29th Nov 2006 07:01
Warner Estate Holdings PLC29 November 2006 WARNER ESTATE JOINS FTSE 250 AS PROPERTY UNDER MANAGEMENT NEARS £3BILLION Warner Estate Holdings PLC ("Warner Estate") the property investment,development and fund management group has announced its interim results for thesix months to 30 September 2006. Financial Highlights • Adjusted net asset value per share up 8% to 803p(1)• Net asset value per share up 9% to 722p• Triple net asset value per share up 8% to 724p(2)• Profit before tax up £6.7million to £42.5million• Recurring earnings per share 9.4p (September 2005: 9.5p)(3)• Earnings per share 73.3p (September 2005: 52.3p)• Interim dividend up 5% to 10.0p• Total annualised return 19.9% (September 2005: 21.6%)(4) Business Highlights • Property owned and under management up 13.5% to £2.8billion• Commercial rent roll under management £164m• Establishment of a Greater London Offices Fund• Radial Distribution Fund approaches £300m• Ashtenne Industrial Fund exceeds £1billion• NWDA select the Ashtenne Industrial Fund as partner• Goal of attaining FTSE 250 achieved• Conversion to REIT likely (1) Adjusted for deferred tax on revaluation gains and other items per Table 10 (2) Adjusted as in 1 and for potential deferred tax and fair value of debt per Table 10 (3) Adjusted for net fair value gains on investment properties and other items per Table 5 (4) Adjusted for deferred tax on revaluation gains, fair value of debt and other items per table 4 Philip Warner, Chairman of Warner Estate commented: "We have delivered another encouraging performance. Our asset managementbusiness continues to expand and we now own or manage £2.8 billion of property.We are pleased with progress of the 1.5million sq ft development pipeline, whichwill add significant value to properties under management, whether in funds,joint ventures or wholly owned." "We are delighted that the growth of the Company has brought admission to theFTSE 250." "We are well positioned for the future; we continue to attract investors to ourfunds and the introduction of REITs should enhance our track record of dividendgrowth." -ends- Date: 29 November 2006 For further information contact:Warner Estate Holdings PLC cityPROFILEPhilip Warner, Chairman Simon CourtenayPeter Collins, Finance Director Tel: 020-7488-3244Michael Stevens, Property DirectorTel: 020-7907-5100Web: www.warnerestate.co.uk CHAIRMAN'S STATEMENT Warner Estate has continued to make good progress with an 8% rise in triple netasset value and an increase in property under management, including that whollyowned, from £2.5billion to £2.8billion at 30 September. The total return forthe period was a respectable 19.9% on an annualised basis. This period is the first in which I am able to report on the performance of theAshtenne Fund Management business on a wholly owned basis. This business whichhad some £690million of assets under management on purchase last year nowmanages over £1billion and has proved to be a very profitable acquisition. Wehave also recently formed a new joint venture with Barclays Capital to invest inGreater London offices, purchasing two buildings in the City of London for£97million. I am particularly pleased to report the Group's entry into the FTSE 250, whichshareholders may recall was an objective set a number of years ago and theprospect of conversion to a Real Estate Investment Trust (REIT) should maintainmomentum. RESULTS In the six months to September 2006 adjusted net asset value per share increasedby 8.4% from 741p to 803p, net asset value by 9.3% from 660p to 722p and triplenet asset value (TNAV) on which the Group assesses its total return by 8.2% from669p to 724p. As previously reported, these asset values do not take fullaccount of the value of the fund management business in that only £11.2millionis included in the accounts for the purchased goodwill. As I report below, theApia and AIF asset management businesses generated a recurring operating profitof £2.2million which does not include any performance fees because these canonly arise in the second half of the year. If these asset management businesseswere valued, the substantial improvement in the profits they make would haveincreased further the total return made by the Group in this half year. Pre-tax profits have increased by £6.7million to £42.5million. Of thisincrease, £3million relates to an improvement in profits before fair value gainsand the balance to valuation movements. Recurring profits as detailed in table5 were £6.5million against £6.4million for the comparable period last year.This increase would have been greater but for the decision of the Group to bringproperty development management in-house. Development costs of some £0.3millionin the first half of this year have been expensed whereas last year, when theywere externally billed, they were capitalised to specific developments withinthe Group and the Agora joint venture. If the recurring profits were adjustedto exclude these development costs which are being incurred to createnon-recurring capital profits then underlying recurring profits would have risenby 6% to £6.8million and total return would have been even better. Operating profit before net gain on investments, which excludes the effect ofnet finance expenses, was up 8% to £9.4million (September 2005: £8.7million). A more detailed analysis of the results for the period will be found in theFinance Report which follows this statement. The Board has increased the interim dividend to 10p against 9.5p last year, arise of 5%. Although the dividend is not covered by recurring earnings of 9.4pthese do not include further earnings from performance fees which can only arisein the second half of the year. However, the dividend is covered 1.2 times byrealised profits after tax and will be paid on 23 February 2007 to shareholderson the register at close of business on 26 January 2007. PROPERTY OVERVIEW During the period, the main driver for total return across the propertyinvestment market has been continuing yield compression. Investment PropertyDatabank (IPD) estimate the all property yield has fallen by 33 basis pointsover the period and now stands at 4.67%. This compares with our own yield at 30September 2006 of 5.5% which has fallen by 25 basis points over the period. Ourstanding investments, those held throughout the six months whether in funds,joint ventures or wholly owned, increased overall by 5.9% from £2.37billion to£2.51billion. Forecasters predict the imminent end of yield compression and alikely stabilising at current levels over the short to medium term. This shouldimprove the potential for the more active asset managers, such as Warner Estate,with their focus on income generation and improvement, reflecting a strategy wehave been pursuing consistently over recent years. An important part of that asset management is the enhancement of existingproperty under management through the development pipeline of almost 1.5millionsq ft with an expected capital spend of £350million over the next four years,spread over our fund, joint venture and wholly owned properties. We havecontinued to make progress with planning consents, pre-letting campaigns andcompletions. AIF completed its 66,000 sq ft Colville Park scheme in EastKilbride, Scotland and achieved planning permission for 85,500 sq ft atQuedgeley, Gloucestershire. Agora now has over 40% of its 100,000 sq ftextension in Bolton pre-let and in Middleton, Manchester, has completed 45,000sq ft of new space. With Bride Hall Group, the specialist development company in which we have aninvestment, the new 200,000 sq ft Bouverie Place Shopping Centre in Folkestoneis scheduled to complete in summer 2007 with 83% of the floor space alreadypre-let and we have progressed the 265,000 sq ft extension to Hale Leys ShoppingCentre, Aylesbury where our Collaboration Agreement with Aylesbury Vale DistrictCouncil secured preferred developer status in spring this year. The last six months have seen significant expansion of our Radial DistributionFund, which has continued post 30 September, and, as demonstrated by theformation of the new fund investing in Greater London offices, we shall continueto consider and research new sectors which further our strategy. As previouslyreported, these may include Europe where we still own assets following theacquisition of Ashtenne last year. KEY STATISTICS TABLE 1 Total under management Wholly owned* 30 September 2006 31 March 2006 30 September 2006 31 March 2006 Capital Value £2,823million £2,487million £319million £344millionAnnualised rent roll £163.8million £151.5million £18.0million £20.7millionInitial Yield 5.5% 5.8% 5.3% 5.6%Average Unexpired 7.88 yrs 4.25 yrs 6.12 yrs 12.2 yrsLease TermVoid Rate** 8.7% 9.5% 4.3% 4.0%Number of Properties 494 499 53 66Average Lot Size £5.71million £4.99million £6.02million £5.21million * Investment properties and properties within the course of development, wherethe capital value is before the accounting adjustment for ground lease interestfor leasehold properties of £1.4million (March 2006: £1.1million). ** The void rate of total under management excluding the Ashtenne IndustrialFund was 3.9%. The breakdown by sector at 30 September 2006 was as follows:WHOLLY OWNED TABLE 2 No. of Capital Annual Net Properties Value Rent Roll ERV initial yield Weighting £million £million £millionRetailRetail Warehouses 5 23.8 1.4Shopping Centres 2 80.2 4.5High Street 9 38.3 1.7Retail sub total 16 142.3 7.6 9.4 5.02% 45% Offices sub total 26 131.7 8.5 9.4 6.11% 41% Distribution 3 18.2 1.0Industrial 3 11.9 0.9Distribution & Industrial sub total 6 30.1 1.9 1.9 5.91% 9% Land 4 0.3 - - - -Development (shopping centres) 1 14.4 - - - 5%Total wholly owned 53 318.8 18.0 20.7 5.30% 100% Trading (Inventories) 5 9.8 0.5 0.7 4.72% Total wholly owned including trading 58 328.6 18.5 21.4 5.32% UNDER MANAGEMENT Net No. of Capital initial Properties Value Income ERV yieldAggregate of all properties £million £million £millionApia Regional Offices 20 444.9 25.6 29.0 5.41%Ashtenne Industrial 396 1,120.6 66.3 82.3 5.60%Agora Max Shopping Centres* 2 324.6 19.5 23.0 4.78%Agora Shopping Centres* 4 252.6 13.5 15.5 4.76%Radial Distribution* 12 253.9 15.3 15.6 5.70%Greater London Offices* 2 97.6 5.1 5.7 5.07%Wholly owned including trading* 58 328.6 18.5 21.4 5.55%Total under management 494 2,822.8 163.8 192.5 5.50% * Capital value is before accounting adjustments for ground lease interest forleasehold properties, and certain properties treated as finance lease assets. PROPERTY FUNDS These funds are held as investments directly by the Group. As Warner Estate actas asset managers for both funds we have provided key interim highlights forreaders' information. Apia Regional Office Fund Value - £445million (Valuers: DTZ) Rental income - £25.6million pa Co-managed with Morley Fund Management, this fund continues to attract investorswith a further three joining since March 2006 and now manages £445million ofproperty across the UK's major central business districts. In Scotland, there have been letting successes in both Edinburgh and Glasgow.In July, and within weeks of becoming vacant, Faber Maunsell took the entiresecond floor (14,225 sq ft) of 225 Bath Street, Glasgow and The Passport Officehas leased a newly refurbished floor at Apex 123, Edinburgh. Elsewhere, other significant asset management initiatives have been realised atNorfolk House, Manchester through a combination of lettings, lease extensionsand rent reviews. The principal highlight was a letting of the part first floor(7,720 sq ft) to Lloyds TSB Plc at a record rent for the building of £24.33 persq ft. Also in Manchester, a significant tenant of Sunlight House, BDP Ltd, hasregeared their lease of c40,000 sq ft at an increased rent of £18.56 per sq ft. Robert Game, formerly of Citigroup and MEPC, has been appointed ManagingDirector of Apia Asset Management. The Ashtenne Industrial Fund (AIF) Value - £1.1billion (King Sturge) Rental Income - £66.3million pa Also co-managed with Morley, the fund acquired £135million and sold £40millionof industrial properties in the nine months to the 30 September 2006 and now hasover £1billion assets under management. The most notable transactions in the period were the letting at Holgate Park inYork to Network Rail on a five year lease at £948,000 pa and being selected bythe Northwest Development Agency to be their partner in a new £140millionlimited partnership which will lead to opening a new regional office inLiverpool, the business's seventh across the UK. In addition, the fund raised a further £100million of equity from existing andnew investors in the nine months to the 30 September 2006 at premiums in excessof 6%. PROPERTY JOINT VENTURES Agora Max Shopping Centre Fund Value - £325million (DTZ) Rental income - £19.5million pa In July 2006 we completed Phase I of the new development at Pyramids and TheGrange, Birkenhead comprising six units, five of which are already let. We havealso secured vacant possession of the WH Smith unit in readiness to undertakePhase II, creating a new 25,000 sq ft unit, for which planning consent wasgranted in June. At The Pallasades in Birmingham we have been discussing with Network Rail theirGateway Development proposals for New Street Station whilst progressing thereconfiguration and improvement of our retail offer. Through active managementwe have increased the rental level of the Stephenson Street units from £45 persq ft in terms of zone A (ITZA) to £55 per sq ft ITZA and let eight of the 14vacant units inherited at purchase in November 2005. Agora Shopping Centre Fund Value - £253million (DTZ) Rental income - £13.5million pa In June 2006 we successfully completed Phase I of our development at Middletonadding 45,000 sq ft of new retail space, let to Quality Save, Cool Trader andStreetwise Sports. At Bolton, we served development notices on all the MarketHall tenants bringing their leases to an end on the 17 January 2007, whichguarantees vacant possession of the Market Hall and will enable the 96,416 sq ftredevelopment to commence in March 2007, with pre-lets signed with H&M Hennes,Office, Joy, Starbucks, Lush and Carphone Warehouse. At Cavern Walks,Liverpool, we completed a new letting to fashion retailer, Cricket, furtherexpanding their presence in the scheme as one of the key retail anchors. Radial Distribution Fund Value - £193million (DTZ), £61million (Directors) Rental income - £15.3millionpa The fund has continued to grow with purchases of the 218,000 sq ft AccidentExchange unit at Hams Hall, Birmingham, for £17.6million and the 484,000 sq ftHowdens Joinery warehouse at Brackmills, Northampton, for £41.7million. Since30 September the purchase of Marks & Spencer's 184,000 sq ft distributionfacility at Radial Point, Stoke on Trent, for £14.3million completed andcontracts have been exchanged for the purchase of a fourth 222,000 sq ftwarehouse at DIRFT, Daventry, for £17.9million completing in January 2007. Thistakes Radial's assets up to 14 with a total floor space of 3.2million sq ftunder management. Greater London Office Fund Value - £98million (Directors) Rental income £5.1million pa In September we launched our new Greater London Office Fund jointly withBarclays Capital, with the purchase of £96.5million (plus acquisition costs) ofoffices at 55 Old Broad Street and Central House, Camperdown Street, both in theCity of London. We shall be looking for further acquisitions throughout thecapital. WHOLLY OWNED PORTFOLIO and TRADING PORTFOLIO Value - £266million (Cushman & Wakefield), £62.8million (Directors) RentalIncome - £18.5million At Hale Leys Shopping Centre, Aylesbury, Zone A rents have increased to £93 persq ft ITZA. We are working with Bride Hall Group to promote the extension ofthe Centre which is progressing with terms agreed for the acquisition of themajority of the site from the local authority. At The Royals Shopping Centre, Southend-on-Sea, rents have improved to £75 persq ft ITZA. A second tranche of industrial assets was sold to AshtenneIndustrial Fund for £41.8million and programmed disposals were achieved atWellington House, Leicester (£6.5million), Stockport, Manchester (£4.8million),Albion House, Leicester (£0.5million) and Edgbaston (£2.5million). In addition,we re-entered the City of London office market this half year with our purchaseof 24/26 Minories for £10.9million. PERSONNEL The Group now employs 198 people of which 129 operate in the asset managementbusiness distributed as follows: TABLE 3 Total Direct of which service charge recoverable Agora Max Shopping Centres 8 1 7Agora Shopping Centres 14 5 9Apia Regional Offices 6 6 -Ashtenne Industrial 111 85 26Greater London Offices 1 1 -Radial Distribution 2 2 -Wholly Owned & Head Office 56 50 6 Total on payroll at 30 September 2006 198 150 48 REAL ESTATE INVESTMENTS TRUSTS ("REITs") The Group appointed PricewaterhouseCoopers and Clifford Chance earlier this yearto assist in evaluating the REIT proposals . Subject to the final guidance whichis not yet available the Directors have concluded that conversion would be ofbenefit to shareholders and therefore the Group currently intends to convert.Conversion would not take place before 1 April 2007. As at 30 September 2006 theconversion charge and related costs would be of the order of £15-20million andthe capital gains tax liability which would be extinguished is £34million. PROSPECTS In June, I reported the Group as being well placed for current conditions andthat remains the case with £2.8billion of property now under management. Demandfrom investors for property remains strong and the advent of REITs shouldprovide further encouragement, although it remains to be seen whether recentrises in interest rates will dampen enthusiasm. Any such dampening may provideus with further buying opportunities because, although we have continued to findproperty to which we can add value, the current climate makes that task moredifficult. However, within the existing portfolio there remain significantopportunities for value creation, both through development and rental valueuplift. We have the team for ensuring efficient asset management and I amconfident of continuing progress. FINANCE REPORT The Group measures its performance on a total return that incorporates bothrealised profits and net revaluation surpluses achieved on shareholders' triplenet asset funds. Whilst a total return under IFRS is very similar to theGroup's previously reported return under UK GAAP, there are fundamentaldifferences in the treatment of deferred tax, finance lease assets and dividendspayable. TABLE 4Return: 30 September 2006 30 September 2005 31 March 2006 £million £million £millionProfit for the period attributable to equity 39.0 27.7 74.4shareholdersAdd back / (less) effect of treating investment 0.6 (0.3) 0.3properties as finance leasesAdd back deferred tax on fair value gains (including 1.7 11.8 9.2joint ventures)(Less) / add back fair value adjustments on derivative (1.8) 2.2 1.4financial instrumentsAdd back goodwill reduction on Ashtenne asset - - 17.7management business 39.5 41.4 103.0Deferred tax arising on unrealised gains (6.8) (8.8) (17.2)Change in fair value of debt, net of tax 2.7 (2.8) (0.5)Total adjusted return for the period 35.4 29.8 85.3 Shareholders' triple net asset funds at start of 355.2 277.7 277.7period per table 9 Annualised return on shareholders' triple net asset 19.9% 21.6% 30.7%fundsOf whichPost tax profit 1.0% 2.4% 10.8%Net gain from fair value adjustment on investment 11.8% 16.2% 15.1%propertiesNet gain from fair value adjustment on investments 5.6% 5.0% 5.0%Change in fair value of debt 1.5% (2.0)% (0.2)% This shows a small decline in total return in the comparable six months. Asexplained above this is partly due to the costs of the development businessbeing accounted for through the income statement rather than capitalised aspreviously. Results The table below illustrates the different constituents that make up the resultsfor the period. As can be seen, recurring profits are £6.5million (September2005: £6.4million). These results are further analysed to show the respectivecontribution from asset management and wholly owned activities in tables 6a and6b. TABLE 5Reconciliation of profit before tax 30 September 30 September 31 March 2006 2006 2005 £million £million £millionRecurring profit 6.5 6.4 15.9Property disposals and other non-recurring profit 1.4 (1.5) 12.2Profit before net gain from fair value adjustments 7.9 4.9 28.1Net gain from fair value adjustments 40.4 35.1 71.0Profit including joint ventures and associates before 48.3 40.0 99.1taxExcluding joint ventures and associates Current tax (3.6) (1.4) (12.8) Deferred tax 0.1 (6.7) (3.7)Joint ventures and associates Current tax - (0.8) (2.9) Deferred tax (5.8) (3.4) (5.2)Profit for the period 39.0 27.7 74.5 TABLE 6AProfit Analysis - Period to 30 Joint PropertySeptember 2006 Ventures Investment (our 50% and Head Asset share) Office Other Management Sub Total Costs Income Total Under Management Wholly OwnedAsset value £000 £000 £000 £000 £000 £000100% of Properties Managed / Owned 1,565,000 929,000 2,494,000 329,000 - 2,823,000IncomeRental and similar income - 12,849 12,849 13,265 - 26,114Asset management fees receivable 6,353 - 6,353 - - 6,353Asset management fees payable - (517) (517) - - (517)Performance fees receivable - - - - - -Performance fees payable - - - - - -Expenses (4,124) (3,047) (7,171) (6,548) - (13,719)Recurring operating profit 2,229 9,285 11,514 6,717 - 18,231Investment income 2,505 - 2,505 - 79 2,584Interest receivable / (payable) 530 (8,602) (8,072) (6,259) - (14,331)Recurring profit 5,264 683 5,947 458 79 6,484 Net gain from fair value adjustments - 16,352 16,352 8,169 - 24,521on investment propertiesNet gain from fair value adjustments 12,176 - 12,176 - 1,073 13,249on investmentsChange in fair value of derivative - 1,997 1,997 710 - 2,707financial instrumentsProfit on sale of investment - - - 1,738 - 1,738propertiesProfit on sale of investments 28 - 28 - - 28Profit on sale of trading properties - - - 385 - 385Non-recurring income / (expenses) - - - (452) - (452)Investment properties treated as - (124) (124) - - (124)finance lease assetsCost of employee share option - - - (171) - (171)schemesProfits before tax including joint 17,468 18,908 36,376 10,837 1,152 48,365ventures and associatesTaxation - current - (25) (25) - - (25)Taxation - deferred - (5,811) (5,811) - - (5,811)Minority interest - (3) (3) - - (3)Profit before income tax 17,468 13,069 30,537 10,837 1,152 42,526 Percentage of recurring operating 12% 51% 63% 37% n/a 100%profit Note: the interest costs within the Group have not been reapportioned to reflect the cost of the Group's equityinvestments in the funds and joint ventures. TABLE 6BProfit Analysis - Period to 30 Joint PropertySeptember 2005 Ventures Investment (our 50% and Head Asset share) Office Other Management Sub Total Costs Income Total Under Management Wholly OwnedAsset value £000 £000 £000 £000 £000 £000100% of Properties Managed / Owned 261,000 1,517,000 1,778,000 331,000 - 2,109,000IncomeRental and similar income - 14,325 14,325 13,666 - 27,991Asset management fees receivable 1,430 1,063 2,493 - - 2,493Asset management fees payable - (551) (551) - - (551)Performance fees receivable - - - - - -Performance fees payable - - - - - -Expenses (776) (4,731) (5,507) (4,546) - (10,053)Recurring operating profit 654 10,106 10,760 9,120 - 19,880Investment income 366 420 786 - 25 811Interest receivable / (payable) 2,419 (10,381) (7,962) (6,341) - (14,303)Recurring profit 3,439 145 3,584 2,779 25 6,388 Net gain from fair value adjustments - 15,826 15,826 15,301 - 31,127on investment propertiesNet gain from fair value adjustments 2,648 727 3,375 - 3,695 7,070on investmentsChange in fair value of derivative - (2,986) (2,986) (157) - (3,143)financial instrumentsProfit on sale of investment - 246 246 37 - 283propertiesProfit on sale of investments - 3 3 - - 3Profit on sale of trading properties - - - 455 - 455Non-recurring expenses (578) (538) (1,116) (909) - (2,025)Investment properties treated as - (143) (143) - - (143)finance lease assetsCost of employee share option - - - (57) - (57)schemesProfits before tax including joint 5,509 13,280 18,789 17,449 3,720 39,958ventures and associatesTaxation - current - (768) (768) - - (768)Taxation - deferred - (3,379) (3,379) - - (3,379)Minority interest - - - - - -Profit before income tax 5,509 9,133 14,642 17,449 3,720 35,811 Percentage of recurring operating 3% 51% 54% 46% n/a 100%profit Note: the interest costs within the Group have not been reapportioned to reflect the cost of the Group's equityinvestments in the funds and joint ventures. Asset Management Businesses The key constituents of the £2.2million (September 2005: £0.7million) recurringoperating profit are the Ashtenne and Apia asset management businesses whichmade profits of some £1.7million and £0.5million respectively. These areanalysed below. TABLE 7Ashtenne Asset Management Business Six months to 30 Four months to 30 September 2006 September 2005 (50% share held through IFL joint venture) £000 £000 Asset management fees 2,579 612Letting and other fees 1,861 451Total fees 4,440 1,063Costs (2,674) (852)Profit before performance fees 1,766 211Performance fees - -Recurring operating profit 1,766 211 Goodwill in financial statements 11,205 - Investment in Ashtenne Industrial FundDistributions from fund 1,126 353 (a)Value of units at 30 September 42,923 23,552 (b)% share of fund 6.52% 5.26% (b) (a) £53k wholly owned, £300k 50% share of income in Industrial FundsLimited (IFL). (b) £12,031k (2.68%) wholly owned, £11,521k (2.58%) is 50% share ofinvestment held in IFL. This business was owned for four months in the period to September 2005 and thenonly through IFL, a 50% joint venture. Therefore the actual improvement in theperformance of this business on a like-for-like basis is not apparent. If thebusiness had been wholly owned for those six months then the pro-rated operatingprofit would have been £0.6million. On this basis the improvement onperformance of £1.1million in the current period is due to a £1.2millionincrease in fees arising from both the expansion of the Ashtenne Industrial Fundover the year and the activity of that fund with costs only increasingmarginally by £0.1million. TABLE 8Apia Asset Management Business Six months to 30 Four months to 30 September 2006 September 2005 £000 £000 Asset management fees 879 327Costs (380) (155)Profit before performance fees 499 172Performance fees - -Recurring operating profit 499 172 Goodwill in financial statements - - Investment in Apia Regional Office FundDistributions from fund 1,356 313Value of units at 30 September 71,843 46,705% share of fund 28.59% 34.83% Here again the comparable figures are distorted by the fact that Apia was onlyin existence for four months in the period to September 2005 although theoverall results for the interims to September 2005 also included the resultsfrom the Group's Skipper joint venture, which became part of Apia in June 2005.If the Apia business had been in existence for the full six months then thepro-rated recurring operating profit would have been £0.26million. Theimprovement on this basis is £0.24million which is a direct result of theincrease in assets under management with fees up by £0.40million and costs up by£0.16million. Earnings Per Share Earnings per share were 72.3p (September 2005: 52.0p) and recurring earningsper share were 9.4p (September 2005: 9.5p). Earnings per share include the fairvalue gains of 58.3p (September 2005: 50.0p) and one-off profits of 5.6p(September 2005: 7.2p losses) which are excluded from recurring earnings.Recurring earnings per share fell while recurring earnings rose because of theplacing of 5% of the Company's shares in April 2005 to help fund the acquisitionof Ashtenne. Balance Sheet The underlying elements of the growth in shareholders' funds are analysed in thetable below, but it is not expected that the deferred taxation provided wouldbecome payable in full if the properties and investments were sold. TABLE 9 Pence per £million shareEquity shareholders funds at 31 March 2006 350.6 660.3Change in weighted average number of shares (1.6) 658.7Movement in the period to 30 September 2006Profit before fair value gains 8.7 16.3Net fair value gains 40.4 75.9Effect of the treatment of investment properties as finance leases (0.6) (1.1)Cost of employee share option schemes (0.2) (0.4)Taxation - current (3.6) (6.7)Taxation - deferred (5.7) (10.7)Profit for the period 39.0 73.3 Other equity movementsDividends paid (5.3) (10.0)Actuarial losses on retirement benefit obligations (0.1) (0.2)Equity shareholders' funds at 30 September 2006 384.2 721.8 As at 30 September 2006, equity shareholders' funds were £384.2m (March 2006:£350.6m) an increase of 9% in the half year, whilst adjusted shareholders' funds(shown in the table below) rose by 8% to £427.6m (March 2006: £393.5m). Interms of the adjusted shareholders' funds, this uplift is after deducting theproposed interim dividend of £5.3m (10p per share) which, if added back wouldgive an overall uplift of 10% in the half year. The Group's NAV per share is722p (March 2006: 660p), whilst adjusted NAV per share is 803p (March 2006:741p) and TNAV is 724p (March 2006: 669p). TABLE 10 30 September 2006 30 September 2005 31 March 2006 £million Pence per £million Pence per £million Pence per share share shareEquity shareholders' funds 384.2 721.8 309.0 583.3 350.6 660.3Add back deferred tax on revaluation 44.6 83.8 39.3 74.1 42.9 80.8gains (including JVs)Add back effects of treating investment 4.5 8.5 3.3 6.2 3.9 7.3properties as finance leasesLess proposed dividend (5.3) (10.0) (5.1) (9.5) (5.3) (10.0)(Less) / add back fair value adjustments (1.4) (2.6) 1.2 2.3 0.4 0.8on derivative financial instrumentsAdd other minor adjustments 1.0 1.9 0.7 1.3 1.0 1.9Adjusted equity shareholders' funds 427.6 803.4 348.4 657.7 393.5 741.1Less potential deferred tax (39.7) (74.6) (24.5) (46.3) (32.9) (62.0)Less fair value adjustment net of tax on (2.7) (5.1) (7.7) (14.5) (5.4) (10.2)debtEquity shareholders' triple net asset 385.2 723.7 316.2 596.9 355.2 668.9funds The majority of the uplift in the period has arisen from revaluation surplusesin the Group and in the joint ventures totalling £37.7m, of which £24.5m relatesto investment property and £13.2m to investments. Bride Hall As disclosed previously we were required to equity account for this investmentas an associate. We have now renegotiated our equity holding to ensure we arenot able to exert significant influence and we have therefore reclassified ourinvestment as "investments in listed and unlisted shares." (See notes 14 and 15to the Financial Statements) Leasehold Liability Portfolio The liability on the balance sheet relating to the leasehold liability portfolioof properties was £8.2million at 30 September 2006. The movement of £3.8millionrepresents the net payment of liabilities in the period. The Directors haveassessed the value of the liability at 30 September 2006 and remain of theopinion that the value at which the liability was acquired, less subsequentpayments, remains unchanged and no profit or loss has been recorded. (See note17 to the Financial Statements) Borrowings Debt Total net borrowings for the Group as at 30 September 2006 were £191.3million(March 2006: £185.6million). The breakdown of debt at 30 September 2006,compared with 31 March 2006, is set out below: TABLE 11 On balance Share of Share of sheet joint funds ventures Total £million £million £million £million Net short-term (cash) / debt (30.4) (8.2) (3.3) (41.9)Long term debt 221.7 341.4 86.2 649.3 Total net debt at 30 September 2006 191.3 333.2 82.9 607.4 Of which:Total net recourse debt 173.3 - - 173.3Long-term non-recourse debt 18.0 333.2 82.9 434.1 Gearing (on adjusted shareholders' funds) 45% 142%Recourse gearing 41% 41% Total net debt at 31 March 2006 185.6 260.2 87.8 533.6Gearing (on adjusted shareholders' funds) 48% 138%Recourse gearing 35% 35% Despite an increase in base rates during the period, the Group's average cost ofdebt fell to 5.93% as at 30 September 2006 (March 2006: 6.07%). The Group had unutilised facilities of £19million (March 2006: £44million) asat 30 September 2006, which are sufficient to meet our working capitalrequirements. With the introduction of Real Estate Investment Trust legislation, we arereviewing the Group's borrowing facilities with a view to putting in place themost appropriate facilities to meet the Group's funding requirements in thefuture. As part of this restructure the £25.5million term loan with Bank ofScotland was repaid on 16 October 2006. In the joint ventures, the Greater London Office Fund was established during theperiod with Barclays Capital. This joint venture had debt of £72.2million at 30September and is financed 73% by debt and 27% by equity. There is rental incometo interest cover of 1.3 times. In the Radial Distribution Fund, a new facility of £120million has been put inplace with Bank of Scotland. This will allow the joint venture to acquireproperty up to a value of £150million of which £33million had been utilised asat 30 September 2006. At 30 September 2006, the Group held investments in the Apia Regional OfficeFund and the Ashtenne Industrial Fund amounting to 28.6% and 6.5% respectively.Apia has drawn down debt of £196million and AIF has net debt of £444million.Both Funds have loan to value ratios of less than 50% and more than 2.5 timesrental income to interest cover. There was headroom within the existingfacilities of Apia and AIF of £21million and £36million respectively as at 30September 2006. Hedging The Group is commercially fully hedged on the drawn balances as at 30 September2006, as shown below. The 10 year cancellable swap, whereby the interest chargewas fixed at 3.5% for the first six months to 30 September 2006 and thereafterat 4.19% for the remaining 91/2 years, was not cancelled by the bank at 30September 2006. Therefore, the Group will continue to benefit from the swap at4.19% until such time as it is cancelled. In the joint ventures, the new facility in Radial was drawn to £33million at 30September 2006. A swap of £32million at 4.1% which was surplus to requirementsin the Agora Shopping Centres joint venture, has been novated to hedge the drawnbalance in the new Radial facility. The Group continues to monitor its interest rate exposure to ensure that thereis certainty over the interest cost on the current level of borrowings. TABLE 12 On balance sheet Share of joint ventures £million £millionFixed rate debt 74.1 -Floating rate debt 117.2 333.2 191.3 333.2Percentage of floating rate loans at 30 September 2006 Covered by swaps 99% 91% Covered by caps 1% 9% 100% 100%Percentage of floating rate loans at 31 March 2006 Covered by swaps 91% 75% Covered by caps 9% 25% 100% 100% Cash Flow During the period cash outflows from operations were £6.2million (September2005: inflows of £4.4million). The reduction in the net cash inflow is largelydue to the net payments made against the provision for the leasehold liabilityportfolio of £3.8million along with the repayment of a short term loan of£5.0million and several creditor balances within the former Ashtenne companies.In addition there was a decrease in receipts on disposal of trading propertieswhich is as a result of the increasingly reduced trading property portfolio. The other main flows resulting in the net outflow of £8.2million arose throughpurchases of investment properties of £12.8million, investments made in jointventures of £17.8million mainly as a result of setting up the Greater LondonOffice Fund (£12.1million) and the purchase of Daventry by Radial (£4.2million).£4.4million was repaid on the Royal Bank of Scotland term loan on disposal ofsome of the properties secured under this facility. A dividend of £5.3millionwas paid in the period. These are offset by sales of investment properties of£48.3million and distributions received from joint ventures of £1.3million andfrom the investments in Apia and AIF of £3.1million. It should be noted that intra group cash and borrowing, including finance leasebalances within each subsidiary are required to be separately categorised withinthe Warner Estate group. Therefore, movements in these balance sheet accountsshould be considered together and by reference to the interim consolidated cashflow statement. Post Balance Sheet Events Since the end of September we have continued to expand our Radial DistributionFund which now approaches £300million in value Following AIF's selection inearly October as preferred bidder to manage jointly a £140million portfolio withthe Northwest Development Agency, this partnership is being formalised. As stated above, the £25.5million term facility with Bank of Scotland within theGroup was repaid in full on 16 October 2006. SIGNIFICANT EVENTS DURING SIX MONTH PERIOD TO 30 SEPTEMBER 2006 Key Highlights Date Detail Category April 2006 Purchase of Alpha 1 at Hams Hall National Distribution Park, Joint venture Birmingham by Radial Distribution joint venture for £17.62million May 2006 Purchase of 24-26 Minories, London EC3 for £10.85million Group Investment Property September 2006 Sale of industrial portfolio to Ashtenne Industrial Fund for Group Investment £41.85million Property September 2006 Establishment of the Greater London Offices Fund, a joint venture Joint venture with Barclays Capital, and the purchase of 55 Old Broad Street, London EC2 and Central House, Camperdown Street, London E1 for £96.5million September 2006 Purchase of Howdens Joinery Distribution Warehouse, Brackmills Joint venture Industrial Estate, Northampton by Radial Distribution joint venture for £41.7million SIGNIFICANT EVENTS POST 30 SEPTEMBER 2006 Date Detail Category October 2006 Purchase of Marks & Spencer Distribution Unit, Radial Point, Stoke on Joint venture Trent by Radial Distribution joint venture for £14.3million. October 2006 Northwest Development Agency selects Ashtenne Industrial Fund as the Funds preferred bidder to form Public Private Partnership joint venture for a portfolio of industrial estates situated across the North West region. October 2006 Purchase of Unit 1E, DIRFT, Daventry by Radial Distribution joint Joint venture venture for £17.95million October 2006 Repayment of £25.5million term loan with Bank of Scotland Group UNAUDITED CONSOLIDATED INCOME STATEMENT For the six months ended 30 September 2006 6 months 6 months Year ended 30 ended 30 ended 31 September September March 2006 Notes 2006 2005 £000 £000 £000Revenue 21,349 18,520 67,478Rental and similar income 10,936 12,176 24,003Revenue from property trading activities 1,731 3,424 31,167Cost of sales of property trading activities (1,346) (2,969) (24,584)Service charge and similar income 2,329 1,490 2,972Service charge expense and similar charges (2,710) (1,723) (3,591)Net rental and trading income 2 10,940 12,398 29,967Revenue from asset management activities 6,353 1,430 9,336Cost of sales of asset management activities (4,124) (776) (3,512)Net income from asset management activities 2 2,229 654 5,824Administrative expenses (1,713) (1,099) (2,390)Property expenses (2,045) (3,225) (7,517)Operating profit before net gains on investments 2 9,411 8,728 25,884Net gain from fair value adjustments on 8,169 15,301 27,101investment propertiesNet gain from fair value adjustment on 13,230 6,343 16,050investmentsProfit on sale of investment properties 4 1,738 37 3,102Profit on sale of investments 5 28 - 3,024Operating profit 32,576 30,409 75,161Finance income 6 3,281 3,091 8,306Finance expense 7 (7,129) (6,665) (14,445)Change in fair value of derivative financial 710 (157) (72)instrumentsShare of associates' post tax profits 19 - 715Share of joint ventures' post tax profits 13,069 9,133 21,291Profit before income tax 42,526 35,811 90,956Taxation - current 8 (3,617) (1,397) (12,842)Taxation - deferred 8 98 (6,689) (3,659)Profit for the period 39,007 27,725 74,455Attributable to:Equity holders 39,004 27,721 74,432Minority interests 3 4 23 p p pEarnings per share 9 73.28 52.34 140.17Fully diluted earnings per share 9 72.33 52.03 138.79 UNAUDITED CONSOLIDATED BALANCE SHEET Notes 30 30 31 September September March 2006 2006 2005 £000 £000 £000ASSETSNon-current assetsGoodwill 10 11,205 - 11,205Investment properties 11 305,768 315,141 333,198Properties under the course of development 11 14,414 11,000 12,261Plant and equipment 527 422 465Investments in joint ventures 12 132,798 127,490 103,372Investments in funds 13 115,766 58,790 104,081Investments in listed and unlisted shares 14 21,406 19,213 5,115Investments in associates 15 155 5,327 15,518Deferred income tax assets 16 383 509 552Derivative financial assets - 1 -Trade and other receivables 97 496 363 602,519 538,389 586,130Current assetsInventories 9,819 5,363 10,939Trade and other receivables 24,417 12,106 23,096Current income tax assets 358 - -Cash and cash equivalents 30,813 98,240 98,358 65,407 115,709 132,393Total assets 667,926 654,098 718,523LIABILITIESNon-current liabilitiesBorrowings, including finance leases (223,203) (270,230) (283,625)Derivative financial liabilities (720) (1,378) (1,361)Deferred income tax liabilities 16 (29,274) (26,864) (29,563)Retirement benefit obligations 3 (556) (321) (481)Provisions for other liabilities and charges 17 (8,829) (185) (12,503) (262,582) (298,978) (327,533)Current liabilitiesBorrowings, including finance leases (417) (22,700) (1,893)Trade and other payables (17,410) (21,517) (29,569)Current income tax liabilities - (1,946) (5,608) (17,827) (46,163) (37,070)Total liabilities (280,409) (345,141) (364,603)Net assets 387,517 308,957 353,920EQUITYCapital and reserves attributable to theCompany's equity holdersShare capital 19 2,675 2,675 2,675Reserves 19 382,413 307,345 348,837Investment in own shares 19 (908) (1,063) (926)Equity shareholders' funds 384,180 308,957 350,586Minority interest 22 3,337 - 3,334Total equity 387,517 308,957 353,920 UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the six months ended 30 September 2006 6 months 6 months Year ended ended 30 ended 30 31 March September September 2006 2006 2005 £000 £000 £000Profit for the period attributable to equity shareholders 39,004 27,721 74,432Actuarial losses on retirement benefit obligations (109) (21) (219)Deferred tax arising on retirement benefit obligations 23 (5) 43Total recognised income and expense for the period 38,918 27,695 74,256 UNAUDITED RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS For the six months ended 30 September 2006 6 months 6 months Year ended ended 30 ended 30 31 March September September 2006 2006 2005 £000 £000 £000Opening equity in shareholders' funds 350,586 272,103 272,103Shares issued - 127 127Share premium on shares issued - 13,493 13,493Acquisition of investment in own shares (341) (76) (139)Disposal of investment in own shares 359 680 880 350,604 286,327 286,464Total recognised income and expense for the period 38,918 27,695 74,256Dividend paid in period (5,342) (5,065) (10,134)Closing equity shareholders funds 384,180 308,957 350,586 UNAUDITED CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 September 2006 Notes 30 September 30 September 31 March 2006 2005 2006 £000 £000 £000Cash flows from operating activitiesCash (outflows) / inflows from operations 20 (6,240) 4,407 24,703Interest paid (6,445) (6,559) (13,209)Interest received 186 905 5,285UK Corporation tax paid (9,400) (2,149) (10,604)Net cash (outflow) / inflow from operating (21,899) (3,396) 6,175activitiesCash flows from investing activitiesPurchase of investment properties and related (12,771) (11,128) (59,787)capital expenditureSale of investment properties 48,289 28,062 95,063Purchase of plant and equipment (134) (137) (154)Purchase of investments in listed and unlisted (209) (56,142) -sharesSale of investments in listed shares - - 14,411Purchase of investments in funds - - (66,910)Sale of investments in funds 438 - 1,000Purchase of investments in associates - - (5,000)Net cash acquired from purchase of shares in 137 9,815 22,600subsidiary companyPurchase of shares in joint ventures (11,072) (275) (16,676)Sale of shares in joint ventures - 100 -Loans to joint ventures (6,724) (46,708) (47,544)Loans repaid by joint ventures - 29,916 37,559Loans repaid by associates - - 4,651Payment received for leasehold liabilities - - 13,750Dividends received from listed investments 79 25 422Dividends received from funds 3,153 - 1,566Dividends received from joint ventures 1,274 1,000 1,000Dividends received from associates 373 - 5,058Net cash inflow / (outflow) from investing 22,833 (45,472) 1,009activitiesCash flows from financing activitiesIssue of shares - 13,620 13,620Purchase of own shares for AESOP scheme (341) (119) (139)Disposal of own shares for share option scheme 352 681 807Dividends paid (5,342) (5,065) (10,134)Increase in bank loans 1,548 36,390 37,915Repayment of bank loans (5,339) (1,125) (72,232)Repayment of mortgages and other loans - (57,346) (57,346)Net cash outflow from financing activities (9,122) (12,964) (87,509)Net decrease in cash and cash equivalents* (8,188) (61,832) (80,325)Cash and cash equivalents at beginning of period (77,672) 2,653 2,653Cash and cash equivalents at end of period (85,860) (59,179) (77,672) * Includes overdraft facility balances shown in borrowings UNAUDITED NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES Basis of preparation The interim consolidated financial statements of the Group for the six months to30 September 2006 have been prepared on the basis of accounting policies set outin the published accounts of the Group for the year ended 31 March 2006. The published accounts for the year ended 31 March 2006 were the Group's firstfull financial statements under IFRS. The basis of accounting and format ofpresentation is subject to change following any further interpretative guidancethat may be issued by the International Accounting Standards Board ("IASB") andthe International Financial Reporting Interpretation Committee ("IFRIC") fromtime to time. These Interim Financial Statements do not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 March 2006 have been delivered tothe Registrar of Companies and include an audit report which was unqualified anddid not contain a statement under either Section 237(2) or 237(3) of theCompanies Act 1985. The preparation of financial statements in conformity with IFRS requires the useof certain critical accounting estimates. It also requires management toexercise judgment in the process of applying the Group's accounting policies.Although these estimates are based on management's best knowledge of the amount,events or actions, actual results ultimately may differ from those estimates. 2. SEGMENTAL REPORTING BUSINESS SEGMENTS For management purposes the Group is organised into two operating divisions,Property Investment and Asset Management: Property Asset Management Unallocated and Group Total Investment other activities £000 £000 £000 £000Six months to 30 September 2006Rental and similar income 10,936 - - 10,936Turnover from property trading activities 1,731 - - 1,731Cost of sales of property trading activities (1,346) - - (1,346)Service charge and similar income 2,329 - - 2,329Service charge expense and similar charges (2,710) - - (2,710)Net rental and trading income 10,940 - - 10,940Turnover from asset management activities Management fee income - 6,353 - 6,353 Performance fee income - - - - - 6,353 - 6,353Asset management expenses - (4,124) - (4,124)Administrative expenses (1,713) - - (1,713)Property management expenses (2,045) - - (2,045)Operating profit before net gain on investments 7,182 2,229 - 9,411Net gain from fair value adjustments on investment 8,169 - - 8,169propertiesNet gain from fair value adjustments on investments - 12,157 1,073 13,230Profit on sale of investment properties 1,738 - - 1,738Profit on sale of investments - 28 - 28Operating profit 17,089 14,414 1,073 32,576 Total assets 349,643 263,346 54,937 667,926Liabilities net of borrowings (28,897) (20,019) (7,873) (56,789)Borrowing, including finance leases (1,501) - (222,119) (223,620)Net assets 319,245 243,327 (175,055) 387,517 Other segment items:Capital expenditure 2,244 - - 2,244Depreciation - - 72 72 Property Asset Management Unallocated and Group Total Investment other activities £000 £000 £000 £000Six months to 30 September 2005Rental and similar income 12,176 - - 12,176Turnover from property trading activities 3,424 - - 3,424Cost of sales of property trading activities (2,969) - - (2,969)Service charge and similar income 1,490 - - 1,490Service charge expense and similar charges (1,723) - - (1,723)Net rental and trading income 12,398 - - 12,398Turnover from asset management activities Management fee income - 1,430 - 1,430 Performance fee income - - - - - 1,430 - 1,430Asset management expenses - (776) - (776)Administrative expenses (1,099) - - (1,099)Property management expenses (3,225) - - (3,225)Operating profit before net gain on investments 8,074 654 - 8,728Net gain from fair value adjustments on investment 15,301 - - 15,301propertiesNet gain from fair value adjustments on investments - 2,648 3,695 6,343Profit on sale of investment properties 37 - - 37Profit on sale of investments - - - -Operating profit 23,412 3,302 3,695 30,409 Total assets 339,385 188,566 126,147 654,098Total liabilities (38,841) (7,596) (5,774) (52,211)Borrowing, including finance leases (1,515) - (291,415) (292,930)Net assets 299,029 180,970 (171,042) 308,957 Other segment items:Capital expenditure 128 - - 128Depreciation - - 61 61 Property Asset Management Unallocated and Group Total Investment other activities £000 £000 £000 £000Year ended 31 March 2006Rental and similar income 24,003 - - 24,003Turnover from property trading activities 31,167 - - 31,167Cost of sales of property trading activities (24,584) - - (24,584)Service charge and similar income 2,972 - - 2,972Service charge expense and similar charges (3,591) - - (3,591)Net rental and trading income 29,967 - - 29,967Turnover from asset management activities Management fee income - 6,065 - 6,065 Performance fee income - 3,271 - 3,271 - 9,336 - 9,336Asset management expenses - (3,512) - (3,512)Administrative expenses (2,390) - - (2,390)Property management expenses (7,517) - - (7,517)Operating profit before net gain on investments 20,060 5,824 - 25,884Net gain from fair value adjustments on investment 27,101 - - 27,101propertiesNet gain from fair value adjustments on investments - 14,968 1,082 16,050Profit on sale of investment properties 3,102 - - 3,102Profit on sale of investments - 98 2,926 3,024Operating profit 50,263 20,890 4,008 75,161 Total assets 361,886 223,477 133,160 718,523Total liabilities (26,799) (24,577) (27,709) (79,085)Borrowing, including finance leases (1,514) - (284,004) (285,518)Net assets 333,573 198,900 (178,553) 353,920 Other segment items:Capital expenditure 9,255 - - 9,255Depreciation - - 139 139 All turnover and operating profit has arisen from continuing operations. 3. RETIREMENT BENEFIT OBLIGATIONS The Group operates and contributes to pension schemes for certain Directors andemployees and makes some discretionary allowances. The costs charged to theincome statement for the six months to 30 September 2006 in respect of theseamounted to £386,000 (September 2005: £149,000; March 2006: £397,000).Pension premiums paid in advance were £306,000 (September 2005: £35,000; March2006: £70,000). The Group operated a defined benefit scheme in the UK, The Warner Estate GroupRetirement Benefits Scheme. A full valuation was carried out at 1 April 2005.The values at 30 September 2006, 30 September 2005, and 31 March 2006 wereupdates of the 1 April 2005 valuation carried out by a qualified independentactuary. It has been agreed with the Trustees that the Group contributes are 26.8% ofpensionable salary plus £68,000 per annum. The value of the assets and liabilities of the Scheme were as follows: Value at 30 Value at 30 Value at 31 September September March 2006 2006 2005 £000 £000 £000Total market value of assets 5,791 5,369 5,820Present value of scheme liabilities (6,347) (5,690) (6,301)Retirement benefit obligations (556) (321) (481) Analysis of amount charged to operating profit 6 months 6 months Year ended 30 ended 30 ended 31 September September March 2005 2006 2005 £000 £000 £000Current service cost 32 22 44 4. PROFIT ON SALE OF INVESTMENT PROPERTIES 6 months 6 months Year ended 30 ended 30 ended 31 September September March 2005 2006 2005 £000 £000 £000Surplus over book value:Investment properties 1,738 37 3,102 5. PROFIT ON SALE OF INVESTMENTS 6 months 6 months Year ended 30 ended 30 ended 31 September September March 2005 2006 2005 £000 £000 £000Surplus over book value:Listed investments - - 2,975Unlisted investments 28 - 98Other - - (49) 28 - 3,024 The profit on sale of listed investments for the year ended 31 March 2006 of£2.975m arose on the disposal of the Group's investment in East Surrey Holdingsplc for a consideration of £14m in November 2005. 6. FINANCE INCOME 6 months 6 months Year ended 30 ended 30 ended 31 September September March 2006 2006 2005 £000 £000 £000Income from investmentsDividends from listed investments 79 25 422Distributions from funds (see note 13) 2,505 366 3,363 2,584 391 3,785Interest receivable and similar income:From joint ventures 530 2,419 3,540Other interest 161 281 977Other finance incomeExpected return on pension scheme assets 157 - 294Interest on pension scheme liabilities (151) - (290) 6 - 4 3,281 3,091 8,306 7. FINANCE EXPENSE 6 months 6 months Year ended 30 ended 30 ended 31 September September March 2006 2006 2005 £000 £000 £000Interest payable on bank loans and overdrafts, mortgages 7,309 6,622 13,575and other loansCharges in respect of cost of raising finance 310 356 1,732 7,619 6,978 15,307Less: Interest capitalised (551) (371) (991) 7,068 6,607 14,316Interest payable under finance leases 61 59 129 7,129 6,666 14,445Other finance costExpected return on pension scheme assets - (146) -Interest on pension scheme liabilities - 145 - - (1) - 7,129 6,665 14,445 8. TAXATION The taxation charge for the period has been estimated from the expected taxableprofits of the Group after taking account of capital allowances available. 9. EARNINGS PER SHARE Earnings per share of 73.28p (half year to 30 September 2005: 52.34p; year to31 March 2006: 140.17p) are calculated on the profit for the period of£39,004,000 (half year to 30 September 2005: £27,721,000; year to 31 March2006: £74,432,000) and the weighted average of 53,224,590 (half year to 30September 2005: 52,970,778; year to 31 March 2006: 53,100,390) shares in issuethroughout the period. Diluted earnings per share of 72.33p (half year to 30 September 2005: 52.03p;year to 31 March 2006: 138.79p) are based on the profit for the period as abovedivided by the weighted average number of shares in issue, being 53,926,052(half year to 30 September 2005: 53,285,741; year to 31 March 2006:53,628,509) after the dilutive impact of share options granted. 10. GOODWILL £000GroupCostAt 31 March 2006 and 30 September 2006 11,205Impairments -At 30 September 2006 -Net book value at 30 September 2006 11,205 The goodwill was as a result of the acquisition of the remaining 50% ofIndustrial Funds Limited on 1 December 2005. Goodwill is not amortised but issubject to an annual impairment test. The goodwill of £11,205,000 is allocatedto the cash generating unit ("CGU") defined as the fund management businessowned by Industrial Funds Limited. The recoverable amount of the CGU has beencalculated based on the value-in-use calculations. These calculations use cashflow projections based on financial projections approved by management coveringa five year period. 11. INVESTMENT PROPERTIES AND PROPERTIES UNDER THE COURSE OF DEVELOPMENT Freehold Leasehold Total Properties with over Investment Under the 50 years Properties Course of unexpired Development £000 £000 £000 £000 At 31 March 2006 279,533 53,665 333,198 12,261Acquisitions 11,078 - 11,078 -Capital expenditure 48 43 91 2,153Disposals (27,264) (19,287) (46,551) -Exchange differences (217) - (217) -Net gain from fair value adjustments on investment 8,254 (85) 8,169 -propertyAt 30 September 2006 271,432 34,336 305,768 14,414 12. JOINT VENTURES At 30 At 30 At 31 March September September 2006 2006 2005 £000 £000 £000Share of joint venturesAt 31 March 2006 103,372 102,517 102,517Share of profit for the period 13,069 9,133 21,291Net equity movements 9,633 (952) 15,415Net loan movements 6,724 16,792 (35,851)At 30 September 2006 132,798 127,490 103,372Unlisted shares at cost less amounts written off 37,798 11,215 27,632Group's share of post acquisition retained profits and reserves 50,465 25,821 37,929 88,263 37,036 65,561Amounts owed by joint ventures 44,535 90,454 37,811 132,798 127,490 103,372 Included in share of joint ventures' gross assets and liabilities are: Agora Radial Bareway Agora Max Greater Others Total Shopping Distribution Industrial Limited London Centres Limited Properties (f) Offices (h) Limited Limited (a) (c) (d) (g) £000 £000 £000 £000 £000 £000 £000Period to 30 September 2006Group share of resultsRevenue 4,332 2,802 - 5,464 - - 12,598Operating profit before net 2,643 2,568 (6) 3,825 - 4 9,034gains on investmentsNet gain from fair value 4,966 5,711 - 5,675 - - 16,352adjustments on investmentpropertiesNet gain from fair value - - - - - - -adjustments on investmentsProfit / (loss) on sale of - - - - - - - investment propertiesProfit on sale of fixed asset - - - - - - -investmentsOperating profit 7,609 8,279 (6) 9,500 - 4 25,386Net finance expense (2,398) (2,563) - (3,535) - 21 (8,475)Change in fair value of 234 534 - 1,877 (648) - 1,997derivative financialinstrumentsShare of associate's post tax - - - - - - -lossProfit / (loss) before income 5,445 6,250 (6) 7,842 (648) 25 18,908taxTaxation - current (2) (17) - - - (6) (25)Taxation - deferred (1,668) (2,054) - (2,283) 194 - (5,811)Profit / (loss) after income 3,775 4,179 (6) 5,559 (454) 19 13,072taxMinority interests - - - (3) - - (3)Profit / (loss) for the 3,775 4,179 (6) 5,556 (454) 19 13,069period Amounts received andreceivable by GroupAsset management fees 300 302 - 432 - - 1,034Performance fees - - - - - - -Interest receivable 272 258 - - - - 530 Group share ofNon-current assetsInvestment properties 130,338 118,203 - 177,542 48,792 - 474,875Investments in unlisted - - - - - 25 25sharesFinance lease assets - 3,954 - - - - 3,954Deferred income tax assets - - - - 194 - 194Derivative financial assets 1,381 245 - 1,928 - - 3,554Other non-current assets 418 - - - - - 418 132,137 122,402 - 179,470 48,986 25 483,020Current assetsFinance lease assets - 257 - - - - 257Other current assets 23,109 3,116 - 5,171 946 3,854 36,196 23,109 3,373 - 5,171 946 3,854 36,453Total assets 155,246 125,775 - 184,641 49,932 3,879 519,473Non-current liabilitiesDeferred income tax (9,755) (5,486) - (4,462) - - (19,703)liabilitiesBorrowings, including finance (86,669) (103,583) - (131,489) (39,392) - (361,133)leasesDerivative financial - - - - (648) - (648)liabilities (96,424) (109,069) - (135,951) (40,040) - (381,484)Current liabilitiesDeferred income tax - - - - - - -liabilitiesBorrowings, including finance (4,860) - - (7) - - (4,867)leasesOther current liabilities (14,802) (4,140) - (22,682) (861) (2,374) (44,859) (19,662) (4,140) - (22,689) (861) (2,374) (49,726)Total liabilities (116,086) (113,209) - (158,640) (40,901) (2,374) (431,210)Share of net assets 39,160 12,566 - 26,001 9,031 1,505 88,263Effective Group share 50% 50% 50% 50% 50% 50% Potential recourse to the Nil Nil Nil Nil Nil NilGroup Agora Skipper Radial Bareway Industrial Others Total Shopping Offices Distribution Industrial Funds Centres Limited Limited Properties Limited (h) Limited (a) (b) (c) (d) (e) £000 £000 £000 £000 £000 £000 £000Period to 30 September 2005Group share of resultsRevenue 7,457 1,545 2,683 496 2,895 - 15,076Operating profit before net 4,838 996 2,453 422 989 - 9,698gains on investmentsNet gain from fair value 11,463 - 3,632 731 - - 15,826adjustments on investmentpropertiesNet gain from fair value - - - - 727 - 727adjustment on investmentsProfit / (loss) on sale of 22 (810) 918 - 116 - 246investment propertiesProfit on sale of fixed asset - - - - 3 - 3investmentsOperating profit 16,323 186 7,003 1,153 1,835 - 26,500Net finance expense (4,898) (1,486) (2,444) (438) (968) - (10,234)Change in fair value of (1,664) (305) (1,017) - - - (2,986)derivative financialinstrumentsProfit / (loss) before income 9,761 (1,605) 3,542 715 867 - 13,280taxTaxation - current 45 (375) (158) 5 (285) - (768)Taxation - deferred (3,078) 839 (677) (231) (232) - (3,379)Profit / (loss) for the period 6,728 (1,141) 2,707 489 350 - 9,133 Amounts received andreceivable by GroupAsset management fees 570 150 292 50 41 - 1,103Interest receivable 337 537 275 278 992 - 2,419 Group share ofNon-current assetsIntangible assets - - - - 3,373 - 3,373Investment properties 204,066 - 77,597 14,460 - - 296,123Investments in unlisted shares - - - - 11,563 25 11,588Finance lease assets - - 4,210 - - - 4,210Deferred income tax assets - - 300 - - - 300Derivative financial assets 937 - - - - - 937Non-current assets held for - - - 18,779 - 18,779re-saleOther non-current assets 506 - - - - - 506 205,509 - 82,107 14,460 33,715 25 335,816Current assetsFinance lease assets - - 244 - - - 244Other current assets 3,525 - 11,871 1,057 17,919 - 34,372 3,525 - 12,115 1,057 17,919 - 34,616Total assets 209,034 - 94,222 15,517 51,634 25 370,432Non-current liabilitiesDeferred income tax (9,430) - (1,979) - (232) - (11,641)liabilitiesBorrowings, including finance (127,092) - (82,898) - - - (209,990)leasesDerivative financial - - (998) - - - (998)liabilities (136,522) - (85,875) - (232) - (222,629)Current liabilitiesDeferred income tax - - - (498) - - (498)liabilitiesBorrowings, including finance (35,811) - - (9,132) (20,872) - (65,815) leasesOther current liabilities (6,803) - (3,107) (4,614) (29,930) - (44,454) (42,614) - (3,107) (14,244) (50,802) - (110,767)Total liabilities (179,136) - (88,982) (14,244) (51,034) - (333,396)Share of net assets 29,898 - 5,240 1,273 600 25 37,036Effective Group share 50% 50% 50% 50% 50% 50% Potential recourse to the Nil Nil Nil 9,150 Nil NilGroup Agora Skipper Radial Bareway Industrial Agora Max Others Total Shopping Offices Distribution Industrial Funds Limited Centres Limited Limited Properties Limited (f) (h) Limited (a) (b) (c) (d) (e) £000 £000 £000 £000 £000 £000 £000 £000Year to 31 March 2006Group share of resultsRevenue 14,178 2,086 5,372 686 3,962 2,863 1,261 30,408Operating profit before netgains on investments 8,153 996 4,896 564 284 1,582 (361) 16,114Net gain from fair valueadjustments on investmentproperties 13,936 - 7,856 - - 7,123 - 28,915Net gain from fair valueadjustments on investments - - - - 1,063 - - 1,063Profit / (loss) on sale ofinvestment properties 4,023 (810) 892 664 (80) 11 - 4,700Profit on sale of fixed asset - - - - 77 - - 77investmentsOperating profit 26,112 186 13,644 1,228 1,344 8,716 (361) 50,869Net finance expense (10,110) (1,486) (4,731) (584) (832) (1,796) 18 (19,521)Change in fair value ofderivative financialinstruments (1,454) (305) (308) - - 51 - (2,016)Share of associate's post tax - - - - (200) - - (200)lossProfit / (loss) before income 14,548 (1,605) 8,605 644 312 6,971 (343) 29,132taxTaxation - current (1,067) (375) (321) (320) (421) (262) (6) (2,772)Taxation - deferred (1,735) 839 (2,429) 267 - (2,180) - (5,238)Profit / (loss) after income 11,746 (1,141) 5,855 591 (109) 4,529 (349) 21,122taxMinority interests (4) - - - 185 (12) - 169Profit / (loss) for the period 11,742 (1,141) 5,855 591 76 4,517 (349) 21,291 Amounts received andreceivable by GroupAsset management fees 1,082 150 596 68 57 208 840 3,001Performance fees 1,947 - - - - - - 1,947Interest receivable 674 537 516 370 1,443 - - 3,540 Group share ofNon-current assetsInvestment properties 122,561 - 81,802 - - 171,179 - 375,542Investments in unlisted shares - - - - - - 25 25Finance lease assets - - 4,085 - - - - 4,085Deferred income tax assets - - 87 - - - - 87Derivative financial assets 1,147 - - - - 51 - 1,198Other non-current assets 272 - - - - - - 272 123,980 - 85,974 - - 171,230 25 381,209Current assetsFinance lease assets - - 250 - - - - 250Other current assets 25,812 - 4,245 2,000 - 9,449 4,063 45,569 25,812 - 4,495 2,000 - 9,449 4,063 45,819Total assets 149,792 - 90,469 2,000 - 180,679 4,088 427,028Non-current liabilitiesDeferred income tax (8,087) - (3,518) - - (2,180) - (13,785)liabilitiesBorrowings, including finance (86,181) - (73,731) - - (131,024) - (290,936)leasesDerivative financial - - (289) - - - - (289)liabilities (94,268) - (77,538) - - (133,204) - (305,010)Current liabilitiesDeferred income tax - - - - - - - -liabilitiesBorrowings, including finance (4,704) - - (108) - (7) - (4,819)leasesOther current liabilities (15,412) - (4,543) (512) - (27,049) (4,122) (51,638) (20,116) - (4,543) (620) - (27,056) (4,122) (56,457)Total liabilities (114,384) - (82,081) (620) - (160,260) (4,122) (361,467)Share of net assets / 35,408 - 8,388 1,380 - 20,419 (34) 65,561(liabilities)Effective Group share 50% 50% 50% 50% 50% 50% 50% Potential recourse to the Nil Nil Nil Nil Nil Nil NilGroup (a) Agora Shopping Centres was set up on 5 March 2003 and subsequentlyacquired the Pyramids, Birkenhead on 25 June 2003 and The Grange, Birkenhead on30 September 2004. On 7 March 2006, The Pyramids, Birkenhead and The Grange,Birkenhead were disposed of into the Agora Max joint venture group. (b) Skipper Offices Limited was set up on 23 July 2003. In June 2005, theproperties were disposed of into the Apia Regional Offices Fund and the Groupsubsequently acquired the remaining 50% interest of Skipper Offices Limited. (c) Fairway Industrial Limited was set up on 29 August 2003 and changed itsname to Radial Distribution Limited on 14 October 2004. (d) Bareway Industrial Properties Limited was set up on 29 August 2003. InNovember 2005, the properties were disposed of into the Ashtenne IndustrialFund. On 11 September 2006 the Group acquired the remaining 50% interest ofBareway Industrial Properties Limited. (e) Industrial Funds Limited was set up in March 2005 and completed theacquisition of Ashtenne Holdings PLC on 13 July 2005. On 1 December 2005, theGroup acquired the remaining 50% interest. (f) Agora Max Limited was set up on 16 September 2005 and subsequentlyacquired The Pallasades, Birmingham on 25 October 2005. The Pyramids and TheGrange, both in Birkenhead, were acquired from Agora Shopping Centres on 7 March2006. (g) Greater London Offices Limited was set up and subsequently acquired OldBroad Street and Central House, London on 28 September 2006. (h) Net assets relate to £25k investment in the general partner of ApiaRegional Office Fund and a net asset of £1,480k which is the investment insmaller joint ventures acquired through Ashtenne. Amounts owed by joint ventures comprise: At 30 At 30 At 31 March September September 2006 2006 2005 £000 £000 £000Agora Shopping Centres Limited 25,687 25,687 25,687Radial Distribution Limited 16,194 12,675 12,016Bareway Industrial Properties Limited - 7,092 108Industrial Funds Limited - 45,000 -Greater London Offices Limited 2,654 - - 44,535 90,454 37,811 13. INVESTMENTS IN FUNDS £000As at 31 March 2006 104,081Disposals (472)Net gain from fair value adjustments 12,157At 30 September 2006 115,766 Fund information: AIF Apia Others Total (a) (b) (c) £000 £000 £000 £000Period to 30 September 2006 Distributions receivable 1,126 1,356 23 2,505 Net assets at 30 September 2006 658,328 251,287 -Percentage share at 30 September 2006 6.52% 28.59% -Group share of net assets 42,923 71,843 1,000 115,766 AIF Apia Others Total (a) (b) (c) £000 £000 £000 £000Period to 30 September 2005 Distributions receivable 53 313 - 366 Net assets at 30 September 2005 448,642 134,094 -Percentage share at 30 September 2005 2.68% 34.83% -Group share of net assets 12,031 46,705 54 58,790 AIF Apia Others Total (a) (b) (c) £000 £000 £000 £000Year to 31 March 2006 Distributions receivable 1,468 1,886 9 3,363 Net assets at 31 March 2006 546,780 223,774 -Percentage share at 31 March 2006 7.09% 28.77% -Group share of net assets 38,752 64,374 955 104,081 (a) The Group invested £12,000,000 in the Ashtenne Industrial Fund inAugust 2005. A £23,105,000 investment was acquired on the purchase of theremaining 50% of Industrial Funds Limited. (b) Apia was set-up on 7 June 2005 and the Group invested an initial£44,088,000. A further £10,000,000 was invested in December 2005, of which£902,000 was disposed of in March 2006. A further £472,000 was disposed of inApril 2006. It is treated as an investment rather than an associate as the Groupdoes not exert significant influence as a Trustee which is independent of theGroup is responsible for the strategic decisions of the unit trust and theGroup's investment holding in the unit trust will continue to reduce over theshort-term. (c) This relates to minority interest holdings in Apia IV Unit Trust, AgoraMax Unit Trust, Agora Max Birkenhead Unit Trust and The Pallasades BirminghamUnit Trust which were acquired during the year to 31 March 2006. The holding inApia IV Unit Trust was disposed of on 30 September 2006. 14. INVESTMENTS IN LISTED AND UNLISTED SHARES At 30 At 30 At 31 March September September 2006 2006 2005 £000 £000 £000Listed investments 6,397 19,213 5,115Unlisted investments (reclassified from Investment in 15,009 - -Associates) 21,406 19,213 5,115 15. INVESTMENTS IN ASSOCIATES Bride Hall Other Total Group Limited £000 £000 £000CostAt 31 March 2006 1,173 509 1,682Disposals - (373) (373)Share of profits - 19 19Reclassified as unlisted investment (1,173) - (1,173)At 30 September 2006 - 155 155 Goodwill arising on acquisitionAt 31 March 2006 13,836 - 13,836Reclassified as unlisted investment (13,836) - (13,836)At 30 September 2006 - - - At 30 September 2006 - 155 155At 31 March 2006 15,009 509 15,518 16. DEFERRED TAXATION At 30 At 30 At 31 September September March 2006 2005 2006 £000 £000 £000Deferred taxation assetsDeferred taxation arising from unrealised derivative 216 413 408financial instruments valuationsDeferred taxation arising from retirement benefit 167 96 144obligations 383 509 552Deferred taxation liabilitiesDeferred taxation arising from the temporarydifferences noted below:Capital and industrial buildings allowances claimed on (1,813) (3,450) (2,215)investment propertiesUnrealised property and investment valuations (27,461) (23,414) (27,348) (29,274) (26,864) (29,563) 17. PROVISIONS FOR OTHER LIABILITIES AND CHARGES Share-based Onerous Total payments contracts £000 £000 £000GroupAt 31 March 2006 503 12,000 12,503Charged to consolidated income statement: 171 - 171Utilised during the period - (3,845) (3,845)At 30 September 2006 674 8,155 8,829 Provisions have been analysed between current and non-current as follows: At 30 At 30 At 31 September September March 2006 2005 2006 £000 £000 £000Non-current 8,829 185 12,503Current - - - 8,829 185 12,503 The provision for share-based payments represents the cost of granting shareoptions and other share-based remuneration to employees and Directors. Thecharge is reversed if it appears probable that applicable performance criteriawill not be met. The onerous lease provision is made in relation to onerous leases on propertieswhich are vacant or sublet at a level which renders the properties loss-makingover the remaining life of the lease. The provision represents the Directors'estimate of the net cash flows on the properties. 18. FINANCIAL INSTRUMENTS Financial Liabilities The interest rate profile of the Group's financial liabilities at 30 September2006, after taking account of interest rate instruments taken out by the Groupwas: At 30 At 30 At 31 March September September 2006 2005 2006 £000 £000 £000Floating financial rate liabilities - - -Capped rate financial liabilities 12,731 95,766 13,669Fixed rate financial liabilities 194,153 108,840 194,968 206,884 204,606 208,637 The above balances are net of cash balances of £15,657,000 (half year to 30September 2005: £87,746,000; year to 31 March 2006: £76,018,000) which can beoffset under the Group's borrowing arrangements. The benchmark rate for determining interest payments for the floating ratefinancial liabilities was LIBOR / base rate depending upon the facility. The weighted average interest rate on the fixed rate debt and the averagematurity of that debt was as follows: At 30 At 30 At 31 March September September 2006 2005 2006 % % %Weighted average interest rateGroup 5.90 7.35 7.37Joint Ventures 5.81 5.70 5.66 Weighted average period for which interest rate is fixed Years Years YearsGroup 6.60 4.96 7.08Joint Ventures 5.87 3.13 2.75 Maturity of financial liabilities At 30 At 30 At 31 September September March 2006 2005 2006 £000 £000 £000 Group Within one year or on demand 417 22,700 1,893 Between one and two years 14,214 12,798 13,768 Between two and five years 185,410 210,824 222,438 In five years or more 22,500 46,030 46,556 222,541 292,352 284,655 Borrowing facilities The Group has various borrowing facilities that were not fully utilised at theperiod end and for which the conditions for utilising those facilities were met. At 30 At 30 At 31 March September September 2006 2005 2006 £000 £000 £000 Expiring in one year or less: Total facilities - 120,000 - Unutilised - 50,327 - Expiring between two and five years: Total facilities 123,388 - 137,741 Unutilised 19,120 - 43,691 Fair values of financial assets and liabilities The table below sets out by category the changes to the balance sheet values onfixed rate debt that would occur if fair values were applied. At 30 At 30 At 31 March September September 2006 2005 2006 Fair value Fair value Fair value adjustment adjustment adjustment £000 £000 £000 GroupPrimary financial instrumentsLiabilitiesLong term debt (over one year) (6,052) (9,299) (7,286)AssetsLong term loan notes (over one year) (935) (428) (535)Fixed rate loan - 15 -Joint VenturesPrimary financial instrumentsLong term loan notes 935 428 535Fixed rate loan - (7) -Increase in fair value (6,052) (9,291) (7,286) The effect on net assets per share of the total fair value adjustment(£6,052,000 less tax £1,816,000) would be a decrease of 8.0 pence (half year to30 September 2005: 12.3p; year to 31 March 2006: 9.6 pence) The calculation of the fair values has been arrived at as follows: Debt has been calculated by discounting cash flows at prevailing rates ofinterest. The equity assets have been valued at bid price. Interest rate swaps have generally been valued at the usually relative currentactive market rate for such swaps. 19. CAPITAL AND RESERVES Reserves Share Non-distributable Distributable Investment Total Capital reserves reserves in own shares £000 £000 £000 £000 £000At 31 March 2006 2,675 139,386 209,451 (926) 350,586Retained profit for the - - 39,004 - 39,004periodRealised on disposal of - (10,867) 10,867 - -investment propertiesRealised on disposal of - (54) 54 - -investmentsRealised on disposal of - (779) 779 - -joint ventures' investmentpropertiesNet gain from fair value - 8,169 (8,169) - -adjustment on investmentpropertiesShare of joint ventures' net - 16,886 (16,886) - -gain from fair valueadjustment on investmentpropertiesShare of associates' net - 19 (19) - -gain from fair valueadjustment on investmentpropertiesNet gain from fair value - 1,073 (1,073) - -adjustment on listedinvestmentsNet gain from fair value - 12,157 (12,157) - -adjustment on unlistedinvestmentsChange in fair value of - 710 (710) - -derivative financialinstrumentsChange in fair value of - 1,398 (1,398) - -joint ventures' derivativefinancial instrumentsAcquisition of investments - - - (341) (341)in own sharesDisposal of investment in - - - 359 359own sharesDividends paid - - (5,342) - (5,342)Actuarial losses on pensions - - (109) - (109)scheme assetsDeferred tax movement on - - 23 - 23pension assetsAt 30 September 2006 2,675 168,098 214,315 (908) 384,180 20. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW At 30 At 30 At 31 March September September 2006 2005 2006 £000 £000 £000 Operating profit before net gains on investments 9,411 8,728 25,884Depreciation of plant and equipment 72 62 139Profit on sale of plant and equipment - - 1Decrease in inventories 1,120 2,872 19,292(Increase) / decrease in trade and other receivables (1,163) (308) 2,682Decrease in trade and other payables (15,680) (6,947) (23,295)Cash (outflows) /inflows from operations (6,240) 4,407 24,703 21. CONTINGENT ASSETS Six months Six months Year ended ended 30 ended 30 31 March September September 2006 2005 2006 £000 £000 £000Potential performance fees arising under joint ventureagreementsAgora Shopping Centres 8,800 - 5,000Radial Distribution 1,800 - 1,000 10,600 - 6,000 These assets have not been recognised on the balance sheet. 22. MINORITY INTEREST This represents investments held by The F15 Partnership in Balmcrest EstatesLimited. 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