3rd Quarter Results

8th Nov 2007 07:02

Mapeley Limited08 November 2007 Press Release MAPELEY LIMITED Unaudited third quarter results for the nine months ended 30 September 2007 Mapeley Limited (LSE: MAY), the Guernsey based market leader in propertyinvestment and outsourcing, announces today its unaudited quarterly results forthe nine months ended 30 September 2007. Mapeley owns and manages a commercialproperty portfolio of over £2.2 billion covering some 2.4 million square metresthroughout the UK. Highlights • Dividends declared up 14.6% to £1.41 per share (2006: £1.23 per share) • FFO* the key measure of operating performance up 16.7% to £42.0 million, equating to 143 pence per share** (30 September 2006: £36.0 million, equating to 138 pence per share) • EBITDA*** increased by 20.7% to £93.3 million (30 September 2006: £77.3 million) • Investment property acquisitions in the period of £223.3 million (30 September 2006: £306.2 million) • Revenue up 11.9% to £310.1 million (30 September 2006: £277.2 million) • Loss before tax of £18.6 million (30 September 2006: profit before tax of £42.0 million) due to non-cash revaluation losses in the quarter of £45.8 million in line with market trends • Total asset value up 8.8% to £2,429.8 million (31 December 2006: £2,232.7 million) Commenting on the results, Jamie Hopkins, Chief Executive of Mapeley, said: "We are pleased to report results in line with expectations despite moreuncertain macro market conditions. The embedded organic growth in our businesscontinues to drive returns and our dividend remains underpinned by strong cashflows. 94% of our income is derived from government and investment gradetenants, we have a 10 year average lease length across the portfolios and ouroccupancy rate remains stable at 96%."Conference call Mapeley management will hold a results conference call on Thursday 8 November2007 at 2 pm London time (9 am New York time). Analysts and investors arewelcome to participate on the live call. You can access the conference call bydialling 0800 953 0844 (from within the UK), 1866 832 0717 (from within the US)or +44 (0) 1452 562 716 (from outside the UK) ten minutes prior to the scheduledstart of the call; please reference "Mapeley Q3 2007 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 callto visit the site and download the necessary software required to listen to theinternet broadcast. A replay of the webcast will be available for three monthsfollowing the call. A replay of the conference call will be available until 10 am London time onThursday 15 November 2007 by dialling 0800 953 1533 (from within the UK), 1866247 4222 (from within the US) or +44 (0) 1452 550 000 (from outside the UK);please reference access number "19562206#". For further information, please contact: Emma Parr, Investor Relations Fiona Laffan/Pavla ShawMapeley BrunswickTel: +44(0)20 7788 1742 Tel: +44(0)20 7404 5959Email:[email protected] Email: [email protected] * see note 18 to the accounts for definition of FFO ** based on weighted average number of shares in issue for the period on an undiluted basis *** see note 17 to the accounts for definition of EBITDA Mapeley Limited - Third quarter results Key financial information Three months ended Key Performance Measures Nine months ended Year ended 30 September 30 September 31 December 2007 2006 2007 2006 2006Unaudited Unaudited Unaudited Unaudited Audited £m £m £m £m £m 14.5 11.4 Funds from operations (FFO) (refer to note 18) 42.0 36.0 45.7 13.8 11.4 Dividends declared during period 41.4 32.6 45.8 47p 43p Dividend per share (pence/share)* 141p 123p 168p 49p 43p FFO per share (pence/share) ** (refer to note 18) 143p 138p 170p Income Statement 104.6 99.5 Revenue 310.1 277.2 385.0 32.3 28.2 EBITDA (refer to note 17) 93.3 77.3 93.5 (48.8) 15.3 (Loss)/profit before tax (18.6) 42.0 42.8 As at As at As at 30 September 30 September 31 December Balance Sheet 2007 2006 2006 £m £m £m Property assets*** 2,214.0 1,979.6 2,044.4 Net assets (refer to note 20) 670.4 624.3 712.7 Bank loans excluding finance costs 1,498.7 1,308.3 1,278.1 * The dividend per share calculation represents the declared coupon for the period. For the 9 months ended 30 September 2007, 30 September 2006 and the year ended 31 December 2006 the dividend per share calculation aggregates the coupon rates declared for the periods. ** FFO per share calculations are based on the weighted average number of ordinary shares in issue for the three months ended 30 September 2007 of 29,423,496, for the nine months ended 30 September 2007 of 29,415,761 (three months ended 30 September 2006: 26,491,676; nine months ended 30 September 2006: 26,104,021; year ended 31 December 2006: 26,887,700). *** Property assets are defined as total non-current assets plus non-current assets held for sale, less non-current trade and other receivables, financial instruments, deferred tax assets and plant and equipment held within property, plant and equipment (30 September 2007: £0.4 million; 30 September 2006: £0.3 million; 31 December 2006: £0.2 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 £2.2bn 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 Highlights Results for the third quarter of 2007 were in line with our expectations. FFO,the key measure of our operating performance, increased by £3.1 million to £14.5million in the quarter, an increase of 27.2% over the same period last year. Wehave maintained the dividend at 47 pence per share for the third quarter, thisbrings cumulative dividends for 2007 to 141 pence per share, an increase of14.6% over the same period in 2006. We purchased £43.1 million of new assets in total for the quarter and £223.3million for the nine months to 30 September 2007. Our national operatingplatform continues to provide tangible competitive advantage in the regionalmarkets enabling us to expand our database of potential acquisition targets.In line with market trends, we have reported an overall decrease in propertyvaluations this quarter which contributes to a loss before tax of £18.6 million.Since 30 June 2007 values have fallen on a like for like basis by 0.5% and 1.5%respectively in our HMRC and Abbey portfolios and the value of our directproperty investments (DPI) portfolio has fallen by 3.8%. The fall in value ofthe DPI portfolio is a result of yield increase of an average 30 basis pointsapplied to the portfolio by our external valuers. Organic growth We have continued to deliver good organic performance from the business with theoutsourcing contracts driving returns. By increasing income over costs inrelation to our outsourcing contracts and by achieving rental growth in our DPIassets we have consistently managed to generate organic growth. The main cost to Mapeley of providing the outsourcing proposition is the rentpayable on the leasehold assets we operate on behalf of our clients. For Mapeleythe strategy is simple: work hard at rent reviews to limit or, if possible,prevent growth in rent payable whilst at the same time collecting fixed annualincreases in the income we receive from our clients. In the six years we havebeen operating our outsourcing contracts we have generated a profitable andsustainable spread between annual increases in income and costs. IPD have continued to analyse our leasehold portfolio where we act as tenant. Inthe first two quarters of this year we reported the results of IPD's analysis ofrent reviews due in 2005 where Mapeley acted as tenant. As we progress though2007, we now have an adequate sample size in relation to 2006 rent reviews andare able to report results for this period. We are pleased to confirm that wehave continued to out-perform the IPD benchmark of 2.1% by incurring only 1.6%annual rental growth on our leasehold portfolio for 2006 rent reviews whereMapeley is tenant. We will continue to report 2006 rent review performance asfurther transactional evidence comes through. During the third quarter we also continued to produce further evidence of ourability to keep tenants in buildings where we are landlord, which is a keystrategy for Mapeley and underlines both our estate management and acquisitionefforts. Two significant examples of this in our DPI portfolio are propertiesleased to the government in London and to EDS in Peterlee, County Durham. Thelease of this London asset was due for expiry in September 2008. However, wehave agreed a new 25 year lease at the same initial rent of £1.8 million risingto £2 million per annum reflecting a net initial yield of 7.3% rising to 8%, atno additional cost to Mapeley. The Peterlee lease which expires in 2019,contained a tenant break exercisable in July 2007. The tenant did not exercisethe break and consequently Mapeley's lease with EDS now continues without breakuntil 2019. The roll-over of these leases, together with roll-overs and the grant of newleases this year in respect of other properties in our portfolio, provides anexcellent endorsement of our acquisition strategy. Accurate assessments of ourtenants' long-term real estate requirements, combined with the strongrelationships we have with our tenants, drives good organic growth for Mapeleyand enhances the financial performance of the Group. Acquisitions During the third quarter we completed £43.1 million of acquisitions, with anaverage net initial yield of 6.8%. The average lease length of these assets is14.0 years and 98% are let to government and major corporates. Given thechanging capital market environment and its potential impact on asset values, webelieve that there will be improving opportunities for acquisitions in thefuture. As at 30 September 2007 we had acquired £223.3 million of new investments sincethe beginning of 2007 (2006: £306.2 million), bringing the total DPI portfoliovalue to £1,079.1 million. Chief Executive's Statement (continued)Outlook We continue to evaluate outsourcing opportunities in the public and privatesectors and have seen a moderate increase in the number of private deals beingoffered to the market. Whilst these tend to be small in size and involve mostlythe transfer of leasehold liabilities, we are able to add these transactions onto our regional operating platform with ease and with minimal cost. We alsoremain engaged with a number of public authorities in respect of their plans tooutsource their property requirements, but these discussions are at preliminarystages. Our forward pipeline of acquisition opportunities remains strong and we havedebt capacity of £140 million available to use for further acquisitions.Although the pipeline is strong, given the changes in the capital markets, weare taking a cautious view on acquisitions. Our exposure to interest rate volatility is limited such that at 30 September2007 only £64.0 million of our total debt of £1,498.7 million was floating andthe weighted average term of our debt facilities to maturity is 7 years. Wehedge 70% of the purchase price of each asset on acquisition to ensure we havelocked in the majority of the spread of income over finance costs in advance ofrefinancing. The embedded organic growth in our business continues to drive returns and ourdividend remains underpinned by strong cash flows. 94% of our income is derivedfrom government and investment grade tenants, we have a 10 year average leaselength across the portfolios and our occupancy rate remains stable at 96%. Jamie HopkinsChief Executive Officer Operating review 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. As usual, each portfolio has beenrevalued at the end of the quarter by external valuers. The overall valuation at30 September shows a reduction compared to the value at 31 December 2006, whichis the cause of the non-cash loss before tax for the period. However, there aresignificant differences between the portfolios as described below and thereduction in portfolio values has been more significant during the third quarterdue to market trends. Outsourcing Contracts The HMRC portfolio As at 30 September 2007, the HMRC portfolio had a value of £555.4 million (31December 2006: £560.1 million). The value of this portfolio has held uprelatively well and is only £2.6 million lower than at 30 June 2007. Itcomprised 138 freehold or long leasehold properties, (31 December 2006: 138) and376 rack rented leasehold properties (31 December 2006: 381). Portfoliooccupancy (based on area) was 97.9% at 30 September 2007 (31 December 2006:98.9%). The Abbey portfolio As at 30 September 2007, the Abbey portfolio (see note 9) had a value of £576.3million (31 December 2006: £575.7 million). The Abbey portfolio fell in value by£8.9 million compared to 30 June 2007. It comprised 367 freehold or longleasehold properties (31 December 2006: 367) and 660 rack rented leaseholdproperties (31 December 2006: 698). Portfolio occupancy (based on area) was89.7% at 30 September 2007 (31 December 2006: 90.3%). Identity and Passport Service ("IPS") Interview Centre Outsourcing ContractThe phased roll out programme has continued during the period with 66 sitesacquired as at 30 September 2007, leaving 3 to be completed in 2007. Investment property Direct Property Investments ("DPI") portfolio During the quarter, the Group continued to pursue its strategy of acquiringindividual properties or portfolios of regional office properties. The Groupcontinues to focus on purchasing property let to strong credit quality tenants,with good long-term occupancy prospects. During the quarter furthertransactional evidence of the success of the acquisition strategy materialisedwith lease roll-overs and re-gears with EDS and a government client (see page3). In the quarter, the Group purchased investment property at an aggregate cost of£43.1 million, bringing acquisitions for the nine months to 30 September 2007 to£223.3 million with an average net initial yield of 6.8% on the quarter'sacquisitions and a yield on the total acquisitions in the nine months to 30September 2007 of 6.4% (6.9% excluding Elinia House, Cardiff). Mapeley alsocontinues to identify a significant target pool of properties it may consideracquiring in the future which is fed into our proprietary database. Elinia House, Cardiff is let to BT until 2020 and was acquired in March 2007for£62 million. The net initial yield on the property is 5.4% but the rent issubject to fixed increases throughout the lease resulting in an average yield of7.0%. Simultaneously with completion of the purchase a swap was taken out on theallocated loan amount for this property which locks in the interest rate tomatch the fixed rental uplifts and ensures a smoothing of the leveraged yield at9.0%. As at 30 September 2007, the DPI portfolio (see note 9) comprised of 92properties (31 December 2006: 69) with a value of £1,079.1 million (31 December2006: £903.7 million). While some market participants had been predicting yieldshift in excess of 50 basis points for secondary assets, the impact on the DPIportfolio is considerably less than this at 30 basis points. However, there hasstill been a 3.8% (£40.8 million) like for like reduction in value since 30 June2007 and a 4% or £35.9 million like for like reduction since 31 December 2006.This was the main cause of the loss before tax for the period. The net initialyield on the total portfolio was 6.9% (31 December 2006: 7.0%). The propertieswere 98.5% let on fully repairing and insuring leases to central and localgovernment and major corporate tenants (31 December 2006: 97.9%) with an averageunexpired lease length of 7.7 years (31 December 2006: 7.8 years). 2) Property Management This was another operationally active quarter for Mapeley with the positivetrends continuing from the first six months of 2007. Lettings During the first nine months of 2007 the Group let 26 vacant units (30 September2006: 36) with an annual rent roll of £1.7 million (30 September 2006: £1.3million). Operating review (continued) Rent reviews and lease renewals - As landlord During the first nine months of 2007 the Group settled 47 rent reviews (30September 2006: 38) on rack rented properties in its portfolios with an annualrent roll of £11.4 million (30 September 2006: £1.3 million). The averageincrease was 1.6% per annum. During the same period the Group also completed lease renewals for 15 properties(30 September 2006: 6) with an annual rent roll of £0.6 million (30 September2006: £0.2 million). The average annual increase was 1.8%. Rent reviews and lease renewals - As tenant During the first nine months of 2007 the Group settled 138 rent reviews (30September 2006: 153) on rack rented properties in its portfolios with an annualrent roll of £35.7 million (30 September 2006: £25.6 million). The averageincrease was 2.0% per annum. During the same period the Group also completed lease renewals for 45 properties(30 September 2006: 35) with an annual rent roll of £2.2 million (30 September2006: £3.0 million). The average annual increase was 2.0%. The rent review performance data in this paragraph covers those rent reviewsarising in the nine months to 30 September 2007 which includes not only rentreviews due for settlement in 2007 but also those from prior years that have notyet been settled. This data differs to the data validated by IPD as set out inthe Chief Executive's Statement, which is in respect only of those rent reviewsdue for settlement in 2006. Financial review Profitability has been impacted heavily by the reduction in property values (seepage 3) which has been the direct cause of a loss before tax for the period.This however is of course not a cash loss and the underlying healthy financialperformance of the group is evidenced by good growth in both Funds fromoperations ("FFO") and EBITDA. 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 pay dividends,service debt and make capital expenditure. Further information on FFO is set outin note 18. FFO was £42.0 million for the nine months ended 30 September 2007, compared with£36.0 million for the nine months ended 30 September 2006. The increase in FFOof £6.0 million was primarily driven by the increase in income as a result ofinvestment properties acquired since the equivalent period in the prior year andthe realised profit on the disposal of property, plant and equipment andnon-current assets held for sale. These increases are offset by decreases inasset management receipts and increases in net finance costs for the nine monthperiod. The Group has separately disclosed organic FFO, which is defined as the FFOgenerated following the first anniversary of the acquisition of a property assetor commencement of an outsourcing contract. Organic FFO for the period was £36.5million compared to £26.9 million for the period ended 30 September 2006, anincrease of 35.7%. Dividends On 7 November 2007, the Board of Directors declared an interim dividend for thequarter of £13.8 million, equating to £0.47 per share (quarter ended 30September 2006: £11.4 million, equating to £0.43 per share), (quarter ended 30June 2007: £13.8 million, equating to £0.47 per share) based on the number ofshares in issue on an undiluted basis during the period. This brings cumulativedividends declared in the period to 30 September 2007 to £1.41 per share (2006:£1.23 per share) representing an increase of 14.6%. The record date for this dividend is 16 November 2007 and the payment date is 30November 2007. Revenue Group revenue for the nine months ended 30 September 2007 was £310.1 million, anincrease of £32.9 million (11.9%) over the same period last year. The increaseis due to additional rental income of £16.4 million from the Direct PropertyInvestments (DPI) portfolio. In addition there has been an increase of £16.5million from outsourcing contracts. Of this increase, £13.3 million results fromthe increased contribution from the Identity and Passport Service (IPS) contractfor the first nine months of the year. All properties acquired under the IPScontract are being fitted-out by Mapeley. These works are paid for by the clientand reflected in Mapeley's group revenue. The costs of the fit-out have beenaccounted for under Property operating expenses. Property operating expenses The property operating expenses of the Group in the nine months ended 30September 2007 were £209.5 million (of which £121.9 million was rentals payable)compared to £195.6 million (£123.7 million rentals payable) for the same periodin the previous year, an increase of 7.1%. The increase was primarily driven byan increase in costs of £11.1 million associated with the IPS contract, most ofwhich was for fit-out as described above. Administrative and other expenses Administrative and other expenses were £14.5 million for the nine months ended30 September 2007 compared to £15.2 million for the nine months ended 30September 2006, a decrease of 4.6%. This was due to increases in staff andbusiness development costs offset by decreases in bid costs compared to theequivalent period in the prior year. EBITDA The EBITDA result is a reflection of the strong underlying performance of thegroup. EBITDA (see note 17) was £93.3 million for the nine months ended 30September 2007, compared to £77.3 million for the nine months ended 30 September2006, an increase of 20.7%. This was primarily due to revenue growth of 11.9%outstripping property operating expense growth of 7.1%. Financial review (continued) Finance costs and finance income Finance costs in the nine months ended 30 September 2007 were £67.2 million (30September 2006: £72.2 million). The movement is due to a decrease of £13.4million relating to exceptional costs from breaking interest rate swaps in thenine months ended 30 September 2006. This has been offset by increases in swaplosses of £4.1 million in the nine months ended 30 September 2007 and increasesof £3.9 million in interest costs due to the financing of acquisitions in theperiod. Finance income has decreased from £14.7 million in the nine months ended 30September 2006 to £7.9 million in the nine months ended 30 September 2007. Thisis due to swap gains of £11.8 million in the period ended 30 September 2006compared to gains of £4.9 million in the period ended 30 September 2007. 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 incurred adeferred tax charge in the period of £1.7 million in relation to the write downof the deferred tax asset from £10.9 million at 31 December 2006 to £9.2 millionas a result of changes to the future tax rates. In addition the deferred taxliability arising from the revaluation of interest rate swaps increased from£4.6 million at 31 December 2006 to £7.1 million at 30 September 2007 due torevaluation movements in the nine month period, however this is a decrease fromthe £10.5 million held at 30 June 2007. The cumulative movement of £2.5 millionhas been 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 increased by £182.7million between 31 December 2006 and 30 September 2007. Investment property (see note 9) increased to £1,660.6 million from £1,483.1million at 31 December 2006, an increase of £177.5 million. This reflects theacquisition of new investment property in the nine months to 30 September 2007of £223.3 million however this is offset by revaluation losses of £46.8 millionon the DPI portfolio, consisting of the write off of purchase costs of £10.0million and revaluation losses of £36.8 million. Despite the difficult marketconditions the Abbey portfolio has maintained a revaluation gain for the ninemonths ended 30 September 2007 of £1.0 million although losses for the threemonths ended 30 September 2007 were £8.9 million. Over the same period, property, plant and equipment (see note 8) has similarlydecreased in value from £523.3 million at 31 December 2007 to £520.5 million at30 September 2007. This is due to the revaluation gains of certain of theGroup's freehold and long leasehold properties held under the HMRC portfolio of£4.7 million, offset by the disposal of assets with a net book value of £7.3million. 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 30 September 2007, £1,498.7 million had been drawn under theGroup's loan facilities (31 December 2006: £1,278.1 million). The weightedaverage term of Mapeley's debt facilities to maturity is 7 years The Group has continued to finance the acquisition of direct propertyinvestments using its three year £400.0 million revolving facility (the DeltaAcquisition facility). This facility was increased from £300.0 million to £400.0million during the quarter. At 30 September 2007 £257.6 million was drawn downon this facility (31 December 2006: £36.4 million) which requires refinancing byApril 2008. Gearing The Group's financial strategy is to maintain an optimal gearing ratio (see note19) to ensure that shareholders benefit from maximum leveraged returns. TheGroup purchases investment property in accordance with its strategy. Investmentproperty is initially funded using short term revolving facilities. Thesefacilities are subsequently refinanced at up to 80% loan to value ratio usinglong-term debt with a lower interest rate, with the balance being funded by newequity. At 30 September 2007, the Group had a gearing ratio of 215% (31 December 2006:169%). The increase in gearing was primarily driven by the increase in debtresulting from the drawdown of £221.1 million to fund new acquisitions made bythe DPI portfolio. Independent review report to Mapeley Limitedon the third quarter IFRS financial information for the nine months ended 30 September 2007 Introduction We have been engaged by the Company to review the financial information for thenine months ended 30 September 2007 in the interim financial report whichcomprises the Consolidated Income Statement, Consolidated Statement of Changesin Equity, Consolidated Balance Sheet, Consolidated Cash Flow Statement and therelated notes 1 to 20. We have read the other information contained in the thirdquarter financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with guidance containedin ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performedby the Independent Auditor of the Entity" issued by the Auditing PracticesBoard. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company, for our work, for this report,or for the conclusions we have formed. Directors' Responsibilities The third quarter financial report is the responsibility of, and has beenapproved by, the directors. The Directors are responsible for preparing thethird quarter financial report in accordance with the Listing Rules of theUnited Kingdom's Financial Services Authority, which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. As disclosed in note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thefinancial information included in this third quarter financial report has beenprepared in accordance with the Listing Rules of the United Kingdom's FinancialServices Authority. Our Responsibility Our responsibility is to express to the Company a conclusion on the financialinformation in the third quarter financial report based on our review. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the financial information for the nine months ended 30 September 2007 isnot prepared, in all material respects, in accordance with the accountingpolicies outlined in Note 2, which comply with International Financial ReportingStandards as adopted by the European Union and which the group intends to applyin its financial statements for the period ended 31 December 2007, and inaccordance with the Listing Rules of the United Kingdom's Financial ServicesAuthority. Ernst & Young LLP London7 November 2007 Consolidated income statement For the nine months ended 30 September 2007 Three months ended Nine months ended Year ended 30 September 30 September 31 December 2007 2006 Notes 2007 2006 2006 Unaudited Unaudited Unaudited Unaudited Audited £m £m £m £m £m 104.6 99.5 Revenue 3 310.1 277.2 385.0 (69.3) (69.6) Property operating expenses 3 (209.5) (195.6) (283.5) ------- ------- --------- ------- -------- 35.3 29.9 Net contract, rental & related income 3 100.6 81.6 101.5 Net valuation (deficit)/surplus on (51.6) 10.7 investment property 9 (45.8) 29.4 40.8 Reversal of impairment of - 0.7 non-investment property 8 0.1 0.7 0.8 (Loss)/gain on disposal of (0.7) 1.8 non-investment property 0.3 3.0 3.2 (4.6) (6.2) Administrative and other expenses (14.5) (15.2) (20.7) ------- ------- --------- ------- -------- (21.6) 36.9 Operating (loss)/profit 40.7 99.5 125.6 (28.2) (22.7) Finance costs 4 (67.2) (72.2) (89.6) 1.0 1.1 Finance income 4 7.9 14.7 6.8 ------- ------- --------- ------- -------- (48.8) 15.3 (Loss)/profit before tax (18.6) 42.0 42.8 - - Income tax (expense)/credit 5 (1.7) (0.1) 10.9 ------- ------- --------- ------- -------- (48.8) 15.3 (Loss) /profit for the period (20.3) 41.9 53.7 ======= ======= attributable to equity holders of Mapeley Limited £m £m Dividends £m £m £m 13.8 10.9 - paid 6 40.8 29.5 40.9 13.8 11.4 - proposed and declared 6 41.4 32.6 45.8 ======= ======= ========= ======= ======== pence/share pence/share Dividends per share pence/share pence/share pence/share 47 41 - paid 6 139 117 160 47 43 - proposed and declared 6 141 123 168 ======= ======= --------- ------- -------- pence/share pence/share (Loss)/earnings per share pence/share pence/share pence/share (166) 59 - basic 7 (69) 161 200 (166) 59 - diluted 7 (69) 161 200 ======= ======= ========= ======= ======== Consolidated statement of changes in equity For the period ended 30 September 2007 and 30 September 2006 Net unrealised Issued Share (losses)/ Retained Asset Other Total capital premium gains losses reserve reserves equity £m £m £m £m £m £m £mAt 31 December2006 (Audited) - 329.2 14.7 (49.9) 315.2 103.5 712.7 Revaluationsurplus - - - - 4.7 - 4.7Depreciationwritten back onrevaluation of non-investment property - - - - 4.4 - 4.4Transfer ofexcessrevaluationdepreciation - - - 4.1 (4.1) - -Revaluationsurplus onassetdisposals - - - 5.6 (5.6) - -Net gain oncash flowhedges - - 11.1 - - - 11.1Tax on itemstaken directlyto equity - - (2.5) - - - (2.5) ------ ------ -------- ------ -------- ------ --------Total incomefor the periodrecogniseddirectly in equity - - 8.6 9.7 (0.6) - 17.7Loss for theperiod - - - (20.3) - - (20.3) ------ ------ -------- ------ -------- ------ --------Total income/(expense) for theperiod - - 8.6 (10.6) (0.6) - (2.6)Cost relatedto issue ofordinaryshares - (0.3) - - - - (0.3)Issue ofshares toNon-executiveDirectors - - - - - 0.1 0.1Issue ofshares toemployeesunder theEmployee Share Plan - - - - - 1.3 1.3Equitydividends - - - (40.8) - - (40.8) ------ ------ -------- ------ -------- ------ --------At 30 September 2007(Unaudited) - 328.9 23.3 (101.3) 314.6 104.9 670.4 ====== ====== ======== ====== ======== ====== ======== At 31 December2005 (Audited) - 132.4 (26.6) (68.5) 318.6 101.6 457.5 Revaluationsurplus - - - - 3.0 - 3.0Depreciationwritten back onrevaluation of non-investment property - - - - 4.9 - 4.9Transfer ofexcessrevaluationdepreciation - - - 4.5 (4.5) - -Net gain oncash flowhedges - - 27.9 - - - 27.9Realised gainon cash flowhedge - - 10.9 - - - 10.9 ------ ------ -------- ------ -------- ------ --------Total incomefor the periodrecognised directly in equity - - 38.8 4.5 3.4 - 46.7Profit for theperiod - - - 41.9 - - 41.9 ------ ------ -------- ------ -------- ------ --------Total incomefor the period - - 38.8 46.4 3.4 - 88.6Issue ofordinaryshares - 110.0 - - - - 110.0Cost relatedto issue ofordinaryshares - (3.8) - - - - (3.8)Issue ofshares toNon-executiveDirectors - - - - - 0.5 0.5Issue ofshares toemployeesunder theEmployee Share Plan - - - - - 1.0 1.0Equitydividends - - - (29.5) - - (29.5) ------ ------ -------- ------ -------- ------ --------At 30September 2006(Unaudited) - 238.6 12.2 (51.6) 322.0 103.1 624.3 ====== ====== ======== ====== ======== ====== ======== Consolidated statement of changes in equity For the year ended 31 December 2006 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 December2005 (Audited) - 132.4 (26.6) (68.5) 318.6 101.6 457.5 Revaluationdeficit - - - - (2.8) - (2.8)Depreciationwritten backon revaluation of non-investment property - - - - 5.6 - 5.6Transfer ofexcessrevaluationdepreciation - - - 5.2 (5.2) - -Transfer ofrevaluation onsurplus onassetdisposals - - - 0.6 (0.6) - -Gain on cashflow hedges - - 34.6 - - - 34.6Realised gainon cash flowhedge - - 10.9 - - - 10.9Tax on itemstaken directlyto equity - - (4.2) - (0.4) - (4.6) ----- ------- ------- ------- -------- ------ --------Total incomefor the yearrecogniseddirectly in equity - - 41.3 5.8 (3.4) - 43.7Profit for theyear - - - 53.7 - - 53.7 ----- ------- ------- ------- -------- ------ --------Total income /(expense) forthe year - - 41.3 59.5 (3.4) - 97.4Issue of newordinaryshares - 203.5 - - - - 203.5Cost relatedto issue ofnew ordinaryshares (6.7) - - - - (6.7)Issue ofshares toNon-executiveDirectors - - - - - 0.5 0.5Issue ofshares toemployeesunder theEmployee Share Plan - - - - - 1.4 1.4Equitydividends - - - (40.9) - - (40.9) ----- ------- ------- ------- -------- ------ --------At 31 December2006 (Audited) - 329.2 14.7 (49.9) 315.2 103.5 712.7 ===== ======= ======= ======= ======== ====== ======== Consolidated balance sheet - at 30 September 2007 30 September 30 September 31 December 2007 2006 2006 Unaudited Unaudited Audited Notes £m £m £mASSETSNon-current assetsProperty, plantand equipment 8 520.5 529.6 523.3Investmentproperty 9 1,660.6 1,413.8 1,483.1Premiums onoperatingleases 33.0 36.1 35.2Trade and otherreceivables 5.8 5.9 5.9Financialinstruments 32.2 20.3 20.2Deferred taxasset 9.2 - 10.9 ----------- ---------- ----------Totalnon-currentassets 2,261.3 2,005.7 2,078.6 ----------- ---------- ----------Current assetsTrade and otherreceivables 101.0 75.8 73.8Cash and short-term deposits - in controlled accounts 11 26.5 15.6 22.7 - for operational purposes 11 40.7 67.4 54.6 ----------- ---------- ----------Total currentassets 168.2 158.8 151.1 ----------- ---------- ----------Non-currentassets held forsale 10 0.3 0.4 3.0 ----------- ---------- ---------- TOTAL ASSETS 2,429.8 2,164.9 2,232.7 =========== ========== ==========EQUITY AND LIABILITIESEquity attributable to equityholders of Mapeley LimitedIssued capital(net of treasury shares) 12 - - -Share premium 328.9 238.6 329.2Net unrealisedgains 23.3 12.2 14.7Retained losses (101.3) (51.6) (49.9)Assetrevaluationreserve 314.6 322.0 315.2Other reserves 104.9 103.1 103.5 ----------- ---------- ----------Total equity 670.4 624.3 712.7 ----------- ---------- ----------Non-current liabilitiesTrade and otherpayables 5.5 5.6 5.2Interest &non-interestbearing loansand borrowings 13 1,233.8 1,299.6 1,268.7Provisions 29.0 30.7 31.5Deferred assetmanagementreceipts 14 77.1 80.4 78.9Deferred taxliability 7.1 - 4.6 ----------- ---------- ----------Totalnon-currentliabilities 1,352.5 1,416.3 1,388.9 ----------- ---------- ----------Current liabilitiesTrade and otherpayables 116.4 112.4 110.5Interest &non-interestbearing loansand borrowings 13 268.8 0.1 1.2Provisions 13.5 5.9 13.5Financialinstruments 2.2 - -Deferred assetmanagementreceipts 14 6.0 5.9 5.9 ----------- ---------- ----------Total currentliabilities 406.9 124.3 131.1 ----------- ---------- ----------Totalliabilities 1,759.4 1,540.6 1,520.0 ----------- ---------- ---------- TOTAL EQUITYAND LIABILITIES 2,429.8 2,164.9 2,232.7 =========== ========== ========== Consolidated cash flow statement for the nine months ended 30 September 2007 Three months ended Nine months ended Year ended 30 September 30 September 31 December 2007 2006 2007 2006 2006Unaudited Unaudited Notes Unaudited Unaudited Audited £m £m Cash flows from operating activities £m £m £m (21.6) 36.9 Operating (loss)/profit 40.7 99.5 125.6 Adjustment for: Reversal of impairment of non-investment - (0.7) property (0.1) (0.7) (0.8) Net valuation deficit/(surplus) on investment 51.6 (10.7) property 9 45.8 (29.4) (40.8) 2.3 2.7 Depreciation and amortisation 6.9 7.9 9.5 0.7 (1.8) Loss/(profit) on disposal of assets (0.3) (3.0) (3.2) 0.5 0.3 Share benefit expense 1.4 1.5 1.9 ------- ------- Operating profit before changes in working 33.5 26.7 capital 94.4 75.8 92.2 (22.5) 9.8 (Increase) / decrease in trade & other receivables (27.1) (8.1) (6.1) (1.2) 6.4 (Decrease) / increase in trade & other payables 2.1 3.9 0.9 (4.3) (1.5) Decrease in provisions (4.3) (3.5) 4.5 (Decrease) / increase in deferred asset management 0.1 0.2 receipts (1.7) 7.1 5.6 ------- ------- -------- ------- ------- 5.6 41.6 Cash generated from operations 63.4 75.2 97.1 (19.1) (17.8) Interest paid (52.6) (48.5) (65.4) 1.0 1.1 Interest received 3.0 2.9 4.0 ------- ------- -------- ------- ------- (12.5) 24.9 Net cash flows from operating activities 13.8 29.6 35.7 ------- ------- -------- ------- ------- Cash flows from investing activities - - Proceeds on disposal of investment property 4.0 - - 6.6 4.3 Proceeds from disposal of property, plant and equipment 6.6 5.2 6.6 (0.1) - Purchase of property, plant and equipment (0.3) (0.1) (0.1) (43.1) (115.9) Purchase of investment property 9 (222.3) (306.2) (366.4) ------- ------- -------- ------- ------- (36.6) (111.6) Net cash flows used in investing activities (212.0) (301.1) (359.9) ------- ------- -------- ------- ------- Cash flows from financing activities (0.4) (8.9) Costs of raising finance (1.5) (11.3) (14.2) (0.2) (0.2) Payment of finance lease liabilities (0.5) (0.4) (0.6) - (13.4) Swap and loan termination fees 4 - (13.4) (13.4) 43.8 292.6 Receipt of new bank loans 221.1 688.5 956.3 (0.4) (176.0) Repayment of bank loans (0.6) (466.8) (764.6) - - Proceeds from issue of ordinary shares - 110.0 203.5 - (0.2) Costs related to issue of ordinary shares (0.3) (3.8) (6.7) (13.8) (10.8) Dividend paid to equity holders 6 (40.8) (29.5) (40.9) ------- ------- -------- ------- ------- 29.0 83.1 Net cash flows from financing activities 177.4 273.3 319.4 ------- ------- Net (Decrease) / increase in cash and short-term (20.1) (3.6) deposits (20.8) 1.8 (4.8) 75.7 86.6 Cash and cash equivalents at start of period 11 76.4 81.2 81.2 ------- ------- -------- ------- ------- 55.6 83.0 Cash and cash equivalents at end of period 11 55.6 83.0 76.4 ======= ======= ======== ======= ======= Notes to the unaudited third quarter results at 30 September 2007 1. General information The consolidated financial statements of the Group for the nine months ended 30September 2007 comprise the Company and its subsidiaries and were authorised bythe Board for issue on 7 November 2007. The Company's registered office islocated at Regency 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 2006, 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 2006 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 2007 and as set out below with respect to thetreatment of work in progress. Accordingly IAS 1 (para 124A - 124C)"Presentation of Financial Statements", IFRS 7 "Financial Instruments:Disclosures", IFRIC 8 "Scope of IFRS 2", IFRIC 9 "Reassessment of embeddedderivatives" and IFRIC 10 "Interim Financial Reporting and Impairment" have beenadopted by the Group in preparing these interim financial statements. Theadoption of these standards has had no material impact on the Group's financialstatements. The following new standards and interpretations have been issued but are noteffective for the financial year ending 31 December 2007, and have not beenadopted early: IFRS 8 "Operating segments", IFRIC 11 "IFRS 2 - Group andtreasury share transactions", IFRIC 12 "Service concession arrangements", IAS 23"Borrowing costs", IFRC 13 "Customer Loyalty Programmes" and IFRIC 14 "IAS 19 -The limit on a defined benefit asset, minimum funding requirements and theirinteraction". The financial statements of the Group for the year ending 31 December 2007 willbe prepared in accordance with IFRS as adopted for use by the European Union at31 December 2007. The interim consolidated financial statements should be readin conjunction with the Group's annual financial statements as at 31 December2006. Work in progress The directors have reconsidered the treatment for work in progress since theannual report for the year ended 31 December 2006 and have concluded that it ismore appropriate to treat this item as accrued income under the terms of IAS 18 - Revenue. The effect of this change is as follows: - Work in Progress of £15.7 million as at 30 September 2007 (30 September 2006 £18.1million, 31 December 2006 £15.7 million) has been reclassified in the balance sheet as "Unbilled Revenue" which is included in trade and other receivables and the amounts recorded adjusted by £0.4 million at 30 September 2007 (30 September 2006 £0.5 million, 31 December 2006 £0.5 million) - In the period to 30 September 2007 Revenue has decreased by £0.5 million and Property Operating expenses have decreased by £0.5 million (period to 30 September 2006 £1.5million and £1.5 million respectively and year to 31 December 2006 £2.0 million and £1.9 million respectively). Consequently profit has not been affected in the nine months ended 30 September 2007 (period to 30 September 2006 no effect, year to 31 December 2006 £0.1 million). Retained earnings brought forward at 31 December 2005 have been adjusted by £0.6 million. - References to Work in Progress in 'Funds from Operations' in note 18 have been changed 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 segment previously known as "Investment property" has been renamed "DirectProperty 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. 30 September 2007 (Unaudited) 30 September 2006 (Unaudited) Direct DirectThree months ended Property Outsourcing Total Property Outsourcing TotalBusiness segments Investments contracts operations Investments contracts operations £m £m £m £m £m £mRental revenue 18.0 - 18.0 13.5 - 13.5Propertytrading andother income - 0.1 0.1 - (0.5) (0.5) ------- ------- ------ ------- ------- -------Facilityunitary charge - 55.8 55.8 - 53.5 53.5Contractualrents - 23.5 23.5 - 26.0 26.0Third partyrents - 7.2 7.2 - 7.0 7.0 ------- ------- ------ ------- ------- -------Contractualrevenue - 86.5 86.5 - 86.5 86.5 Segment revenue 18.0 86.6 104.6 13.5 86.0 99.5 Rentals payable (0.1) (38.7) (38.8) (0.3) (40.7) (41.0)Other directproperty andcontractexpenditure * (0.7) (29.8) (30.5) (0.5) (28.1) (28.6) ------- ------- ------ ------- ------- -------Net contract,rental &related income 17.2 18.1 35.3 12.7 17.2 29.9Reversal ofimpairment ofnon-investmentproperty - - - - 0.7 0.7Net valuation(deficit)/surplus oninvestmentproperty (42.7) (8.9) (51.6) (1.8) 12.5 10.7(Loss)/gain ondisposal ofassets - (0.7) (0.7) - 1.8 1.8 ------- ------- ------ ------- ------- -------Segment result (25.5) 8.5 (17.0) 10.9 32.2 43.1 ======= ======= ======= =======Unallocatedexpenses (4.6) (6.2) ------ -------Operating(loss)/profit (21.6) 36.9Net financecosts (27.2) (21.6)Income tax - - ------ -------(Loss)/profitfor the period (48.8) 15.3 ====== ======= * Other direct property and contract expenditure includes depreciation. 3. Revenue and segmental information (continued) 30 September 2007 (Unaudited) 30 September 2006 (Unaudited) Direct DirectNine months ended Property Outsourcing Total Property Outsourcing TotalBusiness segments Investments contracts operations Investments contracts operations £m £m £m £m £m £mRental revenue 51.3 - 51.3 35.0 - 35.0Propertytrading andother income 0.1 0.3 0.4 - 0.5 0.5 ------- ------- ------ ------- ------- -------Facilityunitary charge - 173.0 173.0 - 155.4 155.4Contractualrents - 64.4 64.4 - 65.4 65.4Third partyrents - 21.0 21.0 - 20.9 20.9 ------- ------- ------ ------- ------- -------Contractualrevenue - 258.4 258.4 - 241.7 241.7 Segment revenue 51.4 258.7 310.1 35.0 242.2 277.2 Rentals payable (0.5) (121.4) (121.9) (0.4) (123.3) (123.7)Other directproperty andcontractexpenditure * (2.0) (85.6) (87.6) (1.0) (70.9) (71.9) ------- ------- ------ ------- ------- -------Net contract,rental &related income 48.9 51.7 100.6 33.6 48.0 81.6Reversal ofimpairment ofnon-investmentproperty - 0.1 0.1 - 0.7 0.7Net valuation(deficit)/surplus oninvestmentproperty (46.9) 1.1 (45.8) 5.6 23.8 29.4Gain ondisposal ofassets - 0.3 0.3 - 3.0 3.0 ------- ------- ------ ------- ------- -------Segment result 2.0 53.2 55.2 39.2 75.5 114.7 ======= ======= ======= =======Unallocatedexpenses (14.5) (15.2) ------ -------Operatingprofit 40.7 99.5Net financecosts (59.3) (57.5)Income tax (1.7) (0.1) ------ -------(Loss)/Profitfor the period (20.3) 41.9 ====== ======= Year ended 31 December 2006 (Audited) Direct Property Outsourcing TotalBusiness segments Investments contracts operations £m £m £mRental revenue 50.3 - 50.3Property tradingand other income - 0.8 0.8 --------------------------------- Facility unitary charge - 217.7 217.7 Contractual rents - 88.3 88.3 Third party rents - 27.9 27.9 ---------------------------------Contractualrevenue - 333.9 333.9Segment revenue 50.3 334.7 385.0Rentals payable (0.3) (173.7) (174.0)Other directproperty andcontractexpenditure * (1.2) (108.3) (109.5) ----------- ---------- ---------Net contract,rental & relatedincome 48.8 52.7 101.5Reversal ofimpairment ofnon-investmentproperty - 0.8 0.8Net valuationsurplus oninvestmentproperty 8.1 32.7 40.8Gain on disposalof non-investmentproperty - 3.2 3.2 ----------- ---------- ---------Segment result 56.9 89.4 146.3 =========== ==========Unallocatedexpenses (20.7) ---------Operating profit 125.6Net financecosts (82.8)Income taxcredit 10.9 ---------Profit for theyear 53.7 ========= * Other direct property and contract expenditure includes depreciation. 4. Finance costs and finance income Three months ended Nine months ended Year ended 30 September 30 September 31 December 2007 2006 2007 2006 2006Unaudited Unaudited Unaudited Unaudited Audited £m £m £m £m £m Finance costs 21.2 17.4 Bank loans and overdrafts 58.7 54.8 73.7 Finance charges payable 0.1 0.1 under finance leases 0.4 0.3 0.6 6.3 2.2 Loss on interest swap 6.3 2.2 - - 2.5 Loss on breaking interest rate swap - 13.4 13.4 - - Loan termination costs - - - ------- ------- -------- -------- ------- Unwinding of discount on 0.6 0.5 provisions 1.8 1.5 1.9 ------- ------- -------- -------- ------- 28.2 22.7 67.2 72.2 89.6 ======= ======= ======== ======== ======= Finance income 1.0 1.1 Bank interest receivable 3.0 2.9 4.0 - - Gain on interest swap 4.9 11.8 2.8 ------- ------- -------- -------- ------- 1.0 1.1 7.9 14.7 6.8 ======= ======= ======== ======== ======= Bank loans and overdraft charges include a charge of £1.7 million (nine monthsended 30 September 2006: £6.2 million; year ended 31 December 2006: £7.7million) relating to loan finance fees recognised under the effective interestmethod. Of this amount £nil million (nine months ended 30 September 2006: £4.4million; year ended 31 December 2006: £6.4 million) relates to exceptionalcharges resulting from a change in timing of the repayment of the original loansas a consequence of refinancing. 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. The charge during the nine months ended 30 September 2006 of£0.1 million related to UK income tax. Deferred taxation A tax charge of £1.7 million has been recognised in the current period in theincome statement in relation to the movement in the deferred tax asset balancearising as a result of changes in future tax rates and utilisation of losses. Inaddition a further £2.5 million charge has been recognised directly in equity inrelation to the movement in the deferred tax liability on the revaluation ofinterest 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 however the deferred tax asset has decreased to £9.2 million (31December 2006: £10.9 million) due to changes in the future rates of taxresulting in a charge of £1.7 million to the income statement. The Group hasadditional tax losses available for carry forward to future years but in manycases these losses are only available to offset against future taxable profitsin the 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. The deferred tax liability has increased during the period to £7.1 million (31December: £4.6 million) as a result of the revaluation of interest rate swaps tofair value during the period. This has given rise to a tax charge of £2.5million which has been recognised directly in equity. 6. Dividends Nine months ended Year ended 30 September 31 December 2007 2006 2006 Unaudited Unaudited Audited £m £m £mDeclared and paid during the period:Equity dividends on ordinary shares:Fifth interim dividend for2005: £0.37 per share, paid 5 January 2006 - 8.3 8.3First interim dividend for2006: £0.39 per share - 10.3 10.3Second interim dividend for2006: £0.41 per share - 10.9 10.9Third interim dividend for2006: £0.43 per share - - 11.4Fourth interim dividend for2006: £0.45 per share 13.2 - -First interim dividend for2007: £0.47 per share 13.8 - -Second interim dividend for2007: £0.47 per share 13.8 - - ---------- ---------- ---------- 40.8 29.5 40.9 ========== ========== ==========Proposed and approved at the Board meeting on7 November 2007Equity dividends on ordinary shares:Third interim dividend for2007: £0.47 per share; (30 September 2006: £0.43 per share; 31 December2006: £0.45 per share) 13.8 11.4 13.2 ========== ========== ========== 7. Earnings / (loss) 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 months ended 30 September 2007 of £48.8 million (three months ended 30 September 2006: profit of £15.3 million) - Net loss attributable to equity holders of the Company for the nine months ended 30 September 2007 of £20.3 million (nine months ended 30 September 2006: profit of £41.9 million; year ended 31 December 2006: profit of £53.7 million) - Weighted average number of ordinary shares for the three months ended 30 September 2007 for basic earnings per share 29,423,496 (three months ended 30 September 2006: 26,491,676) - Weighted average number of ordinary shares for diluted earnings per share for the three months ended 30 September 2007 for basic earnings per share 29,423,496 (three months ended 30 September 2006: 26,504,846) - Weighted average number of ordinary shares for the nine months ended 30 September 2007 for basic earnings per share 29,415,761 (nine months ended 30 September 2005: 26,104,021; year ended 31 December 2006: 26,887,700) - Weighted average number of ordinary shares for diluted earnings per share 29,415,761 (nine months ended 30 September 2006: 26,117,191; year ended 31 December 2006: 26,903,833) 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 January2007 (audited) 479.2 46.3 16.4 541.9Additions - - 0.3 0.3Revaluations 3.1 1.6 - 4.7Transfers (0.3) - - (0.3)Disposals (7.3) - - (7.3) ---------- --------- --------- ---------At 30 September 2007(unaudited) 474.7 47.9 16.7 539.3 ========== ========= ========= ========= Accumulated depreciation:At 1 January2007 (audited) - (2.4) (16.2) (18.6)Providedduring theperiod (4.4) (0.3) (0.1) (4.8) ---------- --------- --------- ---------Written back on Revaluation 4.4 0.2 - 4.6 ---------- --------- --------- ---------At 30 September 2007(unaudited) - (2.5) (16.3) (18.8) ========== ========= ========= ========= Net book value:At 30 September 2007(unaudited) 474.7 45.4 0.4 520.5 ========== ========= ========= ========= At 31 December2006 (audited) 479.2 43.9 0.2 523.3 ========== ========= ========= ========= 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 30 September 2007 of £474.7 million (31 December 2006:£479.2 million) and the majority of the property acquired under finance leasesat 30 September 2007 of £43.4 million (31 December 2006: £41.7 million) werevalued at 30 September 2007 by Savills Commercial Limited ("Savills"), a valuerexternal to the Group as part of the valuation of all the valuable propertiesheld by the Group under the HMRC contract. The valuations at 30 September 2007and 31 December 2006 have been carried out in accordance with The RoyalInstitution of Chartered Surveyors' ("RICS") Appraisal and Valuation Standards,Fifth 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 2006 £2.2 million) having takenadvice from a suitably qualified employee (a member of The Royal Institution ofChartered Surveyors). 9. Investment property Property Freehold acquired under At valuation: property finance leases Total £m £m £mAt 1 January 2007(Audited) 1,457.0 26.1 1,483.1Additions 222.1 1.2 223.3Revaluations (46.1) 0.3 (45.8) ---------- ---------- ----------At 30 September2007 (Unaudited) 1,633.0 27.6 1,660.6 ========== ========== ========== It is the Group's policy to carry investment property at fair value inaccordance with IAS 40 "Investment Property". Investment property was valued at30 September 2007 by CB Richard Ellis Limited ("CBRE") and Savills, valuersexternal to the Group. These valuations have been incorporated into the third quarter financialstatements. Both Savills and CBRE have consented to the use of their names inthese financial statements. 9. Investment property (continued) Investment property comprises the Group's Abbey portfolio and its directproperty investments. CBRE's valuation of the Abbey portfolio of properties was£576.3 million (31 December 2006: £575.7 million). As at 31 December 2006 twoproperties with as valuation of £3.0 million were identified for sale and heldwithin non-current assets held for sale. As at 30 September 2007 theseproperties have been sold. Savills and CBRE both carried out valuations of the Group's other propertiesheld within investment property, which were valued as at 30 September 2007 at£86.6 million (31 December 2006: £53.1 million), and at £992.5 million (31December 2006: £850.6 million) respectively as at 30 September 2007. The remaining properties held under Property acquired under finance leases werevalued by the Directors at a market value of £5.2 million (31 December 2006:£4.2 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 30 September 31 December 2007 2006 Unaudited Audited £m £mValuation of Abbey portfolio by CBRE 576.3 575.7Valuation of asset held for sale by theDirectors - 2.5Transfer to non-current assets held forsale - (3.0) ------------ ------------ 576.3 575.2Valuation of direct propertyinvestments by Savills 86.6 53.1Valuation of direct propertyinvestments by CBRE 992.5 850.6Valuation of certain finance leases bythe Directors 5.2 4.2 ------------ ------------ 1,660.6 1,483.1 ============ ============ The valuations at 30 September 2007 and 31 December 2006 have been carried outin accordance with The Royal Institution of Chartered Surveyors' ("RICS")Appraisal and Valuation Standards, Fifth Edition. Income and expenditure derived from those long leaseholds and freeholds heldunder the Abbey portfolio as investment properties is as follows: Three months ended Nine months ended Year ended 30 September 30 September 31 December 2007 2006 2007 2006 2006Unaudited Unaudited Unaudited Unaudited Audited £m £m £m £m £m 11.3 13.0 Revenue 32.2 32.9 43.0 Property operating expenditure from Abbey investment property that has generated revenue in 0.1 0.1 the period 0.2 - - Property operating expenditure from Abbey investment property that has not generated 0.5 0.8 revenue in the period 1.6 1.6 2.1 The above information relating to the investment property held under the DPIportfolio is disclosed as the Direct Property Investments segment within note 3. 10. Non-current assets held for sale As at As at 30 September 31 December 2007 2006 Unaudited AuditedAt valuation £m £mAt start of the period 3.0 1.4Reclassifications from InvestmentProperty - 3.0Reclassifications from Property, Plantand Equipment 0.3 -Disposals (3.0) (1.4) ------------ ------------At end of the period 0.3 3.0 ============ ============ As at 31 December 2006 two properties were held within non-current assets heldfor sale, previously these properties were held as investment properties. Duringthe nine months to 30 September 2007 these properties were sold. During the period ended 30 September 2007 one property was transferred fromproperty, plant and equipment to non-current assets held for sale. This propertyis being actively marketed and it is anticipated that this disposal will takeplace in the near future. In accordance with the provisions of IFRS 5, thisproperty is held at the lower of carrying value and fair value less estimatedcosts of realisation and forms part of the Group's outsourcing business segment. 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 30 September 2007 was £66.9 million (31 December 2006£77.3 million). For the purposes of the consolidated cash flow statement, cash and short-termdeposits comprise the following: As at As at 30 September 31 December 2007 2006 Unaudited Audited £m £mCash at bank- in controlled accounts 26.5 22.7- for operational purposes 40.7 54.6 ------------ ------------Cash and short-term deposits 67.2 77.3 Bank overdrafts (note 13) - (0.9)Working capital facility (note 13) (11.6) - ------------ ------------Total cash and short-term deposits netof bank overdrafts 55.6 76.4 ============ ============ The amounts held in controlled accounts comprise property sale proceeds andother capital receipts which will be held in controlled accounts until the nextinterest payment date in accordance with the terms of the relevant loan facilityagreements. This cash can be accessed within 24 hours of any request by theGroup. 12. Issued capital As at 30 September 2007 No. of ordinary Authorised shares £mOrdinary shares at par value of £nil Unlimited - ============ ====== Issued No. of shares £mAt 1 January 2007 (net of 698 treasuryshares) 29,416,128 -Issued on 2 May 2007 20,000 -Movement in shares held by the EmployeeShare Trust (13,928) - ------------ ------At 30 September 2007 (net of 14,626 treasuryshares) 29,422,200 - ============ ====== 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 2006 and 30 September 2007: As at As at Effective 30 September 31 December interest 2007 2006 rate % Maturity Unaudited Audited £m £mNon-currentObligations underfinance leases 8.2% 2008-2021 8.1 7.0Bank loans:Term loan underthe HMRC portfoliofacility 5.8% Mar 2021 166.6 166.5Term loan underthe Abbeyportfolio facility 5.6% Jul 2012 451.7 451.7Acquisition termloan 5.8% Jul 2015 170.1 170.0Term loan underthe Beta portfoliofacility 5.4% Apr 2016 207.6 207.5Term loan underthe Gammaportfolio 5.0% Jan 2017 229.7 229.6facilityRevolving Deltaacquisitionfacility 6.4% Apr 2008 - 36.4 ----------- ---------- 1,233.8 1,268.7 =========== ==========CurrentObligations underfinance leases 8.2% 2007 0.1 0.1Bank loans:Overdraft (note 11) 2007 - 0.9Term loan underthe HMRC portfoliofacility 5.8% 2007 - 0.2Revolving Deltaacquisitionfacility 6.4% Apr 2008 257.1 -Working capitalfacility 11.6 ----------- ---------- 268.8 1.2 =========== ========== All of the Group's properties, as valued by Savills and CBRE, have been securedagainst the Group's loan facilities. The loan balances above represent theamounts outstanding at 30 September 2007 and 31 December 2006 on the followingfacilities: 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. 13. Interest and non-interest bearing loans and borrowings (continued) 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. Revolving Delta Acquisition facility The Group has a 3 year, £400.0 million revolving acquisition facility to financefurther property investments. Acquisitions under this facility are initiallyfully debt financed and will be refinanced using a mix of long-term debt andequity at a later date. The facility is repayable in April 2008. The interestrate payable on the facility is LIBOR plus a margin of between 1.0% and 1.15 %plus mandatory costs (if any). The group has entered into nine interest rateswaps totalling £193.6 million at rates between 4.4% and 5.9% (excluding EliniaHouse) for periods of between 10 and 12 years to fix part of its anticipatedlong-term exposure to interest rate risk on these property acquisitions. Working capital facility The Group has a £25.0 million working capital facility which ends in June 2008.At 30 September 2007, £11.6 million was drawn down. The interest rate payable onthe facility is LIBOR plus 2.0% plus mandatory costs (if any). The loan isguaranteed by Mapeley Limited. 14. Deferred asset management receipts £mAt 31 December 2006- current 5.9- non-current 78.9 ------------Total deferred asset management receipts 84.8 Movement in periodReceived in period 2.9Released to income statement in period (4.6) ------------ At 30 September 2007- current 6.0- non-current 77.1 ------------Total deferred asset management receipts 83.1 ============ 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. Related party transactions The Group continues to provide property management services in respect of 135property interests owned by Pinnacle Towers Limited, a company in which FortressInvestment Group LLC held a significant interest. In return for the provision ofthese services, the Group receives £100,000 per annum evenly spread across theyear and receivable one month in arrears. During the period £75,000 had beenreceived of which £8,000 was outstanding as at 30 September 2007. 16. Subsequent events The Board of the Company proposed and declared an interim dividend of £13.8million (31 December 2006: £13.2 million; 30 September 2006: £11.4 million) at aBoard meeting held on 7 November 2007. The dividend payment date is 30 November2007. 17. 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 Nine months ended Year ended 30 September 30 September 31 December 2007 2006 2007 2006 2006Unaudited Unaudited Unaudited Unaudited Audited £m £m £m £m £m (48.8) 15.3 Profit/(loss) before tax (18.6) 42.0 42.8 27.2 21.6 Add back: Finance cost net of finance income 59.3 57.5 82.8 2.3 2.7 Depreciation and amortisation 6.9 7.9 9.5 Net valuation deficit/(surplus) on 51.6 (10.7) investment property 45.8 (29.4) (40.8) Reversal of impairment of - (0.7) non - investment property (0.1) (0.7) (0.8) -------- ------- ------- -------- ------- 32.3 28.2 EBITDA 93.3 77.3 93.5 ======== ======= ======= ======== ======= 18. 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. This definitionhas been refined at 31 December 2006 but this has had no impact on reported FFOfor 2006. More detailed definitions of these adjustments to EBITDA are givenbelow: "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. "Organic FFO" is defined as the FFO contribution from property assets orservices following the first anniversary of their acquisition or commencement ofthe contract, net of central overhead costs. "Acquisition FFO" is defined as the FFO contribution from property assets orservices in the first year of ownership in the case of property assets andcontract commencement in the case of new services. "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. 18. Funds from operations (continued) Unaudited Unaudited Three months ended 30 September Three months ended 30 September 2007 2006 Organic Acquisition Total Organic Acquisition Total £m £m £m £m £m £mEBITDA 27.9 4.4 32.3 20.5 7.7 28.2Net financecosts (15.9) (3.6) (19.5) (11.5) (4.2) (15.7)Movement inthe onerousleaseprovision (4.3) - (4.3) (1.5) - (1.5)Movement inunbilledrevenue 0.4 - 0.4 (0.1) - (0.1)Movement inlong-termaccrued costs (0.2) - (0.2) - - -Net assetmanagementreceipts (0.1) - (0.1) 0.1 - 0.1Share benefitexpense 0.5 - 0.5 0.4 - 0.4Realisedprofit ondisposal forFFO 5.4 - 5.4 - - - ------ ------- ------- ------ ------- -------FFO 13.7 0.8 14.5 7.9 3.5 11.4 ------ ------- ------- ------ ------- ------- FFO per share 0.49 0.43 ------- ------- Unaudited Unaudited Nine months ended 30 September Nine months ended 30 September 2007 2006 Organic Acquisition Total Organic Acquisition Total £m £m £m £m £m £mEBITDA 78.3 15.0 93.3 53.3 24.0 77.3Net financecosts (45.0) (9.5) (54.5) (31.1) (14.9) (46.0)Movement inthe onerousleaseprovision (4.4) - (4.4) (3.5) - (3.5)Movement inunbilledrevenue 0.5 - 0.5 (0.3) - (0.3)Movement inlong termaccrued costs (0.7) - (0.7) 0.7 - 0.7Net assetmanagementreceipts (1.7) - (1.7) 6.4 - 6.4Share benefitexpense 1.4 - 1.4 1.4 - 1.4Realisedprofit ondisposal forFFO 8.1 - 8.1 - - - ------ ------- ------- ------ ------- -------FFO 36.5 5.5 42.0 26.9 9.1 36.0 ------ ------- ------- ------ ------- ------- FFO per share 1.43 1.38 ------- ------- 18. Funds from operations (continued) Audited Year ended 31 December 2006 Organic Acquisition Total £m £m £mEBITDA 61.6 31.9 93.5Net finance costs (43.5) (19.1) (62.6)Movement in the onerous lease provision 4.5 - 4.5Movement in unbilled revenue 2.1 - 2.1Movement in long-term accrued costs - 0.7 0.7Net asset management receipts 5.6 - 5.6Share benefit expense 1.9 - 1.9 ------- ------- --------FFO 32.2 13.5 45.7 ------- ------- -------- FFO per share 170 pence -------- The calculation of FFO per share is based on the following: - FFO for the three months ended 30 September 2007 of £14.5 million (three months ended 30 September 2006: £11.4 million) - FFO for the nine months ended 30 September 2007 of £42.0 million (nine months ended 30 September 2006: £36.0 million; year ended 31 December 2006: £45.7 million) - Weighted average number of ordinary shares for the three months ended 30 September 2007 of 29,423,496 (three months ended 30 September 2006: 26,491,676) - Weighted average number of ordinary shares for the nine months ended 30 September 2007 of 29,415,761 (nine months ended 30 September 2006: 26,104,021; year ended 31 December 2006: 26,887,700) - FFO per share calculated using diluted weighted average number of shares for the three months ended 30 September 2007 of 29,423,496 (three months ended 30 September 2006: 26,504,846) is 49 pence per share (three months ended 30 September 2006: 43 pence per share) - FFO per share calculated using diluted weighted average number of shares for the nine months ended 30 September 2007 of 29,415,761 (nine months ended 30 September 2006: 26,117,191; year ended 31 December 2006: 26,903,833) is 143 pence per share (nine months ended 30 September 2006: 138 pence per share; year ended 31 December 2006: 170 pence per share) 19. 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 30 September 30 September 31 December 2007 Unaudited 2006 Unaudited 2006 Audited £m £m £m"Total debt" 1,510.3 1,308.3 1,279.2Less: Cash andshort-termdeposits (67.2) (83.0) (77.3) ----------- ----------- -------------Net debt 1,443.1 1,225.3 1,201.9 =========== =========== ============= Equity 670.4 624.3 712.7 =========== =========== ============= Gearing ratio 215% 196% 169% =========== =========== ============= 20. Net assets per share As at As at As at 30 September 30 September 31 December 2007 Unaudited 2006 Unaudited 2006 AuditedBasic netassets pershare £22.78 £23.57 £24.23 =========== =========== ============Diluted netassets pershare £22.78 £23.55 £24.21 =========== =========== ============ 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 the Company as at 30 September 2007 of £670.4 million (30 September 2006: net assets of £624.3 million; 31 December 2006: net assets of £712.7 million) - Number of ordinary shares for basic net asset value per share 29,422,200 (30 September 2006: 26,491,676; 31 December 2006: 29,416,128) - Number of ordinary shares for diluted net asset value per share 29,422,200 (30 September 2006: 26,511,676; 31 December 2006: 29,436,128) This information is provided by RNS The company news service from the London Stock Exchange

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