Half-yearly report

GRESHAM HOUSE PLC INTERIM RESULTS 6 MONTHS ENDED 30 JUNE 2009 CHAIRMAN'S INTERIM STATEMENT AND MANAGEMENT REPORT I am pleased to report that the half year results show a much reduced revenue loss of £140,000 compared to the loss for the year to 31st December, 2008 of £3,140,000. The annual result included a provision of £2,220,000 against the value of the development sites which, if excluded, would have reduced the 2008 loss to £920,000. The half year loss compares with a loss for the half year ending 30th June, 2008 of £85,000. Rental income for the current half year was £1,027,000. This fell by £195,000 compared to the half year to 30th June, 2008 as a result of the loss of income at Newton-le-Willows where a major distribution tenant reduced their space requirement at the expiry of their lease. Both administration overheads and finance costs were lower than the corresponding half year in 2008. The administration overheads reduction of £236,000 is principally due to overall consolidation of staff and considerably lower legal fees than in 2008 whilst the finance cost reduction from £498,000 to £320,000 is due to the reduction in interest rates since last year. Interest rates on the majority of the loans are now locked in for at least 2 years so it is anticipated that this benefit will be ongoing. Capital account for the half year to 30 June 2009 The capital surplus for the half year was £2,628,000 against a loss in the similar period last year of £2,524,000. The surplus was as a result of the value of our quoted investment portfolio increasing by £2,675,000 in the six months to 30th June, 2009 and net realised gains on share disposals of £186,000. The principal reason for the significant increase in the value of the investment portfolio was the performance of Hallin Marine which increased in value by 76% following the announcement of record results in March, resulting in an unrealised gain of £2,368,000. The overall increase in the share portfolio was partly offset by the provision made against Investment Properties of £233,000 by prudently writing off capital expenditure incurred in the half year. As a consequence of the above the basic net asset value per share as at 30th June, 2009 shows a healthy increase of 46.8 p to 452.8p per share, representing an increase of 11.5% since the year end. However, following a trading update in July 2009, Hallin Marine's share price has fallen back by 38p as at close of business on 26th August, 2009 against its valuation as at 30th June, resulting in a decrease in the value of our investment of £1,406,000. Had this occurred in the first half our increase in net asset value at that time would have been limited to 18.0p. Finance I am delighted to report that all loans relating to Property Investments have now been refinanced for a minimum period of two years. The Royal Bank of Scotland has renewed loans totalling £3,514,000 which mature in June 2011 with the balance of our loan amounting to £14,215,000 maturing in 2012. A new loan from The Royal Bank of Scotland of £3.6 million replaced the existing facility from Morgan Stanley on which we obtained a settlement discount of £148,000. This profit will be taken in the accounts for the full year. The group's cash balance as at 30th June, 2009 amounted to £2.7 million. We intend to ensure that we have a surplus of cash available to enable us to cover any adverse cash movements resulting from tenant failure or voids in our property portfolio. We continue to follow our stated policy of progressive realisation of the investment portfolio. Property portfolio As is the Company's usual practice no interim independent valuations have been carried out as at 30th June, 2009. We have maintained the value of the properties at 31st December, 2008 valuations and, as a result, have provided for £233,000 against capital expenditure incurred in the first 6 months to 30th June, 2009. Whilst we have let 17,000 sq.ft. of warehouse space at Southern Gateway, Speke so far this year, we anticipate losing further rental income at Newton-le- Willows later in the year as two leases expire. We understand that the present distribution tenant is unlikely to renew all 217,000 sq.ft. currently occupied. Strenuous efforts are being made to improve lettings but there is a significant amount of industrial and distribution space available on the market in the North West. Our recently constructed warehouse at Northern Gateway, Knowsley has also proved difficult to let but we remain optimistic of a potential sale of this facility. We are implementing planning consents at Newton-le-Willows, Vincent Lane, Dorking and a 6 acre site at Knowsley. We expect to have positive news on the Newton-le-Willows application early next year where an application for 400 houses and around 25,000 sq.ft. of commercial space is to be submitted shortly. It is our understanding that the local council are likely to be supportive of our plans. Outline terms have been agreed for the sale of Vincent Lane, Dorking to a major food retailer and discussions are ongoing with the local council to achieve the required planning consent. A new planning application is being submitted in respect of our 6 acre development site in Knowsley to include food retail. Terms have been agreed with Mole Valley council for the release of an onerous Section 106 agreement on our development site in Dorking. This had restricted lettings to local users and the release of this condition will enable us to market the unfettered site to secure national as well as local tenants. Investment portfolio Investments sales during the first half year amounted to £575,000 resulting in net realised gains £186,000. We continue with the policy of reducing the investment portfolio when the opportunities arise. The value of the portfolio increased by £2,675,000 over the period to £9,017,000 at the 30th June, 2009. The principal increase was that of our largest investment, which continues to be Hallin Marine, recording a rise of £2,368,000 to £5,476,000. As mentioned above however the share price has since fallen back. Future prospects Our approach of progressively improving our property portfolio and the opportunity to release potential planning gains will to some extent offset the continued downward pressure on the commercial property market. Capital growth (all properties), as measured by the Investment Property Data Bank (IPD), has decreased by 13.3% since 1st January, 2009. Signs are looking positive that we may be close to the bottom of the market as the IPD index produced the lowest negative capital growth decline in two years, falling by 0.13% in July 2009. The market however remains difficult through falling rents and tenant failure. We continue to remain cautiously optimistic that we will gradually see a return in capital value appreciation and more liquidity in the debt markets to enable a slow recovery in 2010. We would like to thank the executive board and the staff for their efforts in securing improved results and extending bank loans in what has continued to be a very difficult period. Tony Ebel Chairman 27th August, 2009 GRESHAM HOUSE PLC INTERIM RESULTS UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Half year ended Half year ended Year ended 30 June 2009 30 June 2008 31 December 2008 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Income: Dividend and interest income 140 - 140 157 - 157 266 - 266 Rental income 1,027 - 1,027 1,222 - 1,222 2,451 - 2,451 Other operating income 46 - 46 195 - 195 (6) - (6) ----- ----- ----- ----- ----- ----- ----- ----- ----- Total Revenue 1,213 - 1,213 1,574 - 1,574 2,711 - 2,711 Gains/(losses) on investments held at fair value - 2,861 2,861 - 395 395 - (6,330)(6,330) Movement in fair value of property investments - (233) (233) - (3,292)(3,292) -(13,512)(13,512) Profit on disposal of property,plant & equipment - - - - - - - 507 507 ----- ----- ----- ----- ----- ----- ----- ----- ----- Total income and gains/ (losses) on investments 1,213 2,628 3,841 1,574 (2,897)(1,323) 2,711(19,335)(16,624) ----- ----- ----- ----- ------ ------ ----- ------ ------ Operating Costs Property out- goings and impairments (559) - (559) (411) - (411) (3,291) - (3,291) Administrative overheads (464) - (464) (700) - (700) (1,462) - (1,462) ----- ----- ----- ----- ----- ----- ----- ----- ----- (1,023) - (1,023)(1,111) - (1,111) (4,753) - (4,753) ----- ----- ----- ----- ----- ----- ----- ----- ----- Group operating profit/(loss) 190 2,628 2,818 463 (2,897)(2,434)(2,042)(19,335)(21,377) Finance costs (320) - (320) (498) - (498) (927) - (927) Share of associate's operating loss (10) - (10) (50) - (50) (171) - (171) ----- ----- ----- ----- ----- ----- ----- ----- ----- Group and share of associate's operating loss before taxation (140) 2,628 2,488 (85)(2,897)(2,982)(3,140)(19,335)(22,475) Taxation - - - - 373 373 - 848 848 ----- ----- ----- ----- ----- ----- ----- ----- ------ Profit/(loss) and total comprehensive income for the period (140) 2,628 2,488 (85)(2,524)(2,609)(3,140)(18,487)(21,627) ===== ===== ===== ===== ===== ===== ===== ====== ====== Attributable to: Equity holders of the parent (312) 2,646 2,334 (10)(2,388)(2,398)(2,874)(17,943)(20,817) Minority interests 172 (18) 154 (75) (136) (211) (266) (544) (810) ----- ----- ----- ----- ----- ----- ----- ----- ------ (140) 2,628 2,488 (85)(2,524)(2,609)(3,140)(18,487)(21,627) ===== ===== ===== ===== ===== ===== ===== ====== ====== Basic earnings/(loss) per Ordinary share (note 9) 47.8p (49.2p) (426.6p) ======= ===== ======= Diluted earnings/(loss) per Ordinary share (note 9) 47.8p (49.2p) (426.6p) ======= ===== ======= GRESHAM HOUSE PLC INTERIM RESULTS UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Half year ended 30 June 2009 Equity attributable Ordinary Share to equity share Share option Capital Retained share Minority capital premium reserve reserve Earnings holders interest Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2008 1,220 847 42 30,363 (12,650) 19,822 331 20,153 Loss for the period being total income and expense for the period - - - 2,646 (312) 2,334 154 2,488 Ordinary dividend paid (note 8) - - - - (49) (49) - (49) ----- ----- ----- ------ ----- ------ ----- ----- Balance at 30 June 2009 1,220 847 42 33,009 (13,011) 22,107 485 22,592 ===== ===== ===== ====== ====== ====== ===== ====== Half year ended 30 June 2008 Equity attributable Ordinary Share to equity share Share option Capital Retained share Minority capital premium reserve reserve Earnings holders interest Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2007 1,219 831 44 48,306 (9,538) 40,862 1,141 42,003 Loss for the period being total income and expense for the period - - - (2,388) (10) (2,398) (211)(2,609) Ordinary dividend paid (note 8) - - - - (244) (244) - (244) ----- ----- ----- ------ ----- ------ ----- ----- Balance at 30 June 2008 1,219 831 44 45,918 (9,792) 38,220 930 39,150 ===== ===== ===== ====== ===== ====== ===== ====== Year ended 31 December 2008 Equity attributable Ordinary Share to equity share Share option Capital Retained share Minority capital premium reserve reserve Earnings holders interest Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2007 1,219 831 44 48,306 (9,538) 40,862 1,141 42,003 Loss for the period being total income and expense for the period - - - (17,943) (2,874) (20,817) (810)(21,627) Ordinary dividend paid (note 8) - - - - (244) (244) - (244) Issue of shares 1 16 - - - 17 - 17 Share based payments - - (2) - 6 4 - 4 ----- ----- ----- ------ ----- ------ ----- ----- Balance at 31 December 2008 1,220 847 42 30,363 (12,650) 19,822 331 20,153 ===== ===== ===== ====== ====== ====== ===== ====== GRESHAM HOUSE PLC INTERIM RESULTS UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2009 30 June 30 June 31 December 2009 2008 2008 Assets £'000 £'000 £'000 Non current assets Investments held at fair value 9,017 14,347 6,688 Property investments 25,750 35,740 25,750 Investment in associate - - - Property, plant and equipment 3 481 3 ------- ------- ------- Total non current assets 34,770 50,568 32,441 ------- ------- ------- Current assets Trade and other receivables 358 683 361 Accrued income and prepaid expenses 514 645 1,721 Other current assets 3,361 5,985 3,432 Cash and cash equivalents 2,741 1,180 1,839 ------- ------- ------- Total current assets 6,974 8,493 7,353 ------- ------- ------- Total assets 41,744 59,061 39,794 ------- ------- ------- Current liabilities Trade and other payables 1,374 1,799 1,702 Short term borrowings 7,363 11,216 17,939 ------- ------- ------- Total current liabilities 8,737 13,015 19,641 ------- ------- ------- Total assets less current liabilities 33,007 46,046 20,153 Non current liabilities Long term borrowings 10,415 6,421 - Deferred taxation - 475 - ------- ------- ------- 10,415 6,896 - ------- ------- ------- Net assets 22,592 39,150 20,153 ======= ======= ======= Capital and reserves Ordinary share capital (note 10) 1,220 1,219 1,220 Share premium 847 831 847 Share based payments 42 44 42 Capital reserve 33,009 45,918 30,363 Retained earnings (13,011) (9,792) (12,650) ------- ------- ------- Equity attributable to equity shareholders 22,107 38,220 19,822 Minority interest 485 930 331 ------- ------- ------- Total equity 22,592 39,150 20,153 ======= ======= ======= Basic net asset value per ordinary share 452.8p 783.7p 406.0p (note 11) ======= ======= ======= Diluted net asset value per ordinary share 452.8p 781.3p 405.3p (note 11) ======= ======= ======= GRESHAM HOUSE PLC INTERIM RESULTS UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 30 JUNE 2009 12 months to 6 months to 6 months to 31 December 30 June 2009 30 June 2008 2008 £'000 £'000 £'000 Cashflow from operating activities Investment income received 117 104 166 Interest received 23 53 100 Rental income received 1,027 1,071 2,431 Other cash payments (984) (613) (1,601) ------- ------- ------- Net cash generated from operations 183 615 1,096 (note 14) Interest paid on property loans (331) (506) (967) ------- ------- ------- Net cash flows from operating activities (148) 109 129 ======= ======= ======= Cash flows from investing activities Purchase of investments (31) (225) (264) Investment in associate (10) (50) (171) Sale of investments 564 538 1,511 Expenditure on investment properties (233) (224) (513) Disposal of property, plant & equipment 980 - - Disposal of investment properties - - 56 Purchase of developments in hand (10) - (260) ------- ------- ------- 1,260 39 359 ======= ======= ======= Cash flows from financing activities Repayment of loans (10,804) (221) (443) Receipt of loans 10,643 160 684 Share capital issued - - 17 Equity dividends paid (49) (244) (244) ------- ------- ------- (210) (305) 14 ======= ======= ======= Increase/(decrease) in cash and cash equivalents 902 (157) 502 Cash and cash equivalents at start of period 1,839 1,337 1,337 ------- ------- ------- Cash and cash equivalents at end of period 2,741 1,180 1,839 ======= ======= ======= GRESHAM HOUSE PLC INTERIM RESULTS NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 REPORTING ENTITY Gresham House plc ("the Company") is a company incorporated in England. The unaudited consolidated interim financial statements of the Company as at and for the six months ended 30th June 2009 comprise the Company and its subsidiary undertakings (together referred to as the "Group"). All intra-group transactions, balances, income and expenses are eliminated on consolidation. 2 STATEMENT OF COMPLIANCE These unaudited consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting. They do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. The Group has adopted IAS 1 (Revised) Presentation of Financial Statements for the first time in these interim financial statements. The unaudited consolidated interim financial statements should be read in conjunction with the consolidated financial statements of the Group and Company as at and for the year ended 31 December 2008 which were prepared in accordance with IFRS as adopted by the European Union and those parts of the Companies Act 1985 applicable to companies reporting under IFRS, and have been reported on by the Company's auditors. The auditors' report was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The unaudited consolidated interim financial statements were approved by a duly appointed and authorised committee of the Board of Directors on 27 August 2009. The financial information for the half years ended 30 June 2009 and 30 June 2008 has not been audited and the auditors have not reported on or reviewed these interim financial statements. The information for the year ended 31 December 2008 has been extracted from the latest published audited financial statements. 3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies applied by the Group in these unaudited consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2008. Where presentational guidance set out in the Statement of Recommended Practice ("the SORP") for investment trusts issued by the Association of Investment Companies ("the AIC") is consistent with the requirements of IFRS and appropriate in the context of the Company's activities, the directors have sought to prepare the interim financial statements on a basis compliant with the recommendations of the SORP. 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of the unaudited consolidated interim financial statements requires the use of estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these unaudited consolidated interim financial statements, the significant judgements made by management were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2008. 5 PRINCIPAL RISKS The principal risks of the Group are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2008. 6 INCOME Half year Half year ended 30 ended 30 Year ended 31 June 2009 June 2008 December 2008 Income from investments £'000 £'000 £'000 Dividend income (UK Listed) 117 104 166 Interest receivable: bank and brokers 9 21 63 Other 14 32 37 ----- ----- ----- 140 157 266 Rental income 1,027 1,222 2,451 ----- ----- ----- 1,167 1,379 2,717 ----- ----- ----- Other operating income Dealing profits and losses (7) 27 (178) Management fees receivable 44 124 141 Other 9 44 31 ----- ----- ----- 46 195 (6) ----- ----- ----- Total income 1,213 1,574 2,711 ===== ===== ===== Total income comprises: Dividends 117 104 166 Interest 23 53 100 Other income 1,073 1,417 2,445 ----- ----- ----- 1,213 1,574 2,711 ===== ===== ===== 7 FINANCE COSTS Half year Half year ended 30 ended 30 Year ended 31 June 2009 June 2008 December 2008 £'000 £'000 £'000 Interest payable on loans and overdrafts 320 498 927 ===== ===== ===== In addition: Interest capitalised on development properties 43 147 269 ===== ===== ===== 8 DIVIDENDS Half year Half year ended 30 ended 30 Year ended 31 June 2009 June 2008 December 2008 £'000 £'000 £'000 Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 31st December, 2008 of 1p (2007: 5p) per share 49 244 244 ======= ======= ======= 9 EARNINGS PER SHARE Basic and diluted earnings per share The Basic and diluted earnings per share figure is based on the net profit attributable to equity holders of the parent for the half year of £2,334,000 (half year ended 30 June, 2008: loss of £2,398,000; year ended 31 December, 2008: loss of £20,817,000) and on 4,881,880 (half year ended 30 June, 2008: 4,876,880; year ended 31 December, 2008: 4,879,694) ordinary shares, being the weighted average number of ordinary shares in issue during the period. The calculation for diluted earnings per share for the period ended 30 June, 2009 should have included a figure in respect of shares deemed to have been issued at nil consideration as a result of options granted. However as this would have reduced the weighted average number of shares in issue by 9,247 and hence result in the diluted earnings per share being greater than the basic earnings per share they have not been recognised. The calculation for the period ended 30 June, 2008 and year ended 31 December, 2008 is the same as the basic earnings per share as the result for the respective periods was a loss. The earnings per ordinary share figures detailed above can be further analysed between revenue and capital as follows:- Half year Half year ended 30 ended 30 Year ended 31 June 2009 June 2008 December 2008 £'000 £'000 £'000 Net revenue loss attributable to equity holders of the parent (312) (10) (2,874) Net capital profit/(loss) attributable to equity holders of the parent 2,646 (2,388) (17,943) ------- ------- ------- Net total profit/(loss) 2,334 (2,398) (20,817) ======= ======= ======= Weighted average number of ordinary shares in issue during the period Basic and diluted 4,881,880 4,876,880 4,879,694 Basic and diluted earnings per share Pence Pence Pence Revenue (6.4) (0.2) (58.9) Capital 54.2 (49.0) (367.7) ------- ------- ------- Total basic and diluted earnings per share 47.8 (49.2) (426.6) ======= ======= ======= 10 ORDINARY SHARE CAPITAL 30 30 31 June 2009 June 2008 December 2008 Share capital £'000 £'000 £'000 Authorised: £4,750,000 (30 June 2008 & 31 December 2008: £4,750,000) Allotted: Ordinary - 4,881,880 (30 June 2008:4,876,880, 31 December 2008: 4,881,880) fully paid shares of 25p each 1,220 1,219 1,220 ======= ======= ======= 11 NET ASSET VALUE PER SHARE (i) As at 30 June, 2009 Basic and diluted net asset value Basic and diluted net asset value per ordinary share is based on Equity attributable to equity shareholders at each respective period end and on 4,881,880 ordinary shares being the number of ordinary shares in issue at the period end. The calculation for diluted net asset value should have included a figure in respect of shares deemed to have been issued at nil consideration as a result of options granted. However as this would have reduced the number of ordinary shares in issue at the period end by 9,247 and hence result in the diluted net asset value per share being greater than the basic net asset value per share they have not been recognised. (ii) As at 30 June, 2008 and 31 December, 2008: Basic Basic net asset value per ordinary share is based on Equity attributable to equity shareholders at each respective period end on 4,876,880 (year ended 31 December, 2008: 4,881,880) ordinary shares being the number of ordinary shares in issue at the period end. Diluted Diluted net asset value per ordinary share is based on Equity attributable to equity shareholders at each respective period end and on 4,891,946 (year ended 31 December, 2008: 4,890,788) ordinary shares. The number of shares is based upon the number of shares in issue at the period end together with those number of shares deemed to have been issued at nil consideration as a result of option granted. 12 INVESTMENTS - SECURITIES As at 30 June 2009 the Company's ten largest investments were:- Market % of Value Portfolio £'000 UK Listed Securities Welsh Industrial Investment Trust plc 473 5.2 Securities dealt in under AIM Byotrol plc 104 1.2 Hallin Marine Subsea International plc 5,476 60.7 Plus Markets Group plc 181 2.0 Portland plc 144 1.6 SpaceandPeople plc 873 9.7 Securities dealt in under PLUS Market Wheelsure Holdings plc 175 1.9 Unlisted Securities Audiogravity Holdings Ltd 228 2.5 Gizmo Packaging Limited 188 2.1 Strathclyde University Incubator Limited 120 1.3 ------ ----- 7,962 88.2 ====== ===== 13 RELATED PARTY TRANSACTIONS Mr A. G. Ebel has a controlling interest in Watlington Securities Limited, a company which invoiced the Group a sum of £nil (half year ended 30 June, 2008: £nil; year ended 31 December, 2008: £14,910) during the period. Conversely the Group invoiced the same company £33,969 (half year ended 30 June, 2008: £20,000; year ended 31 December, 2008: £57,364). At the period end there remained balances outstanding of £nil (half year ended 30 June, 2008: £705; year ended 31 December, 2008: £nil) and £5,214 (half year ended 30 June, 2008: £23,500; year ended 31 December, 2008: £nil) respectively. Mr D Lucie-Smith has an interest in Pelham (London) Limited which invoiced the Group a sum of £11,504 (half year ended 30 June, 2008: £nil; year ended 31 December, 2008: £9,264). At the period end there remained balances outstanding of £nil (half year ended 30 June, 2008: £nil; year ended 31 December, 2008: £9,264). The Rowe Trust holds an interest of 644,209 (year ended 31 December, 2008: 644,209) ordinary shares in the Company. Mrs R H Chopin-John is a trustee of the Rowe Trust but has no beneficial interest. Monies due to Mr D Lucie-Smith of £62,500 (half year ended 30 June, 2008: £nil; year ended 31 December, 2008: £29,000) and Mr J Lorimer of £50,000 (half year ended 30 June, 2008: £nil; year ended 31 December, 2008: £23,000) have been invoiced by businesses in which they have a material interest. All figures shown above exclude VAT other than the balances outstanding at the respective period ends which are shown inclusive of VAT. 14 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS Half year Half year ended 30 ended 30 Year ended 31 June 2009 June 2008 December 2008 £'000 £'000 £'000 Revenue return before taxation (140) (85) (3,140) Interest payable 320 498 927 Share based payments - - 4 Depreciation - 6 11 Share of associate's losses 10 50 171 ------- ------- ------- 190 469 (2,027) (Increase)/decrease in current assets 310 (174) 2,869 Increase/(decrease) in current liabilities (317) 320 254 ------- ------- ------- 183 615 1,096 ======= ======= ======= 15 SEGMENTAL REPORTING Property Investment Investment Consolidated £'000 £'000 £'000 Half year ended 30 June 2009 Revenue 163 1,027 1,190 ======== ======== ======== Result 3,024 235 3,259 ======== ======== Unallocated corporate expenses (464) -------- Operating loss 2,795 Share of associate's loss (10) Interest expense (320) Interest income 23 -------- Profit before taxation 2,488 ======== Half year ended 30 June 2008 Revenue 269 1,251 1,520 ======== ======== ======== Result 664 (2,456) (1,792) ======== ======== Unallocated corporate expenses (696) -------- Operating profit (2,488) Share of associate's loss (50) Interest expense (498) Interest income 54 -------- Loss before taxation (2,982) ======== Year ended 31 December 2008 Revenue 65 2,546 2,611 ======== ======== ======== Result (5,758) (14,257) (20,015) ======== ======== Unallocated corporate expenses (1,462) -------- Operating loss (21,477) Share of associate's loss (171) Interest expense (927) Interest income 100 -------- Loss before taxation (22,475) ======== All revenue is derived from operations within the United Kingdom. Responsibility Statement of the Directors in respect of the unaudited condensed consolidated interim financial statements We confirm that to the best of our knowledge: (a) the unaudited consolidated interim financial statements, which have been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; (b) the Chairman's interim statement and management report includes a fair review of the information required by: (i)DTR 4.2.7R of the Disclosure and Transparency Rule, being an indication of important events that have occurred during the first six months of the financial year and their impact on the unaudited consolidated financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and (ii)DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. Principal risks and uncertainties The Board consider the principal risks and uncertainties relating to the Group for the next six months to be the same as detailed in the consolidated financial statements for the year ended 31 December 2008. Full details of the risks and uncertainties are detailed under the Investment Policy section of those financial statements. The principal risks to the business are:- Economic Strategic and investment Regulatory Financial and operating Market and market liquidity; and Asset liquidity. A G Ebel D Lucie-Smith Chairman Chief Executive Officer

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