Half Yearly Report

SHAFTESBURY ANNOUNCES HALF YEAR RESULTS

CONTINUED STRONG TENANT DEMAND AND PORTFOLIO GROWTH

Shaftesbury PLC ("Shaftesbury") today announces its half year results for the six months ended 31 March 2011. Shaftesbury owns a portfolio of over 500 properties in London's West End (Covent Garden, Carnaby, Chinatown, Soho and Charlotte Street).

Results and interim dividend

·; EPRA adjusted* profit before tax £14.0 million (31.3.2010: £11.1 million)

·; Net property income £32.1 million, an increase of £4.0 million against first half last year

·; Invoiced rents increased by 6% on a like-for-like basis compared with first half last year

·; Interim Property Income Distribution increased 10% to 5.5p per share (31.3.2010: 5.0p); total interim distribution £13.7 million

·; EPRA adjusted* diluted earnings per share 6.0p (31.3.2010: 4.8p)

·; Profit before tax £101.0 million (31.3.2010: £122.8 million) includes property revaluation surpluses of £49.6 million (31.3.2010: £111.3 million) and reduction in the fair value deficit of financial derivatives of £37.4 million (31.3.2010: £Nil)

Net asset value and portfolio performance since 30.9.2010

·; EPRA adjusted* diluted net asset value per share increased by 5.3% (22p) to £4.36. Unadjusted diluted net asset value per share £4.17 increased by 10.3% (39p)

·; Capital value return 3.2% (IPD Monthly Index - Capital Growth: 1.1%); 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 marginally by 0.03% from 5.10% to 5.07%

·; Current passing rents increased by £5.2 million to £73.5 million during the period

·; Portfolio ERV now £88.7 million (30.9.2010: £83.9 million). Reversionary potential now £15.2 million

Portfolio activity

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

·; Vacant accommodation remains at historically low levels

·; Acquisitions totalling £42.0 million in the period of which over half by value in Covent Garden

·; St Martin's Courtyard redevelopment now completed and virtually fully let

·; Further schemes throughout the portfolio being progressed

Finance

·; Successful Placing in March 2011 at £4.50 per share raised £99.8 million (net of expenses)

·; Committed unutilised bank facilities of £169.8 million available to fund further acquisitions

·; Earliest bank facility maturity April 2016

Management changes

·; Brian Bickell will be appointed Chief Executive and Jonathan Lane will become Deputy Chairman with effect from 1 October 2011

John Manser, Chairman, commented:

"Despite challenging trading conditions across much of the UK economy, visitor numbers and spending have remained buoyant in London's West End.

The UK's traditions and heritage provide London with unrivalled attractions, which encourage large numbers of domestic and overseas visitors and support the West End economy. As we have experienced with the recent Royal Wedding, events such as The Olympics and the Queen's Diamond Jubilee celebrations in 2012 will bring more visitors to London. These global events attract the world's media and promote London as an attractive destination to millions of people around the world.

Our uniquely located investments and the long term impact of these forthcoming events give us great confidence that we shall maintain our record of out-performance in income, dividend and capital growth in the coming years."

25 May 2011

* Adjusted in accordance with the European Public Real Estate Association ("EPRA") Best Practice Guidelines as set out on below.

For further information:

There will be a presentation to analysts at 10.30 am on Wednesday 25 May 2011 at The London Stock Exchange,10 Paternoster Row, London EC4M 7LS.

There is a dial-in facility for the presentation. Analysts and investors are welcome to participate. The facility may be accessed by calling +44 (0)20 3140 0668 or via a toll free number 0800 368 1950. The PIN code is 941188#. 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 0800 368 1890 or toll free +1 877 846 3198). The Conference Reference is 377114#.

Financial Highlights

* Adjusted in accordance with the European Public Real Estate Association ("EPRA") Best Practice Recommendations.

Performance Summary for the six months ended 31 March 2011

*Source: Investment Property Databank Ltd © 2011. Shaftesbury Group data (other than Total Shareholder Return) derived from financial results.

Business Review

Despite challenging trading conditions across much of the UK economy, visitor numbers and spending have remained buoyant in London's West End. Domestic and overseas visitors continue to be attracted by the unique concentration and richness of London's cultural heritage as well as London's reputation as the world's best city for shopping and its sheer variety of leisure attractions.

Our villages, located in the heart of the West End, continue to experience healthy demand for all uses. Rental income and values have continued to grow over the period and our vacant space remains at an historically low level. Our St Martin's Courtyard project, which is now virtually fully let, is beginning to make an important contribution to our income growth and profits.

We have acquired investments totalling £42.0 million in the period. In March 2011 we added to our financial resources with an equity issue which raised £99.8 million (net of expenses) which will allow us to pursue further acquisition opportunities.

Results

EPRA adjusted profit before tax for the six months ended 31 March 2011 amounted to £14.0 million, compared with £11.1 million in the same period last year.

Net property income rose to £32.1 million, an increase of £4.0 million compared with the first half of last year. Within the wholly owned portfolio we continue to crystallise our reversionary income potential through higher rents whilst maintaining a low level of vacancies. After eliminating the impact of acquisitions and disposals, there was a 6% increase in rents receivable compared with the first half of last year.

In the Longmartin Joint Venture, we have during the period secured and completed further lettings in the St Martin's Courtyard scheme which, by 31 March 2011, was substantially fully let. Whilst our share of Longmartin's net property income increased by £0.7 million in the first half, we anticipate a greater increase in the second half.

Provision for current tax on the EPRA adjusted profit for the period amounted to £0.1 million (31.3.2010: £0.1 million). No taxation liability arises in the wholly owned Group, as its activities are largely tax-exempt under Real Estate Investment Trust ("REIT") tax legislation. Our interest in the Longmartin Joint Venture remains outside our REIT group so its profits continue to be subject to corporation tax.

The EPRA adjusted profit after tax for the period amounted to £13.9 million (31.3.2010: £11.0 million).

EPRA adjusted net assets at 31 March 2011 totalled £1,100.2 million, equivalent to a diluted net asset value per share of £4.36. The increase in EPRA adjusted diluted net asset value per share over the six months ended 31 March 2011 was £0.22, an uplift of 5.3%. The increase in EPRA adjusted diluted net asset value per share over the period before the payment of the 2010 final dividend of 5.25p per share was £0.27, an uplift of 6.6%.

Interim dividend

Your Directors are pleased to declare an interim dividend of 5.5p per share, an increase of 10% on last year's interim dividend of 5.0p. This represents a distribution of £13.7 million on the enlarged share capital following our equity issue in March 2011 (31.3.2010: interim distribution of £11.4 million). The interim dividend will be paid entirely as a Property Income Distribution.

As a REIT, our dividends reflect the distribution obligations contained in legislation, which broadly require distribution of a minimum of 90% of net rental income (calculated by reference to tax rather than accounting rules). Future distributions will reflect the underlying growth in our net rental income and profits in both our REIT and non-REIT businesses.

Our portfolio

Our property portfolio has been valued at £1,582.2 million at 31 March 2011 resulting in a revaluation surplus for the six months of £49.6 million. Allowing for acquisitions and capital expenditure over the six months since 1 October 2010, there has been a 3.2% increase in the value of our properties. The IPD UK Monthly Index: Capital Values recorded an increase of 1.1% over the same period.

Although our assets are less cyclical than the wide range of properties which are components of the IPD indices, they continue to outperform. The valuation uplifts over the six months to 31 March 2011 have been substantially the result of increases in contracted rents, higher rental values evidenced by lettings and the impact of changes of use which we initiate.

The values of Carnaby and our wholly owned investments in Covent Garden have shown very similar increases of 3.7% and 3.8% respectively. The 2.0% increase in value of our Chinatown village reflected the absence of open market lettings as we have had very little space available to let and there have been few market comparables outside our holdings.

The equivalent yield attributed to our wholly owned portfolio at 31 March 2011 was 5.07%, a marginal improvement on the equivalent yield of 5.10% reported at 30 September 2010.

The value of properties in our Longmartin Joint Value increased by 4.0% over the period. This follows the substantial increase of 20.3% in the six months ended 30 September 2010 as St Martin's Courtyard neared completion. The equivalent yield attributed to Longmartin's portfolio at 31 March 2011 was 4.86% (30.9.2010: 4.98%).

Portfolio reversionary potential

* Excludes pre-lettings and contracted rent free periods

** Of this amount £3.6 million (80%) was contracted at 31 March 2011

Our valuers have estimated the rental value of the Group's portfolio at 31 March 2011 at £88.7 million compared with £83.9 million at 30 September 2010, an increase of £4.8 million. This contrasts with the Group's current passing income (which excludes pre-lettings and contracted rent free periods) of £73.5 million. Of the portfolio's reversion of £15.2 million, £10.7 million arises in our wholly owned portfolio and £4.5 million in Longmartin. The reduction in Longmartin's reversionary potential reflects the rising rental income we are now receiving from the St Martin's Courtyard scheme. 80% of Longmartin's reversion was already contracted at 31 March 2011.

Of the estimated rental value and the reversionary potential within our wholly owned portfolio, 71% is attributable to our shops and restaurants, where rental values continue to show steady growth. We are confident that as we have demonstrated in past years we shall, over time, realise this reversionary potential and, through our management initiatives, continue to produce rental growth.

Strategy

Our strategy of concentrating all our investments in London's West End, in an area bounded by Regent Street to the West and Kingsway to the East, is quite deliberate.

It was twenty years ago at a time of recession that we decided only to invest in the liveliest areas within London's West End. We are now in another period of economic uncertainty in which we continue to benefit from central London's unique and enduring prosperity. London, the world's most visited city, has an exceptional choice of shops and restaurants. In addition it has a unique heritage, which includes galleries, theatres, music venues, historic buildings, royal parks and unrivalled pageantry, which are all within walking distance of our villages. Many of these attractions are still free for residents and tourists to visit and enjoy. London is also exceptionally multi-cultural as increasingly people from all parts of the world choose to work and live here.

The creation of business districts such as Canary Wharf and Paddington Central and the regeneration of Stratford and King's Cross are enormously important catalysts to London's prosperity. All are also within twenty minutes by tube of the attractions in London's West End. Crossrail will make our areas even more accessible to those who will work and live in these large urban clusters and should reduce the journey time from Canary Wharf to the West End to twelve minutes.

As a consequence of choosing such central and long established locations within London, all of our buildings are in Conservation Areas and many are listed for their historic and architectural interest. Whilst this presents challenges, it also offers us many opportunities to restore some of the traditional character to historic streets and introduce improvements and a variety of uses, which enhance the demand for and extend the economic life of our buildings.

Fundamental to our strategy and to the generation of rental growth over the long term is our choice of location and mix of uses in buildings across our villages. It is also important to achieve layouts, specifications and balance of uses appropriate for each village. We seek flexibility so that we can adapt to changing demand. As we indicated at our year end, we are giving priority in our current projects to satisfying the strong demand for larger shops, restaurants of all sizes and residential accommodation.

A key element of our strategy is close co-operation with Westminster City Council, The London Borough of Camden and English Heritage to achieve improvements to the public realm - the streets, pavements and public areas, which surround and link our villages.

Substantial public investment in Leicester Square, Piccadilly Circus and Oxford Circus and the up-grading of nearby underground stations are bringing significant improvements to a very congested West End. These improvements in turn, increase access to our villages.

The success of Westminster City Council's recently completed works of pedestrianisation around Carnaby, Chinatown and St Martin's Courtyard, which we have helped to design and to fund, has encouraged us to identify other such schemes in our areas. Our discussions with the local authority also include the Berwick Street Action Area, where improvements are acknowledged to be a priority.

Whilst our strategy can restrict our expansion, it has delivered sustained rental growth over many years and we expect it will continue to do so. This is clearly evident in the table above which shows current contracted and potential reversionary income across our portfolio.

Portfolio activity

In the six months ended 31 March 2011 we bought properties totalling £42.0 million, of which £21.3 million were in Covent Garden. The purchases, which extend to 50,000 sq. ft., include ten restaurants, four shops and two office buildings with potential for a change of use. The initial yield on current uses and passing rents is 5.0%. Of the current income 45% is generated from ten restaurant, cafe and leisure tenancies.

Since 31 March 2011 we have purchased a 7,000 sq. ft. investment in Chinatown for £4.8 million and we are investigating a number of potential acquisitions, particularly in and around Berwick Street.

Capital expenditure during the period amounted to £7.8 million, which included £2.0 million incurred in the Longmartin Joint Venture. This level of capital expenditure, which remains low in relation to the value of our portfolio, reflects the predominance of retail and restaurant uses in our portfolio, where we provide accommodation in shell form only.

Wholly owned vacant commercial space at 31 March 2011

Our vacant accommodation remains historically low. At 31 March 2011 the rental value of wholly owned vacant commercial accommodation held for or under refurbishment was £1.9 million (30.9.2010: £1.9 million), which represented 2.6% of the estimated rental value of our wholly owned commercial portfolio. Within this space 70% comprised the new shop and office development at 36/39 Carnaby Street. The estimated rental value of vacant accommodation ready to let or under offer was £1.0 million (30.9.2010: £1.1 million).

With the exception of two new shops under construction at 37/39 Carnaby Street, we still have no larger wholly owned shops to let. Of our eight other vacant shops (total area 7,000 sq. ft.), three are under offer. Vacancies in our smaller shops are currently exceptionally low but we expect them to increase later this year.

Two of the three vacant restaurants are under offer. The remaining one, which is in Chinatown, has just become available following completion of building work and is attracting considerable interest.

Of the 23,000 sq. ft. of vacant offices, 15,000 sq. ft. is under construction or refurbishment, of which almost 9,000 sq. ft. comprises the new space at 36 Carnaby Street, 6,000 sq. ft. is subject to change of use principally to residential accommodation and the balance of 8,000 sq. ft. is vacant and ready to let.

At 31 March 2011 we had 352 wholly owned and completed apartments of which 21 were vacant and ready to let following completion in March 2011 of two large projects. A further 15 units were under construction.

Longmartin's vacant commercial space at 31 March 2011*

* Shaftesbury Group has a 50% interest in these figures 

Construction of the St Martin's Courtyard scheme in our Longmartin Joint Venture with The Mercers' Company was completed in March 2011. Lettings have been good and at 31 March 2011 there were only four shops vacant of which two were under offer. Within Longmartin's portfolio 10,000 sq. ft. of offices are undergoing refurbishment. Of the total of 76 apartments, five of the recently completed units are currently to let (estimated rental value £0.3 million per annum).

Our wholly owned portfolio

At 31 March 2011 our wholly owned portfolio included 309 shops, extending to 397,000 sq. ft. They produce 37% of current income, with an average rent of £85,000 per annum and a weighted average unexpired lease term of four years. We continue to experience good demand for our retail accommodation and as a result, we are keen to accelerate changes in tenant mix which would allow us to introduce new retailers and concepts.

We now have 202 wholly owned restaurants, cafes, pubs, bars and clubs, which extend to 478,000 sq. ft. with an average rent of £120,000 per annum. Following further recent purchases this use forms an increasingly important part of our business and now provides 34% of current income in our wholly owned portfolio. Leases for this use are usually initially for 20 or 25 years and the average unexpired lease term is twelve years.

Shop and restaurant uses now represent 71% of our estimated rental value (shops account for 38% and restaurants 33%). Of our 50 largest tenants by rental income in our wholly owned portfolio, 22 are retailers and 23 are restaurateurs.

We have 421,000 sq. ft. of offices, most of which are let in small units (average letting 1,250 sq. ft.). Offices now represent 20% of our current income and our average rent is about £34 per sq. ft. The average unexpired lease term is two years.

As a result of conversions and extensions in recent years, principally from older and smaller offices, our residential portfolio now extends to 367 wholly owned apartments, of which fifteen are under construction. They produce 9% of our income and comprise principally studios, one or two bedroom apartments which we let on tenancies of up to three years. We review our residential portfolio regularly and, in exceptional circumstances, consider sales but only where a disposal would not detract from the value of our remaining long term investments.

Covent Garden (including Longmartin Joint Venture)

With the completion and letting of St Martin's Courtyard, which is part of our 50% Joint Venture with The Mercers' Company, our Covent Garden holdings are now our largest investment district representing 36% of our assets. Our combined investments here now include more shops than Carnaby village and more restaurants than Chinatown.

Covent Garden as a whole covers a large area between Charing Cross Road to the west and Kingsway to the east. Covent Garden retains an atmosphere which is different from other parts of the West End and where, in addition to the Piazza, there are many distinctive and historic quarters including Seven Dials, Opera Quarter, Coliseum and now St Martin's Courtyard.

With its narrow streets and courtyards, Covent Garden can be very congested at evenings and weekends and, as elsewhere, we work closely with the local authorities to increase and improve pedestrian access.

Across Covent Garden there is a long established and flourishing residential community. We have 153 wholly owned apartments here and 76 in our Longmartin Joint Venture which continue to let readily and at higher rents than elsewhere in our portfolio.

St Martin's Courtyard, the mixed use development in our Joint Venture, is now finished. All the offices, restaurants and 21 of the 23 shops have been let or are under offer. 30 of the 35 recently completed apartments have also been let. When the principal office tenants (Robert Walters plc, PZ Cussons Plc and Apple) have completed their fit-outs in the coming weeks, it is estimated that over 800 people will be working within the Courtyard.

Carnaby

Carnaby, which extends across twelve streets immediately to the east of Regent Street is the most internationally known of our villages. Currently it represents 34% of our portfolio. Of our 22 existing larger shops, sixteen are in Carnaby. With some of our more modern buildings, Carnaby also includes 56% of our offices.

Westminster City Council's pedestrianisation of Kingly Street, which is now closed to traffic between 11am and 8pm each day, has been a success in improving access and footfall. The scheme extends to Little Marlborough Street where much of the frontage on the south side is offices which we own and where there is the potential to introduce other uses. We are discussing with Westminster City Council further improvements during 2011 to Ganton Street, where we have a number of restaurants.

Carnaby currently offers us our most immediate opportunities to satisfy the current strong demand for larger shops. The two new shops at 37/39 Carnaby Street will be available in shell form this autumn and there is already strong demand to lease them. We are also about to market the 9,000 sq. ft. of new offices on the upper floors.

Subject to receiving planning consent, we intend to develop further projects in Foubert's Place and Kingly Street nearby and these will include a total of about 15,000 sq. ft. of retail and restaurant space, 10,000 sq. ft. of offices and twelve new apartments.

We are also exploring other opportunities to reconfigure and extend our restaurants, as the success of this village has increased demand for dining, which is under-represented in Carnaby. The recent improvements to Kingly Street have already given us opportunities to improve and extend restaurants there.

Chinatown

Chinatown represents 24% of our portfolio, where 64 restaurants and 61 shops provide 86% of the income. This was the first of our West End villages and has, over almost 25 years, delivered consistent growth in net rental income and out-performance in capital values. It is rare that we have any vacant accommodation and currently there is strong interest to rent the one restaurant which we have available in Lisle Street.

Chinatown is our most centrally located village and with its predominance of restaurants, long hours of trading and proximity to Piccadilly Circus, Leicester Square's premier cinemas and to Theatreland, it can become very crowded at peak times. Recent pedestrianisation of Wardour Street, south of Shaftesbury Avenue, and improvements to Lisle Street have improved access. This has also prompted us to encourage Westminster City Council to link these street improvements, via Leicester Street, direct to their major works of improvement in Leicester Square. We expect this work to start at the end of this year.

These contracted and planned major investments in the public realm, which we welcome, are now encouraging a number of innovative entrepreneurs with exciting new and complementary European concepts to approach us to rent space in and around Chinatown. The recently opened St. John Hotel and restaurant in Leicester Street is one such venture.

Soho

We started to invest in Berwick Street almost four years ago and this year have extended our purchases to other specific areas within Soho. Our investment, which includes 29 shops and restaurants, now totals £63.3 million.

Many properties in Berwick Street and the streets and public spaces immediately to the west are in very poor repair, having lacked investment over many years. As a result, the environment is un-welcoming, properties are empty and businesses are struggling.

We are currently discussing various options with public bodies which have adjacent ownerships to see whether we can, through our own investment and initiatives, stimulate much needed improvements which Westminster City Council has sought since designating the district an Action Area in 2007.

Results

The EPRA adjusted profit before taxation for the six months ended 31 March 2011, (adjusted as shown above) amounted to £14.0 million, compared with £11.1 million in the first half of last year. The profit before tax reported in the Group Statement of Comprehensive Income of £101.0 million (31.3.2010: £122.8 million) included investment property revaluation surpluses of £49.6 million (31.3.2010: £111.3 million) and a reduction of £37.4 million in the non-cash fair value deficit attributable to our financial derivatives during the period (31.3.2010: value unchanged).

Our rental income has continued to rise, with rents receivable for the current period across the Group (adjusted for lease incentives) increasing to £36.6 million, compared with £32.4 million in the first half of last year. For the wholly owned Group, eliminating the impact of acquisitions and disposals, there was a 6% increase in rents receivable compared with the first half of last year.

Our share of Longmartin's rental income, which rose to £1.7 million in the first half, will increase further in the second half as recent lettings and pre-let space handed over to tenants in the St Martin's Courtyard scheme begin to generate income.

Property outgoings for the period totalled £4.5 million, compared with £4.3 million in the first half of last year. We do not capitalise property outgoings of a revenue nature incurred in advance of or during refurbishment schemes.

Group net rental income increased to £32.1 million, compared with £28.1 million in the first half of last year. The contribution from Longmartin was £1.2 million (31.3.2010: £0.5 million).

Total administration expenses amounted to £4.1 million (31.3.2010: £3.6 million) and included £0.5 million (31.3.2010: £0.5 million) for employee annual bonuses and £0.8 million (31.3.2010: £0.5 million) in respect of equity settled remuneration. The accounting charge in respect of share options increased by £0.2 million to £0.5 million. The charge for employer's national insurance liability on share awards and share options increased by £0.1 million to £0.3 million, principally as a result of the rise in the Company's share price over the period.

Finance costs, including settlements under interest rate derivative contracts, amounted to £14.0 million, (31.3.2010: £13.4 million). Currently the marginal interest cost of drawings under our bank facilities is less than 1.75% as short term interest rates have remained at unprecedented low levels. Net interest payable was covered 2.0 times by operating profit before investment property disposals and valuation movements (31.3.2010: 1.8 times).

Market expectation of a more rapid rise in interest rates has reduced the fair value deficit of our long term interest rate derivatives by £37.4 million to £43.1 million at 31 March 2011. This non-cash accounting provision, which is excluded in the calculation of our banking covenants, is gradually reversing as interest rates move closer 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 EPRA adjusted profit for the year was £0.1 million (31.3.2010: £0.1 million). The tax charge for the current period arises in the Longmartin Joint Venture which is outside the Group's REIT election, so that our share of its profit continues to be subject to corporation tax.

EPRA adjusted diluted post-tax earnings per share for the current period amounted to 6.0p per share, compared with 4.8p in the first half of last year. The unadjusted diluted post-tax earnings per share shown in the Group Statement of Comprehensive Income for the current period amounted to 43.1p (31.3.2010: 53.7p).

The EPRA adjusted net asset value at 31 March 2011 (adjusted as set out above) amounted to £1,100.2 million, an increase of £151.8 million over the period. Of this increase, the net proceeds of our equity issue in March 2011 accounted for £99.8 million, and property revaluation surpluses contributed £49.6 million. The EPRA adjusted diluted net asset value per share at 31 March 2011 was £4.36, an increase of £0.22 per share or 5.3% per share since 30 September 2010. The additional equity, issued at a price of £4.50 per share, accounted for approximately £0.01 of this increase.

Unadjusted shareholders' funds at 31 March 2011 totalled £1,052.1 million, an increase of £188.4 million since 30 September 2010. In addition to the movements in the EPRA adjusted net assets referred to above, the reduction in the fair value deficit of our financial derivatives added £37.4 million to the total unadjusted shareholders' funds over the period. Diluted net asset value at 31 March 2011 amounted to £4.17 per share, an increase since the last year end of £0.39 per share.

Finance

The Board keeps under review the Group's financial resources to ensure it maintains the appropriate levels of equity and debt finance, the maturity profile of loan facilities and interest rate exposure and hedging.

In early March 2011 we issued 22.7 million Ordinary shares, equivalent to approximately 9.9% of our issued share capital at that time, by way of a Placing. The shares were issued at a price of £4.50 each, representing a small premium to our adjusted net asset value at the date of issue, realising net proceeds after expenses of £99.8 million. This share issue has strengthened our equity base and will allow us to pursue further acquisition opportunities. We are investigating options for raising additional long term debt which will further add to our resources.

The nominal value of Debenture and bank borrowings at 31 March 2011 totalled £466.2 million, a net reduction of £50.5 million over the period. Net proceeds of £99.8 million from our equity issue were used in the short term to repay bank debt, which we will redraw as future acquisitions are secured. Cash outflows during the period on acquisitions of investment properties amounted to £40.0 million and expenditure on refurbishments totalled £7.8 million. Revenue operations after payments of interest and taxation produced a net cash surplus of £11.0 million.

Gearing at 31 March 2011, calculated by reference to our EPRA adjusted net assets referred to above and the nominal rather than book value of our Debenture and net bank debt, was 42% (30.9.2010: 55%). This compares with the maximum level of gearing of 175% permitted under our bank facilities. The ratio of the nominal value of Debenture and bank debt to the market value of the property assets available to secure that debt was 29% (30.9.2010: 35%). We are comfortably within the maximum ratio of 66.7% permitted under the terms of our bank facilities.

At 31 March 2011, our committed bank facilities, which are provided by five lenders, totalled £575.0 million with a weighted average maturity of 6.8 years. Facilities expire in 2016, 2020 and 2021. Committed unutilised facilities at 31 March 2011 totalled £169.8 million. The average margin over LIBOR paid on amounts drawn from our facilities at 31 March 2011 was 0.85%.

The overall weighted average cost of our Debenture and bank debt (including margin) at 31 March 2011 was 5.82% (30.9.2010: 5.13%). The proceeds of our equity issue in March 2011 have been used in the short term to repay a large portion of our unhedged floating rate debt, on which the effective rate of interest was approximately 1.5%, resulting in lower total debt but an increase in its weighted average cost.

At 31 March 2011, £421.0 million of borrowings, equivalent to 90% of our bank and Debenture debt was either at fixed rate or hedged at fixed rates, reflecting the short term repayment of floating rate debt in March 2011 referred to above. The weighted average fixed rate of our interest rate swaps (excluding margin) is currently 4.87% (30.9.2010: 4.87%), with a weighted average maturity of 22 years.

Performance and benchmarking

The table above summarises our performance for the period against our chosen benchmarks.

Over the period there was a small decrease in yields attributed to our portfolio and in the market generally. However the income and estimated rental value growth in our portfolio exceeded the wider market. As a result, we recorded a capital value return of 3.2% over the six months ended 31 March 2011 compared with 1.1% shown by our benchmark IPD Monthly Index. Similarly, our total return of 5.3% over the period exceeded the 4.5% shown by our benchmark IPD Monthly Index.

Having seen considerable out-performance in total shareholder return against the FTSE 350 Real Estate Index in the second half of the last financial year, over the six months ended 31 March 2011 we recorded a return of 10.6% against a 14.2% return shown by our benchmark index. Taking the year to 31 March 2011, our total shareholder return amounted to 26.2% compared with 12.6% shown by our benchmark index.

Management changes

On 30 November 2010 the Board announced that Jonathan Lane would retire from his role as Chief Executive during 2011. After an extensive search process conducted by an external consultant, the Board is pleased to announce that Brian Bickell, currently our Finance Director, will be appointed Chief Executive with effect from 1 October 2011 at which time Jonathan Lane will become Deputy Chairman.

The process to recruit a new Finance Director will now commence.

Principal risks and uncertainties

The principal risks facing the Group for the remaining six months of the financial year, which are consistent with those outlined in the Annual Report for the year ended 30 September 2010, are summarised below:

·; Reductions in value of the Group's portfolio and the consequent impact on the Group's asset value and its ability to continue to meet covenants in its Debenture and bank facilities;

·; Threats to public safety, security and health, or of transport disruption which would discourage the large number of visitors who visit the West End and underpin the local economy generally and the prosperity of the Group's retail and restaurant tenants in particular;

·; The concentration of the Group's properties within the jurisdictions of Westminster City Council and the London Borough of Camden, as changes to their policies, particularly those relating to planning and licensing, could have a significant impact on the Group's ability to maximise the long term potential of its assets;

·; As a result of adverse conditions in the wider economy, a restriction in the availability of credit for consumers and businesses could lead to lower levels of consumer spending, a higher level of business failures and difficulties for new ventures in raising start-up capital; and

·; Development and letting risks associated with refurbishments and developments carried out on a speculative basis.

Prospects

Long term success in commercial property investment has always depended on rental growth and low obsolescence. This is especially apparent in current market conditions when further general yield improvement to increase property values is less likely in the immediate future. Our results for the first half of this financial year reflect healthy rental growth of 6% in like-for-like rental income. We expect further growth in our rental income, particularly now that the St Martin's Courtyard scheme is virtually fully let. This success is the result of a disciplined investment strategy, careful positioning of uses and detailed local knowledge accumulated over two decades.

With the continuing and active support of our shareholders, we have substantial financial resources with which to buy further properties in this competitive market and to initiate potentially valuable new schemes.

Whilst the outlook for the national economy remains uncertain, the UK's traditions and heritage provide London with unrivalled attractions, which encourage large numbers of domestic and overseas visitors and support the West End economy. As we have experienced with the recent Royal Wedding, events such as The Olympics and the Queen's Diamond Jubilee celebrations in 2012 will bring more visitors to London. These global events attract the world's media and promote London as an attractive destination to millions of people around the world.

Our uniquely located investments and the long term impact of these forthcoming events give us great confidence that we shall maintain our record of out-performance in income, dividend and capital growth in the coming years.

Jonathan S Lane - Chief Executive

Brian Bickell - Finance Director

25 May 2011

Portfolio analysis at 31 March 2011

* Shaftesbury Group's share

Basis of Valuation at 31 March 2011

Notes

1. The Market Values at 31 March 2011 (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. For Longmartin this includes 100% of income from tenants who are, or will be paying, 50% as an initial rent.

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 the properties.

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

1. 13. For presentation purposes percentages have been rounded to the nearest integer.

Unaudited Group Statement of Comprehensive Income

For the six months ended 31 March 2011

 The notes below form an integral part of this Group financial information.Unaudited Group Balance Sheet

As at 31 March 2011

The notes below form an integral part of this Group financial information.Unaudited Group Statement of Changes in Shareholders' Equity

For the six months ended 31 March 2011

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

Unaudited Group Cash Flow Statement

For the six months ended 31 March 2011

The notes below form an integral part of this Group financial information.Notes to the Half Year Results

For the six months ended 31 March 2011

1. Basis of preparation

The condensed consolidated half year financial information for the six months ended 31 March 2011 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union.

The condensed consolidated half year information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 September 2010 were approved by the Board of Directors on 30 November 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. The condensed half year information has been reviewed, not audited.

The condensed consolidated half year financial information should be read in conjunction with the annual financial statements for the year ended 30 September 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 30 September 2010, as described in those annual financial statements.

a) The following amendment to a standard is mandatory for the first time for the financial year beginning 1 October 2010:

·; IFRS 2 (amended) Share-based payments. The amendments are effective from 1 January 2010. The amendments provide a clear basis to determine the classification of share based payment awards in both consolidated and separate financial statements. The amendments incorporate IFRIC 8 and IFRIC 11 into the standard and expand on the guidance given in IFRIC 11 to address plans that were not considered in the interpretation.

Overall no material changes to accounting policies arose as a result of this new amendment.

(b) Interpretations and amendments to standards becoming effective in the year ending 30 September 2011

but not relevant to the Group:

(c) Standards, amendments and interpretations that are not yet effective and not expected to have significant impact on the Group's financial statements:

* These standards are not expected to be relevant to the Group.

Significant judgements, assumptions and estimates

The preparation of financial statements requires management to make judgements, assumptions and estimates that affect the application of accounting policies and amounts reported in the Statement of Comprehensive Income and Balance Sheet. Such decisions are made at the time the financial statements are prepared and adopted based on the best information available at the time. Actual outcomes may be different from initial estimates and are reflected in the financial statements as soon as they become apparent.

The measurement of fair value constitutes the principal area of judgement exercised by the Board in the preparation of these financial statements. The fair valuations of investment properties, financial derivatives and share based payments are carried out by external advisors whom the Board considers to be suitably qualified to carry out such valuations.

Certain statements in this Half Year Report are forward looking. Although the Group believes that the expectations reflected in these forward looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward looking statements.

The Group undertakes no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

2. Revenue from properties and segmental information

Rents receivable include lease incentives recognised of £0.9 million (31.3.2010: £0.4 million; 30.9.2010: £1.1 million).

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 half year 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.

3. Property charges

4. Net property income

5. Charge in respect of equity settled remuneration

6. Finance costs

7. Taxation

Factors affecting the tax charge:

8. Earnings per share

In October 2010, the European Public Real Estate Association (EPRA) issued updated performance measures as part of their Best Practice Recommendations. The aim is to improve comparability between European property companies by providing a universal measure of underlying business performance.

The prior year adjusted amounts have been recalculated to include deferred tax in respect of capital allowances in the Longmartin Joint Venture which are not expected to crystallise. There is no material difference to the figures previously disclosed.

The calculations below are in accordance with EPRA's Best Practice Recommendations:

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.

9. Dividends paid 

An interim dividend in respect of the six months ended 31 March 2011 of 5.5p per Ordinary share amounting to approximately £13.7 million was declared by the Board on 25 May 2011. The interim dividend will be paid entirely as a Property Income Distribution on 1 July 2011 to shareholders on the register at 10 June 2011. The dividend will be accounted for as an appropriation of revenue reserves in the six months ending 30 September 2011.

10. Investment properties

Investment properties were subject to external valuation as at 31 March 2011 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) issued by the Royal Institution of Chartered Surveyors.

Investment properties include freehold properties valued at £1,378.3 million, leasehold properties with an unexpired term of over 50 years valued at £123.1 million and a notional apportionment of value in respect of part freehold/part leasehold properties, where the apportionment in respect of the leasehold element with over 50 years unexpired is £80.8 million.

Capital commitments

11. Trade and other receivables

At 31 March 2011, cash deposits totalling £10.1 million were held against tenants' rent payment obligations (31.3.2010: £9.0 million; 30.9.2010: £9.1 million).

12. Cash

Cash balances at 31 March 2011 include £1.2 million (31.3.2010: £1.2 million; 30.9.2010: £1.2 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 on completion of the building contract.

13. Trade and other payables

14. Borrowings

Availability and maturity of Debenture and bank debt at 31 March 2011

Movement in Borrowings during the period

Interest rate profile of interest bearing borrowings

15. Fair value of financial derivatives