Interim Results

Cardiff Property PLC 19 May 2006 THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY AND ITS SUBSIDIARIES FOR RELEASE 7.00 AM 19 MAY 2006 THE CARDIFF PROPERTY PLC (The group, including Campmoss, specialises in property investment and development in the Thames Valley. The portfolio, valued in excess of Â£34m, is primarily located to the west of London, close to Heathrow Airport and in Surrey and Berkshire.) INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006 Highlights: Six months Six months Year 31 March 31 March 30 September 2006 2005 2005 IFRS IFRS IFRS (Unaudited) (Unaudited)* (Unaudited)* Group revenue Â£'000 259 1,364 1,672 Property sales Â£'000 - 1,113 1,113 Net assets per share* pence 1,006 850 990 Profit before tax Â£'000 452 1,023 3,201 Earnings per share pence 20.7 53.1 193.6 Interim/final dividend pence 2.75 2.5 9.0 per share Gearing % nil nil nil * Figures restated for IFRS ** Properties not revalued at half year Richard Wollenberg, Chairman, commented: 'A healthy increase in tenant demand across all sectors of the property market in the Thames Valley has been evident over the last six months. The group's property portfolio continues to focus within the area known as The Golden Triangle namely to the west of London and close to Heathrow Airport. Residential activities are confined to the counties of Surrey and Berkshire. Interest rates continue to remain at current low levels and there is a renewed confidence in the property market as a whole.' For further information: The Cardiff Property plc Richard Wollenberg 01784 437444 Arbuthnot Securities Richard Dunn 020 7012 2000 THE CARDIFF PROPERTY PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006 CHAIRMAN'S INTERIM STATEMENT Dear shareholder A healthy increase in tenant demand across all sectors of the property market in the Thames Valley has been evident over the last six months. A number of lettings of Grade A office buildings situated to the West of London have been successfully concluded indicating a marginal increase in headline rent levels. Landlords' incentives are, however, still an important feature of any transaction and currently represent a concession of up to 10% over the first five years of the lease term. The average period for new leases is between 5 and 15 years and often includes a tenant's break after 5 or 10 years. These are all welcoming features but shareholders should appreciate that although confidence is gradually returning, the market place for new lettings remains fragile. As always, a prospective tenant or purchaser will require a well located building, a high quality of construction and the availability of good car parking facilities. The level of interest for purpose built business units and industrial premises to the west of Heathrow has remained reasonably buoyant with rental levels unchanged. Lettings close to the airport, primarily in the logistics sector, indicate a marginal increase in rental levels. The commercial property investment market, dominated by UK and overseas institutions as well as private investors, remains very active. Individual institutions have increased their weightings towards this sector and, with the real prospect of rental growth, investment values are expected to remain firm. The increasing number of owner occupiers acquiring their own freeholds rather than renting has contributed to the strength of the market place. The Thames Valley residential market has recently experienced an upturn in the number of viewings by prospective purchasers and it will be interesting to see if, during the year, this translates into actual sales. Property values have remained similar to last year although with the continued difficulty and length of time taken to obtain a planning permission, the availability of new stock will always be in short supply. Dividend The directors have declared an increased interim dividend of 2.75p per share (March 2005: 2.5p; September 2005: 9.0p) which will be paid on 7 July 2006 to shareholders on the register on 9 June 2006. Financial The consolidated results for the six months ended 31 March 2006 are the first to be prepared by the group under applicable International Financial Reporting Standards adopted by the European Union ('IFRS') which have been adopted and incorporated into the principal accounting policies as set out in note 2. From 1 January 2005, all listed companies traded on a regulated market in any European Union member state are required to adopt this basis of accounting. Note 8 and the subsequent pages set out detailed reconciliations to show the differences in accounting treatment as compared to the previous UK GAAP basis of accounting. There are reconciliations for the Group Income Statement (formerly the Group Profit and Loss Account) and Group Balance Sheet for the current period, the restated comparative results for the year ended 30 September 2005 and the six months ended 31 March 2005, together with an opening balance sheet at 1 October 2004, the date of transition to IFRS. The key changes resulting from the introduction of IFRS are set out on page 8. The principal one affecting the group is the inclusion of deferred tax on revaluation of property which was previously shown by way of a note to the accounts. The effect on net assets under IFRS at 30 September 2005 was to reduce the UK GAAP amount of 1,025p per share to 990p per share. Under IFRS net assets at 31 March 2006, including our share of Campmoss, our 47.62% owned jointly controlled entity, totalled Â£17.72m (March 2005: Â£15.18m; September 2005: Â£17.58m) equivalent to 1,006p per share (March 2005: 850p; September 2005: 990p). For the half year to 31 March 2006, under IFRS, profit before tax amounted to Â£0.45m (March 2005: Â£1.02m; September 2005: Â£3.20m) which included a contribution from Campmoss of Â£0.17m (March 2005: Â£0.36m; September 2005: Â£2.12m). Group revenue totalled Â£0.26m (March 2005: Â£1.37m; September 2005: Â£1.67m) representing gross rental income of Â£0.26m (March 2005: Â£0.49m; September 2005: Â£0.56m) and sales of commercial property of nil (March 2005: Â£1.11m; September 2005: Â£1.11m). Earnings per share was 20.7p (March 2005: 53.1p; September 2005: 193.6p). Shareholders should note that under UK GAAP, results for Campmoss were identified under all the component parts of the income statement (formerly the profit and loss account). Under IFRS, however, profit before tax includes a single line item 'share of jointly controlled entity'. The net effect is the same but the presentation is significantly different. The group's property portfolio is valued annually and therefore the figures for the half year are based on values as at 30 September 2005. Gearing at Campmoss was 44% (March 2005: 145%; September 2005: 47%) and for Cardiff nil (March 2005: nil; September 2005: nil). During the first half the company acquired 14,000 of its own shares for cancellation. Cash balances are placed on short term deposit and bank borrowing facilities have been renewed and remain available for acquisitions. The investment and development portfolio The group's property portfolio continues to focus within the area known as The Golden Triangle namely to the west of London and close to Heathrow Airport. Residential activities are confined to the counties of Surrey and Berkshire. The company's office, retail and business units are located at Egham, Windsor, Maidenhead and Cardiff. Other than Maidenhead, referred to below, these buildings are let on medium to long term institutional leases to well known national and local companies. At the Maidenhead Enterprise Centre, major refurbishment work has now been completed. The property comprises six individual business units totalling 14,000 sq ft. Agents have been appointed to seek either a letting or a freehold sale. At Egham, two of our newly built residential houses remain available for sale. One house has been let on a short term basis. At Ashleigh House, Englefield Green, Surrey an acceptable offer has been received and as indicated in my post balance sheet comments, the sale has now been completed. Campmoss Property Company Ltd Campmoss continues to retain freehold commercial property at Britannia Wharf, Woking, The Priory, Burnham and Kiln Lane, Bracknell. Gross annual rental income generated from this portfolio is now in excess of Â£1.42m. Freehold properties at Tangley Place, Worplesdon, Datchet Meadows, Datchet, Market Street, Bracknell and Highway House, Maidenhead, are all the subject of detailed planning discussions with individual Local Authorities' Planning Departments. In all cases planning applications have been lodged and although this remains a long and arduous task each individual scheme, as and when planning is achieved, represents an exciting project for the future. Whilst planning matters proceed part of the office and retail buildings at Market Street, Bracknell have been let on a short term basis. Shareholders telephone dealing service This low commission share dealing facility provided by the company's registrars, Computershare Investor Services Plc, and used by a number of shareholders, has been renewed. The company is continuing to offer its free share sale service to those shareholders who wish to dispose of holdings of 1,000 shares or less. Shareholders should be aware that this service should not be construed as an encouragement to buy or sell the company's shares. If in any doubt shareholders should contact their own financial advisors. Computershare can be contacted on 0870 703 0084. Post balance sheet events The sale of Ashleigh House and adjacent land for Â£1.72m has now been successfully completed and the funds placed on short term deposit. At Maidenhead an acceptable offer for leasing two of the units has been received and is in solicitor's hands. At Windsor an acceptable offer for the freehold of one of the business units has been received and is also in solicitor's hands. Interest rates continue to remain at current low levels and as evidenced by the above events renewed confidence in the property market, as a whole, is evident. I look forward to reporting on further progress to shareholders with the year end results. J Richard Wollenberg Chairman 18 May 2006 Consolidated Income Statement FOR THE SIX MONTHS ENDED 31 MARCH 2006 Six months Six months Year 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) Â£'000 Â£'000 Â£'000 Revenue 259 1,364 1,672 Cost of sales (19) (712) (722) ------ ------ ------ Gross profit 240 652 950 Administrative expenses (243) (272) (573) Other operating income 209 168 282 ------ ------ ------ Operating profit before gains on investment properties 206 548 659 Profit on sale of other investments - 1 1 Surplus on revaluation of investment properties - - 225 ------ ------ ------ Profit before financing 206 549 885 Financing: Interest receivable and similar income 78 113 197 Interest payable - - (5) Share of jointly controlled entity 168 361 2,124 ------ ------ ------ Profit before taxation 452 1,023 3,201 Tax on profit on ordinary activities (85) (86) 233 ------ ------ ------ Profit for the period 367 937 3,434 ------ ------ ------ Dividends Paid 115 104 149 Proposed 48 45 115 ------ ------ ------ Earnings per share - pence On profit for the six months Basic 20.7 53.1 193.6 Diluted 20.6 52.9 192.0 ------ ------ ------ The above results relate entirely to continuing activities. There were no acquisitions or disposals of businesses during the period. Consolidated Balance Sheet AT 31 MARCH 2006 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) Â£'000 Â£'000 Â£'000 Non-current assets Investment properties 5,576 4,719 5,444 Investment in jointly controlled entity 7,164 5,347 6,996 Property, plant and equipment 3 5 4 Other financial assets 393 303 303 ------ ------ ------ Total non-current assets 13,136 10,374 12,747 ------ ------ ------ Current assets Stock and work in progress 2,701 2,799 2,701 Trade and other receivables 250 487 328 Cash and cash equivalents 3,101 3,660 3,356 ------ ------ ------ 6,052 6,946 6,385 ------ ------ ------ Total assets 19,188 17,320 19,132 ------ ------ ------ Current liabilities Trade and other payables (688) (910) (775) Non-current liabilities Provisions and deferred tax (785) (1,235) (781) ------ ------ ------ Total liabilities (1,473) (2,145) (1,556) ------ ------ ------ Net assets 17,715 15,175 17,576 ------ ------ ------ Capital and reserves Called up share capital 352 357 355 Share premium account 4,946 4,944 4,946 Other reserves 2,295 2,291 2,29 Profit and loss account - non-distributable 3,990 3,444 3,990 Profit and loss account - distributable 6,132 4,139 5,993 ------ ------ ------ Shareholders' funds - equity 17,715 15,175 17,576 ------ ------ ------ Net assets per share 1,006p 850p 990p ------ ------ ------ Consolidated Cash Flow Statement FOR THE SIX MONTHS ENDED 31 MARCH 2006 Six months Six months Year 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) Â£'000 Â£'000 Â£'000 Cash flows from operating activities Profit for the year 367 937 3,434 Adjustments for: Depreciation, amortisation and impairment 1 2 3 Financial income (78) (113) (197) Financial expense - - 5 Share of profit of jointly controlled entity (217) (493) (2,378) Profit on sale of other investments - (1) (1) Surplus on revaluation of investment properties - - (225) Equity settled share-based payment expenses 25 25 50 Taxation 134 218 21 ------ ------ ------ Operating profit before changes in working capital 232 575 712 Decrease in trade and other receivables 74 1,845 1,986 Decrease in stock - 624 722 (Decrease)/increase in trade and other payables (170) 4 3 ------ ------ ------ Cash generated from operations 136 3,048 3,423 Tax paid - - (132) ------ ------ ------ Net cash from operating activities 136 3,048 3,291 ------ ------ ------ Cash flows from investing activities Interest received 85 72 155 Interest paid - - (5) Acquisition of property, plant and equipment (223) (782) (1,286) Proceeds of disposals of plant and equipment - 9 9 ------ ------ ------ (138) (701) (1,127) ------ ------ ------ Cash flows from financing activities Proceeds from the issue of share capital - 104 105 Purchase of owhares (138) - (76) Dividends paid (115) (103) (149) ------ ------ ------ Net cash from financing activities (253) 1 (120) ------ ------ ------ Net (decrease)/increase in cash and cash equivalents (255) 2,348 2,044 Cash and cash equivalents brought forward 3,356 1,312 1,312 ------ ------ ------ Cash and cash equivalents at end of period 3,101 3,660 3,356 ------ ------ ------ Other Primary Statements FOR THE SIX MONTHS ENDED 31 MARCH 2006 Consolidated statement of changes in equity Six months Six months Year 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) Â£'000 Â£'000 Â£'000 Opening shareholders' funds as previously reported 18,186 15,548 15,548 Effects of IFRS (610) (1,335) (1,335) ------ ------ ------ Opening shareholders' funds restated under IFRS 17,576 14,213 14,213 Share capital on options exercised - 10 9 Share premium on options exercised - 94 95 Own shares purchased (138) - (76) Fair value of share options granted 25 25 50 ------ ------ ------ 17,463 14,342 14,291 Total recognised income and expense for the period 367 937 3,434 ------ ------ ------ 17,830 15,279 17,725 Dividends (115) (104) (149) ------ ------ ------ Closing shareholders' funds 17,715 15,175 17,576 ------ ------ ------ Notes to the Financial Statements FOR THE SIX MONTHS ENDED 31 MARCH 2006 1. International Financial Reporting Standards The consolidated results for the six months ended 31 March 2006 are the first to be prepared by the group under applicable International Financial Reporting Standards adopted by the European Union ('IFRS') which have been adopted and incorporated into the principal accounting policies as set out in note 2. From 1 January 2005, all listed companies traded on a regulated market in any European Union member state are required to adopt this basis of accounting. Note 8 and the subsequent pages set out detailed reconciliations to show the differences in accounting treatment as compared to the previous UK GAAP basis of accounting. There are reconciliations for the Group Income Statement (formerly the Group Profit and Loss Account) and Group Balance Sheet for the current period, the restated comparative results for the year ended 30 September 2005 and the six months ended 31 March 2005, together with an opening balance sheet at 1 October 2004, the date of transition to IFRS. The financial information included in this document is unaudited and does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative figures for the financial year ended 30 September 2005 are not the company's statutory accounts for that financial year. The statutory accounts for the year ended 30 September 2005, prepared in accordance with UK GAAP, have been filed with the Registrar of Companies. The auditor gave an unqualified report, without any statement under section 237(2) or (3) of the Companies Act 1985. Basis of preparation The results have been prepared using applicable IFRS, which includes International Accounting Standards (IAS) and interpretations issued by the International Accounting Standards Board (IASB) and its committees, which are expected to be endorsed by the European Union and apply to the 2006 full year results. Key changes The main differences from UK GAAP are: â€¢ annual revaluation surpluses or deficits on investment properties are included in the income statement, whereas previously this was reported as a movement on the balance sheet through the revaluation reserve; â€¢ capital gains tax payable in the event that all the group's investment properties were sold at the balance sheet date is included as an additional deferred tax liability in the balance sheet, having previously been disclosed as a note to the accounts. The movement in valuation of the investment properties during the year will affect the tax charge in the income statement; â€¢ the value of lease incentives is spread over the life of a lease rather than to the first rent review; â€¢ no provision is made for proposed dividends; and â€¢ the fair value of options granted is recognised as an employee expense with a corresponding increase in equity. Cash flow Despite all the changes to the reporting of assets, liabilities and performance, the cash flows that underline the business remain the same, hence no reconciliations of cash flows under UK GAAP and IFRS have been prepared. The cash flow statements reported under IFRS differ only in presentation from UK GAAP. The effect of the change in categorisation is to reduce the number of headings in the cash flow statements. 2. Accounting policies The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to the group's financial statements. The financial statements have been prepared under the historical cost convention, modified by the revaluation of investment properties, and in accordance with applicable accounting standards and with the Companies Act 1985 except as noted below under investment properties. These accounting policies have been applied consistently across the group for the purposes of these consolidated interim financial statements. Basis of consolidation The group's financial statements include the financial statements of the company and its subsidiaries and jointly controlled entity made up to 31 March 2006. The purchase method of acquisition has been adopted. Under this method, the results of subsidiary undertakings acquired or disposed of in the year are included in the consolidated income statement from the date of acquisition or up to the date of disposal. Intra-group transactions are eliminated on consolidation. A jointly controlled entity is one in which the group has a long term interest and over which it exercises joint control. The group's investment in the jointly controlled entity is accounted for using the equity method, hence the group's share of the profits less losses of the jointly controlled entity is included in the consolidated income statement and its interest in the net assets is included in investments in the consolidated balance sheet. Goodwill Goodwill represents amounts arising on acquisition of subsidiaries, associates and jointly controlled entities. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. Identifiable assets include intangible assets which can be sold separately or which arise from legal rights regardless of whether those rights are separable. The classification and accounting treatment of acquisitions that occurred prior to 1 October 2004 has not been reconsidered in preparing the group's opening IFRS balance sheet at 1 October 2004. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually at the balance sheet date for impairment. In respect of associates and jointly controlled entities, the carrying amount of goodwill is included in the carrying amount of the investment in that associate or jointly controlled entity. Impairment The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill to cash-generating units) and recognising an impairment loss, if the recoverable amount is lower. Impairment losses are recognised through the income statement. Investment properties Investment properties are properties which are held either to earn rental income or for capital appreciation or both. Investment properties are stated at fair value which are based on market values. Design, construction and management expenses together with interest incurred in respect of investment properties in the course of development are capitalised until the building is effectively completed and available for letting along with the costs directly attributable to the initial letting of newly developed properties. Thereafter they are charged to the income statement. Whilst under development such properties are classified as assets in the course of construction and any accumulated revaluation surpluses or deficits are recognised in the income statement. These properties are revalued at the year end and surpluses or deficits recognised in the income statement. An external, independent valuer, having an appropriate recognised professional qualification and recent experience in the location and category of property being valued, values the company portfolio each year. The directors of the jointly controlled entity value its portfolio each year. Depreciation Property and plant and equipment are stated at cost less accumulated depreciation and impairment losses. Provision is made for depreciation on other tangible fixed assets so as to write off their cost less the estimated residual value on a straight-line basis over their expected useful lives as follows: â€¢ motor vehicles - 4 years; and â€¢ fixtures, fittings and equipment - 4 years. Impairment The carrying amounts of the group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated and an impairment loss recognised where the recoverable amount is less than the carrying value of the asset. Stocks and work in progress Stocks, being properties under development intended for resale, are stated at the lower of cost, including attributable overheads, and net realisable value Revenue Revenue consists of rental income earned from properties held for investment purposes together with the proceeds from the sale of development properties. Rental income is recognised in the income statement on a straight-line basis over the total lease period. Payments due on early terminations of lease agreements are recognised in the income statement within revenue. Proceeds from the sale of investment properties are not included in revenue, but in profit on sale of investment property. The profit or loss on disposal is calculated with reference to the carrying amount in the balance sheet. Purchases and sales of investment properties are accounted for when exchanged contracts become unconditional. Financial assets Investments in equity securities are classified as assets available for sale and are stated at fair value with any resultant gain or loss being recognised directly in equity except for any impairment loss. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in the income statement. In the company's financial statements, investments in subsidiary undertakings, associates and jointly controlled entities are stated at cost less any impairment value. Trade and other receivables Trade and other receivables are stated at their historic cost (discounted if material) less impairment. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group's cash management are included as a component of cash and cash equivalents for the purpose only of the statement of cash flows. Share based payments The share option programme allows group employees to acquire shares of the ultimate parent company; these awards are granted by the ultimate parent. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at the date of grant and spread over the period during which the employees become unconditionally entitled to the options using an option valuation model, taking into account the terms and conditions upon which options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices not achieving the threshold for vesting. Dividends Dividends are recognised as a liability in the period in which they are approved. Provisions A provision is recognised in the balance sheet when the group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Taxation Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. 3. Analysis of revenue, profit before tax and net operating assets Six months Six months Year 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) Â£'000 Â£'000 Â£'000 Revenue (wholly in the United Kingdom) Gross rents receivable: 259 251 559 Sale of development property - 1,113 1,113 ------ ------ ------ 259 1,364 1,672 ------ ------ ------ Profit before tax Property and other investment 353 517 2,666 Property development 99 506 535 ------ ------ ------ 452 1,023 3,201 ------ ------ ------ Net operating assets Property and other investment 15,722 11,338 15,656 Property development 1,993 3,837 1,920 ------ ------ ------ 17,715 15,175 17,576 ------ ------ ------ 4. Taxation The tax position for the six months is estimated on the basis of the anticipated tax rates applying for the full year. 5. Dividends Period Year 31 March 30 September 2006 2005 Â£'000 Â£'000 Final 2005 115 Final 2004 5.8p per share 101 6.5p per share Increase in 2004 final dividend following issue of shares in respect of options exercised 3 Interim 2006 2.75p per share - Interim 2005 2.5p per share 45 ----- ----- 115 149 ----- ----- The interim dividend of 2.75p per share will be paid on 7 July 2006 to shareholders on the register on 9 June 2006. Under IFRS rules this dividend is not included in the consolidated income statement for the six months ended 31 March 2006 nor the balance sheet as at that date. 6. Earnings per share Earnings per share has been calculated using the profit after tax for the period of Â£367,000 (six months to 31 March 2005: Â£937,000; year to 30 September 2005: Â£3,434,000) and the weighted average number of shares as follows: Weighted average number of shares 31 March 31 March 30 September 2006 2005 2005 Basic 1,773,234 1,764,936 1,773,706 Adjustment to basic for bonus element of shares to be issued on exercise of options 7,920 7,018 14,690 --------- --------- --------- Diluted 1,781,154 1,771,954 1,788,396 --------- --------- --------- 7. Share based payments In accordance with the transitional provisions in IFRS 1 and IFRS 2, the recognition and measurement principles in IFRS have not been applied to grants made prior to 7 November 2002. For grants subsequent to this date the fair values of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the option is measured based on a Black Scholes model (with the contractual life of the option and expectations of early exercise built into the model). The option vests after a period of 3 years and in addition, the average of the previous three years net asset value per share must exceed the corresponding increase in the FT Property Index over the same period, by at least 3%. The terms and condition of outstanding share options are as follows: Date granted Amount paid No. of Option Exercisable ordinary price between shares per share ------------- -------- --------- --------- ---------- 14 January 2003 Â£1 10,000 515p 2006-2013 The principal assumptions used in assessing the fair value of the options are as follows: â€¢ share price - 515p; â€¢ exercise price - 515p; â€¢ option life - 10 years; â€¢ expected dividends - 1.4%; and â€¢ risk-free interest rate - 4.3%. 8. Reconciliation of UK GAAP to IFRS To illustrate the changes introduced by IFRS and the impact on the group results when compared to UK GAAP, the transitional requirements are for a set of detailed reconciliations going back to the balance sheet date at 1 October 2004. In the subsequent pages, reconciliations are set out for the six months ended 31 March 2006 and also for the restated comparative results for the year ended 30 September 2005 and the six months ended 31 March 2005. The balance sheet as at 1 October 2004 is also included. The IFRS accounting standards that impact on the group's results are identified in the reconciliations and are as follows: Reconciliation of UK GAAP to IFRS Consolidated Income Statement FOR THE SIX MONTHS ENDED 31 MARCH 2006 UK GAAP Share Adjusted Dividends Revaluations IFRS (under IFRS option share of under and related presentation) expense profit of IAS 10 deferred IFRS 2 jointly taxation controlled taken to entity consolidated income statement Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------ ------ ------ ------ ------ ------ Revenue 259 259 Cost of sales (19) (19) ------ ------ ------ ------ ------ ------ Gross profit 240 240 Administrative expenses (218) (25) (243) Other operating 209 209 income ------ ------ ------ ------ ------ ------ Operating profit before gains 231 (25) 206 on investment properties Profit on sale - - of other investments Surplus on - - revaluation of investment properties ------ ------ ------ ------ ------ ------ Profit before financing 231 (25) 206 Financing: Interest receivable and similar income 78 78 Interest - - payable Share of jointly 168 168 controlled entity ------ ------ ------ ------ ------ ------ Profit before taxation 477 (25) 452 Tax on profit on ordinary (85) (85) activities ------ ------ ------ ------ ------ ------ Profit for the period 392 (25) 367 ------ ------ ------ ------ ------ ------ Dividends 48 67 115 ------ ------ ------ ------ ------ ------ Earnings per share - pence On profit for the six months Basic 22.1 20.7 Diluted 22.0 20.6 ------ ------ Reconciliation of UK GAAP to IFRS Consolidated Balance Sheet AS AT 31 MARCH 2006 UK GAAP Share Adjusted Dividends Revaluations IFRS (under IFRS option share of under and related presentation) expense profit of IAS 10 deferred IFRS 2 jointly taxation controlled taken to entity consolidated income statement Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------ ------ ------ ------ ------ ------ Non-current assets Investment properties 5,576 5,576 Investment in jointly controlled entity 7,393 (229) 7,164 Property, plant and equipment 3 3 Other financial assets 393 393 ------ ------ ------ ------ ------ ------ Total non-current assets 13,365 (229) 13,136 ------ ------ ------ ------ ------ ------ Current assets Stock and work in progress 2,701 2,701 Trade and other receivables 250 250 Cash and cash equivalents 3,101 3,101 ------ ------ ------ ------ ------ ------ 6,052 6,052 ------ ------ ------ ------ ------ ------ Total assets 19,417 (229) 19,188 ------ ------ ------ ------ ------ ------ Current liabilities Trade and other payables (736) 48 (688) Non-current liabilities Provisions and deferred tax (289) (496) (785) ------ ------ ------ ------ ------ ------ Total liabilities (1,025) 48 (496) (1,473) ------ ------ ------ ------ ------ ------ Net assets 18,392 (229) 48 (496) 17,715 ------ ------ ------ ------ ------ ------ Capital and reserves Called up share capital 352 352 Share premium account 4,946 4,946 Investment property revaluation reserve 4,486 (4,486) - Other reserves 2,295 2,295 Profit and loss account - non-distributable - 3,990 3,990 Profit and loss account - distributable 6,313 (229) 48 6,132 ------ ------ ------ ------ ------ ------ Shareholders' funds - equity 18,392 (229) 48 (496) 17,715 ------ ------ ------ ------ ------ ------ Net assets per share 1,044p 1,006p ------ ------ Reconciliation of UK GAAP to IFRS Consolidated Income Statement FOR THE YEAR ENDED 30 SEPTEMBER 2005 UK GAAP Share Adjusted Dividends Revaluations IFRS (under IFRS option share of under and related presentation) expense profit of IAS 10 deferred IFRS 2 jointly taxation controlled taken to entity consolidated income statement Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------ ------ ------ ------ ------ ------ Revenue 1,672 1,672 Cost of sales (722) (722) ------ ------ ------ ------ ------ ------ Gross profit 950 950 Administrative expenses (523) (50) (573) Other operating 282 282 income ------ ------ ------ ------ ------ ------ Operating profit before gains 709 (50) 659 on investment properties Profit on sale of 1 1 other investments Surplus on revaluation of investment properties - 225 225 ------ ------ ------ ------ ------ ------ Profit before financing 710 (50) 225 885 Financing: Interest receivable and similar income 197 197 Interest (5) (5) payable Share of jointly 1,733 391 2,124 controlled entity ------ ------ ------ ------ ------ ------ Profit before taxation 2,635 (50) 391 225 3,201 Tax on profit on ordinary (88) 321 233 activities ------ ------ ------ ------ ------ ------ Profit for the period 2,547 (50) 391 546 3,434 ------ ------ ------ ------ ------ ------ Dividends 163 (14) 149 ------ ------ ------ ------ ------ ------ Earnings per share - pence On profit for the year Basic 143.6 193.6 Diluted 142.4 192.0 ------ ------ Reconciliation of UK GAAP to IFRS Consolidated Balance Sheet AS AT 30 SEPTEMBER 2005 UK GAAP Share Adjusted Dividends Revaluations IFRS (under IFRS option share of under and related presentation) expense profit of IAS 10 deferred IFRS 2 jointly taxation controlled taken to entity consolidated income statement Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------ ------ ------ ------ ------ ------ Non-current assets Investment properties 5,444 5,444 Investment in jointly controlled entity 7,225 (229) 6,996 Property, plant and equipment 4 4 Other financial assets 303 303 ------ ------ ------ ------ ------ ------ Total non-current assets 12,976 (229) 12,747 ------ ------ ------ ------ ------ ------ Current assets Stock and work in progress 2,701 2,701 Trade and other receivables 328 328 Cash and cash equivalents 3,356 3,356 ------ ------ ------ ------ ------ ------ 6,385 6,385 ------ ------ ------ ------ ------ ------ Total assets 19,361 (229) 19,132 ------ ------ ------ ------ ------ ------ Current liabilities Trade and other payables (890) 115 (775) Non-current liabilities Provisions and deferred tax (285) (496) (781) ------ ------ ------ ------ ------ ------ Total liabilities (1,175) 115 (496) (1,556) ------ ------ ------ ------ ------ ------ Net assets 18,186 (229) 115 (496) 17,576 ------ ------ ------ ------ ------ ------ Capital and reserves Called up share capital 355 355 Share premium account 4,946 4,946 Investment property revaluation reserve 4,486 (4,486) - Other reserves 2,292 2,292 Profit and loss account - non-distributable - 3,990 3,990 Profit and loss account - distributable 6,107 (229) 115 5,993 ------ ------ ------ ------ ------ ------ Shareholders' funds - equity 18,186 (229) 115 (496) 17,576 ------ ------ ------ ------ ------ ------ Net assets per share 1,025p 990p ------ ------ Reconciliation of UK GAAP to IFRS Consolidated Income Statement FOR THE SIX MONTHS ENDED 31 MARCH 2005 UK GAAP Share Adjusted Dividends Revaluations IFRS (under IFRS option share of under and related presentation) expense profit of IAS 10 deferred IFRS 2 jointly taxation controlled taken to entity consolidated income statement Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------ ------ ------ ------ ------ ------ Revenue 1,364 1,364 Cost of sales (712) (712) ------ ------ ------ ------ ------ ------ Gross profit 652 652 Administrative expenses (247) (25) (272) Other operating 168 168 income ------ ------ ------ ------ ------ ------ Operating profit before gains 573 (25) 548 on investment properties Profit on sale of 1 1 other investments Surplus on - - revaluation of investment properties ------ ------ ------ ------ ------ ------ Profit before financing 574 (25) 549 Financing: Interest receivable and similar income 113 113 Interest - - payable Share of jointly 341 20 361 controlled entity ------ ------ ------ ------ ------ ------ Profit before taxation 1,028 (25) 20 1,023 Tax on profit on ordinary (86) (86) activities ------ ------ ------ ------ ------ ------ Profit for the period 942 (25) 20 937 ------ ------ ------ ------ ------ ------ Dividends 47 56 103 ------ ------ ------ ------ ------ ------ Earnings per share - pence On profit for the six months Basic 53.4 53.1 Diluted 53.2 52.9 ------ ------ Reconciliation of UK GAAP to IFRS Consolidated Balance Sheet AS AT 31 MARCH 2005 UK GAAP Share Adjusted Dividends Revaluations IFRS (under IFRS option share of under and related presentation) expense profit of IAS 10 deferred IFRS 2 jointly taxation controlled taken to entity consolidated income statement Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------ ------ ------ ------ ------ ------ Non-current assets Investment properties 4,719 4,719 Investment in jointly controlled entity 5,947 (600) 5,347 Property, plant and equipment 5 5 Other financial assets 303 303 ------ ------ ------ ------ ------ ------ Total non-current assets 10,974 (600) 10,374 ------ ------ ------ ------ ------ ------ Current assets Stock and work in progress 2,799 2,799 Trade and other receivables 487 487 Cash and cash equivalents 3,660 3,660 ------ ------ ------ ------ ------ ------ 6,946 6,946 ------ ------ ------ ------ ------ ------ Total assets 17,920 (600) 17,320 ------ ------ ------ ------ ------ ------ Current liabilities Trade and other payables (955) 45 (910) Non-current liabilities Provisions and deferred tax (418) (817) (1,235) ------ ------ ------ ------ ------ ------ Total liabilities (1,373) 45 (817) (2,145) ------ ------ ------ ------ ------ ------ Net assets 16,547 (600) 45 (817) 15,175 ------ ------ ------ ------ ------ ------ Capital and reserves Called up share capital 357 357 Share premium account 4,944 4,944 Investment property revaluation reserve 4,261 (4,261) - Other reserves 2,291 2,291 Profit and loss account - non-distributable - 3,444 3,444 Profit and loss account - distributable 4,694 (600) 45 4,139 ------ ------ ------ ------ ------ ------ Shareholders' funds - equity 16,547 (600) 45 (817) 15,175 ------ ------ ------ ------ ------ ------ Net assets per share 928p 850p ------ ------ Reconciliation of UK GAAP to IFRS Consolidated Balance Sheet AS AT 30 SEPTEMBER 2004 UK GAAP Share Adjusted Dividends Revaluations IFRS (under IFRS option share of under and related presentation) expense profit of IAS 10 deferred IFRS 2 jointly taxation controlled taken to entity consolidated income statement Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------ ------ ------ ------ ------ ------ Non-current assets Investment properties 3,935 3,935 Investment in jointly controlled entity 5,492 (619) 4,873 Property, plant and equipment 5 5 Other financial assets 311 311 ------ ------ ------ ------ ------ ------ Total non-current assets 9,743 (619) 9,124 ------ ------ ------ ------ ------ ------ Current assets Stock and work in progress 3,423 3,423 Trade and other receivables 2,369 2,369 Cash and cash equivalents 1,349 1,349 ------ ------ ------ ------ ------ ------ 7,141 7,141 ------ ------ ------ ------ ------ ------ Total assets 16,884 (619) 16,265 ------ ------ ------ ------ ------ ------ Current liabilities Trade and other payables (923) 101 (822) Non-current liabilities Provisions and deferred tax (413) (817) (1,230) ------ ------ ------ ------ ------ ------ Total liabilities (1,336) 101 (817) (2,052) ------ ------ ------ ------ ------ ------ Net assets 15,548 (619) 101 (817) 14,213 ------ ------ ------ ------ ------ ------ Capital and reserves Called up share capital 347 347 Share premium account 4,850 4,850 Investment property revaluation reserve 4,261 (4,261) - Other reserves 2,291 2,291 Profit and loss account - non-distributable - 3,444 3,444 Profit and loss account - distributable 3,799 (619) 101 3,281 ------ ------ ------ ------ ------ ------ Shareholders' funds - equity 15,548 (619) 101 (817) 14,213 ------ ------ ------ ------ ------ ------ Net assets per share 895p 818p ------ ------ Financial Calendar 2006 19 May Interim results for 2006 announced 7 June Ex dividend date for interim dividend 9 June Record date for interim dividend 7 July Interim dividend to be paid 30 September End of accounting year December Final results for 2006 announced 2007 January Annual general meeting February Final dividend to be paid Directors and Advisers Directors Auditor J Richard Wollenberg, KPMG Audit Plc Chairman and chief executive David A Whitaker FCA Finance director Stockbrokers and financial Nigel D Jamieson BSc, MRICS, FSI, advisers Independent non-executive director Arbuthnot Securities Ltd Secretary Bankers David A Whitaker FCA HSBC Bank plc Non-executive director of wholly owned Solicitors subsidiary First Choice Estates plc Charles Russell Derek M Joseph BCom, FCIS, MSII Morgan Cole Head office Registrar and transfer office 56 Station Road Computershare Investor Services plc Egham PO Box 82 Surrey TW20 9LF The Pavilions Telephone: 01784 437444 Bridgwater Road Fax: 01784 439157 Bristol BS99 7NH E-mail: webmaster@cardiff-property.com Telephone: 0870 702 0001 Web: www.cardiff-property.com Dealing line: 0870 703 0084 Registered office Registered number Marlborough House 22705 Fitzalan Court Fitzalan Road Cardiff CF24 0TE This information is provided by RNS The company news service from the London Stock Exchange

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