- Loss before tax was £888.8m, compared with a profit of £1,979.1m a year ago
- The ‘loss before tax’ includes the revaluation deficit on our investment properties of £1,304.5m
- Revenue profit, our measure of underlying profit before tax, decreased from £392.2m to £379.1m
- Adjusted diluted earnings per share showed a 16.4% increase on last year to 81.71p (2007: 70.20p)
The Group’s loss before tax was £888.8m, compared to a profit of £1,979.1m a year ago. The loss before tax includes the revaluation deficit on our investment properties of £1,304.5m (2007: £1,382.7m surplus). Revenue profit, our measure of underlying profit before tax, decreased from £392.2m to £379.1m. Earnings per share decreased from 753.59p last year to a loss per share of 188.80p, with adjusted diluted earnings per share showing a 16.4% increase on last year to 81.71p (2007: 70.20p).
The combined investment portfolio decreased in value from £14.8bn to £13.6bn. This included a valuation deficit of £1,279.6m or 8.8%. Net assets per share decreased by 10.3% to 2067p from 2304p, with adjusted diluted net assets per share decreasing by 10.3% to 1956p (2007: 2181p).
(Loss)/profit before tax
The main drivers of our loss before tax are the change in value of our investment portfolio (including any profits or losses on disposal of properties), our net rental income, the performance of our Trillium business, and the amount of interest we paid. The degree to which movement on these and other items led to the reduction in our profit before tax from £1,979.1m last year to a loss of £888.8m this year, is explained in Table 6 below:
table 6
Table 6
Principal changes in profit before tax and revenue profit
| |
Profit/(loss)
before tax
£m |
Revenue
profit
£m |
| Year ended 31 March 2007 |
1,979.1 |
392.2 |
| Valuation deficit |
(2,687.2) |
– |
| Profit on disposal of non-current properties |
(50.1) |
– |
| Profit on sale of trading properties |
(2.5) |
– |
| Amortisation of bond derecognition1 |
9.5 |
– |
| Long-term development contract profits2 |
(12.3) |
– |
| Net rental and service charge income3 |
7.9 |
7.9 |
| Indirect costs |
1.5 |
1.5 |
| Trillium operating profit (including joint ventures)4 |
34.6 |
34.6 |
| Interest associated with PPP investments5 |
(42.0) |
(42.0) |
| Other Trillium interest6 |
(18.9) |
(18.9) |
| Other interest7 |
3.8 |
3.8 |
| Demerger costs8 |
(9.8) |
– |
| Debt restructuring charges |
17.3 |
– |
| Joint venture tax adjustment |
(79.9) |
– |
| Interest rate swaps |
(39.8) |
– |
| Year ended 31 March 2008 |
(888.8) |
379.1 |
- The debt instruments issued as part of the refinancing in November 2004 do not meet the requirements of IAS 39 as they are not deemed to be substantially different from the debt they replaced. As a result, the book value of the new instruments is reduced to the book value of the debt it replaced and the difference is amortised over the life of the new instruments. The decrease in amortisation over the comparable period is a reflection of the maturity profile of debt replaced.
- 2007 benefited from the first time recognition of profits on the BBC Broadcasting House contract.
- Increased as a result of completed developments and like-for-like rental income growth, partially offset by properties sold.
- Increase is mainly due to DWP contract and Accor hotels. See Table 42 for details.
- Interest cost associated with acquiring PPP investments on which no revenue is recognised.
- Increased costs due to higher average capital employed, principally associated with Royal Mail and Accor.
- Relates to property investment business and Group. Lower interest costs due to net sales of investment properties, offset by interest on REIT entry charge and movement to quarterly dividends.
- All costs related to the proposed demerger were expensed during the year but do not form part of the calculation of revenue profit.
