30th May 2007 07:00
Shaftesbury PLC30 May 2007 SHAFTESBURY PLC PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007 Shaftesbury PLC ("Shaftesbury") today announces its half year results for thesix months ended 31 March 2007. Shaftesbury owns a portfolio of over 400properties in London's West End (Carnaby and Chinatown) and Covent Garden. Results • Adjusted diluted net asset value per share up 19p (3.2%) to £6.09 in the six months to 31.3.2007 (up 39p (6.6%) to £6.29 excluding REIT conversion charge) Diluted unadjusted net asset value per share up 33% to £6.04 • Portfolio valued at £1,332.8 million reflecting a 4.6% valuation surplus over six month period Valuation uplifts from rental growth and estate management - yields largelyunchanged • Adjusted profit before tax down 17.3% to £6.56 million Increase in rental income of £1.7 million, offset by higher property andinterest charges arising from high levels of activity across the portfolio • Profit before tax £70.1 million against £8.8 million in first half last year (no interim external valuation last year) • Adjusted diluted earnings per share down 24.5% to 3.32p Unadjusted diluted earnings per share 158.06p against 5.14p in first half lastyear (no interim external valuation last year) • Interim dividend up 12.5% to 2.16p • Conversion to REIT status effective from 1 April 2007 - removes contingent capital gains liability of £172.3 million - conversion charge £27.5 million (equivalent to 20p per share) Portfolio activity • £13.2 million of acquisitions in period, bringing total for last 18 months to £120.8 million • Continuing strong tenant demand across all uses in every village; portfolio ERV now £69 million (up £3 million in six months) • New schemes will make increasing contribution to future growth John Manser, Chairman commented, "Our clearly defined strategy to invest only in London's West End continues todeliver growth in our net asset value, with the results for the six months ended31 March 2007 showing further growth in rental income and capital values. . Our investment strategy is unique amongst UK listed real estate companies and weintend to take full advantage of the flexibility of our new REIT status toadvance our business. London's importance as a World financial centre and major visitor destinationcontinues to grow and we are actively pursuing new investment opportunities inour chosen locations. Additionally, within our holdings, we continue to identifyand implement new schemes which will make an increasing contribution to ourprogress in the medium term. We believe our unique strategy and portfolio willcontinue to deliver growth in income and capital value." Date: 30 May 2007 For further information:Shaftesbury PLC 020 7333 8118 cityPROFILE 020 7448 3244Jonathan Lane, Chief Executive Simon CourtenayBrian Bickell, Finance Director Andrew Harriswww.shaftesbury.co.uk Index Page2 Financial Highlights and Performance Summary 15 Unaudited Group Balance Sheet3 Business Review 16 Unaudited Group Cash Flow Statement12 Portfolio Analysis 16 Statement of changes in shareholders' equity14 Unaudited Group Income Statement 17 Notes to the Interim Results Financial Highlights 31.3.2007 31.3.2006 30.9.2006Net property income £'000 24,465 23,459 46,983Adjusted profit before tax* £'000 6,560 7,934 13,879Adjusted diluted earnings per share Pence 3.32 4.40 7.47Profit before tax £'000 70,083 **8,757 187,602Diluted earnings per share Pence 158.06 **5.14 103.32Interim dividend per share Pence 2.16 1.92 1.92Final dividend per share Pence - - 3.73Property assets at book value £'000 1,332,140 **1,041,282 1,254,776Adjusted net assets *** £'000 822,353 **607,414 788,704Adjusted diluted net assets per share Pence 609 **455 590Net assets £'000 816,118 **477,197 606,881Diluted net asset value per share Pence 604 **358 454 * Adjusted to exclude property and financial derivatives fair valuationmovements, gain on sale of investment properties and, loss on purchase ofdebenture stock ** Based on market value of investment properties at the previous year end *** Adjusted to exclude fair valuation of financial derivatives and deferred taxin respect of investment property revaluations and financial instrument fairvalues (see note 19) Performance Summary for the six months ended 31 March 2007 Shaftesbury Benchmark GroupPortfolio return +4.6% IPD UK Monthly Index-(the valuation uplift and realised surpluses arising on the Group'sinvestment portfolio expressed as a percentage return on the valuation at Capital Valuesthe beginning of the period adjusted for acquisitions and capitalexpenditure) +3.6% Year ended 30.9.2006 +18.1% +14.7%Overall portfolio return +6.5% IPD UK Monthly Index-(a combination of the portfolio return referred to above and the netproperty revenue from the portfolio for the period expressed as a Total Returnpercentage return on the valuation at the beginning of the period adjusted +6.1%for acquisitions and capital expenditure) Year ended 30.9.2006 +22.4% +20.7%Net asset value return (the growth in diluted net asset value per Ordinary share plus dividendsdeclared per Ordinary share expressed as a percentage of the diluted netasset value per share at the beginning of the period)Based on adjusted net assets - before REIT conversion charge +7.3%- after REIT conversion charge +3.9% Year ended 30.9.2006 +30.8%Based on reported net assets (reflecting the conversion charge and release +33.0%of deferred taxation arising on REIT conversion) Year ended 30.9.2006 +28.9%Total shareholder return +27.2% FTSE 350 Real Estate Index(the growth in the market price of an Ordinary share plus dividendsreceived during the period expressed as a percentage of the share price at +14.7%the beginning of the period. Share price at 31.3.2007 - £7.60) Year ended 30.9.2006 +59.3% +35.3% Note: Comparative amounts for the six months ended 31 March 2006 have not beenprovided as no external valuation was carried out at that date. Business Review Our clearly defined strategy to invest only in London's West End continues todeliver growth in our net asset value, with the results for the six months ended31 March 2007 showing further growth in rental income and capital values. Thereduction in adjusted profit for the period reflects the impact of increasedcosts and interest which we are incurring in connection with a number ofsubstantial new projects, which we believe will deliver significant shareholdervalue in the medium term. These Interim Results reflect the first interim external valuation of ourportfolio together with the costs and release of deferred tax liabilitiesarising from our conversion to a Real Estate Investment Trust ("REIT"), whichbecame effective on 1 April 2007. In order to give a better indication of theGroup's underlying performance, we refer below to adjusted profits, whichexclude the one-off effects of REIT conversion, the effects of property andfinancial derivative valuation movements, and exceptional costs, together withassociated tax reported in the Income Statement. The adjusted net assetdisclosures referred to below exclude the valuation of financial derivatives anddeferred tax in respect of investment property revaluation surpluses andfinancial derivatives. Results Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Net assets reported in the Group Balance Sheet 816,118 477,197 606,881Adjusted for:Fair value adjustment in respect of financial derivatives 2,108 10,881 9,318Deferred tax provided in respect of:Investment property revaluation gains 4,127 122,600 175,300Financial derivatives - (3,264) (2,795) Adjusted net assets 822,353 607,414 788,704Adjusted diluted net asset value per share £6.09 £4.55 £5.90 Adjusted net assets at 31 March 2007 totalled £822.4 million, equivalent to adiluted net asset value per share of £6.09. These figures include the charge wehave incurred on conversion to REIT status of £27.5 million, equivalent to areduction in diluted net asset value per share of 20 pence. The increase indiluted net asset value per share over the period excluding this one-off chargewas 39 pence, an uplift of 6.6%, which reduces to 19 pence, an uplift of 3.2%,once the charge is deducted. Shareholders' funds shown in the unadjusted Group Balance Sheet at 31 March2007, which totalled £816.2 million, equivalent to £6.04 per share, reflect therelease arising on REIT conversion of net deferred taxation liabilitiesamounting to £172.3 million, less the conversion charge referred to above. Theincrease in the unadjusted shareholders' funds since the last year end totalled£209.2 million, equivalent to £1.50 per share, an uplift of 33%. Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000 Profit before tax reported in the Group Income Statement 70,083 8,757 187,602Profit on disposal of investment properties - (683) (748)(Surplus)/deficit arising on revaluation of investment (58,670) 569 (190,933)propertiesMovement in fair value of financial derivatives (7,327) (709) (2,051)Loss on purchase of debenture stock 2,474 - 20,009Adjusted profit before tax 6,560 7,934 13,879 Adjusted profit before tax for the six months ended 31 March 2007 amounted to£6.6 million, compared with £7.9 million in the same period last year. Althoughwe have seen an increase in rental income of £1.7 million compared with lastyear, property expenses have risen by £0.7 million, reflecting costs incurredahead of commencement of a number of major new schemes. Finance costs have risenby £2.2 million, in part due to higher interest rates but also as a result ofthe cost of financing the strategic acquisitions made over the last 18 months.The low initial income from these purchases has been further reduced in theshort term as a result of our deliberate policy of securing vacant possession inadvance of refurbishment and reletting. As last year, the National Insurance liability in respect of past grants ofshare awards and share options has increased as a result of the increase in theCompany's share price from £6.00 to £7.60 at the end of the period, giving riseto a charge in the Income Statement of £0.75 million (2006 - £0.7 million). Profit before tax reported in the Income Statement was £70.1 million andincluded investment property revaluation surpluses of £58.7 million and areduction in the fair value deficit of our financial derivatives of £7.3 million(2006 - £0.7 million). The reported profit for the same period last year, whichdid not include an external revaluation of investment properties, was £8.8million. The results also include a loss of £2.5 million on repurchase of £6.5 million(nominal) of 8.5% Debenture Stock 2024, which was completed in October 2006.This was the final phase of the refinancing of our historic fixed rate long termdebt announced in September 2006, which has allowed us to create a usefuleconomic surplus ahead of REIT conversion and provided greater flexibility infuture financing. Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000 Taxation (credit)/charge reported in the Group Income (141,817) 1,938 50,100StatementCurrent tax in respect of:REIT conversion charge (27,512) - -Loss on purchase of debenture stock 742 - 6,002Deferred tax in respect of:Property disposals - 428 5,268Revaluation of investment properties (1,583) - (56,708)Movements in fair value of financial derivatives - (263) (732)Deferred tax released on REIT conversion 172,278 - -Adjusted taxation charge on the adjusted profit before tax 2,108 2,103 3,930 Provision for current and deferred tax on the adjusted profit for the periodamounted to £2.1 million (2006 - £2.1 million). The liability for corporationtax on the wholly owned Group's profits has been eliminated by the utilisationof losses arising from the Debenture refinancing carried out in September andOctober 2006 and other tax losses arising during the period. The tax credit reported in the Income Statement of £141.8 million (2006 - charge- £1.9 million) includes both the charge incurred on conversion to REIT statusof £27.5 million and a release of net deferred tax liabilities of £172.3 millionas a result of conversion. Our interest in the Longmartin joint venture has notbeen included within our REIT election, so its provisions for corporation anddeferred tax remain. The adjusted profit after tax for the period amounted to £4.5 million (2006 -£5.8 million). The profit after tax reported in the Group Income Statementamounted to £211.9 million (2006 - £6.8 million). Your Directors are pleased to declare an interim dividend of 2.16 pence perOrdinary Share, a 12.5% increase on last year's interim dividend of 1.92 pence.Future dividends will reflect the distribution obligations contained in REITlegislation, which broadly require distribution of a minimum of 90% of rentalprofits (calculated by reference to tax rather than accounting rules) arising onthat part of our business within the REIT regime. The final dividend for thecurrent year, expected to be announced in December 2007 and paid in February2008, will include our first Property Income Distribution at a level which willreflect the REIT status of our wholly owned business for the second half of theyear only. From next year we expect that interim and final dividends will bemore evenly balanced. Portfolio Valuation This is the first year in which we have commissioned an external valuation atthe half year. As expected, the recent cycle of yield reduction has virtuallyended in our predominantly shop and restaurant portfolio. Almost all theincrease in value of our properties in this first half has been the result ofrental growth and estate management. We are confident of further steady growthin rental values as demand remains healthy for all uses across our villages. The expectation of higher interest rates has increased uncertainty about thefuture trend in investment yields. We expect that currently planned and newprojects will make an increasing contribution to our growth in coming years. Our valuers have estimated the rental value of our total portfolio at 31 March2007 to be £69.0 million per annum (30.9.2006 - £66.0 million), based on provenrental levels. This compares with the portfolio's passing income at that date of£56.0 million per annum (30.9.2006 - £53.9 million). Once again, DTZ, the valuers of our wholly owned portfolio have noted theconcentration of a high proportion of our properties in adjacent or adjoininglocations within our principal villages and the dominance of retail andrestaurant uses. They continue to advise that, as a consequence of theseunusual factors, our wholly owned portfolio as a whole or in parts may have agreater value than that currently reflected in their valuation. We have acquired properties at a cost of £13.2 million in the first six monthsof the year, bringing our total investment in the past 18 months to £120.8million. Most of our acquisitions over that period have been of un-modernisedbuildings which are either let on very short term leases or are vacant. Sincetheir acquisition, as part of our management strategy, we have obtained vacantpossession of further space and are now seeking consents for change of use aheadof reconstruction. Inevitably in the short-term, these preparations reduce ourprofits as there is little income to off-set interest charges and irrecoverablecosts. We expect that future purchases are likely to have similar short termincome characteristics. Our Strategy Shaftesbury's strategy to invest only in the busiest parts of London's West Endis founded on London's position as Europe's major centre of economic andfinancial activity and on its status as the World's most popular City foroverseas visitors. The variety of choice within the West End and the vibrancythat it supports are attractions that no other city can boast. Shaftesbury ownsa unique cluster of over 400 mixed use properties in the West End's busiestlocations. Against a background of an unrivalled mix of shops, restaurants, theatres,cinemas, galleries, museums, historic buildings and public spaces, Shaftesburyseeks to create distinctive neighbourhoods such as Carnaby, Seven Dials, theOpera Quarter and Chinatown. These districts are characterised by theircombination of alternative shops, individual restaurants, vibrant street lifeand flourishing business and residential communities. Our villages are alsohome to a thriving night time economy with long trading hours, seven days aweek. Our strategy is unique amongst UK listed companies and we intend to take fulladvantage of the flexibility offered by our new REIT status to advance ourbusiness both in acquiring and selling properties. With our extensive local knowledge, we aim to create value through: - Identifying and securing new investments which offer long term opportunities to create rental and capital growth through the application of our management strategies, skills and experience. Frequently we acquire properties which initially are either vacant or producing low income, but in locations which we believe can be improved by our management initiatives and offer opportunities materially to increase tenant demand and rents; - Concentrating our ownerships to allow us to create destinations which have a particular identity reflecting the mix of retail and restaurant tenants we introduce to enhance the long term attractiveness of these areas for occupiers and their customers. As our villages are synonymous with fashion and leisure, we are alert to the need continually to introduce new operators and concepts despite the disruption to short term income which may arise from such changes; - Within our mixed use portfolio, continually identifying and implementing schemes which improve the use of space to meet occupier needs and focus on higher value uses which are less cyclical and suffer minimal obsolescence; - Selective disposals of assets which are not integral to our village ownerships and no longer meet our long term investment criteria. Portfolio Activity Acquisitions during the first half totalled £13.2 million. Expenditure onexisting properties totalled £5.5 million. The timing of future expenditure,particularly on our larger projects, will depend very much on when we obtainplanning consents which determine our ability to start on site. In the first six months we let commercial space with a rental value of £1.5million comprising £0.5 million of shops, £0.4 million of restaurants and barsand £0.6 million of offices. Whilst lettings of offices have been historicallyhigh, those of shops and restaurants have been constrained principally by thelack of supply of larger units as almost all are fully let and we await consentfor new schemes. The rental value of all vacant wholly owned commercial space at 31 March 2007was £2.5 million (see table below), of which only £850,000 was ready andavailable to let. The remainder was either under offer or in course ofrefurbishment. The current rental value of our vacant residential accommodation was £0.7million, mostly comprising properties being converted or refurbished. Analysis of Vacant Wholly Owned Commercial Space at 31 March 2007 Shops Restaurants and Offices Total leisureEstimated Rental Value £'000 £'000 £'000 £'000Under refurbishment 217 28 212 457Ready to let 646 - 211 857Under offer 467 577 149 1,193Total 1,330 605 572 2,507Area - sq. ft. 20,000 15,000 25,000 60,000 Our Portfolio Our wholly owned portfolio at 31 March 2007 included 297 shops with a total of383,000 sq.ft. producing 41% of contracted income with an average unexpiredlease term of six years. As we have had few vacancies during the period oflarger shops (over 1,000 sq.ft. net), the first half has seen few new lettingsof any size. Consequently, across our portfolio, we are actively looking foropportunities to secure vacant possession of such shops. In contrast, it is inthe nature of our smaller shops (with an average size of 500 sq.ft.), that wehave a number of vacancies at any one time. However, this does provide us withsome welcome flexibility to accommodate tenant movement and to create new rentalevidence. We have 150 wholly owned restaurants, bars and clubs with a total area of393,000 sq.ft. These provide 30% of contracted income with an average unexpiredlease term of 14 years. Of the three units currently vacant, two are under(B1)offer. As with our larger shops, we are keen to secure possession of thoserestaurants which no longer meet our current expectations of quality. This willallow us to introduce experienced caterers with exciting new concepts. Our wholly owned offices extend to 419,000 sq.ft. across 308 tenancies andaccount for 23% of our income. We have seen excellent letting activity over thefirst six months and few new voids. In that period, our office vacancies havereduced by over 40%. However, leases of our predominantly small units (average1,360 sq.ft.) are mostly short term. Consequently, in spite of present buoyantoffice demand, we continue our policy of conversion of small office space toother less cyclical commercial and residential uses. We now have 254 flats and maisonettes which represent 6% of our income.Currently, we are creating 23 new units in former office space and we expectcompletion in the coming weeks. We are making planning applications for afurther 12 new units. Carnaby Carnaby, our largest village, represents 39% of our assets by value and includes46% of our wholly owned shops and 58% of our wholly owned offices. Recent lettings of larger shops have included Hugo Boss and Wrangler,international retailers choosing to open new concept stores in Carnaby tocomplement their main brands located in nearby high streets. There are noshops to let in Carnaby Street. As we have several similar applicants eager toopen here we are actively exploring opportunities for taking surrenders ofleases from existing tenants who no longer meet our criteria for the area. Similarly, we have recently secured possession of a number of restaurants whichwe have re-let with little delay to experienced restaurateurs with distinctivenew ideas of high quality. Prior to completion of our street improvements at Broadwick Street where itmeets Carnaby Street, we have agreed to let three of our four new shops to asingle tenant, new to the UK. Continuing our partnership with Westminster CityCouncil, we are now exploring the feasibility of extending street andenvironmental improvements into Kingly Street which forms an important westernboundary to Carnaby adjacent to Regent Street. We have identified a number of substantial mixed use schemes we hope to initiateover the next three years which will increase the retail space we are able tooffer. Also, we are investigating a number of interesting acquisitionopportunities in and around Carnaby. Covent Garden Our holdings in Covent Garden, including our 50% share in the Longmartin JointVenture, represent 34% of our property assets. Seven Dials is now a well established destination for alternative fashion andlifestyle, where our holdings are substantially fully let. For the immediatefuture our greatest refurbishment activity is concentrated on creating two newdistricts - the Opera Quarter and our Longmartin Joint Venture. We are making good progress with our schemes to improve and extend our holdingsin the Opera Quarter, principally a restaurant district next to some of London'slargest and most prestigious theatres. Our strategy is to establish a food andleisure quarter of the highest quality with a mix of uses on the upper floors,which fits in with this central area within Covent Garden. Following further key purchases, we are securing vacant possession of sevenun-modernised restaurants and shops, and are seeking consent to extend others.Currently we have nine projects in hand to convert mostly derelict upper floorsto a mix of uses. Subject to obtaining further planning consents and vacancies,we hope to complete improvements to the Opera Quarter over the next two years. We welcome the investment proposed by the new owner of the Covent Garden Piazzaand adjoining areas which, over time, should enhance the diversity ofattractions and increase visitor numbers to Covent Garden as a whole. Longmartin Joint Venture Our 50% joint venture currently extends to 247,000 sq.ft. of lettable space onvirtually an island site with, at present, frontages to four streets includingLong Acre. It is also immediately south of our Seven Dials village. Here, in currently our largest new scheme, we are proposing an entirely newquarter which is designed to complement adjacent areas, with public accessleading both north from Long Acre and west from Upper St. Martin's Lane to meetin a large central open courtyard. Lower floors will provide a mix of retail andrestaurant accommodation. Our ideas, as well as capitalising on the site'sclose proximity to Leicester Square and Soho, are intended to enhance the uniquecharacter of Covent Garden. To date, we have made four planning applications, all of which are outstanding.These extend to about 105,000 sq. ft. net and introduce an equal balance ofshops, restaurants, offices and residential in place of current historic uses,80% of which are offices and garaging. All of this space is currently eithervacant or let short term. We expect planning decisions by early Autumn. We arenow considering further phases which we expect to advance in the coming months. Concurrently, together with our Joint Venture partner, The Mercers' Company, whoown adjacent properties fronting Long Acre, we are supporting Westminster CityCouncil's initiatives to implement environmental and street improvements both toLong Acre and to its busy junction with St. Martin's Lane. Chinatown With its 56 restaurants and bars, which provide an increasing variety of FarEastern food, and 54 shops, our holdings now encompass much of London'sChinatown. They represent 25% of our property assets. All lettable space remainsfully occupied, and when vacancies do occur, tenants are found within a fewweeks. Whilst Chinatown, with its very central location, is tightly confined wecontinue to find opportunities for improvement and expansion. In addition to advancing our phased conversion of Horse and Dolphin Yard to aspecialist retail courtyard for Far Eastern food, we are now exploring thepotential for creating trading space in Dansey Place. Also we have acquiredfurther buildings in Newport Court, an important pedestrian route into Chinatownfrom Charing Cross Road. When we obtain possession in 2008, together with ourexisting holdings, we will create a number of small shop units which we expectwill let readily. Westminster City Council's street and environmental improvements in and aroundGerrard Street are now substantially complete. Following current works toreplace water mains, improvements are now about to commence in Lisle Street.These schemes, together with our own initiatives which raise quality throughbold external treatments as we carry out refurbishments to buildings, areencouraging several of our restaurant tenants to invest in substantial works ofmodernisation. REIT Conversion The Shaftesbury Group, excluding our Longmartin Joint Venture, completed itsconversion to REIT status, which became effective from 1 April 2007. Theconversion charge we will be required to pay amounts to £27.5 million and wehave elected to pay this charge over a four year period. The first instalmentwill be due in October 2007 with the final payment due in January 2011. Thepayment of the conversion charge instalments will be broadly similar to thecorporation tax payments we would have expected to pay over this period had wenot converted to REIT status. As a result of conversion, we have been able to release deferred tax liabilitiesof £172.3 million, as the wholly owned Group will no longer have a liability tocorporation tax on its property-derived income so long as it meets the REITeligibility criteria laid down in tax legislation. We expect REITs will over time bring greater liquidity into property markets andincrease investor interest in corporate investment vehicles which enjoy REITstatus. For Shaftesbury, we will have added flexibility when consideringselective asset disposals, which in effect will be free of tax and, in certaincircumstances, give us a particular advantage in our local market when we areseeking to acquire assets with substantial inherent capital gains. Finance Cash generated from revenue operations less interest payments and after net taxreceipts for the six months to 31 March 2007 amounted to £7.3 million, whichexceeded equity dividend payments of £5.0 million. Cash outflows on acquisitionsof properties totalled £13.1 million and on capital expenditure amounted to£5.2 million. There were no property disposals during the period. The final phase of the partial refinancing of the Group's historic long termDebenture debt was completed in October 2006, with the purchase and cancellationof a further £6.5 million of stock, which resulted in a book loss of £2.5million. The purchase was funded by further drawing from a 10 year bank facilityarranged in September 2006. The total of Debenture and net bank borrowings increased by £13.4 million in theperiod. At 31 March 2007, the book value of our Debenture and bank debt totalled£468.8 million, of which 56% was either fixed or hedged at fixed rates and 19%was capped to protect us against LIBOR rates above 6.50%. The weighted averagecost of borrowings including margin was 6.10%, compared with 5.93% at 30September 2006. Gearing at 31 March 2007, calculated by reference to the nominal value ofDebenture and bank debt and adjusted net assets as described above, was 57%,unchanged from the previous year end. The ratio of debt compared with the marketvalue of our portfolio was 35% (30.9.2006 - 36%). Committed bank facilities at 31 March 2007 totalled £500 million, compared withactual drawings at that date of £406.1 million. The weighted average maturity ofour facilities was 8.3 years. The increase in the general level of interest rates and rate expectations overthe period has increased finance costs charged in the Income Statement but hasresulted in a reduction of £7.3 million in the fair value deficit of our longterm interest rate hedges to a net deficit of £2.1 million at the end of theperiod. Similarly, the fair value deficit of the Group's remaining Debenturedebt has declined to £19.3 million at 31 March 2007, equivalent to 14 pence pershare. Performance and Benchmarking The table on page 2 summarises our performance for the period against our chosenbenchmarks. Against a background of generally static yields over the period, we haveout-performed the IPD Indices for all main commercial property categories forboth Portfolio Return and Overall Portfolio Return. The impact of higherproperty costs reduced the degree of out-performance against the OverallPortfolio Return benchmark. Eliminating the effects of REIT conversion, our Net Asset Value Return was 7.3%for the half year. Total Shareholder Return, based on a share price of £7.60 at31 March 2007 was 27.2%, compared with growth of 14.7% for the FTSE 350 RealEstate Index over the same period. Prospects Our investment strategy is unique amongst UK listed real estate companies and weintend to take full advantage of the flexibility of our new REIT status toadvance our business. London's importance as a World financial centre and major visitor destinationcontinues to grow and we are actively pursuing new investment opportunities inour chosen locations. Additionally, within our holdings, we continue to identifyand implement new schemes which will make an increasing contribution to ourprogress in the medium term. We believe our unique strategy and portfolio willcontinue to deliver growth in income and capital value. Jonathan S Lane - Chief Executive Brian Bickell - Finance Director 30 May 2007 Portfolio Analysis at 31 March 2007P Carnaby Covent Chinatown Charlotte Wholly Owned Longmartin Total Garden Street Portfolio Portfolio Market Value (note1) £525.0m £366.7m £335.4m £29.2m £1,256.3m *£76.5m £1,332.8m% of total Market Value 39% 28% 25% 2% 94% 6% 100%Current gross income £21.8m £15.3m £14.8m £1.3m £53.2m *£2.8m £56.0m (note 2)Estimated rental value (ERV) £27.5m £19.2m £17.0m £1.5m £65.2m *£3.8m £69.0m(note 3)ShopsNumber 138 102 54 3 297 7Area - sq.ft. 190,000 134,000 55,000 4,000 383,000 16,000% of current gross income 48% 49% 26% 7% 41% 28%% of ERV 50% 50% 28% 9% 43% 22%Vacancy rate by % of ERV 3% 2% 1% 2% 2% -Average unexpired lease 5 9 7 13 6 2length - years (note 4)Restaurants and leisureNumber 34 53 56 7 150 6Area - sq.ft. 78,000 125,000 170,000 20,000 393,000 35,000% of current gross income 12% 25% 60% 46% 30% 24%% of ERV 13% 22% 58% 42% 28% 19%Vacancy rate by % of ERV - - 2% - 1% -Average unexpired lease 12 13 16 15 14 6length - years (note 4)OfficesNumber of tenancies 166 67 66 9 308 37Area - sq.ft. 245,000 109,000 50,000 15,000 419,000 **159,000% of current gross income 37% 16% 8% 29% 23% 36%% of ERV 33% 17% 8% 33% 22% 50%Vacancy rate by % of ERV 2% 1% - 6% 1% 18%Average unexpired lease 4 4 4 3 4 3length - years (note 4)ResidentialNumber 58 107 71 18 254 43Area - sq.ft. 43,000 72,000 45,000 10,000 170,000 37,000% of current gross income 3% 10% 6% 18% 6% 12%% of ERV 4% 11% 6% 16% 7% 9%Vacancy rate by % of ERV 1% 3% 1% 1% 1% 1.5% *Shaftesbury Group's share ** Includes 35,000 sq.ft. of garaging Basis of Valuation Overall initial yield (note 3.79% 3.77% 4.16% 3.96% 3.89% 3.16%6)Overall equivalent yield 4.64% 4.56% 4.77% 4.51% 4.65% 4.40%(note 7)Tone of retail equivalent 4.35 - 4.00 - 4.75 - 4.25 - 5.00%yields 5.60% 5.50% 5.50% 4.15 - 4.50%Tone of retail estimated £100 £70 -£350 £150 - £260 £72.50 -£80rental values - ITZA £ per -£315sq.ft. £317 - £390Tone of restaurant 5.00% 4.00 - 4.75 - 4.25 - 4.75% 4.00 -equivalent yields 5.25% 5.125% 6.00%Tone of restaurant £55 -£80 £44.25 £130 - £315 £70estimated rental values -£ -£105 ITZAper sq.ft. £40 - £81Tone of office equivalent 4.50 - 5.00 - 5.25 -5.60% 5.00 - 5.75%yields 6.00% 5.60% 4.15 - 6.00%Tone of office estimated £35 - £50 £27.50 - £30 - £40 £35.00 -rental values -£ per sq.ft £45.00 £37.50 £25 - £37.50Tone of residential £9,100 - £10,100 - £7,800 - £8,650 - £13,000estimated rental values-£ £32,500 £52,000 £26,700 £17,200 -£28,000per annum Notes 1. The Market Values shown above in respect of the four Villages are, ineach case, the aggregate of the market values of several different propertyinterests located within close proximity which, for the purpose of this analysisare combined to create each Village. The different interests in each Villagewere not valued as a single lot. 2. Current gross income includes total actual and 'estimated income'reserved by leases. Current gross income does not reflect any ground rents, headrents or rent charges and estimated irrecoverable outgoings as at 31 March 2007(the 'date of valuation'). 'Estimated income' refers to gross estimated rentalvalues in respect of rent reviews outstanding at the date of valuation and,where appropriate estimated rental values in respect of lease renewalsoutstanding at the date of valuation where the Market Value reflects terms for arenewed lease. 3. Estimated rental value is the respective valuers' opinion of the rentalvalue of the properties, or parts thereof, reflecting the terms of the relevantleases or, if appropriate, reflecting the fact that certain of the properties,or parts thereof, have been valued on the basis of vacant possession and theassumed grant of a new lease. Estimated rental value does not reflect anyground rents, head rents or rent charges and estimated irrecoverable outgoings. 4. Average unexpired lease length has been calculated by weightingthe leases in terms of current rent reserved under the relevant leases and,where relevant, by reference to tenants' options to determine leases in advanceof expiry through effluxion of time. 5. Where mixed uses occur within single leases, for the purpose ofthis analysis the majority use by rental value has been adopted. 6. The initial yield is the net initial income at the date ofvaluation expressed as a percentage of the gross valuation. Yields reflect netincome after deduction of any ground rents, head rents and rent charges andestimated irrecoverable outgoings at 31 March 2007. 7. Equivalent yield is the internal rate of return, being thediscount rate which needs to be applied to the flow of income expected duringthe life of the investment so that the total amount of income so discounted atthis rate equals the capital outlay at values current at the date of valuation.The Equivalent Yield shown for each Village has been calculated by mergingtogether the cash flows and Market Values of each of the different interestswithin each Village and represents the average Equivalent Yield attributable toeach Village from this approach. 8. The tone of rental values and yields is the range of rentalvalues or yields attributed to the majority of the properties. Unaudited Group Income Statement For the six months ended 31 March 2007 Note Six months ended Year ended 30.9.2006 31.3.2007 31.3.2006 £'000 £'000 £'000Continuing operations Revenue from properties 2 32,518 29,999 58,792 Property charges 3 (8,053) (6,540) (11,809) Net property income 24,465 23,459 46,983 Administration expenses (2,194) (2,141) (5,320) Charge in respect of equity settled 4 (1,127) (970) (2,101)remuneration Total administration expenses (3,321) (3,111) (7,421) Operating profit before investment property 21,144 20,348 39,562disposals and valuation movements Profit on disposal of investment properties 5 - 683 748 Investment property valuation movements 58,670 (569) 190,933 Operating profit 79,814 20,462 231,243 Interest receivable 104 80 130 Interest payable 6 (14,688) (12,494) (25,813) Change in fair value of financial derivatives 7,327 709 2,051 Loss on purchase of debenture stock 7 (2,474) - (20,009) Profit before tax 70,083 8,757 187,602 Current tax 8 (27,978) (2,315) (391) Deferred tax 8 169,795 377 (49,709) Tax credit/(charge) for the period 141,817 (1,938) (50,100) Profit for the period 211,900 6,819 137,502 Earnings per share: 9 Basic 158.97p 5.15p 103.75p Diluted 158.06p 5.14p 103.32p Unaudited Group Balance Sheet As at 31 March 2007 Note 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Non-current assets Investment properties 11 1,332,140 1,041,282 1,254,776 Office assets and vehicles 415 463 409 Deferred tax 17 - - 7,610 1,332,555 1,041,745 1,262,795 Current assets Trade and other receivables 12 17,832 12,532 15,058 Cash 18 680 9,090 Total assets 1,350,405 1,054,957 1,286,943 Current liabilities Trade and other payables 13 32,515 23,403 22,633 Non-current liabilities Taxation payable 14 21,231 - - Borrowings 15 474,306 420,981 468,341 Financial derivatives 16 2,108 10,881 9,318 Deferred tax 17 4,127 122,495 179,770 Total liabilities 534,287 577,760 680,062 Net assets 816,118 477,197 606,881 Equity Called up share capital 18 33,572 33,108 33,192 Other reserves 18 125,819 122,419 123,888 Retained earnings 18 656,727 321,670 449,801 Total equity 816,118 477,197 606,881 Net assets per share: 19 Basic £6.08 £3.60 £4.57 Diluted £6.04 £3.58 £4.54 Unaudited Group Cash Flow Statement For the six months ended 31 March 2007 Note Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Operating activitiesCash generated from operations 20 20,509 21,341 41,564Interest received 80 130 104Interest paid (14,241) (13,101) (27,356)Tax receipts/(payments) in respect of operating 896 (695) (2,182)activitiesCash flows from operating activities 7,268 7,625 12,156Investing activitiesProperty acquisitions (13,063) (89,226) (107,389)Capital expenditure on properties (5,243) (4,763) (8,212)Net proceeds from sales of properties - 60,236 60,262Net purchase of office assets and vehicles (79) (173) (185)Cash flows from investing activities (18,385) (33,926) (55,524)Financing activitiesIssue of shares 3,693 419 1,184Purchase of debenture stock (9,312) - (74,874)Increase in borrowings 13,036 31,091 134,032Bank loan arrangement costs (266) (95) (773)Payment of finance lease liabilities (132) (83) (208)Equity dividends paid (4,974) (4,351) (6,903)Cash flows from financing activities 2,045 26,981 52,458Net change in cash (9,072) 680 9,090 Statement of changes in shareholders' equityAt 1 October 2006 606,881 473,161 473,161Profit for the period 211,900 6,819 137,502Dividends paid (4,974) (4,351) (6,903)Proceeds of shares issued for cash 3,693 419 1,184Fair value of share based remuneration 380 272 539Deferred tax in respect of share based remuneration (1,762) 877 1,398(released from)/charged to equityAt 31 March 2007 816,118 477,197 606,881 Notes to the Interim Results For the six months ended 31 March 2007 1. Basis of preparation The Interim Report is unaudited and does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The statutoryaccounts for the year ended 30 September 2006, which were prepared in accordancewith International Financial Reporting Standards as endorsed by the EuropeanUnion ("IFRS") and with those parts of the Companies Act 1985 applicable tocompanies reporting under IFRS, have been delivered to the Registrar ofCompanies. The auditors' opinion on those accounts was unqualified and did notcontain a statement made under Section 237(2) or Section 237(3) of the CompaniesAct 1985. The financial information in this Interim Report comprises the Group balancesheets as at 31 March 2007, 31 March 2006 and 30 September 2006 and relatedstatements of Group income, cash flow and changes in shareholders' equity andthe related notes for periods then ended ("financial information"). As permittedunder IFRS, the Group has chosen not to adopt IAS 34 "Interim FinancialReporting" in preparing this Interim Report, and therefore the financialinformation is not in full compliance with the presentational and disclosurerequirements of IFRS. The financial information has been prepared in accordance with the Listing Rulesof the Financial Services Authority and the Group's principal accountingpolicies set out in the 2006 Annual Report. It has been prepared under thehistorical cost convention as modified by the revaluation of investmentproperties and financial derivatives. The preparation of financial statements requires management to make judgements,assumptions and estimates that affect the application of accounting policies andamounts reported in the Income Statement and Balance Sheet. Such decisions aremade at the time the financial statements are prepared and adopted based on thebest information available at the time. Actual outcomes may be different frominitial estimates and are reflected in the financial statements as soon as theybecome apparent. 2. Revenue from properties Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Rents due from tenants 27,109 25,303 51,535Recognition of lease incentives 455 569 696 27,564 25,872 52,231Recoverable property expenses 4,954 4,127 6,561 32,518 29,999 58,792 3. Property chargesProperty outgoings 3,099 2,413 5,248Recoverable property expenses 4,954 4,127 6,561 8,053 6,540 11,809 4. Charge in respect of equity settled remunerationCharge in respect of share based remuneration 380 272 539Employers' National Insurance in respect of share awards 747 698 1,562and share options vested or expected to vest 1,127 970 2,101 5. Profit on disposal of investment properties Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Net sale proceeds - 48,391 48,338Book value at date of sale - (47,708) (47,590) - 683 748 6. Interest payableDebenture stock interest and amortisation 2,551 4,941 9,868Bank and other interest 12,005 7,470 15,737Amount payable under finance leases 132 83 208 14,688 12,494 25,813 7. Loss on purchase of debenture stockCost of debenture stock purchased:Nominal amount - £6.494 million 9,312 - -Nominal amount - £52.101 million - - 74,874Nominal amount of stock purchased (6,494) - (52,101) 2,818 - 22,773Unamortised net premium written off (344) - (2,764) 2,474 - 20,009 8. TaxationCurrent taxUK Corporation tax at 30% 466 2,315 754REIT conversion charge 27,512 - -Adjustments in respect of prior years - - (363) 27,978 2,315 391Deferred taxRevaluation of investment properties 1,583 - 56,708Revaluation of financial derivatives - 263 732Provision in respect of capital allowances - 196 -Properties sold in period - (428) (5,268)Other temporary differences 900 (408) (2,326)Released on REIT conversion (172,278) - -Adjustments in respect of prior years - - (137) (169,795) (377) 49,709Tax (credit)/charge for the period (141,817) 1,938 50,100Tax (credited)/charged directly to reserves:Deferred tax in respect of share based remuneration - 877 1,398Deferred tax in respect of share based remuneration (1,762) - -released on REIT conversion (1,762) 877 1,398 8. Taxation (continued) Factors affecting the tax charge: Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Profit before tax 70,083 8,757 187,602UK Corporation tax at 30% 21,025 2,627 56,280Deferred tax not provided in respect of property and (18,216) - -financial derivative valuation movements as a result of REITconversionExpenses and provisions not deductible for Corporation tax 140 (56) (188)purposes and other timing differencesDifference due to tax treatment of property disposals - (633) (5,492)Adjustments in respect of prior periods - - (500)Effect of REIT conversion:REIT conversion charge 27,512 - -Deferred tax provided in prior years now released (172,278) - - (141,817) 1,938 50,100 9. Earnings per shareProfit after tax used for calculation of basic earnings per 211,900 6,819 137,502shareAdjusted for:Gain on sale of investment properties - (683) (748)Investment property valuation movements (58,670) 569 (190,933)Movement in fair value of financial derivatives (7,327) (709) (2,051)Loss on purchase of debenture stock 2,474 - 20,009Current tax in respect of:REIT conversion charge 27,512 - -Loss on purchase of debenture stock (742) - (6,002)Deferred tax in respect of:Investment property revaluation gains 1,583 - 56,708Deferred tax released on REIT conversion (172,278) - -Adjustment in respect of property disposals - (428) (5,268)Movement in the fair value of financial derivatives - 263 732Profit after tax used for adjusted earnings per share 4,452 5,831 9,949 Weighted average number of shares in issue '000 133,298 132,320 132,532Weighted average number of shares in issue for calculation 134,067 132,595 133,084of diluted earnings per share '000Earnings per share (pence):Basic 158.97 5.15 103.75Diluted 158.06 5.14 103.32Adjusted basic 3.34 4.41 7.51Adjusted diluted 3.32 4.40 7.47 9. Earnings per share (continued) The difference between the weighted average and diluted average number ofOrdinary Shares arises from the potentially dilutive effect of outstandingvested options granted over Ordinary Shares. The adjusted earnings per share is considered to give an indication of theGroup's underlying revenue performance, eliminating the effects of propertydisposals, movements in the valuation of investment properties and financialderivatives, losses on Debenture Stock purchases and the impact of REITconversion. 10. Dividends paid Six months ended Year ended 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Final dividend paid in respect of:Year ended 30 September 2006 at 3.73p per share 4,974 - -Year ended 30 September 2005 at 3.30p per share - 4,351 4,360Interim dividend paid in respect of:Six months ended 31 March 2006 at 1.92p per share - - 2,543 4,974 4,351 6,903 An interim dividend in respect of the six months ended 31 March 2007 of 2.16pper Ordinary Share amounting to £2.896 million was declared by the Board on 30May 2007. The interim dividend will be paid on 29 June 2007 (record date 15 June2007). The dividend will be accounted for as an appropriation of revenuereserves in the six months ending 30 September 2007. 11. Investment properties 31.3.2007 31.3.2006* 30.9.2006 £'000 £'000 £'000At 1 October 2006 1,249,215 987,516 987,516Acquisitions 13,170 89,307 107,667Refurbishment and other capital expenditure 5,540 5,302 8,856Disposals - (45,851) (45,757)Net surplus/(deficit) on revaluation 58,670 (569) 190,933 1,326,595 1,035,705 1,249,215Add: Head lease liabilities grossed up 5,545 5,577 5,561Book value at 31 March 2007 1,332,140 1,041,282 1,254,776 Market value at 31 March 2007:Properties valued by DTZ Debenham Tie Leung 1,256,275 1,184,255Properties valued by Knight Frank LLP 76,500 70,685 1,332,775 1,254,940Add: Head lease liabilities grossed up 5,545 5,561Less: Lease incentives recognised to date (6,180) (5,725)Book value at 31 March 2007 1,332,140 1,254,776Historic cost of properties at valuation 689,096 670,386 *Investment properties were not subject to revaluation at 31 March 2006 11. Investment properties (continued) Investment properties were subject to external valuation as at 31 March 2007 byqualified professional valuers, being members of the Royal Institution ofChartered Surveyors, either working for DTZ Debenham Tie Leung, CharteredSurveyors (in respect of the Group's wholly owned portfolio) or Knight FrankLLP, Chartered Surveyors (in respect of properties owned by LongmartinProperties Limited), both firms acting in the capacity of External Valuers. Allsuch properties were valued on the basis of Market Value in accordance with theRICS Appraisal and Valuation Standards. Investment properties include freehold properties valued at £1,174.2 million,leasehold properties with an unexpired term of over 50 years valued at £83.4million and a notional apportionment of value in respect of part freehold/partleasehold properties, where the apportionment in respect of the leaseholdelement with over 50 years unexpired is £74.5 million. 12. Trade and other receivables 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Amounts due from tenants 7,696 6,349 7,616Lease incentives recognised in the Income Statement 6,180 5,596 5,725Corporation tax recoverable - - 1,000Other receivables and prepayments 3,956 587 717 17,832 12,532 15,058 13. Trade and other payablesRents invoiced in advance 11,817 10,252 11,061Corporation tax and REIT conversion charge payable (see 7,008 2,776 365note 14)Trade payables in respect of capital expenditure 1,880 477 1,438Other trade payables and accruals 11,810 9,898 9,769 32,515 23,403 22,633 14. Taxation payableREIT conversion charge 27,512 - -Less: Payable within one year included in current liabilities (6,281) - - 21,231 - -The Group has elected to pay the REIT conversion charge ininstalments as follows:Between October 2007 and March 2008 in two instalments 6,281In quarterly instalments: 6,658 Year to 31 March 2009Year to 31 March 2010 7,035Year to 31 March 2011 7,538 27,512 15. Borrowings Nominal value Unamortised 31.3.2007 31.3.2006 30.9.2006 premium and issue £'000 costs £'000 £'000 £'000 £'0008.5% First Mortgage 61,048 3,194 64,242 126,073 71,125Debenture Stock 2024Secured bank loans 406,139 (1,620) 404,519 289,331 391,655 467,187 1,574 468,761 415,404 462,780Finance lease obligations 5,545 - 5,545 5,577 5,561 472,732 1,574 474,306 420,981 468,341 16. Fair values of financial derivatives 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Interest rate hedgesAt 1 October 2006 - Deficit (9,318) (11,758) (11,758)Fair value movement credited in the Income Statement 7,327 709 2,051Net amounts (received)/paid in respect of interest rate (117) 168 389hedges during the periodAt 31 March 2007 - Deficit (2,108) (10,881) (9,318) Changes in the fair value of the Group's financial derivatives, which are notheld for speculative purposes, are reflected in the Income Statement. They havebeen valued by J. C. Rathbone Associates Limited by reference to the mid pointof the yield curve at the balance sheet date. In October 2006 hedging was put in place on £75 million notional principal at afixed rate of 5.00%. The hedges commenced between November 2006 and January 2007and expire seven years from commencement. 8.5% Mortgage Debenture Stock 2024Fair value deficit not recognised in the reported results forthe period:At 31 March 2007 (nominal value of stock in issue £61.042 (19,271) - -million)At 30 September 2006 (nominal value of Stock in issue £67.542 - - (24,921)million)At 31 March 2006 - (nominal value of Stock in issue £119.643 - (41,202) -million) 17. Deferred taxAt 1 October 2006 172,160 123,849 123,849Released on transfer of assets to joint venture - (100) -Recognised in Income Statement (169,795) (377) 49,709Recognised in equity:Share based payments 1,762 (877) (1,398)At 31 March 2007 4,127 122,495 172,160Comprising:Deferred tax assets - - (7,610)Deferred tax liabilities 4,127 122,495 179,770 4,127 122,495 172,160 17. Deferred tax (continued) 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Deferred tax provided in respect of:Valuation of investment properties 4,127 122,600 175,300Valuation of financial derivatives - (3,264) (2,795)Capital allowances - 4,882 3,494Other timing differences - (1,723) (3,839) 4,127 122,495 172,160 18. Shareholders' funds Ordinary Share premium Share based Retained Total shares payments earnings £'000 £'000 £'000 £'000 £'000At 1 October 2006 33,192 120,734 3,154 449,801 606,881Shares issued on exercise of options 380 3,313 - - 3,693Fair value of share based payments - - 380 - 380Deferred tax in respect of share based - - (1,762) - (1,762)remuneration released on REIT conversionProfit for the period - - - 211,900 211,900Dividend paid during the period - - - (4,974) (4,974)At 31 March 2007 33,572 124,047 1,772 656,727 816,118 At 1 October 2005 33,046 119,696 1,217 319,202 473,161Shares issued on exercise of options 62 357 - - 419Fair value of share based payments - - 272 - 272Deferred tax adjusted in equity - - 877 - 877Profit for the period - - - 6,819 6,819Dividend paid during the period - - - (4,351) (4,351)At 31 March 2006 33,108 120,053 2,366 321,670 477,197 At 1 October 2005 33,046 119,696 1,217 319,202 473,161Shares issued on exercise of options 146 1,038 - - 1,184Fair value of share based payments - - 539 - 539Deferred tax adjusted in equity - - 1,398 - 1,398Profit for the year - - - 137,502 137,502Dividends paid during the year - - - (6,903) (6,903)At 30 September 2006 33,192 120,734 3,154 449,801 606,881 19. Net assets per share 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Net assets used for calculation of basic net assets per 816,118 477,197 606,881shareAdjusted for:Cumulative fair value adjustment in respect of financial 2,108 10,881 9,318derivativesCumulative deferred tax provided in respect of:Investment property revaluation gains 4,127 122,600 175,300Financial derivatives - (3,264) (2,795)Adjusted net assets 822,353 607,414 788,704 31.3.2007 31.3.2006 30.9.2006Ordinary shares in issue '000 134,316 132,704 132,768Diluted Ordinary shares '000 135,619 134,333 134,425 Net assets per share:Basic £6.08 £3.60 £4.57Diluted £6.04 £3.58 £4.54Adjusted basic £6.12 £4.58 £5.94Adjusted diluted £6.09 £4.55 £5.90 The calculations of diluted net asset value per share show the potentiallydilutive effect of outstanding vested options granted over Ordinary Shares andinclude the increase in shareholders' equity which would arise on the exerciseof those options. The Group's net assets at 31 March 2007 include the tax charge arising onconversion to REIT status of £27.512 million, equivalent to £0.20 per OrdinaryShare. 20. Cash flows from operating activities Six months ended Year ended 31.3.2007 31.3.2006 30.9.2005 £'000 £'000 £'000Operating activitiesOperating profit 79,814 20,462 231,243Adjustment for non-cash items:Amortisation of lease incentives (455) (569) (696)Share option expense 380 272 539Depreciation and losses on disposals 73 73 140Profit on sale of investment properties - (683) (748)Investment property valuation movements (58,670) 569 (190,933)Cash flows from operations before changes in working capital 21,142 20,124 39,545Change in trade and other receivables (3,319) 1,151 (249)Change in trade and other payables 2,686 66 2,268Cash flows from operating activities 20,509 21,341 41,564 21. Results of Joint Venture The Shaftesbury Group's 50% share of the results, assets and liabilities ofLongmartin Properties Limited included in the Group results for the period wereas follows: Six months 5.12.2005 to 5.12.2005 to ended 31.3.2006 30.9.2006 31.3.2007 £'000 £'000 £'000Income StatementRents receivable 1,464 1,010 2,485Recoverable property expenses 160 131 272 1,624 1,141 2,757Property expenses 139 80 275Recoverable property expenses 160 131 272 299 211 547Net property income 1,325 930 2,210Administration expenses (188) (156) (350)Operating profit before investment property disposals and 1,137 774 1,860valuation movementsProfit on disposal of investment property - 40 40Investment property valuation movements 5,276 - 8,479Operating profit 6,413 814 10,379Interest receivable 527 308 794Interest payable (132) (83) (208)Profit before tax 6,808 1,039 10,965Current tax (466) (315) (746)Deferred tax (1,583) - (2,544)Tax charge for the period (2,049) (315) (3,290)Profit for the period 4,759 724 7,675Dividends paid in period (1,050) (150) (1,150)Retained profit 3,709 574 6,525 Balance Sheet 31.3.2007 31.3.2006 30.9.2006 £'000 £'000 £'000Non-current assetsInvestment properties at market value 76,500 61,866 70,685Head lease liability grossed up 5,545 5,577 5,561 82,045 67,443 76,246Current assetsTrade and other receivables 583 461 544Amounts due from shareholders 19,775 19,875 19,875Cash 18 680 193Total assets 102,421 88,459 96,858 Current liabilitiesTrade and other payables 1,583 1,327 1,296Non-current liabilitiesDeferred tax 4,127 - 2,544Head lease liability 5,545 5,577 5,561Total liabilities 11,255 6,904 9,401Net assets attributable to the Shaftesbury Group 91,166 81,555 87,457 22. Interim Report The Interim Report will be posted to shareholders on Friday 8 June 2007.-------------------------- (B1) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SHB.L