Half Yearly Results

RNS Number : 0070C
Quintain Estates & Development PLC
05 November 2009
 



5 November 2009

Quintain Estates and Development plc

("Quintain"/"Company"/"Group")


Half Yearly results for the six months ended 30 September 2009


Quintain Estates and Development plc today announces its half year results for the six months ended 30 September 2009. 


In a separate announcement, issued today, Quintain has also announced the launch of a fully underwritten Rights Issue to raise gross proceeds of approximately £191.2m (£183.5m net of expenses) by the issue of 390,160,296 New Shares through a 3 for 1 Rights Issue at 49 pence per New Share.  


Progress on strategic priorities

  • £152.8m of cash repatriated since 1 April 2008, exceeding the target for the current financial year five months ahead of schedule
  • 25% reduction in administrative costs for 2009 against budget
  • Re-negotiation of covenants with banks, providing further financial flexibility
  • Rights issue launched today to reduce further the Group's borrowings and thereby strengthen the balance sheet. The balance of the proceeds will be utilised both to bring forward selectively the next phases of Wembley and Greenwich and to invest in value-creating and income-generating specialist fund management and direct investment opportunities.


Results

  • Gross assets stable at £1.2bn (March 2009: £1.2bn), with a marginal increase of 1.7% in the valuation of the Group's property assets 
  • Gearing of 94% at period end (31 March 2009: 105%) 
  • Basic net asset value per share up 2.3% to 356p (31 March 2009: 348p)
  • Adjusted diluted net asset value per share up 2.2% to 413p (31 March 2009: 404p)
  • Gross profit for the six months fell by 6.3% to £14.1m (30 September 2008: £15.1m), owing to a reduction in rental income from disposals made during the period
  • Profit before tax of £9.5m (30 September 2008: loss of £51.6m).


Urban Regeneration

  • Second pre-let at Greenwich Peninsula completed, taking total commercial space let on the scheme to 217,000 sq. ft.
  • Adoption by the London Borough of Brent of revised masterplan, including all key points of Quintain's proposals for phase two at Wembley City
  • Construction scheduled to start on the hotel within the Summit/Quintain joint venture this year and infrastructure work underway on the site of W05.


Fund Management

  • Continued momentum in building the Group's recurring earnings from its specialist fund management and direct investment activities:
    • £1.1bn of assets under management as at 30 September 2009 (31 March 2009: £980m)

    • £12.6m of fund management fees recognized over the twelve months to 30 September 2009

  • Quercus property level return of 2.1% relative to its IPD benchmark of 0.5% 

  • Three new schemes opened by the Group's student accommodation fund, iQ, increasing income-producing beds by 49%.


Adrian Wyatt, Quintain's Chief Executive, commented:

"The fundamental strength of Quintain's underlying business has been clearly demonstrated during the reporting period. We have also surpassed our cash repatriation target ahead of schedule, significantly reduced our cost base and secured substantial flexibility whilst the shape and pace of the market recovery becomes clear.


"The Rights Issue announced today is transformational, providing the means not only to reduce our debt still further and cushion the Group against a possible further period of economic deterioration, but also to drive momentum in our major schemes through the bottom of the cycle and grow our fund management business."


William Rucker, Chairman of Quintain, commented:

"The Rights Issue will enhance the Group's financial position and enable us to unlock substantial value from our existing portfolio.  


"Quintain will continue to follow its disciplined and intellectually rigorous investment approach, whilst seeking to remain entrepreneurial and responsive to market opportunities. We will maintain our focus on identifying mispriced assets and specialist sectors where our broad experience and proven investment, asset management and structuring skills can create value for shareholders."



A meeting for analysts and institutional investors will take place today at 9.15 a.m. at J.P. Morgan, 10 Aldermanbury, London EC2V 7RF. The meeting can also, subject to certain restrictions, be accessed via a conference call dial in facility, using the following details:


Dial in number:

+44 (0)20 3037 9221

Password:

Quintain


In addition, an audio webcast will, subject to certain restrictions, be made available on the Company's website www.quintain.co.uk following the meeting.



FINANCIAL HIGHLIGHTS



Six months

to

30 Sept

2009


Six months

to

30 Sept

2008


Change

(%)




Year

To

31 March

2009


Change

(%)




Balance Sheet












Investment and development properties (£000)


825,135


869,073


(5.1)


800,140


3.1








Net asset value per share (pence):






  basic

356

443

(19.6)

348

2.3

  diluted 

354

439

(19.4)

346

2.3







Adjusted diluted (EPRA) net asset value per share (pence):


413


485


(14.8)


404


2.2







Total return (%)

2.3

(22.7)


(39.0)








Gearing (%) (Note)

94

90


105








Income Statement












Group turnover (£000)

26,163

20,719

26.3

66,019








Gross profit (£000)

14,132

15,076

(6.3)

35,033








Operating profit (loss) before recognition of results of non-current asset sales and revaluation (£000)



3,304



2,140



54.4



8,588



Profit (loss) before tax (£000)


9,549


(51,595)



(129,066)








Earnings per share (pence):






  basic

5.9

(34.3)


(83.0)


  diluted

5.9

(34.3)


(83.0)



Note:


Gearing is calculated in accordance with the Group's banking covenants which require equity shareholders' funds to be adjusted for deferred tax and mark-to-market adjustments on derivative financial instruments.


For further information, please contact:


Quintain Estates and Development plc

Rebecca Worthington/Cressida Curtis

Tel: +44 (0)20 7495 8968


Financial Dynamics

Stephanie Highett/Dido Laurimore/Laurence Jones

Tel; +44 (0)20 7831 3113


This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the United States.


Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration, or an exemption from registration, under the Securities Act.



Chief Executive's Statement


The fundamental strength of Quintain's underlying business and the Group's skill at responding successfully to the evolving market were clearly demonstrated during the six months to 30 September 2009, as the Board continued to improve the financial position of the Company despite the challenging economic and market conditions. 


Whilst maintaining our commitment to the Group's long term value-creation strategy, over the last 16 months the Board's focus has been on managing the business in line with the priorities stated in our August 2008 Interim Management Statement. These are:

  • Firm management of risk

  • Strengthened focus on preserving cash

  • Selective exploitation of the strongest value-creating opportunities


A programme of measures has been successfully undertaken to reinforce the Group progressively against the full impact of the economic decline: 

  • £152.8m of cash has been repatriated to date since 1 April 2008; 

  • A 25% reduction in administrative expenses against budget for 2009 has been achieved; and

  • The development pipeline has been re-aligned to reflect the market conditions.


These measures have ensured the Group continues to operate within its original banking covenants. However, it was considered prudent to extend these, to provide confidence to the market and greater flexibility in case conditions deteriorate beyond expectations. This was successfully achieved with the support of our relationship banks.


The management's short-term focus on these protective measures has significantly strengthened the financial position of the Company whilst keeping all major strategic interests intact. 


PERFORMANCE

During the period under review, the Group's property assets saw a marginal increase of 1.7%, and the value of gross assets at 30 September 2009 was £1.2bn (March 2009: £1.2bn), reflecting evidence of management actions and stabilisation in some sectors of the property market. Basic NAV also stabilised at 356p (March 2009: 348p). 


Gearing, as calculated for our banking covenants, stood at 94% at 30 September 2009 (March 2009: 105%), and the Company continues to operate without recourse to the extended gearing facility of up to 150% that remains available. 


On an operational basis, the Group's gross profit fell by 6.3%, due mainly to loss of rental income from disposals made during the period. Revenue rose by 26.6% over the six months to £26.2m, compared with £20.7m in the same period last year, predominantly reflecting the disposal of units within W04 at Wembley to Registered Social Landlords.


BUSINESS DELIVERY

During the period, the business continued to deliver a good operational performance, with progress achieved on all major schemes and distributions from funds under management increasing despite the pressures in the wider market.


Within the Urban Regeneration business the first commercial building was opened at Greenwich Peninsula and fully occupied during the period, with an additional pre-let to London Borough of Greenwich completed on 21,000 sq ft of the second building this week. At Wembley, finance has been offered for the new hotel within the Quintain / Summit joint venture, announced in April, and construction is expected to begin before the end of the year.  Contractors have now started work on supporting infrastructure relating to the retail core and W05, which is the hotel and student accommodation plot. We have also achieved progress on our regional schemes during the period, most particularly with the grant of outline planning consent for the 16 acre Beverley scheme and the first phase of residential apartments now completed at One Brighton, where sales have been good.


Our Fund Management business continues to prosper. Excluding the investment properties used to seed our new SeQuel Fund at the end of the period, funds under management fell only marginally by 1.7% to £964.1m in the six months to 30 September 2009. Three new student accommodation schemes have now opened within our iQ fund, increasing the portfolio by 48.5% to 3,618 income-producing beds. Quercus continues to deliver excellent relative performance, showing a property level return for the six months of 2.1% relative to its IPD benchmark of 0.5%. 


BOARD

During the reporting period we were pleased to announce the appointment of William Rucker, Chief Executive of Lazard London, as Chairman of the Board with effect from 1 October 2009. William brings to the Group considerable financial expertise and strategic capability at a time of great opportunity and we welcome him to the Board. William succeeds John Plender, who has been with Quintain since 2002. We are delighted that John will remain a non-executive director until the end of the financial year, enabling us to continue to benefit from his insight and wise counsel.


With regret, I announce today the forthcoming departure of Tonianne Dwyer, who will be returning with her family to her native Australia next spring. Since her arrival in 2003, Tonianne has, with energy and skill, built and led the team that grew the fund management business into a resilient income-generator for Quintain. She has been a tremendous asset to the Group and her involvement in identifying the right successor will help to ensure continuity of the programme after her departure at the end of the financial year.


STRATEGY AND OUTLOOK 

The measures we have taken over the last 16 months to guide Quintain through turbulent market conditions were carefully considered and have delivered the primary objective of achieving stability without undue sacrifice. Although some evidence of market stabilisation is beginning to emerge, our primary consideration is to safeguard the firm financial platform that we have secured, whilst positioning the Group to take full advantage of our existing pipeline and the opportunities presented by the market as conditions begin to improve. 


We will therefore continue to manage the business in a considered manner, remaining vigilant on costs and focused on income-producing activities. Our priorities for the near-term are to:


1.

Achieve a cashflow-positive position for the Group



2.

Invest selectively to produce maximum value from our urban regeneration schemes and accelerate the growth of fund management



3.

Secure best in class joint venture partners.


The Rights Issue announced today will transform the landscape in which we operate, providing not only the means with which to reduce our debt still further and cushion the Group against a possible further period of economic deterioration, but concurrently enable us to drive momentum in our major schemes through the bottom of the cycle and grow our Fund Management business. 


In recent years we have made clear our intention to accelerate the growth of funds under management, which currently stand at £1.1bn, and today we announce our intention of doubling this figure within the next three years. This is an aggressive programme, but one that acknowledges the proven resilience of the specialist sectors on which we focus and their positive demographic characteristics. 


We will continue to be visionary, agile and rigorously analytical with regard to risk and we are confident that our underlying strategy remains the right route to create and unlock significant future value for our shareholders.


Adrian Wyatt

Chief Executive

5 November 2009 



Business Review

Urban Regeneration

68% of the Group's assets are managed within the Urban Regeneration business. Our two largest schemes are in London at Wembley and Greenwich and we hold a range of smaller regional projects, all of which are mixed use. 


Wembley City

Quintain owns 85 acres around the National Stadium at Wembley. The business plan for this scheme is to create value through planning and development gain whilst building into the scheme the service infrastructure that will deliver robust income from future residents, employees and visitors to the site. Prior to development, income is derived from our land holdings through events and commercial deals.


Over the six months to 30 September 2009, the value of the scheme rose marginally to £492.5m (March 2009: £481.4m), reflecting management initiatives to increase value and more stable conditions in the property sector. Revenue from Wembley City has also increased slightly during the period to £9.9m, compared with £9.3m over the same period last year.


Tangible progress has been made onsite throughout the reporting period. Finance has been offered for the construction of a hotel at the northern gateway to the scheme within the Summit / Quintain joint venture, which was announced in April. Construction of the new building is expected to begin before the end of the year. It is anticipated that the hotel will be completed well before the 2012 Olympics, for which the National Stadium to the south of Quintain's scheme is a venue.


Construction continues of the second residential block, W04, of which 62.1% by value was sold prior to construction to Registered Social Landlords. The building is scheduled to complete in March 2010. Infrastructure work is scheduled to begin later this month on the site of the Western Core, preparing the way for future development in phase one.


Sales of the 145 private homes within Forum House continue, with 67 now complete and 17 reserved. Our lettings business has secured private rental deals on 67 units to date, at an average yield of 5.2%. 


140 residents within Forum House have subscribed to Velocity1, our 100mbs broadband, IP telephony and digital TV platform. Revenue per user stands at £38.47 per month and the platform now offers Sky content, including premium products, taking the total number of channels on offer to over 100. 


The progress made regarding the agreement of heads of terms with a major operator for Wembley City's ten screen cinema has already stimulated expressions of interest from associated restaurant brands. Completion of the cinema deal is anticipated during this financial year. 


We also announced in July that the London Borough of Brent had adopted the revised masterplan for the wider Wembley Regeneration Area, within which Quintain is the major landowner. Specifically, it supports all the Company's key aspirations for the second and third phases of the Wembley City scheme. It endorses Quintain's plan to create a new retail street running north from Wembley Arena to Wembley Park tube station and the location of a new Civic Centre on Quintain's land at the heart of the Company's scheme. It also supports the creation of further hotels, conferencing facilities, cafes, bars and offices as well as new large scale visitor attractions and the location of coach parking for the Stadium to the east of the scheme. This is a major step forward in the scheme's evolution and clears the way for an application from Quintain for outline planning consent for Phase Two, which is expected to be submitted during the summer of 2010.


Greenwich Peninsula

Momentum continues to build at Greenwich Peninsula, to which Quintain holds the development rights in joint venture with Lend Lease Europe Ltd.


After capital expenditure, the valuation of Quintain's interest in this scheme rose 9.8% during the period to £271m (March: £230m), reflecting the progress achieved.


The first commercial building, 14 Pier Walk, was completed and opened during the period, bringing 1,800 Transport for London (TfL) employees to the Peninsula. The environmental credentials of this building are strong, with a BREEAM rating of Excellent. The entire building is subject to a 20 year lease, and we have now also agreed a ten year pre-let of 21,000 sq ft of the adjacent second commercial building, Mitre Passage, to the London Borough of Greenwich.


The construction of Ravensbourne College, which is located between The O2 and Pier Walk, continues and is on schedule to open prior to the start of the next academic year. This will bring 1,400 students to Greenwich Peninsula and, with them, further animation to the centre of the scheme.


Work is now underway on the first of the 10,000 homes consented for development across the Peninsula. We announced in July that the Homes and Communities Agency had committed £2m of funding to the Bellway residential plot in the south east of the Peninsula. Bellway subsequently started construction on the site. We are currently undertaking the infrastructure work that will support this first plot and three additional buildings in this district, adjacent to Greenwich Millennium Village.


In October, Quintain and Lend Lease announced the sale for £24.0m of their shares in Meridian Delta Dome Ltd, which held the 999 year head lease to the land on which the former Millennium Dome is located. The disposal to Trinity College Cambridge, which unlocked £11.8m of capital for Quintain, introduces another respected institution to this growing scheme. The operation of the venue by AEG is not effected by this sale.


Regional Schemes

The first phase of our zero carbon development at Brighton reached practical completion in September. 51 homes within this phase have been handed over to Moat Housing Association, and the sale of 27 private homes are complete, with contracts exchanged on a further 26 homes and 14 more reserved. 


The Flemingate regeneration scheme in Beverley, of which we own 19%, reached an important milestone during the period with outline planning consent granted by the Secretary of State. Several housebuilders have shown significant interest in purchasing the residential component of the scheme and we are now working towards the submission of an application for detailed planning consent for phase one.


Agreement to sell Plot 4 at our Birmingham scheme, City Park Gate, to La Tour Hotels was reached in May. Planning consent, on which the sale depends, is expected to be determined in November. We are now actively marketing Island House, a period building on the site that is non-core to the overall scheme and offers a good stand-alone re-development proposition. Having secured planning consent for a car park on our land at this site, terms are now being agreed with operators.


Investment Portfolio 

In line with our corporate strategy of growing our Fund Management business, towards the end of the reporting period £83.3m of secondary assets that had been incubated within the Investment Portfolio were used to seed a new fund of secondary properties called SeQuel. This leaves a residual £34.1m of directly held properties within the Investment Portfolio. 


The role of this business within the Group is tactical and its size will continue to wax and wane in line with market conditions and the opportunities presented in urban regeneration and fund management. Over the last five years we have been net sellers, reducing the portfolio as value in this sector became scarce. Over the next few years, as liquidity allows, we intend to target very specific high yielding properties to add to this portfolio, which may in time be transferred to seed further funds or augment our urban regeneration schemes.


Quintain Fund Management

29% of the Group's assets are administered through the Fund Management business, which creates value from four alternative asset classes that benefit from prevailing social trends such as an ageing population, increasing student numbers and government focus on research and development. 


During the period, as part of the corporate cash repatriation programme, Quintain sold Quercus units at book cost, reducing the Group's interest in this fund to 16.0%. Funds under management, excluding the assets within the new SeQuel Fund which was established at the end of September, fell 1.7% during the reporting period from £980.3m at March 2009 to £964.1m. Gross profit from fund management fees increased marginally from £2.5m to £2.6m.


SeQuel 

At the end of the reporting period we seeded a new fund with £83.3m of high yielding property assets from our Investment Portfolio. 


In the UK, the value of commercial property has fallen by 44% since its peak in 2007. This material correction in the market and the recent levelling of values indicates that the sector has significant potential for value-creation in the near term and the SeQuel fund seeks to capitalise on this dynamic.


The fund consists predominantly of secondary office properties, alongside some industrial and retail assets. Over the six month period these properties saw a 0.5% increase in value, contrasting with the 18.4% decrease during the preceding six months. The initial yield was 10.2%, reversionary yield 10.9% and net rental income from the assets amounted to £9.5m against an ERV of £10.2m.


Our strategy for this fund is to invest in high yielding assets where there is the potential to create substantial capital uplift from active management. We intend to bring new equity partners into the fund and there will be a focus on recovery opportunity in secondary markets where re-pricing potential exists.


Quercus 

Our healthcare fund, Quercus, once again delivered a robust performance relative to the market over the six months. It produced a total return of 2.1% against its IPD benchmark for the period of 0.5%, although the impact of gearing and fees reduced fund level returns to 1.4%.


At investment level, the net initial yield on the fund moved out by 10 basis points over the period to 8.2% and rents remained strong, due to the 3% minimum uplifts.


Operators continue to report strong occupancy rates. However, we are monitoring tenants closely as public sector spending is likely to come under pressure due to the economic conditions. The impact on the healthcare sector is likely to be moderate as the underlying demographic trend of an ageing population remains strong.


27 care homes were sold during the period, 23 of them in the second quarter, realising a total of £58.8m at prices on average 2.4% below latest valuations. 26 of these sales were made to existing tenants, indicating that many operators in the fund are in a strong position to secure bank debt despite the difficult economic conditions: a positive indicator of the strength of the underlying business. The proceeds of these sales have been used to reduce gearing, which at 30 September 2009 stood at 51.2% against a covenant of 60%. Since the quarter end a further £13.5m of sales have been completed, reducing gearing further.


During the period, Quercus and Care Village Group (the operator of the Fund's assisted living scheme at Westbury) entered into a lease of 13 one bed rental units at the development. This transaction, which reflects a net initial yield of 8.5%, converts units held for sale into investment properties. To date, three tenants have moved into the leased apartments and two deposits have been taken on other units for sale, with the barn conversion under offer at £0.4m (£360 per sq ft).


The acquisition of Southlands Care Home near Beverley for £3.8m, to which the Fund committed early in 2008, took place, reflecting a net initial yield of 7.9%. The home provides nursing care for the elderly mentally ill with 46 registered beds and is currently fully occupied.


At the end of the period three of the 242 homes within the fund were in administration, and all three are now being managed by a respected operator known to the fund. Regulatory bodies have reported that they are highly satisfied with the new operator and this has been reflected in increased occupancy levels.


Alongside Aviva Investors, we are considering raising new equity for the fund in the new year, with a view to taking advantage of attractive opportunities in the healthcare market.


iQ

Income from our student accommodation fund, iQ, continues to grow, with 1,182 beds in three new schemes added to the operational portfolio over the reporting period. 


At 30 September 2009, iQ had gross property assets of £187.4m, compared with £145.7m at 31 March 2009. The net initial yield of the portfolio rose 25bps to 6.65%, however, this was more than offset by rental growth. The loan to value ratio reduced over the period from 61.0% to 56.9%, against a covenant of 65% and we continue to monitor this closely.  


Several years of successive growth in student numbers have combined with tighter regulations regarding accommodation and the ageing of housing stock held by universities to support rental price growth in this sector and, despite the relative immaturity of all our schemes, iQ has delivered year on year average rental growth of 5.5%. 


The portfolio now totals nine schemes containing 3,618 beds, an increase of 48.5% year on year. Occupancy levels at the end of October in the six established schemes were strong at 96.8% and the three new buildings are also showing a good performance, with occupancy across the total portfolio at 88.8% to date. We are still taking bookings and expect second semester courses, which start in January, to increase occupancy.


We are pleased to report that our new scheme at Bristol has been pre-wired with Quintain's Velocity1 digital platform and has 257 student customers within the block, demonstrating not only the strength of the product but also the opportunities for growth provided within the Quintain portfolio alone.


Two further schemes, both in Edinburgh, are currently under construction and due to complete in good time for marketing prior to the start of the 2010 academic year. These will add 634 beds to the operational portfolio and, with them, another significant rise in rental income.


As stated in June, site preparation works are underway to permit the start of construction on the Corsham Street building in the new year. The Zone 1 location of the scheme, excellent transport links and significant undersupply of purpose built student accommodation in London mean that we continue to experience strong interest from universities.


Quantum

Funds under management within Quantum remained stable over the period and there were no acquisitions or disposals.


The major asset within Quantum is the right to develop the 54 acre Bristol and Bath Science Park. We expect to agree shortly with the South West Regional Development Agency heads of terms to provide additional capital support for the first phase of development on the site. The arrangements are subject to SWRDA and Treasury approvals, following which we would expect to announce a date for work to start on the site.


Our property at Cambridge is undergoing refurbishment prior to marketing in the new year. At Edinburgh we have successfully renewed the lease of a significant occupier on improved terms and have completed a lease to a new tenant ahead of business plan.



Finance Review


Headline Results

The basic net asset value per share at 30 September 2009 was 356p, an increase of 2.3% from 348p at 31 March 2009. On a diluted basis, the net asset value per share rose 2.3% from 346p to 354p. Adjusted diluted net asset value per share, the measure recommended by The European Public Real Estate Association ("EPRA"), rose by 2.2% to 413p per share (31 March 2009: 404p).



30 September 2009


31 March 

2009


% change

NAV per share basic

356p

348p

2.3

NAV per share diluted

354p

346p

2.3

NAV per share EPRA¹

413p

404p

2.2

Total return per share²

2.3%

(39.0)%


¹ The EPRA NAV per share excludes the fair value adjustments for debt and related derivatives and deferred taxation on revaluations and is calculated on a diluted basis.

² The total return is calculated by the increase in net assets per the Consolidated Balance Sheet adding back the dividend paid.


Operating Performance

Gross profit for the six months fell by 6.3% to £14.1m (30 September 2008: £15.1m). Within this, gross rental income from directly owned properties was £10.5m, down £0.3m compared with the same period last year. Despite this, cost of sales rose marginally from £2.2m to £2.4m reflecting increased void costs, particularly arising from the maintenance costs at Hudson House, where 19% of space is un-let, and a higher level of bad debts of £0.2m, mainly in relation to Wembley Retail Park.



30 September 2009

£m


31 March 2009

£m


Directly owned properties

Within joint ventures

Total

Directly owned properties

Within joint ventures

Total

Gross rental income

10.5

10.5

21.0

22.1

23.0

45.1

Contracted annualised rent

20.8

20.1

40.9

20.6

21.3

41.9

ERV*

26.9

24.6

51.5

26.8

22.0

48.8

*ERV is the estimated rental value


The contracted annualised rent and ERV within joint ventures fell marginally with the loss of income from sale of units within Quercus more than offsetting the additional rent from our share of the three new student accommodation schemes.


Sales of affordable units in Quadrant Court (W04), Wembley gave rise to proceeds of £6.3m, but were profit neutral. In the same period last year there were no disposals of directly owned trading properties. 

Income from hotel operations relates to the Plaza hotel at Wembley. Gross profit was in line with the prior period at £2.2m before charging administration expenses of £1.3m (30 September 2008: £1.3m). Performance held up despite the difficult economic environment as the hotel benefited from events being held at the Stadium and Arena.


Net fees from fund management for the period fell slightly to £3.0m (30 September 2008: £3.2m) reflecting lower gross assets within Quercus and the end of the development management agreement at Forum House, Wembley, following completion of this building.


Net other income fell by £0.3m to £0.7m for the period, with higher abortive project fees.


Administration expenses fell by 16.3% to £10.8m for the six months with the largest saving being made in staff salaries and related costs. The provision for Employers' National Insurance on share schemes was significantly higher than in the same period last year because of the increase in the share price over the six months. Legal costs were substantially reduced as a £1m settlement had been made in the equivalent period last year.


Loss on Sale of Non-Current Assets

Sales of investments in the period with proceeds of £40.8m gave rise to a profit on historic cost of £2.2m and a loss against valuation of £10.1m predominantly relating to the disposal of Quercus units. There were no sales in the same period last year. Lack of liquidity during the period for most property classes meant that it was a buyers' market. This trend has now started to reverse for prime properties.


Revaluation Surpluses and Deficits

The net revaluation surplus arising from directly held properties was £27.9m. This is all recognised in the Income Statement as, from 1 April 2009, development properties are accounted for under IAS 40 'Investment Property'. For the same period last year the deficit was £215.5m split between £33.4m reflected in the Income Statement and £182.1m in equity. The revaluation movements on joint venture investments are incorporated within the share of profit from joint ventures which is discussed in more detail below.


Share of Loss from Joint Ventures

The loss from joint ventures in the six months was £5.9m (30 September 2008: loss £8.9m). Before revaluation movements, tax and losses on disposals this would have been a profit of £3.5m (30 September 2008: profit £4.3m). The reduction in profits is mainly attributable to lower profits on the sale of residential units at Forum House (W01), Wembley and the disposal of an interest in a joint venture in the previous period at a profit. This excludes net fees receivable of £3.0m (30 September 2008: £3.2m) in relation to managing the funds. A summarised income statement split by joint venture is included in note 11i to the accounts.


Impairment of Other Non-Current Investments

There were no charges for impairment of other non-current investments in the period. (30 September 2008: £7.8m).


Finance Expenses

Net finance expenses for the period were £5.8m (30 September 2008: £3.5m). Interest payable has reduced to £15.6m (30 September 2008: £19.5m) reflecting in particular a lower average cost of debt for the six months of 4.7%, compared with 6.3% for the same period last year. The rate is likely to increase in the near future with debt being paid down limiting the advantage we take of floating rate debt. At 30 September 2009, whilst 100% of our debt was hedged, 25% was floating with caps, so benefiting from lower rates.


Interest capitalised in the period of £6.6m (30 September 2008: £7.4m) relates to Wembley (£5.7m) and Greenwich Peninsula (£0.9m). Interest receivable was £2.5m (30 September 2008: £5.4m). The higher level of interest receivable in the prior period came from a third party loan that was repaid in September 2008.



30 September

2009

£m

30 September

2008

£m

Interest payable

(15.6)

(19.5)

Interest capitalised

6.6

7.4

Interest receivable

2.5

5.4

Change in fair value of ineffective interest rate swaps and caps

0.7

(0.1)

Profit on termination of interest rate swaps

-

3.3

Total net finance expenses

(5.8)

(3.5)

 

Taxation

A tax charge of £2.0m, of which £1.9m is deferred, has been reflected in the Income Statement (30 September 2008: credit £7.8m). This has arisen because of revaluation movements in the period.


Balance Sheet

At 30 September 2009, investment and development properties were valued at £825.1m after a net revaluation surplus of £27.9m. For Wembley and Greenwich, the two largest assets in the portfolio, a greater analysis of the valuations and sensitivities is set out below.


Wembley City


£m

As at 1 April 2009

481.4

Capital expenditure on investment and development assets

5.3

Disposals

(5.0)

Capitalised interest

5.7

Valuation surplus

5.1

As at 30 September 2009

492.5


The valuation was broadly neutral for the six months. On the investment properties leased on long term lets to robust businesses at the Stadium Retail Park yields reduced by 100bps. Elsewhere, lets with shorter leases to more susceptible organisations, yields rose by between 50 and 130bps. The impact of this combined with a reduction in ERVs was largely offset by a reduction in costs and progress on site. 


On the development properties, whilst the valuation is a view of what the market may pay at any point in time, it is supported by a discounted cashflow model. The discount rate was unchanged at 15%. Average base rates for residential fell in line with expectations to £457 per square foot from £526 in March 2009. Growth rates on residential prices were unchanged except for a further six month delay in the regeneration uplift. There still remains incorporated within these growth rates an uplift in addition to market movements to re-set base prices at a higher level, as Wembley is transformed as a location. 


The model is based on many assumptions and the table below is included to provide shareholders with a better understanding of the dynamics relating to some of these assumptions. It is a sensitivity analysis and is not necessarily an indication of the Company's view.


Valuation £m


Discount Rate



13.5%

15%

16.5%

Annualised residential

+2%

648

574

511

price inflation

  0%

555

492.5

439


-2%

478

425

379


It is important to note that there is a strong correlation over time between growth rates and construction cost inflation so the impact of movements in growth rates may be largely neutralised by changes in cost inflation.


Greenwich Peninsula

The valuation below relates to Quintain's interests at Greenwich Peninsula as developer and landowner.


£m

As at 1 April 2009

230.0

Capital expenditure

15.9

Capitalised interest

0.9

Valuation surplus

24.2

As at 30 September 2009

271.0


The valuation of Greenwich, which is shown partly in development properties and partly within joint ventures, rose by £24.2m to £271m. Key factors in this were a 50bps hardening of yields in Pier Walk at Greenwich, which is let for 20 years to TfL and average base rates for residential, of £347 to £609 per square foot, holding up against previous forecasts of deflation. This is obviously contrary to Wembley and reflects the differing nature of the locations.


As with Wembley, the valuation is supported by a discounted cash flow model. The discount rate remained unchanged at 15.7% as did the residential growth rate. Commercial yields moved out 25bps. 


On a similar basis to Wembley, varying the discount and growth rates gives the following valuation sensitivities:


Valuation £m


Discount Rate



14.2%

15.7%

17.2%

Annualised residential

+2%

360

324

296

price inflation

  0%

300

271

249


-2%

248

227

208


Joint Ventures

As at 30 September 2009, Quintain had net investment in joint ventures totalling £197.8m (31 March 2009: £215.0m). The main contributor to the reduction was the sale of units in Quercus in September for proceeds of £31.3m. The summarised balance sheets of the joint venture investments are available in note 11i to the accounts.


Capital Commitments

The table below sets out Quintain's contractual capital commitments including our share of any commitments within joint ventures. All these commitments will be funded from existing corporate and joint venture facilities.



30 September 2009

£m

Group:


  Wembley

19.2

   City Park Gate, Birmingham

6.9

  Others

0.6

Joint ventures:


  iQ

5.8

  BioRegional Quintain

2.8

  Wembley - Quintessential

0.4

  Quantum

12.2

   Greenwich - N0204 / infrastructure

8.6

Total

56.5


Financing Strategy 

Our financial strategy in the medium term is to manage a level of debt that balances the risks to the business with the higher returns on equity that, over time, will accrue due to the lower cost of debt. Gearing levels, being the proportion of debt compared with equity, will vary depending on the profile of operational risks, the capital that is currently committed or expected to be committed in the future and the cyclical high or low of property valuations. As the economy deteriorated over the last year the balance sheet became highly geared. In order to respond to this, from August 2008 the Company implemented a series of measures focusing on cash repatriation, such as the disposal of selected assets. The target of delivering £150m by 31 March 2010 has already been achieved with £152.8m secured to date. 


Whilst the absolute level of debt for these markets was high, the structure of the debt has supported the business. Our financing structure needs to be flexible and cost effective. This has been achieved through securing funding at the corporate level, giving us the scope to fund efficiently all areas of the portfolio some of which would otherwise have been more challenging, such as infrastructure works at Wembley and Greenwich. It also provides us with liquidity and operational flexibility. 


In response to falling property values, in March we negotiated an increase in the maximum gearing covenant from 110% to 150% in a structure that allowed us to pay additional costs only where we needed the headroom. The bank margin remains as before unless gearing rises above the original covenant of 110%. At that point it would ratchet up to a maximum of 3.5% over LIBOR for gearing levels over 140%. The Company has the option to apply this amendment each year for three years by the payment of an annual amendment fee of 1%. Once the option has expired the underlying bank margin will increase permanently by 25 basis points.


During the period we reached agreement with one of our lending banks regarding a £95m facility, removing the option for the bank to require repayment by April 2010, resulting in a maturity of April 2013, in return for the commitment being reduced to £50m, amortising to £35m by April 2011. This means the first material maturity is now 2013. We also reached agreement with all drawn banks that, alongside the gearing amendment, the Company could - at its election - remove any losses on disposals from the interest cover covenant calculation in return for the net proceeds being used to repay and pro-rata cancel facilities. 



Covenant

30 September 2009


31 March 2009


Net borrowings


£534.9m

£533.3m

Weighted average debt maturity


4 years

4.5 years

% of net debt hedged


100%

100%

Undrawn committed facilities 




  Group


£165.2m

£134.5m

  Joint ventures


£86.8m

£96.0m

Banking covenants




Gearing per banking covenants¹ 

150%

94%

105%

Interest cover²

1.25 times

2.3 times

1.7 times

¹Gearing as per our banking covenants is defined as net borrowings not subject to joint arrangements, divided by shareholders funds, excluding the impact of deferred tax and marking to market of debt

²Interest cover, per our banking covenants, is defined as operating profit before net finance expenses plus realised surpluses on disposals divided by net finance costs excluding marking to market adjustments.


Hedging

At 30 September 2009, Quintain's interest rate was 100% hedged (31 March 2009: 100%). The fair value adjustment on these interest rate hedging instruments was a surplus of £4.8m (30 Sept 2008: surplus £2.4m). Of the movement during the period £0.7m was credited to the Income Statement, being the element relating to non-cashflow hedges and £4.1m credited directly to equity.


In relation to joint ventures, the fair value adjustment on these interest rate hedging instruments was a surplus of £0.5m (30 September 2008: £0.7m) which was credited directly to equity. 


Cashflow

Net cash inflow from operating activities was an outflow of £16.6m (30 September 2008: inflow £7.5m), of which £8.6m was an increase in trading properties.


The purchase and development of property assets of £4.2m and loans to joint ventures and associates of £24.6m was more than offset by proceeds of £40.2m from the sales of non-current assets. This resulted in a net cash inflow from investing activity of £16.5m.


Key Performance Indicators

Our key performance indicators are as set out in the Group's annual report and accounts for the year ended 31 March 2009. 


Financial Outlook

Whilst valuations have stabilised over the period, the economic outlook remains uncertain. The actions taken in repatriating cash and reducing costs alongside the additional flexibility delivered on the banking covenants, has significantly improved the financial security of the business. At 30 September 2009 valuations would have to fall by a further 17% to breach the revised gearing covenant. The Rights Issue announced today, if approved by shareholders, will result in an additional net £180m of cash. This will initially be used to reduce debt further, increasing the headroom discussed above to 43%. 


Part of the proceeds will be set aside to further enhance the stable financial position that has been secured. It is intended that the balance will be deployed to achieve two objectives:

  • Ensure momentum at Wembley City and Greenwich Peninsula with investment in planning, infrastructure and the next phase of key development.

  • Invest in income producing opportunities, particularly within our specialist areas, to deliver a positive recurring income position


Risk Management 

In addition to those general economic, security and regulatory risks faced by a wide range of companies that are part of the general commercial environment, we consider there to be the following specific risks faced by our Company.


Market conditions 

The Group's business is dependent on the general economic and property market conditions in the United Kingdom. A deterioration in residential and commercial property markets could lead to further declines in the value of the Group's property portfolio, tenant default and a reduction in income from these properties. Whilst values have stabilised in the period, there remains the threat of a 'double dip'.


Valuation risk

In addition to the inherent difficulty in valuing real estate investments and consequent uncertainty, values are subject to short term fluctuations. This is more acute in development properties. As the Group's debt facilities include a corporate gearing covenant, falls in value could lead to a potential banking default. In addition the estimates resulting from the valuation process may not reflect actual sales prices, even were such sales to occur shortly after the valuation date.


Development risks

The Group is on site with three developments (and associated infrastructure), two of which are in joint venture. Property development involves certain risks including construction cost inflation, cost overruns and delays to the completion of projects. These and other factors could give rise to losses on individual development projects. To control these risks, Quintain's in-house project management team transfers risk to contractors where possible. The supply chain management programme is creating increased visibility into costs and opportunities for cost reduction, whilst standardisation across Quintain's projects is increasing predictability. The economic recession is reducing pressure on construction costs and we may see construction cost deflation in the near term. 


Whilst the Group has a substantial pipeline, we have limited further obligations, and will only enter into future commitments where, in the judgement of the Board, it is financially prudent to do so. 


Debt funding

Lack of availability of debt generally in the market can reduce the number of purchasers, which will make it more difficult to sell assets and potentially result in a reduction in the price that the buyer would be willing to pay. Lack of availability of funds for the regeneration projects could give rise to delays with a follow-on impact on both values and the ability to capitalise interest against these sites, so worsening the interest cover ratio for our corporate banking covenants.


Key judgements 

Properties are externally valued twice a year by independent valuers. There is currently less direct evidence of property values because of a lower level of transactions than usual, giving rise to an increased level of uncertainty with respect to the values. This uncertainty is more acute in the case of our large scale urban regeneration projects where there are no direct comparables. 


Counterparty risk

The Group engages in contractual relationships with third parties in the ordinary course of business. The failure of third parties to fulfil their contractual responsibilities, for example, a bank, contractor, joint venture partner or purchaser defaulting, could place the Group or its projects at risk. 


Tenant default

Tenants are likely to be facing difficult operating conditions and there is therefore an increased risk that some may default on their rent payments. However, the large number of tenants and the diversity of their businesses and geographical spread would reduce the likely impact on the Group.


Dependence on key personnel 

The loss of key personnel could affect delivery of the business strategy. This risk is currently increased because share incentive packages have very little value or no value, although partially offset by a poor employment market. As highlighted in the March 2009 accounts the intention is to implement a new share incentive plan during 2010.



Responsibility statement of the directors in respect of the half-yearly financial report 

We confirm that to the best of our knowledge: 

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; 

• the interim management report includes a fair review of the information required by: 

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and 

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.


Adrian Wyatt

Rebecca Worthington

Chief Executive

Finance Director




Forward looking statements 


This document includes statements that are, or may be deemed to be, "forward-looking statements''. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes'', "estimates'', "plans'', "anticipates'', "targets'', "aims'', "continues'', "projects'', "assumes'', "expects'', "intends'', "may'', "will'', "would'' or "should'', or in each case, their negative or other variations or comparable terminology. 


These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, liquidity, prospects, growth strategies and the sectors in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the market, market position of the Group, earnings, financial position, cash flows, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future.  Subject to the Company's continuing obligations under the Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules, the Company undertakes no obligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise.  



INDEPENDENT REVIEW REPORT TO Quintain Estates and development PLC


Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2009 which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cashflow Statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.


This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.


Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.


As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the EU. 


Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 


Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.


Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.


Stephen Bligh

for and on behalf of KPMG Audit Plc

Chartered Accountants

8 Salisbury Square

London

EC4Y 8BB


5 November 2009



Quintain Estates and Development PLC


Consolidated Income Statement

for the six months ended 30 September 2009






Notes

Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000






Revenue 

2

26,163

20,719

66,019

Cost of sales

2

(12,031)

(5,643)

(30,986)

Gross profit 


14,132

15,076

35,033






Administrative expenses before exceptional expenses

4

(10,828)

(12,936)

(24,109)

Exceptional administrative expenses

4

-

-

(2,336)






Operating profit before recognition of results from non-current asset sales and revaluation




3,304


2,140


8,588






(Loss) profit from sale of non-current assets

5

(10,071)

19

(4,821)

Gain (deficit) on revaluation of investment and 

  development properties



27,868


(33,380)


(68,249)

Share of loss from joint ventures

11i

(5,932)

(8,944)

(47,291)

Share of profit (loss) from associate


175

(107)

86

Impairment of other non-current investment

11ii

-

(7,790)

(7,790)







Operating profit (loss) before net finance expenses



15,344


(48,062)


(119,477)






Interest payable


(9,008)

(12,060)

(21,163)

Change in fair value of derivative financial instruments 


660

3,165

1,912






Finance expenses


(8,348)

(8,895)

(19,251)

Finance income


2,553

5,362

9,662






Net finance expenses

6

(5,795)

(3,533)

(9,589)






Profit (loss) before tax


9,549

(51,595)

(129,066)






Current tax


(92)

(83)

11,362

Deferred tax


(1,900)

7,837

11,474






Tax (charge) credit for the period 

7i

(1,992)

7,754

22,836






Profit (loss) for the financial period attributable to equity shareholders



7,557


(43,841)


(106,230)






Earnings per share (pence):

8i




  basic


5.9

(34.3)

(83.0)

  diluted


5.9

(34.3)

(83.0)



Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2009






Notes

Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000






Foreign currency translation differences


(28)

(4)

250

Deficit on revaluation of development properties


-

(182,083)

(212,062)

Deficit on revaluation of other non-current  

  investments


(80)

(175)

(364)

Recycling of revaluation movement on other 

  non-current investment


-

2,159

2,159

Effective portion of changes in fair value of 

  cashflow hedges, net of recycling


4,092

2,522

(29,712)

Share of other comprehensive income in joint 

  ventures, net of tax

11i

343

321

(12,125)

Tax on other comprehensive income 

7ii

(1,146)

53,493

66,139






Other comprehensive income for the financial 

  period, net of tax 


3,181

(123,767)

(185,715)

Profit (loss) for the financial period 


7,557

(43,841)

(106,230)






Total comprehensive income for the 

  financial period net of tax


10,738

(167,608)

(291,945)



Consolidated Balance Sheet

as at 30 September 2009






Notes

Unaudited

As at

30 Sept 2009

£000

Unaudited

As at

30 Sept 2008

£000

Audited

As at

31 March 2009

£000

Non-current assets





Investment properties

10

825,135

189,043

143,452

Development properties

10

-

680,030

656,688

Owner-occupied properties, plant and equipment


3,754

2,667

4,135

Investment in joint ventures

11i

197,788

288,884

214,995

Investment in associate


1,418

1,050

1,243

Other non-current investments

11ii

4,055

11,008

10,820






Total non-current assets


1,032,150

1,172,682

1,031,333






Current assets





Trading properties


33,989

30,280

26,601

Trade and other receivables

12

17,141

26,192

15,658

Current investments


4

4

4

Cash and cash equivalents


8,626

7,677

9,215






Total current assets


59,760

64,153

51,478






Total assets


1,091,910

1,236,835

1,082,811






Current liabilities





Bank loans and other borrowings

14

(6,200)

-

-

Trade and other payables

13

(42,862)

(37,822)

(46,913)

Current tax liability


(1,273)

(7,373)

-






Total current liabilities


(50,335)

(45,195)

(46,913)






Non-current liabilities





Bank loans and other borrowings

14

(530,091)

(560,647)

(533,490)

Deferred tax liability

7iii

(29,071)

(42,308)

(26,025)

Obligations under finance leases


(11,152)

(11,723)

(11,156)

Other payables


(14,657)

(8,849)

(20,382)






Total non-current liabilities


(584,971)

(623,527)

(591,053)






Total liabilities


(635,306)

(668,722)

(637,966)






Net assets


456,604

568,113

444,845






Equity





Issued capital

16

32,515

32,511

32,511

Share premium account


51,527

51,518

51,518

Revaluation reserve


(95)

201,460

174,588

Other capital reserves


108,136

108,136

108,136

Cashflow hedge reserve


(36,762)

1,815

(41,727)

Translation reserve


540

314

568

Retained earnings


311,275

184,299

131,191

Own shares held reserve


(10,755)

(11,940)

(11,940)






Equity shareholders' funds


456,381

568,113

444,845

Non-controlling interest

20

223

-

-






Total equity


456,604

568,113

444,845






Net asset value per share (pence):

8ii




  basic


356

443

348

  diluted


354

439

346



Consolidated Statement of Changes in Equity

for the six months ended 30 September 2009











Unaudited


Share

capital



£000

Share

premium

account


£000

Revaluation

reserve



£000

Other

capital

reserves


£000

Cashflow

hedge

reserve


£000

Translation

reserve



£000

Retained

earnings



£000

Own

shares

held

reserve

£000

Total

equity



£000











Equity shareholders' funds










Balance 1 April 2009

32,511

51,518

174,588

108,136

(41,727)

568

131,191

(11,940)

444,845

Transfer on change

  in accounting 

  policy relating to

  development 

  properties (note 1)





-





-





(174,603)





-





-





-





174,603





-





-

Total

  comprehensive 

  income for the 

  period, net of tax




-




-




(80)




-




4,965




(28)




5,881




-




10,738

Issue of shares

  less costs


4


9


-


-


-


-


(9)


-


4

Purchase of own 

  shares as treasury

  shares



-



-



-



-



-



-



-



(36)



(36)

Cost relating to 

  share-based 

  payment   

  schemes




-




-




-




-




-




-




830




-




830

Shares awarded 

  to employees

  under

  share-based  

  bonus schemes





-





-





-





-





-





-





(1,221)





1,221





-











Balance 30 Sept 2009

32,515

51,527

(95)

108,136

(36,762)

540

311,275

(10,755)

456,381

Non-controlling

  interest










223











Total equity









456,604












Consolidated Statement of Changes in Equity

for the six months ended 30 September 2008











Unaudited


Share

capital


£000

Share

premium

account

£000

Revaluation

reserve


£000

Other

capital

reserves

£000

Cashflow

hedge

reserve

£000

Translation

reserve


£000

Retained

earnings


£000

Own shares

held

reserve

£000

Equity

shareholders'

funds

£000












Balance 1 April 2008


32,483


51,343


327,360


108,136


(322)


318


238,805


(12,422)


745,701

Total  

  comprehensive 

  income for the 

  period, net of tax




-




-




(125,900)




-




2,137




(4)




(43,841)




-




(167,608)

Issue of shares less

  costs


28


175


-


-


-


-


(71)


-


132

Cost relating to 

  share-based 

  payment schemes



-



-



-



-



-



-



760



-



760

Shares awarded to 

  employees under 

  share-based bonus 

  schemes




-




-




-




-




-




-




(482)




482




-

Dividends paid

  in period


-


-


-


-


-


-


(10,872)


-


(10,872)











Balance 30 Sept 2008

32,511

51,518

201,460

108,136

1,815

314

184,299

(11,940)

568,113



Consolidated Statement of Changes in Equity

for the year ended 31 March 2009 











Audited


Share

capital


£000

Share

premium

account

£000

Revaluation

reserve


£000

Other

capital

reserves

£000

Cashflow

hedge

reserve

£000

Translation

reserve


£000

Retained

earnings


£000

Own shares

held

reserve

£000

Equity

shareholders'

funds

£000











Balance 1 April 2008

32,483

51,343

327,360

108,136

(322)

318

238,805

(12,422)

745,701

Total

  comprehensive

  income for the 

  year, net of tax




-




-




(152,772)




-




(41,405)




250




(98,018)




-




(291,945)

Issue of shares less

  costs


28


175


-


-


-


-


(71)


-


132

Cost relating to 

  share-based 

  payment schemes



-



-



-



-



-



-



1,829



-



1,829

Shares awarded to 

  employees under 

  share-based bonus 

  schemes




-




-




-




-




-




-




(482)




482




-

Dividends paid in

  year


-


-


-


-


-


-


(10,872)


-


(10,872)











Balance 31 March 2009

32,511

51,518

174,588

108,136

(41,727)

568

131,191

(11,940)

444,845



Consolidated Cashflow Statement 

for the six months ended 30 September 2009






Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000

Operating activities





Profit (loss) for the financial period


7,557

(43,841)

(106,230)

Adjustments for:





Depreciation of plant and equipment


395

399

726

Cost relating to share-based payment schemes


830

760

1,829

Net finance expenses


5,795

3,533

9,589

Loss (profit) on sale of properties held as 

  non-current assets 


10,071

(19)

4,821

(Gain) deficit on revaluation of investment and 

  development properties



(27,868)


33,380


68,249

Share of loss from joint ventures 


5,932

8,944

47,291

Share of (profit) loss from associate


(175)

107

(86)

Profit from sale of plant and equipment


-

(4)

(4)

Impairment of other non-current investment


-

7,790

7,790

Tax on continuing operations


1,992

(7,754)

(22,836)








4,529

3,295

11,139

(Increase) decrease in trade and other receivables


(2,162)

9,203

19,746

(Decrease) increase in trade and other payables


(1,290)

10,946

(4,209)

Increase in trading properties


(8,602)

(8,925)

(4,462)






Cash generated from operations


(7,525)

14,519

22,214

Interest paid


(11,624)

(14,045)

(29,708)

Interest received


777

2,990

8,561

Tax recovered


1,779

3,986

2,625






Net cashflow from operating activities


(16,593)

7,450

3,692






Investing activities





Purchase and development of property assets


(4,226)

(20,753)

(23,594)

Purchase of plant and equipment


-

(387)

(2,104)

Proceeds from sales of non-current assets


40,166

6,519

39,057

Tax paid on sales of non-current assets


-

(4,048)

-

Loans to joint ventures and associate


(24,590)

(61,010)

(64,113)

Distributions received from joint ventures


5,167

2,751

5,921

Acquisition of other investments


-

(1,618)

(1,619)

Proceeds from non-current receivable


-

43,081

43,081






Net cashflow from investing activities


16,517

(35,465)

(3,371)


Financing activities





Issue of shares


4

132

132

Investment in own shares


(36)

-

-

Proceeds from new borrowings


179,950

217,000

440,000

Repayment of borrowings


(179,000)

(197,600)

(441,600)

Payment of loan issue costs


(1,006)

(537)

(6,787)

Payment of finance lease liabilities


(386)

(409)

(796)

Equity dividends paid 


-

(10,872)

(10,872)






Net cashflow from financing activities


(474)

7,714

(19,923)


Net decrease in cash and cash equivalents



(550)


(20,301)


(19,602)

Cash and cash equivalents at start of period


9,215

27,982

27,982

Effect of exchange rate fluctuations on cash held


(39)

(4)

835






Cash and cash equivalents at end of period


8,626

7,677

9,215



Notes to the accounts

for the six months ended 30 September 2009


1.  Accounting policies


The comparative figures for the financial year ended 31 March 2009 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified but included an emphasis of matter paragraph on the material uncertainty arising from the impact on loan covenants of the continuing fall in property values which appeared to cast a significant doubt on the Group's and Company's ability to continue as a going concern. The audit report did not contain statements under section 237(2) or (3) of the Companies Act 1985. These accounts are available on the Company's website (www.quintain-estates.com).


The improving outlook for the Group's properties, as evidenced by the positive revaluation movement in the period, and the results of the programme for the repatriation of funds through the disposal of properties and non-current investments, have reduced the gearing ratio, as defined within the banking loan documentation, and increased the headroom in relation to the maximum gearing level. 


As at 30 September 2009, the Group had headroom of some 17% to accommodate any further falls in the valuation of its properties should these arise. While the directors continue to explore various options to increase this headroom, they consider that the actions taken to date and the changed conditions under which the Group operates enable the directors to conclude that there is no longer a material uncertainty which may cast significant doubt on the ability of the Group to continue as a going concern. The directors consider it appropriate to prepare the financial statements on a going concern basis. 


The interim statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and in particular, with IAS 34, 'Interim Financial Reporting', and apply the significant accounting policies set out on pages 74 to 78 of the 2009 Annual Report and Accounts with the exceptions listed below. 


IAS 1 (revised) requires the presentation of a Statement of Changes in Equity as a primary statement, separate from the Income Statement and Statement of Comprehensive Income. As a result, a Consolidated Statement of Changes in Equity has been included in the primary statements, showing changes in each component of equity for each period presented. 


One of the amendments which forms part of the International Accounting Standards Board annual improvements project and has effect for accounting periods  commencing  on  or  after   January  2009  relates  to  the  accounting  treatment  for  development  properties,  previously  accounted  for   under IAS 16, 'Property, Plant and Equipment'. Under the amendment, such properties are now accounted for under IAS 40, 'Investment Property', with revaluation movements recognised in the Income Statement rather than through equity. This change has had no impact upon the Group's net assets or cashflows and prior periods' results have not been restated. The cumulative balance of £174,603,000 included within the revaluation reserve in respect of development properties as at 1 April 2009 has been transferred to retained earnings in the current period. 


The Group has also applied IFRS 2 (amendment), 'Share-based Payments' and IFRS 8, 'Operating Segments', both of which are effective for accounting periods beginning on or after 1 January 2009. Neither has had a material impact upon the financial statements. In particular, the segmental disclosure in prior periods already reflected the structure upon which the management of the Group's business and the allocation of its resources is based.  


The preparation of the interim 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 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 the 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. The principal valuers of the Group's investment and development properties are Savills Commercial Limited and Jones Lang LaSalle Limited while Colliers CRE plc, Knight Frank LLP and Christie + Co have valued the investment and development properties within Quercus, the Group's healthcare joint venture. The changes in the market values of properties are disclosed in notes 10 and 11 and discussed in the Risk Management section of the Financial Review.


The Group has also exercised its judgement in relation to the recognition of deferred tax assets, the estimation of the tax rate for the six month period using the tax rate expected to apply to the full year's results, the measurement of fair value of derivative financial instruments, for which it has relied on the valuation carried out by JC Rathbone Associates Limited, and in assessing the recoverability of trade receivables by reference to their age and the ability of debtors to pay. 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 revisions affect both current and future periods.


There have been no material changes in reportable contingent liabilities since 31 March 2009 and the Group's financial performance does not suffer materially from seasonal fluctuations.



2.  Revenue, cost of sales and gross profit



Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009


Revenue


£000

Cost of

sales

£000

Gross

profit

£000

Revenue


£000

Cost of

sales

£000

Gross

profit

£000

Revenue


£000

Cost of

sales

£000

Gross

profit

£000











Rental income 

10,502

(2,405)

8,097

10,828

(2,221)

8,607

22,074

(5,348)

16,726

Income from 

  sale of trading 

  properties



6,336



(6,336)



-



-



-



-



19,381



(19,381)



-

Income from

  hotel

  operations



4,039



(1,795)



2,244



3,975



(1,773)



2,202



7,332



(3,384)



3,948

Fees from fund

  management

  and other

  services

  provided to

  related parties






3,490






(441)






3,049






4,062






(827)






3,235






14,007






(1,069)






12,938

Other income

1,796

(1,054)

742

1,854

(822)

1,032

3,225

(1,804)

1,421












26,163

(12,031)

14,132

20,719

(5,643)

15,076

66,019

(30,986)

35,033


There were no contingent rents in the current period or the comparative periods. 


The analysis of rental income and the related cost of sales (direct operating expenses) between investment and development properties was as follows: 



Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009


Revenue


£000

Cost of

sales

£000

Gross

profit

£000

Revenue


£000

Cost of

sales

£000

Gross

profit

£000

Revenue


£000

Cost of

sales

£000

Gross

profit

£000











Investment  

   properties


10,502


(2,405)


8,097


7,073


(934)


6,139


14,321


(2,946)


11,375

Development 

  properties 


-


-


-


3,755


(1,287)


2,468


7,753


(2,402)


5,351












10,502

(2,405)

8,097

10,828

(2,221)

8,607

22,074

(5,348)

16,726


Other income related to:



Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009


Revenue


£000

Cost of

sales

£000

Gross

profit

£000

Revenue


£000

Cost of

sales

£000

Gross

profit

£000

Revenue


£000

Cost of

sales

£000

Gross

profit

£000











Surrender

   premiums


107


-

107


119


-

119


194


-


194

Management

  fees and 

  commissions



979



(205)

774



1,164



(275)



889



1,778



(782)



996

Car parking 

   income


454


(107)

347


449


(133)


316


941


(274)


667

Abortive project

   costs


-


(429)

(429)


-


(258)


(258)


-


(359)


(359)

Sundry income

256

(313)

(57)

122

(156)

(34)

312

(389)

(77)












1,796

(1,054)

742

1,854

(822)

1,032

3,225

(1,804)

1,421



3.  Operating segments


The Group has three reporting segments by which the Board monitors the business and allocates resources. All activities are based in the United Kingdom and Channel Islands



Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2009

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Unaudited

Six months

ended

30 Sept

2008

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009

Audited

Year

ended

31 March

2009


Revenue


Gross

profit

Profit (loss)

before tax

Revenue


Gross

profit

Loss

before tax

Revenue


Gross

profit

Loss

before tax


£000

£000

£000

£000

£000

£000

£000

£000

£000

Investment 

 Portfolio

6,118

4,623

3,701


6,748


5,422


(14,850)


13,250


9,888


(38,364)

Urban 

  Regeneration

16,722

6,705

34,527

10,259

6,833

(8,125)

39,081

12,693

(28,314)

Fund

  Management

3,323

2,804

(12,056)


3,712


2,821


(12,151)


13,688


12,452


(26,354)












26,163

14,132

26,172

20,719

15,076

(35,126)

66,019

35,033

(93,032)

Administrative

  expenses



(10,828)



(12,936)



(24,109)

Exceptional 

  administrative

  expenses 



-



-



(2,336)

Operating

  profit (loss)



15,344



(48,062)



(119,477)

Net finance

  expenses



(5,795)



(3,533)



(9,589)

Profit (loss) 

  before tax



9,549



(51,595)



(129,066)





Unaudited

30 Sept

2009

Unaudited

30 Sept

2009

Unaudited

30 Sept

2009

Unaudited

30 Sept

2008

Unaudited

30 Sept

2008

Unaudited

30 Sept

2008

Audited

31 March

2009

Audited

31 March

2009

Audited

31 March

2009


Investment

properties



£000

Joint

ventures

and

associate

£000

Trading

properties



£000

Investment

and

development

properties

£000

Joint

ventures

and

associate

£000

Trading

properties



£000

Investment

and

development

properties

£000

Joint

ventures

and

associate

£000

Trading

properties



£000

Investment 

 Portfolio

34,056

-

-

159,159


-

-

117,853


-


-

Urban 

  Regeneration

656,597

92,866

33,989

691,979

99,578

30,280

631,237

77,929

26,601

Fund

  Management

134,482

106,340

-

17,935

190,356

-


51,050


138,309

-












825,135

199,206

33,989

869,073

289,934

30,280

800,140

216,238

26,601








Unaudited

30 Sept

2009

Unaudited

30 Sept

2008

Audited

31 March

2009

Unaudited

30 Sept

2009

Unaudited

30 Sept

2008

Audited

31 March

2009





Total

revaluation

movement

£000

Total

revaluation

movement

£000

Total

revaluation

movement

£000

Capital

expenditure


£000

Capital

expenditure


£000

Capital

expenditure


£000

Investment 

  Portfolio




(933)

(20,736)

(47,180)

62

601

852

Urban

  Regeneration




28,904

(188,414)

(288,090)

664

18,477

23,820

Fund

  Management




(7,632)

(23,764)

(18,117)

110

-

254















20,339

(232,914)

(353,387)

836

19,078

24,926



4.  Administrative expenses 




Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000






Directors' remuneration


1,022

1,853

2,328

Staff costs


5,846

5,858

12,016






Total staff costs


6,868

7,711

14,344

Legal and other professional fees


1,073

2,099

3,347

Office costs


1,754

1,912

4,110

Profit on sale of plant and equipment


-

(4)

(4)

Depreciation of tangible fixed assets 


310

399

712

Operating lease payments


541

535

1,178

General expenses


282

284

422






Total administrative expenses (before 

  exceptional expenses)


10,828

12,936

24,109


The exceptional administrative expenses incurred in the year ended 31 March 2009 related to fees incurred in respect of an abortive fund raising exercise.



5.  (Loss) profit from sale of non-current assets


The loss in the period arose primarily from the disposal of units in the Quercus Healthcare Property Unit Trust at below book value but in terms of the historic cost of this investment, the result of the sale was neutral. 



6 Net finance expenses 




Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000






Interest payable on bank loans and overdrafts


15,094

18,679

32,311

Interest payable on other loans


113

402

596

Interest on obligations under finance leases


383

406

790








15,590

19,487

33,697

Interest capitalised


(6,582)

(7,427)

(12,534)






Interest payable


9,008

12,060

21,163

Profit realised on termination of derivative financial 

  instruments


-

(3,297)

(3,297)

Change in fair value of derivative financial instruments


(660)

132

1,385






Finance expenses


8,348

8,895

19,251

Finance income: interest receivable 


(2,553)

(5,362)

(9,662)






Net finance expenses


5,795

3,533

9,589


Of interest capitalised in the period, the amount capitalised to investment properties under development was £6,291,000 (six months ended 30 September 2008: £7,110,000 and the year ended 31 March 2009: £11,851,000) and trading properties £291,000 (six months ended 30 September 2008: £317,000 and the year ended 31 March 2009: £683,000).  The average interest rate used for capitalisation was 5.4 % (six months ended 30 September 2008: 6.3% and the year ended 31 March 2009: 5.6%).



7 Tax


i) Tax charge (credit) on profit (loss)



Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000






UK current tax at 28% (2008: 28%)


-

-

-

Adjustments to prior years' UK corporation tax


-

-

(11,393)








-

-

(11,393)

Overseas tax


92

83

31






Total current tax charge (credit)


92

83

(11,362)

Deferred tax (note 7iii)


1,900

(7,837)

(11,474)






Tax charge (credit)


1,992

(7,754)

(22,836)


ii) Tax recognised directly in equity 



Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000






Deferred tax credit on revaluation 


-

(54,199)

(57,820)

Deferred tax charge (credit) on effective element of 

  interest rate swaps



1,146

706


(8,319)








1,146

(53,493)

(66,139)


iii) Deferred tax movements


Audited



Unaudited

Unaudited


31 March

2009

£000

Recognised

in income

£000

Recognised

in equity

£000

30 Sept

2009

£000

30 Sept

2008

£000







Capital gains less capital 

  losses

37,576

6,860

-

44,436

43,172

Capital allowances

7,081

749

-

7,830

6,738

Derivative financial 

  instruments

(8,770)

185

1,146

(7,439)

665

Other temporary differences

(573)

(3,678)

-

(4,251)

402

Revenue tax losses

(9,289)

(2,216)

-

(11,505)

(8,669)







Deferred tax provision

26,025

1,900

1,146

29,071

42,308



8 Earnings per share and net asset value per share


i) Earnings per share


Unaudited

Six months

ended

30 Sept

2009

Profit after

tax



£000

Unaudited

Six months

ended

30 Sept

2009

Weighted

average

number

of shares

000

Unaudited

Six months

ended

30 Sept

2009

Earnings

per share



pence

Unaudited

Six months

ended

30 Sept

2008

Loss after

tax



£000

Unaudited

Six months

ended

30 Sept

2008

Weighted

average

number

of shares

000

Unaudited

Six months

ended

30 Sept

2008

Earnings

per share



pence

Audited

Year

ended

31 March

2009

Loss after

tax



£000

Audited

Year

ended

31 March

2009

Weighted

average

number

of shares

000

Audited

Year

ended

31 March

2009

Earnings

per share



pence











Basic 

7,557

128,074

5.9

(43,841)

127,871

(34.3)

(106,230)

127,927

(83.0)

Adjustment:










Employee 

  share-based

  payment  

  schemes




-




547








-




-








-




-















Diluted

7,557

128,621

5.9

(43,841)

127,871

(34.3)

(106,230)

127,927

(83.0)


ii) Net asset value per share


Unaudited

As at

30 Sept

2009

Unaudited

As at

30 Sept

2009

Unaudited

As at

30 Sept

2009

Unaudited

As at

30 Sept

2008

Unaudited

As at

30 Sept

2008

Unaudited

As at

30 Sept

2008

Audited

As at

31 March

2009

Audited

As at

31 March

2009

Audited

As at

31 March

2009


Equity

shareholders'

funds

£000

Number

of shares


000

Net asset

value

per share

pence

Equity

shareholders'

funds

£000

Number

of shares


000

Net asset

value

per share

pence

Equity

shareholders'

funds

£000

Number

of shares


000

Net asset

value

per share

pence











Basic 

456,381

128,163

356

568,113

128,212

443

444,845

127,983

348

Adjustment:










Employee 

  share-based

  payment  

  schemes




673




942








3,474




1,878








-




435















Diluted

457,054

129,105

354

571,587

130,090

439

444,845

128,418

346


The number of shares in issue has been adjusted for the 1,896,057 (30 September 20082,059,388 and 31 March 20092,059,388) shares held by ESOP Trusts and by the Group as treasury shares.


Entitlements under the Executive Directors' Performance Share Plan have been excluded from the calculation in both i) and ii) above as the commitments relate to contingently issuable shares where the conditions had not been met at the Balance Sheet date.



9 Dividends


The Board does not propose to pay an interim dividend (six months ended 30 September 2008 and year ended 31 March 2009: nil pence).



10 Investment and development properties


The movements in the period in investment and development properties were as follows:




Unaudited

30 Sept 2009

Investment

properties

Unaudited

30 Sept 2009

Development

properties

Unaudited

30 Sept 2008

Investment

properties

Unaudited

30 Sept 2008

Development

properties

Audited

31 March 2009

Investment

properties

Audited

31 March 2009

Development

properties



£000

£000

£000

£000

£000

£000


Opening balance



143,452


656,688


220,624


843,536


220,624


843,536

Reclassification 

  (note 1) 



656,688


(656,688)


-


-


-


-

Transfer to trading 

  properties



-


-


-


(5,812)


-


(5,812)

Additions


836

-

600

18,478

784

24,142

Interest capitalised


6,291

-

-

7,110

-

11,851

Disposals


(10,000)

-

-

-

(14,674)

-

Revaluation surplus

  (deficit)



27,868


-


(32,181)


(183,282)


(63,282)


(217,029)









Closing balance


825,135

-

189,043

680,030

143,452

656,688


All of the Group's properties were externally valued as at 30 September 2009 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 holdings at Greenwich and Wembley have been valued by Savills Commercial Limited. The discount rates which have been applied in relation to these developments were 15.7% for the Greenwich interests and 15% for the Wembley development. 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:




Unaudited

30 Sept 2009

Investment

properties

Unaudited

30 Sept 2008

Investment

properties

Unaudited

30 Sept 2008

Development

properties

Audited

31 March 2009

Investment

properties

Audited

31 March 2009

Development

properties



£000

£000

£000

£000

£000

Investment and development 

  properties at market value 

  as determined by valuers




815,646



187,615



670,427



143,225



647,317

Adjustment in respect of rent-free

  periods and other tenant incentives



(1,693)


(538)


(178)


(1,174)


(410)

Adjustment in respect of minimum

  payments under head leases 

  separately included as a liability 

  in the Balance Sheet





11,182




1,966




9,781




1,401




9,781








As shown in the Balance Sheet


825,135

189,043

680,030

143,452

656,688



11 Non-current investments


i) Investment in joint ventures


a) The movement in investment in joint ventures was as follows:




30 Sept

2009


30 Sept

2009

    Unaudited

30 Sept

2009


30 Sept

2008


30 Sept

2008

Unaudited

30 Sept

2008


31 March

2009


31 March

2009

Audited

31 March

2009


Share of

net assets

£000

Advances


£000

Total


£000

Share of

net assets

£000

Advances


£000

Total


£000

Share of

net assets

£000

Advances


£000

Total


£000

Opening balance

(17,229)

232,224

214,995

71,974

167,366

239,340

71,974

167,366

239,340

Additions

1,379

-

1,379

-

-

-

41

-

41

Amounts 

  advanced


-


31,443


31,443


-


61,010


61,010


-


64,858


64,858

Disposals

(39,779)

-

(39,779)

-

-

-

(23,250)

-

(23,250)

Distributions

(4,661)

-

(4,661)

(2,843)

-

(2,843)

(6,578)

-

(6,578)

Share of losses

  net of tax


(5,932)


-


(5,932)


(8,944)


-


(8,944)


(47,291)


-


(47,291)

Share of other 

  comprehensive 

  income, net of

  tax 




343




-




343




321




-




321




(12,125)




-




(12,125)











Closing balance

(65,879)

263,667

197,788

60,508

228,376

288,884

(17,229)

232,224

214,995


b) The Group's interest in its principal joint ventures was as follows:




% of share capital held

Country of incorporation

Principal joint venture partners






Quercus Healthcare Property Unit Trust (Quercus) 


15.99

Channel Islands

Aviva Life & Pensions UK Limited

Greenwich Peninsula Regeneration Limited (GPRL)


50.00

United Kingdom

Lend Lease Europe Limited

Meridian Delta Dome Limited (MDDL)


49.00

United Kingdom

Lend Lease Europe Limited

Greenwich Peninsula N0204 Block A&B Unit Trusts

  (Greenwich Peninsula N0204) 


50.00

Channel Islands

Lend Lease N0204 Block A Limited/

Lend Lease N0204 Block B Limited

iQ Unit Trust (iQ) 


49.98

Channel Islands 

Wellcome Trust Investment 

Limited Partnership

Quantum Unit Trust (Quantum)


50.00

Channel Islands

Aviva Life & Pensions UK Limited

Quintessential Homes (Wembley) LLP (Quintessential) 


50.02

United Kingdom

Geninvest Limited/

Family Housing Development

Company Limited  

BioRegional Quintain Limited (BioRegional)


49.90

United Kingdom

BioRegional Properties Limited

Wembley City HIX Limited (Wembley Hotel)  


49.00

United Kingdom

Summit Hotels Limited


c) The Group's share of the results of its joint venture operations was as follows:


Summarised income statements 

for the six months ended 30 September 2009



Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Unaudited

Group share

in joint

ventures

£000











Rental income

7,455

391

498

1,944

110

52

-

-

10,450

Proceeds from sale of

  trading properties


-


-


-


-


-


1,733


-


-


1,733

Other income

-

264

-

-

-

-

109

-

373











Revenue

7,455

655

498

1,944

110

1,785

109

-

12,556

Cost of sales 

-

-

(5)

(1,041)

(37)

(1,708)

(45)

(78)

(2,914)











Gross profit (loss)

7,455

655

493

903

73

77

64

(78)

9,642

Administrative

  expenses

(1,038)

(54)

(35)

(564)

(15)

(3)

(201)

-

(1,910)











Operating profit (loss)

  before results from

  non-current asset

  sales and revaluation

6,417

601

458

339

58

74

(137)

(78)

7,732

Loss from sale of 

  non-current 

  property assets  



(2,210)



-



-



-



-



-



-



-



(2,210)

(Deficit) gain on

  revaluation of

  investment

  properties


(5,725)


(3,884)


4,383


(3,077)


(155)


-


-


754


(7,704)

Share of profit from

  joint ventures


-


-


-


-


-


-


230


-


230











Operating (loss) profit

(1,518)

(3,283)

4,841

(2,738)

(97)

74

93

676

(1,952)

Finance expenses

(2,363)

(9)

(320)

(1,384)

-

(16)

(805)

-

(4,897)

Finance income

393

6

-

-

-

2

28

-

429











(Loss) profit before 

  taxation


(3,488)


(3,286)


4,521


(4,122)


(97)


60


(684)


676


(6,420)

Taxation

422

792

(1,333)

754

38

-

-

(185)

488











(Loss) profit after

  taxation


(3,066)


(2,494)


3,188


(3,368)


(59)


60


(684)


491


(5,932)



Share of other comprehensive income 

for the six months ended 30 September 2009




Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Unaudited

Group share

in joint

ventures

£000

Share of effective

  portion of changes

  in fair value of 

  cashflow hedges, 

  net of tax



230



-



(187)



300



-



-



-



-



343



Summarised balance sheets

as at 30 September 2009



Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Unaudited

Group share

in joint

ventures

£000











Investment properties

115,989

11,780

50,000

93,611

5,108

-

-

6,000

282,488

Investment in 

  joint ventures


-


1,170


-


-


-


-


3,805


-


4,975

Trading properties

-

57,667

-

-

-

10,988

2,115

-

70,770

Other assets

8,648

8,140

1,154

1,953

338

383

6,691

2,331

29,638











Gross assets 

124,637

78,757

51,154

95,564

5,446

11,371

12,611

8,331

387,871

Current liabilities:










Trade and other 

  payables


(4,990)


(14,935)


(2,816)


(2,361)


(314)


(4,345)


(959)


(554)


(31,274)

Current tax 

  liability

-

(101)

-

-

(28)

-

-

(25)

(154)

Non-current liabilities:










Bank loans and 

  other borrowings


(57,247)


-


(44,180)


(53,544)


-


-


-


-


(154,971)

Deferred tax 

  (liability)

  asset


(2,052)


(3,359)


6,216


8,222


403


-


-


(201)


9,229

Other liabilities

-

-

(3,220)

(8,814)

-

-

(879)

-

(12,913)











Net external 

  assets

60,348

60,362

7,154

39,067

5,507

7,026

10,773

7,551

197,788











Represented by:










  Capital

(43,209)

9,214

(16,204)

(20,390)

(1,086)

6,143

(2,425)

2,078

(65,879)

  Loans

103,557

51,148

23,358

59,457

6,593

883

13,198

5,473

263,667











Total investment

60,348

60,362

7,154

39,067

5,507

7,026

10,773

7,551

197,788












The valuation of investment properties held within Quercus as at 30 September 2009 was performed by Colliers CRE, Christie + Co and Knight Frank LLP on the basis of market value and in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors.  Properties within the Greenwich joint ventures and the iQ Unit Trust were valued by Savills Commercial Limited and those within the Quantum Unit Trust by CB Richard Ellis Limited on a similar basis.



Summarised income statements 

for the six months ended 30 September 2008



Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Unaudited

Group share

in joint

ventures

£000











Rental income

8,982

427

-

1,314

160

-

-

-

10,883

Proceeds from sale of

trading properties 


-


-


-


-


-


15,724


-


-


15,724

Other income

-

244

-

-

-

-

41

-

285











Revenue

8,982

671

-

1,314

160

15,724

41

-

26,892

Cost of sales

-

(165)

-

(608)

(61)

(15,062)

-

-

(15,896)











Gross profit 

8,982

506

-

706

99

662

41

-

10,996

Administrative expenses

(1,374)

(308)

(12)

(808)

(32)

(18)

(174)

-

(2,726)











Operating profit (loss)

 before results from 

 non-current asset

 sales and revaluation 

7,608

198

(12)

(102)

67

644

(133)

-

8,270

Loss from sale of non-

 current property assets


(155)


-


-


-


-


-


-


-


(155)

(Deficit) gain on

 revaluation of

 investment and

 development properties




(14,551)




3,724




-




(6,396)




(85)




-




-




-




(17,308)

Share of loss from joint 

 venture 


-


-


-


-


-


-


(117)


-


(117)











Operating (loss) profit 

(7,098)

3,922

(12)

(6,498)

(18)

644

(250)

-

(9,310)

Finance expenses

(3,523)

-

-

(863)

-

(73)

(192)

(972)

(5,623)

Finance income

362

9

-

73

50

32

16

1,380

1,922











(Loss) profit

 before taxation


(10,259)


3,931


(12)


(7,288)


32


603


(426)


408


(13,011)

Taxation

3,598

(1,137)

-

1,581

21

-

-

4

4,067











(Loss) profit after taxation

(6,661)

2,794

(12)

(5,707)

53

603

(426)

412

(8,944)



  Share of other comprehensive income 

  for the six months ended 30 September 2008



Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Unaudited

Group share

in joint

ventures

£000

Share of effective 

  portion of changes 

  in fair value of 

  cashflow hedges, 

  net of tax




270




-




(86)




137




-




-




-




-




321



Summarised balance sheets

as at 30 September 2008



Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Unaudited

Group share

in joint

ventures

£000











Investment and  

development properties 

253,759

19,600

29,275

84,363

5,935

-

-

-

392,932

Investment in joint

ventures

-

922

-

-

-

-

2,261

-

3,183

Trading properties

-

42,407

-

-

-

15,311

2,318

-

60,036

Other assets

13,398

24,129

-

5,836

439

1,915

6,205

3,646

55,568











Gross assets

267,157

87,058

29,275

90,199

6,374

17,226

10,784

3,646

511,719

Current liabilities:

Trade and other payables


(735)


(16,842)


(12,689)


(2,720)


(342)


(6,213)


(1,994)


-


(41,535)

Bank loans and other  

 borrowings


-


-


-


-


-


(4,219)


-


(444)


(4,663)

Current tax liability

(1,338)

(163)

-

-

(28)

-

-

(299)

(1,828)

Non-current liabilities:










Bank loans and other  

 borrowings


(115,151)


-


-


(48,467)


-


-


-


-


(163,618)

Deferred tax (liability)

  asset 


(5,830)


(5,566)


34


1,200


62


-


-


(16)


(10,116)

Other liabilities

-

-

-

(1,075)

-

-

-

-

(1,075)











Net external assets

144,103

64,487

16,620

39,137

6,066

6,794

8,790

2,887

288,884











Represented by:










Capital

40,546

15,145

(96)

(2,341)

(260)

6,254

(1,251)

2,511

60,508

  Loans

103,557

49,342

16,716

41,478

6,326

540

10,041

376

228,376











Total investment

144,103

64,487

16,620

39,137

6,066

6,794

8,790

2,887

288,884












Summarised income statements 

for the year ended 31 March 2009



Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Audited

Group share

in joint

ventures

£000











Rental income

17,493

843

-

4,256

390

8

-

-

22,990

Proceeds from sale of

  trading properties 


-


-


-


-


-


18,687


-


-


18,687

Other income

-

-

-

-

-

-

120

-

120











Revenue

17,493

843

-

4,256

390

18,695

120

-

41,797

Cost of sales

-

(65)

-

(1,682)

(156)

(18,113)

(13)

-

(20,029)











Gross profit 

17,493

778

-

2,574

234

582

107

-

21,768

Administrative expenses

(5,666)

(400)

(30)

(1,370)

(49)

(51)

(317)

-

(7,883)











Operating profit (loss)

  before results from 

  non-current asset

  sales and revaluation 

11,827

378

(30)

1,204

185

531

(210)

-

13,885

Loss from sale of non-

  current property assets


(122)


-


-


-


-


-


-


-


(122)

Deficit on revaluation

  of investment and 

  development properties



(27,904)



(976)



(23,712)



(19,059)



(1,094)



-



-



-



(72,745)

Share of loss from joint 

  venture 


-


-


-


-


-


-


(260)


-


(260)











Operating (loss) profit 

(16,199)

(598)

(23,742)

(17,855)

(909)

531

(470)

-

(59,242)

Finance expenses

(6,148)

-

-

(6,136)

(33)

(130)

(469)

(972)

(13,888)

Finance income

393

18

-

94

-

33

19

1,380

1,937











(Loss) profit 

  before taxation


(21,954)


(580)


(23,742)


(23,897)


(942)


434


(920)


408


(71,193)

Taxation

8,298

53

7,476

7,920

324

-

-

(169)

23,902











(Loss) profit after

  taxation

(13,656)

(527)

(16,266)

(15,977)

(618)

434

(920)

239

(47,291)












Share of other comprehensive income 

for the year ended 31 March 2009




Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Audited

Group share

in joint

ventures

£000

Share of deficit on

  revaluation of 

  development 

  properties, net of tax  




-




-




-




(325)




-




-




-




-




(325)

Share of effective 

  portion of changes 

  in fair value of 

  cashflow hedges, 

  net of tax




(4,590)




-




(2,960)




(4,250)




-




-




-




-




(11,800)












(4,590)

-

(2,960)

(4,575)

-

-

-

-

(12,125)












Summarised balance sheets  

as at 31 March 2009



Quercus



£000


GPRL/

MDDL


£000


Greenwich

Peninsula

N0204

£000


iQ



£000


Quantum



£000


Quintessential



£000


BioRegional



£000


Other

joint

ventures

£000

Audited

Group share

in joint

ventures

£000











Investment and 

  development

  properties

205,418

15,000

34,000

72,836

5,159

-

-

-

332,413

Investment in joint 

  ventures 


-


989


-


-


-


-


3,400


-


4,389

Trading properties

-

52,071

-

-

-

12,520

2,058

-

66,649

Other assets

10,663

11,989

4,305

3,897

341

339

7,041

1,536

40,111











Gross assets

216,081

80,049

38,305

76,733

5,500

12,859

12,499

1,536

443,562

Current liabilities:










Trade and other

  payables

(3,363)

(17,164)

(5,301)

(6,102)

(352)

(4,796)

(1,797)

(767)

(39,642)

Bank loans and other

  borrowings


-


-


-


-


-


(1,255)


-


-


(1,255)

Current tax liability

-

(185)

-

-

(28)

-

-

(324)

(537)

Non-current liabilities:










Bank loans and other

  borrowings


(100,113)


-


(37,053)


(48,496)


-


-


-


-


(185,662)

Deferred tax (liability)

  asset 


(2,384)


(4,310)


7,476


7,584


365


-


-


(16)


8,715

Other liabilities

(2,843)

-

(1,780)

(5,563)

-

-

-

-

(10,186)

Net external assets

107,378

58,390

1,647

24,156

5,485

6,808

10,702

429

214,995











Represented by:










  Capital

3,821

11,881

(19,223)

(17,322)

(968)

6,085

(1,746)

243

(17,229)

  Loans

103,557

46,509

20,870

41,478

6,453

723

12,448

186

232,224











Total investment

107,378

58,390

1,647

24,156

5,485

6,808

10,702

429

214,995












ii) Other non-current investments


The movement in other non-current investments, all of which have been classified as available for sale, was as follows:





Unaudited

30 Sept 2009

£000

Unaudited

30 Sept 2008

£000

Audited

31 March 2009

£000






Opening balance


10,820

15,196

15,196

Additions


-

1,618

1,619

Impairment as charged in the Income Statement


-

(7,790)

(7,790)

Disposals


(6,685)

-

-

Recycling of revaluation movement from earlier periods


-

2,159

2,159

Revaluation deficit


(80)

(175)

(364)






Closing balance


4,055

11,008

10,820






During the period, the Group disposed of its holding in The Iceberg Alternative Real Estate II Fund. The remaining investment under this heading is shown at the value at which it is quoted on AIM. 


The impairment loss recognised in the six months ended 30 September 2008 and the year ended 31 March 2009 related to the whole of the Group's investment in Serrastone SA following a revision of cashflow forecasts as a result of current economic conditions. 



12.  Trade and other receivables




Unaudited

30 Sept 2009

£000

Unaudited

30 Sept 2008

£000

Audited

31 March 2009

£000






Trade receivables


6,392

14,133

5,837

Other receivables


7,075

7,831

6,288






Trade and other receivables


13,467

21,964

12,125

Tax recoverable


-

-

596

Prepayments and accrued income


3,674

4,228

2,937








17,141

26,192

15,658







13 Trade and other payables




Unaudited

30 Sept 2009

£000

Unaudited

30 Sept 2008

£000

Audited

31 March 2009

£000






Trade payables


3,674

3,208

2,918

Other payables


10,976

13,107

10,778

Accruals


16,828

21,507

23,841

Interest rate swaps


11,384

-

9,376








42,862

37,822

46,913







14 Bank loans and other borrowings




Unaudited

30 Sept 2009

£000

Unaudited

30 Sept 2008

£000

Audited

31 March 2009

£000






Current liabilities:





Bank loans


6,200

-

-






Non-current liabilities:





Bank loans  


535,250

561,500

540,500

10% first mortgage debenture stock 2011 


2,093

2,093

2,093








537,343

563,593

542,593

Amortised borrowing costs


(7,252)

(2,946)

(9,103)



530,091

560,647

533,490






Total bank loans and borrowings


536,291

560,647

533,490






The loans are secured by floating charges over assets owned by subsidiary undertakings.


The 10% first mortgage debenture stock 2011 issued by Estates Property Investment Company Limited is secured by a cash deposit of £3,362,000 and has a redemption value of £2,017,000. The premium over par arising from fair valuing the debenture on acquisition is amortised over its remaining life.


a) The maturity profile of the Group's debt was as follows:





Unaudited

Unaudited

Audited

Unaudited

Unaudited

Audited


30 Sept

2009

Bank loans

and overdrafts

30 Sept

2009

Other loans


30 Sept

2009

Total debt


30 Sept

2008

Total debt


31 March

2009

Total debt


30 Sept

2009

Undrawn

facilities

30 Sept

2008

Undrawn

facilities

31 March

2009

Undrawn

facilities


£000

£000

£000

£000

£000

£000

£000

£000










Within one year

6,200

-

6,200

-

-

-

-

-

From one to two years

6,600

2,093

8,693

75,000

95,000

5,000

20,000

-

From two to five years

486,300

-

486,300

177,093

447,593

158,500

50,000

134,500

From five to 25 years

42,350

-

42,350

311,500

-

1,722

83,500

-











541,450

2,093

543,543

563,593

542,593

165,222

153,500

134,500











b) After taking account of interest rate swaps and caps, the risk profile of the Group's borrowings was as follows:






Unaudited

30 Sept

2009

£000

Unaudited

30 Sept

2008

£000

Audited

31 March

2009

£000






Fixed or capped


543,543

552,093

542,593

Floating


-

11,500

-








543,543

563,593

542,593







c) The interest rate profile of the Group's fixed or capped rate debt was as follows:


Percent



Unaudited

30 Sept

2009

£000

Unaudited

30 Sept

2008

£000

Audited

31 March

2009

£000






4.0 - 5.0 


105,500

-

100,000

5.0 - 6.0


28,000

-

-

6.0 - 7.0


350,000

350,000

350,000

7.0 - 8.0


50,000

50,000

50,000

8.0 - 9.0


7,950

150,000

40,500

9.0 - 10.0


2,093

2,093

2,093








543,543

552,093

542,593







d) The weighted average rate and the weighted average period of the Group's fixed or capped rate debt were as follows:



Unaudited

30 Sept

2009

%

Unaudited

30 Sept

2008

%

Audited

31 March

2009

%

Unaudited

30 Sept

2009

years

Unaudited

30 Sept

2008

years

Audited

31 March

2009

years









6.0

6.3

6.1

4

5

4









15 Financial instruments


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 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 based on LIBOR and uses hedging to achieve an interest rate profile where the majority of borrowings are fixed or capped.  As at 30 September 2009100 % (30 September 2008: 99.8% and 31 March 2009100%) of the Group's net debt was fixed or capped.


i) Effective cashflow hedges


As at 30 September 2009, the fair value adjustments on the Group's interest rate swaps were as follows: 





Amount




Maturity date




Swap rate

Unaudited

Six months

ended

30 Sept 2009

Unaudited

Six months

ended

30 Sept 2008

Audited

Year

ended

31 March 2009

  £000 


%

£000

£000

£000







 100,000

05.05.10

3.02

178

-

(1,581)

  75,000

22.04.13

4.96

833

659

(6,743)

  75,000

22.04.13

4.99

841

582

(6,816)

  50,000

03.01.14

4.94

740

421

(4,851)

  50,000

03.01.14

4.97

746

426

(4,859)

   50,000

03.01.14

5.00

754

434

(4,862)







400,000



4,092

2,522

(29,712)








These interest rate swaps have been classified as effective and fair value adjustments reflected in equity. 


ii) Ineffective cashflow hedges  


As at 30 September 2009, the fair value adjustments on the Group's interest rate caps were as follows:   


Amount

Maturity date

Strike rate

Unaudited

Six months

ended

30 Sept 2009

Unaudited

Six months

ended

30 Sept 2008

Audited

Year

ended

31 March 2009

  £000 


%

£000

£000

£000







  25,000

03.01.13

5.50

92

149

(222)

  25,000

03.01.13

5.75

70

149

(137)

150,000

22.04.13

7.50

435

(567)

(852)

  50,000

22.07.13

6.50

194

(23)

(304)







250,000



791

(292)

(1,515)







These interest rate caps have been classified as ineffective and fair value adjustments reflected in the Income Statement. 


iii) Financial instruments held in joint ventures


As at 30 September 2009, the Group's share of fair value adjustments on interest rate swaps held within Quercus, a joint venture in which the Group has a 15.99% interest (30 September 2008: 29.74% and 31 March 2009: 25.42%), were as follows:





Amount




Maturity date




Swap rate

Unaudited

Six months

ended

30 Sept 2009

Unaudited

Six months

ended

30 Sept 2008

Audited

Year

ended

31 March 2009

  £000 


%

£000

£000

£000







  40,000

22.01.09

4.86

-

-

(45)

  50,000

22.10.09

4.84

128

21

(298)

  25,000

22.10.09

5.02

80

(136)

(282)

  25,000

24.10.11

2.95

(92)

-

-

  30,000

23.07.12

3.10

(106)

-

-

  80,000

22.01.13

5.11

142

224

(1,764)

100,000

22.01.13

4.99

168

266

(2,229)







350,000



320

375

(4,618)








These swaps were classified as effective and the Group's share of the fair value adjustments reflected in equity.


As at 30 September 2009, the Group's share of the fair value adjustments on interest rate caps and collars shown within iQ, a joint venture in which the Group has 49.98% interest (30 September 2008 and 31 March 200949.98%), were as follows:






Unaudited

Six months

ended

Unaudited

Six months

ended

Unaudited

Six months

ended

Unaudited

Six months

ended

Audited

Year

ended

Audited

Year

ended


 Amount



Maturity

date


Strike rate

Floor


Strike rate

Cap

30 Sept 2009

30 Sept 2009

30 Sept 2008

30 Sept 2008

31 March 2009

31 March 2009

Income

Statement

Equity


Income 

Statement

Equity


Income

Statement

Equity


£000


%

%

£000

£000

£000

£000

£000

£000











12,951

04.10.12

5.08

6.00

-

91

112

-

-

(1,969)

12,951

04.10.12

5.28

5.75

-

258

-

190

(42)

(2,146)

12,951

04.10.12

4.89

6.25

-

67

87

-

(1,850)

-

12,952

04.10.12

4.69

6.50

45

-

62

-

(1,744)

-











51,805




45

416

261

190

(3,636)

(4,115)












As at 30 September 2009, the Group's share of the fair value adjustments on the interest rate swap within Greenwich Peninsula N0204, a joint venture in which the Group has a 50.00% interest (30 September 2008 and 31 March 2009: 50.00%), were as follows:





Amount




Maturity date




Swap rate

Unaudited

Six months

ended

30 Sept 2009

Unaudited

Six months

ended

30 Sept 2008

Audited

Year

ended

31 March 2009

  £000 


%

£000

£000

£000







   29,301

30.12.11

5.28

(260)

(120)

(2,960)








This swap was classified as effective with the fair value adjustment reflected in equity.



16 Share capital



Unaudited

Number of

shares

000

Unaudited

Nominal

value

£000

Authorised as at 30 September 2009



Ordinary shares at 25p each

200,000

50,000




Allotted, called up and fully paid: 



In issue as at 1 April 2008

129,930

32,483

Issue of shares under share-based payment schemes at between 25p and 155.3p

112

28







In issue as at 30 September 2008 and 31 March 2009

130,042

32,511

Issue of shares under share-based payment schemes at 25p 

17

4







In issue as at 30 September 2009

130,059

32,515





As at 30 September 2009, Share capital included 1,890,823 (30 September 2008 and 31 March 2009: 2,054,154) shares held by ESOP Trust. At that date, these shares had a market value £3,990,000 (30 September 2008: £4,134,000 and 31 March 2009: £173,000), a cost of £10,722,000 (30 September 2008 and 31 March 2009: £11,908,000) and a nominal value of £472,706 (30 September 2008 and 31 March 2009: £513,539).


As at 30 September 2009, the Company also held 5,234 (31 March 2009 and 30 September 2008: 5,234) of its own shares which had a market value of £11,000 (30 September 2008: £11,000 and 31 March 2009: £440), a cost of £32,000 (30 September 2008 and 31 March 2009: £32,000) and nominal value of £1,309 (30 September 2008 and 31 March 2009: £1,309). 



17.  Revaluation movements




Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000

Recognised in Income Statement:





  Gains (deficitson revaluation of investment properties 


27,868

(33,380)

(68,249)

  Deficits on revaluation of investment and development 

   properties in joint ventures



(7,704)


(17,308)


(72,745)

  Gain (deficit) on revaluation of investment properties 

   in associate


175

(143)

120

Recognised directly in equity:  





 Deficits on revaluation of development properties


-

(182,083)

(212,062)

 Deficits on revaluation of development properties in joint   

  ventures



-


-


(451)








20,339

(232,914)

(353,387)







As from 1 April 2009, revaluation movements on development properties held as investment properties are recognised through the Income Statement rather than through equity (note 1).



18 Capital commitments


As at 30 September 2009, the Group had capital commitments of £28,353,000 (30 September 2008: £27,734,000 and 31 March 2009: £32,488,000) in relation to the development of its own investment properties and £99,000 (30 September 2008: £63,000 and 31 March 2009: £56,000) in respect of contractual commitments for repairs, maintenance and enhancement in relation to its investment properties.  


In respect of commitments relating to investment properties under development, the Group is entitled to receive £1,738,000 (30 September 2008: £nil and 31 March 2009: £8,074,000) in contracted payments from third parties for work to be carried out on their behalf.


In addition, the Group has entered into a conditional contract for £91,000,000 in respect of the purchase of a student accommodation scheme. The conditions relate to planning and financing, the former of which has, since the year end, been satisfied while the latter remains outstanding. 


The Group's share of capital commitments in relation to its joint ventures was £29,804,000 (30 September 2008: £86,625,000 and 31 March 2009: £36,139,000). 



19. Related party disclosures


During the period, the Group received the following fees in respect of services provided to its joint ventures:




Unaudited

Six months ended

30 Sept 2009

£000

Unaudited

Six months ended

30 Sept 2008

£000

Audited

Year ended

31 March 2009

£000






  Quercus Healthcare Property Partnership


1,754

2,084

10,610

  iQ Property Partnership


1,228

1,263

2,335

  Greenwich Peninsula Regeneration Limited


368

421

556

  BioRegional Quintain Limited


100

154

326

  Quintessential Homes (Wembley) LLP


30

130

160

  Quantum Property Partnership


10

10

20








3,490

4,062

14,007

   






The Group also received interest on loan notes amounting to £829,000 (six months ended 3September 2008: £1,757,000 and year ended 31 March 2009: £3,108,000) from Greenwich Peninsula Regeneration Limited, £280,000 (six months ended 30 September 2008: £472,000 and year ended 31 March 2009: £865,000) from Greenwich Peninsula N0204, £905,000 (six months ended 30 September 2008: £520,000 and year ended 31 March 2009: £1,323,000) from BioRegional Quintain Limited and £221,000 (six months ended 30 September 2008 and year ended 31 March 2009: £nil) from Wembley City HIX Limited, which are included in finance income.


The following amounts due from related parties are included in Trade and other receivables in note 12:

 



Unaudited

30 Sept 2009

£000

Unaudited

30 Sept 2008

£000

Audited

31 March 2009

£000






 Quercus Healthcare Property Partnership


27

3,175

57

 iQ Property Partnership


691

813

693

 Greenwich Peninsula Regeneration Limited


272

726

100

 BioRegional Quintain Limited


2,018

1,209

1,722

 Quintessential Homes (Wembley) LLP


7

201

303

 Quantum Property Partnership


103

89

44

 South East Properties (Redhill) Limited


-

2,023

-








3,118

8,236

2,919






 

20 Non-controlling interest


On 30 September 2009, the Group disposed of a 1.5% stake in a subsidiary entity, the sole assets of which were a number of investment properties valued in these accounts at £88,557,000.  


This information is provided by RNS
The company news service from the London Stock Exchange
 
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