8th May 2008 07:01
Mapeley Limited08 May 2008 Press Release - not for release before 07:00 08 May 2008 MAPELEY LIMITED Unaudited first quarter results for the three months ended 31 March 2008 Mapeley Limited (LSE: MAY), the Guernsey based market leader in propertyinvestment and outsourcing, announces today its unaudited quarterly results forthe three months ended 31 March 2008. Mapeley owns and manages a commercialproperty portfolio of over £2.0 billion covering some 2.4 million square metresthroughout the UK. Highlights • FFO* the key measure of operating performance up 226% to £45.0 million, equating to 153 pence per share** (31 March 2007: £13.8 million, equating to 47 pence per share) • Excluding the effect of above average asset management receipts in the quarter, FFO remains stable at 48 pence per share (31 March 2007: 47 pence per share) • EBITDA*** increased by 8.9% to £35.6 million (31 March 2007: £32.7 million) • Revenue down 4.3% to £99.6 million (31 March 2007: £104.1 million) • Loss before tax of £27.4 million (31 March 2007: profit before tax of £11.4 million) due to non-cash revaluation losses in the quarter of £39.2 million in line with market trends • Total asset value of £2,253.9 million (31 December 2007: £2,317.6 million) • NAV per share decreased to £17.32 per share (31 December 2007: £18.62) • Dividends to be paid at the half year and full year rather than quarterly • The Board intends to seek a general authorisation from shareholders to buy back shares Commenting on the results, Jamie Hopkins, Chief Executive of Mapeley, said: "Results for the first quarter were in line with our expectations and again ourfinancial performance was reinforced by the resilience of our income stream. Over 90% of our income is derived from government and investment gradecorporates, with low vacancy rates and a 10 year average lease length across theportfolio. The Board has decided to seek a general authorisation from the shareholders tobuy back shares. The dividend will now be paid semi-annually at a revisedpayout ratio. This will allow the Company to increase balance sheet flexibility,invest its cash flow accretively and pursue any authorised share repurchases.The Company remains committed to returning cash flow to shareholders." Conference call Mapeley management will hold a results conference call on Thursday 8 May 2008 at2 pm London time (9 am New York time). Analysts and investors are welcome toparticipate on the live call. You can access the conference call by dialling +44(0) 1452 586 513 ten minutes prior to the scheduled start of the call; pleasereference "Mapeley Q1 2008 Results Call". A webcast of the conference call will be available to the public on alisten-only basis at www.mapeley.com. Please allow extra time prior to the call to visit the site and download thenecessary software required to listen to the internet broadcast. A replay of the webcast will be available for three months following the call. Areplay of the conference call will be available until 10 am London time onThursday 15 May 2008 by dialling +44 (0) 1452 55 00 00; please reference accessnumber "42752262#". For further information, please contact: Fiona Laffan/Pavla ShawBrunswickTel: +44(0) 20 7404 5959Email: [email protected] * see note 17 to the accounts for definition of FFO ** based on weighted average number of shares in issue for the period on anundiluted basis ***see note 16 to the accounts for definition of EBITDA Key financial information Key Performance Measures Three months ended Year ended 31 March 31 December 2008 2007 2007 Unaudited Unaudited Audited £m £m £m Funds from operations (FFO) (refer to note 17) 45.0 13.8 56.4 Dividends declared during period - 13.8 55.2 Dividend per share (pence/share)* - 47p 188p FFO per share (pence/share) ** (refer to note 17) 153p 47p 192p Income Statement Revenue 99.6 104.1 417.4 EBITDA (refer to note 16) 35.6 32.7 115.4 (Loss)/profit before tax (27.4) 11.4 (129.0) Balance Sheet As at As at As at 31 March 31 March 31 December 2008 2007 2007 £m £m £m Property assets*** 2,064.8 2,148.5 2,116.8 Net assets (refer to note 19) 509.4 726.0 547.8 Bank loans excluding finance costs 1,449.8 1,379.4 1,496.0 * The dividend per share calculation represents the declared coupon for theperiod. For the 3 months ended 31 March 2007 and the year ended 31 December 2007the dividend per share calculation aggregates the coupon rates declared for theperiods. ** FFO per share calculations are based on the weighted average number ofordinary shares in issue for the three months ended 31 March 2008 of 29,417,093,(three months ended 31 March 2007: 29,412,844; year ended 31 December 2007:29,417,876). *** Property assets are defined as total non-current assets plus non-currentassets held for sale, less non-current trade and other receivables, financialinstruments, deferred tax assets and plant and equipment held within property,plant and equipment (31 March 2008: £1.0 million; 31 March 2007: £0.2 million;31 December 2007: £1.1 million). Notes to Editors Mapeley is a market leading property investment and outsourcing company.Mapeley focuses on the acquisition, ownership and management of a diverseportfolio of commercial properties, primarily let to government and strongcredit quality tenants. It currently owns and actively manages a propertyportfolio of over £2.0 bn covering some 2.4 million square metres throughout theUK. The size and diversity of Mapeley's property portfolio has enabled Mapeley todevelop significant property management expertise, first hand knowledge ofregional markets, relationships and contacts with local owners, brokers andtenants and an understanding of the needs and behaviour of public sector andcorporate tenants. Chief Executive's statement Overview Results for the first quarter were in line with our expectations, and again ourfinancial performance was reinforced by the resilience of our income stream.Total FFO benefited from above average asset management receipts for thequarter. Excluding this, underlying FFO of 48 pence per share increased by 2.1%compared to 47 pence per share for the first quarter of 2007. EBITDA alsoincreased by 8.9% to £35.6 million for the period. In line with the broader property market, we have reported a mark to marketdecrease in property values. This non-cash item has contributed directly to aloss before tax of £27.4 million. We believe that our current share price reflects a substantial discount to ournet asset value given the quality, security of income and performance of ourassets and the long term growth prospects of our business. The Company remainscommitted to returning cash flow to shareholders. The Board has decided to seeka general authorisation from the shareholders to buy back shares, and thedividend will now be paid semi-annually at a revised payout ratio. Thiscombination of actions will allow the Company to increase balance sheetflexibility, and invest its cash flow accretively. Our opinion is that utilisinga portion of the cash that could otherwise be returned to shareholders in theform of dividends in these ways or for share repurchases is consistent withmaximising value in the long term for shareholders. Operational Performance There were no acquisitions in the period so the strong financial performance wasdriven entirely by existing assets. The first three months were once again an operationally busy time for Mapeley.Our property and facilities management teams delivered another strong result inkeeping underlying cost increases below the rate of contractual revenueincreases on our HMRC and Abbey outsourcing contracts. Since the inception ofthe outsourcing contracts, our same store income has grown at an average rate of3.2% per annum, whilst our main cost, rents payable, has increased at only 2.2%per annum. During the first quarter we settled rent reviews and lease renewals as tenant atrates of 1.5% and 2.1% respectively. 58 transactions took place and theincreases were well below the contractual rates of revenue increase for theoutsourcing contracts. In addition, IPD's analysis of our performance in respectof 2006 rent reviews on our leasehold estate once again demonstrates thatMapeley has beaten the market by experiencing an increase of only 1.4% in rentalpayments on our leasehold portfolio versus the IPD benchmark of 2.1%. In line with the broader property market, since our last valuation at 31December 2007 we have experienced a decline in values of 2.4% across allportfolios representing an adverse yield shift of 25 basis points. The largestfall came from the DPI Portfolio which fell by £30.7 million. Its currentvaluation implies an 8.0% initial yield. Additionally, during the quarter, we successfully refinanced all of our shortterm (less than 1 year) borrowings. Our average debt maturity is 7 years and ourearliest debt maturity is for only £60 million due during second quarter 2009. Outlook Our financial performance continues to be underpinned by our strong incomestream, of which 91% is derived from government and investment grade corporates,low vacancy rates and 10 year average lease length across the portfolio. We believe that the Mapeley business model is robust and defensive and while weexpect 2008 to be challenging, we look forward to delivering a solidperformance. Operating review 1) Portfolio review Mapeley Limited and its subsidiaries' ("Mapeley" or the "Group") real estateportfolio is split into two distinct segments - Outsourcing Contracts and theDirect Property Investments Portfolio. Each portfolio has been revalued at theend of the quarter by external valuers. The overall valuation at 31 March showsa reduction compared to the value at 31 December 2007 representing an adverseyield shift of 25 basis points across the portfolios. This is the cause of thenon-cash loss before tax for the period. Outsourcing Contracts The HMRC Portfolio As at 31 March 2008, the HMRC Portfolio had a value of £552.0 million (31December 2007: £563.4 million). This fall in value of £11.4 million is a resultof an adverse yield shift of 19 basis points across the portfolio. It comprised136 freehold or long leasehold properties (31 December 2007: 136) and 366 rackrented leasehold properties (31 December 2007: 371). Portfolio occupancy (basedon area) was 97.1% at 31 March 2008 (31 December 2007: 98.1 %). The currentyield on this portfolio at 31 March 2008 was 8.3% (3 December 2007: 8.2%). The Abbey Portfolio As at 31 March 2008, the Abbey Portfolio (see note 9) had a value of £547.8million (31 December 2007: £556.2 million). The Abbey Portfolio fell in value by£8.4 million compared to 31 December 2007 as a result of an adverse yield shiftof 33 basis points across the portfolio. It comprised 367 freehold or longleasehold properties (31 December 2007: 367) and 648 rack rented leaseholdproperties (31 December 2007: 656). Portfolio occupancy (based on area) was89.2% at 31 March 2008 (31 December 2007: 89.7 %). The current yield on thisportfolio at 31 March 2008 was 6.8% (31 December 2007: 6.6%). Identity and Passport Service ("IPS") Interview Centre Outsourcing ContractThe phased roll out programme has continued during the period with the finalsite acquired as at 31 March 2008. There are 68 operational leasehold assets inthis portfolio. Direct Property Investments Direct Property Investments ("DPI") Portfolio As at 31 March 2008, the DPI Portfolio (see note 9) comprised 92 properties (31December 2007: 92) with a value of £965.7 million (31 December 2007: £996.5million). The portfolio fell in value by £30.8 million representing an adverseyield shift of 25 basis points across the portfolio. The properties were 98.2%let on fully repairing and insuring leases to central and local government andmajor corporate tenants (31 December 2007: 98.5%) with an average unexpiredlease length of 8.0 years (31 December 2007: 8.2 years). The current yield onthis portfolio as at 31 March 2008 was 8.0% (31 December 2007: 7.7%). 2) Property Management Lettings During the first 3 months of 2008 the Group let 8 vacant units (31 March 2007:7) with an annual rent roll of £0.7 million (31 March 2007: £0.2 million). Rent reviews and lease renewals - As landlord During the first three months of 2008 the Group settled 20 rent reviews (31March 2007: 22) on rack rented properties in its portfolios with an annual rentroll of £2.1 million (31 March 2007: £2.5 million). During the same period the Group also completed lease renewals for 6 properties(31 March 2007: 6) with an annual rent roll of £0.4 million (31 March 2007: £0.1million). The average annual increase was 0.8%. Rent reviews and lease renewals - As tenant During the first three months of 2008 the Group settled 40 rent reviews (31March 2007: 60) on rack rented properties in its portfolios with an annual rentroll of £6.3 million (31 March 2007: £17.5 million). The average increase was1.5% per annum. During the same period the Group also completed lease renewals for 18 properties(31 March 2007: 6) with an annual rent roll of £0.8 million (31 March 2007: £0.2million). The average annual increase was 2.1%. Financial review During the period the Group has been impacted by further reductions in propertyvalues causing a loss before tax for the period. However the operatingperformance of the underlying business has continued to be strong as evidencedby the increase in EBITDA. Excluding the effects of exceptional asset managementreceipts received during the period FFO, the Group's measure of underlyingoperating performance, has remained strong. Funds from operations FFO is a non-GAAP financial management measure used to demonstrate theunderlying operating performance of real estate businesses. It providesinvestors with information regarding the Group's ability to service debt andmake capital expenditure. This is achieved by eliminating from EBITDA items thatare non-cash in nature. Further information on FFO is set out in note 17. FFO was £45.0 million for the three months ended 31 March 2008, compared with£13.8 million for the three months ended 31 March 2007. The Group maintains astrong pipeline of asset management opportunities and during the period theGroup secured £33.0 million of asset management receipts, which is aboveaverage. Excluding the impact of the above average asset management receipts,underlying FFO was £14.1 million for the three months ended 31 March 2008, thisequates to 48 pence per share (31 March 2007: 47 pence per share). Revenue Group revenue for the three months ended 31 March 2008 was £99.6 million, adecrease of £4.5 million (4.3%) over the same period in the prior year. Revenuefrom Outsourcing Contracts has decreased by £6.7 million due to a reduction inrevenue from the fit-out and refurbishment of properties under the IPS contractof £7.9 million offset by increases in third party rents and contractual incomeof £1.2 million. Revenue from Direct Property Investments has increased by £2.2million since the period ended 31 March 2007. This is due to the contributionfrom properties acquired after the first quarter of 2007. Property operating expenses The property operating expenses of the Group in the three months ended 31 March2008 were £60.0 million (of which £38.6 million was rentals payable) compared to£68.9 million (£38.0 million rentals payable) for the same period in theprevious year, a decrease of 12.9%. In the prior year the Group incurredexpenditure of £6.9 million associated with the initial fit-out andrefurbishment of properties under the IPS contract. All properties have now beencompleted and therefore these costs have decreased. In addition there has been adecrease in refurbishment costs within the Direct Property Investment Portfolioof £0.6 million and a one-off rebate of costs of £1.1 million compared to thesame period in the prior year. Administrative and other expenses Administrative and other expenses were £5.6 million for the three months ended31 March 2008 compared to £4.8 million for the three months ended 31 March 2007,an increase of 16.7%. This increase is due to increases in accommodation costs,business development costs and staff costs. EBITDA The EBITDA result is a reflection of the strong underlying performance of theGroup. EBITDA (see note 16) was £35.6 million for the three months ended 31March 2008, compared to £32.7 million for the three months ended 31 March 2007,an increase of 8.9%. This was primarily due to decreases in property operatingexpenditure of 11.3% offsetting and outstripping the decrease in revenue of3.3%. Finance costs and finance income Finance costs in the three months ended 31 March 2008 were £31.0 million (31March 2007: £18.6 million). This increase of £12.4 million is due to an increasein interest costs of £3.5 million due to the financing of purchases of DirectProperty Investments made in the period after 31 March 2007. In addition swapvaluation losses of £8.7 million were incurred on swaps held under the Deltaterm facility. Finance income has increased by £7.3 million due to an increase in swap gains of£7.3 million on the extinguishment of interest rate swaps under the Deltarevolving acquisition facility. Taxation Certain Group companies are resident in Bermuda and are classified as UKnon-resident landlords for tax purposes. Taxable profits in these companies aresubject to UK income tax and are exempt from local Bermuda taxes. The Group and its subsidiaries have not paid income or corporation tax in theperiod due to their tax residence and the availability of current and prior yeartax losses and other tax deductible allowances. The Group has recorded adeferred tax credit in the period of £0.9 million recognised on unutilisedlosses, decelerated capital allowances and asset management receipts. As aresult the deferred tax asset has increased from £15.1 million at 31 December2007 to £16.0 million at 31 March 2008. In addition the deferred tax liabilityarising from the revaluation of interest rate swaps decreased from £3.8 millionat 31 December 2007 to £3.2 million at 31 March 2008 due to revaluationmovements in the three month period. The cumulative movement of £0.6 million hasbeen recognised directly in equity. The Group has additional tax losses available for carry forward to future yearsbut these losses are only available to offset against future taxable profits inthe entity in which the losses arose. The Group has not recognised a deferredincome tax asset in respect of these losses and deductions due to the degree ofuncertainty over both the amount and timing of utilisation. Non-current assets Non-current assets, comprising investment property, property plant andequipment, premiums paid for operating leases, non-current trade and otherreceivables, financial instruments and deferred tax assets decreased by £53.8million between 31 December 2007 and 31 March 2008. Investment property (see note 9) decreased to £1,518.8 million from £1,558.0million at 31 December 2007, a decrease of £39.2 million. This is due torevaluation losses of 8.4 million on the Abbey Portfolio and £30.8 million onthe Direct Property Investments Portfolio. Over the same period, property, plant and equipment (see note 8) has similarlydecreased in value from £518.6 million at 31 December 2007 to £506.4 million at31 March 2008. This is due to the revaluation losses of certain of the Group'sfreehold and long leasehold properties held under the HMRC Portfolio. The totalportfolio has decreased by £11.4 million as valued by the Group's externalvaluers. However this movement includes gains of £0.6 million made on assetswhich are held within the financial statements as non-current assets held forsale and premiums held as operating leases. Since these are held at book valuerather than valuation within the financial statements this gain is notrecognised and therefore the Group records a total loss of £12.0 million withinthe financial statements net of £0.2 million depreciation on finance leases andother non-property assets. Bank loans The Group seeks to finance its property investments with long-term debtfacilities on which the interest rates have been fixed by utilising a mixture offixed rate debt and floating rate debt with matching interest rate swapagreements. At 31 March 2008, £1,449.8 million had been drawn under the Group'sloan facilities (31 December 2007: £1,496.0 million). During the period theGroup completed the refinancing of the £257 million Delta acquisition revolvingfacility. This was replaced with two loans, a £152 million seven year termfacility and a separate £60 million facility maturing in April 2009. The balanceof the repayment was made with cash from within the business. The weighted average term of Mapeley's debt facilities to maturity is 7 yearsand the average total cost of borrowing across the Group is 5.7%. Consolidated income statementFor the three months ended 31 March 2008 Three months ended Year ended 31 March 31 December Notes 2008 2007 2007 Unaudited Unaudited Audited £m £m £m Revenue 3 99.6 104.1 417.4Property operating expenses 3 (60.0) (68.9) (288.4) --------- -------- --------- Net contract, rental & related income 3 39.6 35.2 129.0 Net valuation (deficit) oninvestment property (39.2) (2.0) (148.6)Reversal of impairment/(impairment) ofnon-investment property - 0.1 (0.4)Gain on disposal ofnon-investment property - - 0.3Administrative and other expenses (5.6) (4.8) (20.2) --------- -------- --------- Operating (loss)/profit (5.2) 28.5 (39.9) Finance costs 4 (31.0) (18.6) (98.4)Finance income 4 8.8 1.5 9.3 --------- -------- --------- (Loss)/profit before tax (27.4) 11.4 (129.0) Income tax credit 5 0.9 - 4.1 --------- -------- ---------(Loss)/profit for the period (26.5) 11.4 (124.9) ========= ======== =========attributable to equity holders of Mapeley Limited Dividends £m £m £m- paid 6 - 13.2 54.6- proposed and declared 6 - 13.8 55.2 ========= ======== ========= Dividends per share pence/share pence/share pence/share- paid 6 - 45 186- proposed and declared 6 - 47 188 --------- -------- --------- (Loss)/earnings per share pence/share pence/share pence/share- basic 7 (90) 39 (424)- diluted 7 (90) 39 (424) ========= ======== ========= Consolidated statement of changes in equityFor the period ended 31 March 2008 and 31 March 2007 Net unrealised Asset Issued Share (losses)/ Retained revaluation Other Total capital premium gains losses reserve reserves equity £m £m £m £m £m £m £mAt 31 December 2007 (Audited) - 328.9 12.4 (220.7) 321.9 105.3 547.8 Revaluation deficit - - - - (12.0) - (12.0)Depreciation written back on revaluation of non-investment property - - - - 0.7 - 0.7Transfer of excess revaluation depreciation - - - 0.7 (0.7) - -Net Loss on cash flow hedges - - (1.7) - - - (1.7)Tax on items taken directly to equity - - 0.6 - - - 0.6 ------ -------- ----------- ------- ----------- -------- ---------Total (expense)/income for the period recognised directly in equity - - (1.1) 0.7 (12.0) - (12.4)Loss for the period - - - (26.5) - - (26.5) ------ -------- ----------- ------- ----------- -------- ---------Total expense for the period - - (1.1) (25.8) (12.0) - (38.9)Cost related to issue of ordinary shares - - - - - - -Issue of shares to employees under the Employee Share Plan - - - - - 0.5 0.5Equity dividends - - - - - - - ------ -------- ----------- ------- ----------- -------- ---------At 31 March 2008 (Unaudited) - 328.9 11.3 (246.5) 309.9 105.8 509.4 ====== ======== =========== ======= =========== ======== ========= At 31 December 2006 (Audited) - 329.2 14.7 (49.9) 315.2 103.5 712.7 Revaluation surplus - - - - 4.8 - 4.8Depreciation written back on revaluation of non-investment property - - - - 1.5 - 1.5Transfer of excess revaluation depreciation - - - 1.4 (1.4) - -Net gain on cash flow hedges - - 8.5 - - - 8.5 ------ -------- ----------- ------- ----------- -------- ---------Total income for the period recognised directly in equity - - 8.5 1.4 4.9 - 14.8Profit for the period - - - 11.4 - - 11.4 ------ -------- ----------- ------- ----------- -------- ---------Total income for the period - - 8.5 12.8 4.9 - 26.2Cost related to issue of ordinary shares - (0.2) - - - - (0.2)Issue of shares to Non-executive Directors - - - - - 0.1 0.1Issue of shares to employees under the Employee Share Plan - - - - - 0.4 0.4Equity dividends - - - (13.2) - - (13.2) ------ -------- ----------- ------- ----------- -------- ---------At 31 March 2007 (Unaudited) - 329.0 23.2 (50.3) 320.1 104.0 726.0 ====== ======== =========== ======= =========== ======== ========= Consolidated statement of changes in equityFor the year ended 31 December 2007 Net unrealised Asset Issued Share (losses)/ Retained revaluation Other Total capital premium gains losses reserve reserves Equity £m £m £m £m £m £m £m At 31 December 2006 (Audited) - 329.2 14.7 (49.9) 315.2 103.5 712.7 Revaluation surplus - - - - 12.2 - 12.2Depreciation written back on revaluation of non-investment property - - - - 3.0 - 3.0Transfer of excess revaluation depreciation - - - 2.9 (2.9) - -Transfer of revaluation on surplus on asset disposals - - - 5.8 (5.8) - -Loss on cash flow hedges - - (2.9) - - - (2.9)Tax on items taken directly to equity - - 0.6 - 0.2 - 0.8 ------ --------- ----------- --------- ----------- ------- -----------Total (expense)/income for the year recognised directly in equity - - (2.3) 8.7 6.7 - 13.1Loss for the year - - - (124.9) - - (124.9) ------ --------- ----------- --------- ----------- ------- -----------Total income (expense)/income for the year - - (2.3) (116.2) 6.7 - (111.8)Cost related to issue of new ordinary shares (0.3) - - - - (0.3)Issue of shares to Non-executive Directors - - - - - 0.1 0.1Issue of shares to employees under the Employee Share Plan - - - - - 1.7 1.7Equity dividends - - - (54.6) - - (54.6) ------ --------- ----------- --------- ----------- ------- -----------At 31 December 2007 (Audited) - 328.9 12.4 (220.7) 321.9 105.3 547.8 ====== ========= =========== ========= =========== ======= =========== Consolidated balance sheet - at 31 March 2008 31 March 2008 31 March 2007 31 December 2007 Unaudited Unaudited Audited Notes £m £m £mASSETSNon-current assetsProperty, plant andequipment 8 506.4 528.2 518.6Investment property 9 1,518.8 1,585.5 1,558.0Premiums on operating leases 31.5 34.5 32.2Trade and other receivables 5.6 5.9 5.6Financial instruments 14.4 29.1 17.0Deferred tax asset 16.0 10.9 15.1 ----------- ---------- ----------Total non-current assets 2,092.7 2,194.1 2,146.5 ----------- ---------- ----------Current assetsTrade and other receivables 88.8 73.5 71.2Cash and short-term deposits- in controlled accounts 11 23.0 20.4 29.1 - for operational purposes 11 40.3 71.0 61.7 ----------- ---------- ----------Total current assets 152.1 164.9 162.0 ----------- ---------- ----------Non-current assets heldfor sale 10 9.1 0.5 9.1 ----------- ---------- ---------- TOTAL ASSETS 2,253.9 2,359.5 2,317.6 =========== ========== ==========EQUITY AND LIABILITIESEquity attributable to equityholders of Mapeley LimitedIssued capital (net oftreasury shares) 12 - - -Share premium 328.9 329.0 328.9Net unrealisedgains/losses 11.3 23.2 12.4Retained losses (246.5) (50.3) (220.7)Asset revaluation reserve 309.9 320.1 321.9Other reserves 105.8 104.0 105.3 ----------- ---------- ----------Total equity 509.4 726.0 547.8 ----------- ---------- ----------Non-current liabilitiesTrade and other payables 5.9 5.2 6.0Interest & non-interestbearing loans andborrowings 13 1,442.8 1,369.5 1,233.0Provisions 36.6 28.8 34.3Deferred assetmanagement receipts 14 109.9 77.4 81.1Deferred tax liability 3.2 4.6 3.8 ----------- ---------- ----------Total non-current liabilities 1,598.4 1,485.5 1,358.2 ----------- ---------- ----------Current liabilitiesTrade and other payables 118.6 113.5 124.4Interest & non-interestbearing loans andborrowings 13 0.1 15.1 257.7Provisions 10.7 13.5 15.2Financial instruments 7.8 - 7.8Deferred assetmanagement receipts 14 8.9 5.9 6.5 ----------- ---------- ----------Total current liabilities 146.1 148.0 411.6 ----------- ---------- ----------Total liabilities 1,744.5 1,633.5 1,769.8 ----------- ---------- ---------- TOTAL EQUITY AND LIABILITIES 2,253.9 2,359.5 2,317.6 =========== ========== ========== Consolidated cash flow statementfor the three months ended 31 March 2008 Three months Three months Year ended ended 31 March ended 31 March 31 December 2008 2007 2007 Notes Unaudited Unaudited AuditedCash flows from operating activities £m £m £m(Loss)/profit before tax (27.4) 11.4 (129.0)Adjustment for:Net finance costs 22.2 17.1 89.1(Reversal)/impairment of non-investment property - (0.1) 0.4Net valuation deficit on investment property 39.2 2.0 148.6Depreciation and amortisation 1.6 2.3 6.3Loss on disposal of assets - - (0.3)Share benefit expense 0.5 0.5 1.8Operating profit before changes inworking capital 36.1 33.2 116.9(Increase)/decrease in trade & otherreceivables (17.1) 0.3 2.9(Decrease)/increase in trade & otherpayables (3.2) 1.8 10.2(Decrease)/increase in provisions (2.9) (3.3) 2.1Increase/(decrease) in deferred assetmanagement receipts 31.1 (1.5) 2.9 ---------- --------- ----------Cash generated from operations 44.0 30.5 135.0Interest paid (24.0) (16.4) (74.0) Interest received 1.1 1.0 4.4 ---------- --------- ----------Net cash flows from operatingactivities 21.1 15.1 65.4 ---------- --------- ---------- Cash flows from investing activitiesProceeds on disposal of non investmentproperty - 2.5 4.1Proceeds from disposal of property,plant and equipment - - 7.5Purchase of property, plant andequipment - (0.1) (1.1)Purchase of investment property - (104.4) (222.3) ---------- --------- ----------Net cash flows used in investingactivities - (102.0) (211.8) ---------- --------- ---------- Cash flows from financing activitiesCosts of raising finance (2.2) (0.8) (1.3)Payment of finance lease liabilities (0.2) (0.1) (0.7)Receipt of new bank loans 212.0 101.4 221.0Repayment of bank loans (258.2) (0.2) (3.3)Costs related to issue ofordinary shares - (0.2) (0.3)Dividend paid to equity holders 6 - (13.2) (54.6) ---------- --------- ----------Net cash flows from financingactivities (48.6) 86.9 160.8Net (decrease)/increase in cashand short-term deposits (27.5) - 14.4 Cash and cash equivalents atstart of period 11 90.8 76.4 76.4 ---------- --------- ----------Cash and cash equivalents atend of period 11 63.3 76.4 90.8 ========== ========= ========== Notes to the unaudited first quarter resultsat 31 March 2008 1. General information The consolidated financial statements of the Group for the three months ended 31March 2008 comprise the Company and its subsidiaries and were authorised by theBoard for issue on 7 May 2008. The Company's registered office is located atRegency Court, Glategny Esplanade, St Peter Port, Guernsey GY1 1WW. 2. Basis of preparation and accounting policies The financial information comprises the consolidated balance sheets,consolidated statements of income, cash flow and changes in equity and therelated notes for the periods then ended. The financial information contained inthis report is unaudited and does not constitute statutory accounts within themeaning of The Companies (Guernsey) Law, 1994. The annual report and accountsfor the year ended 31 December 2007, which were prepared under IFRS as adoptedby the European Union, received an unqualified auditors' report. The unauditedfinancial information has been prepared in accordance with the Listing Rules ofthe Financial Services Authority. The interim consolidated financial statements are presented in pounds sterlingand all values are rounded to the nearest million (£m) except where otherwiseindicated. The functional currency of the Group is pounds sterling. The accounting policies adopted in the preparation of the interim consolidatedfinancial statements are consistent with those as reported in the Group's annualreport for the year ended 31 December 2007 except where such policies have beenrevised to reflect amendments to International Accounting Standards ("IAS") andthe adoption of new International Financial Reporting Standards ("IFRS") whichbecame effective from 1 January 2008. Accordingly IFRIC 12 "Service ConcessionArrangements" and IFRIC 14: IAS 19 "The Limit on a Defined Benefit Asset,Minimum Funding Requirements and their Interaction" have been adopted by theGroup in preparing these interim financial statements. The adoption of thesestandards has had no material impact on the Group's financial statements. The following new standards and interpretations have been issued but are noteffective for the financial year ending 31 December 2008, and have not beenadopted early: IFRS 8 "Operating segments", IAS 1 "Presentation of FinancialStatements", IAS 23 "Borrowing costs", IFRC 13 "Customer Loyalty Programmes". The financial statements of the Group for the year ending 31 December 2008 willbe prepared in accordance with IFRS as adopted for use by the European Union at31 December 2008. The interim consolidated financial statements should be readin conjunction with the Group's annual financial statements as at 31 December2007. Work in progress During 2007 the Directors reconsidered the treatment for work in progress sincethe annual report for the year ended 31 December 2006. It was concluded that itwas more appropriate to treat this item as accrued income under the terms of IAS18 - Revenue. The impact of this on the first quarter 2008 financial informationis as follows: - Work in Progress of £15.7 million as at 31 March 2007 has been reclassified inthe balance sheet as "Unbilled Revenue" which is included in trade and otherreceivables and the amounts recorded adjusted by £0.5 million at 31 March 2007. - In the period to 31 March 2007 Revenue has decreased by £0.2 million andProperty Operating expenses have decreased by £0.2 million. Consequently profithas not been affected in the three months ended 31 March 2007. Retained earningsbrought forward at 31 December 2006 have been adjusted by £0.5 million. - References to Work in Progress in 'Funds from operations' in note 17 have beenchanged to Unbilled Revenue. 3. Revenue and segmental information For management purposes, the Group is currently organised into two segments inline with the Group's business model - Outsourcing Contracts and Direct PropertyInvestments. These divisions are the basis on which the Group reports itsprimary segment information. The segments are described below: Outsourcing Contracts This segment consists of activities arising from the purchase and subsequentleaseback of the HMRC and Abbey property portfolios and the fit-out and deliveryof serviced accommodation under the IPS contract. The main characteristics ofthese arrangements are listed below: • long-term contracts (the contracts run over periods from 3 to 20 years); • agreements are tailored in accordance with the client's accommodation requirements (from simple purchase and lease back to fully serviced accommodation); • the HMRC and Abbey agreements allow them to exercise flexibility to vacate properties within defined parameters; and • under the HMRC and Abbey agreements the revenue earned is subject to annual increases. Direct Property Investments The Group has embarked on a separate strategy of acquiring individual andportfolios of office property. The Group's activities within this segment willfocus on purchasing property primarily let to strong credit quality tenants, whoare likely to stay in the properties for a minimum term of 5 years. The Group has a single geographical segment, being the UK commercial propertymarket. Three months ended 31 March 2008 31 March 2007 (Unaudited) (Unaudited) Direct Direct Property Outsourcing Total Property Outsourcing TotalBusiness segments Investments Contracts operations Investments Contracts operations £m £m £m £m £m £mRental revenue 18.3 7.7 26.0 16.0 6.8 22.8Other income - 0.1 0.1 0.1 0.1 0.2 ------- ------- ------ ------- ------- -------Facility unitary charge - 53.5 53.5 - 60.3 60.3Contractual rents - 20.0 20.0 - 20.8 20.8 ------- ------- ------ ------- ------- -------Contractual revenue - 73.5 73.5 - 81.1 81.1 Segment revenue 18.3 81.3 99.6 16.1 88.0 104.1 Rentals payable (0.1) (38.5) (38.6) (0.2) (37.8) (38.0)Other direct property and contractexpenditure * (0.3) (21.1) (21.4) (1.0) (29.9) (30.9) ------- ------- ------ ------- ------- -------Net contract, rental &related income 17.9 21.7 39.6 14.9 20.3 35.2Reversal of impairment ofnon-investmentproperty - - - - 0.1 0.1Net valuation(deficit)/surplus on investmentproperty (30.8) (8.4) (39.2) (4.2) 2.2 (2.0) ------- ------- ------ ------- ------- -------Segment result (12.9) 13.3 0.4 10.7 22.6 33.3 ======= ======= ======= =======Unallocated expenses (5.6) (4.8) ------ -------Operating(loss)/profit (5.2) 28.5Net finance costs (22.2) (17.1)Income tax 0.9 - ------ -------(Loss)/profitfor the period (26.5) 11.4 ====== ======= * Other direct property and contract expenditure includes depreciation. 3. Revenue and segmental information (continued) Year ended 31 December 2007 (Audited) Direct Property Outsourcing TotalBusiness segments Investments contracts operations £m £m £mRental revenue 69.5 28.3 97.8Other income 0.1 1.4 1.5 ----------- ---------- --------- Facility unitary charge - 232.6 232.6 Contractual rents - 85.5 85.5 ----------- ---------- ---------Contractual revenue - 318.1 318.1Segment revenue 69.6 347.8 417.4Rentals payable (0.7) (170.6) (171.3)Other direct property and contractexpenditure * (3.7) (113.4) (117.1) ----------- ---------- ---------Net contract, rental & related income 65.2 63.8 129.0Reversal of impairment of non-investmentproperty - (0.4) (0.4)Net valuation surplus on investmentproperty (129.6) (19.0) (148.6)Gain on disposal of non-investmentproperty - 0.3 0.3 ----------- ---------- ---------Segment result (64.4) 44.7 (19.7) =========== ==========Unallocated expenses (20.2) ---------Operating profit (39.9)Net finance costs (89.1)Income tax credit 4.1 ---------Loss for the year (124.9) ========= * Other direct property and contract expenditure includes depreciation. 4. Finance costs and finance income Three months ended Year ended 31 March 31 December 2008 2007 2007 Unaudited Unaudited Audited £m £m £mFinance costsBank loans and overdrafts 21.4 17.9 82.5Finance charges payable under finance leases 0.1 0.1 0.6Loss on interest swap 8.7 - 12.9Loan termination costs 0.1 - - ---------- -------- ---------Unwinding of discount on provisions 0.7 0.6 2.4 ---------- -------- --------- 31.0 18.6 98.4 ========== ======== =========Finance incomeBank interest receivable 1.0 1.0 4.4Gain on interest swap 7.8 0.5 4.9 ---------- -------- --------- 8.8 1.5 9.3 ========== ======== ========= Bank loans and overdraft charges include a charge of £0.7 million (three monthsended 31 March 2007: £0.3 million; year ended 31 December 2007: £4.1 million)relating to loan finance fees recognised under the effective interest method. 5. Income tax expense a) Tax on profit on ordinary activities Current taxation No current income tax is chargeable to the income statement or the statement ofchanges in equity in the current period in respect of Guernsey, UK or otheroverseas taxation. During the year ended 31 December 2007 a current tax chargeof £0.1 million was recorded in respect of withholding tax. Deferred taxation A tax credit of £0.9 million (three months ended 31 March 2007: £nil; twelvemonths ended 31 December 2007: £4.2 million) has been recognised in the currentperiod in the income statement in relation to the movement in the deferred taxasset balance arising as a result of changes in future tax rates and utilisationof losses. In addition £0.6 million credit (three months ended 31 March 2007:£nil; twelve months ended 31 December 2007: £0.6 million credit) has beenrecognised directly in equity in relation to the movement in the deferred taxliability on the revaluation of interest rate swaps to fair value. b) Deferred income tax The Group has re-evaluated its forecasts of future profits of Group companiesand has concluded that the recognition of a deferred tax asset remainsappropriate. The deferred tax asset has increased to £16.0 million (31 December2007: £15.1 million) and arises in respect of losses not utilised, deceleratedcapital allowances and asset management receipts. The Group has additional taxlosses available for carry forward to future years but in many cases theselosses are only available to offset against future taxable profits in the entityin which the losses arose. The Group has not recognised a deferred income taxasset in respect of these losses and deductions due to the degree of uncertaintyover both the amount and timing of utilisation. The deferred tax liability has decreased during the period to £3.2 million (31December 2007: £3.8 million) as a result of the revaluation of interest rateswaps to fair value during the period. This has given rise to a tax credit of£0.6 million which has been recognised directly in equity. 6. Dividends Three months ended Year ended 31 March 31 December 2008 2007 2007 Unaudited Unaudited Audited £m £m £mDeclared and paid during the period:Equity dividends on ordinary shares:Fourth interim dividend for2006: £0.45 per share - 13.2 13.2First interim dividend for 2007:£0.47 per share - - 13.8Second interim dividend for2007: £0.47 per share - - 13.8Third interim dividend for 2007:£0.47 per share - - 13.8 ---------- ---------- ---------- - 13.2 54.6 Equity dividends on ordinary shares proposed and declared:Fourth interim dividend for 2007proposed and approved at a Boardmeeting on 14 March 2008 andpaid on 11 April 2008 (£0.47 pershare) - - 13.8 ========== ======== ========First interim dividend for 2007proposed and approved at a Boardmeeting on 2 May 2007 and paidon 25 May 2007 (£0.47 per share) - 13.8 - ========== ======== ======== 7. (Loss)/earnings per share The calculation of basic and diluted earnings per share figures is based on thefollowing: - Net loss attributable to equity holders of the Company for the three monthsended 31 March 2008 of £26.5 million (three months ended 31 March 2007: profitof £11.4 million; twelve months ended 31 December 2007: loss of £124.9 million) - Weighted average number of ordinary shares for the three months ended 31 March2008 for basic earnings per share 29,417,093 (three months ended 31 March 2007:29,412,844; year ended 31 December 2007: 29,417,876) - Weighted average number of ordinary shares for the three months ended31 March 2008 for diluted earnings per share 29,417,093 (three months ended 31March 2007: 29,431,878; year ended 31 December 2007: 29,417,876) 8. Property, plant and equipment Property Freehold acquired under Plant and property finance leases equipment Total £m £m £m £m Cost or valuation:At 1 January 2008 (Audited) 473.9 46.1 17.3 537.3Revaluations (12.2) 0.2 - (12.0) ---------- --------- --------- ---------At 31 March 2008(Unaudited) 461.7 46.3 17.3 525.3 ========== ========= ========= ========= Accumulated depreciation:At 1 January 2008 (Audited) - (2.5) (16.2) (18.7)Provided during the period (0.7) (0.1) (0.1) (0.9) ---------- --------- --------- ---------Written back on Revaluation 0.7 - - 0.7 ---------- --------- --------- ---------At 31 March 2008(Unaudited) - (2.6) (16.3) (18.9) ========== ========= ========= ========= Net book value:At 31 March 2008(Unaudited) 461.7 43.7 1.0 506.4 ========== ========= ========= ========= At 31 December 2007 (Audited) 473.9 43.6 1.1 518.6 ========== ========= ========= ========= Freehold property and property acquired under finance leases are included inproperty, plant and equipment where the Group provides significant ancillaryservices to tenants, and is carried at fair value. Freehold property held at 31 March 2008 of £461.7 million (31 December 2007:£473.9 million) and the majority of the property acquired under finance leasesat 31 March 2008 of £41.7 million (31 December 2007: £41.5 million) were valuedat 31 March 2008 by CB Richard Ellis Limited ("CBRE"), a valuer external to theGroup as part of the valuation of all the valuable properties held by the Groupunder the HMRC contract. The valuations at 31 March 2008 and 31 December 2007have been carried out in accordance with The Royal Institution of CharteredSurveyors' ("RICS") Valuation Standards, Sixth Edition (the "Red Book"). Certain other properties held under finance lease and included within Property,Plant and Equipment were valued in accordance with the Red Book by the directorsat a market value of £2.0 million (31 December 2007 £2.1 million) having takenadvice from a suitably qualified employee (a member of The Royal Institution ofChartered Surveyors). 9. Investment propertyAt valuation: Property acquired under Freehold finance leases Total property £m £m £mAt 1 January 2008(Audited) 1,530.1 27.9 1,558.0Revaluations (40.0) 0.8 (39.2) ---------- ---------- ----------At 31 March 2008(Unaudited) 1,490.1 28.7 1,518.8 ========== ========== ========== It is the Group's policy to carry investment property at fair value inaccordance with IAS 40 "Investment Property". Investment property was valued at31 March 2008 by CB Richard Ellis Limited ("CBRE") and Knight Frank LLP ("KnightFrank"), valuers external to the Group. These valuations have been incorporated into the first quarter financialstatements. Both CBRE and Knight Frank have consented to the use of their namesin these financial statements. Investment property comprises the Group's Abbey Portfolio and its directproperty investments. CBRE's valuation of the Abbey Portfolio of properties was£547.8 million (31 December 2007: £556.2 million). CBRE and Knight Frank both carried out valuations of the Group's otherproperties held within investment property, which were valued as at 31 March2008 at £891.0 million (31 December 2007: £918.6 million), and at £74.7 million(31 December 2007: £77.9 million) respectively as at 31 March 2008. The remaining properties held under Property acquired under finance leases werevalued by the Directors at a market value of £5.3 million (31 December 2007:£5.3 million), having taken advice from a suitably-qualified employee (a memberof The Royal Institution of Chartered Surveyors). These valuations are summarised below: As at As at 31 March 31 December 2008 2007 Unaudited Audited £m £mValuation of Abbey Portfolio by CBRE 547.8 556.2Valuation of direct property investments by Knight Frank 74.7 77.9Valuation of direct property investments by CBRE 891.0 918.6Valuation of certain finance leases by the Directors 5.3 5.3 ------------ ------------ 1,518.8 1,558.0 ============ ============ The valuations at 31 March 2008 and 31 December 2007 have been carried out inaccordance with The Royal Institution of Chartered Surveyors' ("RICS") ValuationStandards, Sixth Edition (the "Red Book"). Income and expenditure derived from investment properties relates to the DirectProperty Investments Portfolio and also those long leaseholds and freeholds heldunder the Abbey Portfolio as investment property as follows: Three months Year ended ended 31 March 31 December 2008 2007 2007 Unaudited Unaudited Audited £m £m £mRevenueRevenue from Direct PropertyInvestments Portfolio 18.3 16.0 69.5Revenue from Abbey investmentproperties 10.3 10.9 43.4 --------- -------- --------- 28.6 26.9 112.9Property operating expenditureExpenditure from Direct PropertyInvestments Portfolio 0.4 1.2 4.3Expenditure from Abbey investmentproperty 0.7 0.1 0.2 --------- -------- --------- 1.1 1.3 4.5 Property operating expenditure from investment property that has not generatedrevenue in the period is £nil (three months ended 31 March 2007 £0.6 million;year ended 31 December 2007 £2.2 million). 10. Non-current assets held for sale As at As at 31 March 31 December 2008 2007 Unaudited AuditedAt valuation £m £mAt start of the period 9.1 3.0Reclassifications from Investment Property - 9.1Disposals - (3.0) ------------ ------------At end of the period 9.1 9.1 ============ ============ As at 31 December 2007 the Group held four properties within non-current assetsheld for sale. All such properties continue to be actively marketed and it isanticipated that these disposals will take place in 2008. All non-current assetsheld for sale had previously been recorded within property, plant and equipmentand carried at fair value. 11. Cash and short-term deposits Cash and short-term deposits earn interest at floating rates based on daily bankdeposit rates. Short-term deposits are made for varying periods of between oneday and one month depending on the immediate cash requirements of the Group, andearn interest at the respective short-term deposit rates. The fair value of cashand short-term deposits at 31 March 2008 was £63.3 million (31 December 2007£90.8 million). For the purposes of the consolidated cash flow statement, cash and short-termdeposits comprise the following: As at As at As at 31 March 2008 31 March 2007 31 December 2007 Unaudited Unaudited Audited £m £mCash at bank- in controlled accounts 23.0 20.4 29.1- for operational purposes 40.3 71.0 61.7 --------- --------- ----------Cash and short-term deposits 63.3 91.4 90.8 ========= ========= ========== Working capital facility - (15.0) - --------- --------- ----------Total cash and short-termdeposits net of bank overdrafts 63.3 76.4 90.8 ========= ========= ========== The amounts held in controlled accounts comprise tenant deposits, property saleproceeds and other capital receipts which will be held in controlled accountsuntil the next interest payment date in accordance with the terms of therelevant loan facility agreements. 12. Issued capital As at 31 March 2008Authorised No. of ordinary shares £mOrdinary shares at par value of £nil Unlimited - ============ ====== Issued No. of shares £mAt 1 January 2008 (net of 19,686 treasury shares) 29,417,140 -Movement in shares held by the Employee Share Trust (216) - ------------ ------At 31 March 2008 (net of 19,902 treasury shares) 29,416,924 - ============ ====== 13. Interest and non-interest bearing loans and borrowings The table below sets out the Group's interest and non-interest bearing loans andborrowings as at 31 December 2007 and 31 March 2008: As at As at 31 March 31 December Effective 2008 2007 interest rate % Maturity Unaudited Audited £m £mNon-currentObligations underfinance leases 8.1% 2012-2977 8.0 8.1Bank loans:Term loan under theHMRC Portfoliofacility 6.4% Apr 2021 165.6 165.8Term loan under theAbbey Portfoliofacility 5.6% Jun 2012 451.9 451.8Acquisition term loan 5.8% Jul 2015 170.1 170.0Term loan under theBeta Portfoliofacility 5.4% Apr 2016 207.6 207.6Term loan under theGamma Portfolio facility 5.0% Jan 2017 229.8 229.7Delta term loan 6.7% Mar 2015 150.0 -Delta facility 10.7% Apr 2009 59.8 - ----------- ---------- 1,442.8 1,233.0 =========== ==========CurrentObligations underfinance leases 8.1% 2009 0.1 0.1Bank loans:Revolving deltaacquisition facility 5.9% Apr 2008 - 257.6 ----------- ---------- 0.1 257.7 =========== ========== All of the Group's properties, as valued by CBRE and Knight Frank, have beensecured against the Group's loan facilities. The loan balances above representthe amounts outstanding at 31 March 2008 and 31 December 2007 on the followingfacilities, net of costs of raising finance: Term loan under the HMRC Portfolio facility The HMRC Portfolio is financed by a 15 year, £176.0 million fixed rate loansecured on properties held in the HMRC Portfolio. The interest rate payable onthis facility is a fixed rate of 4.5% plus a margin of 0.65% for the first 7years of the loan increasing to 2.25% for the remainder of the loan, plusmandatory costs (if any). Term loan under the Abbey Portfolio facility The Abbey Portfolio is financed by a £455.0 million, 7 year loan which issecured against all investment property held in the Abbey Portfolio and by acharge over the investments of Mapeley Columbus Holdings Limited. The loan isrepayable in 2012. Interest on the loan is paid quarterly at a rate of LIBORplus 0.95% plus mandatory costs (if any). The borrowers have entered intoseparate interest rate agreements to fix the interest payable. Acquisition term loan Mapeley's direct investment portfolio is partly financed with a 10 year, £170.9million term loan. At inception the loan had a loan to value ratio of 70%. Thereis no amortisation during its term and the loan is repayable in July 2015. Theinterest payable on this loan is fixed at 4.95% plus a 0.75% margin. Beta acquisition term loan Mapeley's direct investment portfolio is further financed with a 10 year, £208.6million term loan. At inception the loan had a loan to value ratio of 75%. Thereis no amortisation during its term and the loan is repayable in April 2016. Theinterest payable on this loan is fixed at 4.53% plus a 0.85% margin. Gamma acquisition term loan Mapeley's direct investment portfolio is further financed with a 10 year, £231.3million term loan. At inception the loan had a loan to value ratio of 75%. Thereis no amortisation during its term and the loan is repayable in January 2017.The interest payable on this loan is currently fixed at 4.28% plus a 0.67%margin; however the interest payable increases by 0.20% each year until the endof the loan. 13. Interest and non-interest bearing loans and borrowings (continued) Revolving delta acquisition facility As at 31 December 2007 the Group had a 3 year, £400.0 million Revolvingacquisition facility to finance further property investments of which £257.6million was drawn down. The facility was repayable in April 2008. The interestrate payable on the facility was LIBOR plus a margin of between 1.0% and 1.15 %plus mandatory costs (if any). The Group had also put in place ten swapagreements totalling £257.6 million to fix its anticipated long term exposure tointerest rate risk on this facility. On 13 March 2008 the Revolving Deltaacquisition facility was refinanced with a combination of cash and two new loanfacilities which incorporate a proportion of the existing swap arrangements. Delta term loan The Delta investment portfolio has been financed with a new seven year £152million term loan during the period. At inception the loan had a loan to valueratio of 70%. Amortisation of £0.4 million per quarter is payable from April2009 and the loan is repayable in March 2015. The interest payable on this loanis fixed at 5.30% plus a 1.35% margin which incorporates four existing swapsfrom the previous Revolving Delta acquisition facility. The remaining swaps havebeen extinguished. Delta facility The second new facility is a £60 million corporate loan made to Mapeley Limitedrepayable in April 2009. The interest payable on this loan is at 3 month LIBORplus a 5.0% margin. 14. Deferred asset management receipts £mAt 31 December 2007- current 6.5- non-current 81.1 ------------Total deferred asset management receipts 87.6 Movement in periodReceived in period 33.0Released to income statement in period (1.8) ------------ At 31 March 2008- current 8.9- non-current 109.9 ------------Total deferred asset management receipts 118.8 ============ Asset management receipts, which represent premiums given by lessors in returnfor the Group extending its existing lease terms or removing break clauses fromexisting leases, are deferred and released as a credit to property operatingexpenses evenly over the shorter of the lease term or the period to the firstbreak, even if the payments are not made on such a basis. 15. Subsequent events The dividend proposed and approved at a Board meeting on 14 March 2008 of £13.8million was paid on 11 April 2008 (£0.47 per share). 16. Earnings before interest, tax, depreciation and amortisation Earnings before interest, tax, depreciation and amortisation or "EBITDA" is akey performance measure of the Group defined by the Group as profit before tax,finance costs, depreciation and amortisation, valuation surplus/deficit oninvestment property, gain on disposal of subsidiaries and impairment/impairmentreversal of non-investment property. EBITDA for the period is computed asfollows: Three months ended Year ended 31 March 31 December 2008 2007 2007 Unaudited Unaudited Audited £m £m £m (Loss)/profit before tax (27.4) 11.4 (129.0)Add back: Finance cost net offinance income 22.2 17.1 89.1Depreciation and amortisation 1.6 2.3 6.3Net valuation deficit on investment property 39.2 2.0 148.6(Reversal)/impairment of non - investment property - (0.1) 0.4 ---------- --------- --------EBITDA 35.6 32.7 115.4 ========== ========= ======== 17. Funds from operations Funds from operations or "FFO" is a management measure used to demonstrate theunderlying operating performance of real estate businesses such as the Company.It provides investors with information regarding the Group's ability to servicedebt and make capital expenditure. FFO does not represent cash generated fromoperating activities in accordance with IFRS, therefore it should not beconsidered an alternative to cash flow as a measure of liquidity, and is notnecessarily indicative of cash funds available. This calculation of FFO may bedifferent from the calculation used by other companies and, therefore,comparability may be limited. The Group defines "FFO" as Group "EBITDA" less "net finance costs" less the"movement in the onerous lease provision" less the "movement in work inprogress" plus the movement in "net asset management receipts" plus the chargein respect of "employee shares" plus realised revaluation gains. More detaileddefinitions of these adjustments to EBITDA are given below. "Net finance costs" comprise finance costs less finance income as set out in theGroup income statement, adjusted to exclude amortisation of loan finance fees,gains or losses on interest rate swaps, loan termination costs and the unwindingof discounts on provisions. "Movement in the onerous lease provision" is the net release (or charge) to theGroup income statement as a result of the change in the Group onerous leaseprovisions, excluding interest charged on the unwinding of the provision.Although these amounts offset rental costs in the income statement, they do notrepresent cash movements and are therefore excluded from the computation of FFO. "Movement in unbilled revenue" is the year on year change in Group accruedincome. The amount represents the increase of decrease in life cycle revenueaccrued by the Group so as to allocate revenue in the period in which work isperformed. This caption has been renamed from "movement in work in progress"(see note 2). "Net asset management receipts" are the total cash receipts in the year lessamounts amortised in the financial period. The accounting treatment of assetmanagement receipts is set out in the accounting policies. "Employee shares" - Under IFRS 2, costs are charged to the Group incomestatement when share based payments are made. This is a non cash expense and istherefore excluded from the measure. "Realised profit on disposal for FFO" is defined as the difference between theprofit on disposal as per the income statement and the profit on disposalcalculated based upon the historical cost of the asset. 17. Funds from operations (continued) Three months Three months Year ended 31 March ended 31 March ended 31 December 2008 2007 2007 £m £m £mEBITDA 35.6 32.7 115.4Net finance costs (19.9) (16.7) (74.5)Movement in the onerous lease provision (2.9) (3.3) 2.1Movement in unbilledrevenue (0.1) (0.1) 1.5Movement in long-termaccrued costs 0.7 (0.3) (1.1)Net asset managementreceipts 31.1 (1.5) 2.9Share benefit expense 0.5 0.5 1.8Realised profit ondisposal for FFO - 2.5 8.3 ---------- ---------- -----------FFO 45.0 13.8 56.4 ---------- ---------- ----------- FFO per share 153 pence 47 pence 192 pence ---------- ---------- ----------- The calculation of FFO per share is based on the following: - FFO for the three months ended 31 March 2007 of £45.0 million (three monthsended 31 March 2007: £13.8 million; year ended 31 December 2007: £56.4 million) - Weighted average number of ordinary shares for the three months ended31 March 2008 of 29,417,093 (three months ended 31 March 2007: 29,412,844; yearended 31 December 2007: 29,417,876) - FFO per share calculated using diluted weighted average number ofshares for the three months ended 31 March 2008 of 29,417,093 (three monthsended 31 March 2007: 29,431,878; 31 December 2007: 29,417,876) is 153 pence pershare (three months ended 31 March 2007: 47 pence per share; year ended 31December 2007: 192 pence per share) 18. Gearing ratio Gearing is defined as Group net debt (total debt less cash and short-termdeposits) as a proportion of total consolidated equity attributable to theequity holders of the parent. "Total debt" is defined as actual current andnon-current loan balances together with any overdrafts owed to lenders andexcludes any unamortised finance costs or adjustments to apply the effectiveinterest rate method. Equity is as set out in the consolidated balance sheet.Gearing is computed as follows: As at As at As at 31 March 2008 31 March 2007 31 December 2007 Unaudited Unaudited Audited £m £m £m"Total debt" 1,449.8 1,394.4 1,496.0Less: Cash andshort-term deposits (63.3) (91.4) (90.8) ----------- ----------- -------------Net debt 1,386.5 1,303.0 1,405.2 =========== =========== ============= Equity 509.4 726.0 547.8 =========== =========== ============= Gearing ratio 272% 180% 257% =========== =========== ============= 19. Net assets per share As at As at As at 31 March 2008 31 March 2007 31 December 2007 Unaudited Unaudited Audited Basic netassets per share £17.32 £24.67 £18.62 =========== =========== ============Diluted netassets per share £17.32 £24.65 £18.62 =========== =========== ============ The calculation of basic and diluted net asset value per share figures is basedon the following: - Consolidated net assets (equity) attributable to the equity holders of theCompany as at 31 March 2008 of £509.4 million (31 March 2007: net assets of£726.0 million; 31 December 2007: net assets of £547.8 million) - Number of ordinary shares for basic net asset value per share 29,416,924 (31March 2007: 29,407,470; 31 December 2007: 29,417,140) - Number of ordinary shares for diluted net asset value per share 29,416,924 (31March 2007: 29,427,470; 31 December 2007: 29,417,140) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Mayflower (wi)