Interim Management Statement

Quintain Estates & Development PLC
15 August 2007

15 August 2007

                      Quintain Estates and Development PLC
                         ('Quintain'/'Company'/'Group')

                          INTERIM MANAGEMENT STATEMENT



Quintain announces a strong start to its financial year to 31 March 2008. In
particular, the Company is delighted to report a number of commercial
partnerships and agreements with some of the world's leading organisations at
its flagship project at Wembley and significant progress in its development
pipeline elsewhere.



Highlights to date include:



  • Supply chain, utility and fibre optic network deals agreed at Wembley,
    thereby securing progress towards Quintain's stated aim to 'run towns as
    businesses'
  • Detailed planning consent received for the BioRegional Quintain joint
    venture's first two residential blocks at Middlehaven
  • Detailed consent for the construction of Ravensbourne College in
    Greenwich, bringing 1,500 students a day to the Peninsula
  • Pipeline of student accommodation deals secured from developer Keyhaven,
    the first being a £26.5m development in Edinburgh
  • Amendment of banking covenants to increase liquidity; overall gearing of
    36% ensures the Group has significant financial firepower.



Adrian Wyatt, Chief Executive of Quintain, reporting on the period said,



'We have once again demonstrated strong progress across the Group in the year to
date. In particular I am pleased to announce the advancement of our concept of '
running towns as businesses' with deals in hand with Siemens, First Mile
Networks and Scottish and Southern Energy.



'Our major projects have huge potential and the amendment to our gearing
covenant in the period has materially increased liquidity, positioning Quintain
strongly to benefit from the considerable inherent value.



'Since its flotation, Quintain has established an outstanding track record in
terms of value creation.  Our innovative and synergistic approach has enabled us
to ensure that the activities of our three divisions - Special Projects, Fund
Management and Investment Portfolio - complement and reinforce each other.  A
current example is at Wembley, where the provision of student accommodation will
be delivered by our specialist joint venture with The Wellcome Trust.



'The diversity of our business, the potential of our major, long-term Special
Projects and our Fund Management business and the significant growth of our
strategic partnerships with a number of the world's leading organisations means
that we are strongly positioned to outperform in current market conditions and
continue our track record of creating shareholder value.'





For further information, please contact:



Quintain Estates and Development PLC
Rebecca Worthington
Tel: [phone]

Financial Dynamics
Stephanie Highett/Dido Laurimore
Tel: [phone]

Business Review



Quintain's strategy continues to be to focus on the financial characteristics of
properties to identify assets and special situations where we can use our skills
to create value. We seek opportunities and pricing anomalies in three areas:



  • Large scale urban regeneration
  • Specialist fund management
  • The UK secondary property investment market across all sectors.



Our diversified business model, with its balance of mixed-use urban
regeneration, investment property and specialist fund management, ensures that
the Group is well positioned to outperform in the years ahead, in terms of our
core measure of total return.



Market conditions

Apart from London offices, the commercial property market, particularly for
secondary properties, is seeing yields drifting sideways or rising. By contrast,
London residential is performing extremely well and, supported by net
immigration, household formation and wage inflation, this performance seems set
to continue.



Quintain is well positioned to benefit from these market conditions, with a
reduced exposure to investment properties, and diversification into nursing
homes and student accommodation where positive trends apply. Also, within urban
regeneration, we have consent for around 15,000 homes in London. A combination
of this strategic positioning and the scale and nature of our development
pipeline means that we are well placed to perform both in absolute and relative
terms over the coming year.



Special Projects



Good progress continued to be made within our large urban regeneration projects.



The concept of 'running towns as businesses' has made a significant step forward
with initial deals being signed. On the supply chain side, we have signed a
Strategic Partnership Agreement with Siemens to be our Technology Partner for
the provision of mechanical and electrical equipment across the Wembley
development. For the commercial exploitation of Information and Communication
Technology fibre networks we have signed Heads of Terms with First Mile Networks
to create 'Quintain Communications'. Heads of Terms are now also in place with
Scottish and Southern Energy to design, install and operate the site-wide
utility network. This takes the form of a capital contribution and profit
sharing arrangement. Over time, these and similar deals have the potential to
generate extremely valuable non-property income streams for the Company.



At Greenwich we announced, during the period, exclusive negotiations with Crest
Nicholson on the first residential plot for the North East of the Peninsula. The
1.1 acre site will provide approximately 295 apartments and 120 parking spaces,
together with approximately 5,000 sq ft of retail space. A planning application
was submitted in July 2007 and construction is anticipated to start in Spring
2008. In addition a planning application was submitted and detailed consent,
subject to S106, given in the period for Ravensbourne College which, when built,
will bring 1,500 students a day to the site. Detailed consent for the Bellway
plot in the South East corner of the site was also approved, releasing initial
cash payments.



Practical completion was achieved at our 140,000 sq ft distribution unit in
Redditch and marketing has commenced.



Within our BioRegional Quintain joint venture, detailed consent has been
received for the first two residential blocks at Middlehaven, one of our
exemplar sustainability schemes. We anticipate starting on site with our
marketing suite next month and with the first residential block in January 2008.



The Company's track record in the highly specialised field of major regeneration
projects ensures that we are continually assessing other similar schemes where
our skills and experience can be used to generate value for our shareholders.



Quintain Fund Management



In the quarter to 30 June 2007, Quercus, our healthcare fund, made acquisitions
of £45.5m at an average initial yield of 7.2%. Further fundraising has taken
place, with Quintain committing £10.3m to maintain its stake at 28.0%.



In iQ, our student accommodation joint venture with The Wellcome Trust, the next
two schemes are due to achieve practical completion at the end of this month in
preparation for the start of the academic year, giving an additional 1,000
income producing bed spaces. During the period we signed an agreement with
Keyhaven to secure their development pipeline, the first deal being 314 beds at
Edinburgh in a scheme worth £26.5m.



Within Quantum, our specialist science park fund, planning is progressing at the
800,000 sq ft science and technology park, SPark, at Emersons Green in Bristol.
This should lead to a submission later this month for an amendment to the
masterplan reconfiguring the layout of the site and a negotiated S106
(infrastructure contribution and affordable content). Discussions have commenced
with a first potential tenant.



Investment Portfolio



During the period, we unconditionally exchanged on the sale of First National
House, Harrow, for £6.5m, which after costs will be neutral in terms of the
income statement. This office building has been vacant since 2006 and, having
reviewed the potential profit on a refurbishment and the likelihood of a major
redevelopment, we have decided it does not offer an appropriate return for the
risk profile.



New lettings in the period amount to £218,000 of rental income of which £117,000
relates to St Davids House, Cardiff.



Capital Structure and Funding



During the period, Quintain extended the maturity of its £475m corporate
facility by one year to five years and amended the gearing covenant. This was
previously 110% of net assets less equity held in joint ventures. The revised
definition, which is 110% of net assets, is structurally important given the
strategy of the business to grow our funds under management whilst retaining
equity in the funds and to build up our urban regeneration business bringing in
specialist partners in joint ventures. The critical element of our funding is
the flexibility it gives us. Given current gearing levels of 36%, the amended
definition gives us significant firepower to pursue our strategy, providing us
with sufficient headroom on gearing to meet all cash requirements within
existing deals based on our latest proposals.



On hedging, historically we have used swaps to give certainty of interest costs
against relatively certain rental income receipts. Under current market
conditions with the business becoming less reliant on rental income, it was
appropriate to change the hedging mechanisms in place to caps, which cap our
maximum interest cost, given less certainty of timings over development
receipts. Our strategy is to be between two thirds and 100% hedged on our
interest exposure. During the period we cancelled all swaps giving rise to a
profit of £1.7m and replaced them with £225m of caps at 6.5%. Given net
borrowings of £302m at 30 June 2007, this equated to 75% of debt being hedged.
At this date the fair value of the caps was £3.2m, compared with a cost of
£1.5m.



At 30 June 2007 gearing of 36% was unchanged from the year end with receipts
from sales offsetting acquisitions and capital expenditure. During the period,
acquisitions of £22.7m comprised the Stadium Retail Park at Wembley. Capital
expenditure of £7.4m also mainly related to Wembley.



Gearing including debt within joint ventures was 48%. Undrawn but committed
facilities at 30 June 2007 were £171m.



Clarification of intentions by Quill Securities



As shareholders are aware, Quintain is currently in an offer period as a result
of an announcement made on 16 July 2007 by Quill Securities Limited ('Quill
Securities'), a controlled undertaking of HBOS plc, that it was evaluating its
options in relation to Quintain.  Following this announcement, and at our
request, the Takeover Panel has required Quill Securities to clarify its
intentions by 10 September 2007.



Outlook



The Company has made good progress across the business in the first quarter. The
deals signed at Wembley and Greenwich with Siemens, First Mile Networks and
Scottish and Southern Energy illustrate the positive steps we are taking to
achieve our strategy to create new towns and destinations and run them as
significant income-generating businesses.  In addition, fund management
generates value across all areas in its own right in addition to realising
synergies for the Group. This performance underpins the belief that we will
continue to create and deliver excellent shareholder value in the future.



                                    - Ends-





Forward Looking Statements

This document may contain certain 'forward-looking' statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances. Actual outcomes and results may differ
materially from any outcomes or results expressed or implied by such
forward-looking statements.



Any forward-looking statements made by or on behalf of Quintain speak only as at
the date they are made and no representation or warranty is given in relation to
them, including as to their completeness or accuracy or the basis on which they
were prepared. Quintain does not undertake to update forward-looking statements
to reflect any changes in Quintain's expectations with regard thereto or any
changes in events, conditions or circumstances on which any such statement is
based.



Information contained in this document relating to the Company should not be
relied upon as an indicator of future performance.


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