Half Yearly Report

CAPITAL SHOPPING CENTRES GROUP PLC

INTERIM REPORT FOR THE HALF YEAR ENDED 30 JUNE 2012

RESULTS DEMONSTRATE CONTINUING RESILIENCE OF CSC'S PRIME ASSETS

David Fischel, Chief Executive of Capital Shopping Centres Group PLC, commented:

"Our prime UK regional shopping centres have continued to show considerable resilience, with robust operating metrics supporting sound financial results. We have made good progress on our two strategic priorities for 2012, ensuring that our centres produce a strong performance relative to current economic conditions while positioning each asset for longer term organic growth from an increasing pipeline of active management projects and extensions."

Enquiries:

A presentation to analysts and investors will take place at UBS, Room 29, 1 Finsbury Avenue, London EC2M 2PP at 09.30BST on 26 July 2012. The presentation will also be available to international analysts and investors through a live audio call and webcast. The presentation and this announcement will be available for download from our website www.capital-shopping-centres.co.uk.

NOTES TO EDITORS

FIRST HALF 2012 HIGHLIGHTS

Operational highlights

Robust operating performance supporting earnings and valuations:

·; Occupancy remains firm at the 95 per cent level reported in the first quarter IMS (31 December 2011: 97 per cent)

·; Like-for-like net rental income down 2.3 per cent, with rental increases offset by the effect of lower occupancy following tenant failures

·; Underlying earnings per share up 1 per cent to 8.1 pence

·; Resilient property values: unchanged, out-performance compared with IPD retail down 2.9 per cent

·; Encouragingly footfall has been steady since the end of first quarter and down only one per cent year to date, out-performing the national benchmark

Tenant mix improvements:

·; 79 new long term leases signed, £15 million annual rent, in aggregate around 6 per cent above previous passing rent and in line with valuation assumptions

·; 14 brands brought to CSC centres for the first time including Schuh Kids, Lavazza, Nespresso and Locker Room

Major organic projects positioning the business for the future:

·; £1 billion ten year pipeline of projects including major extensions and active management initiatives

·; Lakeside - proposed 325,000 sq. ft. extension awaiting determination and plans for new leisure destination published

·; Watford - agreement with Watford Borough Council to acquire and redevelop the adjacent Charter Place creating with The Harlequin a retail, catering and leisure destination of over 1 million sq. ft.

·; Nottingham - active discussions with retailers and local authority regarding a strategy for the city centre

·; Acquisitions at Braehead and Cribbs Causeway of adjacent property with potential for future development

Strong financial position:

·; Loan to value ratio unchanged at 48 per cent; cash and available facilities of £420 million

·; Wholly owned assets, mostly freehold, make up 75 per cent of investment properties by value giving flexibility to recycle equity

·; £49 million was realised in March from part disposal of Equity One shareholding

Financial highlights (1)

(1) Please refer to glossary for definition of terms

(2) 30 June 2011 income data includes Trafford Centre results for the 5 month period from acquisition in January 2011.

OPERATING AND FINANCIAL REVIEW

OPERATING REVIEW

INTRODUCTION

Capital Shopping Centres has delivered a robust operating performance in the first half of 2012, supporting sound earnings and a resilient valuation outcome. These results demonstrate the continuing attraction of prime regional shopping centre assets against the backdrop of a weak national economy.

We have made good progress on our two strategic priorities for 2012, ensuring that our centres produce a strong performance relative to current economic conditions while positioning each asset for longer term organic growth.

We are working on a range of projects to enhance our centres and reinforce their position as the most vibrant and dynamic retail and leisure destinations in their communities.

CSC is in a strong financial position with a debt to asset ratio of 48 per cent. We are looking at steps to improve our overall financial flexibility to enable us to build further on the strong momentum within the business.

Chart 1 - CSC asset valuations

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Chart 1 illustrates the extent of CSC's focus, with two thirds by value invested in five of the UK's eight super-regional out-of-town centres and over 85 per cent in ten of the UK's top 25 shopping centres. These top centres are best positioned to benefit from the current retail trends of customers increasingly favouring highest quality destinations and retailers focusing on fewer, but flagship, stores.

Retail property occupational market background

The unsettled macro environment remains a significant influence on the UK retail property occupational market. The UK economy has been performing poorly for some time with a third consecutive quarter of negative GDP growth to June 2012.

For CSC, tenant failures are the most direct effect of the weak environment, with some short term disruption while agreements are reached with successor or replacement operators. Further, current conditions reinforce the importance of CSC's pro-active approach to management of lease expiries as retailers focus intensely on optimising their pan-UK store network to ensure they have the right stores in the right locations.

External statistics indicate that average disposable income continues to fall but, with inflation easing and in particular fuel costs falling, the rate of decline has been slowing this year. Consumer confidence has not improved in the period and the BRC's non-food like-for-like sales index continues to show marginal declines. Against this backdrop, the level of retail spend and footfall at CSC centres is encouraging evidence of the strength of CSC's business.

BRC data also shows non-store sales continuing to record above-trend growth. For many retailers, the role of the store is broadening. As well as driving in-store sales, the shop is increasingly functioning as a brand and product showroom with the objective of driving revenues across all their channels. In many cases this means focusing investment on fewer stores which offer more theatre and personal engagement to the visitor and allow access to the full range either physically or complemented by online capabilities within the store.

As a further dynamic, construction of new shopping centre space, which was curtailed during the credit crisis, remains exceedingly low and is not expected to pick up until a sustained economic upturn occurs. The lack of new supply, particularly of units suitable for modern retailing, is to the benefit of existing prime centres such as CSC's.

Retail property investment market background

Chart 2 - Comparison of CSC yield and 10 year gilt yield

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Chart 2 illustrates the extent to which yields on gilts and other fixed income instruments have dropped below those of retail property. In this context prime shopping centres represent an attractive asset class particularly to long term investors such as major pension funds and sovereign wealth funds.

Yields for prime regional shopping centres such as those owned by CSC have remained stable in the period. Conversely, investor concern about the occupational market is affecting appetite for secondary assets and causing yields for secondary shopping centres to increase markedly and values to come under pressure.

Property valuations

The aggregate market value of CSC's investment properties was broadly steady in the first half of 2012. This represents a significant out-performance of IPD UK monthly index (retail), which showed 2.9 per cent negative capital growth in the period.

Overall, a marginal yield improvement was offset by a small reduction in rental values in the period, but there was a range of outcomes for both factors across individual centres. Notable movements included:

·; positive evidence on new lettings and recent rent reviews increasing ERVs at Trafford Centre and Manchester Arndale

·; outward yield movement at Victoria Centre, Nottingham, due to CSC building increased flexibility on lease terms in the run-up to development; and at The Potteries, Stoke-on-Trent, to allow for risk in the upcoming lease expiry cycle

·; the valuer taking a more cautious approach to expected rents on the few remaining unlet units at St David's, Cardiff

·; improved yield at Braehead due to letting evidence and increased footfall following tenant mix improvements in 2011 and at Metrocentre reflecting reduced risk following further progress on the 2011/12 lease expiries

ROBUST OPERATING PERFORMANCE

Despite the weak trading environment, CSC has generated a robust operating performance.

Net rental income

Chart 3 - Growth in like-for-like net rental income

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After a 3.6 per cent increase in 2011, like-for-like net rental income fell 2.3 per cent in the first six months of 2012. While rental revenue increased £10 million due to an extra month of The Trafford Centre and marginal overall rent increases at existing centres, the impact of vacancy and related direct costs has reduced like-for-like net rental income in the period.

Occupancy

Occupancy remains firm at the 95 per cent level reported at the end of the first quarter (31 December 2011: 97 per cent).

By way of comparison with the CSC occupancy ratio, UK shop vacancy amounts to 15 per cent (source: Local Data Company, May 2012).

The reduction in CSC's occupancy since the year end is the result of tenant administrations and we continue to take a robust approach to relettings which could result in this slightly higher level of vacancy continuing in the short term.

At 30 June 2012 CSC had 80 units and 3 per cent of rent occupied by tenants in administration and not yet relet (31 March 2012: 78 units and 3 per cent of rent; 31 December 2011: 50 units and 2 per cent of rent). 27 of these units (1 per cent of rent) are being traded during administration. The remaining 53 units (2 per cent of rent) are treated as unoccupied.

At 30 June 2012 CSC had 129 short-term leases which represented 2 per cent of passing rent, 2 per cent of space and 3 per cent of ERV (31 December 2011: 1 per cent, 2 per cent and 4 per cent respectively).

Footfall

Footfall at CSC's centres continued to outperform the national benchmark as measured by Experian. Encouragingly the number of customer visits is unchanged year on year since the end of the first quarter, in aggregate a one per cent reduction in the first six months compared to a 3 per cent reduction in the benchmark. Footfall remains well above the visitor numbers of 2010.

Retailer sales

Retailer sales in CSC centres were broadly stable in the year to 30 June 2012, out-performing the national trend. The benchmark BRC non-food like-for-like index has indicated declines for the last seven quarters.

The estimated occupancy cost ratio (annual rent to retailer turnover) is 13.0 per cent excluding anchor stores, compared to 13.2 per cent for the year ended 31 December 2011 and 13.7 per cent for the year ended 30 June 2011.

TENANT MIX IMPROVEMENTS

Lettings

We have made good progress in the period in agreeing leases which enhance or reinforce the tenant mix in our centres.

79 new long term leases have been agreed, representing £15 million of new annual rent, in aggregate approximately 6 per cent above previous passing rent and in line with valuation assumptions for those units. These include:

·; a major global brand already trading in several CSC centres to double its space at Manchester Arndale and to open in Harlequin, Watford, and The Glades, Bromley in September 2012

·; significant tenant mix improvements at individual centres including Hugo Boss doubling its space at Trafford, Thomas Sabo to open at Victoria Centre, Nottingham and Braehead, River Island to take a flagship store at St David's, Cardiff, and Forever 21 now open at The Trafford Centre

·; more "firsts for Wales" at St David's, Cardiff, including two new catering operators

·; 14 new brands to CSC including Locker Room by Footlocker and Schuh Kids at Lakeside, Lavazza and Nespresso at The Trafford Centre

Chart 4 - Lease expiry profile

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CSC's average lease maturity has increased slightly to 8.1 years (31 December 2011: 7.5 years). As lease expiries are an area where the weak macro environment can have an impact on our business, centre-specific concentrations of expiries in the next few years are being managed closely:

·; the Metrocentre 2011/12 expiries process is progressing well, with over three quarters now settled or in solicitors' hands

·; we are starting to implement our plans for the 2013 expiries at each of The Trafford Centre, Cribbs Causeway and The Potteries, Stoke-on-Trent

MAJOR ORGANIC PROJECTS POSITIONING THE BUSINESS FOR THE FUTURE

As consumers and retailers focus their attention and investments on a smaller number of retailing destinations, one of our strategic priorities for 2012 and beyond is to position our centres to fulfil a broader range of their needs in a vibrant and dynamic environment:

·; active management initiatives totalling some £200 million to the end of 2017 are driving change across most centres

·; we have recently secured seven planning consents, with other applications awaiting determination and more being prepared

·; we have recently acquired adjacent property at Braehead and Cribbs Causeway to give us flexibility for future development. We are in the process of acquiring further sites around other centres

·; major extensions are now being planned at five centres, starting with Lakeside, Nottingham and Watford with Braehead and Cribbs Causeway to follow. We aim to be on site with at least one of these projects during 2014. These projects would add around 2 million sq. ft. including, for all five, a significantly enhanced catering and leisure concept

·; in aggregate, our plans project an overall investment of around £1 billion over the next ten years

Significant progress in the first half includes:

Lakeside

·; our application for a 325,000 sq. ft. extension is awaiting determination. Our current objective is for work to commence in 2014, with the majority of the c. £180 million investment made within two years of commencement

·; we have submitted a further planning application for a 34,000 sq. ft., 81 bed hotel to be operated by Travelodge and public consultation has recently started on our plans for a new leisure destination including restaurants, bars, family entertainment and fitness facilities

·; the construction of a roof box to accommodate Forever 21's 35,000 sq. ft. flagship store is on schedule for handover in August

The Harlequin, Watford

·; we have agreed outline terms with Watford Borough Council for CSC to acquire and redevelop the Charter Place centre adjacent to The Harlequin. The plan, also incorporating CSC's existing holdings on the High Street, would add 320,000 sq. ft. of restaurants and a modern configuration of retail and leisure facilities to create an enlarged Harlequin Centre of over 1 million sq. ft.

·; we look forward to commencing this c. £100 million redevelopment and expect to move quickly with planning applications and securing pre-lettings

Victoria Centre & Broadmarsh, Nottingham

·; following our acquisition of Broadmarsh, Nottingham's second shopping centre, in late 2011, we have an exciting opportunity to move Nottingham back up the rankings with a more modern retail offer

·; we are in discussion with the local authority regarding our plans that would see both centres and the city centre much improved. These would give each a distinct focus playing to its inherent strengths and would anchor a diverse retail offer between them. We have also appointed agents to assess the needs of retailers and we expect to move forward in the next 12 months with submitting planning applications

The Trafford Centre

·; we have secured planning consent at Barton Square for 100,000 sq. ft, of additional retail space

·; we have agreed terms, subject to planning permission, for an aquarium attraction at Barton Square

Metrocentre, Gateshead

·; construction of the MetrOasis fully pre-let restaurant development is on programme and on budget and is scheduled to open in September 2012

·; we have further restaurant projects and other upgrades within the centre under consideration

Eldon Square, Newcastle

·; we have applied for planning consent for construction of an impressive new entrance from Northumberland St., the main shopping street. This is the start of the next phase of a modernisation programme which follows the opening of the St Andrew's Way mall in February 2010. This phase will enhance the existing malls and reconfigure units to current retailer and restaurant operator needs

The Potteries, Stoke-on-Trent

·; we have secured planning consent for a 58,000 sq. ft. leisure and catering development and are in advanced negotiations with cinema and restaurant operators

·; this is in line with our objective of ensuring that The Potteries remains the prime retail destination in the Stoke-on-Trent area

Dividends

The Directors have resolved to pay an interim dividend of 5.0 pence per share on 20 November 2012 to shareholders on the register on 19 October 2012. This dividend will be a property income distribution ("PID") subject to applicable withholding tax.

Following the approval by shareholders at the Annual General Meeting on 29 April 2012 of the scrip dividend scheme, the Board may choose to offer a scrip dividend for any individual dividend. Should the Directors decide to offer a scrip alternative to the 2012 interim dividend, shareholders will be advised no later than Friday 28 September 2012. The Board's decision will be dependent on the stock market conditions, in particular the level of the share price relative to the net asset value per share, up to that date.

PROSPECTS

We set out in our 2011 Annual Report our strategic priorities for 2012, which are unchanged:

·; to optimise the performance of our existing assets, prioritising medium-term value creation

·; to identify further initiatives and create the financing flexibility to advance CSC's business and deliver incremental returns

In a period of weak UK economic performance and low growth, when absolute returns are muted, our focus is on strengthening our assets' relative position such that they attract an increasing share of consumer interest and retailer investment.

Pro-active management of the risks relating to tenant failures and lease expiries is likely to remain a feature of the business, with a view to sustaining the virtuous circle of strong footfall and compelling tenant mix.

We look forward to implementing the substantial profitable organic growth opportunities at our high quality shopping centres, reinforcing their status among the very top UK retail and leisure destinations.

FINANCIAL REVIEW

FINANCING STRATEGY AND FINANCIAL MANAGEMENT

Notable financial highlights for the period include:

·; Underlying earnings up by 4.8 per cent

·; NAV per share at 390 pence; total financial return for the six months of 2.3 per cent

·; Debt to assets ratio at 48 per cent in target range of 40-50 per cent and interest cover for the six months of 1.70x exceeds target minimum of 1.60x

RESULTS FOR THE PERIOD ENDED 30 JUNE 2012

Income statement

The Group recorded a profit for the period of £78 million, compared to the £192 million achieved for the comparable prior year period.

The 2012 results include a £0.2 million gain on property valuations and a £29 million non-cash gain on the movement in the fair value of derivative financial instruments. The 2011 profit included a £58 million gain on property valuations and a £22 million favourable movement in the fair value of derivative financial instruments.

Underlying earnings which excludes valuation and exceptional items, increased by £3.2 million to £70 million, as shown in Chart 5. Underlying earnings per share increased by 1 per cent from 8.0 pence per share in 2011 to 8.1 pence per share in the current period.

The Group's net rental income which increased by 2 per cent to £182 million in the period, benefitted by £7 million from an additional one month's contribution as a result of the acquisition of the Trafford Centre in January 2011. On a like-for-like basis net rental income fell by 2 per cent. Further commentary on the rental performance is included in the Operating Review.

Underlying net finance costs of £102 million, which exclude exceptional items, were in line with the comparable prior period. The benefit of the interest rate swap amendments undertaken in January 2012 offset the £4 million additional month's cost of the Trafford Centre CMBS notes.

Administration expenses, excluding the £1 million exceptional costs, increased from £12 million in 2011 to £13 million in 2012 largely due to higher employee related costs.

Chart 5 - Underlying earnings bridge H1 2011 - H1 2012

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Exceptional costs in the period include finance costs of £39 million incurred on interest rate swap amendment costs. The exceptional administration costs of £1 million largely relate to costs associated with the Broadmarsh acquisition that was completed at the end of 2011.

Provogue, the Indian retailer in which the Group holds a 9.9 per cent stake, undertook a demerger of its 75 per cent holding in Prozone, a shopping centre developer, in the first half of 2012. The demerger was achieved by way of distribution of shares in Prozone. The receipt of the additional shares is treated as a dividend valued at £10.2 million. Prior to the demerger the Group had a direct 25 per cent holding in Prozone and following the demerger the Group's holding in Prozone has now increased to 32.4 per cent. As Prozone is classified as an associate company of the Group, the holding is valued as the Group's percentage share of the associate's underlying net assets. The Group's 32.4 per cent holding in Prozone's net assets post the demerger is therefore valued at £42 million.

Balance sheet

The Group's net assets attributable to equity shareholders remain broadly the same level as the £2.9 billion disclosed in the 2011 annual report.

As detailed in the table below, net assets (diluted, adjusted) have decreased by £8 million from 31 December 2011 with 2011 final dividend of £85 million being largely offset by the earnings for the current six month period.

The investments of £197 million as at 30 June 2012 comprise the Group's interests in the US and India. The investment in the US comprises the 11.4 million shares in a joint venture with Equity One, that the Group received in exchange for its interest in C&C US. Based on the Equity One share price of $21.20 the Group's investment has been valued at £154 million at 30 June 2012.

The most significant factor in the increase in other assets and liabilities is the accrual for the 2011 final dividend. This dividend, totalling £85 million, was paid after the period end.

Adjusted net assets per share

As illustrated in Chart 6, diluted adjusted net assets per share were 390 pence at 30 June 2012, a small decrease in the period that is largely due to the 2011 final dividend of 10 pence per share, partially offset by the earnings for the first half of 2012.

Chart 6 - Adjusted net assets per share

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Cash flow

The cash flow summary below shows an increase in the Group's cash balance in the period. This can be attributed to the cash generated from operations. In addition, the capital expenditure for the period of £30 million was more than covered by the £49 million proceeds from the disposal of 4.1 million shares in Equity One.

Investment in property related assets includes £13 million in respect of the purchase of the Group's 50 per cent share of the Centaurus Retail Park, which is adjacent to the Mall at Cribbs Causeway, and £5 million in respect of King George V dock, which is adjacent to Braehead.

Expenditure on existing assets included St David's, Cardiff (£3 million), Lakeside (£3 million) and Metrocentre (£2 million).

Net debt repayments of £20 million are discussed in the Debt structure section below.

The dividend payment in the period relates to withholding tax in respect of the 2011 interim dividend. The 2011 final dividend of 10p per ordinary share was paid in July 2012.

Capital commitments

The Group has an aggregate commitment to capital projects of £47 million at 30 June 2012. In addition to the committed expenditure, the Group has an identified project pipeline, excluding major extensions, of some £200 million covering the period up to the end of 2017. It is anticipated that approximately £50 million relating to capital projects, including those projects currently accrued on the Group's balance sheet, will be funded in the balance of 2012.

Financial position and financing structure

At 30 June 2012, the Group had net external debt of £3,344 million, a decrease of £30 million compared to the 31 December 2011 balance of £3,374 million. In addition to cash balances of £100 million the Group had £320 million undrawn on the revolving credit facility at 30 June 2012, giving total headroom of £420 million.

Debt structure

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. It is largely syndicated bank debt and CMBS structures with corporate-level debt limited to the revolving credit facility.

Chart 7 - Debt maturity profile

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During the period debt repayments of £30 million were made which related to scheduled debt amortisation payments. A further £10 million was drawn under the Group's revolving credit facility.

The revolving credit facility which was successfully refinanced in November 2011 was the first step towards a broader refinancing of the Group's asset specific debt. The above table shows that the value of maturities peaks in 2015-2017. Planning continues in connection with the possibility of replacing these facilities early. A further update will be given when the full year results are presented in February 2013.

The Group intends to continue with a diversified funding structure, allowing opportunistic access to bank and bond markets, whilst minimising its cost of funds. Despite the current uncertain economic outlook, demand for fixed income issuance backed by quality assets has remained strong.

Hedging 

The majority of the Group's debt is floating rate. The Group uses interest rate swaps to fix short and medium-term interest obligations, reducing cash flow volatility caused by changes in interest rates. The Group is currently effectively fully hedged. 

The table below sets out the nominal amount and average rate of hedging, excluding lenders' margins, in place under current and forward starting swap contracts:

Covenants

Full details of the loan financial covenants are included in the Other Information section of this report. The Group is in compliance with all of its corporate and asset-specific loan covenants. As detailed in that analysis, the headroom over the minimum covenant levels has remained broadly in line with December 2011 levels although the headroom has improved on a number of interest cover covenants due to lower interest costs.

Taxation

Since the Group became a UK REIT on 1 January 2007, the Group has made REIT entry charge payments of £199 million, with £15 million paid in the period. The payments in the period largely relate to, and complete, the amounts due in respect of the Trafford Centre. The cash flow benefits to date have amounted to £200 million, comprising net rental income and capital gains sheltered from UK tax.

Key risks and uncertainties

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

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the interim report and condensed set of financial statements, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge:

·; the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union; and

·; the interim report includes a fair review of the information required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

The operating and financial review refers to important events which have taken place in the period.

The principal risks and uncertainties facing the business are referred to in the operating and financial review.

Related party transactions are set out in note 22 of the condensed set of financial statements.

A list of current Directors is maintained on the Capital Shopping Centres Group PLC website: www.capital-shopping-centres.co.uk.

By order of the Board

David Fischel

Chief Executive

Matthew Roberts

Finance Director

26 July 2012

INDEPENDENT REVIEW REPORT TO CAPITAL SHOPPING CENTRES GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim report for the half year ended 30 June 2012, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the half year ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLPChartered AccountantsLondon

26 July 2012

CONSOLIDATED INCOME STATEMENT (unaudited)

For the six months ended 30 June 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

For the six months ended 30 June 2012

CONSOLIDATED BALANCE SHEET (unaudited)

As at 30 June 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

For the six months ended 30 June 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

For the year ended 31 December 2011