CEO Review

In our first full reporting period since becoming a Real Estate Investment Trust (REIT), we have delivered a set of results which belie the current negative sentiment towards the UK commercial property market.

Our achievements have resulted in a 2.5% increase in adjusted diluted net assets per share over the six months, founded on a 0.9% valuation surplus from our £15.0bn investment portfolio. Pre-tax profit was £375.2m, down 68.2% on the comparable period as a result of a smaller valuation surplus than in the prior period. As expected, revenue profit, our measure of underlying pre-tax profit, was down by 10.5% to £172.8m due to the accounting treatment which requires us to recognise the interest cost of the loan associated with acquiring Secondary Market Infrastructure Fund (SMIF) but not the income from the underlying contracts. However, our adjusted diluted earnings per share were up by 11.0% to 36.46 pence per share, largely as a result of no longer paying tax on the majority of our activities following conversion to REIT status on 1 January. For the current financial year commencing 1 April 2007, we have moved to quarterly dividend payments and, as previously announced, the second quarterly dividend will be 16.00 pence per share payable on 7 January 2008.