Final Results part 2
Quintain Estates & Development PLC
13 June 2007
QUINTAIN ESTATES AND DEVELOPMENT PLC
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2007
2007 2006
Notes £000 £000
Revenue from continuing operations 2 43,426 42,051
Cost of sales in respect of continuing operations 2 (12,542) (15,295)
Gross profit from continuing operations 30,884 26,756
Administrative expenses 4 (25,819) (22,660)
Operating profit before recognition of results from
non-current property asset sales and revaluation 5,065 4,096
Profit from sale of non-current property assets 11,823 14,188
Profit from sale of shares in subsidiaries 6,786 -
Gain on revaluation of investment properties 12,181 23,911
Deficit on revaluation of investment properties (924) (1,777)
Deficit on revaluation of development properties (182) (1,834)
Reversal of deficit on revaluation of development 1,255 3,598
properties
Share of profit from joint ventures 12i 23,011 32,864
Share of (loss) profit from associates 12ii (455) 393
Operating profit before net finance expenses 58,560 75,439
Interest payable (12,174) (9,041)
Change in fair value of derivative financial instruments 1,493 (2,994)
Finance expenses (10,681) (12,035)
Finance income 3,759 1,549
Net finance expenses 5 (6,922) (10,486)
Profit before tax 51,638 64,953
Current tax (8,347) (3,033)
Deferred tax 1,508 (2,429)
Tax charge for the year 6i (6,839) (5,462)
Profit after tax but before result from discontinued operations 44,799 59,491
Loss from discontinued operations, net of tax 7 (34) (2,829)
Profit for the financial year 44,765 56,662
Earnings per share from continuing operations (pence): 8i(a)
basic 35.0 46.1
diluted 34.3 45.2
Earnings per share from total operations (pence): 8i(b)
basic 34.9 43.9
diluted 34.3 43.0
Dividends per share (pence): 9
interim (paid) 3.50 3.25
final (proposed) 8.25 7.25
Total 11.75 10.50
In accordance with IAS 10, 'Events after the Balance Sheet Date', the
Consolidated Balance Sheet reflects dividends which have been paid in the year.
Proposed dividends are shown for information purposes only.
QUINTAIN ESTATES AND DEVELOPMENT PLC
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 31 March 2007
2007 2006
Notes £000 £000
Foreign currency translation differences (319) 278
Gain on revaluation of development properties 179,284 100,798
Deficit on revaluation of other non-current investments (882) -
Effective portion of changes in fair value of cashflow hedges, net of 7,047 (1,676)
recycling
Share of recognised income and expense in joint ventures, net of tax 12i 546 (102)
Tax recognised on income and expense recognised directly in equity 6iii (44,328) (31,435)
Net income recognised directly in equity 141,348 67,863
Profit for the financial year 44,765 56,662
Total recognised income and expense for the financial year 186,113 124,525
QUINTAIN ESTATES AND DEVELOPMENT PLC
CONSOLIDATED BALANCE SHEET
as at 31 March 2007
2007 2006
Notes £000 £000
Non-current assets
Investment properties 10 288,938 290,088
Development properties 10 769,305 599,455
Owner-occupied properties, plant and equipment 11 1,470 942
Investment in joint ventures 12i 170,099 120,076
Investment in associates 12ii 1,222 1,677
Other non-current investments 12iii 3,044 2,716
Non-current receivables 13 45,349 -
Total non-current assets 1,279,427 1,014,954
Current assets
Trading properties 14 6,831 6,814
Trade and other receivables 15 73,667 72,312
Current investments 16 4 7
Cash and cash equivalents 20i 36,048 7,954
Total current assets 116,550 87,087
Total assets 1,395,977 1,102,041
Current liabilities
Bank loans and other borrowings 18 (3,000) (4,432)
Trade and other payables 17 (37,466) (49,104)
Current tax liability (9,216) (1,521)
Total current liabilities (49,682) (55,057)
Non-current liabilities
Bank loans and other borrowings 18 (333,924) (246,626)
Deferred tax liability 6iv (149,620) (106,800)
Obligations under finance leases 19 (11,734) (12,213)
Other payables (4,919) (4,670)
Total non-current liabilities (500,197) (370,309)
Total liabilities (549,879) (425,366)
Net assets 846,098 676,675
Equity
Issued capital 23 32,457 32,324
Share premium account 22 50,797 47,265
Revaluation reserve 22 370,814 248,836
Other capital reserves 22 108,136 113,227
Cashflow hedge reserve 22 671 (4,808)
Translation reserve 22 86 405
Retained earnings 22 292,481 242,920
Own shares held reserve 22 (9,344) (3,494)
Equity shareholders' funds 846,098 676,675
Net asset value per share (pence): 8ii
basic 660 526
diluted 655 516
Approved by the Board of Directors and signed on its behalf by:
ADRIAN WYATT REBECCA WORTHINGTON
Director Director
13 June 2007
QUINTAIN ESTATES AND DEVELOPMENT PLC
CONSOLIDATED CASHFLOW STATEMENT
for the year ended 31 March 2007
2007 2006
Notes £000 £000
Operating activities
Profit for the financial year 44,765 56,662
Adjustments for:
Short leasehold amortisation 248 408
Depreciation of plant and equipment 472 441
Cost relating to share-based payment schemes 3,718 1,180
Net finance expenses 6,922 10,486
Profit from sale of non-current property assets (11,823) (14,188)
Profit from sale of shares in subsidiaries (6,786) -
Gain on revaluation of investment properties (12,181) (23,911)
Deficit on revaluation of investment properties 924 1,777
Deficit on revaluation of development properties 182 1,834
Reversal of deficit on revaluation of development properties (1,255) (3,598)
Share of profit from joint ventures (23,011) (32,864)
Share of loss (profit) from associates 455 (393)
Loss from sale of plant and equipment 61 30
Impairment of other investments 69 632
Tax on continuing operations 6,839 5,462
Tax on discontinued operations (14) (1,213)
9,585 2,745
Decrease in trade and other receivables 1,870 7,830
(Decrease) increase in trade and other payables (7,061) 430
(Increase) decrease in trading properties (17) 3,313
Cash generated from operations 4,377 14,318
Interest paid (18,930) (15,395)
Interest received 3,587 1,526
Tax paid (520) (231)
Net cashflow from operating activities (11,486) 218
Investing activities
Purchase and development of property assets (133,096) (112,058)
Purchase of plant and equipment (1,010) (2,365)
Proceeds from sales of non-current assets 117,595 88,390
Tax paid on sales of non-current assets (3,230) (5,486)
Proceeds from sale of current investments 3 12
Proceeds from sale of shares in subsidiary companies 20,476 -
Acquisition of shares in subsidiary companies - (7,335)
Acquisition of investment in joint ventures (2,335) (553)
Loans to joint ventures and associates (17,588) (24,474)
Distributions received from joint ventures 8,400 3,002
Acquisition of other investments (54,962) (3,160)
Proceeds from sale of other investments 7,851 -
Net cashflow from investing activities (57,896) (64,027)
Financing activities
Issue of shares 1,120 247
Purchase of own shares for cancellation - (108)
Investment in own shares (6,060) (1,955)
Proceeds from new borrowings 315,000 281,004
Repayment of borrowings (197,432) (205,150)
Payment of loan issue costs (431) (400)
Payment of finance lease liabilities (873) (190)
Equity dividends paid (13,744) (12,867)
Net cashflow from financing activities 97,580 60,581
Net increase (decrease) in cash and cash equivalents 28,198 (3,228)
Cash and cash equivalents at start of year 7,954 11,090
Effect of exchange rate fluctuations on cash held (104) 92
Cash and cash equivalents at end of year 36,048 7,954
Net cashflow from discontinued operations included in net cashflow
from operating activities 7 (489) (2,374)
QUINTAIN ESTATES AND DEVELOPMENT PLC
NOTES TO THE ACCOUNTS
for the year ended 31 March 2007
1 ACCOUNTING POLICIES
i) BASIS OF PREPARATION
The Group's financial statements have been prepared and approved by the Board in
accordance with International Financial Reporting Standards and interpretations
issued by the International Financial Reporting Interpretations Committee as
adopted by the European Union ('IFRS') and those parts of the Companies Act 1985
applicable to companies reporting under IFRS.
The financial statements are presented in Sterling and have been prepared on an
historical cost basis except that investment and development properties, other
non-current investments and certain financial instruments as described in
section xvii below have been stated at fair value.
The Group has adopted the amendments to IAS 39, 'Financial Instruments:
Recognition and Measurement', and IFRS 4, 'Insurance Contracts', which apply in
relation to financial guarantee contracts, both of which are effective for
accounting periods commencing on or after 1 January 2006. Where Group companies
enter into financial guarantee contracts to guarantee the indebtedness or
obligations of other companies within the Group, these are considered to be
insurance arrangements and accounted for as such. In this respect, the guarantee
contract is treated as a contingent liability until such time as it becomes
probable that the guarantor will be required to make a payment under the
guarantee. Accordingly, the amendments have not had any impact upon these
financial statements.
As at the date of these financial statements, IFRS 7, 'Financial Instruments:
Disclosure', had been issued but was not effective and has not been adopted by
the Group. On adoption, the Standard will affect only presentation and
disclosure and will not result in any adjustments to the financial statements.
ii) SIGNIFICANT JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements under IFRS requires the Board to make
judgements, estimates and assumptions that affect the application of accounting
policies, the reported amounts of assets and liabilities as 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 judgements that are not readily apparent from other sources. However,
the actual results may differ from these estimates.
The measurement of fair value constitutes the main area of judgement exercised
by the Board in respect of the Group's results. In relation to the Group's
investment and development properties, the Board has relied upon the external
valuations carried out by professionally qualified valuers in accordance with
the Appraisal and Valuation Standards of the Royal Institution of Chartered
Surveyors. Copies of the valuation reports of Savills Commercial Limited and
Jones Lang LaSalle Limited, which together account for 98.5% of these categories
of non-current assets, and of Christie + Co which values the investment
properties within Quercus, currently the Group's principal joint venture, are
contained within the annual report.
In respect of derivative financial instruments, the Board has relied on the
valuation carried out by JC Rathbone Associates Limited, financial risk
consultants, and the basis for this exercise is referred to below in section
xvii of this note and in note 21.
The Board has also exercised its judgement in relation to the recognition of
certain deferred tax assets, which is discussed in further detail in note 6iv,
and in assessing the recoverability of trade receivables by reference to their
age and the ability of debtors to pay. Other areas of judgement, risk and
uncertainty which are relevant to an understanding of these results and the
Group's financial position are referred to in the Operating and Financial
Review.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised, if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
iii) BASIS OF CONSOLIDATION
The Group's financial statements consolidate those of the Company and its
subsidiaries, together referred to as the Group, and equity account the Group's
interest in joint ventures and associates. The Parent Company financial
statements present information about the Company as a separate entity and not
about the Group. The Company has elected to prepare its parent company financial
statements in accordance with UK GAAP.
Subsidiaries are those entities controlled by the Group. Control exists when
the Group has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that are currently exercisable or
convertible are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date it ceases.
A joint venture is an undertaking in which the Group has a long term interest
and over which it exercises joint control. An associate is an entity in which
the Group has significant influence but not control over financial and operating
policies. The Group equity accounts for its share of net profit after tax of
joint ventures and associates, which includes its share of fair value
adjustments to their investment properties, through the Income Statement. The
effective portion of changes in the fair value of cashflow hedges within joint
ventures less any related tax is recognised directly in equity. All other
changes are recognised in the Income Statement. The Group's interest in the net
assets of joint ventures and associates is included in the Consolidated Balance
Sheet.
iv) FOREIGN CURRENCY
Assets and liabilities of foreign operations are translated into Sterling at
exchange rates ruling at the Balance Sheet date. Operating income and expenses
are translated at average exchange rates. The year end and average rates used
for these purposes were as follows:
Year end Year end Average Average
2007 2006 2007 2006
France £1= €1.47 €1.44 €1.49 €1.47
United States £1= $1.96 $1.74 $1.89 $1.79
Exchange differences arising from the translation of the net investment in
foreign operations are reflected in the translation reserve and released to the
Income Statement upon disposal of the foreign operation.
v) REVENUE AND COST OF SALES
Revenue is stated net of VAT and comprises rental income, proceeds from sales of
trading properties, income from hotel operations, fees from fund management,
commissions and other income.
Rental income from investment and development properties leased out under
operating leases is recognised in the Income Statement on a straight-line basis
over the term of the lease. Contingent rents such as turnover rents and indexed
rents are recognised as income in the periods in which they are earned. Rent
reviews are recognised when such reviews have been agreed with tenants.
Lease incentives are recognised as an integral part of the net consideration for
the use of the property and amortised on a straight-line basis over the term of
the lease, or the period to the first tenant break, if shorter.
Property operating costs are expensed as incurred including any element of
service charge expenditure not recovered from tenants.
Sales of trading properties are recognised on the unconditional exchange of
contracts by the Balance Sheet date.
Income from hotel operations represents income receivable from the Plaza Hotel,
Wembley prior to the redevelopment of the site, for which outline planning
consent has been obtained.
Fees from fund management relate to base and performance fees receivable in
respect of asset management together with property procurement fees.
Performance fees are recognised when it is likely that performance criteria have
been met.
Other income comprises income receivable from derivative instruments entered
into by the Group, tenant lease surrender premiums, insurance commission, car
parking receipts, property management fees and miscellaneous income.
vi) PURCHASE AND DISPOSAL OF PROPERTIES HELD AS NON-CURRENT ASSETS
Property purchases and sales are recognised in the accounts on the date of
unconditional exchange or, where an exchange is conditional, on the date that
conditions have been satisfied. Profits or losses arising on disposal are
calculated by reference to the carrying value of the asset at the beginning of
the year, adjusted for subsequent capital expenditure.
vii) IMPAIRMENT
The Group's assets are reviewed at each reporting date to determine whether
there is any indication of impairment. If such indication becomes evident, the
asset's recoverable amount is estimated and an impairment loss recognised
whenever the carrying amount of the asset exceeds its recoverable amount.
The recoverable amount of an asset is the greater of its net selling price and
its value-in-use. The value-in-use is determined as the net present value of
the future cashflows expected to be derived from the asset, discounted using a
pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. Any impairment of financial
assets is based on the original effective interest rate attributable to the
financial asset on acquisition.
viii) EMPLOYEE BENEFITS
Pensions
Contributions to employees' personal pension plans are charged to the Income
Statement as incurred.
Share-based payment schemes
The fair value of equity rights is estimated using the Black Scholes and
binomial models at the date of grant to Directors and staff and is dependent on
factors such as the exercise price, expected volatility, option price and risk
free interest rate. The fair value is then amortised through the Income
Statement on a straight-line basis over the vesting period. Expected volatility
is determined based on the historic share price volatility (market price) for
the Company on the grant date over a period matched to the expected life of the
awards.
ix) CAPITALISATION OF BORROWING COSTS
Net borrowing costs in respect of capital expenditure on properties under
development or undergoing refurbishment are capitalised. Interest is capitalised
using the Group's weighted average cost of borrowing from the commencement of
development work until the date of practical completion. The capitalisation of
finance costs is suspended if there are prolonged periods when development
activity is interrupted. All other borrowing costs are recognised in the Income
Statement in the period in which they are incurred.
x) TAX
Tax is included in the Income Statement except to the extent that it relates to
items recognised directly in equity, in which case the related tax is recognised
in equity. Current tax is the expected tax payable on the taxable income for the
year using tax rates applicable at the Balance Sheet date. Tax payable upon the
realisation of revaluation gains recognised in prior periods is recorded as a
current tax charge with a release of the associated deferred taxation.
Deferred tax is provided on all temporary differences, except in respect of
investments in subsidiaries and joint ventures where the timing of the reversal
of the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred tax is provided using the Balance Sheet liability method in respect of
temporary differences between the carrying amount of assets and liabilities for
financial reporting purposes and amounts used for taxation purposes.
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 applicable 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.
xi) DISCONTINUED OPERATIONS
In accordance with IFRS 5, 'Non-current Assets held for Sale and Discontinued
Operations', the loss from discontinued operations is shown in the Income
Statement net of tax.
xii) INVESTMENT PROPERTIES
Investment properties are properties owned or leased by the Group which are held
either for long term rental growth or for capital appreciation or both.
Investment property is initially recognised at cost including related
transaction costs and valued annually by professionally qualified external
valuers.
Additions to investment properties consist of costs of a capital nature and in
the case of investment properties under development, capitalised interest.
Investment properties are independently valued annually by external valuers at
market value. The valuations are prepared by considering the aggregate of the
net annual rents receivable from the properties and where relevant, associated
costs. A yield which reflects the specific risks inherent in the net cashflows
is then applied to the net annual rentals to arrive at the property valuation.
Gains or losses arising from changes in the fair value of investment property
are included in the Income Statement of the period in which they arise.
When the Group redevelops an existing investment property for continued future
use as an investment property, the property remains an investment property and
is not reclassified.
xiii) DEVELOPMENT PROPERTIES
Properties acquired with the intention of redevelopment are classified as
development properties and stated at fair value in accordance with IAS 16, '
Property, Plant and Equipment'. Changes in fair value are recognised through
equity in the revaluation reserve. However, a deficit on revaluation of a
development property is recognised in the Income Statement to the extent it
exceeds any surplus held in the revaluation reserve relating to a previous
revaluation of that property. Similarly, a surplus on revaluation is credited
to the Income Statement to the extent of a deficit previously charged.
All costs directly associated with the purchase and construction of a
development property are capitalised. When development properties are
completed, they are reclassified as investment properties and any accumulated
balance on revaluation is transferred to retained earnings. Development
properties which are independently valued annually by external professional
valuers are stated at estimated market value on completion less estimated costs
to complete.
xiv) LEASES
The Group as lessor
Leases are classified according to the substance of the transaction. A lease
that transfers substantially all the risks and rewards of ownership to the
lessee is classified as a finance lease. All other leases are classified as
operating leases.
The Board has exercised judgement in considering the potential transfer of risks
and rewards of ownership in accordance with IAS 17, 'Leases', for all properties
leased to tenants and has determined that all such leases are operating leases.
Accordingly, all the Group's leasehold properties are classified as investment
or development properties, as appropriate, and included in the Balance Sheet at
fair value.
The Group as lessee
The obligation to the freeholder or superior leaseholder for the buildings
element of the leasehold is included in the Balance Sheet at the present value
of the minimum lease payments at inception. Payments to the Group's landlords
are apportioned between a finance charge and a reduction of the outstanding
liability. The finance charge is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining balance
of the liability.
Rent reviews are charged as an expense in the period in which they are incurred.
xv) OWNER-OCCUPIED PROPERTIES, PLANT AND EQUIPMENT
Fixtures, fittings and equipment are carried at cost less accumulated
depreciation. Depreciation is provided on a straight-line basis over the useful
life of these assets estimated at between three to five years.
xvi) TRADING PROPERTIES
Trading properties are properties acquired or developed and held for sale and
are shown at the lower of cost and net realisable value. The cost of trading
properties is determined on the basis of specific identification of their
individual costs. Net realisable value is the estimated selling price in the
ordinary course of business less estimated costs to completion and the estimated
costs necessary to make the sale.
xvii) FINANCIAL INSTRUMENTS
Non-current receivables
Non-current receivables are held at amortised cost.
Other non-current investments
Other non-current investments are non-derivative investments that are designated
as available for sale. As permitted, these were previously held at cost less
impairment owing to information on which to assess fair value being unavailable.
At the current year end, these investments are shown at fair value.
Trade and other receivables
Trade and other receivables are recognised at invoiced values less provisions
for impairment. A provision for impairment of trade receivables is established
where there is objective evidence that the Group will not be able to collect all
amounts due according to the agreed terms of the receivables concerned.
Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, deposits with banks and other
short term highly liquid investments with original maturities of three months or
less.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Borrowings are subsequently stated at amortised
cost with any difference between the amount initially recognised and the
redemption value being recognised in the Income Statement over the period of the
borrowings on an effective interest rate basis.
Trade and other payables
Trade and other payables are non-interest bearing and are recognised at invoiced
amount.
Derivative financial instruments
The Group uses interest rate swaps to help manage its interest rate risk. These
derivative financial instruments are recognised initially at fair value and
subsequently re-measured. The gain or loss on re-measurement to fair value is
recognised immediately in the Income Statement, unless the derivatives qualify
for hedge accounting as cashflow hedges, in which case the effective element of
the gain or loss is recognised directly through equity in a hedging reserve.
The fair value of interest rate swaps is the estimated amount that the Group
would receive or pay to terminate the swap at the Balance Sheet date, taking
account of current interest rates and the current creditworthiness of the swap
counterparties.
The Group's interest rate swaps are shown in these accounts at fair value as
derived by JC Rathbone Associates Limited, financial risk consultants, based on
market prices, estimated future cashflows and forward rates as appropriate.
Other derivative instruments
From time to time, the Group invests in derivatives to mitigate or enhance its
exposure to a particular class or a spectrum of property assets and related
businesses. Such instruments are accounted for initially at fair value with
subsequent adjustments to fair value being reflected through the Income
Statement.
xviii) OWN SHARES HELD BY ESOP TRUSTS AND TREASURY SHARES
Transactions of the Group-sponsored ESOP Trusts, The Quintain Group Employee
Benefit Trust and The Quintain Estates and Development Deferred Bonus Plan
Trust, are included in the Group's financial statements. In particular, the
Trusts' purchases of shares in the Company and shares acquired as treasury
shares are debited directly to equity.
2 REVENUE, COST OF SALES AND GROSS PROFIT
2007 2007 2007 2006 2006 2006
Revenue Cost of Gross Revenue Cost of Gross
sales profit sales profit
£000 £000 £000 £000 £000 £000
Rental income 29,661 (6,821) 22,840 29,897 (8,210) 21,687
Income from sales of trading properties 28 - 28 4,065 (3,687) 378
Income from hotel operations 3,376 (2,019) 1,357 - - -
Fees from fund management 4,650 (1,661) 2,989 3,290 (1,375) 1,915
Other income 5,711 (2,041) 3,670 4,799 (2,023) 2,776
Continuing operations 43,426 (12,542) 30,884 42,051 (15,295) 26,756
Discontinued leisure operations (note 7) 1,295 (716) 579 5,848 (6,738) (890)
44,721 (13,258) 31,463 47,899 (22,033) 25,866
The cost of sales in relation to rental income comprised:
2007 2006
£000 £000
Service charge expenditure 3,613 3,998
Service charge recovery (2,224) (2,489)
Irrecoverable service charges 1,389 1,509
Rents payable 223 243
Property management fees 632 547
Legal and professional fees 883 787
Short leasehold amortisation 248 408
Other property costs 3,446 4,716
6,821 8,210
Other income was derived from:
2007 2007 2007 2006 2006 2006
Revenue Cost of Gross Revenue Cost of Gross
sales profit sales profit
£000 £000 £000 £000 £000 £000
Income from property derivatives 2,056 (826) 1,230 2,026 (453) 1,573
Surrender premiums 1,608 (108) 1,500 1,154 - 1,154
Management fees and commissions 1,175 (410) 765 636 - 636
Car parking income 724 (255) 469 525 (141) 384
Impairment of other non-current investments - - - - (632) (632)
Abortive project costs - (325) (325) - (737) (737)
Sundry income 148 (117) 31 458 (60) 398
5,711 (2,041) 3,670 4,799 (2,023) 2,776
3 SEGMENTAL ANALYSIS
i) BUSINESS SEGMENTAL ANALYSIS
The analysis of the Group's results by business segment, which are described in
the Operating and Financial Review, was as follows:
2007 2006 2007 2006 2007 2006 2007 2006
Gross Gross Gross Gross Share of Share of Profit from Profit from
revenue revenue profit profit profit from profit from sale of sale of
joint joint non- non-
ventures ventures current current
and and assets assets
associates associates
£000 £000 £000 £000 £000 £000 £000 £000
Investment portfolio 16,690 23,720 12,450 17,155 - - 3,461 13,959
Special projects 19,800 13,644 13,597 6,287 (685) 542 9,356 115
Fund management 6,936 4,687 4,837 3,314 23,241 32,715 5,792 114
43,426 42,051 30,884 26,756 22,556 33,257 18,609 14,188
2007 2006
Profit Profit
before before
tax tax
£000 £000
Investment portfolio 25,673 46,840
Special projects 23,836 10,350
Fund management 34,870 40,909
84,379 98,099
Administrative expenses (25,819) (22,660)
Net finance expenses (6,922) (10,486)
Profit before tax from continuing operations 51,638 64,953
Loss before tax from discontinued operations (note 7):
Special projects (48) (4,042)
Profit before tax from total operations 51,590 60,911
2007 2007 2007 2007 2006 2006 2006 2006
Investment Development Joint Total Investment Development Joint Total
properties properties ventures revaluation properties properties ventures revaluation
at at valuation and uplift at valuation at valuation and uplift
valuation associates associates
£000 £000 £000 £000 £000 £000 £000 £000
Investment 228,053 24,481 - 10,559 219,588 19,040 - 17,176
portfolio
Special 51,150 738,524 42,758 181,938 42,100 575,415 30,409 102,259
projects
Fund 9,735 6,300 128,563 26,383 28,400 5,000 91,344 35,126
management
288,938 769,305 171,321 218,880 290,088 599,455 121,753 154,561
2007 2006
Capital expenditure £000 £000
Investment portfolio 27,217 42,775
Special projects 52,445 68,468
Fund management 55,719 5,839
135,381 117,082
ii) GEOGRAPHICAL SEGMENTAL ANALYSIS
The geographical split of the Group's results was as follows:
2007 2006 2007 2006 2007 2006 2007 2006
Gross Gross Gross Gross Profit Profit Profit Profit
revenue revenue profit profit from sale from sale before before
of of non- tax tax
non-current current
assets assets
£000 £000 £000 £000 £000 £000 £000 £000
United Kingdom and
Channel Islands 42,530 40,388 30,527 25,864 17,818 14,188 50,629 63,341
France 886 1,628 347 857 791 - 1,025 1,612
United States 10 35 10 35 - - (16) -
43,426 42,051 30,884 26,756 18,609 14,188 51,638 64,953
Loss before tax from
discontinued operations
(note 7):
United Kingdom (48) (4,042)
Profit before tax from total operations 51,590 60,911
2007 2006 2007 2006
Net assets Net assets Capital Capital
expenditure expenditure
£000 £000 £000 £000
United Kingdom and Channel Islands 1,150,407 906,122 135,381 116,731
France (3,433) 13,657 - 351
1,146,974 919,779 135,381 117,082
Cash and cash equivalents 36,048 7,954
Current liabilities: bank loans and other borrowings (3,000) (4,432)
Non-current liabilities: bank loans and other borrowings (333,924) (246,626)
846,098 676,675
As at 31 March 2007, all investment properties, development properties, joint
ventures and associates were located in the United Kingdom and Channel Islands.
iii) SECTOR ANALYSIS
The analysis of the Group's results by sector was as follows:
2007 2006 2007 2006 2007 2006 2007 2006
Gross Gross Gross Gross Share of Share of Profit Profit
revenue revenue profit profit profits profits from sale from sale
from joint from joint of non- of non-
ventures ventures current current
and and assets assets
associates associates
£000 £000 £000 £000 £000 £000 £000 £000
Healthcare 5,016 4,625 3,358 3,251 17,589 32,322 1,934 -
Hotels 4,735 2,013 2,589 1,991 - - 2,307 1,978
Industrial 4,144 8,643 3,668 5,676 - - 1,679 652
Land 4,474 3,355 2,005 725 (707) 542 3,012 24
Leisure 6,172 847 6,091 497 - - 508 114
Offices 14,464 16,727 10,768 13,553 - - 5,055 8,328
Retail 1,369 3,715 918 263 - - 171 3,103
Student accommodation 1,313 - 1,028 - 6,129 - 3,833 -
Other 1,739 2,126 459 800 (455) 393 110 (11)
43,426 42,051 30,884 26,756 22,556 33,257 18,609 14,188
2007 2006
Profit Profit
before before
tax tax
£000 £000
Healthcare 22,674 39,365
Hotels 4,898 5,120
Industrial 7,917 11,670
Land 4,309 1,291
Leisure 7,117 596
Offices 24,442 36,368
Retail 1,949 2,047
Student accommodation 10,990 -
Other 83 1,642
84,379 98,099
Administrative expenses (25,819) (22,660)
Net finance expenses (6,922) (10,486)
Profit before tax from continuing 51,638 64,953
operations
Loss before tax from discontinued operations (note 7):
Leisure (48) (4,042)
Profit before tax from total operations 51,590 60,911
2007 2007 2007 2007 2006 2006 2006 2006
Investment Development Joint Total Investment Development Joint Total
properties properties ventures revaluation properties properties ventures revaluation
at at valuation and uplift at at valuation and uplift
valuation associates valuation associates
£000 £000 £000 £000 £000 £000 £000 £000
Healthcare 9,735 - 112,629 21,510 22,300 - 89,667 33,264
Hotels 4,700 10,580 - 2 4,698 22,742 - 7,285
Industrial 46,059 81,223 - 11,956 43,558 71,785 - 23,230
Land - 615,088 42,747 168,090 75 421,866 30,409 74,302
Leisure 43,316 - - 518 42,150 8,500 - 63
Offices 167,493 33,633 - 9,197 160,204 52,581 - 16,388
Retail 16,035 22,481 - 2,585 15,653 16,981 - (1,319)
Student
accommodation - - 14,723 6,199 - - - -
Other 1,600 6,300 1,222 (1,177) 1,450 5,000 1,677 1,348
288,938 769,305 171,321 218,880 290,088 599,455 121,753 154,561
2007 2006
Capital expenditure £000 £000
Healthcare 4,462 151
Hotels 10,712 433
Industrial 7,168 12,265
Land 31,630 65,589
Leisure 649 22
Offices 25,978 33,685
Retail 3,546 4,735
Student accommodation 49,260 -
Other 1,976 202
135,381 117,082
4 ADMINISTRATIVE EXPENSES
2007 2006
£000 £000
Directors' remuneration 4,971 4,148
Staff costs 11,967 13,857
Cost relating to employee share-based payment schemes 1,439 1,180
Total staff costs 18,377 19,185
Reorganisation provision for discontinued operations - 650
Legal and other professional fees 2,615 1,817
Office costs 3,548 2,817
Loss on sale of plant and equipment 61 30
Depreciation of plant and equipment 472 441
Operating lease payments 880 480
General expenses 493 392
Total administrative expenses 26,446 25,812
Continuing operations 25,819 22,660
Discontinued operations (note 7) 627 3,152
26,446 25,812
In addition to the depreciation charge disclosed above, short leasehold
amortisation of £248,000 (2006: £408,000) is charged under cost of sales and
shown in note 2.
i) FEES PAID TO AUDITORS AND THEIR AFFILIATES
2007 2006
£000 £000
Fees payable to the Company's auditor for the audit of the Company's annual accounts 240 220
Fees payable to the Company's auditor and its associates for other services:
The audit of the Company's subsidiaries pursuant to legislation 64 40
Other services pursuant to legislation 32 30
Tax services 8 44
Other services 40 27
Fees paid to other accountancy firms amounted to £431,000 (2006: £270,000) of
which £140,000 (2006: £162,000) were capitalised. These fees related mainly to
tax advisory and internal audit services.
ii) STAFF COSTS
Staff costs are included in both cost of sales and administrative expenses.
Gross staff costs were as follows:
2007 2006
£000 £000
Wages and salaries 13,417 14,390
Cost relating to Executive Directors' Performance Share 641 566
Plan
Cost relating to other share-based incentive schemes 798 614
Provision for national insurance on unexercised share options and rights 628 408
Social security costs 2,044 2,051
Pension costs 830 806
Other employment costs 778 350
19,136 19,185
Cost of sales 759 -
Administrative expenses 18,377 19,185
19,136 19,185
Details of Directors' emoluments, pensions and entitlements to share options and
rights are contained in the Remuneration Report.
Details of Directors' interests in the share capital of the Company are
contained in the Report of the Directors.
iii) STAFF NUMBERS
The average number of persons employed by the Group during the year was as
follows:
2007 2006
Number Number
Property portfolio management and 120 128
administration
Leisure operations 11 55
Hotel operations 68 -
199 183
Staff are allocated between cost of sales and administrative expenses as
follows:
2007 2006
Number Number
Cost of sales 59 -
Administrative expenses 140 183
199 183
5 NET FINANCE EXPENSES
2007 2006
£000 £000
Interest payable on bank loans and overdrafts 18,606 15,328
Interest payable on other loans 1,912 1,307
Interest on obligations under finance leases 865 230
21,383 16,865
Interest capitalised (9,209) (7,824)
12,174 9,041
Change in fair value of ineffective interest rate swaps (1,493) 2,994
Finance expenses 10,681 12,035
Finance income: interest receivable (3,759) (1,549)
Net finance expenses 6,922 10,486
Of interest capitalised in the year, the amount capitalised to development
properties was £8,980,000 (2006: £7,506,000) and to investment properties was
£229,000 (2006: £318,000).
In accordance with IAS 39, the Group has reviewed its interest rate hedges in
existence as at 31 March 2007 along with those in its joint ventures. As
assessed by JC Rathbone Associates Limited, movements in fair value of the
elements of those viewed as effective have been recognised through equity while
all other movements, including those relating to the ineffective elements of
effective hedges, are reflected in the Income Statement.
6 TAX
i) TAX CHARGE ON PROFIT
2007 2006
£000 £000
UK current tax at 30% (2006: 30%) 3,207 1,892
Adjustment to prior years' UK corporation tax 1,382 900
4,589 2,792
Overseas tax 3,758 241
Total current tax charge 8,347 3,033
Deferred tax:
On investment properties 946 3,052
On derivative financial instruments (450) (898)
On other temporary differences (2,004) 275
Total deferred tax (credit) charge (1,508) 2,429
Tax charge 6,839 5,462
ii) TAX CHARGE RECONCILIATION
2007 2006
£000 £000
Profit before tax 51,638 64,953
Tax applied at UK corporation tax rate of 30% 15,491 19,486
Locked-in capital allowances (1,984) (3,551)
Use of losses and differing tax rates in respect of overseas results 83 (231)
Use of tax losses (1,265) -
Indexation relief on UK investment properties (2,194) (1,703)
Adjustment to prior years' current and deferred tax 1,883 (534)
Tax charge included in share of income from joint ventures and associates (6,643) (9,205)
Other movements 1,468 1,200
Tax charge 6,839 5,462
iii) TAX RECOGNISED DIRECTLY IN EQUITY
2007 2006
£000 £000
Deferred tax charge on revaluation of development properties 42,214 31,938
Deferred tax charge (credit) on effective element of interest rate swaps 2,114 (503)
44,328 31,435
iv) DEFERRED TAX MOVEMENTS
1 April Recognised Recognised 31 March
2006 in income in equity 2007
£000 £000 £000 £000
Capital gains less capital losses 105,257 946 42,214 148,417
Capital allowances 5,776 (1,890) - 3,886
Derivative financial instruments (2,986) (450) 2,114 (1,322)
Other temporary differences 1,173 (114) - 1,059
Revenue tax losses (2,420) - - (2,420)
Deferred tax provision 106,800 (1,508) 44,328 149,620
Deferred tax assets estimated at £11,528,000 (2006: £21,360,000) have not been
recognised due to a higher degree of uncertainty over both the amount and timing
of the utilisation of the underlying tax losses and deductions. Under current
tax legislation, there is no expiry date associated with the unprovided deferred
tax assets.
v) TOTAL TAX CHARGE
The total tax charge recognised in these financial statements was as follows:
2007 2006
£000 £000
Tax charge on profit as above 6,839 5,462
Tax credit on discontinued operations (note 7) (14) (1,213)
Tax charge on share of profit in joint ventures (note 12i(c)) 9,686 1,625
Tax (credit) charge on share of profit in associates (195) 57
Tax charge on income and expenses recognised directly in equity 44,328 31,435
Tax charge (credit) on share of income and expenses in joint ventures recognised
directly in equity 234 (44)
60,878 37,322
7 DISCONTINUED OPERATIONS
The results from the Arena, Conference Hall and Exhibition Centres at Wembley
have been classified in these financial statements as discontinued. The
breakdown of the numbers disclosed in the Income Statement in relation to these
activities was as follows:
2007 2006
£000 £000
Revenue 1,295 5,848
Cost of sales (716) (6,738)
Gross profit (loss) 579 (890)
Administrative expenses (627) (3,152)
Loss before tax on discontinued operations (48) (4,042)
Tax credit 14 1,213
Loss after tax on discontinued operations (34) (2,829)
The impact upon cashflow of discontinued operations was as follows:
2007 2006
£000 £000
Loss after tax on discontinued operations as above (34) (2,829)
(Decrease) increase in provision for reorganisation costs, net of tax (455) 455
Net cashflow from discontinued operations included in net cashflow from operating (489) (2,374)
activities
The decision taken by the Board to cease to be involved in the business of
operating the Arena as well as to terminate
its conference and exhibition activities at Wembley has led to the
classification of the results from these operations, which together constitute
the Group's leisure activities, as discontinued. The Arena has been leased to a
third party as from April 2006 with the income generated being shown as rent
while the Conference Hall and Exhibition Centres, which ceased to trade by July
2006, are in the process of demolition prior to the redevelopment of the sites.
The basic loss per share for discontinued operations was 0.1p (2006: 2.2p). The
diluted loss per share for these operations was 0.04p (2006: 2.2p).
8 EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
i) EARNINGS PER SHARE
a) From continuing operations
2007 2007 2007 2006 2006 2006
Profit after Weighted Earnings Profit after Weighted Earnings
tax and average per share tax and before average per share
before number discontinued number
discontinued of shares operations of shares
operations
£000 000 pence £000 000 pence
Basic 44,799 128,169 35.0 59,491 128,937 46.1
Adjustments:
Interest on 8% convertible 243 2,000 235 2,000
unsecured loan stock
Employee share-based
payment schemes - 1,225 - 1,237
Diluted 45,042 131,394 34.3 59,726 132,174 45.2
b) From total operations
2007 2007 2007 2006 2006 2006
Profit after Weighted Earnings Profit after Weighted Earnings
tax and after average per share tax and after average per share
discontinued number discontinued number
operations of shares operations of shares
£000 000 pence £000 000 pence
Basic 44,765 128,169 34.9 56,662 128,937 43.9
Adjustments:
Interest on 8% convertible 243 2,000 235 2,000
unsecured loan stock
Employee share-based
payment schemes - 1,225 - 1,237
Diluted 45,008 131,394 34.3 56,897 132,174 43.0
ii) NET ASSET VALUE PER SHARE
2007 2007 2007 2006 2006 2006
Equity Number Net asset Equity Number Net asset
shareholders' of shares value shareholders' of shares value
funds per share funds per share
£000 000 pence £000 000 pence
Basic 846,098 128,199 660 676,675 128,635 526
Adjustments:
8% convertible unsecured - - 2,893 2,000
loan stock (note 18)
Employee share-based 9,642 2,520 9,766 2,925
payment schemes
Diluted 855,740 130,719 655 689,334 133,560 516
The number of shares in issue has been adjusted for the 1,627,414 (2006:
659,596) shares held by ESOP Trusts and by the Group as treasury shares.
Although not required under IFRS, net asset value per share is considered a key
performance indicator in the sector in which the Group operates.
Entitlements under the Executive Directors' Performance Share Plan have been
excluded from 8i and 8ii as the commitments relate to contingently issuable
shares where at the Balance Sheet date conditions had not been met.
9 DIVIDENDS
The proposed final dividend of 8.25 pence per share (2006: 7.25 pence per share)
was approved by the Board on 6 June 2007 and is payable on 7 September 2007 to
shareholders on the register at the close of business on 27 July 2007. The
dividend has not been included as a liability as at 31 March 2007. The total
dividend for the year ended 31 March 2007 amounts to 11.75 pence per share
(2006: 10.50 pence per share). The dividend of £13,744,000 included in the
reconciliation of equity in note 22 comprises the 2006 final dividend of
£9,257,000, which was paid on 8 September 2006, together with the interim
dividend of £4,487,000 paid on 18 January 2007.
10 INVESTMENT AND DEVELOPMENT PROPERTIES
The movements in the year in investment and development properties were as
follows:
Investment Investment Investment Investment Development Development Development Development
properties properties properties properties properties properties properties properties
Freehold Long Short Total Freehold Long Short Total
leasehold leasehold leasehold leasehold
£000 £000 £000 £000 £000 £000 £000 £000
Cost or valuation:
Balance 1 April 192,663 87,469 10,070 290,202 419,918 39,038 4,937 463,893
2005
Transfers between
categories 47,060 (4,960) - 42,100 (39,635) (2,465) - (42,100)
Foreign exchange
movement 164 - - 164 - - - -
Additions 31,879 11,531 - 43,410 65,414 4,831 62 70,307
Interest 318 - - 318 7,074 432 - 7,506
capitalised
Disposals (91,448) (15,843) (949) (108,240) (2,305) - - (2,305)
Short leasehold
amortisation - - - - - - (408) (408)
Revaluation surplus 10,224 10,968 942 22,134 93,871 7,353 1,338 102,562
Balance 31 March 190,860 89,165 10,063 290,088 544,337 49,189 5,929 599,455
2006
Transfers between
categories 8,650 - - 8,650 (6,184) (2,466) - (8,650)
Foreign exchange
movement (259) - - (259) - - - -
Additions 26,877 3,912 - 30,789 97,650 1,023 167 98,840
Interest 229 - - 229 8,865 115 - 8,980
capitalised
Disposals (34,560) (17,256) - (51,816) (80,706) (22,875) (5,848) (109,429)
Short leasehold
amortisation - - - - - - (248) (248)
Revaluation surplus
(deficit) 6,504 4,601 152 11,257 180,862 (505) - 180,357
Balance 31 March 198,301 80,422 10,215 288,938 744,824 24,481 - 769,305
2007
Of the additions shown above, £92,388,000 (2006: £41,437,000) related to
acquisitions of properties.
The historical cost of the Group's investment and development properties as at
31 March 2007 was £490,676,000 (2006: £496,786,000) and included capitalised
interest of £23,766,000 (2006: £16,729,000).
All of the Group's properties were externally valued as at 31 March 2007 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 holding in Greenwich and the Wembley Complex have been valued
by Savills Commercial Limited. The discount rates which have been applied in
relation to these developments were 12% and 10% respectively. Other properties
in the United Kingdom have been valued by Jones Lang LaSalle Limited and
Christie + Co. Properties in the Channel Islands have been valued by Guy
Gothard & Co.
A reconciliation of the valuations carried out by the external valuers to the
carrying values shown in the Balance Sheet was as follows:
2007 2006
£000 £000
Investment and development properties at market value as determined by valuers 1,046,962 878,295
Adjustment in respect of rent-free periods and other tenant incentives (466) (965)
Adjustment in respect of minimum payments under head leases separately included
as a liability in the Balance Sheet 11,747 12,213
As shown in the Balance Sheet 1,058,243 889,543
The percentage of investment and development properties valued by each valuer
was as follows:
2007 2007 2007 2007 2006
Per valuers' Adjustment for Properties held Percentage Percentage
reports properties as investment valued by each valued by each
held in joint and valuer valuer
ventures and development
associates properties
£000 £000 £000 % %
Savills Commercial Limited 766,650 (30,242) 736,408 70.3 62.1
Jones Lang LaSalle Limited 296,245 (1,600) 294,645 28.2 36.7
Other valuers 15,909 - 15,909 1.5 1.2
1,078,804 (31,842) 1,046,962 100.0 100.0
Copies of the valuation reports of Jones Lang LaSalle Limited and Savills
Commercial Limited are included within the annual report.
11 OWNER-OCCUPIED PROPERTIES, PLANT AND EQUIPMENT
The movements in owner-occupied properties, plant and equipment were as follows:
Long Short Fixtures, Total
leasehold leasehold fittings &
equipment
£000 £000 £000 £000
Cost:
Balance 1 April 2005 10,039 837 1,250 12,126
Additions 1,341 - 1,024 2,365
Disposals (11,380) (566) (528) (12,474)
Balance 31 March 2006 - 271 1,746 2,017
Additions - - 1,010 1,010
Disposals - (271) (1,007) (1,278)
Balance 31 March 2007 - - 1,749 1,749
Depreciation:
Balance 1 April 2005 - (823) (887) (1,710)
Charge for year - (2) (439) (441)
Disposals - 554 522 1,076
Balance 31 March 2006 - (271) (804) (1,075)
Charge for year - - (472) (472)
Disposals - 271 997 1,268
Balance 31 March 2007 - - (279) (279)
Net book value:
31 March 2007 - - 1,470 1,470
31 March 2006 - - 942 942
31 March 2005 10,039 14 363 10,416
12 NON-CURRENT INVESTMENTS
i) INVESTMENT IN JOINT VENTURES
a) The movements in investment in joint ventures were as follows:
Share of Advances Total
net assets
£000 £000 £000
Balance 1 April 2005 13,195 50,910 64,105
Additions 553 - 553
Acquisition of interest in joint venture 2,812 - 2,812
Acquisition of related deferred tax liability (318) - (318)
Amounts advanced - 24,474 24,474
Distributions (4,312) - (4,312)
Share of profit, net of tax 32,864 - 32,864
Share of effective portion of changes in fair value of cashflow hedges,
net of tax (102) - (102)
Balance 31 March 2006 44,692 75,384 120,076
Additions 132 10,426 10,558
Acquisitions of interest in joint ventures 5,620 - 5,620
Amounts advanced - 18,688 18,688
Distributions (8,400) - (8,400)
Share of profit, net of tax 23,011 - 23,011
Share of effective portion of changes in fair value of cashflow hedges,
net of tax 546 - 546
Balance 31 March 2007 65,601 104,498 170,099
b) The Group's interest in its joint ventures was as follows:
% of Country of Joint venture
equity held incorporation partner
Quercus Healthcare Property Unit Trust 27.96 Channel Islands Norwich Union Life
& Pensions Limited
Meridian Delta Limited 49.00 United Kingdom Lend Lease Europe Limited
Meridan Delta Dome Limited 49.00 United Kingdom Lend Lease Europe Limited
iQ Unit Trust 50.00 Channel Islands Wellcome Trust Investment
Limited Partnership
Quantum Unit Trust 50.00 Channel Islands CGNU Life Assurance Limited
Countryside Properties 50.00 United Kingdom Countryside Properties PLC
(Merton Abbey Mills) Limited
Countryside Quintain Birmingham Limited 50.00 United Kingdom Countryside Properties PLC
BioRegional Quintain Limited 49.90 United Kingdom BioRegional Properties Limited
Quintessential Homes (Wembley) LLP 50.02 United Kingdom Geninvest Limited
Family Housing Development
Company Limited
South East Properties (Redhill) Limited 50.00 United Kingdom South East Properties Limited
c) The Group's share of the results of its joint venture operations was as
follows:
Quercus Meridian iQ Quantum Quintessential BioRegional Quintain Other Group
Delta Homes Quintain Birmingham joint share
ventures in joint
ventures
£000 £000 £000 £000 £000 £000 £000 £000 £000
Summarised income statements for year ended 31 March 2007
Rents 10,669 - 27 - - - - - 10,696
receivable
Other income - - - - - - - (6) (6)
Administrative
expenses (1,608) (235) (88) (32) (85) (271) (23) 9 (2,333)
Operating 9,061 (235) (61) (32) (85) (271) (23) 3 8,357
profit (loss)
Share of gain
on revaluation
of investment
properties 21,717 - 6,199 - - - - - 27,916
Profit before
finance
expenses and 30,778 (235) 6,138 (32) (85) (271) (23) 3 36,273
taxation
Finance (3,674) (16) (9) - - (93) - (13) (3,805)
expenses
Finance 171 - - - 34 2 - 22 229
income
Profit (loss)
before taxation 27,275 (251) 6,129 (32) (51) (362) (23) 12 32,697
Taxation (7,725) - (1,833) - - - - (128) (9,686)
Profit (loss)
after taxation 19,550 (251) 4,296 (32) (51) (362) (23) (116) 23,011
Summarised balance sheets as at 31 March 2007
Investment
properties at 203,051 - 31,600 - - - - - 234,651
valuation
Other non-
current assets - - - - - - - 2,812 2,812
Trading - 30,686 - - 10,470 952 1,655 102 43,865
properties
Other assets 7,112 2,438 1,537 449 - 1,403 271 667 13,877
Gross assets 210,163 33,124 33,137 449 10,470 2,355 1,926 3,581 295,205
Current
liabilities: - - (16,000) - - - - - (16,000)
bank loans
and other
borrowings
Current tax (1,353) - - - - - - - (1,353)
liability
Non-current
liabilities: (76,366) - - - - - - - (76,366)
bank loans
and other
borrowings
Deferred tax (11,951) - (1,833) - - - - (318) (14,102)
liability
Other (7,864) (2,057) (581) (460) (4,835) (834) (66) (588) (17,285)
liabilities
Net external 112,629 31,067 14,723 (11) 5,635 1,521 1,860 2,675 170,099
assets
Represented by:
Capital 52,349 825 4,297 (11) 5,635 (332) 163 2,675 65,601
Loans 60,280 30,242 10,426 - - 1,853 1,697 - 104,498
Total 112,629 31,067 14,723 (11) 5,635 1,521 1,860 2,675 170,099
investment
Quercus Meridian BioRegional Quintain Merton Other Group
Delta Quintain Birmingham Abbey joint share
Mills ventures in joint
ventures
£000 £000 £000 £000 £000 £000 £000
Summarised income statements for year ended 31 March 2006
Rents receivable 7,838 - - - - - 7,838
Profit from sale of trading
properties - - - - 1,469 - 1,469
Administrative expenses (1,031) (216) (272) - (122) - (1,641)
Operating profit (loss) 6,807 (216) (272) - 1,347 - 7,666
Share of gain on revaluation of
investment properties 29,415 - - - - - 29,415
Loss on sale of investment
properties (39) - - - - - (39)
Profit (loss) before finance
expenses and taxation 36,183 (216) (272) - 1,347 - 37,042
Finance expenses (2,519) (16) (20) - (21) - (2,576)
Finance income - - - - 23 - 23
Profit (loss) before taxation 33,664 (232) (292) - 1,349 - 34,489
Taxation (1,342) - - - (283) - (1,625)
Profit (loss) after taxation 32,322 (232) (292) - 1,066 - 32,864
Summarised balance sheets as at 31 March 2006
Investment properties at
valuation 147,831 - - - - - 147,831
Other non-current assets - - - - - 2,812 2,812
Trading properties - 20,772 - - 2,513 - 23,285
Other assets 4,873 1,288 931 1,220 2,790 416 11,518
Gross assets 152,704 22,060 931 1,220 5,303 3,228 185,446
Current tax liability (1,100) - - - (115) - (1,215)
Non-current liabilities: bank
loans and other borrowings (51,479) - - - - - (51,479)
Deferred tax liability (5,345) - - - - (318) (5,663)
Other liabilities (5,113) (1,135) (422) - - (343) (7,013)
Net external assets 89,667 20,925 509 1,220 5,188 2,567 120,076
Represented by:
Capital 37,803 1,056 31 185 3,050 2,567 44,692
Loans 51,864 19,869 478 1,035 2,138 - 75,384
Total investment 89,667 20,925 509 1,220 5,188 2,567 120,076
Details of the floating rate debt within Quercus and iQ and of interest rate
swaps entered into by the former are given in notes 20ii(f) and 21iii.
The valuation of investment properties held within Quercus as at 31 March 2007
has been based on the exercise carried out by Christie + Co, Chartered
Surveyors, as external valuers, on the basis of market value and in accordance
with the Appraisal and Valuation Manual of the Royal Institution of Chartered
Surveyors.
The Quercus joint venture has an accounting period ending on 31 December. The
Group's share of its results for the remainder of the financial year has been
based on its management accounts.
d) The summarised financial statements of the Group's principal joint venture
operations were as follows:
2007 2006 2007 2006 2007 2007 2007
Quercus Quercus Meridian Meridian iQ Quantum Quintessential
Delta Delta Homes
£000 £000 £000 £000 £000 £000 £000
Income statements
Income 116,433 135,750 - - 12,475 - 67
Expenses (18,039) (18,130) (511) (474) (217) (63) (169)
Profit (loss) before 98,394 117,620 (511) (474) 12,258 (63) (102)
taxation
Balance sheets
Non-current assets 726,220 522,187 - 2,628 63,201 - -
Current assets 25,436 17,214 67,600 42,392 3,073 898 16,302
Total assets 751,656 539,401 67,600 45,020 66,274 898 16,302
Current liabilities (75,708) (21,946) (4,198) (2,316) (36,828) (920) (5,037)
Non-current liabilities (273,126) (200,721) - - - - -
Net external assets 402,822 316,734 63,402 42,704 29,446 (22) 11,265
Percentage share held by
Group 27.96% 28.31% 49.00% 49.00% 50.00% 50.00% 50.02%
Group share of net external
assets 112,629 89,667 31,067 20,925 14,723 (11) 5,635
2007 2006 2007 2006 2007 2006
BioRegional BioRegional Quintain Quintain Merton Merton
Quintain Quintain Birmingham Birmingham Abbey Mills Abbey Mills
£000 £000 £000 £000 £000 £000
Income statements
Income 100 - - - 32 2,938
Expenses (825) (589) (45) - (14) (240)
(Loss) profit before taxation (725) (589) (45) - 18 2,698
Balance sheets
Current assets 4,720 1,866 3,852 2,440 1,342 10,606
Total assets 4,720 1,866 3,852 2,440 1,342 10,606
Current liabilities (1,671) (368) (132) - (1,176) (230)
Non-current liabilities - (478) - - - -
3,049 1,020 3,720 2,440 166 10,376
Percentage share held by Group 49.90% 49.90% 50.00% 50.00% 50.00% 50.00%
Group share of net external 1,521 509 1,860 1,220 83 5,188
assets
ii) INVESTMENT IN ASSOCIATES
a) The movement in investment in associates was as follows:
£000
Balance 1 April 2005 1,284
Share of profit, net of tax 393
Balance 31 March 2006 1,677
Share of loss, net of tax (455)
Balance 31 March 2007 1,222
b) The Group's interest in its principal associate undertaking was as follows:
% of equity held Other member
Aqua Trust 50 Norwich Union
Annuity Limited
iii) The movement in other non-current investments, all of which have been
classified as available for sale, was as follows:
£000
Unquoted investments:
Cost 1 April 2005 188
Additions 3,160
Impairment (632)
Net book value 31 March 2006 2,716
Additions 1,248
Disposals (38)
Revaluation deficit (882)
Fair value 31 March 2007 3,044
During the year, the Group added to its investment in Serrastone SA, a company
based in France, which is researching and developing a substitute for natural
stone for building purposes.
13 NON-CURRENT RECEIVABLES
During the year, the Group acquired a loan which carries a coupon of LIBOR +
2.5% and has a maximum term of 17 years. This receivable is shown in the Balance
Sheet at amortised cost.
14 TRADING PROPERTIES
As at 31 March 2007, two properties were held for resale and are shown at the
lower of cost and net realisable value. At that date, trading properties were
fair valued by the Directors at £10,300,000.
15 TRADE AND OTHER RECEIVABLES
2007 2006
£000 £000
Trade receivables 12,175 9,166
Amounts due under contracts for sale 51,275 54,635
Other receivables 7,047 5,424
Prepayments and accrued income 3,170 3,087
73,667 72,312
16 CURRENT INVESTMENTS
2007 2006
£000 £000
Treasury stock 4 7
As at 31 March 2007, the nominal value of the Treasury stock was £4,000 (2006:
£7,000).
17 TRADE AND OTHER PAYABLES
2007 2006
£000 £000
Trade payables 6,751 8,802
Other payables 7,535 3,503
Accruals 18,774 23,854
Interest rate swaps 4,406 12,945
37,466 49,104
18 BANK LOANS AND OTHER BORROWINGS
2007 2006
£000 £000
Current liabilities:
Bank loans (secured) - 4,432
Other loans 3,000 -
3,000 4,432
Non-current liabilities:
Bank loans (secured) 329,054 238,863
8% convertible unsecured loan stock - 2,893
10% first mortgage debenture stock 2011 (secured) 4,870 4,870
333,924 246,626
Total borrowings 336,924 251,058
The loans are secured by floating charges over assets owned by subsidiary
undertakings.
The 8% convertible unsecured loan stock was convertible by 31 March 2007 but was
not converted and was repaid post the Balance Sheet date.
The 10% first mortgage debenture stock 2011 issued by Estates Property
Investment Company Limited is secured by fixed and floating charges over the
assets of the subsidiary undertaking and has a redemption value of £4,617,000.
The premium over par arising from fair valuing the debenture on acquisition is
amortised over its remaining life.
19 OBLIGATIONS UNDER FINANCE LEASES
Finance lease obligations in respect of rents payable on leasehold properties
were as follows:
2007 2007 2007 2006 2006 2006
Minimum Interest Present value Minimum lease Interest Present
lease of minimum payments value of
payments lease payments minimum lease
payments
£000 £000 £000 £000 £000 £000
Within one year 815 (809) 6 863 (855) 8
Between one and five years 3,277 (3,245) 32 3,452 (3,410) 42
Between five and 25 years 16,387 (16,002) 385 17,165 (16,772) 393
After 25 years 43,628 (32,317) 11,311 48,188 (36,418) 11,770
64,107 (52,373) 11,734 69,668 (57,455) 12,213
20 FINANCIAL ASSETS AND LIABILITIES
i) FINANCIAL ASSETS
The currencies in which the Group's cash and cash equivalents were held were as
follows:
2007 2006
£000 £000
Sterling 22,364 2,539
Euros 13,439 5,119
United States dollars 245 296
36,048 7,954
Details of other financial assets are shown in the table in note 20ii(e).
ii) FINANCIAL LIABILITIES
The Group's policy is to finance its activities with equity and long term debt,
the proportions depending on the profile of the operational and financial risks
to the business. The weighted average tenure of the Group's Sterling debt is
five years (2006: five years) and the weighted average cost of debt was 6.6%
(2006: 6.6%).
a) The maturity profile of the Group's debt was as follows:
2007 2007 2007 2006 2007 2006
Bank loans Other loans Total debts Total debts Undrawn Undrawn
and overdrafts facilities facilities
£000 £000 £000 £000 £000 £000
Within one year - 3,000 3,000 4,432 - -
Between one and two years - - - 2,893 - -
Between two and five years 329,054 4,870 333,924 238,863 164,000 254,000
After five years - - - 4,870 - -
329,054 7,870 336,924 251,058 164,000 254,000
b) After taking account of interest rate swap arrangements, the risk profile of
the Group's borrowings was as follows:
2007 2007 2007 2006 2006 2006
Fixed Floating Total debt Fixed Floating Total debt
£000 £000 £000 £000 £000 £000
Sterling 164,877 172,047 336,924 164,770 81,856 246,626
Euros - - - 4,432 - 4,432
164,877 172,047 336,924 169,202 81,856 251,058
c) The interest rate profile of the Group's fixed rate debt was as follows:
2007 2006
Percent £000 £000
4.0 - 5.0 - 4,432
5.0 - 6.0 157,007 157,007
7.0 - 8.0 3,000 2,893
9.0 - 10.0 4,870 4,870
164,877 169,202
d) The weighted average rate and the weighted average period of the Group's
fixed rate debt were as follows:
2007 2006 2007 2006
% % years years
Sterling 5.6 5.5 6 7
Euros - 4.7 - -
Group 5.6 5.5 6 7
e) The fair value of the Group's financial assets and liabilities was as
follows:
2007 2007 2007 2006 2006 2006
Book value Fair value Fair value Book value Fair value Fair value
adjustment adjustment
£000 £000 £000 £000 £000 £000
Other non-current investments 3,044 3,044 - 2,716 2,716 -
Non-current receivables 45,349 45,349 - - - -
Trade and other receivables 73,667 73,667 - 72,312 72,312 -
Current investments 4 4 - 7 7 -
Cash and cash equivalents 36,048 36,048 - 7,954 7,954 -
158,112 158,112 - 82,989 82,989 -
Current liabilities: bank loans and
other borrowings (3,000) (3,000) - (4,432) (4,432) -
Trade and other payables (37,466) (37,466) - (49,104) (49,104) -
Non-current liabilities: bank loans
and other borrowings (333,924) (333,959) (35) (246,626) (246,878) (252)
Obligations under finance leases (11,734) (11,734) - (12,213) (12,213) -
Other payables (4,919) (4,919) - (4,670) (4,670) -
Total net financial liabilities (232,931) (232,966) (35) (234,056) (234,308) (252)
Fair value adjustment on a
post-tax basis (25) (176)
The fair values were calculated by JC Rathbone Associates Limited as at 31 March
2007 and reflect the replacement values of the financial instruments used to
manage the Group's exposure as at that date.
f) The maturity profile of the Group's share of floating rate debt held within
its joint ventures as at 31 March 2007 was as follows:
2007 2006
£000 £000
Within one year 16,000 -
Between two and five years - 51,479
Over five years 76,366 -
92,366 51,479
21 FINANCIAL INSTRUMENTS
The Group is subject to interest rate, liquidity, foreign currency and credit
risks. The Group does not speculate in treasury products but uses these only to
limit potential interest rate fluctuations. It usually borrows at floating
rates of interest and uses hedging instruments to achieve an interest rate
profile where the majority of borrowings are fixed or capped. As at 31 March
2007, 54.8% (2006: 69.6%) of the Group's net debt was fixed or protected.
i) EFFECTIVE CASHFLOW HEDGES
The profile of the Group's interest swaps which were in existence as at 31 March
2007 and for the purpose of these financial statements were classified as
effective cashflow hedges was as follows:
2007 2006
Amount Maturity date Swap rate Fair value Fair value Reflected
adjustments adjustments in equity
£000 % £000 £000 £000
10,000 20.07.09 5.45 62 (186) 248
20,000 20.01.11 5.79 (106) (845) 739
7,507 01.04.11 5.64 (4) (280) 276
18,000 20.01.14 5.33 159 (665) 824
11,500 20.07.14 5.34 80 (467) 547
20,000 20.07.14 5.36 121 (833) 954
20,000 20.07.14 5.45 8 (963) 971
10,000 20.01.15 5.28 93 (393) 486
20,000 20.01.15 5.29 177 (797) 974
20,000 20.01.15 5.61 (220) (1,248) 1,028
157,007 370 (6,677) 7,047
These swaps were valued as at 31 March 2007 by JC Rathbone Associates Limited.
ii) INEFFECTIVE CASHFLOW HEDGES
As at 31 March 2007, the Group has entered into the following forward start
swaps which do not qualify as effective cashflow hedges for the purposes of IAS
39. These were also valued by JC Rathbone Associates Limited.
2007 2006
Amount Start date Maturity date Swap rate Fair value Fair value Reflected in
adjustments adjustments Income
Statement
£000 % £000 £000 £000
10,000 20.01.15 20.01.35 5.28 (841) (1,136) 295
20,000 20.01.15 20.01.35 5.29 (1,694) (2,284) 590
20,000 20.01.15 20.01.35 5.61 (2,241) (2,849) 608
50,000 (4,776) (6,269) 1,493
iii) JOINT VENTURE FINANCIAL INSTRUMENTS
As at 31 March 2007, the following interest rate swaps shown at the full amount,
were held within Quercus, a joint venture in which the Group has a 27.96%
interest (2006: 28.31%).
2007 2006
Amount Maturity Swap rate Fair value Fair value Group share
date adjustments adjustments reflected in
equity
£000 % £000 £000 £000
50,000 22.10.07 5.32 100 (432) 150
40,000 22.01.09 4.86 570 (50) 174
50,000 22.10.09 4.84 1,006 (43) 295
25,000 25.11.09 5.02 404 (173) 161
165,000 2,080 (698) 780
These swaps were valued at the year end by JC Rathbone Associates Limited and
classified as 100% effective cashflow hedges on similar grounds to those which
applied to the Group's own cashflow hedges.
iv) FINANCIAL RISK MANAGEMENT
The Group's policy is to minimise refinancing risk. As at 31 March 2007, the
maturity profile of Group debt showed an average maturity of five years (2006:
five years). Efficient treasury management and strict credit control ensure that
funds are available to meet the Group's financial commitments as these fall due.
The Group's principal financial assets are cash and cash equivalents, trade and
other receivables and investments. The Group's credit risk is primarily
attributable to its non-current receivables and its trade and other receivables.
These amounts are disclosed net of provisions for doubtful debts and allowances
for impairment are made where appropriate. The Group has no significant
concentration of credit risk with exposure spread over a number of
counterparties and tenants.
Creditworthiness evaluations are performed on all potential tenants looking to
enter into lease or pre-lease agreements with the Group. In certain cases, the
Group will require collateral to support these lease obligations. This usually
takes the form of a rent deposit, parent company guarantee or a bank guarantee.
Where the Group places short term deposits, counterparties must have a short
term credit rating of at least A1/P1. Transactions involving derivative
financial instruments are with counterparties with whom the Group has a signed
ISDA agreement as well as having good investment grade credit ratings. Given
their high credit ratings, the Board does not expect any counterparty to fail to
meet its obligations.
On 31 December 2006, the Property Index-linked Total Return Swap entered into by
the Group in the comparative year expired. The credit risk on this instrument
was limited as the counterparty was a bank with a credit rating assigned by an
international credit rating agency.
22 RECONCILIATION OF MOVEMENTS IN EQUITY
Share Share Revaluation Other Cashflow Translation Retained Own Equity
capital premium reserve capital hedge reserve earnings shares share-
account reserves reserve held holders'
reserve funds
£000 £000 £000 £000 £000 £000 £000 £000 £000
Balance 32,298 46,575 180,102 113,222 (3,533) 127 198,401 (1,539) 565,653
1 April 2005
Recognised - - 68,860 - (1,275) 278 56,662 - 124,525
income and
expense for the
year
Issue of shares 31 690 - - - - (474) - 247
less costs
Purchase of own (5) - - 5 - - (108) - (108)
shares for
cancellation
Purchase of own - - - - - - - (1,955) (1,955)
shares as
treasury shares
Cost relating to - - - - - - 1,180 - 1,180
share-based
payment
schemes
Short leasehold - - (126) - - - 126 - -
amortisation
Dividends paid - - - - - - (12,867) - (12,867)
in year
Balance 32,324 47,265 248,836 113,227 (4,808) 405 242,920 (3,494) 676,675
31 March 2006
Recognised - - 136,188 - 5,479 (319) 44,765 - 186,113
income and
expense for the
year
Transfer - - - (5,091) - - 5,091 - -
between
reserves
Issue of shares 133 3,532 - - - - (2,545) - 1,120
less costs
Purchase of - - - - - - - (6,060) (6,060)
own shares as
treasury shares
Cost relating to - - - - - - 1,439 - 1,439
share-based
payment
schemes
Cost relating to - - - - - - 2,279 - 2,279
share-based
bonus schemes
Shares awarded - - - - - - (210) 210 -
to employees
under bonus
scheme
Short leasehold - - (102) - - - 102 - -
amortisation
Realisation of - - (14,108) - - - 14,108 - -
revaluation
gains on sale
Tax on realised - - - - - - (1,724) - (1,724)
gains
Dividends paid - - - - - - (13,744) - (13,744)
in year
Balance 32,457 50,797 370,814 108,136 671 86 292,481 (9,344) 846,098
31 March 2007
Part of the gain on the revaluation of investment and development properties is
recognised in the Income Statement and part directly through equity.
2007 2006
£000 £000
Recognised in the Income Statement:
Gains (deficits) on revaluation of investment properties in:
Group 12,181 23,911
Joint ventures 27,916 29,415
Associates (650) 450
Deficits on revaluation of investment properties (924) (1,777)
Deficits on revaluation of development properties (182) (1,834)
Reversal of deficits on revaluation of development properties 1,255 3,598
Recognised directly in equity:
Gains on revaluation of development properties 179,284 100,798
218,880 154,561
The movements in the Group's other capital reserves were as follows:
Capital Convertible Merger Capital Total other
redemption loan stock reserve reserve capital
reserve reserve reserves
£000 £000 £000 £000 £000
Balance 1 April 2005 2,069 786 106,062 4,305 113,222
Purchase of own shares for cancellation 5 - - - 5
Balance 31 March 2006 2,074 786 106,062 4,305 113,227
Transfer to retained earnings - (786) - (4,305) (5,091)
Balance 31 March 2007 2,074 - 106,062 - 108,136
The charge against retained earnings in respect of the issue of shares less
costs related to options exercised by staff in a subsidiary company. There was
no equivalent entry in the accounts of the Company.
As at 31 March 2007, ESOP Trusts held 1,359,774 (2006: 659,596) shares in the
Company which had been purchased in the market at a cost of £7,714,000 (2006:
£3,494,000). The purpose of the Trusts is to acquire and hold shares which will
be transferred to employees to meet future obligations under the Group employee
share-based payment schemes as set out in note 23 and share-based bonus
entitlements. As at 31 March 2007, these shares had a market value of
£12,177,000 (2006: £4,485,000). The Quintain Group Employee Benefit Trust has
waived the right to receive dividends.
As at 31 March 2007, the Company also held 267,640 (2006: nil) of its own shares
which had been purchased in the market at a cost of £1,630,000 (2006: £nil). As
at that date, these shares had a market value of £2,397,000 (2006: £nil).
CAPITAL REDEMPTION RESERVE
The capital redemption reserve reflects the nominal value of shares purchased
and then cancelled by the Company.
MERGER RESERVE
The merger reserve has arisen following corporate acquisitions where the Group's
equity has formed all or part of the consideration and represents the premium on
the shares issued less costs.
CASHFLOW HEDGE RESERVE
The cashflow hedge reserve comprises the effective portion of the cumulative net
change in the cashflow hedging instruments.
TRANSLATION RESERVE
The translation reserve comprises all foreign exchange differences arising from
the translation of the financial statements of the Group's foreign subsidiaries.
23 SHARE CAPITAL
Number of Nominal
shares value
000 £000
Authorised as at 31 March 2006 and 2007:
Ordinary shares of 25p each 200,000 50,000
Allotted, called up and fully paid:
In issue at 1 April 2005 129,191 32,298
Issue of shares under share-based payment schemes at between 155.3p and 271.0p 124 31
Purchase and cancellation of shares (20) (5)
In issue at 31 March 2006 129,295 32,324
Issue of shares under share-based payment schemes at between 25p and 556.3p 531 133
In issue at 31 March 2007 129,826 32,457
As at 31 March 2007, share capital included 1,359,774 (2006: 659,596) shares
held by ESOP Trusts. These shares had a nominal value of £339,944 (2006:
£164,899). The Company also held 267,640 (2006: nil) of its own shares with a
nominal value of £66,910 (2006: £nil).
As at 31 March 2007, the following commitments to issue shares to employees
under various share-based payment schemes remained outstanding:
Date of grant Number of shares Exercise price per Exercise period Exercise period
share from to
pence
Executive Directors' Performance Share Plan (LTIP)
26.09.03 1,000,000 - 26.09.12 27.09.12
12.07.05 375,000 - 12.07.14 13.07.14
1,375,000
1996 Approved Executive Share Option Scheme (1996 Approved)
22.02.99 6,040 151.5 22.02.02 21.02.09
13.06.00 29,151 155.3 13.06.03 12.06.10
04.09.01 1,504 199.5 04.09.04 03.09.11
17.06.02 13,043 271.0 17.06.05 16.06.12
13.06.03 63,540 287.0 13.06.06 12.06.13
02.02.04 8,720 344.0 02.02.07 01.02.14
13.09.04 88,305 460.0 13.09.07 12.09.14
12.07.05 45,633 556.3 12.07.08 11.07.15
09.01.06 9,450 634.8 09.01.09 08.01.16
10.07.06 42,416 653.0 10.07.09 09.07.16
307,802
1996 Executive Share Option (No.2) Scheme (1996 Unapproved)
04.09.01 79,845 155.3 04.09.04 03.09.08
04.09.01 223,058 199.5 04.09.04 03.09.08
17.06.02 85,382 155.3 17.06.05 16.06.09
17.06.02 892,741 271.0 17.06.05 16.06.09
13.06.03 14,373 271.0 13.06.06 12.06.10
13.06.03 399,066 287.0 13.06.06 12.06.10
1,694,465
2004 Unapproved Share Plan (2004 Unapproved)
13.06.03 12,290 25.0 13.06.06 12.06.10
02.02.04 7,450 25.0 02.04.07 01.02.14
02.02.04 10,551 25.0 02.04.08 01.02.14
02.02.04 11,729 25.0 02.04.09 01.02.14
13.09.04 161,721 25.0 13.09.07 12.09.14
12.07.05 188,638 25.0 12.07.08 11.07.15
09.01.06 1,566 25.0 09.01.09 09.01.16
10.07.06 124,146 25.0 10.07.09 09.07.16
518,091
Total 3,895,358
The movement in the year in the number and weighted average exercise price of
outstanding options was as follows:
2007 2007 2006 2006
Number of shares Weighted average Number of shares Weighted average
exercise price (pence) exercise price (pence)
In issue as at 1 April 4,300,080 155.8 3,919,274 170.1
Options granted 172,232 383.1 740,562 59.8
Options exercised (531,031) (210.8) (124,604) (197.9)
Options lapsed (45,923) (232.4) (235,152) (70.1)
In issue as at 31 March 147.3 4,300,080 155.8
3,895,358
Options granted during the current and previous year have been valued using the
Black Scholes and binomial models on the basis of the following main
assumptions:
Date of grant 12.07.05 09.01.06 10.07.06
LTIP 1996 2004 1996 2004 1996 2004
Approved Unapproved Approved Unapproved Approved Unapproved
Number 375,000 55,310 299,236 9,450 1,566 42,416 129,816
Exercise price (pence) - 556.3 25.0 634.8 25.0 653.0 25.0
Term of option (years) 9 10 7 10 7 10 7
Expected volatility (%) 23 23 23 21 21 22 22
Expected annual 1.7 1.7 1.7 1.8 1.8 1.6 1.6
dividend yield (%)
Risk free rate (%) 4.3 4.3 4.3 4.2 4.2 4.7 4.7
Fair value (pence) 482.0 112.0 480.0 95.0 571.0 135.0 561.0
24 CAPITAL COMMITMENTS
As at 31 March 2007, the Group had capital commitments of £15,669,000 (2006:
£30,570,000) in relation to its own properties and £81,450,000 (2006:
£7,786,000) in relation to its joint ventures.
25 OPERATING LEASE ARRANGEMENTS
i) AS LESSEE
Future minimum lease payments payable by the Group under non-cancellable
operating leases were as follows:
2007 2006
£000 £000
Operating leases which expire:
Between one and five years 22 545
After five years 7,144 7,791
7,166 8,336
ii) AS LESSOR
Future minimum lease payments receivable by the Group under non-cancellable
operating leases were as follows:
2007 2006
£000 £000
Operating leases which expire:
Within one year 1,785 20,957
Between one and five years 14,199 50,197
After five years 128,577 119,164
144,561 190,318
In addition, the Group's share of minimum lease payments receivable under
non-cancellable operating leases contained within the Group's joint ventures was
£377,222,000 (2006: £296,665,000).
26 RELATED PARTY DISCLOSURES
During the year, the Group received the following fees in respect of services
provided to its joint ventures:
2007 2006
£000 £000
Quercus Property Partnership 4,014 3,143
BioRegional Quintain Limited 192 105
iQ Property Partnership 177 -
Quintessential Homes LLP 161 -
Meridian Delta Limited 71 -
Quart Property Partnership 25 42
Quantum Property Partnership 10 -
4,650 3,290
The Group also received interest on loan notes amounting to £1,741,000 (2006:
£1,041,000) from Meridian Delta Limited and £108,000 (2006: £22,000) from
BioRegional Quintain Limited, which are included in finance income.
Amounts due from joint venture undertakings as at 31 March 2007 are shown in
note 12i.
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