Final Results

SHAFTESBURY ANNOUNCES ANNUAL RESULTS:

CONTINUING HEALTHY DEMAND AND RENTAL GROWTH

Shaftesbury PLC ("Shaftesbury") today announces its results for the year ended 30 September 2010. Shaftesbury owns a portfolio of 500 properties in London's West End (Carnaby, Covent Garden, Chinatown, Berwick Street and Charlotte Street).

Net asset value and portfolio performance

·; Adjusted* diluted net asset value per share increased by 23.6% (79p) to £4.14. Unadjusted diluted net asset value per share increased by 20.0% (63p) to £3.78

·; Capital Value Return of 14.2% (IPD Monthly Index - Capital Growth: 14.2%); Group's portfolio less cyclical than wider market and continues to deliver long term out-performance

·; Overall equivalent yield (excluding Longmartin Joint Venture) has reduced over the year by 0.52% from 5.62% to 5.10% (one third of yield movement in second half of year)

·; Portfolio ERV now £83.9 million (30.9.2009: £78.3 million). Reversionary potential now £15.6 million (30.9.2009: £14.9 million)

Results and dividends

·; Adjusted* profit before tax £22.3 million (30.9.2009: £21.3 million) after additional £1.0 million charge for share based remuneration as a consequence of sustained out-performance of portfolio and share price

·; Group net property income increased by £3.1 million to £57.6 million

·; Final Property Income Distribution 5.25p per share (30.9.2009: 4.75p); total distribution £23.3 million, an increase of 11.0%. Annual distributions not covered this year largely due to additional charge for share based remuneration; future annual distributions expected to be fully covered

·; Adjusted** diluted earnings per share 9.7p (30.9.2009: 11.2p)

·; Profit before tax £171.9 million (includes property revaluation surpluses of £183.6 million and increase in financial derivatives fair value deficit of £34.4 million)

Portfolio activity

·; West End economy and visitor numbers remain buoyant; continuing good tenant demand for all uses

·; Acquisitions totalling £65.3 million during year; more properties becoming available

·; £22.5 million expenditure on portfolio including £12.8 million in the Longmartin Joint Venture

·; Considerable activity across all Villages

·; St Martin's Courtyard nearing completion; 81% by rental value of commercial uses contracted or under offer at 30.9.2010

* Adjusted as set out below ** Adjusted as set out in note 10.

John Manser, Chairman, commented:

"London's unrivalled attractions continue to draw millions of visitors, supporting a buoyant local economy. Consequently demand for all of our uses in each of our villages is strong, which is reflected in increasing rental values and an historically low level of vacant space in our portfolio.

Although the impact on consumer spending of higher taxes and lower government spending in the future is uncertain, we believe London's West End, with its uniquely diverse and strong international visitor base, will be less affected by such concerns.

We have made good progress this year, particularly in the letting of our St Martin's Courtyard scheme which will make an important contribution to our results in the years ahead. We expect strong occupier demand for our properties to continue, and we are confident that we shall maintain our record of delivering out-performance in income, dividends and capital values."

Date: 30 November 2010

For further information:

There will be a presentation to analysts at 9.30 am on Tuesday 30 November 2010, at The London Stock Exchange, 10 Paternoster Square, London EC4M 7LS.

There is a dial-in facility for the presentation. Analysts and investors are welcome to participate. The facility can be accessed by calling +44 (0)20 3140 0668 or Freephone 0800 368 1950 (UK only). The PIN code is 248638#. The presentation document is available on the Group's web site www.shaftesbury.co.uk.

A replay service will be available for 30 days after the call. The number is +44 (0)20 3140 0698 (US +1 877 846 3918). The Conference Reference is 374942#.

Financial highlights

* Adjusted to exclude property and financial derivatives fair value movements and gain on sale of investment properties

 ** Adjusted to exclude fair value of financial derivatives and deferred taxation arising on the revaluation of investment properties

 ***Paid in respect of shares in issue prior to the Rights Issue in June 2009.

Performance Summary for the year ended 30 September 2010

* Source: Investment Property Databank Ltd © 2010.

Shaftesbury Group data (other than Total Shareholder Return) derived from financial results.

Chairman's Statement

Our portfolio, located in the heart of London's West End, is prospering, delivering a growing rental income and long term out-performance in capital value growth.

London's unrivalled attractions continue to draw millions of domestic and overseas visitors, supporting a buoyant local economy. Consequently demand for all of our uses in each of our Villages is strong, which is reflected in increasing rental values and an historically low level of vacant space in our portfolio.

We have made substantial progress with our St Martin's Courtyard project. With 81% by rental value of its commercial space contracted or under offer at 30 September 2010, the scheme will make an important contribution to our income from 2011 onwards. During the year we have secured additions to our portfolio totalling £65.3 million as well as progressing important projects, particularly in Carnaby.

Our results

Our net assets at 30 September 2010, adjusted in accordance with the guidance issued by the European Public Real Estate Association ("EPRA") totalled £948.2 million, equivalent to a diluted net asset value per share of £4.14. The increase in adjusted diluted net asset value per share over the year, after the payment of dividends of 9.75p per share, was £0.79, an uplift of 23.6% (2009: reduction of 10.9%). The increase in adjusted diluted net asset value per share before the payment of dividends amounted to 26.5% (2009: reduction of 8.1%).

Shareholders' funds shown in the unadjusted Group Balance Sheet at 30 September 2010 totalled £863.7 million, equivalent to a diluted net asset value of £3.78 per share. The increase in unadjusted net assets per share since the last year end after payment of dividends amounted to £0.63, an uplift of 20.0%. The increase before payment of dividends amounted to 23.1% (2009: reduction of 11.3%).

Profit before tax for the year ended 30 September 2010, adjusted in accordance with EPRA guidance to exclude the surplus on disposal and revaluation of investment properties and the movement in the fair value of financial derivatives, amounted to £22.3 million, an increase of £1.0 million or 4.7% over last year's adjusted profit before tax of £21.3 million. As explained below, our results this year reflect an increase of £1.0 million in the charge for share based remuneration arising as a consequence the sustained out-performance of both our portfolio and our share price.

Group rental income (adjusted for lease incentives) rose to £65.7 million, an increase of £4.0 million over the year. Of this increase, £3.3 million arose in the wholly owned Group from both acquisitions and continuing crystallisation of our reversionary rental potential, through higher rents and a reduction in vacancies. Importantly, £0.7 million arose in our Longmartin Joint Venture, where rental income is now increasing rapidly as we complete lettings in the St Martin's Courtyard scheme.

Property outgoings totalled £8.1 million, an increase of £0.9 million compared with last year. The increase arose mainly in the first half and is principally attributable to:

- Obtaining vacant possession of buildings to create larger new schemes, particularly in Carnaby This has both reduced our income and increased non-recoverable costs and will continue to do so in the short term. We do not capitalise either property outgoings or interest incurred in connection with our schemes.

- With uncertainty continuing in the wider economy, we have increased marketing expenditure, with a number of new initiatives to promote each of our Villages to both domestic and overseas retailers and visitors.

In our lettings of smaller offices and the smallest shops there is a trend of the landlord bearing a greater proportion of service charge expenditure. Also, as we increase the amount of residential accommodation, the extent of service charge recovery is reduced. We expect both of these trends to continue.

Net property income increased by £3.1 million to £57.6 million, compared with £54.5 million last year.

Administration expenses, which amounted to £8.2 million this year compared with £6.8 million last year, include a charge in respect of equity settled remuneration of £1.7 million (2009: £0.7 million). The continuing strong performance of both our portfolio and our share price has increased the likelihood that a greater proportion of performance related share options will vest, which has resulted in a £0.8 million increase in the accounting charge for share options. In addition, the rise in our share price over the year has increased by £0.2 million our potential national insurance liability in respect of share awards and options already vested or now expected to vest.

Interest payable totalled £27.2 million, an increase of £0.6 million over the year. Although our bank debt increased by £94.5 million over the year, this was drawn at prevailing unhedged short term rates which have remained at low levels throughout the year. However, the expectation that these unprecedented low interest rates will continue for some time has resulted in an increase of £34.4 million in the mark-to-market valuation deficit on our long term interest rate swaps over the year.

The profit before tax reported in the Group Statement of Comprehensive Income of £171.9 million (2009: loss £58.4 million) included investment property revaluation surpluses of £183.6 million (2009: deficits of £48.1 million) and an increase in the fair value deficit of financial derivatives of £34.4 million referred to above (2009: £31.6 million).

Provision for current and deferred tax on the adjusted profit for the year amounted to £0.2 million (2009: £0.2 million). The Group's wholly-owned business is subject to the REIT regime so its net rental income and gains included in results for the year are exempt from corporation tax. The wholly owned Group has little other taxable income or gains and consequently has a minimal tax charge.

The tax charge of £4.8 million (2009: £0.3 million) on the unadjusted profit included £0.6 million in connection with the REIT conversion charge payable in respect of a property investment company acquired during the year (2009: £0.1 million) and deferred tax of £4.1 million (2009: £0.1 million) arising in our Longmartin Joint Venture. Our interest in the Joint Venture remains outside of our REIT group, so our share of its profit is subject to corporation tax and deferred tax is provided in respect of property revaluation surpluses and accelerated capital allowances.

The profit after tax for the year, adjusted for the items referred to above, amounted to £22.1 million (2009: £21.1 million). The profit after tax reported in the Group Statement of Comprehensive Income amounted to £167.1 million (2008: loss of £58.4 million).

Dividends

Your Directors are pleased to recommend a final dividend of 5.25p per share, representing a distribution of £11.9 million. This compares with last year's final dividend of 4.75p per share, a distribution of £10.8 million. The final dividend will be paid entirely as a Property Income Distribution ("PID").

Together with the interim dividend of 5.0p (2009: 7.5p), this will bring the total distribution in respect of this year to £23.3 million or 10.25p per share (2009: £21.0 million or 12.25p), an increase in the total distribution of 11.0%. The reduction in the amount per share reflects the increased number of shares in issue following our Rights Issue in June 2009.

Distributions declared in respect of this financial year totalling £23.3 million are in excess of our adjusted profit after tax for the year of £22.1 million, largely as a result of the increase in the accounting charge for equity settled remuneration referred to above. With continuing growth in our rental income, together with a much higher contribution from our Longmartin Joint Venture from 2011, we expect to maintain steady growth in our dividends, which in future will be fully covered by adjusted annual post-tax profits.

Our portfolio

Our property portfolio has been valued at 30 September 2010 at £1,481.9 million resulting in a revaluation surplus for the year of £183.6 million. Allowing for acquisitions, disposals and capital expenditure during the year, this represents an increase of 14.2% in the book value over the year. The IPD UK Monthly Index: Capital Values for all classes of commercial property rose by a similar percentage over the year. Our portfolio showed a total return for the year of 18.5% compared with 22.6% shown by the IPD UK Monthly Index: Total Return, reflecting the lower yields of our properties.

The investment market remains strong in Central London, particularly for well-located properties with secure income and growth prospects. Over the year as a whole, the capital value return attributable to our wholly owned portfolio amounted to 12.6% of its adjusted book value. This year each of our principal Villages grew at a similar rate. With the movement in yields moderating since April, two-thirds of the value growth arose in the first six months of the financial year. As our wholly owned portfolio has substantially out-performed our IPD benchmark over the past five years, and particularly during the downturn from 2007, some short term under-performance at this stage of general recovery in property values is unsurprising.

The equivalent yield attributed by our valuers to our wholly owned portfolio at 30 September 2010 was 5.10%, compared with 5.62% at the previous year end and 5.20% at 31 March 2010.

DTZ, the valuers of our wholly owned portfolio, have once again commented in their report on the concentration of a high proportion of our properties in adjacent or adjoining locations within our principal Villages and the dominance of retail and restaurant uses. They advise that, as a consequence of these unusual factors, some prospective purchasers may consider that parts of the wholly owned portfolio, when combined, may have a greater value than that currently reflected in the valuation that we have adopted in our results.

The properties owned in the Longmartin Joint Venture showed a revaluation surplus of 39.5% of adjusted book value. Construction of St Martin's Courtyard is now nearing completion, and we have made considerable progress during the year in securing lettings and pre-lettings of its commercial space. We are confident that the remainder of the scheme, including the apartments which are only now becoming available, will let readily in the coming months.

Portfolio reversionary potential

* Excludes pre-lettings and contracted rent free periods

** Of this amount, £2.8 million (55%) was contracted at 30 September 2010

Our valuers have estimated the rental value of our portfolio, including our share of the Joint Venture at £83.9 million compared with £78.3 million at 30 September 2009. The portfolio's current gross income, which excludes pre-lettings and contracted rent free periods, amounted to £68.3 million, compared with £63.4 million at 30 September 2009.Of the total reversion of £15.6 million, £10.5 million arises in the wholly owned portfolio and £5.1 million relates to our share of Longmartin's potential additional income. 55% of Longmartin's reversion was contracted at the year end.

Almost all of the reversionary value within our wholly owned portfolio is at present attributable to our shops and restaurants, which account for 72% of our estimated rental value, and where rental values continue to show steady growth. As we have demonstrated in past years we shall, over time, realise current reversionary potential and, through our management initiatives, continue to produce further reversions through growth in rental values.

Finance

Our financial resources are substantial. At the year end we had committed unutilised bank facilities of £119.3 million available to finance future investment. Our gearing levels are modest, revenue cash flow is strong, capital expenditure commitments are very low in relation to the size of our portfolio and we have no facility maturities before April 2016. We remain alert to opportunities to refinance existing facilities and raise additional long term finance as our portfolio expands.

Total Shareholder Return

Over the year we delivered a total shareholder return of 24.4%, compared with a return of 2.1% shown by the FTSE 350 Real Estate Index, our chosen benchmark. We believe that this material out-performance is in part a reflection of the equity market's evaluation of the resilience and qualities of our unique portfolio and its proven and continuing prospects for income and capital growth.

Equity market sentiment towards real estate continued to improve during the year. However it is impossible to predict how market sentiment will be affected by developments in the UK economy in 2011 and particularly the impact of tax increases and government spending plans.

Board changes

In February 2010 Hilary Riva OBE and Jill Little joined the Board as independent non-executive Directors.

Hilary has extensive experience as a senior executive in the fashion retail sector and most recently with the British Fashion Council. Jill is a member of the Management Board of the John Lewis Partnership and is now Strategy and International Director, having previously been Merchandise Director since 2002.

Both Hilary and Jill have an excellent knowledge and understanding of the markets in which Shaftesbury invests and of the West End of London. Their experience is already of great benefit to the Board.

Jonathan Lane, now 65, has advised the Board that he intends to retire from his role as Chief Executive during 2011. Jonathan has been Chief Executive since Shaftesbury's formation in 1986. He has made an enormous contribution to the Group, which is widely regarded as one of the most successful and innovative companies in the sector. We are delighted that following the appointment of his successor, he will be staying with the Group as Deputy Chairman. A process to appoint a new Chief Executive, considering both internal and external candidates, has now begun.

Prospects

The property market generally has continued to recover over the year. Although there is good investment demand for secure, well-located properties it is expected that any further general yield improvement will be modest. However we are confident that that our portfolio, with its resilient qualities of consistent rental growth and limited obsolescence, will to continue to out-perform.

Although the impact on consumer spending of higher taxes and lower government spending in the future is uncertain, we believe London's West End, with its uniquely diverse and strong international visitor base, will be less affected by such concerns.

We have made good progress this year, particularly in the letting of our St Martin's Courtyard scheme which will make an important contribution to our results in the years ahead. We expect strong occupier demand for our properties to continue, and we are confident that we shall maintain our record of delivering out-performance in income, dividends and in capital values.

John Manser

Chairman

30 November 2010

Business Review

Our background

Shaftesbury listed on the London Stock Exchange in 1987. Whilst our initial strategy was geographically UK wide, our current investment focus developed as a result of our experiences during the recession in the early 1990s. At that time we found that although there was in general little demand for property investments and capital values fell, tenant demand continued and rents remained stable in the 32 buildings we had owned in Chinatown since the formation of the Company.

With that experience and local knowledge we sold all of our assets outside the West End and since 1993 we have steadily added to our holdings in the West End. In 1994 we made our first acquisitions in Covent Garden and Carnaby. In 1996, funded in part by two Rights Issues, we acquired the Island Site in Chinatown and the majority of what now comprises our Carnaby Village. In late 2005 we entered into our joint venture with the Mercers' Company as well as acquiring the Opera Quarter. These transactions have formed the backbone of our investment strategy. 

Today our wholly owned holdings in the West End cover more than 11 acres of freeholds across 500 buildings extending to 1.5 million sq. ft. This includes 453,000 sq. ft. of restaurants, bars and leisure space, 394,000 sq. ft. of retail accommodation, 424,000 sq. ft. of offices and 345 apartments over 233,000 sq. ft. The Longmartin Joint Venture, in which we have a 50% interest, owns a 1.9 acre island site in Covent Garden with 215,000 sq. ft. of mixed use commercial space and 54,000 sq. ft. of residential accommodation.

Our cumulative investment in our portfolio, including acquisitions and refurbishment expenditure which, amounted to £885.2 million by 30 September 2010, is now valued at almost £1.5 billion.

Our strategy

Our investment strategy is to focus exclusively on London's West End with the objective of delivering growing and sustainable net rental income over the long term, which will underpin growth in our distributions to shareholders and growth in the value of our property assets.

We achieve growth through investing:

·; Solely in a location where demand and rents have demonstrated great resilience over many years;

·; In local areas and properties within the West End which have, or have potential for, predominantly retail and leisure uses;

·; With the objective of creating significantly higher income through change of use and refurbishment, often starting with run down areas and under-managed or dilapidated buildings and where rental levels are initially modest;

·; In buildings which offer the flexibility to provide a variety of commercial and residential uses and are less prone to obsolescence;

·; To establish clusters of ownerships which allow us to create distinctive destinations, particularly through the management of tenant mix, bringing greater footfall and prosperity;

·; Using our forensic knowledge of the areas in which we operate to adapt and manage our assets effectively and intensively;

·; In the local environment and community to create safe and welcoming areas for our tenants, their customers and local residents.

A key aspect of our success is London's prosperity and growth and, in particular, London's reputation as the world's most popular city for visitors. Tourists from across the UK as well as from overseas are increasingly attracted by the exceptional vitality and diversity of the West End. Recent research has indicated that some 200 million visitors travel into the West End each year, of which 25% are from overseas and 21% are from the rest of the UK outside the south east. It is reassuring that almost 80% of those interviewed continue to give their principal reasons for visiting the West End as sightseeing, shopping, eating out, the performing arts as well as galleries and museums. 79% rated their visit as "good" or "very good" with West End theatre achieving the strongest individual response.

Today, London's reputation as a world centre of creativity in the visual and applied arts has never been greater. It is no coincidence that our investment and regeneration initiatives in Soho, Covent Garden, Chinatown and Charlotte Street are where the West End's creative quarters originated and have flourished for over 300 years since they moved westward following the Great Fire.

All of our investments are adjacent to or within walking distance of London's principal visitor attractions. We foster well known Villages such as Carnaby and Chinatown and, within Covent Garden, the distinctive quarters of Seven Dials, St Martin's Courtyard (a joint venture with The Mercers' Company), Opera Quarter and Coliseum. We have also invested in Charlotte Street, a long established restaurant district, and more recently, in and around Berwick Street, Soho's local high street.

Our strategy is to combine change with continuity. We improve accommodation and encourage mixed uses to create lively areas. Within our ownerships we seek to improve the local environment in partnership with local authorities to attract greater footfall.

All our investments are within fifteen minutes walk of our office, so we have an unrivalled knowledge of our locations. Being "on the spot" we can act very quickly. We are on site every day and we have regular contact with our tenants, the local community and other stakeholders.

A commitment to the local community is an integral aspect of our strategy. We support a number of charities and initiatives associated with the arts, social issues and community projects that have to be located in the West End but need backing to be there. We provide accommodation in our buildings on preferential terms so that these organisations are able to be close to their key stakeholders. We are now actively encouraging these organisations to explore joint programmes and shared facilities. Their activities and specialist knowledge are invaluable to the prosperity and security of the West End and provide us with useful insights on how to adapt our plans for the long term benefit of our own business and the local community.

A reliable, safe and integrated public transport system is essential to the prosperity of London as many millions travel in and out daily. Investment in new rail projects such as Crossrail is to be welcomed. However, construction is lengthy and can cause considerable disruption in the short term. Less heralded, but of equal importance and of more immediate benefit, are on-going improvements to the existing underground and overground networks as well as the new and popular London Cycle Hire scheme. For example, improvements in rail transport from the east of London, and in particular Stratford, will reduce journey times between the West End and the Olympic park to only twenty minutes. The current reconstruction and substantial extension of Tottenham Court Road station as part of the Crossrail project will make this station an important gateway to the West End and improve access to Covent Garden (to the south) and Charlotte Street (to the north).

We work closely with Westminster City Council and the London Borough of Camden, within whose jurisdictions our properties are located, to improve the public realm in and around our Villages, particularly the streets, pavements and lighting. We promote and make substantial financial contributions to schemes which prioritise the needs of pedestrians. These initiatives greatly improve access and safety as well as increasing footfall and dwell time. This year schemes have been completed at Lisle Street and Wardour Street in Chinatown and at Kingly Street in Carnaby. We are discussing further public realm improvements with both local authorities although, in the current financial climate, public funding is becoming more restricted.

All of our investments are in Conservation Areas and many are listed as a consequence of their historic and architectural interest. Together with the intricate variety of uses and their historic street patterns, this contributes to a lively and vibrant atmosphere in our Villages. This valuable historic environment presents us with particular challenges:

·; The average age of our buildings is over 125 years and many have elements which date from the seventeenth and eighteenth centuries. With our experience and an imaginative approach, together with advice from specialist consultants, we introduce improvements and uses which further extend the economic lives of our buildings whilst retaining their character. London's traditional terraced buildings are surprisingly flexible in their layout and we endeavour to make our buildings easily adaptable to a number of potential uses and layouts.

·; Working closely with English Heritage and Westminster City Council we are now exploring a number of initiatives to improve the environmental performance of our historic buildings. We seek to preserve the embodied energy within these valuable existing structures whilst introducing energy saving features.

As a consequence of the prosperity of the West End, there is strong demand across all our areas. This allows us to experiment with new ideas and foster change by encouraging new retail concepts into our Villages. We offer smaller shops on flexible leases which enables tenants to satisfy themselves of the viability of their ideas without any initial long term commitment. We designed Kingly Court in Carnaby for just such retailers and it has been increasingly successful as a location for new ventures, some of which have progressed to take larger shops from us.

Our current strategy is one of expansion across all of our Villages, although the timing and nature of our acquisitions can be unpredictable and opportunistic. Some changes in our portfolio are emerging:

·; Demand is particularly strong for our larger and more modern shops and offices centred in Carnaby and St Martin's Courtyard in Covent Garden;

·; Restaurants, bars and cafes (33% of our wholly owned income) are becoming more significant in our portfolio, with our holdings increasingly clustered around the theatres and cinemas in Covent Garden and near Chinatown;

·; Conversions of smaller, older offices to apartments across our portfolio are increasing, especially in Covent Garden.

Portfolio activity

More properties of interest have come for sale this year and continue to do so. We have acquired properties totalling £65.3 million during the year and have more under negotiation. By value 70% were in Covent Garden, with the remainder in Berwick Street and Charlotte Street. Our acquisitions included fourteen restaurants and cafes and seven shops, with mainly offices above.

As we generally let our shops and restaurants in shell form, the costs of fitting out and obsolescence which we incur are modest. Consequently capital expenditure during the year on our wholly owned portfolio was £9.7 million (2009: £10.3 million) representing only 0.7% of its capital value.

St Martin's Courtyard, our mixed use joint venture with The Mercers' Company, has now opened to the public. The scheme is completing in phases, with the final office accommodation due to be finished by the end of December 2010. Our share of capital expenditure was £12.8 million in the year ended 30 September 2010 and, in the current financial year, our share of the costs to complete the scheme will be approximately £5.0 million.

Once again the value of commercial lettings in our wholly owned portfolio has been very healthy. During the year we let commercial space with a rental value of £4.1 million per annum, compared with an average of £3.0 million over the previous three years. Our lettings this year comprised £2.4 million of shops, £0.6 million of restaurants and £1.1 million of offices.

Vacant Commercial Space at 30 September 2010 (wholly owned portfolio only)

At 30 September 2010 the rental value of wholly owned vacant commercial accommodation held for or under refurbishment was £1.8 million (2009: £1.1 million). This represented 2.6% of the estimated rental value of the commercial elements of our wholly owned properties. The estimated rental value of accommodation vacant and available for letting amounted to £1.1 million (2009: £2.1 million), equivalent to 1.6% of the estimated rental value of the commercial elements of our wholly owned properties. Almost half of this available space was under offer at the year end. These historically low vacancies reflect healthy demand across all uses and encourage us to seek vacant possession of any space where we see potential for improvement.

At the year end, only four of our 311 wholly owned apartments were vacant and ready to let. This is typical of the high level of occupancy we have seen throughout the year. A further 34 were under construction, principally as a result of changes from office use, with a rental value on completion of approximately £0.9 million per annum.

Our share of the estimated rental value of commercial and residential space at St Martin's Courtyard has increased during the year to £5.4 million per annum (2009: £5.1m per annum). 81% of the commercial space by rental value was contracted or under offer at 30 September 2010. We are now just beginning to market the remaining 30 apartments, which represent 10% of the scheme's rental value. Preliminary indications suggest they will let readily.

Our wholly owned portfolio

Our wholly owned portfolio at 30 September 2010 included 315 shops extending to 394,000 sq. ft. They produce 37% of current income, have an average rent of £78,000 per annum and an average unexpired lease term of five years. We have no large shops (estimated rental value over £100,000 per annum) ready to let other than two units at our development at 36/39 Carnaby Street, where already we have strong demand. Of the remaining eighteen smaller shops at the year end, eight were under offer, ten were to let and one was being refurbished.

Whilst demand for shops remains strong, lease lengths particularly of the smaller units are becoming shorter. As demand exceeds supply, we use short and flexible leases actively to manage tenant changes. We believe this approach has benefits for the tenant and provides us with the ability quickly to introduce new retailers and concepts.

Our 189 restaurants, cafes, bars and clubs extending to 453,000 sq. ft. are an increasingly important element of our business, providing 33% of current income in our wholly owned portfolio. 44 of our 100 largest tenants are restaurant businesses. Catering leases are often initially 25 years and, at the year end, the average unexpired term was 13 years. It is rare that we are able to secure vacant possession of restaurants or cafes, as tenants' investment in our properties and the restrictions placed on this planning use in our locations mean the leases are very valuable for the tenant as well as the landlord. At 30 September 2010 two small units were under offer and one cafe was being refurbished.

Our office space remains integral to our mixed use Villages. Whilst demand for offices is cyclical, lettings of offices across our portfolio have improved during the year and continue to do so. Recent purchases and the construction of additional new offices at 36/39 Carnaby Street have slightly increased the total of our office space this year.

The size and types of offices vary in each Village. Our relatively larger (average size 1,500 sq. ft.) and more modern offices are located in Carnaby and are mainly let to fashion and media related businesses. In contrast, demand for offices in Chinatown is for small areas (average size 600 sq. ft.) for solicitors, accountants and other advisors to the East Asian community.

Residential accommodation, which provides 9% of our current income, continues to grow within our portfolio. We have created many of our apartments by conversion from smaller offices, particularly those which cannot be refurbished to standards expected by today's office occupiers. Our policy is to rent rather than sell our apartments. This provides us with the maximum flexibility in the long term management of our investments, where typically the majority of the value is in the shops and restaurants on the lower floors. However we do sell individual apartments in special situations.

Of our 345 apartments, 311 are complete and 34 are under construction. The rental value of the 34 under construction is £0.9m per annum. We have identified potential for up to 40 more units, principally by conversion from office use, which we will progress over the current year.

Carnaby

Carnaby represents 34% of our property assets. Just east of Regent Street it extends across twelve streets. It has many of our larger shops and modern offices for which demand remains very strong.

Responding to the demand for larger units, we have started to redevelop 36/39 Carnaby Street. The scheme includes 9,000 sq. ft. of retail and 9,000 sq. ft. of offices. Demolition of the original buildings, excavations and groundworks are now complete and construction will start in January 2011. The shops should be finished within nine months, and the offices by the end of 2011, somewhat earlier than we had originally anticipated. The total cost of the scheme is approximately £6.0 million. There is already very strong interest to pre-let the shops.

We are now discussing with Westminster City Council further connected phases to redevelop 14/18 Foubert's Place and 22/25 Kingly Street with a mix of restaurant, retail, offices and residential.

Reconstruction of Kingly Street, providing a single surface with high quality granite finish, is almost complete. The street is now traffic free between 11am and 8pm, making it a much more pedestrian-friendly environment. This will enable us to improve and change the use of several of the buildings which we own along the east side of the street and we have already seen an increase in demand for both retail and restaurant space. Recently we have finished one such scheme at 27/28 Kingly Street where we have pre-let the shop (8,000 sq. ft.), most of the offices and the residential accommodation above. At 12/13 Kingly Street basement and ground floor offices have been converted and let as a restaurant, which has just opened.

Some of the most historic areas in Carnaby Village are the small streets and passages immediately to the east of Carnaby in our Newburgh Quarter. Here small, period properties provide a particularly attractive setting both for multi-national retailers for their niche concepts as well as for independent traders. Footfall and demand in Newburgh Quarter has increased appreciably during the year assisted by our marketing initiatives and the re-opening of the nearby Marshall Street leisure centre.

We are continuing to evaluate opportunities for increasing and reconfiguring retail space within Carnaby to adapt to changing demand, together with further conversions of offices to residential use. Although much of the area is now pedestrianised, we are currently discussing with Westminster City Council improvements to Ganton Street which would enhance this busy street in the heart of Carnaby.

Covent Garden

Whilst our wholly owned investments in Covent Garden represent 28% of our property assets, when our 50% interest in the Longmartin Joint Venture is included, it represents 35%, making Covent Garden for the first time our largest investment district.

With the area's historic origins and containing half of the West End's 38 theatres, Covent Garden retains an alternative atmosphere which is very distinct from the rest of the West End. It also includes a long established and flourishing residential community which is expanding. We have carried out a significant number of schemes to convert offices to residential accommodation in recent years. The floor areas of office and residential space are now almost equal in this Village.

In the year ended 30 September 2010 most of our purchases have been in Covent Garden. These have included six restaurants and four shops with offices above, acquired for a total of £47.8 million during the year. All have a number of interesting medium term opportunities for improvement.

Seven Dials with its broad appeal continues to attract new retailers to add to the diverse and interesting retail offer. In common with our other Villages, vacancies remain at an historic low across all uses. Following the success of the street improvements in Monmouth Street, we are currently discussing with Camden Council proposals for traffic management and repaving in Earlham Street west, an important pedestrian route between Soho and Seven Dials.

We have increased our investment in the Opera Quarter, which is becoming increasingly popular following the introduction of better quality operators. Our latest scheme comprising a pre-let restaurant and nine apartments is nearing completion.

Chinatown

Chinatown represents 25% of our property assets where 64 restaurants and 59 shops provide 86% of its income.

Chinatown, with its high concentration of restaurants at the heart of the West End, is benefitting from the increasing number of visitors to London, especially from China and the Far East. Our properties remain fully let and tenant defaults are rare. We continue to see steady progress in rental income and values. As a consequence of the predominance of non-office uses, capital expenditure, which this year amounted to £0.8 million, remains exceptionally low in relation to the size of our investment.

Westminster City Council's works to the Chinatown section of Wardour Street, together with much of Lisle Street, were completed during the summer. The pedestrian environment in these streets is now much improved, encouraging visitor access to Chinatown from Coventry Street, which reputedly has the highest footfall of any street in Europe.

The redevelopment of Leicester Square, immediately to the south of Chinatown, is about to commence. With a budget of £10 million this will be the West End's most significant public realm improvement scheme since Trafalgar Square in 2003. Together with the opening of an important new hotel on the site of the former Swiss Centre, this will undoubtedly add to the prosperity of the area.

Berwick Street

We have chosen to invest in Berwick Street because, although at the heart of Soho and with good footfall, buildings and the public realm are dilapidated, ownership and tenant mix are disparate, and as a consequence rental levels are modest.

The southern end of Berwick Street and the areas immediately to the west are dominated by publicly owned buildings which are either empty or are in poor repair, having lacked investment in recent years. This gives the area a shabby atmosphere which contributes to the vacancies within Berwick Street market and in adjacent buildings. We support Westminster City Council's designation of Berwick Street as an Action Area, which will stimulate investment in the area as a whole.

We continue to add to our holdings and this year our purchases included six shops and three restaurants.

We intend to acquire and refurbish additional properties as they become available. Extending our ownership will allow us to advance our ideas for the street by developing a cohesive strategy for a broad mix of retailers that particularly reflects the needs of the local residential and working communities and the traditions of the area. Retaining its character as "Soho's local high street", this village will have a wider retail mix and a different atmosphere when compared with our other Villages.

Charlotte Street

It is some seven years since we first identified this neighbourhood at the southern end of Charlotte Street, with its concentration of restaurants and cosmopolitan atmosphere, as a suitable location for long term investment. Although in recent years we have found ourselves being outbid, our patience is now bearing fruit as properties are becoming available at sensible prices.

With major investment planned by others in many of the adjacent streets as well as considerable activity around Tottenham Court Road, we are now adding to our holdings.

Longmartin Joint Venture

Our Longmartin Joint Venture with The Mercers' Company owns a 1.9 acre island site on the corner of Long Acre and Upper St Martin's Lane, close to Leicester Square's underground station.

St Martin's Courtyard, our redevelopment and regeneration project which fronts Long Acre, Upper St Martin's Lane and Mercer Street is now substantially complete. The final phase, comprising offices which have been pre-let, is expected to be completed by the end of 2010, some four months later than expected.

At 30 September 2010, 81% of the commercial space by rental value had been let, pre-let or was under offer. This includes sixteen of the 22 shops, all the restaurants and 76% of the offices.

Following completion of construction works, the remaining 30 apartments within the scheme are now being marketed and should let readily. We expect that by Spring 2011 the remaining vacant commercial space in the scheme will have been substantially let.

We are considering further up-grading of office accommodation in Wellington House, together with

schemes to improve other unmodernised properties adjacent to St Martin's Courtyard.

* Shaftesbury Group has a 50% interest in the figures shown above

Results

Our profit before taxation for the year, adjusted as shown above to eliminate the surplus realised on property disposals and the fair valuation movements in respect of investment properties and financial derivatives, amounted to £22.3 million, an increase of 4.7%, compared with an adjusted profit of £21.3 million in the previous year. The profit on ordinary activities before taxation reported in the Group Statement of Comprehensive Income amounted to £171.9 million (2009: loss £58.1 million).

Our rental income has continued to rise, with rents receivable across the Group (adjusted for lease incentives) increasing from £61.7 million to £65.7 million, an increase of £4.0 million. For the wholly owned Group, after eliminating the impact of property acquisitions and disposals, rents invoiced increased by 3.0% this year compared with the previous year (2009: 3.9% year-on-year increase).

The Group has not experienced any increase in tenant defaults over the year, with a charge in the Group Statement of Comprehensive Income of £0.5 million (2009: £0.5 million) in respect of bad and doubtful debts. The amount of vacant space, already low, has reduced further over the year.

Our share of the current rental income in the Longmartin Joint Venture, where the St Martin's Courtyard scheme is now almost complete, has increased by £0.7 million to £2.2 million during the year. As units are handed over to tenants and further lettings are completed, our share of Longmartin's income will rise rapidly in the current financial year.

The increase in the Group's property outgoings this year of £0.9 million to £8.1 million (2009: £7.2 million) arose mainly in the first half and is principally attributable to:

- Obtaining vacant possession during the year of buildings, particularly in Carnaby, for important new schemes, which has both reduced our income and increased non-recoverable costs in the short term. We do not capitalise property outgoings or interest incurred in our schemes.

- With uncertainty continuing in the wider economy we have increased marketing expenditure, with a number of new initiatives to promote each of our Villages to both domestic and overseas retailers and visitors. In Carnaby we organised a number of events to mark the 50th anniversary of the start of the "Swinging Sixties", when the street first came to international prominence;

- We are bearing a greater proportion of service charge expenditure, particularly in our lettings of smaller offices and the smallest shops, and also as a result of the increasing amount of residential accommodation in our portfolio.

Administration expenses include a charge of £1.7 million (2008: £0.7 million) in respect of equity settled remuneration. The accounting charge in respect of share options has increased by £0.8 million to £1.3 million as our portfolio and our share price continues to out-perform, increasing the likelihood of vesting of performance-based share options. The charge for employer's national insurance liability on share awards and share options has increased by £0.2 million to £0.4 million as a result of the rise in the Company's share price over the year and the expectation that more options will vest in the coming years.

Interest payable, including settlements under interest rate derivative contracts, amounted to £27.2 million, compared with £26.6 million in the previous year. Short term interest rates have remained at unprecedented low levels throughout the year. Although this has increased the cost of settlements under our £360 million of interest swap contracts, we are benefitting from these low rates on our unhedged floating rate bank debt of £94.5 million. Currently our marginal cost of additional bank debt is around 1.5%.

Net interest payable was covered 1.8 times by operating profit before investment property disposals and valuation movements (2009: 1.8 times). Based on the interest cover covenants and definitions contained in our banking agreements, net interest payable was covered 2.1 times by net property income (2009: 2.1 times), compared with the minimum ratio of 1.5 times we are required to maintain. REIT legislation requires us to maintain a minimum ratio of net rental income for properties in the REIT group against attributable interest payable of 1.25 times. The ratio this year was approximately 1.8 times.

With market expectations that interest rates will remain at current low levels for some time, the fair value deficit of our long term interest rate swaps has increased by £34.4 million to £80.5 million at the year end. This non-cash accounting provision, which is excluded in the calculation of our banking covenants, will gradually reverse as interest rates return to their long term historic averages. We can see no commercial benefit at present in terminating any of our interest rate hedging, which would involve crystallising this accounting provision. However we continue to monitor opportunities to restructure our swaps as market sentiment changes.

The tax charge on the adjusted profit for the year was £0.2 million, unchanged from last year, and arises solely in our Joint Venture. Longmartin remains outside the Group's REIT election, so that our share of its results continues to be subject to provisions for corporation tax and deferred tax liabilities.

Adjusted diluted post-tax earnings per share for the current year amounted to 9.7p compared with 11.2p last year, a reduction of 13.4%. Although our profits have risen compared with last year, we have a greater number of shares in issue following the Rights Issue in June 2009. The unadjusted diluted post-tax earnings per share shown in the Group Statement of Comprehensive Income for the current year amounted to 73.0p compared with a loss per share last year of 31.3p.

Unadjusted shareholders' funds at the year end shown in the Group Balance Sheet totalled £863.7 million, an increase over the year of £146.4 million. Adjusting these amounts to exclude the fair value of financial derivatives and the deferred tax arising on property revaluations in the Longmartin Joint Venture, our adjusted net asset value becomes £948.2 million, equivalent to a diluted net asset value per share of £4.14 per share (2009: £763.4 million equivalent to £3.35 per share), an increase of £184.8 million.

Dividends

Distributions charged in the Group Statement of Comprehensive Income this year amounted to £22.2 million, or 9.75p per share. This compares with a total distribution last year of £18.3 million, or 13.5p per share, paid on our share capital prior to the Rights issue in June 2009.

A final dividend in respect of the year ended 30 September 2010 of 5.25p per share, amounting to £11.9 million will be proposed at the 2011 Annual General Meeting. This will result in total distributions in respect of the financial year of £23.3 million. This compares with our adjusted profit after tax of £22.1 million which this year has been reduced by the additional accounting charge for equity settled remuneration arising from the continuing out-performance of our portfolio and our share price.

The interim dividend was paid, and final dividend will be paid entirely as Property Income Distributions ("PID"). Real Estate Investment Trust legislation broadly requires us to distribute of a minimum of 90% of net rental income, calculated by reference to tax rather than accounting rules. Our distributions are in excess of this minimum amount. With continuing growth in our rental income, together with an increased contribution from our Longmartin Joint Venture from 2011, we expect to maintain steady growth in our dividends, fully covered in future by adjusted annual post-tax profits.

Finance

Our strategy is to secure flexible long and medium term debt finance together with non-speculative hedging of the interest rate exposure on a substantial portion of our floating rate debt. This finance strategy is intended to match our funding with our assets which are held for long term investment, and to provide reasonable certainty of finance costs whilst limiting the Group's exposure to adverse movements in interest rates.

The Board keeps under review the level of current and forecast debt and the Group's strategies regarding the appropriate levels of debt and equity finance, the maturity profile of loan facilities and interest rate exposure and hedging.

The nominal value of debenture and bank borrowings at the year end totalled £516.7 million, an increase of £94.5 million over the year. Cash outflows during the year on acquisitions, less capital receipts, amounted to £70.2 million. Expenditure on the Group's portfolio totalled £22.7 million, of which our share of the Longmartin Joint Venture accounted for £14.3 million. Revenue operations after net interest payments produced a net cash surplus of £26.4 million, compared with £20.6 million in the previous year. Tax payments, which totalled £7.4 million (2009: £7.2 million), included £7.2 million in respect of the settlement of our 2007 REIT conversion charge liability. At the year end £3.8 million of this liability remained to be settled by January 2011.

Gearing at the year end, calculated by reference to our adjusted net assets referred to above and the nominal rather than book value of our debenture and net bank debt, was 55% (2009: 55%). The ratio of the nominal value of debenture and net bank debt to the market value of our property assets was 35% (2009: 35%).

We monitor our overall committed facilities at all times to ensure we have sufficient resources to meet our future cash flow commitments with comfortable headroom and we operate well within our banking covenants. Any new prospective commitments, such as property acquisitions, are considered in the light of funding currently available to the Group.

At the year end committed bank facilities totalled £575.0 million, unchanged over the year, with a weighted average maturity of 6.6 years (2009: 7.6 years). Committed unutilised facilities at the year end totalled £119.3 million (2009: £213.8 million)

The average margin over LIBOR we paid on amounts drawn from our bank facilities at the year end was 0.76%. If we fully drew all of our facilities, the weighted average margin we would pay would be 0.81%. These margins, which are fixed throughout the terms of our present facilities, are much lower than would be obtainable for similar arrangements in current debt markets.

We have fixed rate hedging in place on £360.0 million of our £455.7 million of floating rate bank debt, leaving 21% unhedged. The rates range from 4.59% to 5.15% (excluding margin) with a weighted average rate at the year end of 4.87%. The hedging contracts have weighted average maturity of 22.4 years (2009: 23.4 years).

At the year end, reflecting both our hedged and unhedged bank debt, the weighted average cost of bank borrowings including margin was 4.74%, compared with 5.30% at the previous year end. Including our long term Debenture debt, our overall weighted cost of debt at 30 September 2010 was 5.13% (2009: 5.78%).

At 30 September 2010, the fair value of the Group's interest rate derivatives represented a liability of £80.5 million (2009: £46.1 million). Our strategy of taking long term, fixed rate swaps leads to greater volatility in this non-cash mark-to-market calculation, particularly in the current environment of unprecedentedly low interest rates. The commercial certainty of fixing our interest costs on a substantial portion of our debt, at rates which we believe will prove attractive once rates return to their historic averages, outweighs this accounting volatility.

The deficit arising on the fair value of the Group's long term Debenture debt, which is not reflected in our results, amounted to £13.6 million which has increased over the year by £2.8 million as a result of the decline in long term interest rates, particularly in the latter months of the year.

The Group has no legal obligation to crystallise these non-cash fair value deficits by early refinancing of its fixed rate debt or early termination of its interest rate hedges, but may consider doing so where there is a clear economic benefit to the business.

The Board monitors both actual and forecast performance against the financial covenants contained in the Group's bank facilities and Debenture trust deed. Each of our facilities is secured against designated property assets and in addition each of the lenders, including the Debenture trustee, have a shared floating charge over the assets of the parent company and its wholly owned subsidiaries.

The outstanding Debenture stock of £61.0 million is secured by a first charge on property assets, where we must maintain a minimum value of 150% of the stock outstanding, and where the net rental income has to match the coupon of 8.5%. We are comfortably in excess of these covenants based on assets currently charged.

Our banking covenants are structured on a Group-wide basis and are broadly similar for each of our facilities. The financial covenants, together with their status at 30 September 2010, were as follows:

Based on the results for the year ended 30 September 2010, net property income could fall by approximately £17 million (equivalent to 29% of this year's Group net property income) before the interest cover covenant was reached. Based on the year end property valuations and debt levels, property values across the Group would have to decline by around 44% before we reach our loan to value or gearing covenant limits. The actual future headroom on covenants will be affected by a number of factors, including future acquisitions, expenditure commitments and valuation movements.

We believe that, with our good income/interest cover, modest gearing and future expenditure commitments and overall security structure, existing and potential new lenders will continue to view us to be a secure customer. We are confident that we will be able secure additional long term finance when the need arises. Inevitably, pricing of new arrangements would reflect current conditions in debt markets.

Performance and Benchmarking

The table above summarises our performance this year against our chosen benchmarks.

As explained in previous years, we have been unable to identify a published property performance index which relates specifically to a portfolio of mixed use buildings such as ours, or recognises restaurant uses as a component, an important element of our investment strategy. We have therefore used for comparison purposes the IPD UK Monthly Indices which track movements across all main commercial property categories throughout the UK on a monthly basis. Shaftesbury is a constituent of the FTSE 350 Real Estate Index.

As shown in the Performance Summary, taking into account acquisitions and capital expenditure during the year, our portfolio grew in value by 14.2% over the year, which matched the increase our benchmark IPD.

Property values generally recovered sharply over the year, particularly in the first half. As our portfolio had previously declined by a much lower percentage from the start of the decline in the property market in 2007, it is unsurprising that we have not out-performed our benchmark this year.

Taking 1 October 2007 as the start of the present cycle in property markets, our portfolio declined in value over the three years to 30 September 2010 by 5.6%, compared with a fall of 33.9% recorded by our benchmark IPD Index. We expect our properties, which have a consistent record of greater stability in values, rising income and rental values and limited obsolescence, will continue to out-perform the wider market over the long term.

Our portfolio recorded a total return of 18.5% for the year, below the total return of 22.6% recorded by our IPD benchmark, due to the lower yield profile of our property assets.

We recorded a positive total shareholder return for the year ended 30 September 2010 of 24.4% compared with the FTSE 350 Real Estate Index which recorded a return of 2.1% over the year.

Key Performance Indicators

The key financial objective of the Group is to deliver to shareholders sustained out-performance in the long term growth of its net asset value. Fundamental to this objective is the capital value growth delivered by the Group's property assets. The Group's financial key performance indicators measure its portfolio performance, both in terms of capital value and total returns, against the publicly-available IPD UK Monthly Index which, as explained above, tracks movements across all main commercial property categories throughout the UK on a monthly basis. The Group's performance against this Index is set out above.

The rental prospects of the Group's portfolio are the key driver of its long term performance. The key non-financial performance indicators related to rental income growth used within the business measure are:

- the extent to which rental levels are achieved in excess of the market rental values assessed by the Group's external valuers at their last valuation and;

- the ability of management to maximise the occupation of its properties and, where vacancies arise, minimise the time that properties are vacant and not producing income. In the case of properties being refurbished, the void period monitored includes time spent in designing schemes, obtaining planning consents, carrying out physical works and marketing up to the point of completing lettings. For vacant properties which are ready to let, marketing periods are monitored and assessed.

The Board is satisfied that the Group's performance relating to the achievement of rental levels is meeting its expectations. Retail, restaurant and residential rents have continued to meet or exceed valuers' estimates. Demand for offices has improved over the year and rents achieved have generally met valuers' expectations and in some instances incentives granted to tenants, usually in the form of rent-free periods, have been less than anticipated.

The amount of vacant space across the portfolio, already very low, has reduced over the year. The Group has generally been successful in retaining office tenants where leases expire or tenants have the option to exercise lease breaks. Where space has become vacant, void periods have generally remained at acceptable levels. The improvement in demand for offices has been reflected in shorter void periods. The Group continues to experience delays in schemes due to problems beyond its control, such as delays in the planning process or the failure of utility companies to meet their service obligations.

Prospects

Some negative sentiment is to be expected in the New Year as the increase in taxes and substantial cost cutting by Local Authorities and Central Government begin to take effect. Whilst the West End cannot be completely immune from these national factors, we do not expect to see any material deterioration in the buoyant local economy.

We intend to pursue further acquisitions which match our very focussed strategy and, after a very quiet period in 2008 and 2009 in our investment market, activity is returning to more normal levels.

Our success in securing lettings in the St Martin's Courtyard scheme will result in a rapid increase in rental income in the Longmartin Joint Venture in the current financial year.

We are confident that with strong demand for all uses within our chosen areas continuing for the foreseeable future, and innovative management of our portfolio, we shall continue to deliver sustained long term out performance in income and capital values.

Jonathan S. Lane - Chief Executive

Brian Bickell - Finance Director

30 November 2010

Portfolio analysis at 30 September 2010

* Longmartin statistics include space under construction in the St Martin's Courtyard scheme and adjacent accommodation not part of the Courtyard scheme.

** Shaftesbury Group's share.

Basis of Valuation at 30 September 2010

Notes

1. The Market Values at 30 September 2010 (the 'date of valuation') shown above in respect of the five Villages are in each case the aggregate of the market values of several different property interests located within close proximity which, for the purpose of this analysis are combined to create each Village. The different interests within each Village were not valued as a single lot.

2. Current gross income includes total actual and 'estimated income' reserved by leases. No rent is attributed to leases which were subject to rent free periods at the date of valuation. Current gross income does not reflect any ground rents, head rents or rent charges and estimated irrecoverable outgoings at the date of valuation. 'Estimated income' refers to gross estimated rental values in respect of rent reviews outstanding at the date of valuation and, where appropriate estimated rental values in respect of lease renewals outstanding at the date of valuation where the Market Value reflects terms for a renewed lease.

3. Estimated rental value ("ERV") is the respective valuers' opinion of the rental value of the properties, or parts thereof, reflecting the terms of the relevant leases or, if appropriate, reflecting the fact that certain of the properties, or parts thereof, have been valued on the basis of vacant possession and the assumed grant of a new lease. Estimated rental value does not reflect any ground rents, head rents or rent charges and estimated irrecoverable outgoings.

4. The percentage of current gross income and the percentage of ERV in each of the use sectors are expressed as a percentage of total gross income and total ERV for each village.

5. The vacancy rate by percentage of ERV is the ERV of the vacant accommodation within each use sector, on a village-by-village basis, expressed as a percentage of total ERV of each use sector in each village. The vacancy rate includes accommodation which is awaiting or undergoing refurbishment and not available for occupation at the date of valuation.

6. Average unexpired lease length has been calculated by weighting the leases in terms of current rent reserved under the relevant leases and, where relevant, by reference to tenants' options to determine leases in advance of expiry through effluxion of time.

7. Where mixed uses occur within single leases, for the purpose of this analysis the majority use by rental value has been adopted.

8. The initial yield is the net initial income at the date of valuation expressed as a percentage of the gross valuation. Yields reflect net income after deduction of any ground rents, head rents and rent charges and estimated irrecoverable outgoings at the date of valuation.

9. The initial yield ignoring contractual rent free periods has been calculated as if the contracted rent is payable from the date of valuation.

10. Equivalent yield is the internal rate of return, being the discount rate which needs to be applied to the expected flow of income so that the total amount of income so discounted at this rate equals the capital outlay at values current at the date of valuation. The Equivalent Yield shown for each Village has been calculated by merging together the cash flows and Market Values of each of the different interests within each Village and represents the average Equivalent Yield attributable to each Village from this approach.

11. The tone of rental values and yields is the range of rental values or yields attributed to the majority of theproperties.

12. All commercial floor areas are net lettable. All residential floor areas are gross internal.

Group Statement of Comprehensive Income

For the year ended 30 September 2010

The notes form an integral part of this Group financial information.

Group Balance Sheet

As at 30 September 2010

The notes form an integral part of this Group financial information.

Group Cash Flow Statement

For the year ended 30 September 2010

The notes form an integral part of this Group financial information.

Group Statement of Changes in Shareholders' Equity

For the year ended 30 September 2010

The notes form an integral part of this Group financial information.

Notes to the Preliminary Announcement

For the year ended 30 September 2010

1. Basis of preparation

The preliminary announcement does not constitute full financial statements.

The results for the year ended 30 September 2010 included in this preliminary announcement are extracted from the audited financial statements for the year ended 30 September 2010 which were approved by the Directors on 30 November 2010. The auditors' report on those financial statements was unqualified and did not include a statement under Section 498(2) or 498(3) of the 2006 Companies Act.

The 2010 Annual Report is expected to be posted to shareholders on 23 December 2010 and will be considered at the Annual General Meeting to be held on 11 February 2011. The financial statements for the year ended 30 September 2010 have not yet been delivered to the Registrar of Companies.

The auditors' report on the financial statements for the year ended 30 September 2009 was unqualified and did not include a statement under Section 498(2) or 498(3) of the 2006 Companies Act. The financial statements for the year ended 30 September 2009 have been delivered to the Registrar of Companies.

2. Revenue from properties

Rents receivable includes lease incentives recognised of £1.1 million (2009: £0.4 million).

3. Segmental information

The chief operating decision maker has been identified as the Board, which is responsible for reviewing the Group's internal reporting in order to assess performance and the allocation of resources.

The Group's properties, which are all located in London's West End, are managed as a single portfolio. Its properties, which are of similar type, are combined into villages. All of the villages are geographically close to each other and have similar economic features and risks.

For the purposes of IFRS 8, each village is considered to be a separate operating segment. However, in view of the similar characteristics of each village, and the reporting of all investment, income and expenditure to the Board at an overall Group level, the aggregation criteria set out in IFRS 8 have been applied to give one reportable operating segment.

The Board assesses the performance of the reportable operating segment using measures of net property income and investment property valuation. All financial information provided to the Board is prepared on a basis consistent with these financial statements and, as the Group has only one reportable segment, the reconciliation of the measures used in assessing the business to the reported results are set out in the Group Statement of Comprehensive Income.

4. Property charges

5. Net property income

6. Charge in respect of equity settled remuneration

7. Profit on disposal of investment properties

8. Finance costs

9. Taxation

Factors affecting the tax charge:

10. Earnings/(loss) per share

The difference between the weighted average and diluted average number of Ordinary Shares arises from the potentially dilutive effect of outstanding options granted over Ordinary Shares.

The adjusted earnings per share, calculated in accordance with the guidance issued by the European Public Real Estate Association, is considered to give a better indication of the Group's underlying revenue performance before property disposals and movements in the valuation of investment properties and financial derivatives.

11. Dividends paid

A final dividend in respect of the year ended 30 September 2010 of 5.25p per Ordinary share amounting to £11.9 million will be proposed at the 2011 Annual General Meeting. If approved, this dividend will be paid on 18 February 2011 to shareholders on the register at 28 January 2011. The dividend will be accounted for as an appropriation of revenue reserves in the year ending 30 September 2011.

12. Investment properties

Investment properties were subject to external valuation as at 30 September 2010 by qualified professional valuers, being members of the Royal Institution of Chartered Surveyors, either working for DTZ Debenham Tie Leung Limited, Chartered Surveyors (in respect of the Group's wholly owned portfolio) or Knight Frank LLP, Chartered Surveyors (in respect of properties owned by Longmartin Properties Limited), both firms acting in the capacity of External Valuers. All such properties were valued on the basis of Market Value in accordance with the RICS Valuation Standards (Sixth Edition).

Capital commitments

13. Trade and other receivables

14. Cash and cash equivalents

Cash balances at 30 September 2010 included an amount of £1.2 million (2009: £2.5 million), being the Group's share of a deposit made by the Longmartin Joint Venture in respect of payment obligations under a building contract. The deposit will be released in full on completion of the building contract.

15. Trade and other payables

16. Taxation payable (non-current)

17. Borrowings

The Group's finance lease obligations represent its share of the net present value of amounts payable under leases with unexpired terms of 170 years held by Longmartin Properties Limited.

Availability and maturity of Group borrowings

The Group's First Mortgage Debenture Stock carries a rate of interest of 8.5%, which is fixed until maturity in March 2024.

The Group's current bank facilities, which expire between April 2016 and March 2021, are at credit margins which are fixed for the life of the facilities. At 30 September 2010, the actual average credit margin on the amounts drawn under those facilities was 0.76% (2009: 0.71%). If those facilities had been fully drawn at that date, the average credit margin payable would have been 0.81% (2009: 0.81%).

The Group has in place interest rate swaps to hedge £360 million of floating rate bank debt, at fixed rates in the range 4.59% to 5.15%, with a weighted average rate at 30 September 2010 of 4.87%. The swaps, which are settled against three month LIBOR, expire between December 2027 and November 2038 (weighted average term 22.4 years).

Interest rate profile of interest bearing borrowings