HICL Infrastructure Regulatory News (HICL)

20 Nov 2007 07:01

HSBC Infrastructure Company Limited20 November 2007 HSBC Infrastructure Company Limited 20 November 2007 INTERIM RESULTS The Directors of HSBC Infrastructure Company Limited announce the results forthe six months ended 30 September 2007. Highlights • Net asset value per share at 30 September of 122.1p on a consolidated IFRS basis and 122.3p on an investment basis • Directors valuation of the portfolio at 30 September 2007 of £384.1m, up from £342.0m at 31 March 2007, a 12.3% increase • New interests acquired in 4 PFI police projects in August for £36.5m And since 30 September 2007 • Additional investments in 6 projects acquired from Kajima Partnerships Ltd for £30.2m • As separately announced today, the proposed acquisition of an additional stake in Home Office project for £14.4m, subject to shareholder approval at Extraordinary General Meeting to be held on 17 December 2007 Results on an Investment basis • Profit before tax and gains on investments (capital) £4.5m (2006: £5.5m)• Gains on investments (capital) £5.6m (2006: £14.5m)• Profit before tax £10.1m (2006: £20.0m)• Earnings per share 4.0p (2006: 8.0p)• Interim distribution per share 3.05p (2006: 2.875p) 2006 comparatives are for the period 11 January to 30 September 2006 Net Asset Values Consolidated IFRS basis Investment basis• Net Asset Value (NAV) per share at listing 98.4p 98.4p• Net Asset Value (NAV) per share at 30 September 122.1p 122.3p• Interim distribution per share 3.05p 3.05p• NAV per share at 30 September after deducting the interim distribution 119.05p 119.25p• NAV per share at 31 March 2007 after deducting the final distribution 121.2p 118.3p Results on a Consolidated IFRS basis • (Loss)/Profit before tax and gains on investments (capital) (£14.5m) (2006: £4.6m)• Gains on investments (capital) £12.0m (2006: £18.9m)• (Loss)/Profit before tax (£2.5m) (2006: £23.5m)• Earnings per share 0.9p (2006: 8.5p)• Interim distribution per share 3.05p (2006: 2.875p) 2006 comparatives are for the period 11 January to 30 September 2006 and havebeen restated to reflect the adoption of the principles of IFRIC 12. Graham Picken, Chairman of the Board, said: "I am pleased with the Company'scontinued progress. Our two recent acquisitions of UK PFI projects complementthe extant portfolio where all assets are performing well. It is the Board'sview, underscored by that of our Investment Adviser, that prices in the UKsecondary PFI market have eased from their peak earlier in the year. This isreflected in the Directors' valuation and through the underlying discount ratesthat have been applied. Widespread interest in infrastructure as an asset class persists, with theattractiveness of the sector remaining strong, despite the global credit crisis.The Company is well placed to offer shareholders a high quality, long termincome underpinned by robust contracts with public sector authorities. We have announced today the proposed acquisition of an additional stake in theHome Office PFI project for £14.4m. This acquisition will be from a relatedparty to the Company's Investment Adviser and, therefore, shareholder approvalis required. A circular is being sent to shareholders explaining the proposedacquisition in more detail and advising that an EGM will be held on 17thDecember to vote on this transaction." Contacts for the Investment Adviser on behalf of the Board:Sandra Lowe +44 (0)20 7991 3798Tony Roper +44 (0)20 7991 9554 Contacts for M: Communications:Edward Orlebar +44 (0)20 7153 1523Tilly von Twickel +44 (0)20 7153 1541 Information on HSBC Infrastructure Company Limited HSBC Infrastructure Company Limited ("HICL" or the "Company" or, together withits 100% owned subsidiaries, the "Group") was the first investment companylisted on the London Stock Exchange set up to invest in infrastructure projects.It was successfully launched in March 2006 and raised £250m with which itpurchased an initial portfolio (the "Initial Portfolio") of interests in 15,mostly operational, PFI/PPP projects. It now has a portfolio of 26 interests ininfrastructure projects in the UK and the Netherlands, plus a mezzanine loaninterest in Kemble Water, the Thames Water acquisition vehicle. The Company paid a total distribution for the first period to 31 March 2007 of6.1p and is targeting a progressive distribution policy and growth of annualdistributions to 7.0p per share within 6 to 9 years. The long term targetInternal Rate of Return ("IRR") is 7 to 8% (based on the issue price of 100p). The Investment Adviser to the Company is HSBC Specialist Fund ManagementLimited, who is authorised and regulated by the Financial Services Authority,and is a subsidiary of HSBC Specialist Investments Limited, HSBC'sinfrastructure and real estate investment arm. The HSBC equity infrastructureteam now comprises 18 members of which 6 are dedicated to advising the Company. The Company's investment policy is set out on the Company's website and includesinvesting in PFI/PPP type projects, utilities, transportation assets such astoll roads, bridges and railways, and renewable energy and power assets. Company web site www.hicl.hsbc.com Chairman's Statement On behalf of the board, I am pleased to report that the Company has achievedgood progress during the six months to 30 September 2007, with all investmentsperforming in line with, or better than, our projections. Financial results for the six months On an investment basis, profit before tax was £10.1m (2006 : £20.0m). The gainon investments derived from the valuation movement of the portfolio was lowerthan the previous corresponding period. Earnings per share were 4.0p (2006 :8.0p). On a consolidated IFRS basis, the loss before tax was £2.5m (2006 : profit of£23.5m). The loss before tax was the result of a downward revaluation of thefinance debtor in one of our project subsidiaries, following a change to theimplicit rate of interest applied in the financial model. On a consolidated IFRSbasis, earnings per share were 0.9p (2006 : 8.5p). The net asset value (NAV) per share on a consolidated IFRS basis was 122.1p,compared to 124.4p at 31 March 2007. On an investment basis the NAV per sharewas 122.3p (121.5p as at 31 March 2007). The Group is carrying an asset of £4.1m at the period end which relates to anamount of withholding tax to be reclaimed on loan stock interest received fromprojects. The receipt of cash payments against this tax asset is taking longerto finalise than originally anticipated although, after taking advice from theGroup's tax advisers and seeking Counsel's opinion we remain confident that oursubmission to HM Revenue & Customs is a valid one. The Group and its advisersare seeking a timely resolution of our claim. Distributions The Directors have approved an interim distribution of 3.05p per share that willbe paid on 27 December 2007 to shareholders on the register as at 30 November2007. As outlined at the time of the IPO, it was envisaged that in the first twofinancial years, distributions may be paid from the Group's gross income. Grossincome in the period to 30 September 2007 was £14.7m on an investment basis,equating to 5.9p per share. Valuation The Investment Adviser has produced fair market valuations of the Group'sinvestments as at 30 September 2007 based on a discounted cash flow analysis.The Directors have satisfied themselves on the valuation methodology and thediscount rates used. The Directors have approved the valuation of £384.1m before deducting loanstockcommitments of £22.3m as at 30 September 2007, giving a net asset value pershare of 122.1p on a consolidated IFRS basis (122.3p on an investment basis). Gearing As at 30 September 2007, the Group had net debt of £55.6m (31 March 07 : £16.5m)in respect of loans on a recourse basis to the Group (equating to 14.5% of theDirectors valuation of £384.1m). This funding has enabled the Group to make therecent acquisitions. On a consolidated IFRS basis, net debt stood at £201.8m at30 September (31 March 2007 : £163.6m). All project companies have either bankborrowings with interest rate hedges or bonds with fixed interest rate payments,thus ensuring the Group's investments have minimal exposure to interest ratevolatility. The Investment Adviser is currently in the process of refinancing the Group'sexisting debt facilities. New facilities are expected to be concluded shortly. As has been previously noted, since the Company was effectively fully investedat the time of the IPO launch with the purchase of the Initial Portfolio,subsequent investments have been funded by debt. The Company is currentlyconsidering with its advisers the options to enable the Company to continue thesuccessful growth of the portfolio. Portfolio development The portfolio of projects owned by the Group continues to perform in line withour long term objectives and there are no material operational or financialissues to report. All projects are fully operational with the exception of Phase2 of the Colchester Garrison project, where construction is proceeding ahead ofprogramme, with completion now forecast for Q1 2008. In August the Group acquired new interests in four UK police PFI projects from asubsidiary of Allianz SE. These additional interests were acquired for a totalconsideration of £36.5m. The four projects comprise of police stations inManchester and South East London, a firearms and public order training facilityat Gravesend and a firearms and tactical training centre at Urlay Nook on theoutskirts of Stockton. Since the period end, the Group has acquired interests in six further UK PFIprojects, comprising 5 schools and a government office project. Theseinvestments were acquired from Kajima Partnerships Ltd for £30.2m and Kajimaremains the joint shareholder and day-to-day operational manager of thefacilities. Accounting At the period end, the Company had 4 investments which it was deemed to controlby virtue of having the power, directly or indirectly, to govern the financialand operating policies of the project entities. Under International FinancialReporting Standards ("IFRS"), the results of these companies are required to befully consolidated into the Group's financial statements on a line-by-linebasis. In order to provide shareholders with a more meaningful representation of theGroup's net asset value, coupled with greater transparency in the Company'scapacity for investment and ability to make distributions, the results have beenrestated in proforma tables which are presented in the Investment Adviser'sreport. The proforma tables are prepared with all investments accounted for onan investment basis. By deconsolidating the subsidiary investments, theperformance of the business under consolidated IFRS basis may be compared withthe results under the investment basis. Risks and uncertainties The risks facing the Group for the remaining six months of the financial yearare consistent with those outlined in the Company's Annual Report for the yearended 31 March 2007. Should the Group's discussions with HM Revenue & Customsbecome protracted, it may be necessary to consider an impairment review of thetax asset held, and to consider alternative ways to maintain future equitycashflows from the projects in the portfolio. Outlook Whilst the global credit crisis has affected many sectors, it has not had anoticeable impact on the infrastructure market. Transactions involving both PFIprojects and larger infrastructure assets have taken place in the last 6 months.There is some evidence of a softening in the prices paid for PFI assets which isreflected in the change to the underlying discount rates used in the valuation. Looking ahead, we remain positive in our ability to acquire new infrastructureassets which meet our investment criteria. The Board has noted that the Company's share price has traded at a discount toNAV since May. The position is being monitored with our joint Brokers and we arereviewing our options. In the current economic climate, the Group's portfolio of PFI projects, withpublic sector backed revenue streams, continues to deliver an attractive, lowrisk yield. The interim distribution is consistent with our stated policy ofprogressive growth, an aim that is central to how we approach future marketopportunities. Graham PickenChairman19 November 2007 Investment Adviser's Summary Report Portfolio Colchester Garrison is the only project in the portfolio where there is stillconstruction of a part of the project to be completed. Construction remainsahead of programme and is due to be completed in Q1 2008. Standard & Poor'sOctober review of the project and its £578m senior secured bonds resulted inthem changing their outlook for the project from stable to positive, as a resultof the good progress made on the construction of the remaining phase of theproject. The projects in the Group's portfolio have performed in line or better thanexpected. The Investment Adviser has been working with project companymanagement to resolve a small number of teething problems on certain projects,the majority of which have now been addressed. As reported at the time of the Company's Preliminary Results, a programme ofwork has commenced on certain of the projects in the portfolio seeking to bothoptimise the debt repayments and reduce the overall cost of the debt in theseprojects. This work is ongoing and will, when completed, lead to savings forboth the Group and its public sector clients. The asset managers in the Investment Adviser's team continue to oversee theperformance of all the projects and the implementation of certain enhancementsthat have been identified. These include savings on insurance premia, treasuryefficiencies, adding incremental income and maintaining costs to agreedoperational budgets. This is all carefully managed in the context of ensuringthat each project continues to deliver the required services to the client inline with the contractual requirements set out in the project documents. Acquisitions In August the Group completed the acquisition of a 50% interest in four policePFI projects from a subsidiary of Allianz SE for £36.5m. The four police projects are: •Metropolitan Police Specialist Training Centre - a firearms and public order training facility in Gravesend, Kent •South East London Police Stations - 4 police station buildings for the Metropolitan Police Authority (London), in Deptford, Lewisham, Bromley and Sutton •Greater Manchester Police Stations - 17 police station buildings on 16 sites around Greater Manchester •Durham & Cleveland Firearms Training Centre - a firearms and tactical training centre at Urlay Nook on the outskirts of Stockton, northern England The first three projects were developed by John Laing plc, were built by LaingO'Rourke plc, and operational support services are being provided by John LaingIntegrated Services (formally Equion FM), the facilities management division ofJohn Laing plc. The Durham & Cleveland Firearms Training Centre was built byBarr, the Scottish construction company, and is also operated by John LaingIntegrated Services. All the projects are fully operational. Since the period end, the Group has completed the acquisition for £30.2m of 50% interests in five education projects and an accommodation project, through a new joint venture with Kajima Partnerships Ltd ('KPL'), a subsidiary of Kajima Corporation ('Kajima'). These six assets, all PFI accommodation projects, are: •The headquarters of the Health & Safety Executive in Merseyside •Ealing Schools, comprising one secondary school and three primary schools •North Tyneside Schools, comprising one secondary school and three primary schools •Wooldale Centre for Learning, comprising a secondary school with sixth form, public library, primary school and nursery •Haverstock school, a new secondary school in London •Darlington Schools consisting of an Education Village and one primary school All six projects were developed by KPL and built by Kajima Construction Europe, Kajima's construction arm, and are now operational. The facilities management providers are Honeywell Control Systems Ltd and Reliance Integrated Services Limited for HSE's headquarters, and MITIE PFI Ltd for the five schools. KPL will continue the day-to-day management of these projects and there is the opportunity for the Group to invest, through this joint venture, in other projects developed by KPL. Market The Investment Adviser has continued to see a steady stream of investment opportunities in the period, which have been subject to careful scrutiny. Only opportunities which meet the Company's investment criteria and have the required mix of yield with return profile are fully evaluated. Assets which fill these requirements have included PFI/PPP assets, regulated utilities in UK and Europe, and toll roads in the Far East. The Adviser continues to strengthen its growing network of contacts, which are introducing new propositions on a regular basis. These have included investments in regulated utilities, toll roads and the renewables sector. Valuation As in previous periods the Investment Adviser, on the Company's behalf, hascarried out fair market valuations of the Group's investments as at 30September. The valuations were prepared in the same way as in previous periods,using a discounted cash flow (DCF) methodology. This is described in more detailin the Company's Annual Report & Consolidated Financial Statements for theperiod to 31 March 2007 (available to download from the Company's web site). The Group's portfolio was valued as at 30 September 2007 at £384.1m, a 12.3%increase over the valuation at 31 March 2007. (A reconciliation between thisvaluation and that shown in the interim financial statements is given in Note 1to the unaudited consolidated proforma financial statements, the principaldifference relating to the undrawn loanstock commitment). Netting outacquisitions in the period of £36.5m, and investment receipts of £7.3m, thegrowth over the rebased value of £354.9m was 3.8%. The discount rates used for valuing the projects in the portfolio as at 30September 2007 range from 7.0% to 8.8%. The weighted average is 7.3% (comparedwith 7.0% at 31 March 2007). To arrive at a discount rate for each project, theInvestment Adviser uses its judgement in arriving at the appropriate discountrate based on knowledge of the market, intelligence gained from biddingactivities, discussions with market specialists and publicly availableinformation on transactions. In deriving the valuation, the base discount rates have been increasedreflecting higher gilt yields and, in our opinion, a slight reduction in marketprices over the last 6 months. More prudent assumptions have also been adoptedin relation to the refinancing potential (consistent with recent slightincreases in PFI debt costs). These factors have been offset in the valuation by improved project performanceand the use of uniform economic assumptions for all UK projects, specificallyassumptions on the long term Retail Price Index of 2.75% pa and cash depositrates of 5.0% pa. HSBC Specialist Fund Management Limited 19 November 2007 Unaudited consolidated proforma income statementsfor the period ended 30 September 2007 Six months ended 30 September 2007 Investment basis ------------------ Consolidation Consolidated Revenue Capital Total adjustments IFRS basis £million £million £million £million £million--------------- ------- ------- ------- --------- --------- Services revenue - - - 10.6 10.6(Losses)/Gains onfinance receivables - - - (6.4) (6.4)Gains on investments 9.1 5.6 14.7 (2.7) 12.0--------------- ------- ------- ------- --------- ---------Total income 9.1 5.6 14.7 1.5 16.2 Services costs - - - (8.1) (8.1)Administrative expenses (3.0) - (3.0) (0.4) (3.4)--------------- ------- ------- ------- --------- ---------Profit before netfinance costs and tax 6.1 5.6 11.7 (7.0) 4.7 Finance costs (1.7) - (1.7) (5.8) (7.5)Finance income 0.1 - 0.1 0.2 0.3--------------- ------- ------- ------- --------- ---------Profit/(loss) beforetax 4.5 5.6 10.1 (12.6) (2.5) Income taxcredit/(expense) - - - 3.0 3.0--------------- ------- ------- ------- --------- ---------Profit for the period 4.5 5.6 10.1 (9.6) 0.5--------------- ------- ------- ------- --------- --------- Attributable to:Equity holders of theparent 4.5 5.6 10.1 (7.8) 2.3Minority interests - - - (1.8) (1.8)--------------- ------- ------- ------- --------- --------- 4.5 5.6 10.1 (9.6) 0.5--------------- ------- ------- ------- --------- --------- Earnings per share -basic and diluted(pence) 1.8 2.2 4.0 (3.1) 0.9 Unaudited consolidated proforma income statements continued Period from 11 January 2006 to 30 September 2006* Investment basis ------------------ Consolidation Consolidated Revenue Capital Total adjustments IFRS basis £million £million £million £million £million--------------- ------- ------- ------- --------- --------- Services revenue - - - 10.2 10.2(Losses)/Gains onfinance receivables - - - 8.4 8.4Gains on investments 6.6 14.5 21.1 (2.2) 18.9--------------- ------- ------- ------- --------- ---------Total income 6.6 14.5 21.1 16.4 37.5 Services costs - - - (8.2) (8.2)Administrative expenses (1.8) - (1.8) (0.5) (2.3)--------------- ------- ------- ------- --------- ---------Profit before netfinance costs and tax 4.8 14.5 19.3 7.7 27.0 Finance costs (0.2) - (0.2) (4.3) (4.5)Finance income 0.9 - 0.9 0.1 1.0--------------- ------- ------- ------- --------- ---------Profit/(loss) beforetax 5.5 14.5 20.0 3.5 23.5 Income taxcredit/(expense) - - - (1.5) (1.5)--------------- ------- ------- ------- --------- ---------Profit for the period 5.5 14.5 20.0 2.0 22.0--------------- ------- ------- ------- --------- --------- Attributable to:Equity holders of theparent 5.5 14.5 20.0 1.3 21.3Minority interests - - - 0.7 0.7--------------- ------- ------- ------- --------- --------- 5.5 14.5 20.0 2.0 22.0--------------- ------- ------- ------- --------- --------- Earnings per share -basic and diluted(pence) 2.2 5.8 8.0 0.5 8.5 * Restated to reflect the adoption of the principles of IFRIC 12. See Note 2 ofthe Notes to the condensed consolidated financial statements for furtherdetails. See Note 2 of Notes to the condensed consolidated financial statements for thedefinition of revenue and capital items. Unaudited consolidated proforma balance sheetas at 30 September 2007 ------------------------- ---------- ----------- ----------- ----------- ----------- ----------- 30 September 2007 31 March 2007 Investment Consolidation Consolidated Investment Consolidation Consolidated basis adjustments IFRS basis basis adjustments IFRS basis £million £million £million £million £million £million------------------------- ---------- ----------- ----------- ----------- ----------- -----------Non-current assetsInvestments at fair valuethrough profit or loss 361.8 (27.3) 334.5 319.7 (25.8) 293.9Finance receivables atfair value through profitor loss - 163.2 163.2 - 176.2 176.2Intangible assets - 29.1 29.1 - 30.1 30.1Deferred tax assets - 8.1 8.1 - 9.8 9.8------------------------- ---------- ----------- ----------- ----------- ----------- -----------Total non-current assets 361.8 173.1 534.9 319.7 190.3 510.0------------------------- ---------- ----------- ----------- ----------- ----------- -----------Current assetsTrade and other receivables 4.1 3.3 7.4 3.0 5.0 8.0Current tax assets - 0.1 0.1 - - -Cash and cashequivalents 46.5 11.1 57.6 49.1 10.6 59.7------------------------- ---------- ----------- ----------- ----------- ----------- -----------Total current assets 50.6 14.5 65.1 52.1 15.6 67.7------------------------- ---------- ----------- ----------- ----------- ----------- -----------Total assets 412.4 187.6 600.0 371.8 205.9 577.7------------------------- ---------- ----------- ----------- ----------- ----------- -----------Current liabilitiesBank overdraft - - - (0.4) - (0.4)Trade and other payables (4.2) (14.2) (18.4) (2.4) (17.4) (19.8)Loans and borrowings (102.1) (8.4) (110.5) (65.2) (8.5) (73.7)------------------------- ---------- ----------- ----------- ----------- ----------- -----------Total current liabilities (106.3) (22.6) (128.9) (68.0) (25.9) (93.9)------------------------- ---------- ----------- ----------- ----------- ----------- -----------Non-current liabilitiesLoans and borrowings - (148.9) (148.9) - (149.2) (149.2)Other financialliabilities(fair value ofderivatives) (0.3) (5.7) (6.0) - (5.3) (5.3)Deferred tax liabilities - (10.0) (10.0) - (14.7) (14.7)------------------------- ---------- ----------- ----------- ----------- ----------- -----------Total non-currentliabilities (0.3) (164.6) (164.9) - (169.2) (169.2)------------------------- ---------- ----------- ----------- ----------- ----------- -----------Total liabilities (106.6) (187.2) (293.8) (68.0) (195.1) (263.1)------------------------- ---------- ----------- ----------- ----------- ----------- -----------Net assets 305.8 0.4 306.2 303.8 10.8 314.6------------------------- ---------- ----------- ----------- ----------- ----------- ----------- Equity Shareholders'equity 305.8 (0.5) 305.3 303.8 7.3 311.1Minority interest - 0.9 0.9 - 3.5 3.5------------------------- ---------- ----------- ----------- ----------- ----------- -----------Total equity 305.8 0.4 306.2 303.8 10.8 314.6------------------------- ---------- ----------- ----------- ----------- ----------- -----------Net assets per share(pence) 122.3 (0.2) 122.1 121.5 2.9 124.4------------------------- ---------- ----------- ----------- ----------- ----------- ----------- Unaudited consolidated proforma cash flowfor the period ended 30 September 2007 Six months ended Period from 11 January 2006 30 September 2007 to 30 September 2006* Investment Consolidation Consolidated Investment Consolidation Consolidated basis adjustments IFRS basis basis adjustments IFRS basis £million £million £million £million £million £million------------------- ------- --------- --------- ------- -------- -------- Cash flows fromoperating activitiesProfit/(loss)before tax 10.1 (12.6) (2.5) 20.0 3.5 23.5Adjustments for:Gains oninvestments (14.7) 2.7 (12.0) (21.1) 2.2 (18.9)Losses/(Gains)on financereceivables - 6.4 6.4 - (8.4) (8.4)Interest payable and similarcharges 1.4 5.4 6.8 0.2 5.9 6.1Changes infair value ofderivatives 0.3 0.4 0.7 - (1.6) (1.6)Interest income (0.1) (0.2) (0.3) (0.9) (0.1) (1.0)Amortisationof intangibleassets - 1.1 1.1 - 1.1 1.1------------------- ------- --------- --------- ------- -------- --------Operating cashflow before changes in working capital (3.0) 3.2 0.2 (1.8) 2.6 0.8 Changes in workingcapital:(Increase)/decrease in receivables (0.1) 0.7 0.6 (0.2) (3.4) (3.6)Increase in payables 0.4 0.1 0.5 1.8 1.3 3.1------------------- ------- --------- --------- ------- -------- --------Cash flow fromoperations (2.7) 4.0 1.3 (0.2) 0.5 0.3------------------- ------- --------- --------- ------- -------- --------Interest received onbank depositsand financereceivables 0.1 3.7 3.8 1.0 3.2 4.2Cash receivedfrom financereceivables - 4.3 4.3 - 4.6 4.6Interest paid (0.4) (5.3) (5.7) (0.2) (6.3) (6.5)Corporationtax paid - (0.2) (0.2) - (0.2) (0.2)------------------- ------- --------- --------- ------- -------- --------Net cash fromoperatingactivities (3.0) 6.5 3.5 0.6 1.8 2.4------------------- ------- --------- --------- ------- -------- -------- Cash flows frominvesting activitiesPurchases ofinvestments (34.7) 0.1 (34.6) (195.0) 21.0 (174.0)Interestreceived oninvestments 5.2 (0.6) 4.6 1.9 (0.1) 1.8Dividendsreceived 0.5 (0.4) 0.1 0.4 (0.2) 0.2Fees and otheroperatingincome 0.1 - 0.1 0.9 - 0.9Acquisition ofsubsidiariesnet of cashacquired - - - - (7.2) (7.2)Purchase ofminorityinterests - - - - (2.1) (2.1)Loanstock andequityrepaymentsreceived 0.6 (0.1) 0.5 6.9 (0.4) 6.5------------------- ------- --------- --------- ------- -------- --------Net cash usedin investingactivities (28.3) (1.0) (29.3) (184.9) 11.0 (173.9)------------------- ------- --------- --------- ------- -------- -------- Cash flows fromfinancing activitiesProceeds fromissue of sharecapital - - - 246.1 - 246.1Proceeds fromissue of loansand borrowings 37.1 - 37.1 - 1.8 1.8Repayment ofloans andborrowings - (4.1) (4.1) - (4.0) (4.0)Distributionspaid toCompanyshareholders (8.1) - (8.1) - - -Distributionspaid tominorities - (0.8) (0.8) - (0.5) (0.5)------------------- ------- --------- --------- ------- -------- --------Net cash fromfinancingactivities 29.0 (4.9) 24.1 246.1 (2.7) 243.4------------------- ------- --------- --------- ------- -------- --------Net (decrease)/increase in cashand cashequivalents (2.3) 0.6 (1.7) 61.8 10.1 71.9------------------- ------- --------- --------- ------- -------- --------Cash and cashequivalents atbeginning ofperiod 13.8 10.3 24.1 - - -------------------- ------- --------- --------- ------- -------- --------Cash and cashequivalents atend of period 11.5 10.9 22.4 61.8 10.1 71.9 * Restated to reflect the adoption of the principles of IFRIC 12. SeeNote 2 of the Notes to the condensed consolidated financial statements for further details. Notes to the unaudited consolidated proforma financial statementsfor the period ended 30 September 2007 1. Investments The valuation of the Group's portfolio at 30 September 2007 reconciles to thecondensed consolidated balance sheet as follows: 30 September 31 March 2007 2007 £million £million---------------------------- ------------- ------------- Portfolio valuation 384.1 342.0Less : undrawn loanstock commitments (22.3) (22.3)---------------------------- ------------- -------------Portfolio valuation on an investment basis 361.8 319.7Less : equity and loanstock investments inoperating subsidiaries eliminated onconsolidation (27.3) (25.8)---------------------------- ------------- -------------Investments per audited consolidatedbalance sheet 334.5 293.9---------------------------- ------------- ------------- Directors' statement of responsibilities The Directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 Interim Financial Reporting, as adopted bythe European Union, and that the Interim management report includes a fairreview of the information as required by 4.2.7 and 4.2.8 of the Disclosure andTransparency Rules. The Directors of HICL are stated in the Group's Annual Report for the periodfrom 11 January 2006 to 31 March 2007. On behalf of the Board G PickenChairman19 November 2007 Independent review report to HSBC Infrastructure Company Limited (HICL) We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30September 2007 which comprise the Condensed Income Statement, the CondensedStatement of Changes in Shareholders' Equity, Condensed Balance Sheet, CondensedCash Flow Statement and the related notes. We have read the other informationcontained in the half yearly financial report and considered whether it containsany apparent misstatements or material inconsistencies with the information inthe condensed set of financial statements. This report is made solely to the Company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the Disclosureand Transparency Rules ("the DTR") of the UK's Financial Services Authority("the UK FSA"). Our review has been undertaken so that we might state to theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the Directors. The Directors are responsible for preparing the half-yearlyfinancial report in accordance with the DTR of the UK FSA. As disclosed in note 2, the annual financial statements of the Company areprepared in accordance with IFRSs as adopted by the EU. The condensed set offinancial statements included in this half-yearly financial report has beenprepared in accordance with International Accounting Standard 34, InterimFinancial Reporting, as adopted by the EU. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the period ended 30 September 2007 is not prepared, in all materialrespects, in accordance with International Accounting Standard 34 as adopted bythe EU and the DTR of the UK FSA. KPMG Channel Islands LimitedChartered Accountants20 New Street, St Peter PortGuernsey GY1 4AN 19th November 2007 Condensed consolidated income statementfor the period ended 30 September 2007 -------------------------- ------ -------- --------- -------- ----- -------- -------- -------- Six months ended Period from 11 January 2006 30 September 2007 to 30 September 2006* Unaudited Unaudited Note Revenue Capital Total Revenue Capital Total £million £million £million £million £million £million -------------------------- ------ -------- --------- -------- ----- -------- -------- -------- Services revenue 10.6 - 10.6 10.2 - 10.2(Losses)/Gains on financereceivables 1.6 (8.0) (6.4) 3.1 5.3 8.4Gains on investments 7.9 4.1 12.0 5.9 13.0 18.9-------------------------- ------ -------- --------- -------- -------- -------- --------Total income 20.1 (3.9) 16.2 19.2 18.3 37.5 Services costs (8.1) - (8.1) (8.2) - (8.2)Administrative expenses 3 (3.4) - (3.4) (2.3) - (2.3)-------------------------- ------ -------- --------- -------- -------- -------- --------Profit before net financecosts and tax 8.6 (3.9) 4.7 8.7 18.3 27.0 Finance costs (6.8) (0.7) (7.5) (6.1) 1.6 (4.5)Finance income 0.3 - 0.3 1.0 - 1.0-------------------------- ------ -------- --------- -------- -------- -------- --------Profit/(loss) before tax 2.1 (4.6) (2.5) 3.6 19.9 23.5 Income tax (expense)/credit (1.2) 4.2 3.0 (0.3) (1.2) (1.5)-------------------------- ------ -------- --------- -------- -------- -------- --------Profit for the period 0.9 (0.4) 0.5 3.3 18.7 22.0-------------------------- ------ -------- --------- -------- -------- -------- -------- Attributable to: Equity holders of the parent 2.3 - 2.3 4.6 16.7 21.3Minority interests (1.4) (0.4) (1.8) (1.3) 2.0 0.7-------------------------- ------ -------- --------- -------- -------- -------- -------- 0.9 (0.4) 0.5 3.3 18.7 22.0 -------------------------- ------ -------- --------- -------- -------- -------- -------- Earnings per share - basicand diluted (pence) 4 0.9 - 0.9 1.8 6.7 8.5 * Restated to reflect the adoption of the principles of IFRIC 12. See Note 2 ofthe Notes to the condensed consolidated financial statements for furtherdetails. All results are derived from continuing operations. See Note 2 of Notes to thecondensed consolidated financial statements for the definition of revenue andcapital items. Condensed consolidated balance sheetas at 30 September 2007 30 September 2007 31 March 2007 Unaudited Audited--------------------------- ----- ------------ ----------- Note £million £million--------------------------- ----- ------------ -----------Non-current assetsInvestments at fair value throughprofit or loss 8 334.5 293.9Finance receivables at fair valuethrough profit or loss 163.2 176.2Intangible assets 29.1 30.1Deferred tax assets 8.1 9.8--------------------------- ----- ------------ -----------Total non-current assets 534.9 510.0--------------------------- ----- ------------ ----------- Current assetsTrade and other receivables 7.4 8.0Current tax assets 0.1 -Cash and cash equivalents 57.6 59.7--------------------------- ----- ------------ -----------Total current assets 65.1 67.7--------------------------- ----- ------------ ----------- Total assets 600.0 577.7--------------------------- ----- ------------ ----------- Current liabilitiesBank overdraft - (0.4)Trade and other payables (18.4) (19.8)Loans and borrowings (110.5) (73.7)--------------------------- ----- ------------ -----------Total current liabilities (128.9) (93.9)--------------------------- ----- ------------ ----------- Non-current liabilitiesLoans and borrowings (148.9) (149.2)Other financial liabilities (fair valueof derivatives) (6.0) (5.3)Deferred tax liabilities (10.0) (14.7)--------------------------- ----- ------------ -----------Total non-current liabilities (164.9) (169.2)--------------------------- ----- ------------ -----------Total liabilities (293.8) (263.1)--------------------------- ----- ------------ -----------Net assets 306.2 314.6--------------------------- ----- ------------ ----------- EquityOrdinary share capital 25.0 25.0Retained reserves 280.3 286.1--------------------------- ----- ------------ -----------Total equity attributable to equityholders of the parent 305.3 311.1Minority interests 0.9 3.5--------------------------- ----- ------------ -----------Total equity 306.2 314.6--------------------------- ----- ------------ -----------Net assets per share (pence) 6 122.1 124.4--------------------------- ----- ------------ ----------- Condensed consolidated statement of changes in shareholders' equityfor the period ended 30 September 2007 Six months ended 30 September 2007 ------------------ ------------------------------ Unaudited -------------------- Attributable to equity holders of the parent ------- ------- --------- Share capital Retained Total reserves shareholders' Minority Total equity interests equity £million £million £million £million £million------------------ ------- ------- --------- ------- ------Profit for theperiod - 2.3 2.3 (1.8) 0.5Surplus arising on - - - - -purchase of minority interests------------------ ------- ------- --------- ------- ------Total recognisedincome and expense for the period - 2.3 2.3 (1.8) 0.5------------------ ------- ------- --------- ------- ------ Shareholders'equity at 31March / 11January 25.0 286.1 311.1 3.5 314.6 Minority share of - - - -acquired businessesDistributionspaid toCompanyshareholders - (8.1) (8.1) - (8.1)Distributionspaid tominorities - - - (0.8) (0.8)Ordinary shares - - - - -issuedCosts of share issue - - - - -Transfer** - - - - ------------------- ------- ------- --------- ------- ------Shareholders' equity at 30 September 25.0 280.3 305.3 0.9 306.2------------------ ------- ------- --------- ------- ------ Condensed consolidated statement of changes in shareholders' equity continuedfor the period ended 30 September 2007 Period 11 January 2006 to 30 September 2006* Unaudited --------------------------- Attributable to equity holders of the parent --------------------------- Share capital Share Retained Total reserves shareholders' Minority Total equity interests equity Premium** £million £million £million £million £million £million ------------------ ------- -------- ------- ---------- ------- ------- Profit for theperiod - - 21.3 21.3 0.7 22.0Surplusarising onpurchase ofminorityinterests - - 0.2 0.2 (0.5) (0.3)------------------ ------- -------- ------- ---------- ------- -------Totalrecognisedincome andexpense forthe period - - 21.5 21.5 0.2 21.7------------------ ------- -------- ------- ---------- ------- ------- Shareholders' - - - - - -equity at 31 March/ 11 January Minority shareof acquiredbusinesses - - - - 1.3 1.3Distributions paid - - - - - -to CompanyshareholdersDistributionspaid tominorities - - - - (0.5) (0.5)Ordinaryshares issued 25.0 225.0 - 250.0 - 250.0Costs of shareissue - (3.9) - (3.9) - (3.9)Transfer** - (221.1) 221.1 - - ------------------- ------- -------- ------- ---------- ------- -------Shareholders'equity at 30September 25.0 - 242.6 267.6 1.0 268.6------------------ ------- -------- ------- ---------- ------- ------- * Restated to reflect the adoption of the principles of IFRIC 12. See Note 2 ofNotes to the condensed consolidated financial statements for further details ** The share premium account was cancelled by Court order on 21 July 2006 andthe balance of £221.1million transferred to a new, distributable reserve whichhas been combined with retained earnings in these accounts. Condensed consolidated cash flow statementfor the period ended 30 September 2007 Six months Period 11 ended 30 January 2006 to September 2007 30 September 2006 Unaudited Unaudited*--------------------------- ----- ------------ ------------- £million £million--------------------------- ----- ------------ ------------- Cash flows from operating activities(Loss)/Profit before tax (2.5) 23.5Adjustments for:Gains on investments (12.0) (18.9)Losses/(Gains) on financereceivables 6.4 (8.4)Interest payable andsimilar charges 6.8 6.1Changes in fair value ofderivatives 0.7 (1.6)Interest income (0.3) (1.0)Amortisation of intangibleassets 1.1 1.1--------------------------- ----- ------------ -------------Operating cash flow beforechanges in working capital 0.2 0.8 Changes in working capital:Increase in receivables 0.6 (3.6)Increase in payables 0.5 3.1--------------------------- ----- ------------ -------------Cash flow from operations 1.3 0.3 Interest received onbank deposits and financereceivables 3.8 4.2Cash received from financereceivables 4.3 4.6Interest paid (5.7) (6.5)Corporation tax paid (0.2) (0.2)--------------------------- ----- ------------ -------------Net cash from operatingactivities 3.5 2.4--------------------------- ----- ------------ ------------- Cash flows from investing activitiesPurchases of investments (34.6) (174.0)Interest received on investments 4.6 1.8Dividends received 0.1 0.2Fees and other operatingincome 0.1 0.9Acquisition of subsidiariesnet of cash acquired - (7.2)Purchase of minorityinterests - (2.1)Loanstock and equityrepayments received 0.5 6.5--------------------------- ----- ------------ -------------Net cash used in investingactivities (29.3) (173.9)--------------------------- ----- ------------ ------------- Cash flows from financing activities Proceeds from issue of sharecapital - 246.1Proceeds from issue of loansand borrowings 37.1 1.8Repayment of loans andborrowings (4.1) (4.0)Distributions paid toCompany shareholders (8.1) -Distributions paid tominorities (0.8) (0.5)--------------------------- ----- ------------ -------------Net cash from financingactivities 24.1 243.4--------------------------- ----- ------------ -------------Net(decrease)/increase in cash and cashequivalents (1.7) 71.9--------------------------- ----- ------------ -------------Cash and cash equivalents atbeginning of period 24.1 ---------------------------- ----- ------------ -------------Cash and cash equivalents atend of period** 22.4 71.9 * Restated to reflect the adoption of the principles of IFRIC 12. See Note 2 ofthe Notes to the condensed consolidated financial statements for furtherdetails.** At 30 September 2007, £35.2million of bank balances was subject tocontractual restrictions limiting the usage solely to service of debt. Notes to the condensed consolidated financial statementsfor the period ended 30 September 2007 1. Reporting entity HSBC Infrastructure Company Ltd (the "Company") is a company domiciled inGuernsey, Channel Islands, whose shares are publicly traded on the London StockExchange. The interim condensed consolidated financial statements of the Company(the "interim statements") as at and for the period ended 30 September 2007comprise the Company and its subsidiaries (together referred to as "the Group").The Group invests in infrastructure projects in the UK and Europe. Certain items of the accounting policies apply only to those investments of theGroup which are classified for accounting purposes as subsidiaries ("theoperating subsidiaries"). Where applicable, this is noted in the relevantaccounting policy note. 2. Key accounting policies Basis of preparation The interim condensed consolidated financial statements were approved by theBoard of Directors on 19 November 2007. The interim statements have been prepared using accounting policies consistentwith International Financial Reporting Standards ("IFRS") as adopted by theEuropean Union ("EU") and in accordance with International Accounting Standard("IAS") 34 'Interim Financial Reporting'. The interim financial statements have been prepared using the historical costbasis, except that the following assets and liabilities are stated at their fairvalues: derivative financial instruments and financial instruments classified atfair value through profit or loss. The interim statements are presented insterling, which is the Company's and the subsidiaries functional currency. The same accounting policies, presentation and methods of computation arefollowed in these interim statements as were applied in the preparation of theGroup's financial statements for the period from 11 January 2006 to 31 March2007, except for the adoption of new Interpretations, noted below. Adoption ofthese Interpretations did not have any effect on the financial position orperformance of the Group. •IFRIC 8 'Scope of IFRS 2' •IFRIC 9 'Reassessment of Embedded Derivatives' •IFRIC 10 'Interim Financial Reporting and Impairment' •IFRIC 11/IFRS 2 'Group and Treasury Share Transactions' Supplementary information has been provided analysing the income statementbetween those items of a revenue nature and those of a capital nature, in orderto better reflect the Group's activities as an investment company. Those itemsof income and expenditure which relate to the interest and dividend yield ofinvestments and annual operating and interest expenditure are shown as"revenue". Those items of income and expenditure which arise from changes in thefair value of investments, finance receivables and derivative financialinstruments are recognised as capital. The group's financial performance does not suffer materially from seasonalfluctuations. Notes to the condensed consolidated financial statementsfor the period ended 30 September 2007 2. Key accounting policies (continued) Change to previously reported results Comparative information has been presented for the period from 11 January 2006to 30 September 2006. Certain items in the comparatives have been restated toreflect the adoption of the principles of International Finance ReportingInterpretations Committee Interpretation 12 'Service Concessions Arrangements'in the Group's financial statements for the period from incorporation to 31March 2007. Also, certain items in the comparative figures have beenreclassified in order to be consistent with the line disclosures made in thosereport and accounts. The impact on previously reported results of these changes is set out below: Period from 11 January 2006 to 30 September 2006 As previously Adjusted * ---------------------- reported -------------- -------------- £million £million ---------------------- -------------- -------------- Total income 41.7 37.5 Profit for the period 22.3 22.0 Net cash from operating activities 5.6 2.4 Net cash used in investing activities (177.1) (173.9) Net assets 269.7 268.6 ---------------------- -------------- -------------- *Adjusted figures include both the restatement and reclassification amendments 3. Administrative Expenses Six months ended Period from 11 January 2006 30 September 2007 to 30 September 2006 £million £million ----------------------- ------------ ---------------- Audit & Accounting 0.1 0.1Advisory fees 0.1 0.1Management fees 2.1 1.6Investment fees 0.4 -Director's fees 0.1 0.1Professional fees 0.2 0.2Other fees 0.4 0.2----------------------- ------------ ---------------- 3.4 2.3 ----------------------- ------------ ---------------- Notes to the condensed consolidated financial statementsfor the period ended 30 September 2007 4. Earnings per share and Diluted earnings per share Basic and diluted earnings per share is calculated by dividing the profitattributable to equity shareholders of the Company by the weighted averagenumber of ordinary shares in issue during the period. Six months Period 11 ended 30 January 2006 to September 2007 30 September 2006 £million £million--------------------------- ----------- -------------Profit attributable to equityholders of the Company 2.3 21.3 Weighted average numberof ordinary shares in issue 250.0 250.0 Basic and diluted earnings pershare (pence) 0.9 8.5--------------------------- ----------- ------------- 5. Interim distribution The Board has proposed an interim distribution for the period ended 30 September2007 of 3.05 pence per share (30 September 2006: 2.875 pence per share) whichwill result in a total distribution of £7.6million, payable on 27 December 2007.The interim distribution has not been included as a liability as at 30 September2007. The 2007 final distribution of £8.1million, representing 3.225 pence per share,was paid on 26 June 2007 and is included in the condensed consolidated statementof changes in shareholders' equity. 6. Net assets The calculation of net assets per share is based on shareholders' equity of£305.3million at 30 September 2007 and 250million ordinary shares in issue atthat date. 7. Tax Income tax for the six month period includes a current period tax charge of£0.1million, off-set by a deferred tax credit of £2.8million and a £0.3millioncredit adjustment due to the change in UK corporate tax rate from 30.0% to 28.0%(2006: current tax charge of £0.1million and deferred tax charge of£1.4million). The current period charge of £0.1million is a charge representingthe best estimate of the average annual effective income tax rate expected forthe full year, applied to the pre-tax income of the six month period. Under the current system of taxation in Guernsey, the Company itself is exemptfrom paying taxes on income, profits or capital gains. Anticipated tax benefitsof this type of income for the full year are reflected in computing theestimated annual effective income tax rate. Notes to the condensed consolidated financial statementsfor the period ended 30 September 2007 8. Investments at fair value through profit or loss 30 September 31 March 2007 2007 £million £million------------------------ ------------- -------------Acquisition of Initial Portfolio - 170.6Opening balance 293.9 -Investment in the period 36.5 78.6Accrued interest 2.0 4.7Repayments in the period (0.5) (8.8)Gain on valuation 4.6 49.8Other movements (2.0) (1.0)------------------------ ------------- -------------Carrying amount at period end 334.5 293.9------------------------ ------------- ------------- Gain on valuation as above 4.6 49.8Less : transaction costs incurred (0.5) (1.5)------------------------ ------------- -------------Gains on investments 4.1 48.3------------------------ ------------- ------------- The Investment Adviser has carried out fair market valuations of the investmentsas at 30 September 2007. The valuation has been prepared in accordance with theEuropean Venture Capital Association's Valuation Guidelines, using theDiscounted Cash Flows methodology, which it considers to be the most appropriatevaluation method. 9. Purchase of investment holding company In August 2007 the Group acquired a 50.0% interest in the equity and theloanstock of four police PFI projects, through the acquisition of 100.0%interest in the vendor's investment holding company. The total considerationpaid in cash for the interest in this project was £36.5million. This transaction did not constitute a business combination and therefore theconsideration was allocated between the individual assets and liabilities in theinvestment holding company based on their relative fair values at the date ofacquisition. 10. Loans and borrowings In August 2007, the Group renegotiated its unsecured bank loan held with HSBCBank plc, increasing the loan facility to £107.5million. The loan is repayablein full within one year and bears interest at 1.0% above the banks sterling baserate. As at 30 September 2007, £67.2million of the loan had been drawn down. At the same date, the Group also renegotiated its £35.0million secured and£5.0million unsecured bank borrowings held with HSBC Bank plc. The loans bearinterest at market rates and are repayable within 1 year. Repayments of other secured bank borrowings amounting to £3.7million were madein line with previously disclosed repayment terms. Notes to the condensed consolidated financial statementsfor the period ended 30 September 2007 11. Share capital and reserves Ordinary share capital at 30 September 2007 amounted to £25.0million. There wereno movements in the share capital of the Company during the current interimreporting period. During the prior interim period, the Company issued 250million ordinary sharesraising a gross amount of £250.0million, £246.1million after issue expenses. The share premium account was cancelled by Court order on 21 July 2006 and thebalance of the account of £221.1million, was transferred to a new, distributablereserve which has been combined with retained reserves in these accounts. 12. Related party transactions HSBC Specialist Fund Management Ltd ("HSFML") is the Company's InvestmentAdviser and the Operator of a limited partnership through with the Company holdsits investments. The total Operator fees charged to the Income Statement was£1.9million of which the balance remained payable at period end (2006£1.4million). The fee payable to the Operator for new portfolio investments inthe period was £0.4million (2006 nil). The following summarises the transactions between the Group and its associatesand joint ventures in the period: Transactions Balance Six months Period from 30 September 31 March ended 2007 2007 30 September 11 January 2006 2007 to 30 September 2006 £million £million £million £million--------------- ----------- ------------ --------- ---------Loanstockinvestments 9.9 125.8 170.6 162.2Loanstockrepayments (0.6) (7.8) - -Outstandingsubscriptionobligations - - (22.3) (22.3)Loanstockinterest 6.4 4.8 7.1 4.7Dividendsreceived 0.1 0.2 - -Fees and otherincome 0.1 0.9 - ---------------- ----------- ------------ --------- --------- The Group had total borrowing facilities of £147.5million with HSBC Bank plc ofwhich £102.2million had been drawn down at 30 September 2007. The Group also hada £22.3million letter of credit facility, of which the full amount was utilisedat period end. Total fees and interest of £1.4million relating to thesefacilities has been charged to the Income Statement in the period. The Group had total cash holdings with HSBC Bank plc at 30 September 2007 of£53.2million. Total interest income earned from cash holdings held with HSBCBank plc for the period was £0.3million. All of the above transactions were undertaken on an arm's length basis. Notes to the condensed consolidated financial statementsfor the period ended 30 September 2007 13. Guarantees and other commitments As at 30 September 2007 the Group was committed to subscribing a further£22.3million to project investments and one of the subsidiaries had capitalcommitments of £0.4million contracted for but not provided for in thesefinancial statements. 14. Events after balance sheet date On 9 October 2007, the Company completed the acquisition for £30.2million of50.0% interests in five education projects, and 50.0% interest in the Health andSafety Executive's Merseyside headquarters. The transaction was structuredthrough a new joint venture with Kajima Partnerships Ltd, a subsidiary of KajimaCorporation. This information is provided by RNS The company news service from the London Stock Exchange