Results for the six months ended 30 September 2013

RNS Number : 7867T

Quintain Estates & Development PLC

25 November 2013

 



25 November 2013  

Quintain Estates & Development PLC

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

Results for the six months ended 30 September 2013

Quintain Estates & Development PLC, the London investment and development specialist, today announces its Interim Results for the six months to 30 September 2013.

Operational Highlights:

Greenwich Peninsula

·     Significant value created through planning improvements

·     Subsequently completed a £230 million deal to dispose of Greenwich Peninsula interest, crystallising enhanced value and delivering a £31 million profit

Wembley Park

·     AEG appointed to manage Wembley Arena

·     London Designer Outlet successfully opened: now 83% let⁽¹⁾ with 350,000 visitors in the first

month, establishing a compelling destination to underpin new residential development

·     Hilton London Wembley hotel average occupancy over the most recent quarter at 83%

Corporate

·     London focus delivered with £39 million disposal of Sequel regional assets

·     £115 million maiden bond issue executed, diversifying funding sources and extending maturities

·     Solid financial base created, with debt substantially below long-term target of £300 million

Financial Summary: Earnings		6 months to 30 Sept 2013 £m	6 months to   30 Sept 2012 £m
Adjusted profit (pre-capital movements) before tax		3.1	4.6
Profit (loss) after tax		7.1	(22.5)
EPRA diluted EPS		1.2p	0.1p
Balance Sheet	Pro-forma* £m	30 Sept 2013 £m	31 March 2013 £m
Net debt	175.3	452.8	443.6
Bank gearing	30%	76%	76%
Net Asset Value per share	pence	pence	pence
Basic	112	106	104
Diluted	112	106	104
EPRA diluted	113	107	105

* Pro-forma balance sheet as at 30 September 2013 reflecting Sequel and GPRL disposals

Maxwell James, Chief Executive of Quintain said:

"We have completed Quintain's corporate re-positioning and are now poised to embark on an exciting period of growth.

"The actions we have taken to streamline the business have created a company focused on London with a solid financial base and capital to invest. At Wembley Park, where we have just launched the London Designer Outlet, we are focused on increasing the pace of delivery and the scale of our ambition for the development. We are also leveraging the skills of our team, which combines development, investment and transactional expertise, to invest in selective opportunities in London from which we can deliver outperformance for investors."

Meeting, webcast and conference call:

A meeting for analysts and institutional investors will take place today at 9.00am at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS.

The meeting can also be watched live through the Company website: www.quintain.co.uk or accessed via a conference call dial-in facility, using the following details:

·      Dial in number: 020 3059 8125

·      Password: Quintain

For further information, please contact:

Quintain Estates & Development PLC                           

Cressida Curtis: [e-mail]   

Tel: [phone]

RLM Finsbury

Jenny Davey

Charlotte Whitley

Tel: [phone]

CHIEF EXECUTIVE'S REVIEW

A year ago we set out our strategy to reposition Quintain as a London investment and development specialist, with a robust financial platform and a balanced portfolio. This entailed:

i.    focusing activities increasingly on London through a c.£300 million disposal programme;

ii.   increasing financial stability through the reduction of Group debt to below a near-term target of £400 million and the creation of new income streams; and

iii.  creating value through the advancement of development at Greenwich Peninsula and Wembley Park.

Twelve months later, Quintain is a much more focused business and, following the disposal of our 40% interest in Greenwich Peninsula, has achieved financial stability ahead of schedule. We are now in a position to grow the business, developing both our income and asset value.

Results

Profit after tax for the period of £7.1 million (September 2012: a loss of £22.5 million) included a £7.5 million increase in property valuations. Adjusted profit before tax, our measure of underlying earnings, decreased to £3.1 million (September 2012: £4.6 million) principally due to the loss of income from disposals over the past eighteen months and other activities undertaken to re-position the portfolio for future growth.

At the half year, net debt was £452.8 million (March 2013: £443.6 million) and net asset value per share had increased to 106 pence (March 2013: 104 pence). The disposal of our interests in Greenwich Peninsula and the Sequel regional investment property business, both of which occurred after the period end, reduced net debt on a pro-forma basis to £175.3 million with net gearing at 30% and resulted in a pro-forma Net Asset Value per share of 112 pence. Net debt will rise towards £230 million by the year-end as Phase 1 of Wembley Park is completed in the second half of the year.

These transactions assisted us in achieving our long-term target of reducing net debt to below £300 million. In addition, the re-financing in July 2013 of £115 million of debt through a Bond Issue, due July 2020, diversified our sources of finance and extended the debt maturity profile of the Group which now stands at a weighted average of 3.4 years.

Delivery

At Wembley Park, the first 1.8 million sq ft of development has now been completed, establishing a vibrant leisure destination in the Capital with world-class entertainment facilities now sitting alongside London's only designer shopping outlet, which successfully opened last month. This combination establishes a strong identity for Wembley Park with excellent amenities that underpin the next phase of residential development.

The opening of London Designer Outlet and the introduction of AEG as operator of Wembley Arena create new income streams and enhance existing ones, and both will contribute to net income in the second half of the year. These actions follow last year's opening of the Hilton Hotel at Wembley in which we retain a 50% interest and which achieved an occupancy level of 83% for the last quarter.

At Greenwich Peninsula, through the GPRL joint venture, we focused activity on creating value through the securing of planning consents to support the construction of a whole neighbourhood in the south (Peninsula Riverside) and the creation of a premium district in the north (Peninsula Quays). Through the subsequent disposal of our interests in GPRL, we have crystallised the value within the development for shareholders, realising a profit of £31 million: a 20% increase over the sixteen months since we entered into the joint venture.

Our student accommodation vehicle, iQ, has enjoyed another successful start to the academic year with lettings at 99.6% across the 5,183-bedroom portfolio. Currently 47% of the iQ portfolio is located in London, a city with 300,000 students, and we continue to view the sector as one that can deliver further growth for Quintain.

Outlook

Over the last twelve months we have substantially repositioned Quintain. As a result, the Company now has a balance sheet with a level of gearing more aligned to its assets and a portfolio to deliver value and sustainable growth for investors.

Whilst maintaining a financial structure appropriate to our underlying assets, the growth strategy will therefore be delivered through targeted investment in the following activities:

i.          increasing the pace and ambition of delivery at Wembley Park;

ii.         developing and investing in iQ; and

iii.        expanding the London Portfolio.

Together, these activities give Quintain a clear route map through which to drive sustainable risk-adjusted returns for shareholders.

BUSINESS REVIEW

1. London Development

Following the disposal of our interest in Greenwich Peninsula, after the period end, our major large-scale mixed-use development is Wembley Park in North West London, on which we hold outline consent for 6.7 million sq ft of further development.

a) The Market

The continued growth of London's population is well documented and the shortfall in housing delivery to accommodate the continuing increase is most recently calculated by Savills to be 21,500 homes every year.

With outline consent to develop 5,000 new homes at Wembley Park, Quintain's focus is on:

i.          the mid-mainstream residential bracket, where household incomes range between £50,000-£75,000 per annum, accommodation is purchased at prices between £450 and £700 per square foot and there is an estimated under-supply of 3,500 homes (24%) every year; and

ii.         the upper-mainstream bracket, where households draw an income of between £75,000-£100,000 per annum, per square foot prices reach £1,000 and there is an estimated shortfall of approximately 3,000 homes (50%) every year.

In addition, London is experiencing an unprecedented inflow of overseas capital seeking to invest in and benefit from one of the world's most vibrant cities. This is enhancing the value of our existing assets and also presenting opportunities where Quintain can apply its skills and resources to unlock inherent value.

b) Wembley Park

The first phase of our 87-acre, mixed-use development around the National Stadium in North West London is now completed, amounting to 21% of the development for which we hold consent.

Phase One: A new Leisure and Retail heart delivered

Designed to create a new heart for the wider development and an exciting leisure and entertainment district for London, the completion of this phase was marked by the opening on 24 October 2013 of London Designer Outlet: the first and only centre of its kind within London.

Anchored by Nike, Marks & Spencer, GAP and CineWorld, 83% of the centre by base rent is now leased⁽²⁾ and 350,000 people visited the complex during its first month of operation.

The initial marketing campaign reached out to the 780,000 residents living within 20 minutes of the centre who, research shows, are likely to visit the centre regularly to shop and to enjoy the extensive food and beverage facilities and the nine-screen cinema.

London Designer Outlet is the final component of the public Wembley Park leisure destination, which also includes Wembley Arena, the Hilton London Wembley Hotel and Brent Civic Centre, all of which overlook the internationally-renowned Wembley Stadium. A co-funded marketing initiative is now in place to enable Wembley Park to target and host large, multi-faceted events, extending the reach of each of these venues and facilitating valuable cross-selling.

Underpinning the completion of Phase 1, a new brand was rolled-out during the period. This brand retains the historic name for the wider location of "Wembley Park", a leisure destination that was first opened to the public in 1894.

Phase Two: Residential

With the completion of the new 'town centre' for Wembley Park underpinned by a distinctive brand, the next phase of residential development is now being driven forward.

A planning application was submitted in September 2013 seeking detailed consent to build 475 homes on the land adjacent to the Brent Civic Centre wedding gardens. The proposal is for seven buildings arranged around an acre of private gardens with a high specification targeting the significantly under-supplied mid-mainstream buyer. Reflecting the outline consent secured across this phase in November 2011, 90% of the homes are proposed as private tenure. A decision is expected from the planning committee in December and, if positive, this will lead to the start of construction in the first half of the 2014/15 financial year.

c) Greenwich Peninsula

Following the introduction of a new joint venture partner to our Greenwich Peninsula scheme in July 2012, the parties were able to re-configure and increase the ambition for the development.

Significant milestones included: approval for a Deed of Variation that re-balanced and re-distributed the tenure of housing across the site; approval for a new masterplan for the northern district of Peninsula Quays; and detailed consent for 506 homes in the southern district of Peninsula Riverside. Construction of the southern district has now begun, and five new detailed planning applications for a further 880 homes in the south have been submitted. Together, these achievements materially enhanced the value of the site.

This enabled Quintain to crystallise at an early stage the future profits and cashflows from the development through the disposal to Knight Dragon of our 40% interest in the Greenwich Peninsula Regeneration Ltd ("GPRL") Joint Venture and associated interests after the period end for an aggregate of £230 million, creating a pre-tax profit of £31 million.

We are immensely proud of our 14-year association with the Peninsula and, in particular, the momentum we have been able to generate over the last 16 months. We will follow the continued regeneration of the area by Knight Dragon and the Greater London Authority with interest.

2. Asset Management

The Asset Management business continues to provide a significant proportion of the Group's income, contributing £8.5 million (September 2012: £6.6 million) to continuing underlying profit during the period.

a) iQ Student Accommodation

Our largest asset management interest is iQ, the 50:50 student accommodation joint venture with Wellcome Trust. Established in 2006, iQ has grown to become a Top Ten provider of student accommodation in the UK and has 47% of its assets in London, by value.

The undersupply of high quality accommodation coupled with the increasing expectations of students who now pay up to £9,000 per annum in academic fees continues to support this strong market sector, particularly for assets with the high-quality specification and professional in-house management teams supported by iQ.

The 5,183-bedroom portfolio is 99.6% let for the current academic year and has achieved a 2.7% increase in average rent year on year. iQ, for which we act as fund and asset manager, has contributed £3.5 million (September 2012: £2.6 million) to the Group over the reporting period.

b) Quercus

The care home sector remains challenging and we continue to monitor the financial health of our operators. In Quercus, for which we are the asset manager in addition to holding an 11.2% interest, we have reacted to market conditions through pursuing a programme of disposals over the period, reducing the Fund's debt by approximately £60 million in the period. In the six months property values reduced by 3.6%, principally across assets identified for disposal, with Quercus contributing £2.1 million (September 2012: £2.7 million) to the Group's underlying performance. The Fund was extended by Unit Holders for up to five years during the period with the focus now on driving performance from the on-going portfolio.

c) WELPUT

The West End of London Property Unit Trust ("WELPUT") is the top performing UK office fund over the last three and five years, on an annualised basis.

Over the last six months key portfolio milestones have included: the conclusion of lettings at The Point, W2; agreements secured to let all space within One Chapel Place, W1; lettings of vacant space at Orion House, WC2; and 100% rental collection.

With forecast supply limited and rental levels still some way below their 2007 peak, the Fund is well positioned to continue its delivery of strong performance. Our advisory role to WELPUT has contributed £1.1 million (September 2012: £0.8 million) to the Group over the reporting period.

d) Sequel

Subsequent to the period end, the disposal to Palace Capital of our regional investment portfolio, Sequel, was completed. The purchase price of Quintain's interest was £39.1 million and the transaction significantly enhanced our programme to increase management's focus on London.

We have also now completed the sale to Orchard Street Investment Management, acting on behalf of its client, St James's Place Property Trust, of Stadium Retail Park. The asset is adjacent to our Wembley Park development and fully-let at an annual passing rent of £0.8 million on long occupational leases, offering limited opportunity for active management. At a yield of 5.6%, the sale price of £14.2 million represents an increase of £0.4 million on the value at 31 March 2013 and is in line with the 30 September 2013 valuation. The proceeds from the disposal will be recycled into the development of Wembley Park. Within the terms of the disposal we have retained the ability to reacquire the site at market value at certain points in the future, should this be of benefit to our evolving ambitions for Wembley Park.

3. London Portfolio

Across the business, we now have a team that has the expertise to acquire, plan, develop and manage a portfolio of individual London assets for Quintain.

The disposal of our interests in Greenwich Peninsula will facilitate investment in strategically core growth opportunities in key markets of London which offer the potential for yield, capital growth and outperformance, utilising the skills of Quintain's experienced London team.

We are already seeing interesting opportunities in our existing portfolio and through the market and, to date, two mandates have been secured in the Capital. 

FINANCE REVIEW

As set out in our most recent Annual Report, Quintain's financial priority is to strengthen the financial position of the business and to increase underlying earnings. I am delighted to report that following the announcement of the disposal of the Company's 40% interest in Greenwich Peninsula Regeneration Limited ("GPRL") after the period end, the proceeds arising from the transaction have significantly accelerated Quintain's de-leveraging strategy reducing net debt to below our long term target of £300 million.

Our balance sheet continued to strengthen over the first six months of the year. The Company issued a £115.0 million 6.5% sterling Bond in July 2013. The Bond issue diversified the sources of funding available to the Company, increasing liquidity, and will provide stable, long term financing for Quintain at a competitive cost, more closely aligned with the Company's asset profile and activities. In addition, subsequent to the period end, we extinguished £38.0 million of debt following the disposal of the Sequel regional property business.

Our second financial objective is to improve our underlying earnings over the long term. During this period adjusted pre-tax profit decreased by £1.5 million to £3.1 million. This reduction is in line with the expectation set with our full year results in May and is due to the rebalancing of our portfolio. New income streams will progressively flow through from our London investment and development business, including rent from the London Designer Outlet, our 50% interest in the Hilton London Wembley Hotel and increased revenue from Wembley Arena following AEG's recent appointment as manager. This will offset the short-term reduction in Group income in 2013/14 as we continue to dispose of non-core assets, such as Sequel.  During this period of re-positioning, increasing rental income from iQ and reduced administration costs have offset the impact of disposals.

1. Results for the period

The Group reported a post-tax profit for the period of £7.1 million (September 2012: £22.5 million loss). Operating profit for the year was £10.9 million, an increase of £31.0 million, due principally to a valuation surplus of £7.5 million this period, compared to a deficit of £17.7 million last time. Our share of profit from joint ventures and associates decreased by £1.4 million to £5.4 million. This was primarily due to revaluation movements and disposals in Quercus. However, the underlying profitability from joint ventures has improved in the period.  

2. Adjusted profit for the period

Adjusted profit before tax (our measure of underlying earnings, which excludes disposals, valuation and mark to market adjustments) for the period decreased by £1.5 million to £3.1 million as set out below.

Adjusted profit (including discontinued operations)
	30 September 2013			30 September 2012
	Urban Regen-eration	Asset Manag-ement	Total	Urban Regen-eration	Asset Manag-ement	Total
			£m			£m
Net rental income	1.2	2.9	4.1	3.9	3.0	6.9
Fees from asset and development management	1.1	2.9	4.0	0.8	3.0	3.8
Other income	1.9	0.2	2.1	4.3	0.6	4.9
Gross profit	4.2	6.0	10.2	9.0	6.6	15.6
Administrative expenses			(9.6)			(11.6)
Operating profit before joint ventures			0.6			4.0
Share of profit from joint ventures			4.1			2.9
Operating profit			4.7			6.9
Net finance expenses			(1.6)			(2.3)
Adjusted profit before tax1			3.1			4.6

¹Adjusted profit before tax is reconciled to the statutory profit before tax in note 2.1 of the interim financial statements.

Before non-current asset sales and revaluation, operating profit has decreased from £6.9 million to £4.7 million, compared to the same period last year. Within this movement, gross profit has fallen by £5.4 million, from £15.6 million last period to £10.2 million.

Net rental income has fallen from £6.9 million to £4.1 million due principally to disposals and costs associated with the London Designer Outlet pre-opening and the impact of transitioning the management of Wembley Arena to AEG. Fees from asset and development management have increased from £3.8 million to £4.0 million due to increased management fees from Central London activities.

Other income has reduced from £4.9 million last period to £2.1m principally due to the one-off income received in the summer of 2012 from LOCOG over the Olympics period. The £2.0 million reduction in administrative expenses is due to lower staff costs.

Quintain conducts a significant proportion of its business through joint ventures. The table below sets out the combined net rental income and demonstrates that the fall in net rental income from owned operations is offset by the increase in net rental income from joint ventures.

The Group net rental income figures below are prepared on a statutory basis and for Asset Management excludes £2.7 million (September 2012: £3.2 million) in respect of Sequel which is classified as discontinued operations.

Net rental income	30 September 2013			30 September 2012
	Urban Regen-eration	Asset Manag-ement	Total	Urban Regen-eration	Asset Manag-ement	Total
	£m	£m	£m	£m	£m	£m
Group net rental income	1.2	0.2	1.4	3.9	(0.2)	3.7
Share of JV net rental income	0.1	8.2	8.3	0.4	6.6	7.0
Combined net rental income	1.3	8.4	9.7	4.3	6.4	10.7

3. Disposals

On 22 November 2013, Quintain received £230.0 million on completion of the disposal of its remaining 40% interest in GPRL to its current joint venture partner, Knight Dragon.  £185.8 million was in respect of the GPRL shares and GPRL loan stock and a further £44.2 million in settlement, at fair value, of the £50 million outstanding deferred receivable arrangement entered into on completion of Knight Dragon's initial acquisition of its share in the GPRL joint venture in July 2012.  The joint venture interests and deferred receivable are classified as held for sale as at 30 September 2013 and presented in discontinued operations.

On 21 October 2013, Quintain completed the disposal of its Sequel regional investment property business and an additional property, Gelderd Point in Leeds, for gross consideration of £39.1 million, in line with the Company's strategy to exit non-core activities outside London. On 22 November 2013, Quintain also completed the disposal of Stadium Retail Park for £14.2 million.

These operating segments have been classified as held for sale as at 30 September 2013 and presented as discontinued operations.

Assets and liabilities held for sale	30 September 2013
	GPRL	Sequel	Total
	£m	£m	£m
Investment property	-	53.9	53.9
Investment in joint ventures	155.2	-	155.2
Trade and other receivables	44.2	3.2	47.4
Trade and other payables	-	(4.0)	(4.0)
Obligations under finance leases	-	(1.2)	(1.2)
Bank loans and other borrowings	-	(37.7)	(37.7)
	199.4	14.2	213.6
Profit/(loss) on discontinued operations in the consolidated income statement	0.8	(1.5)	(0.7)

The impact of these transactions on the Group balance sheet is shown below.

Proforma information		30 Sept 2013	Disposal of Sequel	Disposal of GPRL	30 Sept 2013
Investment properties		556.8	-	-	556.8
Investment in joint ventures		204.9	-	-	204.9
Other non-current assets		15.0	-	-	15.0
		776.7	-	-	776.7
Trading properties		9.6	-	-	9.6
Net debt		(452.8)	51.5	226.0	(175.3)
Other assets and liabilities		216.5	(51.5)	(192.3)	(27.3)
		550.0	-	33.7	583.7
Gearing (excluding Sequel debt at 30 September 2013)		76%			30%
Proforma Net Asset Value Per Share		106p			112p

The impact of the GPRL disposal on the Group income statement is a reduction of profit before tax and interest of approximately £1 millionper annum which represents the management fees, less overheads and the GPRL joint venture loss. There will also be a reduction in net interest paid of approximately £4.5 million per annum.

4. Result of Joint Ventures

The Group's share of profits from joint ventures decreased to £5.4 million (September 2012: £6.8 million).  The trading profit after interest was £4.1 million, an increase of £1.2 million on the £2.9 million earned in the comparable period last year. This included £1.3 million from Quercus (September 2012: £1.6 million) and £2.5 million from iQ (September 2012: £1.3 million), reflecting disposal activity within Quercus and the growing rental income in iQ which benefits from the first full year of trading for iQ Shoreditch. The net revaluation surplus was £1.9 million (September 2012: £5.6 million), reflecting strong capital growth in iQ offset in part by a reduction in the value of the Quercus portfolio.

5. Net Finance Expenses

Net finance expenses, excluding discontinued operations, decreased from £5.5 million to £2.9 million. Bank and other interest payable was £8.9 million, an increase of £1.0 million on the comparable period last year, with the average cost of debt increasing due to the Bond issue to 3.7% (September 2012: 3.0%). The net charge attributable to hedging adjustments on financial instruments decreased from £5.4 million to £2.8 million.

Net finance expenses	30 September 2013 £m	30 September 2012 £m
Bank and other interest payable	8.9	7.9
Recycling of fair value of financial instruments	3.0	4.7
Change in fair value of financial instruments	(0.2)	0.7
Gross interest cost	11.7	13.3
Interest capitalised	(7.0)	(6.6)
Interest receivable	(1.8)	(1.6)
	2.9	5.1

6. Valuation

The valuation of the Group's properties as at 30 September 2013, including our share of gross assets in joint ventures and associates and excluding held for sale assets, was £891.0 million, an increase of 1.1%, or £9.4 million on a like for like basis, net of capital expenditure, since 31 March 2013. The increase was driven by Wembley investment assets, principally Wembley Arena.

		30 September 2013 £m	Movement since 31 March 2013 £m	% movement
Wembley	Investment assets	232.3	8.3	3.7%
	Development land	312.0	0.1	-
Greenwich	Investment assets	18.8	-	-
CT site, Silvertown	Development land	9.2	0.7	7.8%
iQ	Student accommodation	212.9	4.2	2.0%
Quercus	Long-term healthcare	62.3	(2.3)	(3.6)%
Other regional assets	Secondary property, land	43.5	(1.6)	(3.5)%
		891.0	9.4	1.1%
Assets held for sale	Secondary property	53.9	(1.5)	(2.7)%
	Greenwich development land	157.6	-	-
		1,102.5	7.9	0.7%
Represented by	Group		6.0
	Joint ventures		1.9

7. Contractual capital commitments

As at 30 September 2013, the Group's contractual capital commitments of £56.9 million (31 March 2013: £57.7 million) related almost entirely to ongoing construction and infrastructure work at Wembley.

8. Cashflow

The cash profit generated from operations before working capital movements amounted to £0.8 million (September 2012: £4.1 million). Net cash inflow from operating activities was £8.8 million (September 2012: £2.7 million outflow) which included inflow from trading property sales of £0.6 million (September 2012: £0.7 million). Net operating income distributed by joint ventures contributed a further £2.7 million (September 2012: £1.5 million).

Investment continued on the development pipeline, most notably the completion of the London Designer Outlet. £28.8 million (September 2012: £39.3 million) was invested in the period together with £nil (September 2012: £10.3 million) through joint ventures.

9. Risk Management

The core risks to the business remain as presented in the Annual Report in May, namely economic risk in relation to real estate valuations, development risk and treasury risks in relation to banking covenants and liquidity. The treasury position is set out in a separate note below.

10. Financing strategy and capital structure

Our financing strategy in the medium term is to manage a level of debt appropriate to the nature and risk profile of the Group's assets. Our financing structure needs to be flexible and cost-effective, taking account of the availability of debt. This has been achieved through securing funding at the corporate level, giving us the scope to fund efficiently all areas of the portfolio which otherwise would be more challenging as well as providing us with liquidity and operational flexibility.

On 29 July 2013 Quintain successfully completed the issue of a £115 million 6.5% seven year Sterling bond, the net proceeds of which have been applied to refinance part of the Company's existing bank borrowing, with on-going maturities balanced between three and seven years, increasing the weighted average maturity to 2017.

The Group's key financial covenants are an interest cover covenant, which requires the Group's adjusted operating profit plus realised revaluation surpluses on disposal over adjusted net finance expenses, excluding finance lease interest, to be greater than 1.25 times, and a gearing covenant, which requires the net borrowings of the Company and its wholly-owned subsidiaries to be less than 110% of its equity, as defined in the banking covenants. The Group's forecasts show that the Group is expected to continue to meet both financial covenants for the foreseeable future. 

Debt summary

	Covenant	Pro-forma3	Period end 30 Sept 2013	Year end 31 March 2013
Net debt		£175.3m	£452.8m	£443.6m
Gearing2	110%	30%	76%	76%
Loan-to-value ratio		24%	45%	46%
Look-through LTV		35%	51%	53%
Committed but un-drawn debt			£147.5m	£69.5m
Cash balance (included in net debt)			£26.7m	£44.6m
Average cost of debt			3.7%	3.2%
Weighted average debt maturity (core debt)			3.4 years	2.7 years
% of debt fixed			65.7%	65.1%
% of debt capped			34.3%	34.9%
Interest cover1	1.25x		2.2x	8.5x

¹Interest cover, per our banking covenants, is defined as adjusted operating profit before net finance expenses plus realised surpluses on disposals divided by adjusted net finance costs excluding finance lease interest.

²Gearing, per our banking covenants, is defined as the ratio of net borrowings of the Company and its wholly owned subsidiaries to equity shareholders' funds adjusted for intangible assets, deferred tax and cumulative mark to market movements.

³ Pro-forma balance sheet as at 30 September 2013 reflecting Sequel and GPRL disposals.

11. Financial Outlook

Following the announcement of the disposal of the GPRL joint venture after the period end, the proceeds arising from the transaction have significantly accelerated Quintain's de-leveraging strategy, reducing net debt to below £300 million, the long term target. The disposal has equipped Quintain with a more sustainable balance between investment and development assets, improved profitability, reduced finance costs and created a robust platform for growth.

Looking forward we shall begin to see the benefits of new the income streams from our London development portfolio, including rent from the London Designer Outlet, our 50% interest in the Hilton London Wembley Hotel and increased revenue from Wembley Arena.

Responsibility Statement of the directors

in respect of the half-yearly financial report

The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and that the interim management report includes a fair review of the information required by the Disclosure and Transparency Rules, namely:

§ DTR 4.2.7R - 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

§ DTR 4.2.8R - 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.

On behalf of the Board

Maxwell James                                                                                   Richard Stearn

Chief Executive                                                              Finance Director

22 November 2013                                                          22 November 2013

Forward looking statements

This document contains certain forward-looking statements which, by their nature, involve risk and uncertainty because they relate to or depend upon future events and circumstances. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements, including a number of factors outside Quintain's control. All forward-looking statements are based upon information known to Quintain on the date of this document 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 gives no undertaking to update forward-looking statements whether as a result of new information, future events or otherwise, except to the extent legally required.

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 2013 which comprises the Consolidated Income Statement, Consolidated Statement of Other 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 Conduct Authority ("the UK FCA"). 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 FCA.

As disclosed in note 1.1, 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 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Bill Holland

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London

E14 5GL

22 November 2013

Quintain Estates & Development PLC

Introduction and table of contents

The notes to the interim financial statements have been grouped together under the following headings: ·  Preparation of financial statements ·  Performance for the period ·  Property assets, joint ventures and associates ·  Acquisitions and disposals ·  Other assets and liabilities ·  Funding

Primary statements

Consolidated Income Statement

Consolidated Statement of Other Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cashflow Statement

Section 1:  Preparation of financial statements

1.1 Accounting policies

1.2 Significant judgements and estimates

1.3 Going concern

1.4 Discontinued operations

Section 2:  Performance for the period

2.1 Underlying results for the period

2.2 Segmental information

2.3 Revenue, cost of sales and gross profit

2.4 Property revaluation movements

2.5 Net finance expenses

2.6 Taxation

2.7 Net asset value per share

Section 3:  Property assets, joint ventures and associates

3.1 Investment properties

3.2 Capital commitments

3.3 Investment in joint ventures

Section 4:  Acquisitions and disposals

4.1 Discontinued operations

4.2 Assets and liabilities held for sale

Section 5:  Other assets and liabilities

5.1 Non-current receivables

5.2 Current trade and other receivables

5.3 Other payables (non-current)

5.4 Current trade and other payables

Section 6:  Funding

6.1 Bank loans and other borrowings

Consolidated Income Statement  

For the six months ended 30 September 2013

	Notes	Unaudited Six months ended	Unaudited Six months ended	Audited Year ended
		30 Sept 2013	30 Sept 2012	31 March 2013
			Restated1	Restated1
		£m	£m	£m
Revenue	2.3	13.1	19.9	43.9
Cost of sales	2.3	(6.0)	(7.8)	(24.7)
Gross profit		7.1	12.1	19.2
Administrative expenses		(9.6)	(11.6)	(21.1)
Operating (loss)/profit before recognition of results from joint ventures, non-current asset sales and revaluation		(2.5)	0.5	(1.9)
Share of profit from joint ventures (including revaluation)	3.3	5.4	6.8	1.8
Share of profit from associates		-	-	0.1
Operating profit before non-current asset sales and revaluation		2.9	7.3	-
Profit/(loss) from sale of non-current assets		0.5	(9.7)	(11.1)
Surplus/(deficit) on revaluation of investment properties	2.4	7.5	(17.7)	(23.0)
Operating profit/(loss)		10.9	(20.1)	(34.1)
Finance income	2.5	1.8	1.6	2.8
Finance costs	2.5	(4.7)	(6.7)	(13.7)
Profit/(loss) before tax		8.0	(25.2)	(45.0)
Tax (charge)/credit for the period	2.6	(0.2)	5.6	8.5
Profit/(loss) for continuing operations		7.8	(19.6)	(36.5)
Discontinued operations
Gross profit		2.7	3.2	6.3
Share of loss from joint ventures		(0.7)	(0.1)	(1.0)
Loss from sale of non-current assets		(1.2)	-	-
Deficit on revaluation of investment properties		(1.5)	(6.9)	(11.0)
Operating loss		(0.7)	(3.8)	(5.7)
Finance income		1.5	1.2	2.7
Finance costs		(1.1)	(1.3)	(2.4)
Loss before tax		(0.3)	(3.9)	(5.4)
Tax (charge)/credit for the period		(0.4)	1.0	1.0
Loss on discontinued operations	4.1	(0.7)	(2.9)	(4.4)
Profit/(loss) for the financial period		7.1	(22.5)	(40.9)
Attributable to:
Equity shareholders		7.1	(22.5)	(40.9)
Non-controlling interest		-	-	-
		7.1	(22.5)	(40.9)
Earnings per share (pence):
Basic and diluted		1.3	(4.3)	(7.9)
Earnings per share - continuing operations (pence):
Basic and diluted		1.4	(3.8)	(7.0)

¹See notes 1.4 and 4.1.

Consolidated Statement of Other Comprehensive Income

For the six months ended 30 September 2013

	Notes	Unaudited Six months ended	Unaudited Six months ended	Audited Year ended
		30 Sept 2013	30 Sept 2012	31 March 2013
		£m	£m	£m
Profit/(loss) for the financial period		7.1	(22.5)	(40.9)
Surplus/(deficit) on revaluation of other non-current investments		0.1	(0.5)	(0.4)
Fair value adjustment on cashflow hedges		4.8	3.8	10.2
Share of other comprehensive income/(loss) in joint ventures, net of tax	3.3	0.7	(1.1)	0.2
Tax on other comprehensive income		(1.2)	(1.3)	(2.4)
Other comprehensive income for the financial period		4.4	0.9	7.6
Total comprehensive profit/(loss) for the financial period		11.5	(21.6)	(33.3)
Attributable to:
Equity shareholders		11.5	(21.6)	(33.3)
Non-controlling interest		-	-	-
		11.5	(21.6)	(33.3)

All other comprehensive income may be reclassified as profit and loss in the future and relate to continuing operations.

Consolidated Balance Sheet

As at 30 September 2013

	Notes	Unaudited as at	Unaudited as at	Audited as at
		30 Sept 2013	30 Sept 2012	31 March 2013
		£m	£m	£m
Non-current assets
Investment properties	3.1	556.8	608.9	562.5
Owner-occupied properties, plant and equipment		0.3	0.2	0.2
Intangible assets		6.3	7.2	6.7
Investment in joint ventures	3.3	204.9	339.4	356.8
Investment in associates		1.5	1.4	1.5
Non-current receivables	5.1	6.9	61.3	54.1
Deferred tax asset		-	-	1.9
Total non-current assets		776.7	1,018.4	983.7
Current assets
Trading properties		9.6	20.5	10.2
Trade and other receivables	5.2	27.4	32.7	33.1
Cash and cash equivalents		26.7	9.8	44.6
Assets held for sale	4.2	256.5	-	-
Total current assets		320.2	63.0	87.9
Total assets		1,096.9	1,081.4	1.071.6
Current liabilities
Bank loans and other borrowings	6.1	(34.3)	(76.1)	(71.0)
Trade and other payables	5.4	(49.8)	(38.2)	(28.8)
Current tax liability		(1.0)	(1.3)	(1.4)
Liabilities held for sale	4.2	(42.9)	-	-
Total current liabilities		(128.0)	(115.6)	(101.2)
Non-current liabilities
Bank loans and other borrowings	6.1	(404.2)	(397.3)	(415.2)
Obligations under finance leases		(9.9)	(11.1)	(11.1)
Other payables	5.3	(4.8)	(6.9)	(5.7)
Total non-current liabilities		(418.9)	(415.3)	(432.0)
Total liabilities		(546.9)	(530.9)	(533.2)
Net assets		550.0	550.5	538.4
Equity
Share capital		130.2	130.2	130.2
Share premium		137.3	137.3	137.3
Other capital reserves		107.2	107.0	107.1
Cashflow hedge reserve		(6.9)	(17.8)	(11.2)
Retained earnings		189.7	201.3	182.5
Own shares reserve		(7.8)	(7.8)	(7.8)
Equity shareholders' funds		549.7	550.2	538.1
Non-controlling interest		0.3	0.3	0.3
Total equity		550.0	550.5	538.4
Net asset value per share (pence):	2.7
Basic		106	106	104
Diluted		106	106	104

Consolidated Statement of Changes in Equity

For the six months ended 30 September 2013

	Issued capital	Share premium account	Other capital reserves	Cashflow hedge reserve	Retained earnings	Own shares held reserve	Equity shareholders' funds	Non-controlling interest	Unaudited Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance 1 April 2013	130.2	137.3	107.1	(11.2)	182.5	(7.8)	538.1	0.3	538.4
Profit for the financial period	-	-	-	-	7.1	-	7.1	-	7.1
Other comprehensive income for the period, net of tax	-	-	0.1	4.3	-	-	4.4	-	4.4
Total comprehensive income for the financial period	-	-	0.1	4.3	7.1	-	11.5	-	11.5
Credit relating to share-based payment schemes	-	-	-	-	0.1	-	0.1	-	0.1
Balance 30 September 2013	130.2	137.3	107.2	(6.9)	189.7	(7.8)	549.7	0.3	550.0

Consolidated Statement of Changes in Equity

For the six months ended 30 September 2012

	Issued capital	Share premium account	Other capital reserves	Cashflow hedge reserve	Retained earnings	Own shares held reserve	Equity shareholders' funds	Non-controlling interest	Unaudited Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance 1 April 2012	130.2	137.3	107.5	(19.2)	224.6	(8.7)	571.7	0.3	572.0
Loss for the financial period	-	-	-	-	(22.5)	-	(22.5)	-	(22.5)
Other comprehensive (loss)/income for the period, net of tax	-	-	(0.5)	1.4	-	-	0.9	-	0.9
Total comprehensive (loss)/income for the financial period	-	-	(0.5)	1.4	(22.5)	-	(21.6)	-	(21.6)
Shares awarded to employees under share based payment schemes	-	-	-	-	(0.9)	0.9	-	-	-
Credit relating to share-based payment schemes	-	-	-	-	0.1	-	0.1	-	0.1
Balance 30 September 2012	130.2	137.3	107.0	(17.8)	201.3	(7.8)	550.2	0.3	550.5

Consolidated Statement of Changes in Equity

For the year ended 31 March 2013

	Issued capital	Share premium account	Other capital reserves	Cashflow hedge reserve	Retained earnings	Own shares reserve	Equity shareholders' funds	Non-controlling interest	Audited Total         equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance 1 April 2012	130.2	137.3	107.5	(19.2)	224.6	(8.7)	571.7	0.3	572.0
Loss for the year	-	-	-	-	(40.9)	-	(40.9)	-	(40.9)
Other comprehensive (loss)/ income for the year, net of tax	-	-	(0.4)	8.0	-	-	7.6	-	7.6
Total comprehensive (loss)/income for the year	-	-	(0.4)	8.0	(40.9)	-	(33.3)	-	(33.3)
Shares awarded to employees under share-based payment schemes	-	-	-	-	(0.9)	0.9	-	-	-
Costs relating to share-based payment schemes	-	-	-	-	(0.3)	-	(0.3)	-	(0.3)
Balance 31 March 2013	130.2	137.3	107.1	(11.2)	182.5	(7.8)	538.1	0.3	538.4

Consolidated Cashflow Statement

For the six months ended 30 September 2013

		Unaudited Six months ended	Unaudited Six months ended	Audited Year ended
		30 Sept 2013	30 Sept 2012	31 March 2013
		£m	£m	£m
Operating activities
Profit/(loss) for the financial period		7.1	(22.5)	(40.9)
Adjustments for:
Depreciation of plant and equipment		0.1	-	-
Amortisation of intangible assets		0.4	0.3	0.8
Credit/(costs) relating to share-based payment schemes		0.1	0.1	(0.3)
Net finance expenses		2.5	5.2	10.6
Loss on sale of non-current assets		0.7	9.7	11.1
(Surplus)/deficit on revaluation of investment properties		(6.0)	24.6	34.0
Share of profit from joint ventures		(4.7)	(6.7)	(0.8)
Share of profit from associates		-	-	(0.1)
Taxation		0.6	(6.6)	(9.5)
		0.8	4.1	4.9
Decrease/(increase) in trade and other receivables		0.6	(6.4)	6.9
Increase/(decrease) in trade and other payables		14.5	3.9	(4.5)
Decrease in trading properties		0.6	0.7	4.2
Cash generated from operations		16.5	2.3	11.5
Interest paid		(7.9)	(8.1)	(16.2)
Interest received		0.5	3.1	3.5
Tax paid		(0.3)	-	(0.1)
Net cashflow from operating activities		8.8	(2.7)	(1.3)
Investing activities
Proceeds from sale of investment properties		6.8	91.6	130.0
Purchase and development of investment properties		(28.8)	(39.3)	(63.9)
Purchase of owner-occupied properties, plant and equipment		(0.1)	(0.1)	(0.2)
Proceeds from sale of non-current investments		1.5	-	-
Purchase of subsidiary, net of cash acquired		-	(4.1)	(4.1)
Capital and loan payments advanced to joint ventures		-	(10.3)	(13.1)
Capital and loan repayments received from joint ventures		2.1	33.7	41.7
Distributions received from joint ventures		2.7	1.5	4.4
Net cashflow from investing activities		(15.8)	73.0	94.8
Financing activities
Proceeds from new borrowings		115.0	-	-
Repayment of borrowings		(123.9)	(67.5)	(54.3)
Payment of loan issue costs		(1.6)	(0.1)	(1.3)
Payment of finance lease liabilities		(0.4)	(0.4)	(0.8)
Net cashflow from financing activities		(10.9)	(68.0)	(56.4)
Net (decrease)/increase in cash and cash equivalents		(17.9)	2.3	37.1
Cash and cash equivalents at start of period		44.6	7.5	7.5
Cash and cash equivalents at end of period		26.7	9.8	44.6

Notes to the accounts

For the six months ended 30 September 2013

Section 1: Preparation of financial statements

1.1 Accounting policies

The financial information contained in this half year report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The results for the year ended 31 March 2013 are an abridged version of the full accounts for that year, which received an unqualified report from the auditors, did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 or include a reference to any matter to which the auditors drew attention by way of matter of emphasis without qualifying their report, and have been filed with the Registrar of Companies. The annual financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The condensed set of financial statements included in this report has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union.

The Group has adopted the Amendment to IAS 1 'Presentation of Items of Other Comprehensive Income' which requires an entity to present the items of other comprehensive income that may be recycled to profit and loss in the future separately from those that would never be recycled to profit or loss.

In accordance with the transitional provisions of IFRS 13, the Group has applied the new fair value measurement guidance prospectively and has not provided any comparative information for new disclosures. Notwithstanding the above, the change had no significant impact on the measurements of the Group's assets and liabilities.

Significant accounting policies

The same accounting policies, presentation and key sources of estimation are followed in this condensed set of financial statements as applied to the latest audited annual financial statements, with the exception of discontinued operations as described below in note 1.4.

1.2 Significant judgements and estimates

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 amount 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 the estimates.

In preparing these financial statements the key judgements and estimates made by the Board are consistent with those applied in the financial statements as of, and for the year ended, 31 March 2013.

There have been no material changes to reportable contingent liabilities since 31 March 2013 and the Group's financial performance does not suffer materially from seasonal fluctuations.

1.3 Going concern

The Group financial statements have been prepared on a going concern basis. This policy is supported by the detailed cashflow forecasts prepared by the Group at 30 September 2013 which show that there are adequate undrawn facilities to finance all committed capital expenditure and other outflows and thus the Group will be able to meet its liabilities as they fall due for the foreseeable future.

1.4 Discontinued operations

The Sequel operating segment and the Greenwich Peninsula Regeneration Limited ("GPRL") element of the Greenwich segment have been classified as discontinued operations.  The comparative Consolidated Income Statements have been restated to show the discontinued operation separately from continuing operations.

Notes to the accounts (continued)

Section 2: Performance for the period

2.1 Underlying results for the period

Underlying results for the year are provided to enable readers of the accounts to differentiate between items of an underlying operating nature and those relating to capital or revaluations.

		Unaudited six months ended 30 Sept 2013				Unaudited six months ended 30 Sept 2012 restated				Audited Year ended 31 March 2013 restated
	Adjusted	Removal of discontinued operations	Capital1	Total	Adjusted	Removal of discontinued operations	Capital1	Total	Adjusted	Removal of discontinued operations	Capital1	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	16.3	(3.2)	-	13.1	24.4	(4.5)	-	19.9	52.1	(8.2)	-	43.9
Cost of sales	(6.1)	0.5	(0.4)	(6.0)	(8.8)	1.3	(0.3)	(7.8)	(25.8)	1.9	(0.8)	(24.7)
Gross profit/(loss)	10.2	(2.7)	(0.4)	7.1	15.6	(3.2)	(0.3)	12.1	26.3	(6.3)	(0.8)	19.2
Administrative expenses	(9.6)	-	-	(9.6)	(11.6)	-	-	(11.6)	(21.1)	-	-	(21.1)
Operating profit/(loss) before recognition of results from non-current asset sales and revaluation	0.6	(2.7)	(0.4)	(2.5)	4.0	(3.2)	(0.3)	0.5	5.2	(6.3)	(0.8)	(1.9)
Profit/(loss) from the sale of non-current assets	-	1.2	(0.7)	0.5	-	-	(9.7)	(9.7)	-	-	(11.1)	(11.1)
Surplus/(deficit) on revaluation of investment properties	-	1.5	6.0	7.5	-	6.9	(24.6)	(17.7)	-	11.0	(34.0)	(23.0)
Share of profit/(loss) from joint ventures	4.1	0.7	0.6	5.4	2.9	0.1	3.8	6.8	8.2	1.0	(7.4)	1.8
Share of profit from associates	-	-	-	-	-	-	-	-	-	-	0.1	0.1
Operating profit/(loss)	4.7	0.7	5.5	10.9	6.9	3.8	(30.8)	(20.1)	13.4	5.7	(53.2)	(34.1)
Finance income	3.3	(1.5)	-	1.8	2.8	(1.2)	-	1.6	5.5	(2.7)	-	2.8
Finance costs	(4.9)	1.1	(0.9)	(4.7)	(5.1)	1.3	(2.9)	(6.7)	(10.7)	2.4	(5.4)	(13.7)
Net finance expenses	(1.6)	(0.4)	(0.9)	(2.9)	(2.3)	0.1	(2.9)	(5.1)	(5.2)	(0.3)	(5.4)	(10.9)
Profit/(loss) before tax	3.1	0.3	4.6	8.0	4.6	3.9	(33.7)	(25.2)	8.2	5.4	(58.6)	(45.0)

¹For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included with capital items for continuing operations.

Notes to the accounts (continued)

2.2 Segmental information

The Group has seven reportable segments, being Wembley, Greenwich (including GPRL), Other Urban Regeneration ("UR"), Quercus, iQ, Sequel and Other Quintain Asset Management ("QAM"). The first three of these relate to the Group's Urban Regeneration activities and the remaining four to the Group's Asset Management activities. The latter includes asset management fees and investment returns from properties held for rental income either directly by the Group or in specialist property joint ventures, including Quercus (healthcare) and iQ (student accommodation). The factors used to determine the Group's reportable segments relate to the way in which the business is aligned and the manner in which results and assets are reported to the Board (as the Board is considered to be the chief operating decision maker) and therefore the basis that resource allocations are made. All of the Group's revenues are derived from external customers. There are no inter-segmental revenues.  The segmental information of the Group's results for the six months ended 30 September 2013 was as follows:

	Wembley	Greenwich	Other UR	Total UR	Quercus	iQ	Other QAM	Total QAM	Total from continuing operations	Discontinued operations			Total
										GPRL	Sequel
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m		£m
Revenue	5.6	1.2	0.8	7.6	1.1	1.0	3.4	5.5	13.1	-	3.2		16.3
Cost of sales	(3.1)	-	(0.4)	(3.5)	(0.3)	-	(2.2)	(2.5)	(6.0)	-	(0.5)		(6.5)
Gross profit	2.5	1.2	0.4	4.1	0.8	1.0	1.2	3.0	7.1	-	2.7		9.8
Profit/(loss) from the sale of non-current assets	2.0	-	(1.5)	0.5	-	-	-	-	0.5	-	(1.2)		(0.7)
Surplus/(deficit) on revaluation of investment properties	7.6	-	(0.4)	7.2	-	-	0.3	0.3	7.5	-	(1.5)		6.0
Share of (loss)/profit from joint ventures	-	(0.5)	-	(0.5)	(2.2)	7.0	1.1	5.9	5.4	(0.7)	-		4.7
Operating profit/(loss) before administrative expenses	12.1	0.7	(1.5)	11.3	(1.4)	8.0	2.6	9.2	20.5	(0.7)	-		19.8
Adjusted	2.5	0.9	0.4	3.8	2.1	3.5	2.9	8.5	12.3	(0.7)		2.7	14.3
Capital1	9.6	(0.2)	(1.9)	7.5	(3.5)	4.5	(0.3)	0.7	8.2	-		(2.7)	5.5
Operating profit/(loss) before administrative expenses	12.1	0.7	(1.5)	11.3	(1.4)	8.0	2.6	9.2	20.5	(0.7)		-	19.8

¹For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included with capital items.

Notes to the accounts (continued)

2.2 Segmental information (continued)

The segmental information of the Group's results for the six months ended 30 September 2012 was as follows:

	Wembley	Greenwich	Other UR	Total UR	Quercus	iQ	Other QAM	Total QAM	Total from continuing operations	Discontinued operations		Total
										GPRL	Sequel
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	12.1	0.7	1.2	14.0	1.3	1.4	3.2	5.9	19.9	-	4.5	24.4
Cost of sales	(4.4)	-	(0.6)	(5.0)	(0.3)	-	(2.5)	(2.8)	(7.8)	-	(1.3)	(9.1)
Gross profit	7.7	0.7	0.6	9.0	1.0	1.4	0.7	3.1	12.1	-	3.2	15.3
(Loss)/profit from the sale of non-current assets	(1.2)	(10.7)	-	(11.9)	-	-	2.2	2.2	(9.7)	-	-	(9.7)
(Deficit)/surplus on revaluation of investment properties	(14.4)	0.1	(1.5)	(15.8)	-	-	(1.9)	(1.9)	(17.7)	-	(6.9)	(24.6)
Share of profit/(loss) from joint ventures	0.1	(1.5)	-	(1.4)	(0.8)	8.8	0.2	8.2	6.8	(0.1)	-	6.7
Operating (loss)/profit before administrative expenses	(7.8)	(11.4)	(0.9)	(20.1)	0.2	10.2	1.2	11.6	(8.5)	(0.1)	(3.7)	(12.3)
Adjusted	7.8	0.4	0.6	8.8	2.7	2.6	1.3	6.6	15.4	(0.1)	3.2	18.5
Capital1	(15.6)	(11.8)	(1.5)	(28.9)	(2.5)	7.6	(0.1)	5.0	(23.9)	-	(6.9)	(30.8)
Operating (loss)/profit before administrative expenses	(7.8)	(11.4)	(0.9)	(20.1)	0.2	10.2	1.2	11.6	(8.5)	(0.1)	(3.7)	(12.3)

¹For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included with capital items.

Notes to the accounts (continued)

2.2 Segmental information (continued)

The segmental information of the Group's results for the year ended 31 March 2013 was as follows:

	Wembley	Greenwich	Other UR	Total UR	Quercus	iQ	Other QAM	Total QAM	Total from continuing operations	Discontinued operations		Total
										GPRL	Sequel
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	26.3	2.1	3.6	32.0	2.5	2.4	7.0	11.9	43.9	-	8.2	52.1
Cost of sales	(15.8)	(0.1)	(2.9)	(18.8)	(0.6)	-	(5.3)	(5.9)	(24.7)	-	(1.9)	(26.6)
Gross profit	10.5	2.0	0.7	13.2	1.9	2.4	1.7	6.0	19.2	-	6.3	25.5
(Loss)/profit from the sale of non-current assets	(2.8)	(10.4)	-	(13.2)	-	-	2.1	2.1	(11.1)	-	-	(11.1)
Deficit on revaluation of investment properties	(16.0)	(0.1)	(3.3)	(19.4)	-	-	(3.6)	(3.6)	(23.0)	-	(11.0)	(34.0)
Share of (loss)/profit from joint ventures	(0.2)	(4.4)	-	(4.6)	(8.8)	14.3	0.9	6.4	1.8	(1.0)	-	0.8
Share of profit from associates	-	-	-	-	-	-	0.1	0.1	0.1	-	-	0.1
Operating (loss)/profit before administrative expenses	(8.5)	(12.9)	(2.6)	(24.0)	(6.9)	16.7	1.2	11.0	(13.0)	(1.0)	(4.7)	(18.7)
Adjusted	11.3	1.7	0.7	13.7	4.9	7.6	3.0	15.5	29.2	(1.0)	6.3	34.5
Capital¹	(19.8)	(14.6)	(3.3)	(37.7)	(11.8)	9.1	(1.8)	(4.5)	(42.2)	-	(11.0)	(53.2)
Operating (loss)/profit before administrative expenses	(8.5)	(12.9)	(2.6)	(24.0)	(6.9)	16.7	1.2	11.0	(13.0)	(1.0)	(4.7)	(18.7)

¹For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included with capital items.

Notes to the accounts (continued)

2.2 Segmental information (continued)

The segmental information of the Group's Balance Sheet as at 30 September 2013 was as follows:

	Wembley	Greenwich	Other UR	Total UR	Quercus	iQ	Other QAM	Total QAM	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Investment properties	513.7	5.8	17.8	537.3	-	-	19.5	19.5	556.8
Intangible assets	-	-	-	-	-	-	6.3	6.3	6.3
Investment in joint ventures - continuing operations	30.4	16.5	0.6	47.5	36.1	104.1	17.2	157.4	204.9
Investment in associates	-	-	-	-	-	-	1.5	1.5	1.5
Other current assets	3.1	-	-	3.1	-	-	10.7	10.7	13.8
Non-current receivables	4.5	-	2.4	6.9	-	-	-	-	6.9
Trading properties	0.2	-	9.4	9.6	-	-	-	-	9.6
Total segmented assets	551.9	22.3	30.2	604.4	36.1	104.1	55.2	195.4	799.8
Unallocated assets									40.6
Assets held for sale									256.5
Total assets									1,096.9
Capital expenditure	37.9	-	-	37.9	-	-	0.2	0.2	38.1

The segmental analysis of the Group's Balance Sheet as at 30 September 2012 was as follows:

	Wembley	Greenwich	Other UR	Total UR	Quercus	iQ	Sequel	Other QAM	Total QAM	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Investment properties	489.5	9.5	20.8	519.8	-	-	59.4	29.7	89.1	608.9
Intangible assets	-	-	-	-	-	-	-	7.2	7.2	7.2
Investment in joint ventures	1.9	177.8	0.6	180.3	48.0	95.8	-	15.3	159.1	339.4
Investment in associates	-	-	-	-	-	-	-	1.4	1.4	1.4
Non-current receivables	4.5	42.4	3.7	50.6	-	-	-	10.7	10.7	61.3
Trading properties	8.6	-	11.9	20.5	-	-	-	-	-	20.5
Total segmented assets	504.5	229.7	37.0	771.2	48.0	95.8	59.4	64.3	267.5	1,038.7
Unallocated assets										42.7
Total assets										1,081.4
Capital expenditure	28.7	9.5	1.5	39.7	-	-	-	-	-	39.7

Notes to the accounts (continued)

2.2 Segmental information (continued)

The segmental information of the Group's Balance Sheet as at 31 March 2013 was as follows:

	Wembley	Greenwich	Other UR	Total UR	Quercus	iQ	Sequel	Other QAM	Total QAM	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Investment properties	461.2	5.7	19.4	486.3	-	-	55.3	20.9	76.2	562.5
Intangible assets	-	-	-	-	-	-	-	6.7	6.7	6.7
Investment in joint ventures	27.8	171.9	2.1	201.8	38.8	100.2	-	16.0	155.0	356.8
Investment in associates	-	-	-	-	-	-	-	1.5	1.5	1.5
Non-current receivables	7.2	43.3	3.6	54.1	-	-	-	-	-	54.1
Other current assets	3.1	-	-	3.1	-	-	-	10.7	10.7	13.8
Trading properties	0.5	-	9.7	10.2	-	-	-	-	-	10.2
Total segmented assets	499.8	220.9	34.8	755.5	38.8	100.2	55.3	55.8	250.1	1,005.6
Unallocated assets										66.0
Total assets										1,071.6
Capital expenditure	53.1	10.3	1.9	65.3	-	-	-	-	-	65.3

Notes to the accounts (continued)

2.3 Revenue, cost of sales and gross profit

	Unaudited six months ended 30 Sept 2013			Unaudited six months ended 30 Sept 2012			Audited year ended 31 March  2013
						restated			restated
	Revenue	Cost of sales	Gross profit	Revenue	Cost of sales	Gross profit	Revenue	Cost of sales	Gross profit
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Rental income	3.8	(2.4)	1.4	5.8	(2.2)	3.6	11.4	(5.3)	6.1
Income from sale of trading properties	0.6	(0.7)	(0.1)	0.8	(0.8)	-	11.0	(11.3)	(0.3)
Fees from asset and development management	4.7	(0.7)	4.0	4.5	(0.7)	3.8	9.0	(1.4)	7.6
Income from hotel operations	-	-	-	2.4	(1.6)	0.8	2.4	(1.5)	0.9
Intangible asset amortisation	-	(0.4)	(0.4)	-	-	-	-	(0.8)	(0.8)
Other income	4.0	(1.8)	2.2	6.4	(2.5)	3.9	10.1	(4.4)	5.7
	13.1	(6.0)	7.1	19.9	(7.8)	12.1	43.9	(24.7)	19.2

Summary of group net rental income

	Unaudited six months ended 30 Sept 2013			Unaudited six months ended 30 Sept 2012			Audited year ended 31 March  2013
						restated			restated
	Urban Regen-eration	Asset Manag-ement	Total	Urban Regen-eration	Asset Manag-ement	Total	Urban Regen-eration	Asset Manag-ement	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Group net rental income	1.2	0.2	1.4	3.8	(0.1)	3.7	5.8	0.2	6.0
Share of JV net rental income	0.1	8.2	8.3	0.4	6.6	7.0	0.3	16.6	16.9
Combined net rental income	1.3	8.4	9.7	4.2	6.5	10.7	6.1	16.8	22.9

Notes to the accounts (continued)

2.4 Property revaluation movements

The revaluation movements on the Group's investment properties, whether held directly or through joint ventures and the associates, were as follows:

		Unaudited Six months ended 30 Sept 2013	Unaudited Six months ended 30 Sept 2012	Audited Year ended 31 March 2013
			restated	restated
		£m	£m	£m
Recognised in Income Statement:
Surplus/(deficit) on revaluation of directly held investment properties		7.5	(17.7)	(23.0)
Surplus/(deficit) on revaluation of investment properties in joint ventures		1.9	5.6	(4.5)
Surplus on revaluation of associates		-	-	-
		9.4	(12.1)	(27.5)

2.5 Net finance expenses

		Unaudited Six months ended 30 Sept 2013	Unaudited Six months ended 30 Sept 2012	Audited Year ended 31 March 2013
			restated	restated
		£m	£m	£m
Interest expense on bank debt and associated swaps		8.6	7.6	15.8
Interest on obligations under finance leases		0.3	0.3	0.7
Interest payable		8.9	7.9	16.5
Change in fair value of ineffective caps		(0.2)	0.7	0.9
Recycling of fair value adjustment on effective swaps		3.0	4.7	9.4
Interest capitalised		(7.0)	(6.6)	(13.1)
Finance costs		4.7	6.7	13.7
Finance income: interest income on loans and receivables		(1.8)	(1.6)	(2.8)
		2.9	5.1	10.9

2.6 Taxation

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

		Unaudited Six months ended 30 Sept 2013	Unaudited Six months ended 30 Sept 2012	Audited Year ended 31 March 2013
			restated	restated
		£m	£m	£m
UK current tax at 23% (30 Sept 2012 and 31 March 2013: 24%)		-	-	-
Overseas tax		-	-	-
Total current tax charge		-	-	-
Deferred tax		0.2	(5.6)	(8.5)
Tax charge/(credit)		0.2	(5.6)	(8.5)

Notes to the accounts (continued)

2.6 Taxation (continued)

Tax expense is recognised based on the best estimate of the weighted-average annual income tax rate expected for the full financial year multiplied by the pre-tax income of the interim reporting period.

The deferred tax liability as at the period end has been reduced following the enacted change in the rate of corporation tax from 23% to 21% effective from 1 April 2014 and to 20% effective from 1 April 2015.  The Group has re-measured the deferred tax assets and liabilities at 30 September 2013 using the enacted rate of 20%. 

2.7 Net asset value per share

	Unaudited 30 Sept 2013			Unaudited 30 Sept 2012			Audited 31 March 2013
	Equity shareholders' funds £m	Number of shares m	Net asset value per share pence	Equity shareholders' funds £m	Number of  shares m	Net asset value per share pence	Equity shareholders' funds £m	Number of shares m	Net asset value per share pence
Net assets	549.7	521.5	-	550.2	521.0	-	538.1	521.0	-
Less: Treasury shares	-	(2.2)	-	-	(2.2)	-	-	(2.2)	-
Basic	549.7	519.3	106	550.2	518.8	106	538.1	518.8	104
Adjustment:
Employee share-based payment schemes	-	0.7	-	0.1	0.3	-	-	0.1	-
Diluted	549.7	520.0	106	550.3	519.1	106	538.1	518.9	104

Although not required under IFRS, net asset value per share is considered a key performance indicator in the sector in which the Group operates.

Notes to the accounts (continued)

Section 3: Property assets, joint ventures and associates

3.1 Investment properties 

The movements in investment properties were as follows:

				Unaudited 30 Sept 2013	Unaudited 30 Sept 2012	Audited 31 March 2013
				£m	£m	£m
Opening balance				562.5	825.9	825.9
Additions				38.3	39.7	65.3
Interest capitalised				7.1	6.6	13.2
Disposals				(3.2)	(238.7)	(307.9)
Revaluation surplus/(deficit)				6.0	(24.6)	(34.0)
Transferred to assets held for sale				(53.9)	-	-
Closing balance				556.8	608.9	562.5

The Group's investment properties were externally valued as at 30 September 2013 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 and property holdings at Wembley, Greenwich, Silvertown and Redhill have been valued by Savills Advisory Services Ltd. Other properties in the United Kingdom have been valued by Jones Lang LaSalle Limited, and Christie + Co. The Group's property interests in the Channel Islands have been valued by Guy Gothard & Co.

3.2 Capital commitments

As at 30 September 2013, the Group had capital commitments of £56.9m (30 September 2012: £32.8m and 31 March 2013: £57.7m) in relation to its own developments held as investment properties.

3.3 Investment in joint ventures

The movements in investment in joint ventures were as follows:

			Unaudited 30 Sept  2013	Unaudited 30 Sept 2012	Audited 31 March 2013
			£m	£m	£m
Opening balance			356.8	273.6	273.6
Additions			1.0	104.6	133.4
Amounts advanced			-	10.3	10.3
Amounts repaid			(2.1)	(46.7)	(39.2)
Disposals			-	(5.9)	(15.5)
Distributions			(3.3)	(2.1)	(6.8)
Reclassified as held for sale			(155.2)	-	-
Recognition of deferred profit			2.3	-	-
Share of profit, net of tax			4.7	6.7	0.8
Share of other comprehensive income/(loss), net of tax			0.7	(1.1)	0.2
Closing balance			204.9	339.4	356.8

Notes to the accounts (continued)

3.3 Investment in joint ventures (continued)

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 2013

	Greenwich1	iQ	Quantum	Quercus	Hilton	Other joint ventures	Total continuing joint ventures
	£m	£m	£m	£m	£m	£m	£m
Rental income	0.3	7.7	1.4	2.8	3.7	0.1	16.0
Income from sale   of trading properties	-	-	-	0.2	-	1.7	1.9
Revenue	0.3	7.7	1.4	3.0	3.7	1.8	17.9
Cost of sales	(0.1)	(2.1)	(0.3)	(0.4)	(1.5)	(1.9)	(6.3)
Gross profit/(loss)	0.2	5.6	1.1	2.6	2.2	(0.1)	11.6
Administrative expenses	(0.1)	(0.5)	-	(0.4)	(1.5)	-	(2.5)
Operating profit/(loss)	0.1	5.1	1.1	2.2	0.7	(0.1)	9.1
Loss on disposal of investment properties	-	-	-	(1.2)	-	-	(1.2)
Surplus/(deficit) on revaluation of investment properties	-	4.2	-	(2.3)	-	-	1.9
Profit/(loss) before net finance expenses and tax	0.1	9.3	1.1	(1.3)	0.7	(0.1)	9.8
Finance income	-	-	0.3	-	-	-	0.3
Finance costs	(0.4)	(1.8)	-	(0.9)	(0.7)	-	(3.8)
(Loss)/profit before tax	(0.3)	7.5	1.4	(2.2)	-	(0.1)	6.3
Tax	(0.2)	(0.5)	(0.2)	-	-	-	(0.9)
(Loss)/profit  after tax	(0.5)	7.0	1.2	(2.2)	-	(0.1)	5.4
Share of other comprehensive income:
Effective portion of changes in fair value of cashflow hedges, net of tax	-	0.4	-	0.3	-	-	0.7
	-	0.4	-	0.3	-	-	0.7

¹N0204

Notes to the accounts (continued)

3.3 Investment in joint ventures (continued)

Summarised balance sheets as at 30 September 2013

	Greenwich1	iQ	Quercus	Quantum	Hilton	Other joint ventures	Group share in joint ventures
	£m	£m	£m	£m	£m	£m	£m
Investment properties	13.0	212.9	61.6	5.6	27.8	-	320.9
Trading properties	-	-	0.7	-	-	3.0	3.7
Deferred tax asset	2.9	-	3.4	-	0.3	-	6.6
Other assets	0.8	16.2	4.7	12.9	1.4	1.7	37.7
Total assets	16.7	229.1	70.4	18.5	29.5	4.7	368.9
Current liabilities:
Trade and other payables	(0.2)	(10.7)	(3.5)	(1.0)	(1.7)	(1.5)	(18.6)
Bank loans and other borrowings	-	-	-	-	-	-	-
Non-current liabilities:
Bank loans and other borrowings	(32.6)	(111.5)	(30.8)	-	(21.1)	-	(196.0)
Other liabilities	-	(2.8)	-	(0.3)	-	-	(3.1)
Net (liabilities)/assets	(16.1)	104.1	36.1	17.2	6.7	3.2	151.2
Represented by:
Group share of net (liabilities)/assets	(16.1)	104.1	36.1	17.2	6.7	3.2	151.2
Loans to JVs	32.6	-	-	-	21.1	-	53.7
Total investment	16.5	104.1	36.1	17.2	27.8	3.2	204.9

¹N0204

The valuation of properties held within Quercus as at 30 September 2013 were performed by Christie + Co.  Investment properties within the Greenwich joint ventures were valued by Savills Commercial Limited and within the Quantum Unit Trust and the iQ Unit Trust by CBRE Limited.  Valuations have been undertaken on the basis of market value and in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors

Notes to the accounts (continued)

3.3 Investment in joint ventures (continued)

Summarised income statements for the six months ended 30 September 2012

	Greenwich1	iQ	Quantum	Quercus	Other joint ventures	Total continuing joint ventures
	£m	£m	£m	£m	£m	£m
Rental income	0.3	5.5	0.3	3.1	0.1	9.3
Income from sale of trading properties	-	-	-	-	0.5	0.5
Revenue	0.3	5.5	0.3	3.1	0.6	9.8
Cost of sales	(0.1)	(1.8)	(0.2)	(0.3)	(0.5)	(2.9)
Gross profit	0.2	3.7	0.1	2.8	0.1	6.9
Administrative expenses	-	(0.7)	-	(0.5)	-	(1.2)
Operating profit	0.2	3.0	0.1	2.3	0.1	5.7
(Deficit)/surplus on revaluation of investment properties	(1.4)	9.9	(0.1)	(2.8)	-	5.6
(Loss)/profit before net finance expenses and tax	(1.2)	12.9	-	(0.5)	0.1	11.3
Finance income	-	0.1	0.2	-	-	0.3
Finance costs	(0.5)	(1.9)	-	(0.7)	-	(3.1)
(Loss)/profit before tax	(1.7)	11.1	0.2	(1.2)	0.1	8.5
Tax	0.2	(2.3)	-	0.4	-	(1.7)
(Loss)/profit after tax	(1.5)	8.8	0.2	(0.8)	0.1	6.8
Share of other comprehensive (loss)/ income:
Effective portion of changes in fair value of cashflow hedges, net of tax	-	(1.4)	-	0.3	-	(1.1)
	-	(1.4)	-	0.3	-	(1.1)

¹N0204 and Greenwich Retail (until July 2012)

Notes to the accounts (continued)

3.3 Investment in joint ventures (continued)

Summarised balance sheets as at 30 September 2012

	Greenwich1	iQ	Quantum	Quercus	Other joint ventures	Unaudited Group share in joint ventures
	£m	£m	£m	£m	£m	£m
Investment  properties	15.0	205.0	5.1	83.6	-	308.7
Investment in joint ventures	3.1	-	-	-	-	3.1
Trading properties	158.5	-	-	0.9	6.1	165.5
Deferred tax asset	3.5	-	0.3	0.7	-	4.5
Other assets	9.5	13.6	12.3	4.1	1.0	40.5
Total assets	189.6	218.6	17.7	89.3	7.1	522.3
Current liabilities:
Trade and other payables	(11.8)	(9.7)	(2.4)	(2.8)	(4.6)	(31.3)
Non-current liabilities:
Bank loans and other borrowings	(85.9)	(110.8)	-	(38.5)	-	(235.2)
Other liabilities	-	(2.3)	-	-	-	(2.3)
Net assets	91.9	95.8	15.3	48.0	2.5	253.5
Represented by:
Group Share of net assets	91.9	95.8	15.3	48.0	2.5	253.5
Loans to JVs	85.9	-	-	-	-	85.9
Total investment	177.8	95.8	15.3	48.0	2.5	339.4

¹GPRL and N0204

Notes to the accounts (continued)

3.3 Investment in joint ventures (continued)

Summarised income statements for the year ended 31 March 2013

	Greenwich1	iQ	Quercus	Quantum	Hilton	Other joint ventures	Total continuing joint ventures
	£m	£m	£m	£m	£m	£m	£m
Rental income	0.5	14.8	6.3	0.6	-	0.3	22.5
Income from sale of trading properties	-	-	-	-	-	2.6	2.6
Revenue	0.5	14.8	6.3	0.6	-	2.9	25.1
Cost of sales	(0.3)	(3.8)	(0.8)	(0.6)	-	(2.1)	(7.6)
Gross profit	0.2	11.0	5.5	-	-	0.8	17.5
Administrative expenses	-	(1.5)	(0.8)	-	-	-	(2.3)
Operating profit	0.2	9.5	4.7	-	-	0.8	15.2
Loss from sale of non-current assets	-	-	(0.7)	-	-	-	(0.7)
(Deficit)/surplus on revaluation of investment properties	(3.4)	13.6	(14.2)	0.8	(1.3)	-	(4.5)
(Loss)/profit before net finance expenses and tax	(3.2)	23.1	(10.2)	0.8	(1.3)	0.8	10.0
Finance income	-	-	-	0.5	-	-	0.5
Finance costs	(0.8)	(5.8)	(1.7)	-	-	-	(8.3)
(Loss)/profit before tax	(4.0)	17.3	(11.9)	1.3	(1.3)	0.8	2.2
Tax	(0.4)	(3.0)	3.1	(0.4)	0.3	-	(0.4)
(Loss)/profit after tax	(4.4)	14.3	(8.8)	0.9	(1.0)	0.8	1.8
Share of other comprehensive (loss)/income:
Effective portion of changes in fair value of cashflow hedges, net of tax	-	(0.6)	0.4	-	-	-	(0.2)
Recycling of mark-to-market adjustments	-	0.4	-	-	-	-	0.4
	-	(0.2)	0.4	-	-	-	0.2

¹N0204 and Greenwich Retail (until July 2012)

Notes to the accounts (continued)

3.3 Investment in joint ventures (continued)

Summarised balance sheets as at 31 March 2013

	Greenwich1	iQ	Quercus	Quantum	Hilton	Other joint ventures	Group share in joint ventures
	£m	£m	£m	£m	£m	£m	£m
Investment properties	13.0	208.7	70.8	5.5	27.8	-	325.8
Trading properties	154.5	-	0.9	-	-	4.8	160.2
Deferred tax asset	3.3	-	3.4	-	0.3	-	7.0
Other assets	11.2	11.6	3.4	12.6	0.6	1.2	40.6
Total assets	182.0	220.3	78.5	18.1	28.7	6.0	533.6
Current liabilities:
Trade and other payables	(10.1)	(6.0)	(3.0)	(2.0)	(0.9)	(3.9)	(25.9)
Bank loans and other borrowings	-	-	(5.6)	-	-	-	(5.6)
Non-current liabilities:
Bank loans and other borrowings	(83.8)	(111.2)	(30.9)	-	-	-	(225.9)
Other liabilities	-	(2.9)	(0.2)	(0.1)	-	-	(3.2)
Net assets	88.1	100.2	38.8	16.0	27.8	2.1	273.0
Represented by:
Group share of net assets	88.1	100.2	38.8	16.0	27.8	2.1	273.0
Loans to JVs	83.8	-	-	-	-	-	83.8
Total investment	171.9	100.2	38.8	16.0	27.8	2.1	356.8

¹GPRL and N0204

Section 4: Acquisitions and disposals

4.1 Discontinued operations

During the period the Group entered into negotiations to sell its remaining 40% interest in GPRL to its joint venture partner, Knight Dragon Limited.  The sale completed on 22 November 2013 and consideration consisted of £186m for the purchase of the GPRL shares and GPRL loan stock held by the Group and £44m for the acceleration of the deferred receivable arrangement entered into on completion of the GPRL joint venture in July 2012. 

As announced during the period, the Group agreed to sell its Sequel regional property portfolio excluding Stadium Retail Park. The sale completed on 21 October 2013. During the period Stadium Retail Park was being actively marketed for sale and the disposal completed on 22 November 2013. As a result the operating segment Sequel has been classified as held for sale as at 30 September 2013 and presented as discontinued operations.

Notes to the accounts (continued)

4.1 Discontinued operations (continued)

		Unaudited 30 Sept 2013 £m	Unaudited 30 Sept 2012 £m	Audited 31 March 2013 £m
Cash flows (used in)/from discontinued operation
Net cash (used in)/from operating activities		(0.5)	0.4	3.0
Net cash from investing activities		-	-	3.0
Net cash used in financing activities		(0.5)	(0.9)	(1.8)
Effect on cash flows		(1.0)	(0.5)	4.2

		Unaudited 30 Sept 2013 £m	Unaudited 30 Sept 2012 £m	Audited 31 March 2013 £m
Earnings per share - discontinued operations (pence):
Basic and diluted		(0.1)	(0.5)	(0.9)

4.2 Assets and liabilities held for sale

As at 30 September 2013, the discontinued operations comprised assets of £256.5m less liabilities of £42.9m, detailed as follows.

		Unaudited 30 Sept 2013 £m
Investment properties		53.9
Trade and other receivables		47.4
Investment in joint venture		155.2
Trade and other payables		(4.0)
Finance lease liabilities		(1.2)
Bank loans and other borrowings		(37.7)
		213.6

Section 5:  Other assets and liabilities

5.1 Non-current receivables

		Unaudited 30 Sept 2013 £m	Unaudited 30 Sept 2012 £m	Audited 31 March 2013 £m
Investments at fair value		4.0	2.4	5.5
Loans at amortised cost		2.9	58.9	48.6
Total		6.9	61.3	54.1

Notes to the accounts (continued)

5.2 Current trade and other receivables

		Unaudited 30 Sept 2013 £m	Unaudited 30 Sept 2012 £m	Audited 31 March 2013 £m
Trade receivables		4.5	10.3	4.7
Amount due from related parties		3.7	3.8	3.9
Other receivables		2.7	15.3	7.8
Trade and other receivables		10.9	29.4	16.4
Prepayments and accrued income		2.3	2.9	2.7
Loans at amortised cost		10.7	-	10.7
Investments at fair value		3.1	-	3.1
Interest rate caps at fair value		0.4	0.4	0.2
		27.4	32.7	33.1

The Group has two unsecured loans totaling £10.7m (30 September 2012: £10.7m and 31 March 2013: £10.7m) to an associate, Albemarle Retail Properties LLP, which carry a coupon of 10% per annum and the principal of which will be repaid together with an additional rolled-up coupon of 10% out of the proceeds from the sale of the associate's properties.  The receivables are shown in the Balance Sheet at amortised cost.

5.3 Other payables (non-current)

		Unaudited 30 Sept 2013 £m	Unaudited 30 Sept 2012 £m	Audited 31 March 2013 £m
Interest rate swaps		0.5	2.3	1.1
Other creditors		3.1	3.4	3.4
Unsecured loan notes		1.2	1.2	1.2
		4.8	6.9	5.7

5.4 Current trade and other payables

		Unaudited 30 Sept 2013 £m	Unaudited 30 Sept 2012 £m	Audited 31 March  2013 £m
Trade payables		6.7	1.3	0.8
Other creditors		17.6	13.4	4.0
Accruals and deferred income		24.5	20.8	21.9
Interest rate swaps		1.0	2.7	2.1
		49.8	38.2	28.8

Notes to the accounts (continued)

Section 6:  Funding

6.1 Bank loans and other borrowings

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

	Unaudited 30 Sept 2013	Unaudited 30 Sept  2012	Audited 31 March  2013
	£m	£m	£m
Current liabilities	34.3	76.1	71.0
Non-current liabilities	404.2	397.3	415.2
	438.5	473.4	486.2
Non-current liabilities
1 - 2 years	20.0	36.0	62.1
2 - 5 years	270.5	361.3	353.4
After 5 years	116.7	1.7	1.7
	407.2	399.0	417.2
Amortised borrowing costs	(3.0)	(1.7)	(2.0)
	404.2	397.3	415.2

The Group raised a£115m seven year 6.5% Sterling Bond in the period which is due for repayment in July 2020.

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

The Group has undrawn loan facilities of £147.5m (30 September 2012: £148.0m and 31 March 2013: £69.5m).

The debt relating to Sequel of £37.7m has been reclassified as liabilities held for sale and is presented in Note 4.2.

ii) After taking account of derivatives, the risk profile of the Group's borrowings was as follows: 

	Unaudited 30 Sept 2013	Unaudited 30 Sept 2012	Audited 31 Mar 2013
	£m	£m	£m
Fixed	315.0	328.0	318.0
Capped	126.5	147.1	170.2
Total debt	441.5	475.1	488.2
Weighted average interest rate of fixed rate debt	4.9%	3.6%	3.9%

---

[1] Contracts exchanged or in solicitors' hands

[2] Contracts exchanged or in solicitors' hands

 

END

 

 

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