Quadrise Regulatory News (QED)

1 Oct 2009 07:00



1 October 2009

Quintain Estates & Development plc

("Quintain" / "Company" / "Group")

TRADING UPDATE

Quintain Estates and Development plc sets out below a trading update for the six months to 30 September 2009, ahead of its half year results announcement in November.

Although there is some evidence that market conditions are beginning to improve, we continue to manage the business in line with the priorities stated in our Interim Management Statement on 5 August 2008. These are:

Firm management of risk

Strengthened focus on preserving cash

Selective exploitation of the strongest value-creating opportunities.

Finance

Further to the successful repatriation of £97.5m of cash during the year to 31 March 2009, Quintain announced in the trading update on 1 April 2009 that the cash repatriation programme would be extended into the 2009/2010 financial year with a target of realising an additional £50m of cash by 31 March 2010. Significant progress has already been made towards this target during the first half of the financial year, with the amount repatriated over this period totalling £43.5m, taking the total cash repatriated since the start of the programme to £141.0m.

We are also pleased to announce that, having injected £83.3m of our Investment Portfolio into a vehicle as the seeding property for a new fund, Quintain has received £49.0m from refinancing and initial equity. The cash has initially been used to pay down corporate debt, thereby significantly increasing headroom on the corporate gearing covenant. Our intention is to introduce further third party equity into the fund over the course of the next year. 

Following the amendment in March 2009 of Quintain's loan facilities, which extended gearing covenant headroom, we have now secured agreement from all drawn banks that the Company may elect to exclude any losses on sales from the interest cover covenant, provided that the net proceeds are used to pay down and cancel debt facilities. This arrangement runs concurrently with the March amendment and gives Quintain further financial flexibility.

Despite the recent challenging market conditions, Quintain's underlying business remains sound with rental collection, including the three tenants in administration, at 96.5% prior to the September quarter day, compared with 99.5% at the same point last year. 

With significant further sums of cash repatriated to the Company, £49m of corporate debt paid down, and the option secured to extend gearing covenants and exclude any losses on sales from the interest covenant, Quintain's financial position continues to strengthen. 

Key Events

Our healthcare fund, Quercus, has continued to perform well relative to the market, delivering a fund level return in the quarter to June of 0%, a property level return of 0.7% and a distribution yield of 2.5%. Over the period £58.8m of sales have been made at an average of 2.5% below most recent valuations. 

In September, Quintain received notification from the Secretary of State for the Environment that the 16 acre Flemingate scheme, of which we own 19%, has been awarded outline planning consent. This is a major step forward for the brownfield site regeneration which is located immediately to the west of the existing town centre in Beverley. Significant interest in the residential component of the scheme has been received from housebuilders and work will now start on the application for detailed planning consent for phase one. 

Construction of the first phase of OneBrighton, which is a zero carbon development being delivered in joint venture with Crest Nicholson, was completed in September. 51 homes have been handed over to Moat Housing Association, the sales of 19 of the private homes within the first release have already been completed and residents have started to occupy the building.

Momentum continues to build at Greenwich Peninsula, with 1,800 Transport for London employees taking occupation of the first commercial building in August, the construction of Ravensbourne College on schedule to complete in time for the start of the 2010 academic year, and construction of the first residential plot now being undertaken by Bellway in the south east of the Peninsula.

At Wembley City, it is anticipated that Summit Hotels will begin demolition in October on the site of the new hotel for the Quintain / Summit joint venture announced in April 2009. The building is due for completion by the end of 2011. In addition, final stage negotiations are underway for the construction contract regarding the infrastructure to supply plot W05 and the Western Core. 

In September, the Board announced the appointment of William Rucker, Chief Executive Officer of Lazard London, as Chairman Designate, succeeding John Plender as Chairman from today. John will remain a Non-Executive Director of the Company until 31 March 2010, at which point he will have served almost eight years on the Board of Quintain. William's appointment brings exceptional financial expertise to the Board, together with a deep knowledge and understanding of the business.

Adrian Wyatt, Chief Executive of Quintain, said:

"Last year we set out a clear strategy to guide Quintain through the most challenging market conditions in living memory. The measures we have taken were carefully considered and it is pleasing that we have implemented them successfully whilst keeping the Company's major strategic interests intact. With a total of £141m of cash repatriated to date, new flexibility in our interest cover covenants, enhanced protection of our extended gearing covenant headroom and today's news of £49.0m being unlocked through the seeding of a new fund, our financial position continues to gain strength."

For further information, please contact:

Quintain Estates & Development plc

Rebecca Worthington / Cressida Curtis

Tel: +44 (0) 20 7495 8968

Financial Dynamics

Stephanie Highett / Dido Laurimore / Laurence Jones 

Tel: +44 (0) 20 7831 3113

Forward looking statements

This announcement is for information purposes only and it may contain certain forward looking statements. By their nature forward looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward looking statements.

Any forward looking statements made by or on behalf of Quintain speak only as at the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Quintain does not undertake to update forward looking statements to reflect any changes in Quintain's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this announcement relating to the Company should not be relied upon as an indicator of future performance.