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Max Property Group Plc

Interim Results for the period ended 30 September 2009 

Max Property Group Plc ("Max" or "the Company") is a Jersey-incorporated closed-ended property investment company. The Company has an experienced board of Directors, chaired by Aubrey Adams, and is externally managed by Prestbury Investments LLP ("Prestbury Investments"), which is owned and managed by a team led by Nick Leslau, Mike Brown, Tim Evans and Sandy Gumm.

Key points 

• £211.4m net of expenses raised on 27 May, 2009 upon listing on AIM and CISX

• Maiden acquisition - Industrious portfolio:

- Seven properties acquired prior to 30 September for £12.9m including costs

- Balance of portfolio acquired for £231.2m including costs on 7 October - unconditional on 25 August, and included in the accounts as acquired on that date.  

• Two properties sold in the period for £20.5m and a third property sold after the period end for £2.7m

• £113m of pro forma uncommitted cash post acquisition

• Pro forma net debt post acquisition of £14.4m

• NAV per share* 103p

* NAV is measured on a basis consistent with guidance given by the European Public  Real Estate Association ("EPRA").

Aubrey Adams, proposed Chairman of Max Property Group Plc, comments:

"We believe we have had a positive start to the Company's life, have put in place a good foundation from which we can continue to build the business and look forward to the future with huge enthusiasm."

 

3 December 2009 

ENQUIRIES:

Prestbury Investments	Tel: 020 7647 7647
Nick Leslau
College Hill	Tel: 020 7457 2020
Gareth David
Morgan Stanley (Nominated Adviser)	Tel: 020 7425 8000
Mark Brooker

Chairman's Statement 

It is my pleasure to be writing my maiden interim report to you as Chairman of this new

business.

The Company was successfully launched on AIM and CISX in May of this year, raising net proceeds of £211.4 million through the issue of new shares. The Company took little time in deploying substantial resources in making what now appears to have been a very well timed acquisition in the form of the Industrious industrial portfolio out of receivership. It was a rare opportunity to acquire a high yielding, diverse portfolio with a c. 50% South East weighting and where there are many opportunities to drive income and capital values over the next five years. 

The Company's website provides details of the portfolio, which I will not repeat here, but it is worth mentioning that the next couple of years will present significant challenges to maintaining income during what will remain uncertain economic times. However, the management team has a longstanding reputation for dynamic hands on management and will be working tirelessly to enhance a portfolio which has been neglected for some time due to the constraints imposed upon it through lack of capital investment, the straight jacket of the former owner's CMBS structure and, of course, receivership. 

The entry price of £31 psf capital value is about 40% of replacement cost and with a spread of more than 800 tenants will significantly help protect the downside of this project. The income from the portfolio will deliver high cash on cash returns before any capital value uplift.

We deployed some £96 million of equity in this deal for which we have high expectations. This acquisition leaves us with another £113 million of free cash available to make further acquisitions.  

The management team is looking at potential acquisitions daily and it is considered that, towards Christmas and in the New Year, a lot of new stock will start to be released to the market which will provide further opportunities for those with cash and suitable management skills.  

It is worth noting that in recent months the prime markets have tightened very considerably, making the sourcing of profitable business in that particular arena very challenging. However, your Company does not generally intend to operate in these prime markets and believes there is much more scope for significant value accretion through operating in the non-prime markets where downside can still be well protected by a judicious acquisition approach and the upside, which can be considerable, is much more of a function of management's ability to turn an ugly duckling into a beautiful swan.

We remain very confident that there will be many opportunities to find properties which satisfy all the investment and financing criteria we set out for you in our flotation prospectus. It is reassuring to know that we are not constrained by sector or geography within the UK, as management has a long proven record of operating in virtually every area within the UK property industry.

Financial results and position

The results for the period and the balance sheet are significantly affected by the acquisition of the Industrious portfolio at a cost of £244.1 million and the subsequent disposal of two properties originally acquired as part of that portfolio for cash consideration of £20.5 million. Under the Company's accounting policies and in compliance with applicable accounting standards the acquisition is accounted for as a 'business combination', therefore: 

• the date on which acquisitions and disposals are accounted for is the date on which they become unconditional, and not the date of completion; and 

• the book value of the properties when acquired is taken as their 'fair value', based on an open market valuation on the assumption of a willing buyer and willing seller, rather than the amount actually paid which takes into account the actual circumstances of the transaction.

The accounting applied in the period is explained in note 4 to the Interim Report. The principal impact of applying this treatment is that a 'discount on acquisition' of £14.9 million is recognised (being the difference between the price paid and the fair value of the portfolio on the date of acquisition) and a £3.1 million profit is recognised on the property disposals that were unconditionally committed to before the period end.  

The pre-tax profit for the period before taking into account the discount on acquisition and revaluation surplus was £2.1 million, principally being the £3.1 million profit on the disposal of properties after administrative expenses of £1.5 million.  

The profit before tax for the period was £17.1 million and the profit after tax was £16.3 million.

The net asset value of the Group, including the Industrious assets at their 30 September, 2009 independent valuation, is £226.6 million or 103 pence per share, against 96 pence per share immediately upon listing.  

Of the amount paid for the Industrious portfolio, £33.1 million was paid before 30 September and the remaining £199.4 million was paid on completion on 7 October. The transaction was partly financed by drawing at completion on a non-recourse debt facility amounting to £127.7 million. Adjusting for the post balance sheet payments relating to the acquisition, disposal receipts and borrowings, pro forma net debt amounts to £14.4 million.

Outlook

As has been noted by a number of property companies, the market's recovery is unlikely to follow a seamless, straightforward path. The occupational markets will remain difficult, lagging any economic recovery by a couple of years. With leases shorter than in past cycles and void costs much higher, maintaining cash flow in the intervening period will present a considerable challenge to all property owners. Meanwhile the investment markets will eventually have to face the twin headwinds of rising interest rates and a protracted deleveraging by the banks. 

We believe these issues have the capacity to overwhelm temporarily any recovery, providing windows for attractive acquisitions. Management teams will need to show discipline and patience, interspersed with bursts of activity to assemble the best performing portfolios at the most attractive prices and show excellent asset management skills in the meantime to maintain cash flow. The scene is set for a corrugated recovery.  

We believe we have had a positive start to the Company's life, have put in place a good foundation from which we can continue to build the business and look forward to the future with huge enthusiasm.

AUBREY ADAMS

Chairman

3 December 2009

 

Auditor's independent review report to Max Property Group Plc

Introduction

We have been engaged by the Company to review the condensed financial statements included within this Interim Report for the period from 17 April, 2009 to 30 September, 2009 which comprises the Group Income Statement, Group Statement of Comprehensive Income, Group Statement of Changes in Equity, the Group Balance Sheet, Group Cash Flow Statement and related notes.  

We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The Interim Report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report in accordance with the rules of the London Stock Exchange for companies trading on the Alternative Investment Market and the rules for companies trading securities on the Channel Islands Stock Exchange.  These rules require that the Interim Report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting policies applicable to such annual accounts.   

As disclosed in note 2, the condensed set of financial statements included in this Interim Report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the European Union.  

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Interim Report based on our review.  

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and the rules for trading securities on the Channel Islands Stock Exchange and for no other purpose. No person is entitled to rely on this report unless such a person is entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any such liability.  

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Report for the period ended 30 September 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and the rules for companies trading securities on the Channel Islands Stock Exchange.  

 

BDO LLP

Chartered Accountants and Registered Auditors

Epsom

Surrey

United Kingdom

3 December, 2009

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Group income statement

		Unaudited
		17 April 2009 to
		30 September 2009
	Note	£000
Gross rental income		137
Proceeds from sale of trading properties	4(c)	20,531
		20,668
Property outgoings		(14)
Cost of properties sold	4(c)	(17,453)
		(17,467)
Net rental income		123
Profit on sale of properties held for resale		3,078
Gross profit		3,201
Administrative expenses:
General administrative expenses		(1,371)
Corporate costs		(168)
Total administrative expenses		(1,539)
Revaluation surplus	8	95
Discount on acquisition	4	14,870
Operating profit		16,627
Finance income	5	685
Finance costs	5	(248)
Profit before tax		17,064
Taxation charge	6	(810)
Profit for the period		16,254
Earnings per share		pence per share
Basic and diluted	7	7.4

All amounts relate to continuing activities.

The notes form part of this Interim Report.

Group statement of comprehensive income

		Unaudited
		17 April 2009 to
		30 September 2009
	Note	£000
Profit for the period		16,254
Market value adjustment of interest rate derivatives, recognised directly in equity	12	(1,243)
Tax effect of interest rate derivative valuation adjustment	6	249
Total comprehensive income for the period, net of tax		15,260

Group statement of changes in equity

	Stated	Hedging	Retained
	capital	reserve	earnings	Total
	£000	£000	£000	£000
At incorporation	-	-	-	-
Profit for the period	-	-	16,254	16,254
Market value adjustment of interest rate derivatives	-	(1,243)	-	(1,243)
Tax effect of interest rate derivative valuation adjustment	-	249	-	249
Total comprehensive income for the period, net of tax	-	(994)	16,254	15,260
Issue of ordinary shares of no par value	220,000	-	-	220,000
Share issue costs	(8,623)	-	-	(8,623)
Balance at 30 September 2009 (unaudited)	211,377	(994)	16,254	226,637

The notes form part of this Interim Report.

Group balance sheet

		Unaudited
		As at 30
		September 2009
	Note	£000
Non-current assets:
Investment properties	8	240,335
Deferred tax asset	6	285
		240,620
Current assets:
Properties held for resale		3,280
Trade and other receivables	9	21,477
Cash deposits with maturities
of more than three months	10	110,501
Cash and cash equivalents	10	67,895
		203,153
Total assets		443,773
Current liabilities:
Trade and other payables	11	(214,178)
Non-current liabilities:
Interest rate swap and cap at market value	12	(1,243)
Obligations under finance leases	13	(1,715)
		(2,958)
Total liabilities		(217,136)
Net assets		226,637
Equity:
Stated capital		211,377
Hedging reserve		(994)
Retained earnings		16,254
Total equity		226,637
Net asset value per share (pence)		103p

The notes form part of this Interim Report.

Group cash flow statement

		Unaudited
		17 April 2009 to 30 September 2009
	Note	£000
Cash flows from operating activities:
Profit before tax		17,064
Adjustments for non-cash items:
Discount on acquisition		(14,870)
Revaluation surplus		(95)
Net finance income		(437)
Cash flows from operations before
changes in working capital		1,662
Change in trade and other receivables		(20,958)
Change in trade and other payables		1,896
Change in properties held for resale		17,190
Cash flows from operations		(210)
Investing activities:
Cash flows related to the acquisition	4	(33,057)
Cash placed on long term deposit		(110,501)
Interest received		166
Cash flows from investing activities		(143,392)
Financing activities:
Net proceeds from share issue		211,497
Cash flows from financing activities		211,497
Net increase in cash and cash equivalents		67,895
Cash and cash equivalents at incorporation		-
Cash and cash equivalents at end of period		67,895

The notes form part of this Interim Report.

 

Notes to the interim report

1. General information about the Group

Max Property Group Plc was listed on the AIM and CISX markets on 27 May, 2009. It is a closed-ended real estate investment company that was incorporated in Jersey on 17 April, 2009.  

This interim financial report includes the results and net assets of the Company and its subsidiaries, together referred to as the Group.  

The unaudited financial information set out in this report covers the period from the date of incorporation to 30 September, 2009 and does not constitute statutory accounts. The Company has not previously published or filed any financial statements.  

Further general information about the Company can be found on its website: www.maxpropertygroup.com.  

2. Basis of preparation

 

The financial information contained in this report has been prepared in accordance with IAS 34, "Interim Financial Reporting".  

The accounting policies adopted in this report are consistent with those included on pages 50 to 54 of the admission document issued by the Company on 27 May, 2009, and are also consistent with those that are expected to be applied in the Group's first annual report and financial statements for the period ending 31 March, 2010.  The admission document is available from the 'Investor Centre' page of the Company's website, www.maxpropertygroup.com, or by writing to the Company Secretary at the address at the back of this document.  

3. Segmental information

During the period, the Group operated in and was managed as one business segment, being property investment and trading, with all properties located in the United Kingdom.  

4. Acquisition of the Industrious portfolio

Details of the costs and fair values of the assets and liabilities acquired are as follows:

	Price		Fair
	paid	Adjustments	value
	£000	£000	£000
Investment properties	223,622	16,618	240,240
Properties held for resale	20,503	(33)	20,470
Obligations under finance leases	-	(1,715)	(1,715)
Total	244,125	14,870	258,995
Cash consideration comprises:
Amounts paid in cash prior to period end			33,057
Accrued acquisition costs			11,687
Due to vendor at completion			199,381
Total acquisition cost			244,125
Discount on acquisition: excess of fair value over cost			14,870

(a) Description of the acquisition

The acquisition comprised two transactions under contracts with the same vendor and in respect of 87 properties. The first transaction was the acquisition of seven properties, acquired unconditionally at auction on 16 July, 2009, with cash consideration before costs of acquisition of £12,220,000. The first transaction was completed on 27 August, 2009, prior to the end of the period. The second transaction was for 80 properties with cash consideration before costs of acquisition of £219,881,000. Contracts for this acquisition were exchanged on 4 August, 2009 and became unconditional on 25 August, 2009, prior to the end of the period. The acquisition completed after the balance sheet date, on 7 October, 2009.  

The total consideration before expenses for the two transactions was £232,101,000 and the costs of acquisition for the transaction (principally comprising stamp duty land tax at 4% of the contract price) amounted to £12,024,000, resulting in a total cost of £244,125,000. The cost was settled by payments of £33,057,000 made prior to the period end, and the balance, comprising £199,381,000 paid to the vendor and £11,687,000 of costs, was paid after the balance sheet date. The costs paid prior to the period end included the cash consideration paid for the auction properties, the deposit paid on exchange of contracts of the second contract, and certain acquisition costs paid on account.  

(b) Explanation of accounting for the transaction

The acquisition has been accounted for under the Company's accounting policies which are in accordance with applicable current accounting standards. Under these policies, the two transactions have been accounted for as a single acquisition and the dates on which the transactions took place have been taken as the dates on which contracts became unconditional and not the completion date or the date on which the consideration was paid. The unconditional dates for both transactions were prior to the period end. Assets and liabilities acquired and costs not paid at the period end have been included in the balance sheet under "trade and other payables".

The transaction has been accounted for as a "business combination". As a result, the separable intangible and tangible assets and liabilities acquired have been identified and accounted for at fair value. For this purpose fair value is determined as the open market value of each separable asset and liability, including each individual property, as at the acquisition date between a theoretical willing buyer and willing seller in an arm's length transaction involving parties who are in an equivalent position.  It does not take account of special characteristics of the parties such as financing issues and long term objectives, or the effect of assets being acquired as part of a portfolio.  A deduction is made to reflect the acquisition cost of any future purchaser. The fair value of the separable assets and liabilities does not take account of the actual consideration paid, which reflects the particular circumstances of the parties to the transaction.

The difference between the fair value of the assets and liabilities acquired and the costs of the transaction is treated as goodwill, if the aggregate fair value is less than the costs, and as a discount on acquisition, if the aggregate fair value is more than the costs.  Under the applicable accounting standards, a discount on acquisition is taken to the income statement for the period in which the acquisition is accounted for.

The assets or liabilities identified as a result of the acquisition of the Industrious portfolio were investment properties and obligations (arising on long leasehold properties) under finance leases. No significant intangible assets were identified. The fair value of each of the properties acquired as at the accounting acquisition date was determined, in accordance with the accounting policies, by CB Richard Ellis Limited, Chartered Surveyors, applying the Royal Institution of Chartered Surveyors' Appraisals and Valuation Standards.  

The fair value adjustments for the transaction are set out in the table above. The fair value of the net assets acquired exceeded the cost of the transaction by £14,870,000 and this amount has been included as a discount on acquisition in the profit for the period.

(c)  Sale of properties

Four of the properties acquired were identified as assets held for resale. These properties had a fair value of £20,503,000 which, in accordance with the Company's accounting policies and applicable accounting standards, was arrived at on the same basis as the rest of the portfolio acquired. Two of these properties, with a fair value of £17,190,000 were disposed of for cash proceeds of £20,531,000 under a contract which became unconditional on 16 September, 2009, although the contract was not completed until 7 October, 2009. The disposal has been accounted for as taking place on the unconditional date giving rise to a profit in the period to 30 September, 2009 of £3,078,000. The net proceeds have been included in the balance sheet as "other receivables".

The remaining two properties, with a fair value of £3,280,000 have been included in the balance sheet as "properties held for resale".

5. Finance income and costs

	Unaudited
	17 April 2009 to
	30 September 2009
	£000
Finance income:
Interest on cash deposits	685
Finance costs:
Commitment fees in respect of committed credit line	248

6. Taxation

	Unaudited
	17 April 2009 to
	30 September 2009
	£000
The tax charge for the period comprises:
Current tax:
Tax on results for the period	846
Deferred tax
Change in deferred tax in the period	(36)
Total taxation charges in the income statement	810

The tax assessed for the period varies from the standard rate of income tax in the UK of 20%. The differences are explained below:

Profit before tax	17,064
Profit before tax at the standard rate of income tax in the UK of 20%	3,413
Effects of:
Expenses not deductible for tax	307
Income not subject to tax	(148)
Discount on acquisition not subject to tax	(2,974)
Revaluation surplus not subject to tax	(19)
Trading profits subject to UK tax at 28%	231
	810

Deferred tax assets:

	Other
	temporary and	Excess
	deductible	property
	differences	expenses	Total
	£000	£000	£000
At incorporation	-	-	-
Credited during the period to the income statement	-	36	36
Tax on interest rate derivative adjustment, credited to other comprehensive income	249	-	249
At 30 September 2009 (Unaudited)	249	36	285

        

7. Earnings per share

 

The calculation of earnings per share is based on 220,000,002 ordinary shares of no par value in issue throughout the period during which profits were earned and is based on profits attributable to ordinary shareholders for the period ended 30 September, 2009 of £16,254,000. 

 

There are no share options or other equity instruments in issue and therefore no adjustments to be made for dilutive or potentially dilutive equity arrangements.  

 

International Financial Reporting Standards require that the effects of unrealised revaluation gains and losses on the Group's investment properties are reported through the group income statement. Adjusting earnings to strip out any unrealised market valuation movements, the EPS for the Group would be 0.6p per share for the period.

8. Investment properties

	Unaudited as at 30 September 2009
		Long
	Freehold	Leasehold	Total
	£000	£000	£000
At incorporation	-	-	-
Acquisition at fair value	191,165	49,075	240,240
Revaluation movement	875	(780)	95
Carrying value as at 30 September 2009	192,040	48,295	240,335
Head lease liabilities (note 13)	-	(1,715)	(1,715)
Total group property portfolio
valuation at 30 September 2009	192,040	46,580	238,620

The acquisition of the investment properties and the basis on which they are included in this Interim Report are explained in note 4.  

The properties were valued as at 30 September, 2009 for accounts purposes by CB Richard Ellis Limited, Chartered Surveyors in their capacity as external valuers. The valuation was undertaken in accordance with the Royal Institution of Chartered Surveyors' Appraisal and Valuation Standards on the basis of market value. Market value represents the estimated amount for which a property would be expected to exchange at the date of valuation between a willing buyer and a willing seller in an arms' length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. A deduction is made to reflect an estimate of the acquisition costs of any purchaser.  

The historical cost of the Group's investment properties as at 30 September, 2009 was £223,622,000.  

Since the date that the properties were acquired, the portfolio has accounted for 100% of the Group's rental income and direct property costs.  

9. Trade and other receivables

	Unaudited
	As at 30
	September 2009
	£000
Trade receivables	412
Other receivables	20,531
Interest receivable	519
Prepayments	15
	21,477

    

All amounts above are due within one year.  

Other receivables comprise the proceeds due from buyers of the trading properties sold in the period (see note 4(c)). The proceeds were received on 7 October, 2009.  

10. Cash and cash equivalents

Total cash deposits held at 30 September, 2009 amounted to £178,396,000 of which £110,501,000 is separately disclosed in the group balance sheet as its original maturity period was more than three months.

11. Trade and other payables

	Unaudited
	as at 30
	September 2009
	£000
Trade payables	78
Amount due to vendor for Industrious portfolio acquisition	199,381
Accrued acquisition costs	11,687
Corporation tax	846
Rent received in advance	373
Other amounts payable	1,073
Other accruals	740
	214,178

All amounts above are due within one year.  

The amount due to the vendor for the Industrious portfolio acquisition was satisfied on 7 October, 2009 by bank borrowings net of arrangement fees of £125,453,000 and the balance from the Group's cash resources.  

12. Borrowings

As at 30 September, 2009 the Group had no borrowings.  

On 4 August, 2009 the Group entered into a facility agreement with Eurohypo AG for a five year non-recourse debt facility, to be secured against the assets that were ultimately acquired from the receivers of the Industrious Group. The agreement was conditional upon certain conditions precedent being met as is standard for this sort of agreement. All conditions were met and a loan amounting to £127,709,000 was drawn on 7 October, 2009. The loan is now secured by fixed charges over the investment property portfolio.

In order to protect the interest rate risk on the acquisition of the portfolio, the following derivative instruments were in place as at 30 September, 2009:

			Movement
			recognised in	Unaudited
			group	market
			statement of	value at
	Protected		comprehensive	30 September
	rate	Expiry	income	2009
	%		£000	£000
£70.5m amortising swap	4.0	August 2014	(2,789)	(2,789)
£56.75m cap	4.0	August 2014	1,546	1,546
			(1,243)	(1,243)

The derivative contracts have been valued by reference to interbank bid market rates as at the close of business on 30 September, 2009 by JC Rathbone Associates Limited, and include the full LIBOR basis spread. These derivatives are valued 'clean' and therefore do not take account of any accrued benefit or liability for the period ended 30 September, 2009 because the accrued net cost for that period is included within the interest accrual at the period end.  

The market value of hedging instruments changes constantly with interest rate fluctuations, but the exposure of the Group to movements in interest rates is protected by way of the hedging products listed above. The valuation above does not necessarily reflect the cost or gain to the group of cancelling its interest rate protection at 30 September, 2009, which is generally a marginally higher cost (or smaller gain) than a market valuation.

13. Obligations under finance leases

Finance lease obligations in respect of rents payable on leasehold properties are payable as follows:

			Present value
	Minimum		of minimum
	lease		lease
	payments	Interest	payments
	£000	£000	£000
Less than one year	194	(194)	-
Between one and two years	194	(194)	-
Between two and five years	581	(581)	-
More than five years	17,303	(15,588)	1,715
	18,272	(16,557)	1,715

14. Related party transactions and balances

Interests in shares

The interests of the Directors and their families in the share capital of the company are as follows:

	Interests in
	ordinary shares
	held at 30
	September
	2009
Aubrey Adams	100,000
Mike Brown	5,000,000
Keith Hamill	40,000
Nick Leslau	20,000,000
Alex Ohlsson	40,000
John Stephen	40,000
David Waters	25,000

The interests disclosed above include both direct and indirect interests in shares.  

Fees

Directors' fees of £66,000 were payable for the period ended 30 September, 2009. As at 30 September, 2009 £55,000 of fees payable remained outstanding and are included within other amounts payable (note 11).  

Nick Leslau and Mike Brown hold partnership interests in, and are Chairman and Chief Executive respectively of, Prestbury Investments LLP, which is investment advisor to the Group.  

Management fees of £1,322,000 were payable to Prestbury Investments LLP in respect of the period ended 30 September, 2009, of which £968,000 was payable as at the balance sheet date and is included within other amounts payable (note 11).

Under the terms of the carried interest arrangements between the company and Prestbury (Scotland) LP (a partnership in which Nick Leslau and Mike Brown have interests), once the £211,377,000 of net funds raised on flotation has been returned to shareholders (assuming no further share issues), then cash returns over and above that amount may ultimately be shared as to 80% to the shareholders and a carried interest payment of 20% to Prestbury (Scotland) LP and Och-Ziff, subject to shareholders having first received an 11%pa preferred return.

The carried interest payments are based on cash realisations other than where either the Investment Advisory Agreement has been terminated (where the net asset value of the company is used in the calculation as if that amount had been returned to shareholders in cash) or there has been a takeover of the company (in which case the offer price is used in the calculation).  

No carried interest payment has yet crystallised. If the net asset value of the Group as at 30 September, 2009 was used as the basis of the calculation, this would theoretically amount to £2,583,000 payable to Prestbury (Scotland) LP. This amount has not been included as a liability in this Interim Report on the basis that the uplift in value giving rise to the theoretical carried interest adjustment arises over a very short period of time, during which the hurdle rate has only accrued for some four months, resulting in a disproportionately low hurdle at the period end. The carried interest calculations will be reviewed in the year end accounts and will be provided for if material.

Other transactions

Transactions between the Company and its subsidiaries are not disclosed, as these are eliminated on consolidation.  

15. Post balance sheet events

On 7 October, 2009, the Group completed the acquisition of the portfolio of 76 investment properties and four trading properties for £231,236,000 including costs of acquisition.  The accounting for this transaction is explained in note 4.  On the same date, a group company drew down the credit line described in note 0, drawing £127,709,000 of debt, which amounted to £125,453,000 after arrangement fees and the other costs of debt finance were offset. The properties securing the debt include the seven properties acquired at auction on 16 July, 2009 but exclude any properties held for resale. 

Also on 7 October, 2009, a group company completed the disposal of two properties held for resale which were sold for cash consideration of £20,531,000, resulting in a profit of £3,078,000. The accounting for this transaction is explained in note 4.  

On 14 October 2009 the third of the four properties held for resale was sold for cash consideration of £2,694,000, resulting in a profit of £1,460,000.  

The properties sold were not financed by the Group's external debt facility and the net cash proceeds realised of £22,934,000 were placed on deposit.  

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