Mr. Walker: There are three strands to the FairBriar business. Essentially and traditionally FairBriar has been known as a residential house builder/developer. Increasingly, in the last few years it has been very highly focused on a particular segment of the market, which is defined by it being in central London, high margin and in some ways quite a specialist product. We tend to achieve a margin of about 25%, which is one of the highest if not the highest in the sector. A number of reasons we are able to do that is we take on sites in the center of town and develop them very well. Also, it is a strategic view. We are not able to hold a big land bank because of the cost of doing that in central London would be prohibitive and uneconomical. So, we are always looking for sites with the best value. The point being, if people are talking about the market becoming overheated, if there is a reversal, then provided you've got a healthy margin you can afford for it to come back. Where as, if you are in the volume game, it is quite tough. So, that is a strategic aim. There are essentially two elements to the development side. There is the large city center schemes of which we have done a 69-unit scheme in Stanhope Gardens, which overlooks the gardens. It is located almost opposite the Natural History Museum and is within a mile from Harrod's. We have an 89-unit development in the city right by the Tower of London, near Fenchurch Street station, which is coming to completion early next year. These are the sorts of bigger schemes in the center of town. We are about to start a scheme on a site in Islington Green which comprises 74-units and has been slightly complex in planning. It also has the actual set from the film "Shakespeare in Love" going in as a new theater in the site which makes it of quite special value. It is a building designed by Pierce Gough, the very eminent architect over here. So, again it is quite a high margin, special development and a complicated new deal to put together. That goes on site quite soon. We have just bought into a site in Wandsworth on the riverside to construct 315 apartments. There is also a social housing obligation for 107 units in a commercial element both of which should be sold on soon. We have done that as a joint venture with Centrepoint Properties of Singapore and London Town, a project manager, who have a very small stake and put the site together. Those are the bigger center of town schemes; we think there is a premium quality to each of them, being on the riverside, overlooking the park, the Green with the theater, et cetera. Because of this, if you do get hit by a big turn-around in the market you can still find a price for those things. It would not be quite as high in a strong market but(unintelligible) there is still likely to be a market for such a product. Whereas if you are paying a premium price for a secondary location, that is when you get into difficulties. There are also other schemes we do, sometimes as joint ventures, which are still relatively high margin projects. We have a 14-unit scheme in Ascot, another similar size one in Wapping and another one in Harrow on the Hill. Two of those are joint ventures with a partner, Macleod & Macleod, who we've done a number of schemes with in the past. So, they are similar, but one is a grade II listed building, which is being converted into flats. Then we will build some townhouses, which are slightly smaller in nature so it's actually like a different arm to the development business. But, it is highly focused and that works well. The interesting thing, which is somewhat of a new part of the company, which has evolved over the last 12 months, is the serviced apartment business. In the UK at present, serviced apartments are highly fragmented. No one has really established a branded chain with any significant market presence in the UK in the serviced apartment business and that is what we are seeking to do. It is quite a well-established market and hospitality business both in the US and the Far East. In the US it tends to be hoteliers who have gone into this area, in the Far East it is developers and hoteliers. What we have been seeking to do is get into this market both with some of our own product which we've developed, but also we have gone on a bit of a buying spree. We have bought in other people's product to build up our base of apartments to the point where we set out a goal on our previous annual report to get 1000 apartments under ownership by 2003. We find ourselves now well over 400 already. What we have done essentially in terms of trying to achieve that is have four principal properties because we see the economies of running these things as a little bit like a hotel. They are somewhere between a residential investment and a hotel in terms of cost and yield. We are very much at the premium end. Our property in Stanhope Gardens operates as 69 serviced apartments and was a major development for us. The type of people staying there are for exampleactors while they staring here in the west end stage. Being here for a number of weeks it is much nicer to stay in a luxurious apartment than in a hotel for an extended stay. We also have the captain of the Australian cricket team here as well. So, it is that type of quality product and you have a concierge and all the four to five star services that you would expect. Also, a lot of our business comes from US investment banks, such as JP Morgan and also from large global organisations such as KPMG. We have just acquired a building called Nell Gwynn House on Sloane Avenue, which is just adjacent to Sloane Square and has 124 service departments. It has been operating for about 20 years and was a family business, which we intend to re-brand as a FairBriar Residence. It hass slightly different units to our building in Stanhope Gardens; Nell Gwynn House are slightly smaller, studios, that sort of thing. Again, we can get the economies and it has space for a gym in the building and is a very large freehold block in the middle of Chelsea. Our development in the City we plan to operate as service departments as well, the 89 units on Pepys Street, which is the one adjacent to Tower Bridge and the Tower of London. The city is still very under-bedded hotel wise which makes it a good market for serviced departments. Earlier this year we effectively acquired control of 92 apartments adjacent to Canary Wharf. Again, that has been a spectacular success in terms of the office developments at Canary Wharf. Our units are the closest residential units to the new global headquarters of HSBC Tower and Citibank's European HQ, which is the million-odd square foot commercial tower block. So, we have 92 serviced departments in that part of town which we think is a good location and have space for a gym, et cetera and are quite focused on how we go about it. One or two operators have bought up a few units here and there and manage them on that basis. We have taken a view that we would rather have significant plots so that we can get some of the economies. Now that we have over 400 units in total we are well on the way to building one of the most significant businesses in this sector in London. What we have done to finance it, which is another strand to the business is to set up a limited partnership, which is funded by institutional investors. We are the general partner and in the long run will own about 10% of these partnership. With our first one we sold in the development in Stanhope Gardens we were able to recognize the development profit for it. We have pension fund type investors, such as Clerical Medical, the Coal pension fund here in the UK and the Bank of Scotland. They are all investors in that fund, which owns that building and several others to give them 106 apartments, but is managed by FairBriar Residence. So, we are still operating those and they are operating very well. It has been quite a trend in the UK for property companies to set up limited partnerships for the longer-term investor to fund them with the assets that have that profile. That is really what we have been doing and we now have sufficient further stock what we would like to do and are embarking on doing a further limited partnership fund. In terms of the financial profile for the company what it means is to balance the successful property development side, we have the repeatable earnings of if you like, asset management on the other side and the serviced apartment business, which has an earning stream more close to that of the hotel. So, we have a more balanced range of revenues and that is what makes FairBriar quite interesting at the moment in terms of the company at the valuation. Really, we are only rated as a house builder which compares with the other people in that sector who are focused on that, which is typically a single digit PE. Whereas the types of earning streams from asset management and serviced apartment operation merit, in our view probably be a double digit PE. That is where it is quite interesting for the future.
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