2010 Audited Results

RESULTS CONFIRM FURTHER RECOVERY

·; Growth in net rental income and earnings per share

- Net rental income increased by 4 per cent in total and 2 per cent like-for-like

- 15.4 pence adjusted earnings per share, up 2 per cent on 2009

·; Positive operational performance

- 181 long term lettings generating £28 million annual rent, an increase of £16 million from the previous rent

- Good letting progress at St David's, Cardiff, extension now 83 per cent committed by income (65 per cent on opening)

- Occupancy remains strong at 98.6 per cent (97.7 per cent including St David's, Cardiff)

- Footfall up a further 3 per cent like-for-like year on year, 6 per cent in two years

·; Property valuation improvement

- Valuation surplus 11 per cent, including 3 per cent in the second half, out-performing IPD

- NAV per share up 51 pence, 15 per cent up from demerger pro forma

- Total financial return including dividends for the year of 20 per cent

CORPORATE HIGHLIGHTS

·; Group transformed into the only pure UK prime shopping centre REIT through the successful demerger of Capital & Counties from Liberty International PLC (now Capital Shopping Centres Group PLC)

·; Placing of 62.3 million shares at 355 pence raising £221 million before costs

·; Debt to assets ratio 47 per cent and available financial headroom approximately £500 million (post Trafford Centre acquisition), no significant debt maturity until 2014

and in January 2011

·; Completion of the acquisition of The Trafford Centre

·; Completion of the C&C US transaction with Equity One

STRONGLY POSITIONED FOR GROWTH

·; CSC now owns 14 centres including 10 of UK's top 25 and 4 of the UK's top 6 out-of-town

·; Opportunity for growth in like-for-like net rental income - potential 18 per cent reversionary upside

·; Scope for valuation recovery to continue - valuation yields still above CSC long-run average

·; Potential for value creation through development and active management. Plans for investment (up to £600 million over the medium term) with potential to create at least 4,500 jobs for the regional economies in which CSC operates

·; Integration of The Trafford Centre - draw upon combined expertise to adopt strongest features and best operational practices of individual centres

·; Structural shift in UK retail towards pre-eminent destinations such as CSC's with strong leisure and catering offerings, new supply currently constrained.

(1) Please refer to glossary for definition of terms

(2) 2009 figures have been re-stated to remove the impact of the Capco business following the demerger in May 2010

(3) CSC's share of Liberty International PLC's 2009 dividend of 16.5 pence per share

Patrick Burgess, Chairman of CSC comments as follows:

"The 2010 results demonstrate that CSC's recovery is on track with increased like-for-like net rental income, improved operational performance and continuing property valuation surpluses. CSC has made some striking moves to redefine itself as the specialist REIT focused on pre-eminent UK regional shopping centres, including the demerger of Capco and the transformational acquisition of The Trafford Centre in January 2011.

CSC ends the year in a robust financial position with the debt to assets ratio at 48 per cent, around £500 million of financial headroom and a range of return enhancing organic opportunities which we intend to pursue vigorously. While the UK faces economic challenges over the next few years, CSC is well placed to achieve growth and superior shareholder returns."

Enquiries:

A presentation to analysts and investors will take place at 1 Finsbury Avenue, London EC2 at 09.30GMT on 23 February 2011. The presentation will also be available to international analysts and investors through a live audio call and webcast. The presentation will be available on the Group's website www.capital-shopping-centres.co.uk.

A copy of this announcement is available for download from our website at www.capital-shopping-centres.co.uk

NOTES TO EDITORS

CHAIRMAN'S STATEMENT

INTRODUCTION

A measure of confidence returned in 2010 to the markets in which Capital Shopping Centres Group PLC (CSC) operates and, along with it, a recovery in valuations and further increases in occupational market activity.

Against this backdrop, and with a very encouraging level of shareholder support, CSC has made some striking moves to redefine itself as the specialist REIT focused on pre-eminent regional shopping centres. The strategic clarity brought about by the separation in May of CSC and Capital & Counties Properties PLC (Capco) laid the foundations for what has been labelled the "transformational acquisition" of The Trafford Centre in January 2011.

CSC ended the year in a robust financial position. The combination of improved market values and November's capital raising brought the debt to assets ratio back to 48 per cent, within the Board's long-established objective of 40 to 50 per cent, and there are no significant debt maturities until 2014. With around £500 million of financial headroom, the company is in a strong position to progress its significant organic development opportunities.

In a year of intensive corporate activity we have asked a great deal of all our staff and they have responded with a level of energy and enthusiasm for which I and my fellow Directors are extremely grateful.

Demerger

In May we received shareholder approval for the creation of CSC, the only pure UK prime shopping centre REIT, through the successful demerger of Capco from Liberty International PLC (now CSC). The two strong and focused businesses, each with their own characteristics and different attractions, have both been received well and have started to demonstrate their capability as standalone businesses to execute their own significant strategic plans. It is satisfying to note that both have performed well independently since demerger in May.

The Trafford Centre

At last month's EGM shareholders approved the acquisition of The Trafford Centre, Manchester. This value-enhancing transaction not only strengthens CSC's industry position but enhances the overall quality of the Group's assets by its complementarity. It also extends CSC's ability to engage with the larger retail chains as a clear first choice nationally. After completion, which took place on 28 January 2011, CSC owns fourteen UK shopping centres, including ten of the top 25 centres and four of the top six out-of-town shopping centres.

As well as significantly increasing CSC's presence in the key North West regional retail market, the structure of the transaction creates an enduring relationship with John Whittaker, whose Peel Group is now a significant shareholder, and gives us the opportunity to adopt across the enlarged Group the best practices from both CSC and The Trafford Centre as we continue to focus on the management of shopping centres as attractive destinations.

Board

The demerger of Capco in May inevitably led to some changes in the composition of the Board. Ian Durant, Ian Hawksworth and Graeme Gordon stepped down to become, respectively, Chairman, Chief Executive and Non-Executive Director of Capco. I would like to thank them very much for their services to Liberty International PLC and wish them every success in their new roles.

We were joined in May by Matthew Roberts, who succeeded Ian Durant as Finance Director. Matthew is a Fellow of the Institute of Chartered Accountants in England and Wales and has a wide range of relevant experience at substantial companies in the retail and leisure sectors including Debenhams plc and Gala Coral Group Ltd.

I am also pleased to note formally that in the course of the year Richard Gordon, who has replaced Graeme Gordon, and John Abel, who has had a very successful career in the industry, joined the Board as Non-Executive Directors.

Following the EGM on 26 January 2011, John Whittaker has been appointed a Non-Executive Director and has taken up the position of Deputy Chairman of the Board. John is a highly regarded real estate investor with a passion for the shopping centre business and proven vision and development expertise. I have no doubt that his considerable wisdom and capabilities will prove invaluable to us as his colleagues on the Board as well as beneficial to all shareholders.

Dividends

The Directors are recommending a final dividend of 10.0 pence per share bringing the amount paid and payable in respect of 2010 to 15.0 pence, the same level as CSC's share of the 2009 Liberty International PLC dividend and covered by the adjusted earnings per share for 2010 of 15.4 pence. 5.0 pence per share of the final dividend will be paid as a Property Income Distribution subject to withholding tax. The Board's policy remains to pay a progressive dividend with an appropriate level of cover over adjusted earnings.

Economic contribution and corporate responsibility

CSC makes a significant economic contribution to the regions where its shopping centres are located. We estimate over 50,000 people are directly employed in CSC centres, with numerous other local businesses benefiting indirectly. Through the payment of business rates of around £150 million per annum, we and our tenants also make a major contribution to public finances. Our plans for around £600 million of capital expenditure on three major extensions and other active management projects will represent significant private sector investment with the potential to create an estimated 4,500 jobs at a time when the public sector is likely to be scaling back its capital expenditure plans.

CSC ranks as a leader in the property sector in corporate responsibility. We are committed to working closely with the communities served by our businesses and operating responsibly in terms of care for the environment, reduction in energy consumption and promotion of increased recycling of waste. We also encourage and support a large number of local community initiatives in the neighbourhoods of which we form part, in many of which I am glad to say our staff take a very active part. We have also made a contribution to society at a national level in sponsoring "Engaging Experience", an active and growing network between charity founders and executives on the one hand and young entrepreneurs and City workers on the other hand, facilitating an exchange of inspiration, skills, energies and resources in a sector of growing significance.

We continue to engage with a number of well-regarded benchmarking indices who monitor the environmental and community engagement activities of public companies and remain constituent members of FTSE4Good, JSE SRI Index, Dow Jones Sustainability Indexes, Corporate Responsibility Index and OEKOM. In November 2010, CSC became one of only 38 companies to have achieved the CommunityMark, developed by Business in the Community. The award is recognition of our innovative community programmes tailored to the locations where we operate and is due in large part to the dedication of CSC's staff and our community partners in responding to local issues and needs - what one might think of as part of a "Big-hearted Society".

Prospects

It is clear that business in the UK faces a series of challenges over the next couple of years and retailers and consumers remain cautious, not least about the effects of public sector austerity measures, tax increases and the price of commodities including fuel. In Autumn 2008 I expressed the opinion that, notwithstanding the gloom surrounding the recession into which the UK was being plunged, the economy would recover some convincing traction within a few years. Our present view of the most likely outcome is that the UK will experience a period of low growth rather than a "double dip".

What is clear is that this environment is not affecting all retail property equally. The strongest destinations are growing stronger as UK retail trade continues to concentrate. Prime destinations such as CSC's centres with strong leisure and catering offerings are key locations for retailers' flagship stores. With supply of new centres severely limited, successful UK and international retailers looking to their growth plans for the next couple of years are increasingly likely to compete for high profile, good quality space in those best centres.

The 2010 results demonstrate that CSC's recovery is on track with increased like-for-like net rental income, the key driver of growth in earnings and dividends, improved operational performance and continuing property valuation surpluses. The opportunities for value creation through development and active management described in the accompanying Business Review will be vigorously pursued and I look forward to progress through the planning stages of our major extensions to Victoria Centre, Nottingham, Lakeside, Thurrock and Braehead, Glasgow, as well as embarking on other active management projects. With the demand for space in the top 50 UK shopping centres increasing ahead of supply, a range of return-enhancing organic opportunities, a strongly reinforced corporate position and a reinvigorated approach to ensuring our assets are attractive for the shopping public as well as to investors, CSC is well placed to achieve growth.

With our clear and focused strategy, our unrivalled and irreplaceable assets and our robust financial position the Board is confident of CSC achieving superior shareholder returns.

Patrick Burgess

Chairman

23 February 2011

BUSINESS REVIEW

PROSPECTS AND PRIORITIES

CSC is strongly positioned for growth. Our three key areas of focus for 2011 to realise that potential, each of which is discussed below, are:

·; growth in like-for-like net rental income

·; value creation through continued enhancement of all CSC's centres as retail and leisure destinations by progressing our development and active management opportunities

·; integration of The Trafford Centre, drawing upon the combined expertise of the enlarged Group to adopt more broadly the strongest features and best operational practices of the individual centres and improve the performance of all the assets

Net rental income

Chart 1 illustrates considerable upside between contracted rent and the valuers' assessment of ERV. To view Chart 1, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

The potential to capture the additional 18 per cent in annual rent arises primarily from:

·; lease expiries, especially of concessionary short term lettings which represent 2 per cent of passing rent but 7 per cent of ERV, a £17 million opportunity

·; rent reviews, especially of MSUs and department stores which have experienced national rental growth due to increased demand (see Other Information section for review cycle)

·; vacancies, in particular at St David's, Cardiff, which is on track to be fully let by the end of 2011

An estimated 80 per cent of the reversion is expected to be captured into passing rent within five years and 65 per cent within three years.

Further, CSC is in a strong position to achieve ERV growth from current levels as the demand for high quality shopping centre space continues to increase ahead of supply.

Value creation through development and active management

Major extensions: CSC has 1.4 million sq. ft. of identified extension opportunities at existing centres, an equivalent amount to a new major regional shopping centre. Extensions to existing prime locations carry attractive returns at a lower risk profile for CSC as developer than establishing a new destination. Victoria Centre, Nottingham, Lakeside, Thurrock and Braehead, Glasgow are each the primary centre in a strong catchment, where CSC owns adjoining land and where retailer demand has been identified. In each case, regional planning policies are progressing broadly in line with CSC's objectives and we anticipate that planning applications will be submitted for two of the three during 2011. We estimate (reviewed by DTZ) £170-175 million of development profit from these three projects (equivalent to 19 pence per share), which we would expect that the valuers will start to recognise in the valuation of these centres as the projects progress. Development and ongoing operation of these extensions will generate valuable new jobs for the communities served by the three centres.

Active management opportunities: In addition smaller active asset management opportunities totalling £128 million across most of our centres, including £50 million at The Trafford Centre, are progressing satisfactorily. These generally have a lower risk profile and higher returns than the major extensions and as such, we estimate that the added value is £107 million (equivalent to 11 pence per share), which we would expect to recognise between 2011 and 2013. Examples include:

·; a new flagship store for Primark at Metrocentre (works underway, planned Autumn 2011 opening)

·; a new 65,000 sq. ft. flagship store for Next at Eldon Square (shop fitting underway for a pre-Easter opening)

·; reconfiguration of former Borders store at Chapelfield, Norwich, to create further catering (pre-let to Carluccios)

·; creation of four new catering units at Braehead (three pre-let, opening expected June 2011)

·; six new stores and the doubling in size of an existing store for key US brands Apple and Hollister

(1) Management estimates (reviewed by DTZ) of £170-175 million of development profit from identified extension opportunities, equivalent to 19 pence per share (at mid-point of estimated development profit)

(2) Active asset management projects of £128 million across existing portfolio (including The Trafford Centre, including capitalised interest), with added value of £107 million equivalent to 11 pence per share

The Trafford Centre

The acquisition of The Trafford Centre, announced in November 2010 and completed on 28 January 2011, is a clear strategic fit for CSC and is in line with the demerger objectives. We anticipate significant operating benefits from combining the centre into CSC's existing focused portfolio, including strengthened retailer relationships and the addition of The Trafford Centre's successful leisure and catering offerings. In 2011 we will integrate the complementary skills and expertise of The Trafford Centre team and draw upon the combined talents to adopt more broadly the strongest features and best operational practices of individual centres to improve the performance of all of the enlarged Group's assets. This process has already started with some reorganisation of internal responsibilities and the establishment of regionally focused teams.

PERFORMANCE IN 2010

CSC made good progress on its major priority for 2010 - to improve net rental income, particularly from short-term lease re-lettings and larger space renegotiations. Net rental income has increased 4 per cent in total and 2 per cent like-for-like, following two years of intense letting activity. In 2010, CSC has achieved 181 long term lettings, increasing annual rent by £16 million and closing the gap between contracted rent and ERV from 23 per cent at 30 June 2010 to 18 per cent at 31 December 2010.

CSC's other major objectives for 2010 were to progress the value-enhancing organic growth opportunities and to complete the initial letting of St David's, Cardiff. Significant progress has been made in enhancing CSC's centres through their active management as retail and leisure destinations. This is discussed in the Major Centres section below.

Net rental income

Chart 2 shows the change in like-for-like net rental income. To view Chart 2, please paste the following URL into the address bar of your browser:

http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

Net rental income of £277 million for 2010 is 3.6 per cent above that of 2009. Like-for-like net rental income for 2010 is 2.1 per cent above that of 2009. After having seen positive letting activity for around twelve months, the second half of 2010 saw these better terms come through in the form of good income growth, turning around the first half's reduced rate of decline to achieve a full year increase.

At the gross level, CSC's rental income was 3 per cent higher than 2009 reflecting the completion of developments at Cardiff and Eldon Square and the improved terms on replacement of short term concessionary leases. As the retail environment has improved, bad debt and lease incentive write offs have reduced significantly. Operating expenses have increased slightly, primarily due to the full year of St David's, Cardiff, and rent payable, the share of net income paid to our partners through head lease arrangements such as at Eldon Square, has increased in proportion to those centres' results.

Lettings

181 long term lettings have been completed in the year, for £28 million aggregate annual passing rent, an increase of £16 million over previous rent for those units:

·; deals signed in the second half of 2010 reflected an improved letting environment, on aggregate 8 per cent below ERV compared to 16 per cent below in the first half of the year

·; with the exception of a small number of strategic deals, the remainder of the fourth quarter's deals were at or around ERV

At 31 December 2010 CSC had 202 short term leases which represented 2 per cent of passing rent and 7 per cent of ERV (2009 - 2 per cent and 7 per cent). These are predominantly CSC's smaller units, occupying only 4 per cent of retail space (2009 - 7 per cent), with around 80 per cent smaller than 3,000 sq. ft.

Part of reversion crystallised

As a result of this letting activity, 5 percentage points of 30 June 2010's 23 per cent potential uplift from contracted rent to ERV have been captured leaving 18 per cent upside at 31 December 2010 (see Prospects and priorities section).

New retailers

35 new retail partners were introduced to CSC centres in the year, with six brands choosing a CSC centre for their first UK centre.

Retailer refits

Around one in six units in CSC's centres were refitted by retailers in the year, 139 in respect of new lettings and the balance by existing retailers. This substantial investment represents a firm commitment on the part of retailers and confidence in the quality of CSC's centres.

Occupancy

Chart 3 shows the Group's occupancy levels. To view Chart 3, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

Occupancy remains high at 98.6 per cent (31 December 2009 - 97.8 per cent) (including the new development areas of St David's, Cardiff, 97.7 per cent (31 December 2009 - 95.9 per cent)). The rate of tenant failure continued to slow with only 1 per cent of rent entering administration during the year (2009 - 8 per cent) and only 0.2 per cent in the second half of the year.

Footfall

Estimated footfall across CSC's 13 centres was over 280 million in the year, up 6 per cent in the year largely due to the successful opening of St David's, Cardiff. On a like for-like basis, footfall was up 3 per cent in 2010 following a 3 per cent increase in 2009. Retailer sales across CSC's 13 centres are estimated to have increased 8 per cent year on year, driven by a more than 70 per cent uplift at St David's, Cardiff. Excluding this, sales at the established centres increased by 3 per cent.

Major Centres

Lakeside, Thurrock, (£1,053 million, 18 per cent valuation surplus) has had an excellent year with an extended flagship store for Primark opened and trading well, 20 new long term lettings including Cult, Guess and Panasonic and a broadened catering offer including Ed's Easy Diner and Taco Bell's first UK store. The local regional planning framework, which is due to be adopted in the summer of 2011, indicates scope for significant additional retail space in the Lakeside area. Metrocentre, Gateshead, (£843 million, 8 per cent valuation surplus). The completion of the new leisure and catering offering, including Wagamama, TK Maxx/Homesense and Handmade Burger, has revitalised the yellow quadrant and driven an increase in retail spend. 39 new long term lettings have been completed in 2010 including new brands to Metrocentre, Radley and Office. With the 25th anniversary of opening approaching, good progress is being made in extending leases nearing expiry. Around half of the anticipated peak in the maturity profile has now been renegotiated. In January, an impressive new Next Home store opened on the Retail Park, the first step in the planned evolution of its retail mix.Braehead, Glasgow, (£576 million, 13 per cent valuation surplus) has benefited from the opening of the flagship Primark store in the former Sainsbury's location. In turn, H&M are due in March 2011 to open a flagship store in the former Primark location. Five new brands have been signed up in 2010 including Apple and Hollister, who have chosen to locate flagship stores at Braehead rather than competing retail areas. The broader Braehead destination continues to evolve with the opening shortly of a major garden centre and retail park planning applications in progress. Arndale, Manchester, (£336 million, 16 per cent valuation surplus). The 2006 northern extension has evolved a more aspirational style during 2010 with the addition of brands such as Bose, Pandora and Luke. Further, New Cathedral Street now has the UK flagship Hugo Boss store, opened in November, in place of Heal's.Eldon Square, Newcastle, (£250 million, 8 per cent valuation surplus). After opening fully let in February 2010, the St Andrew's Way mall has driven a 17 per cent increase in footfall through the centre. The development was recognised by the British Council of Shopping Centres (BCSC) as achieving Gold award standard in the Best In-town Retail Scheme category.

St David's, Cardiff, (£243 million, 19 per cent valuation surplus) achieved footfall of 37 million for 2010, well above target for its first full year after opening. The new extension is now 83 per cent committed by income up from approximately 65 per cent on opening day. 20 of 2010's new lettings are to retailers new to Wales, including Lego, Nike and Carluccios. We were delighted that the development was awarded the British Council of Shopping Centres (BCSC) Supreme Gold for Best In-town Retail Scheme.

CSC's other centres have also seen tenant changes, particularly focused on introduction of new international brands and enhancement of destination status though leisure and catering offers. Chapelfield, Norwich now has flagship Hollister and Clas Ohlson stores. We have plans for further catering in the former Borders store at Chapelfield and at The Glades, Bromley.

Equity One transaction

Following receipt of appropriate regulatory, banking and tax clearances, the completion of the transaction with Equity One relating to the restructuring of the Group's holding in C&C US took place on 4 January 2011. CSC now holds 4.1 million shares in Equity One and 11.4 million joint venture units redeemable for cash or Equity One shares with an aggregate value of approximately $290 million based on Equity One's share price at 19 February 2011.

INVESTMENT PROPERTY VALUATIONS

The UK commercial property investment market continued to experience valuation recovery in 2010, following its turning point in mid 2009. In particular, good quality property has continued to perform well while secondary assets have remained under pressure. Prime shopping centres are proving increasingly desirable to major international investors searching for quality UK investments in an environment of low interest rates and relatively attractive currency rates. Yields for prime shopping centres tightened significantly in the first half and, after a cluster of transactions in the autumn, maintained an inward progression while other sub-sectors slowed. Despite the recovery, capital values as measured by the IPD UK monthly retail capital growth index remain well below peak levels, currently at early 2003 levels. We are just over a year on from the largest decline in UK commercial property values for decades and valuation yields remain above CSC's long-run average.

Chart 4 shows CSC's nominal equivalent yield since 1994. To view Chart 4, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

The valuation outcome for CSC's assets for the year was very positive. After a 2.6 per cent increase in the second half of 2009, values rose by 7.7 per cent in the first half of 2010 and by 11.0 per cent for the full year. This represents a significant out-performance of the IPD UK monthly retail capital growth index which produced an increase of 7.5 per cent for the year.

Chart 5 shows the change in like-for-like capital values since June 2007. To view Chart 5 please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

The majority of the valuation movement reflected changes in yield. CSC's out-performance was driven by the prime nature of the assets and the improvement in passing rents including from re-letting of short term concessionary tenancies on longer term leases at higher rents. While ERV remained steady in the second half, passing rent increased by around 5 per cent, significantly narrowing the reversionary gap. However, at 6.3 per cent, CSC's weighted average nominal equivalent yield is still well above its long run average since 1994 of 6.0 per cent.

UK RETAIL PROPERTY MARKET

Chart 6 illustrates the distribution of UK retail and shopping centre space. To view Chart 6, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

CSC's focus is the top 50 UK shopping centre locations, which comprise around 50 million sq. ft. of which CSC owns 33 per cent(1). Such centres are and will remain rare and change hands infrequently. Shopping centres in total represent only around 13 per cent of the UK's 1.3 billion sq. ft. of retail space, the top 50 centres representing only around 4 per cent. The highly regulated planning environment combined with the recent challenging economic environment for financing of new centres has contributed to a limited development pipeline. Controlling stakes change hands very rarely - CSC's acquisition of The Trafford Centre on 28 January 2011 was the first example for a decade of change in control of a top ten centre.

CSC owns 14 centres(1), including four of the UK's top six out-of-town centres and ten of the UK's top 25 centres, attracting well over 300 million customer visits(1) in 2010. CSC owns more pre-eminent shopping centres in the UK than any other operator. Scale strengthens relationships with leading national and international retailers. In particular it gives CSC the ability to discuss national property strategy with expanding retailers and international entrants.

(1) including The Trafford Centre, Manchester, acquired on 28 January 2011

UK retail trade continues to concentrate into fewer locations. The structural shift towards prime destinations with strong leisure and catering offerings benefits CSC's pre-eminent UK shopping centres. Chart 7 illustrates that since the early 1970s the number of locations required to serve 50 per cent of the comparison goods market share has fallen by more than a half, from 200 to 90 locations. To view Chart 7, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

CSC's centres can offer the retailer flagship stores in top locations. Such stores are increasingly becoming a crucial marketing tool for the retailer's brand. The development of other retail channels such as online shopping reinforce the concentration of physical comparison retailing into the destinations, such as CSC's, most attractive to the shopper for retail and broader entertainment. Online sales comprise only a small but growing proportion of total retail spend - 8 per cent in 2010 according to ONS. The most successful retailers now have an integrated approach to online and in-store sales, with strong evidence of high levels of interaction between the two. This is highlighted by the popularity of "click and collect" and "return to store" facilities, both of which reinforce the need for a physical store and produce incremental sales.

As a result, as successful UK and international retailers look to their growth plans for the next couple of years we expect to see increased competition for high profile, good quality space in those best locations. We have seen the early signs of this trend in 2010, including some competitive bidding situations, particularly for larger, well configured units and catering units, resulting in rent settlements above ERV.

Stark evidence of the increasing disparity between top and other shopping centres in the balance of retailer demand and space supply can be seen in the vacancy figures on Chart 8. Vacancy rates for secondary centres are still increasing, whilst those for big centres have reduced during 2010. It is worth noting that average rates for the top 50 are well below even the "big centres" average illustrated here. To view Chart 8, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

FINANCIAL REVIEW

FINANCING STRATEGY AND FINANCIAL MANAGEMENT

In 2010 the Group's financial management has focused on achieving the successful demerger of Capco, addressing the appropriate financial management and medium term funding structure for the demerged Group including the acquisition of The Trafford Centre and continuing to support the organisation in its efforts to drive trading recovery. Notable achievements include:

·; Underlying earnings up by 29 per cent

·; NAV per share at 390 pence; total return for the year 20 per cent

·; Additional equity capital of £216 million net of costs raised which, combined with increased property values, takes debt to assets ratio to within targeted range at 48 per cent

·; Interest cover ratio increased by 15 ppt to 156 per cent just below target level of 160 per cent

As previously indicated, the Group's preference was to bring the debt to assets ratio within the 40-50 per cent range, which has now been achieved. Following completion of the capital raise and The Trafford Centre acquisition, the ratio now stands at 47 per cent. In respect of our additional funding aim, to achieve interest cover greater than 160 per cent, it is encouraging to report significant progress with the 2010 interest cover ratio improving by 15 percentage points to 156 per cent.

Comparative figures re-presented

The successful demerger of Capco and the joint venture agreement with Equity One in respect of the C&C US business, which was completed in January 2011, has resulted in certain comparative figures being re-presented. The Capco results up to the date of demerger have now been classified as discontinued operations in the comparative income statements and cash flow statements. The balance sheet information for Capco at 31 December 2009 is, however, still included in the respective line categories in the balance sheet.

The C&C US results have also been included as discontinued operations in the comparative income statements and cash flow statements. The C&C US balance sheet information at 31 December 2009 is however still included in the respective line categories in the balance sheet. C&C US is categorised as an asset held for sale at 31 December 2010 and therefore in accordance with IFRS 5 non-current assets held for sale its total assets and total liabilities are shown separately on the 31 December 2010 balance sheet.

Income from C&C US has been included in the Group's underlying earnings in 2010 as it is anticipated that following completion of the transaction with Equity One in January 2011 there will be an ongoing income stream from Equity One shares and joint venture units. A gain on disposal of C&C US of approximately £26 million will be recorded in the Group's 2011 results, with the gain being largely due to a reduction in the deferred tax liability associated with the Group's investment in Equity One and joint venture units compared to the liability in connection with C&C US.

A pro forma balance sheet analysis prepared as if the demerger and C&C US transaction had occurred at 31 December 2009 is included in the Other Information section of this report.

Acquisition of The Trafford Centre and associated Capital Raising

The Group successfully completed an equity capital raise in November 2010 in connection with the acquisition of The Trafford Centre. The acquisition of The Trafford Centre was not completed until 28 January 2011 and therefore the impact, with the exception of certain costs of the transaction incurred in 2010, is not reflected in these financial statements. The associated capital raising raised net cash proceeds of £216 million, through a Placing of 62.3 million new ordinary shares issued at 355 pence per share.

As part of The Trafford Centre acquisition in January 2011 Peel subscribed £43.7 million for 12.3 million ordinary shares and £23.7 million for convertible bonds with a nominal value of £26.7 million converting into 6.7 million ordinary shares at a conversion price of 400 pence, giving a total cash inflow of £67.4 million. On completion of the acquisition the loan secured on Barton Square of £81 million was repaid. As indicated in the circular issued in November 2010, the Group also utilised £34 million of the cash raised to re-profile certain interest rate swap contracts in January 2011 which will benefit underlying finance costs.

(1) The gain on sale of C&C US of £25.8 million comprises the increase of £15.1 million attributable to equity shareholders above plus £10.7 million of foreign exchange gains that have previously been taken directly to equity but are required to be recycled through the income statement on disposal.

(2) The other adjustment of £33.2 million is the difference between the deferred tax liabilities as a result of the disposal of C&C US. Such deferred tax liabilities are added back in the calculation of diluted, adjusted net assets.

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

The results for the year ended 31 December 2010 reflect the improved conditions in the UK commercial property market in 2010. This is most clearly illustrated by the 11.0 per cent revaluation gain on the Group's UK shopping centres in the year. However, the general economic environment remains challenging and it is therefore encouraging that the Group achieved growth in both like-for-like net rental income and against the comparable 2009 underlying earnings per share, two of the Group's key measures of performance.

Income statement

The Group recorded a profit for the period of £529 million, a substantial improvement on the loss of £370 million recorded in the year ended 31 December 2009.

The £446 million profit from continuing operations in the year contrasts favourably with the £187 million loss recorded in 2009. The 2010 results include a £501 million gain on property valuations which is partially offset by a £50 million non-cash charge due to the movement in the fair value of derivative financial instruments. In contrast, the 2009 loss included a significant deficit on property valuations, £535 million, which was partially compensated by a £400 million favourable movement in the fair value of derivative financial instruments.

Those businesses classified as discontinued operations, which are detailed above, contributed a profit of £83 million in the period, largely due to property valuation gains.

Underlying earnings, as shown in Chart 9, which excludes valuation and exceptional items, increased by £22 million to £97 million. However, the growth in underlying earnings per share was restricted by the issue of 256 million new shares in the 2009 capital raises, resulting in the increase being restricted to 0.3 pence per share from 15.1 pence to 15.4 pence. To view Chart 9, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

The Group's net rental income which increased by 4 per cent to £277 million in the year benefitted from the income generated by the new developments at St David's, Cardiff and the St Andrew's Way mall at Eldon Square, and an encouraging return to like-for-like growth in the second half of the year. More detail on the rental performance is included in the Business Review.

Administration expenses, excluding the £16 million exceptional costs, reduced from £26 million in 2009 to £23 million in 2010. The saving largely resulted from tight cost control and lower pension costs compared to 2009. In addition, costs, in particular employee related, have been reduced following the demerger of Capco in May 2010.

Underlying net finance costs, which exclude exceptional items, reduced by £10 million in 2010, with the benefit of the treasury strategy of loan prepayments and interest rate swap amendments more than offsetting the £15 million reduction in capitalised interest compared to 2009 following completion of the developments at St David's, Cardiff and Eldon Square, Newcastle.

Exceptional costs incurred in the year included finance costs of £66 million incurred in the first half of the year largely on interest rate swap amendment costs, £28 million of which was in connection with the re-financing of the Lakeside facility. Expenses relating to the Capco demerger amounted to £8 million in the period. These costs are classified as exceptional administration costs. Exceptional administration costs in 2010 also include £4 million of costs relating to the acquisition of The Trafford Centre with the balance relating to the disposal of C&C US. Further costs relating to the Trafford Centre acquisition and related financial advice of £15 million were incurred in January 2011 and will be included in the Group's 2011 results.

Balance sheet

The Group's net assets attributable to equity shareholders have reduced from the £2.4 billion disclosed in the 2009 annual report to £2.3 billion, with the reduction in net assets resulting from the demerger of Capco more than offsetting the impact of the increase in property values recorded in 2010 and equity capital raised. A pro forma balance sheet analysis prepared as if the demerger and proposed sale of C&C US had occurred at 31 December 2009 indicates that the net assets at 31 December 2009 were £1.7 billion.

As detailed in the table below, net assets (diluted, adjusted) have increased by £530 million with the property valuation gain of £501 million being the most significant factor in the increase.

(1) The pro forma analysis removes the Capco balances that were demerged and re-classifies the C&C US assets as held-for-sale, further details are included in the Other Information section of this report.

The investments of £45.2 million as at 31 December 2010 largely comprises the Group's interests in India, being a 25 per cent interest in the shopping centre developer, Prozone, and a 9.9 per cent interest in the listed Indian retailer, Provogue, our joint venture partner in Prozone. The Aurangabad centre (800,000 sq. ft.), Prozone's first centre, which opened in October last year has continued to trade satisfactorily with over 150,000 weekly visitors on average. The number of retailers trading is expected to increase from 74 currently to around 90 by March 2011 with the multiplex cinema due to open in April. Prozone anticipates starting work shortly on the Coimbatore project where good progress is being made on design and signing anchor stores. The Nagpur project is planned to follow thereafter.

The fair value provision for financial derivatives, principally interest rate swaps, included in other assets and liabilities above, increased by £25 million largely as a consequence of the continued low UK interest rate environment. The most significant factor in the elimination of the effect of dilution from 31 December 2009 is the repayment of the £75 million convertible bonds in September 2010, rather than their conversion to equity capital.

Adjusted net assets per share

As illustrated in Chart 10, diluted adjusted net assets per share of 390 pence at 31 December 2010 represents an increase of 15 per cent compared to the 31 December 2009 pro forma value of 339 pence. The increase is attributable to the property valuation gain, partially offset by the 2009 final dividend and the exceptional costs. The other reduction of 9 pence is due to the repayment of the convertible bonds, as noted above, and the impact of the capital raise in November 2010. To view Chart 10, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

Cash flow

The cash flow summary below shows a substantial reduction in the Group's cash balance in the period. This is due to the impact of the demerger and the strategy to minimise low income yielding cash held on the balance sheet through repayment of debt.

The table below illustrates that recurring operating cash flow does not cover the dividend in the year. Cash generation will increase as the impact of rent free periods and incentives granted at recently completed developments reduce. Also, cash flows from the US were affected by the finalisation process of the Equity One transaction. It is anticipated that the Group will start to receive dividends from its Equity One investment in 2011.

2010 investment in property related assets was mainly limited to existing 2009 commitments, with the most significant expenditure in the period being in respect of St David's, Cardiff (£13 million), Eldon Square (£12 million) and Braehead (£5 million). A further £4 million was spent to increase the Group's existing investment in India.

Cash proceeds from the disposal of properties and investments generated £75 million, including £54 million net proceeds received from the disposal of Westgate, Oxford.

Net debt repayments of £172 million are discussed in the Debt structure and maturity section below.

Capital commitments

The Group has an aggregate commitment to capital projects of £90 million at 31 December 2010, down from the £124 million, excluding the Capco commitments, at 31 December 2009. The largest project within the outstanding commitments relates to finalisation of the St David's, Cardiff shopping centre project including the associated residential development, which will be funded through the loan facility secured on St David's, Cardiff. In addition to the committed expenditure, the Group has identified £128 million, including £50 million at The Trafford Centre, of active asset management opportunities. It is anticipated that £31 million relating to these projects will be incurred in 2011.

FINANCIAL POSITION

The Group's debt is largely arranged on an asset-specific basis, with limited or non-recourse from the borrowing entities to other Group companies. This structure permits the Group a high degree of financial flexibility in dealing with debt issues and importantly avoids the concentration of covenant and refinancing risk associated with a single group-wide borrowing. The flexibility of this debt structure was evidenced by the success in obtaining, where required, lender consent to proceed with the demerger.

In addition to the asset-specific debt, the Group has a corporate revolving credit facility of £248 million, which is available until June 2013 and can be utilised to fund opportunities before they reach the stage that they can support their own financing arrangements. This facility, which was utilised to fund working capital requirements during the year, was undrawn at 31 December 2010.

Net external debt decreased from £2,522 million at 31 December 2009 to £2,437 million at 31 December 2010. The largest factor in the decrease is the £216 million net proceeds received from the capital raise completed in November 2010.

The Group had cash balances of £222 million at 31 December 2010. Available undrawn facilities at that date total £331 million, consisting of the £248 million revolving credit facility and approximately £83 million undrawn on the joint venture asset specific loan on St David's, Cardiff. In January 2011 £56 million of the St David's, Cardiff loan was drawn which, combined with the acquisition of The Trafford Centre, gives the Group headroom of c. £500 million.

(1) The pro forma figures include The Trafford Centre balances following the acquisition which was completed on 28 January 2011

(2) The pro forma figures remove the Capco balances that were demerged and the C&C US balances now held for sale

The debt to assets ratio was 48 per cent, a substantial improvement on the pro forma level of 55 per cent at 31 December 2009. Adjusting for The Trafford Centre acquisition to give indicative pro forma figures results in:

·; the debt to assets ratio reducing to 47 per cent from 48 per cent as at 31 December 2010

·; the weighted average debt maturity increasing to 8.0 years from 5.8 years as at 31 December 2010

·; the weighted average cost of gross debt increasing to 5.9 per cent from 5.7 per cent as at 31 December 2010

·; proportion of gross debt with interest rate protection increasing to 95 per cent from 94 per cent at 31 December 2010

Debt structure and maturity

The significant repayments of Group debt during 2010 were £36 million of scheduled loan amortisation plus a voluntary £48 million prepayment on the loan secured on Victoria Centre, Nottingham and the £75 million of convertible bonds. Chart 11 shows the pro forma debt maturity profile. To view Chart 11, please paste the following URL into the address bar of your browser:http://www.rns-pdf.londonstockexchange.com/rns/6824B_-2011-2-22.pdf

In 2011 and 2012, the Group has no debt maturities other than scheduled amortisation. £27 million of unsecured bonds mature in 2013 with the next maturity of secured loans being £56 million in 2014. The undrawn revolving credit facility of £248 million and the facility secured on St David's, Cardiff mature in 2013 and 2014 respectively.

Financial covenants

Full details of the loan financial covenants are included in the Other Information section of this report.

Financial covenants apply to £2.5 billion of secured asset-specific debt. The two main covenants are Loan to Value (LTV) and Interest Cover (IC). The actual requirements vary and are specific to each loan.

As noted in the Interim Report in the first half of 2010 the Group made asset-specific loan prepayments of £48 million and £36 million of swap repayments to reduce financial covenant risk. A further £34 million of CMBS notes, which were owned by a Group company since issuance, were cancelled at zero cash cost to the Group. £2 million was injected into Xscape Braehead Partnership in April 2010, as part of aloan prepayment and covenant moderation agreement which included the Loan to Value covenant being waived until 2012.

The Group is in compliance with all of its corporate and asset-specific loan covenants.

During the year a new £248 million revolving credit facility was put in place with maturity in June 2013. This renegotiation also resulted in reduced borrowing costs and improved financial covenants. These financial covenants are tested semi-annually on a number of the Group's companies, defined as the Borrower Group, and all tests are currently satisfied.

There is a minimum capital cover and interest cover condition applicable to the £231 million mortgage debenture tested semi-annually. Both tests were satisfied at 31 December 2010, the latest test date. Compliance with financial covenants is and will continue to be constantly monitored.

Re-financing activity

The £546 million loan and associated CMBS notes secured on Lakeside, Thurrock were scheduled to mature in July 2011 but were re-financed in January 2010 with a new £525 million, 7 year loan maturing in 2017 to take advantage of the improvement in bank liquidity and reduce near term refinancing risk.

At the time of prepayment the loan had a funding cost of 5.5 per cent. The new loan was partially hedged in 2010, with a significant exposure to low variable interest rates which was a factor in reducing the Group's average cost of debt from 6.0 per cent to 5.7 per cent. The hedging arrangements require an increasing level of protection from 60 per cent in 2010, to 75 per cent in 2011 and 2012, and 90 per cent thereafter until maturity.

As indicated in the circular issued in connection with the acquisition of The Trafford Centre, the Group has repaid the £81 million loan secured on Barton Square and also utilised £34 million of cash to re-profile certain interest rate swap contracts in January 2011.

Interest rate hedging and fair value of financial instruments

At 31 December 2010 the fair value of the Group's derivative financial instruments was a net liability of £340 million. This liability includes the Group's derivative contracts to hedge both interest rate and currency risk. During the period scheduled derivative payments of £97 million were made plus £64 million of interest rate swap prepayments. However lower sterling interest rates resulted in the liability increasing by £25 million from the comparable pro forma balance at the end of 2009.

At 31 December 2010 the Group's gross debt was 94 per cent hedged by a combination of fixed rate debt or floating rate debt with rate protection through interest rate swaps and interest rate caps. Whilst interest rate swaps fix the interest rate payable and provide certainty over future cash flows, interest rate caps allow the Group certainty on the upper level of interest rate payable but also benefit from participating in the current low rate environment.

Following completion of the Equity One transaction, the Group is reviewing its currency hedging policy and therefore the existing currency swaps may not be renewed as they mature.

Taxation

Since the Group became a UK REIT on 1 January 2007, the Group has made REIT entry charge payments of £147 million, including payments made in respect of Capco prior to demerger, with £42 million paid in 2010. The remaining balance of £21 million will be paid in 2011. The financial benefits to date have amounted to £173 million, comprising net rental income and capital gains sheltered from UK tax. In addition, an estimated £33 million will be payable in respect of The Trafford Centre.

The tax charge on continuing operations in the period of £1 million comprises the REIT entry financing charge of £3 million partially offset by deferred tax credits on the revaluation of interest rate swaps.

The total tax charge on discontinued operations of £12 million comprises £10 million deferred tax on the revaluation of the C&C US properties and £2 million of irrecoverable withholding tax suffered on dividends paid by C&C US.

Key risks and uncertainties

The key risks and uncertainties facing the Group are set out in the table below:

Directors' responsibilities

Statement of Directors' responsibilities

The statement of Directors' responsibilities has been prepared in relation to the Group's full Annual Report for the year ended 31 December 2010. Certain parts of the Annual Report are not included within this announcement.

We confirm to the best of our knowledge:

·; the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

·; the Business Review includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

Signed on behalf of the Board on 23 February 2011

David Fischel

Chief Executive

Matthew Roberts

Finance Director

Consolidated income statementfor the year ended 31 December 2010

Underlying earnings per share are shown in note 9.

Consolidated statement of comprehensive income

for the year ended 31 December 2010

Consolidated balance sheet

as at 31 December 2010