Amount Maturity Swap rate Fair value Fair value Group share date adjustments adjustments reflected in equity £000 % £000 £000 £000 50,000 22.10.07 5.32 100 (432) 150 40,000 22.01.09 4.86 570 (50) 174 50,000 22.10.09 4.84 1,006 (43) 295 25,000 25.11.09 5.02 404 (173) 161 165,000 2,080 (698) 780 These swaps were valued at the year end by JC Rathbone Associates Limited and classified as 100% effective cashflow hedges on similar grounds to those which applied to the Group's own cashflow hedges. iv) FINANCIAL RISK MANAGEMENT The Group's policy is to minimise refinancing risk. As at 31 March 2007, the maturity profile of Group debt showed an average maturity of five years (2006: five years). Efficient treasury management and strict credit control ensure that funds are available to meet the Group's financial commitments as these fall due. The Group's principal financial assets are cash and cash equivalents, trade and other receivables and investments. The Group's credit risk is primarily attributable to its non-current receivables and its trade and other receivables. These amounts are disclosed net of provisions for doubtful debts and allowances for impairment are made where appropriate. The Group has no significant concentration of credit risk with exposure spread over a number of counterparties and tenants. Creditworthiness evaluations are performed on all potential tenants looking to enter into lease or pre-lease agreements with the Group. In certain cases, the Group will require collateral to support these lease obligations. This usually takes the form of a rent deposit, parent company guarantee or a bank guarantee. Where the Group places short term deposits, counterparties must have a short term credit rating of at least A1/P1. Transactions involving derivative financial instruments are with counterparties with whom the Group has a signed ISDA agreement as well as having good investment grade credit ratings. Given their high credit ratings, the Board does not expect any counterparty to fail to meet its obligations. On 31 December 2006, the Property Index-linked Total Return Swap entered into by the Group in the comparative year expired. The credit risk on this instrument was limited as the counterparty was a bank with a credit rating assigned by an international credit rating agency. 22 RECONCILIATION OF MOVEMENTS IN EQUITY Share Share Revaluation Other Cashflow Translation Retained Own Equity capital premium reserve capital hedge reserve earnings shares share- account reserves reserve held holders' reserve funds £000 £000 £000 £000 £000 £000 £000 £000 £000 Balance 32,298 46,575 180,102 113,222 (3,533) 127 198,401 (1,539) 565,653 1 April 2005 Recognised - - 68,860 - (1,275) 278 56,662 - 124,525 income and expense for the year Issue of shares 31 690 - - - - (474) - 247 less costs Purchase of own (5) - - 5 - - (108) - (108) shares for cancellation Purchase of own - - - - - - - (1,955) (1,955) shares as treasury shares Cost relating to - - - - - - 1,180 - 1,180 share-based payment schemes Short leasehold - - (126) - - - 126 - - amortisation Dividends paid - - - - - - (12,867) - (12,867) in year Balance 32,324 47,265 248,836 113,227 (4,808) 405 242,920 (3,494) 676,675 31 March 2006 Recognised - - 136,188 - 5,479 (319) 44,765 - 186,113 income and expense for the year Transfer - - - (5,091) - - 5,091 - - between reserves Issue of shares 133 3,532 - - - - (2,545) - 1,120 less costs Purchase of - - - - - - - (6,060) (6,060) own shares as treasury shares Cost relating to - - - - - - 1,439 - 1,439 share-based payment schemes Cost relating to - - - - - - 2,279 - 2,279 share-based bonus schemes Shares awarded - - - - - - (210) 210 - to employees under bonus scheme Short leasehold - - (102) - - - 102 - - amortisation Realisation of - - (14,108) - - - 14,108 - - revaluation gains on sale Tax on realised - - - - - - (1,724) - (1,724) gains Dividends paid - - - - - - (13,744) - (13,744) in year Balance 32,457 50,797 370,814 108,136 671 86 292,481 (9,344) 846,098 31 March 2007 Part of the gain on the revaluation of investment and development properties is recognised in the Income Statement and part directly through equity. 2007 2006 £000 £000 Recognised in the Income Statement: Gains (deficits) on revaluation of investment properties in: Group 12,181 23,911 Joint ventures 27,916 29,415 Associates (650) 450 Deficits on revaluation of investment properties (924) (1,777) Deficits on revaluation of development properties (182) (1,834) Reversal of deficits on revaluation of development properties 1,255 3,598 Recognised directly in equity: Gains on revaluation of development properties 179,284 100,798 218,880 154,561 The movements in the Group's other capital reserves were as follows: Capital Convertible Merger Capital Total other redemption loan stock reserve reserve capital reserve reserve reserves £000 £000 £000 £000 £000 Balance 1 April 2005 2,069 786 106,062 4,305 113,222 Purchase of own shares for cancellation 5 - - - 5 Balance 31 March 2006 2,074 786 106,062 4,305 113,227 Transfer to retained earnings - (786) - (4,305) (5,091) Balance 31 March 2007 2,074 - 106,062 - 108,136 The charge against retained earnings in respect of the issue of shares less costs related to options exercised by staff in a subsidiary company. There was no equivalent entry in the accounts of the Company. As at 31 March 2007, ESOP Trusts held 1,359,774 (2006: 659,596) shares in the Company which had been purchased in the market at a cost of £7,714,000 (2006: £3,494,000). The purpose of the Trusts is to acquire and hold shares which will be transferred to employees to meet future obligations under the Group employee share-based payment schemes as set out in note 23 and share-based bonus entitlements. As at 31 March 2007, these shares had a market value of £12,177,000 (2006: £4,485,000). The Quintain Group Employee Benefit Trust has waived the right to receive dividends. As at 31 March 2007, the Company also held 267,640 (2006: nil) of its own shares which had been purchased in the market at a cost of £1,630,000 (2006: £nil). As at that date, these shares had a market value of £2,397,000 (2006: £nil). CAPITAL REDEMPTION RESERVE The capital redemption reserve reflects the nominal value of shares purchased and then cancelled by the Company. MERGER RESERVE The merger reserve has arisen following corporate acquisitions where the Group's equity has formed all or part of the consideration and represents the premium on the shares issued less costs. CASHFLOW HEDGE RESERVE The cashflow hedge reserve comprises the effective portion of the cumulative net change in the cashflow hedging instruments. TRANSLATION RESERVE The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the Group's foreign subsidiaries. 23 SHARE CAPITAL Number of Nominal shares value 000 £000 Authorised as at 31 March 2006 and 2007: Ordinary shares of 25p each 200,000 50,000 Allotted, called up and fully paid: In issue at 1 April 2005 129,191 32,298 Issue of shares under share-based payment schemes at between 155.3p and 271.0p 124 31 Purchase and cancellation of shares (20) (5) In issue at 31 March 2006 129,295 32,324 Issue of shares under share-based payment schemes at between 25p and 556.3p 531 133 In issue at 31 March 2007 129,826 32,457 As at 31 March 2007, share capital included 1,359,774 (2006: 659,596) shares held by ESOP Trusts. These shares had a nominal value of £339,944 (2006: £164,899). The Company also held 267,640 (2006: nil) of its own shares with a nominal value of £66,910 (2006: £nil). As at 31 March 2007, the following commitments to issue shares to employees under various share-based payment schemes remained outstanding: Date of grant Number of shares Exercise price per Exercise period Exercise period share from to pence Executive Directors' Performance Share Plan (LTIP) 26.09.03 1,000,000 - 26.09.12 27.09.12 12.07.05 375,000 - 12.07.14 13.07.14 1,375,000 1996 Approved Executive Share Option Scheme (1996 Approved) 22.02.99 6,040 151.5 22.02.02 21.02.09 13.06.00 29,151 155.3 13.06.03 12.06.10 04.09.01 1,504 199.5 04.09.04 03.09.11 17.06.02 13,043 271.0 17.06.05 16.06.12 13.06.03 63,540 287.0 13.06.06 12.06.13 02.02.04 8,720 344.0 02.02.07 01.02.14 13.09.04 88,305 460.0 13.09.07 12.09.14 12.07.05 45,633 556.3 12.07.08 11.07.15 09.01.06 9,450 634.8 09.01.09 08.01.16 10.07.06 42,416 653.0 10.07.09 09.07.16 307,802 1996 Executive Share Option (No.2) Scheme (1996 Unapproved) 04.09.01 79,845 155.3 04.09.04 03.09.08 04.09.01 223,058 199.5 04.09.04 03.09.08 17.06.02 85,382 155.3 17.06.05 16.06.09 17.06.02 892,741 271.0 17.06.05 16.06.09 13.06.03 14,373 271.0 13.06.06 12.06.10 13.06.03 399,066 287.0 13.06.06 12.06.10 1,694,465 2004 Unapproved Share Plan (2004 Unapproved) 13.06.03 12,290 25.0 13.06.06 12.06.10 02.02.04 7,450 25.0 02.04.07 01.02.14 02.02.04 10,551 25.0 02.04.08 01.02.14 02.02.04 11,729 25.0 02.04.09 01.02.14 13.09.04 161,721 25.0 13.09.07 12.09.14 12.07.05 188,638 25.0 12.07.08 11.07.15 09.01.06 1,566 25.0 09.01.09 09.01.16 10.07.06 124,146 25.0 10.07.09 09.07.16 518,091 Total 3,895,358 The movement in the year in the number and weighted average exercise price of outstanding options was as follows: 2007 2007 2006 2006 Number of shares Weighted average Number of shares Weighted average exercise price (pence) exercise price (pence) In issue as at 1 April 4,300,080 155.8 3,919,274 170.1 Options granted 172,232 383.1 740,562 59.8 Options exercised (531,031) (210.8) (124,604) (197.9) Options lapsed (45,923) (232.4) (235,152) (70.1) In issue as at 31 March 147.3 4,300,080 155.8 3,895,358 Options granted during the current and previous year have been valued using the Black Scholes and binomial models on the basis of the following main assumptions: Date of grant 12.07.05 09.01.06 10.07.06 LTIP 1996 2004 1996 2004 1996 2004 Approved Unapproved Approved Unapproved Approved Unapproved Number 375,000 55,310 299,236 9,450 1,566 42,416 129,816 Exercise price (pence) - 556.3 25.0 634.8 25.0 653.0 25.0 Term of option (years) 9 10 7 10 7 10 7 Expected volatility (%) 23 23 23 21 21 22 22 Expected annual 1.7 1.7 1.7 1.8 1.8 1.6 1.6 dividend yield (%) Risk free rate (%) 4.3 4.3 4.3 4.2 4.2 4.7 4.7 Fair value (pence) 482.0 112.0 480.0 95.0 571.0 135.0 561.0 24 CAPITAL COMMITMENTS As at 31 March 2007, the Group had capital commitments of £15,669,000 (2006: £30,570,000) in relation to its own properties and £81,450,000 (2006: £7,786,000) in relation to its joint ventures. 25 OPERATING LEASE ARRANGEMENTS i) AS LESSEE Future minimum lease payments payable by the Group under non-cancellable operating leases were as follows: 2007 2006 £000 £000 Operating leases which expire: Between one and five years 22 545 After five years 7,144 7,791 7,166 8,336 ii) AS LESSOR Future minimum lease payments receivable by the Group under non-cancellable operating leases were as follows: 2007 2006 £000 £000 Operating leases which expire: Within one year 1,785 20,957 Between one and five years 14,199 50,197 After five years 128,577 119,164 144,561 190,318 In addition, the Group's share of minimum lease payments receivable under non-cancellable operating leases contained within the Group's joint ventures was £377,222,000 (2006: £296,665,000). 26 RELATED PARTY DISCLOSURES During the year, the Group received the following fees in respect of services provided to its joint ventures: 2007 2006 £000 £000 Quercus Property Partnership 4,014 3,143 BioRegional Quintain Limited 192 105 iQ Property Partnership 177 - Quintessential Homes LLP 161 - Meridian Delta Limited 71 - Quart Property Partnership 25 42 Quantum Property Partnership 10 - 4,650 3,290 The Group also received interest on loan notes amounting to £1,741,000 (2006: £1,041,000) from Meridian Delta Limited and £108,000 (2006: £22,000) from BioRegional Quintain Limited, which are included in finance income. Amounts due from joint venture undertakings as at 31 March 2007 are shown in note 12i. This information is provided by RNS The company news service from the London Stock Exchange

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