Mr. Seamus McCarthy:

Cashflows are projections of events that will happen in the future using the best knowledge available to the entity at the time. Nobody has a crystal ball telling him or her what exactly will happen and, therefore, what the result will be. It is a tool for decision making. What one expect is that the best effort willl be made to say, "We have one strategy here, which is available to us, which is effectively what NAMA was set up for. It was set up to make sure we do not have to take prices from the market at any point in time. We have relatively inexpensive capital that will allow us to hold them and work them out." That was the strategy.

On the question about cashflows and whether there was an undervaluation, there may be a difficulty with an impairment exercise that is not founded on regular valuation of the property and it may not be right. We put a considerable effort into testing it to see that if changes were made, they were appropriate and only changes that were appropriate and supported by evidence to reflect what had actually happened. It is NAMA's policy - it stated this and we referred to it in the report - to take a conservative view about the future. If the market starts to feel there is an upside coming, NAMA does not necessarily respond and reflect this in the cashflows.

There were a couple of issues we picked up. In the offer in December, I believe it was the letter of the 4 December from PIMCO, there is a reference to an expectation that the market has bottomed out here and that they wanted to be in for whatever growth opportunity was coming. So, there is that risk with cashflows. The thing that anchors the value before one goes to a loan sale is the valuation of the underlying property. If one compares Project Eagle to Project Arrow - and in fact it is in NAMA's policy for loan sales that one gets a current market valuation - they got valuations for Project Arrow and the values that property valuers told them at that time, for those assets, were actually higher than were in the cashflows. Applying the potential purchaser's discount they still ended up with a higher value than they were projecting with their own cashflows. The anchor that is needed is the valuation of the underlying property collateral.