Shaftesbury 2015 Annual Results

SHAFTESBURY 2015 ANNUAL RESULTS

STRONG PERFORMANCE DELIVERS 21.9% NAV GROWTH

Shaftesbury PLC ("Shaftesbury") today announces its results for the year ended 30 September 2015.

Growth in NAV, income, earnings and dividend

§ EPRA NAV increased by 21.9% to £8.69 (2014: £7.13).

§ Net asset value return, before dividends: 23.8% (2014: 28.0%).

§ Net property income1 up £4.7 million (6.3%) to £78.8 million (2014: £74.1 million).

§ EPRA earnings increased by 10.7% to £36.1 million (2014: £32.6 million). EPRA earnings per share increased by 6.6% to 13.0p (2014: 12.2p).

§ Final dividend per share of 6.925p (2014: 6.6p), an increase of 4.9%. Total dividend for the year 13.75p, 5.0% above 2014 (13.1p), fully covered by recurring cash earnings.

Continuing strong demand across the portfolio

§ EPRA vacancy1 at 30 September 2015: 1.6% of ERV, of which 0.3% was under offer.

§ Lettings, lease renewals and rent reviews with a rental value of £27.3 million1 concluded in the year across the portfolio:

- Commercial lettings and renewals at an average 8.3% above 30 September 2014 ERV.

- Commercial rent reviews 24.8% above previous rents, equivalent to five-year compound annual growth of 4.5%.

Strong growth in rental and capital values2

§ Portfolio valued at £3.13 billion

§ Portfolio capital value return (like-for-like): +18.0%. 3-year compound annualised growth rate: +16.0%.

§ Annualised current income at 30 September 2015: £102.6 million (2014: £93.5 million). Like-for-like increase: +9.1%.

§ Total portfolio ERV increased by £9.2 million to £127.8 million (2014: £118.6 million). Like-for-like ERV growth: 7.0%, with good growth across all uses.

§ Portfolio reversion £25.2 million, 24.6% above current rent.

§ Equivalent yield compression of 39 basis points to 3.61% in the wholly-owned portfolio and 35 basis points to 3.75% in the Longmartin joint venture.

Continuing investment in our portfolio

§ Acquisitions totalling £25.8 million in Carnaby, Covent Garden, Soho and Charlotte Street. Further purchases totalling £22.1 million secured since the year end.

§ Redevelopment, refurbishment and asset management schemes across 181,000 sq. ft. (10.4% of wholly-owned floor space). Capital expenditure1: £24.7 million.

§ Major mixed-use scheme fronting Foubert's Place and Kingly Street, Carnaby, completed in spring 2015 and was let above ERV.

§ Planning consent granted for our major 45,500 sq. ft. scheme fronting Charing Cross Road, Newport Court and Newport Place. Vacant possession is expected by end 2015 with construction starting early in 2016. Completion expected by mid-2017.

§ Planning application submitted for our 33,000 sq. ft. mixed-use scheme at 57 Broadwick Street, Carnaby. Subject to consent, we expect to be underway by mid-2016.

§ Reconfiguration of 21,000 sq. ft. retail space in the Thomas Neal's Warehouse, Seven Dials, to start in early 2016.

§ We continue to identify further schemes and asset management initiatives to unlock value.

Refinancing added to resources, extended weighted average maturity and reduced weighted average cost of debt

§ Two term loans arranged at a blended fixed interest rate of 3.51% p.a. (£130 million for 15 years; £120 million for 20 years)

§ £150 million revolving credit facilities, due to mature in 2016, cancelled.

§ Interest rate swaps on a notional principal of £70 million terminated at a cost of £28.1 million (equivalent to 10p per share).

§ Weighted average maturity of debt2: 10.2 years (2014: 7.1 years)

§ Weighted average cost of debt2: 4.92% (2014: 5.11%)

§ Committed unutilised facilities: £150.3 million. Marginal cost on these facilities: 1.5%

§ Conservative gearing (loan-to-value ratio2: 22.5%)

Brian Bickell, Chief Executive, commented:

"The West End continues to flourish, benefiting from the long-term growth in London's economy, population and visitor numbers.

Our exceptional portfolio, based in the busiest and liveliest parts of the West End, is focused on shops, restaurants, cafés and pubs. Extending to over 1 million sq. ft., these uses produce 70% of our rental income1. They have a long record of sustained demand and rental growth, unaffected by wider economic and property market cycles.

I remain confident that our innovative and successful strategy will continue to deliver growth in rental income, long-term values and returns for shareholders."

1. Wholly-owned portfolio. Comparative figures re-stated to take into account the change in accounting policy on the implementation of IFRS 11 "Joint Arrangements". See below for further information.

2. Includes 50% of the Longmartin joint venture

24 November 2015

For further information:

There will be a presentation to equity analysts at 9.30 am on Tuesday 24 November 2015, at The London Stock Exchange, 10 Paternoster Square, London EC4M 7LS.

There is a live audio webcast of the analyst presentation which you can access via the following link: http://webcasting.brrmedia.co.uk/broadcast/564b61ad339befbb5946973d or from our website. If you are unable to access this link, there is a dial in facility: +44 (0)203 140 8286. The PIN code is 3062124#. A playback facility of this presentation will be available on the Group's website www.shaftesbury.co.uk by the end of the day. The presentation document is available on the Group's website www.shaftesbury.co.uk

About Shaftesbury

Shaftesbury PLC is a Real Estate Investment Trust, which owns a unique real estate portfolio extending to 14 acres in the heart of London's West End - a highly popular, sought-after and prosperous destination for visitors and businesses. Our holdings are concentrated in Carnaby, Covent Garden, Chinatown, Soho and Charlotte Street.

Our objective is to deliver long-term outperformance in growth in rental income, capital values and shareholder returns.

We focus on retail, restaurants and leisure in the liveliest parts of the West End. Our portfolio now comprises 570 shops, restaurants, cafés and pubs, extending to 1 million sq. ft., which account for 70% of our current income. In our locations these uses have a long record of occupier demand exceeding their availability. It also includes 418,000 sq. ft. of offices and 528 apartments for rent, which provide 17% and 13%, respectively, of our current income.

In addition, we have a 50% interest in the Longmartin joint venture with The Mercers' Company, which has a long leasehold interest in St Martin's Courtyard in Covent Garden. Extending to 1.9 acres, it includes 22 shops, eleven restaurants and cafés, 102,000 sq. ft. of offices and 75 apartments.

Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. Its implementation is supported by an experienced management team with an innovative approach to long-term, sustainable income and value creation and a focus on shareholder returns. We have a strong balance sheet with modest leverage.

Forward-looking statements

This document may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.

Any forward-looking statements made by, or on behalf of, Shaftesbury PLC speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Shaftesbury PLC does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this document relating to Shaftesbury PLC or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

Highlights

1. Comparative figures re-stated to take into account the change in accounting policy on the implementation of IFRS 11 "Joint Arrangements". See below for further information.

2. Including 50% share of the Longmartin joint venture.

3. Adjusted in accordance with EPRA Best Practice Recommendations.

4. Like-for-like, measured against ERV at 30 September 2014.

5. Shaftesbury Group data (other than total shareholder return) derived from financial results.

6. Like-for-like.

7. Wholly-owned portfolio

Chairman's statement

I am pleased to report another year of strong performance

Our long-term strategy of investment in the heart of London's West End continues to deliver increasing shareholder value and dividends, underpinned by sustained demand and growth in actual and prospective rental income.

Across our fourteen acres of ownership1, relentless activity, which includes asset management, schemes and acquisitions, is key to our continuing success.

We focus on retail, restaurants and leisure in iconic West End locations. Businesses seeking space value our strategy of fostering constantly-evolving destinations, which draw many millions of people throughout the year.

Our approach creates prosperous areas for our tenants and, in doing so, establishes the demand that supports long-term growth in our income and the value of our portfolio.

Strong NAV growth

EPRA net asset value per share grew by £1.56 to £8.69 at the year end, primarily driven by strong valuation growth in our portfolio. This represents a NAV return, after adding back dividends, of 23.8%.

The valuation of our portfolio2 rose by £466.6 million to £3.1 billion, an 18% like-for-like increase over the year. This increase is attributable to a combination of:

§ Continuing strong occupier demand, and limited availability of space, which, together, are driving sustained growth in actual and potential rental income;

§ The improvements we make to our buildings to provide better space and enhance their income-generation prospects; and

§ The considerable investment demand for properties in our prosperous and resilient locations, which exceeds the availability of assets to buy.

The portfolio reversionary potential2, estimated by our valuers, stands at £25.2 million, 24.6% above current rents. We are confident that we shall continue our long record of converting this potential into cash flow, whilst growing rental values further.

Importantly, DTZ, independent valuers of our wholly-owned portfolio, continue to advise the Board that, in their view, some prospective purchasers may recognise the compelling opportunity, which the acquisition of the portfolio would provide, to own, in a single transaction, a substantial number of predominantly retail and restaurant properties in adjacent, or adjoining, locations in London's West End. Consequently, they may consider a combination of some, or all, parts of the portfolio to have a greater value than currently reflected in their valuation, which has been prepared in accordance with RICS guidelines.

1. Wholly-owned portfolio

2. Including our 50% share of the property owned in joint venture

Increased EPRA earnings and dividends

EPRA earnings increased by 10.7% to £36.1 million (2014: £32.6 million), largely driven by like-for-like growth in rental income of 5.5%. With sustained strong demand across all our locations and for all uses, we are achieving rents on leasing transactions and rent reviews, on average, 11.2% above ERVs twelve months earlier. As well as crystallising and exceeding the portfolio reversion previously reported, these transactions create new rental tones which benefit our adjoining, or nearby, ownerships.

Your Board is pleased to recommend a final dividend of 6.925p, bringing the total dividends for the year to 13.75p, an increase of 5.0%. The total distribution in respect of the year will amount to £38.3 million (2014: £36.5 million).

Asset management and investment in our portfolio

It has been another busy year of asset management activity and investment across our portfolio.

During the year, we completed £27.3 million of leasing and rent review transactions, equivalent to around 23% of total ERV.

We have worked on a wide variety of refurbishment schemes, extending to 181,000 sq. ft., or 10% of our floor area. This included the completion of our major scheme in Carnaby, fronting Foubert's Place and Kingly Street.

Capital expenditure for the year amounted to £24.7 million. This continues to be modest in relation to the value of our portfolio, as we provide retail, restaurant and leisure space in shell form, and have limited exposure to the obsolescence inherent in offices. In all our schemes, we are mindful of the need to ensure our generally older building stock continues to meet, or exceed, the minimum standards of environmental performance required by law and expected by our occupiers.

We continue to identify and advance further asset management opportunities across our portfolio. In particular, we are making good progress with three important schemes which we shall be starting during 2016:

§ In Chinatown, we have secured planning consent for a major reconfiguration of 45,500 sq. ft. of retail and restaurant space fronting Charing Cross Road and Newport Court. We shall start our works early in 2016.

§ In Carnaby, we have submitted a planning application for the refurbishment and extension of 57 Broadwick Street, which will provide 33,000 sq. ft. of retail, restaurant, office and residential accommodation. Subject to receiving consent, we expect the scheme to be underway by mid-2016.

§ In Seven Dials, in early 2016, we shall commence a scheme to materially alter the Thomas Neal's Warehouse to provide 21,000 sq. ft. of reconfigured space suitable for retailers seeking a flagship presence in this popular location.

The availability of properties to acquire, which meet our strict investment criteria, continues to be limited. Existing owners remain reluctant to relinquish valuable investments which offer both security and good growth prospects. Inevitably, the timing of acquisitions is always unpredictable.

In the first half, we acquired seven properties at a cost of £25.8m. Although we made no purchases in the second half, since the year end, we have secured acquisitions totalling £22.1 million. In each acquisition we have identified potential for asset management initiatives which should deliver good rental and capital growth in the medium-term, and which will benefit our holdings nearby.

Adding to our long-term financial resources

Long-term funding is a natural fit with our business model and portfolio of good quality assets which, with our management, deliver secure and growing income streams.

Since the beginning of 2015, we have completed the refinancing of our remaining debt facilities, which were due to expire in 2016, securing £250 million of long-term loans at an average rate of 3.51%. The refinancing provided us with additional resources of £96.6 million, of which £28.1 million was used to terminate £70 million of long-dated interest rate swaps.

Corporate Governance

We are committed to the principles of good corporate governance and responsibility throughout our business.

PricewaterhouseCoopers LLP, and their predecessor firms, have been our auditors since the company was founded in 1986. In light of new regulations regarding the rotation of auditors, and, in line with emerging best practice, we decided to tender the audit during the year.

Following this tender process, PricewaterhouseCoopers LLP will resign as auditors at the completion of this year's audit and Ernst & Young LLP will be appointed. The Board is recommending that Ernst & Young LLP be reappointed as auditor from the date of the Annual General Meeting in February.

Our team and the Board

Unusually for a business of our size, we operate with a staff of just 25. Their experience, knowledge and commitment are key to the continuing success of the Group's long-term strategy and the evolution of its implementation across our growing portfolio. Their innovative thinking ensures we adapt and respond to an ever-changing environment.

Importantly, we benefit from the experience and advice from a wide range of professional advisors, who share our enthusiasm for, and commitment to, our portfolio, and the areas in which we invest.

We are fortunate that we are able to call on the advice and wider experience of five Non-Executive Directors, who understand our business, how we operate, and the challenges that may lie ahead.

After 29 years at the Company, for many of which I was Chief Executive, I have asked the Nomination Committee, led by our Senior Independent Director Jill Little, to undertake a process to identify my successor as Non-Executive Chairman.

Outlook

London's global status continues to attract domestic and international businesses and visitors in unrivalled numbers. The city is currently experiencing a period of exceptional investment and growth. With forecasts pointing to a rapidly increasing population, more people and businesses are being drawn to its dynamic economy, wide variety of attractions and diverse, cosmopolitan atmosphere.

The completion of Crossrail in 2018, with its two West End transport hubs at Tottenham Court Road and Bond Street, will bring much-needed additional transport capacity to the London network. Importantly for us, accessibility to the West End will be materially improved and footfall patterns will change, which will benefit our holdings, all of which are a short walk from these new hubs.

We invest in predominantly retail, restaurant and leisure locations and buildings in the core West End, where these uses have a long history of sustained demand, resulting in occupancy levels and rental growth which typically are unaffected by wider cyclical trends. With the factors supporting the outlook and long-term success of the West End mirroring those of the entire city, they also underpin the unique qualities and prospects of our exceptional, centrally-located portfolio.

Against this background, and with our experience and forensic knowledge of the West End, we expect to continue to deliver long-term growth in shareholder value and income.

Jonathan Lane OBEChairman

24 November 2015

Valuation

Further strong growth in current rents, ERVs and capital values, underpinned by sustained high occupier and investor demand.

Almost two thirds of our portfolio reversion arises from uses which historically have not suffered from cyclicality in demand, providing a secure platform for further growth in income.

Further strong valuation performance

Our portfolio2 has been valued at 30 September 2015 at £3.13 billion, producing a surplus on revaluation of £466.6 million. The ungeared like-for-like capital value return was 18.0%, with strong growth reported in each village. The like-for-like portfolio cumulative annual growth rate over three years has been 16.0%.

1 Our 50% share

2 Including our 50% share of the Longmartin joint venture

3 Like-for-like

Our capital growth over the year reflects:

§ Continuing strong occupier demand and low vacancy, which is driving sustained growth in actual and prospective rents.

§ Improvements we make to the income potential of the accommodation we offer, including reconfiguration to create better, more efficient trading space and, where possible, the introduction of more valuable uses in our buildings.

§ A reduction in yields investors are prepared to pay to secure assets in the extremely prosperous, resilient West End. Against a background of a scarcity of supply of properties to acquire, this strong investor appetite reflects a desire for assets which provide growing returns, particularly in an environment of low-cost finance.

The equivalent yield attributed by our valuers to our wholly-owned portfolio at 30 September 2015 was 3.61%, a reduction of 0.39% over the year. In the Longmartin joint venture, the reduction was 0.35%, bringing the equivalent yield to 3.75%.

DTZ, independent valuer of our wholly-owned portfolio, have noted that our portfolio has:

§ an unusual concentration of holdings in sought-after West End locations; and

§ a predominance of retail, restaurant, café and leisure uses, for which there continues to be strong occupier demand, as demonstrated by current, and historic, low vacancy levels throughout the portfolio.

They also comment on the extent to which, under RICS Valuation Professional Standards, they are guided to combine or "lot" parts of our portfolio. They continue to advise the Board that, in their view, some prospective purchasers may consider a wider combination of some parts of the portfolio, or the entire wholly-owned portfolio itself, to have a greater value than currently reflected in their valuation, prepared in accordance with RICS valuation standards.

Continuing rental growth

We have, once again, seen growth in both actual and potential income this year, continuing our record of long-term sustainable rental growth, a key driver of long-term value creation. Over the year, our annualised current income1 has grown by £9.1 million from £93.5 million to £102.6 million, of which acquisitions contributed £0.6m. The like-for-like increase was 9.1%. This included the lettings at our completed scheme fronting Foubert's Place and Kingly Street, Carnaby, which totalled £2.4 million.

Importantly, our valuers' estimate of the rental value of our portfolio ("ERV")1 increased by £9.2 million this year and now stands at £127.8 million (30.9.2014: £118.6 million). Excluding the impact of acquisitions, which contributed £1.0 million to the total, the like-for-like increase was £8.2 million (7.0%), reflecting good rental growth across all villages and uses.

Converting the reversionary potential into cash flow

The total reversion1 now stands at £25.2 million, 24.6% higher than the annualised current rent. Of this, £7.1 million is contracted and will be realised as rent-free periods expire. Vacant property, including schemes in hand, accounted for £7.3 million, which will be realised as schemes complete and units are let.

Included in the total ERV is £1.3 million in respect of potential income from our schemes at 57 Broadwick Street, Carnaby, and Charing Cross Road/Chinatown2. This estimate of income is largely based on the existing space and does not fully take into account additional income which we expect to be generated by these schemes.

£9.5 million of our reversionary potential should be realised through the normal cycle of rent reviews, lease renewals and lettings. Shops, restaurants, cafés and pubs account for 63% of this uncontracted reversion. In our experience, these uses have, in our locations, demonstrated a long history of sustained, non-cyclical demand. Together with a restricted supply of space, this underpins their growth prospects. Consequently, we remain confident that, through our proven long-term management strategy, we shall not only convert this potential additional income into cash flow, but also deliver further additional long-term sustained rental growth. With vacancy levels remaining low, where possible, we seek to secure vacant possession of under-rented space and, in re-letting, accelerate the realisation of this potential income.

 1. Including our 50% share of the Longmartin joint venture

 2. To the extent not accounted for within vacancy, in the case of Charing Cross Road/Chinatown

Investment in our portfolio

High level of activity. Good progress has been made on our larger schemes.

§ Schemes undertaken during the year: 181,000 sq. ft. (10.4% of total floor area in the wholly-owned portfolio)

§ Development fronting Foubert's Place and Kingly Street completed and let above ERV

§ Capital expenditure1: £24.7 million

§ Planning consent granted for our major 45,500 sq. ft. Charing Cross Road/Chinatown scheme

§ Planning application made for our scheme at 57 Broadwick Street

§ Seven properties acquired. Cost: £25.8m; further acquisitions since year end

We continue to progress a pipeline of new projects to improve our buildings, increase income and unlock value.

Continued high level of refurbishment activity

A high level of management and refurbishment activity continues across our portfolio, with schemes undertaken during the year extending to 181,000 sq.ft. (10.4% of floor space in the wholly-owned portfolio), at a cost1 of £24.7 million. With strong occupier demand for our properties, securing vacant possession of space provides opportunities to carry out asset management initiatives to deliver growth in rental income and values. We made 96 planning applications during the year, including those for our Charing Cross Road/Chinatown, and 57 Broadwick Street, Carnaby schemes.

Our major scheme in Carnaby, fronting Foubert's Place and Kingly Street, was our largest project completed in the year. This mixed-use development, which cost £15.7 million, comprised 24,500 sq. ft. of retail, restaurant and office space, along with twelve apartments. Rents were £2.0 million above pre-scheme levels and 17.7% ahead of ERV at 30 September 2014.

Other larger projects underway, or completed during the year, included further improvements to Kingly Court, reconfigurations of retail, restaurant and pub space, office refurbishments, residential conversions and refurbishments, and public realm improvements.

1. Wholly-owned portfolio

Good progress with our important larger schemes

We continue to identify and progress a wide range of asset management opportunities across our portfolio, and have a number of schemes at various stages from initial ideas, seeking planning approval, awaiting vacant possession or under construction.

We are making good progress with our important larger schemes:

Charing Cross Road/Chinatown

During the summer, we were granted planning consent to reconfigure our substantial retail and restaurant ownership on the eastern boundary of Chinatown, with extensive frontages to Charing Cross Road, Newport Court and Newport Place. The scheme, totalling some 45,500 sq. ft., will create much improved space for occupiers. This includes a contiguous retail frontage on Charing Cross Road of some 330 feet, new restaurants in Newport Place and Newport Court, and a materially improved gateway into Chinatown.

The scheme, expected to complete in mid-2017, will cost around £10 million and will significantly increase net property income from this property, once fully let. Works will commence early in 2016 and we have started taking back space, with a view to securing vacant possession by the end of 2015.

57 Broadwick Street, Carnaby

We have submitted a planning application for the reconfiguration and extension of 57 Broadwick Street, a prominent building at the eastern gateway to Carnaby from Soho. Broadwick Street, already an important pedestrian route through Soho, linking Carnaby and Berwick Street, is expected to benefit from the opening of Tottenham Court Road Crossrail station's western ticket hall on Dean Street, in 2018. Other nearby schemes, planned or underway, will, over the next five years, bring further active retail and restaurant frontages along the street and greater footfall.

Our proposed scheme provides for:

§ The creation of flagship retail units, extending to 11,000 sq. ft. over the lower floors;

§ Refurbishment and extension of the remaining office space, to provide 20,000 sq. ft. of grade A accommodation; and

§ 2,000 sq. ft. of residential accommodation

Subject to receiving consent, we expect to commence works during spring 2016, with completion in phases from late 2017, and at a cost currently estimated at £14 million. In the interim, we have extended the existing occupational leases to April 2016.

Thomas Neal's Warehouse, Seven Dials

Having secured planning and Listed Building consents, we shall be reconfiguring the Thomas Neal's Warehouse, to produce 21,000 sq. ft. of flagship retail space. We expect this scheme to commence early in 2016, with completion in mid-2017. The project is expected to cost £2 million. It will also involve a loss of annual income, while works are carried out, of £0.8 million.

Investing in, and improving, the public realm

Investment in the public realm in and around our villages is an important catalyst for improving footfall.

Examples during the year include:

§ Upgrading the streetscape along Upper St Martin's Lane, improving the entrance to St Martin's Courtyard and the southern gateway to Seven Dials

§ Resurfacing Carnaby Street and improvements to Foubert's Place, the busiest route into Carnaby from Regent Street

We have also agreed to part-fund a scheme to improve Wellington and Russell Streets in the Opera Quarter and discussions for improvements to Rupert Street, south of Shaftesbury Avenue, continue. Plans are also being discussed with Westminster City Council to create a pedestrianised public square in Newport Court and improve Newport Place.

As part of the infrastructure improvements connected with Crossrail, Cambridge Circus is to be improved, in 2016, to relieve pedestrian congestion at this important and busy junction between Soho with Seven Dials. We anticipate this will encourage more footfall along Earlham Street, where we also expect to contribute to a major public realm improvement scheme, which we are optimistic will commence in 2016. This will bring material long-term benefits to our holdings around this important eastern gateway in to Seven Dials.

We continue to identify, and encourage, further public realm improvements across our villages.

Acquisitions

We acquired seven properties during the year. Costing £25.8 million, these additions to our portfolio in Soho, Charlotte Street, Covent Garden and Carnaby comprised two shops, two restaurants, two cafés, a vacant pub, 4,950 sq. ft. of office space and eight apartments.

These acquisitions, bought with an average net initial yield of 2.0%, complement our existing, extensive ownerships and offer the potential for good rental and capital growth through a combination of asset management and refurbishment schemes. Whilst we have longer-term asset management ambitions for these properties, in the short term, we have already increased the income they generate by 20% and this will rise to approximately 40% once we have completed and let apartments which are currently being upgraded.

In December 2015, we expect to complete the forward-purchase of 6,500 sq. ft. of new retail and restaurant space on the ground floor and basement at 19-25 Broadwick Street, Soho. Completion of this purchase has been delayed by the vendor due to construction issues. We anticipate keen occupier interest once we have secured ownership.

The availability of assets to buy which meet our specific criteria continues to be limited as owners in our extremely prosperous and resilient areas, understandably, remain reluctant to sell. The timing of acquisitions is always unpredictable. Whilst there were no acquisitions in the second half of the year, since year end we have contracted to buy properties, totalling £22.1 million, which we had been investigating for some time.

Demand and occupancy

Continuing strong demand for space in our carefully-curated locations, high occupancy levels and sustained growth in current and prospective rental income.

§ £27.3 million leasing and rent review transactions in the year1

§ Commercial lettings, renewals and reviews up 8.1% vs 30 September 2014 ERV

§ Development and refurbishment vacancy: 4.3% and set to grow as our major schemes commence in 2016

§ Available-to-let vacancy: 1.3%

1. Wholly-owned portfolio

Continued high level of leasing activity

It has been another busy year for lettings, lease renewals and rent reviews, with £27.3 million of transactions, equivalent to 28.7% of our current annualised income. The total included £2.4 million from the letting of our large mixed-use scheme on Foubert's Place and Kingly Street, Carnaby, 17.7% ahead of ERV at 30 September 2014.

1. Excludes £1.9 million of lettings on newly built apartments

In addition, our share of leasing activity in the Longmartin joint venture was £1.6 million, with commercial lettings and reviews 11.5%, on average, above last year's ERV. The final phase of the St Martin's Courtyard development was completed five years ago, and we are now managing the first rent reviews.

Vacancy at 30 September 20151

1 Wholly-owned portfolio

Low vacancy levels

Reflecting the strength of interest we have in our space, vacancy levels have remained low throughout the year, with an average EPRA vacancy of 2.1%. At 30 September 2015, EPRA vacancy in our wholly-owned portfolio amounted to £1.9 million, representing 1.6% of ERV, of which £0.4 million (0.3% of ERV) was under offer, leaving £1.5 million (1.3% of ERV) available to let.

Our redevelopment and refurbishment programme continues apace and, at 30 September 2015, the ERV of schemes underway was £5.0 million (4.3% of ERV). This level will increase further as we start our important Charing Cross Road/Chinatown and Broadwick Street schemes in 2016.

Assets held for, or under, refurbishment included:

§ 24,000 sq. ft. of retail and restaurant space at our major Charing Cross Road/Chinatown scheme (ERV: £1.6 million), where we have started securing vacant possession of space;

§ Four shops in the Thomas Neal's Warehouse (ERV: £0.2 million) in the lead up to our reconfiguration of the centre;

§ Five small shops (ERV < £150,000), with a total ERV of £0.4 million;

§ Five restaurants and cafés (ERV: £0.4 million);

§ 16,400 sq. ft. of office space (ERV £1.0 million); and

§ 46 apartments under construction, or being upgraded (ERV: £1.4 million).

Available-to-let vacancy comprised:

§ Two large shops (ERV: £0.4 million) and seven small shops (ERV: £0.5 million). Since year end we have let, or agreed terms on, three shops (ERV: £0.2 million);

§ One restaurant (ERV: £0.1 million), which has been placed under offer since year end; and

§ Office space totalling 1,900 sq. ft. with an ERV of £0.1 million, and thirteen apartments with an ERV of £0.4 million.

Space under offer at 30 September 2015 included:

§ Three small shops;

§ Two restaurants;

§ 2,400 sq. ft. of office space; and

§ Four apartments.

In addition, in the Longmartin joint venture, two apartments were available to let and there were four apartments, one office suite, and one shop being upgraded or reconfigured at year end. Our 50% share of the vacancy in this joint venture was £0.4 million.

Retail

Competitive rental levels compared with nearby streets

Our 313 wholly-owned shops are occupied principally by fashion and lifestyle retailers. An important element of the character and mix in our villages is our ability to provide a wide range of shop sizes and rental tones across our many different buildings and streets. As well as providing shoppers with a variety of interesting formats, this offers great flexibility for retailers to grow, or open new concepts, within our areas.

Our villages have high, and growing, footfall yet our rental levels remain competitive in relation to nearby streets.

Shorter, more flexible leases

Our retail leases are generally short, giving us the opportunity to refresh tenant mix, an important aspect of maintaining our villages' appeal. Typical retail lease terms are:

§ Smaller shops: 3-5 years

§ Larger shops: 5-10 years

§ Short rent-free period to help cover the tenants' fit-out period.

Sustained, broad-based demand

Our central, iconic retail destinations continue to attract good tenant demand, particularly from North American, European and UK concepts seeking to open flagships or concept stores. We have also had a number of existing tenants who have expanded, relocated, or taken second sites within our villages, particularly in Carnaby, our largest retail area. With this breadth of demand, we continue to introduce new operators to maintain a fresh and interesting retail mix across our areas.

During the year, we completed leasing and rent review transactions with a combined rental value of £8.9 million, equivalent to 27% of our current retail income. This included 34 new lettings, seventeen lease renewals and twelve rent reviews. Vacancy levels remain low and void periods are short. EPRA vacancy1 was 2.4% at year end, of which 0.2% was under offer.

Our share of lettings and rent reviews in the Longmartin joint venture was £0.8 million.

1. Wholly-owned portfolio

Larger retail developments

During the year, we completed the development of 7,500 sq. ft. of new retail space at our scheme on Foubert's Place, Carnaby, which was let to an overseas' brand making its debut in Europe.

We shall commence our redevelopment of our large ownership on Charing Cross Road early in 2016. Our plans include creating approximately 32,000 sq. ft. of large, double-height retail units along a 330 foot frontage on this busy street, which we expect to be a major beneficiary of Crossrail footfall. We are making substantial improvements to the configuration of the space, which we plan to market on completion in 2017.

We have started to secure vacant possession of space ahead of our planned reconfiguration of the 21,000 sq. ft. Thomas Neal's Warehouse, Seven Dials, to reduce the current sixteen units to fewer, larger units, or potentially a single unit. Works are expected to commence early in 2016, with completion in mid-2017.

Our planning application for the reconfiguration and extension of 57 Broadwick Street has been submitted. Subject to consent, we expect to commence works in spring 2016 to convert offices into 11,000 sq. ft. of flagship retail space, at this gateway to Carnaby from Soho.

Restaurants, cafés, pubs and leisure

Increasingly becoming a footfall driver

Eating out and socialising are ever-more popular. Consequently, the variety and quality of restaurants, cafés and pubs in the West End is increasingly becoming a footfall driver in its own right. With 257 wholly-owned restaurants, cafés and pubs, we are the largest provider of food and beverage space across the core West End, owning nearly one in five of the licensed premises.

Long leases, but becoming more flexible for us, as landlord

Tenants invest considerable sums fitting out their space, sometimes spending the equivalent of 3-5 years' rent and, therefore, we grant longer leases to provide them an extended period over which to amortise this cost. Typical restaurant lease terms are:

§ Historic leases (approximately 70%, by rent, of our leases): 25 years, five-yearly upward-only rent reviews and security of tenure on expiry. Often granted over whole buildings.

§ New leases: 15 years, five-yearly upward-only rent reviews. There is no security of tenure on expiry and we also benefit from a turnover-related rental top-up. Leases extend only to operational space i.e. not upper floors.

Historically high demand, with low availability of space

Planning policy in the West End generally seeks to regulate the provision of new restaurant space, in the interests of preserving a balance of commercial uses and the amenity of local residents. This, together with reluctance by existing operators to relinquish their valuable sites, severely limits the supply of space.

Tenant demand continues at historically high levels. In our sought-after locations, we regularly receive numerous competitive offers for available units and pre-letting is common. Our areas attract interest from independent operators, established street-food concepts, start-ups seeking their first site and existing small restaurant groups with new ideas and creative partners. With consumers keen to experience different concepts and tastes, these operators are particularly interesting and relevant to our villages, broadening our dining and leisure offer and bringing both customer and social media interest.

We have completed lettings, renewals and rent reviews with a rental value of £7.8 million in the year, representing 23% of our current restaurant and leisure income. This included introducing nineteen new concepts in our villages, seven lease renewals and twenty three rent reviews. EPRA restaurant vacancy1 was 0.5% at 30 September 2015, half of which was under offer.

Our share of rent reviews in the Longmartin joint venture was £0.2 million.

1. Wholly-owned portfolio

Opportunities to add to, or reconfigure, our accommodation

Responding to the high level of demand, we continue to identify opportunities to secure vacant possession of restaurants which, in the past, had been let on long leases, providing tenants with the right to renew at the end of the term. This allows us to improve the configuration of space on the lower floors, attract new operators on more beneficial terms, and often release valuable upper floors for other uses. At 30 September 2015, we had 16,000 sq. ft. of restaurant and café space where we were either making, or plan to make, improvements.

Our recently-created restaurant quarter in Carnaby includes Kingly Street, Kingly Court and Ganton Street. It is now widely recognised as a major and exciting dining hub, attracting footfall from a wide catchment, including Soho, Oxford Street, Regent Street and Mayfair. It complements Carnaby's reputation as a retail destination.

Having completed our large development scheme fronting Foubert's Place and Kingly Street, Carnaby, two new restaurants have opened, anchoring the food offer at the northern end of Kingly Street. Importantly, almost all the frontages on Kingly Street are now in food and beverage use.

We have made further improvements to Kingly Court in the year, and have introduced restaurants on the second floor. This lively destination now boasts nineteen restaurants and cafés, four bars and clubs and over 1,200 covers, in an alfresco setting.

Our Charing Cross Road/Chinatown scheme, set to commence in 2016, will create improved dining space by relocating restaurant and bar uses from Charing Cross Road, to provide 13,500 sq. ft. of large restaurant units, fronting Newport Place and Newport Court.

Offices

Large provider of small office space in the core West End

We are one of the largest providers of small office space in the core West End. Our 418,000 sq. ft. of office space in the wholly-owned portfolio is let to 294 tenants, of which 240 occupy less than 2,000 sq. ft. The average letting is 1,400 sq. ft. at £46 per sq. ft., and the average ERV is £56 per sq. ft. The tone for our best offices is now £53 - £78 per sq. ft. Lease lengths are typically five years.

Constrained supply and strong demand

Over recent years, supply of small office space across the West End has reduced as a result of office-to-residential conversions and redevelopment of multi-let office buildings to create higher specification space with larger floor plates.

We are experiencing extremely strong demand for our smaller office accommodation, largely from the buoyant SME media, creative, fashion and IT sectors. These businesses traditionally have been based in Soho and Covent Garden. We also have strong interest for our larger floor plates from an increasing number of financial companies, who find our villages to be better value and more lively than their existing locations.

With occupier demand outstripping supply, rents have continued to rise, rent-free periods have reduced, and vacancy levels have been extremely low. When space does become available, pre-letting is commonplace.

During the period, we completed new lettings, lease renewals and rent reviews in the wholly-owned portfolio, extending to 87,000 sq. ft. and totalling £4.9 million, equivalent to 32% of our current office income. This included letting 10,500 sq. ft. of newly-built office space in our development at 25 Kingly Street for £0.8 million. It also included 42 new leases, 23 renewals and four rent reviews. At year end we had just four office suites, totalling 1,900 sq. ft., available to let.

Our share of lettings in the Longmartin joint venture was £0.2 million.

Improving rental prospects

Responding to buoyant demand, we are keen, when opportunities arise, to reconfigure and upgrade our office space to ensure it meets the flexible working space standards expected by SMEs in our areas. At the same time, we improve its environmental performance, as we strive to minimise occupation costs for our tenants.

Our planning application for the reconfiguration of 57 Broadwick Street includes the refurbishment and extension of the existing offices to create 20,000 sq. ft. of modern, large-floor plate space.

Residential

Reliable and growing cash flow

With its wide variety of attractions and lively atmosphere, the West End is a popular place to live, and we see sustained demand for our reasonably-priced apartments to rent. Our 528 wholly-owned flats are mainly studios and one or two bedroom apartments. Mostly, they have been created from the conversion of small office accommodation, which could not be adapted to meet modern occupier requirements. We have secured a number of residential conversion planning consents which we could implement in the future.

Our residential accommodation, with its high occupancy levels, provides a reliable and growing income stream, presently representing 13% of our current income.

Preference to lease, rather than sell, apartments

The value of our buildings is weighted towards the retail, restaurant and leisure uses on the lower floors. We prefer to retain control over whole buildings to avoid compromising the management flexibility needed to realise the long-term potential in those valuable lower floors. Therefore, we choose not to sell our apartments, where, to do so, would compromise this flexibility.

Flexible leases

Our apartments, which are rented unfurnished, typically are let on three year tenancies with annual RPI rent reviews and mutual breaks on a rolling two-month basis after the first six months.

High occupancy levels

During the year, we completed 203 lettings and renewals in the wholly-owned portfolio, with a rental value totalling £5.6 million, representing 45% of our current income from this use.

Our share of residential letting activity in the Longmartin joint venture was £0.3 million.

With continuing strong demand in our locations, residential vacancy levels have been low throughout the year. At 30 September 2015, we had thirteen apartments available to let, whilst a further four were under offer. There were two vacant apartments in the Longmartin joint venture.

We have a rolling refurbishment programme to ensure the accommodation we offer matches the standard of new-build rental flats, which are coming to the market in greater numbers in, and around, the West End. At year end, we were constructing, or upgrading, 46 apartments in the wholly-owned portfolio and four flats in the Longmartin joint venture. 

Results and finance

It has been another year of good progress with further growth in net asset value, rents, earnings and dividends. 

We completed the refinancing of our 2016 debt maturities, considerably lengthening the weighted average maturity profile, diversifying our sources of finance and increasing our financial resources. With substantial and secure resources, we are well-placed to continue growing, and investing in, our portfolio and executing our business strategy.

Change of accounting policy for the Longmartin joint venture

The Group is adopting IFRS 11 'Joint arrangements' for the first time this year. This standard removes the proportionate consolidation option that was previously available under IAS 31 'Interests in Joint Ventures' and instead requires us to account for the joint venture using the equity method. The consequence is that we now include the Group's net equity interest in Longmartin as a single line item in both the consolidated balance sheet and consolidated income statement, rather than proportionally consolidating the Group's share of assets, liabilities, income and expenses on a line-by-line basis. Loans, interest and management fees between the Group and Longmartin are no longer eliminated on consolidation.

Whilst this change in accounting policy does not affect the net asset position nor profit after tax, it does alter the line-by-line analysis in the primary statements and the cash and cash equivalents reported in the Cash Flow statement. The prior year comparatives have been restated accordingly, and the changes are summarised in note 2 to the Financial Statements. The following financial commentary is based on the IFRS position.

Income statement

Further growth in EPRA earnings

Profit after tax for the year was £467.3 million (2014: £440.4 million), and included a valuation surplus of £432.0 million (2014: £394.0 million). As is usual practice in our sector, we produce an alternative measure for earnings, making standard adjustments as set out by EPRA in its Best Practice and Policy Recommendations. EPRA earnings are a measure of the level of recurring income arising from core operational activities. It excludes all items which are not relevant to the underlying performance, such as property and interest rate swap valuation movements.

EPRA earnings increased by 10.7% to £36.1 million (2014: £32.6 million) and EPRA EPS was 13.0p, up 6.6% over the year (2014: 12.2p). The smaller relative increase in EPRA EPS, compared with that for EPRA earnings, reflects the increased weighted average number of shares in issue this year, following our share placing in March 2014.

1 Restated for the change in accounting policy detailed below

Net property income

Rents receivable have increased by 7.6% to £91.8 million (2014: £85.3 million). The like-for-like growth of 5.5% largely reflects the continued crystallisation of the reversionary potential of our portfolio through lettings, renewals and rent reviews. Acquisitions contributed £1.9 million to the increase.

Irrecoverable property costs were £13.0 million (2014: £11.2 million), representing 14.2% of rents receivable (2014: 13.1%). The increase is mainly due to costs associated with the large volume of leasing activity in the year, coupled with the high level of irrecoverable costs at our Charing Cross Road/Chinatown scheme. This block is let on a short-term basis ahead of commencement of our scheme in early 2016. As a result, income is low and there is a high level of irrecoverable costs. Excluding this property, irrecoverable costs were 13.0% of rents receivable (2014: 12.7%).

Net property income was £78.8 million, up 6.3% on last year (2014: £74.1 million).

Administrative expenses

Administrative expenses, excluding the charge for equity settled remuneration, increased by 3.8% to £11.0 million (2014: £10.6 million). This includes a charge for annual bonuses of £2.2 million (2014: £2.6 million). The increase before bonuses was largely due to higher staff costs and an increase in occupation outgoings following our relocation to larger offices in Carnaby in February 2014.

The charge for equity-settled remuneration was £3.0 million (2014: £3.2 million), which included a non-cash accounting provision of £2.3 million (2014: £2.7 million) and a charge for employer's National Insurance of £0.7 million (2014: £0.5 million).

Revaluation surplus

Our portfolio delivered a valuation surplus of £432.0 million (2014: £394.0 million), principally driven by like-for-like ERV growth of 6.8% and yield compression of 39 basis points.

Finance costs

Net finance costs (excluding the change in fair value of our interest rate swaps) increased by £1.2 million to £30.7 million (2014: £29.5 million). The increase is the result of higher average debt levels arising from acquisitions, capital expenditure and the cost of termination of interest rate swap contracts, partly offset by a lower blended cost of debt following our refinancing during the year. The total includes an accelerated write-off of unamortised deferred loan issue costs totalling £0.2 million.

Excluding interest rate swaps which were cancelled in the year at a cost of £28.1 million, the like-for-like fair value deficit on our interest rate swaps increased by £28.5 million to £79.2 million, following a fall in long-dated interest rates in the year. The Board keeps under review the Group's interest rate hedging strategy, and the impact our derivatives have on the long-term financing of the business.

Longmartin profits

Our share of post-tax profit from the Longmartin joint venture increased by £2.1 million to £29.7 million (2014: £27.6 million) principally due to:

§ an increase in net property income of 5.4% to £5.9 million (2014: £5.6 million), driven by a like-for-like increase in rental income of 6.3%.

§ a revaluation surplus of £34.6 million (2014: £32.4 million) with like-for-like ERV growth of 9.1% and equivalent yield compression of 35 basis points.

§ an increase in the tax charge of £0.3 million to £7.2 million (2014: £6.9 million), as a result of deferred tax on the revaluation surplus.

Tax

As a REIT, the Group's activities are largely exempt from corporation tax and, as a result, there is no tax charge in the year (2014: £Nil).

Dividend growth

The Board is pleased to recommend a final dividend of 6.925p per share, an increase of 4.9% on last year's final dividend of 6.6p. Together with the interim dividend paid in July 2015, the total dividend for the year is 13.75p per share, an increase of 0.65p, or 5.0% on 2014.

We aim to maintain a steady growth in dividends, reflecting the long-term trend in our income and cash earnings. In determining this dividend level, the Board has taken into account the non-cash accounting charge for equity-settled remuneration of £2.3 million and the accelerated write-off of unamortised deferred issue costs, totalling £0.2 million, following the refinancing of our Nationwide bank facilities in the year; together these reduced EPRA earnings per share by 0.9p.

Having agreed with HM Revenue & Customs that the cost of terminating interest swaps in 2014 and 2015 was deductible against qualifying REIT income, dividends in respect of the 2015 year are being paid entirely as ordinary dividends. We expect to start paying a PID again next year.

Increased EPRA net asset value

EPRA NAV per share increased by £1.56 (21.9%) to £8.69 (2014: £7.13). This increase included contributions of £1.55 per share and 12p per share from the revaluations of the wholly-owned portfolio and the Longmartin joint venture property respectively. The cost of terminating interest rate swaps in March 2015, following the refinancing of one of our short-term revolving credit facilities, reduced NAV by 10p per share. EPRA profits of 13.0p per share were matched by dividends paid.

1 Restated for the change in accounting policy detailed below

Cash flows and net debt

Net debt increased by £82.6 million to £634.1 million over the period (2014: £551.5 million). The major cash flows were:

§ Operating cash inflow (£37.4 million)

§ Dividend payments (£39.5 million)

§ Acquisitions and capital expenditure (£50.9 million)

§ Interest rate swap termination costs (£28.1 million)

During the year, we completed the refinancing of our remaining 2016 debt, arranging two secured term loans, totalling £250.0 million, at a blended fixed interest rate of 3.51% p.a. The loans are repayable in full at maturity in March 2030 (£130.0 million) and July 2035 (£120.0 million). On drawing the loans, we cancelled two revolving credit facilities, totalling £150.0 million, which were due to expire in 2016. This added £100.0 million to our financial resources, of which £28.1 million was used to fund the termination of £70.0 million of interest rate swaps. Facility arrangement costs totalled £3.4 million. The balance was used to pay down revolving bank facilities, which are available to be re-drawn.

Extended maturity and lower cost of debt

Our weighted average maturity of debt1 at 30 September 2015 was 10.2 years (2014: 7.1 years) and our earliest debt maturity is now a £150 million revolving credit facility, which expires in November 2018.

Although net debt increased over the year by £82.6 million, at year end our loan-to-value ratio1 had fallen to 22.5% (2014: 23.6%), largely as a result of growth in the value of our portfolio over the year. We had £150.3 million of committed undrawn facilities (2014: £139.4 million), which are available to fund further investment in our portfolio. Of our drawn debt, 97.2% was fixed or hedged1 (2014: 82.1%), although this level will fall to around 80% as our undrawn variable-rate facilities are utilised.

The weighted average cost of debt1 was 4.92%, 19 basis points lower than at 30 September 2014. The marginal cost of drawings under our committed facilities is around 1.5% (2014: 1.55%), and so, as further drawings are made, the average cost of debt will reduce. If our facilities had been fully drawn at 30 September 2015, the weighted average cost of debt1 would have been 4.32%. The average margin on our drawn variable-rate bank facilities has increased to 1.16% (2014: 1.11%) and this would rise further to 1.35% if all facilities were fully drawn (2014:1.24%).

1 Including our 50% share of the Longmartin joint venture

2 Based on nominal value of debt

3 Shaftesbury Group's 50% share. This loan is without recourse to Shaftesbury.

4 Based on EPRA net assets

5 Including non-utilisation fees on undrawn bank facilities

Looking ahead

The West End continues to flourish, benefiting from the long-term growth in London's economy, population, and visitor numbers.

Our exceptional portfolio, based in the busiest and liveliest parts of the West End, is focused on shops, restaurants, cafés and pubs. Extending to over 1 million sq. ft., these uses produce 70% of our rental income1. They have a long record of sustained demand and rental growth, unaffected by wider economic and property market cycles.

Strong demand

We continue to experience strong demand in each of our locations, and across all uses. Demand is broad-based, and we are seeing retailers and restaurateurs looking to secure footholds in our carefully-curated areas ahead of Crossrail opening in 2018. This demand is producing good rental growth and high occupancy levels.

Intensive asset management

Our portfolio is highly reversionary and we continue to identify and secure opportunities to take back space, often to carry out improvement projects, and, through re-letting, not only to convert the potential rent into actual income but also improve rental prospects. Our clusters of ownerships allow the benefits of improvements we make to be compounded across our adjacent, or nearby, holdings.

We are making good progress with our major schemes at Charing Cross Road/Chinatown, 57 Broadwick Street, Carnaby, and Thomas Neal's Warehouse, Seven Dials. Works are planned to commence in 2016 with a view to completion over the second half of 2017, when we expect to see a material increase in net property income from these projects.

Opportunities to acquire new assets

The availability of assets to acquire in our locations, and which meet our strict criteria, continues to be constrained as owners, understandably, remain reluctant to sell. Although the timing of additions to our portfolio is impossible to predict, over the medium term, a steady flow of purchases are important in extending our ownership clusters and offering new marriage value possibilities. Having secured two acquisitions since September, we continue to appraise new opportunities.

Confidence in long-term prospects

The West End's prosperity, which is not reliant on the fortunes of the UK economy, underpins the long-term demand for accommodation. Our holdings continue to benefit from this demand, as well as the substantial investment the city attracts.

We have a committed team with a forensic knowledge of the West End. Passion for this business, and the West End, is very much a part of our DNA. I remain confident that, with our innovative and successful strategy, our exceptional portfolio will continue to deliver growth in rental income, long-term values and returns for shareholders.

1 Wholly-owned portfolio

Brian Bickell

Chief Executive

Christopher Ward

Finance Director

PORTFOLIO ANALYSIS

1. Shaftesbury Group's 50% share

BASIS OF VALUATION

Notes

1. The fair values at 30 September 2015 (the "valuation date") shown in respect of the individual villages are, in each case, the aggregate of the fair 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 income includes total annual actual and 'estimated income' reserved by leases. No rent is attributed to leases which were subject to rent-free periods at the valuation date. Current income does not reflect any ground rents, head rents nor rent charges and estimated irrecoverable outgoings at the valuation date. 'Estimated income' refers to gross estimated rental values in respect of rent reviews outstanding at the valuation date and, where appropriate, ERV in respect of lease renewals outstanding at the valuation date where the fair value reflects terms for a renewed lease.

3. 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. Where appropriate, ERV assumes completion of developments which are reflected in the valuations. ERV does not reflect any ground rents, head rents nor rent charges and estimated irrecoverable outgoings.

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

5. 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.

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

7. The initial yield is the net initial income at the valuation date 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 valuation date.

8. The initial yield ignoring contractual rent free periods has been calculated as if the contracted rent is payable from the valuation date and as if any future stepped rental uplifts under leases had occurred.

9. 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 discounted at this rate equals the capital outlay at values current at the valuation date. The equivalent yield shown for each village has been calculated by merging together the cash flows and fair values of each of the different interests within each village and represents the average equivalent yield attributable to each village from this approach.

10. The tone of rental values and yields is the range of rental values or yields attributed to the majority of the properties.

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

12. For presentation purposes some percentages have been rounded to the nearest integer.

13. The analysis includes accommodation which is awaiting or undergoing refurbishment or development and is not available for occupation at the date of valuation.

Group Statement of Comprehensive Income

For the year ended 30 September 2015

Group Balance Sheet

As at 30 September 2015

On behalf of the Board who approved and authorised for issue the financial statements on 24 November 2015.

Brian Bickell Chief Executive

Christopher WardFinance Director

Group Cash Flow Statement

For the year ended 30 September 2015

Statements of Changes in Equity

For the year ended 30 September 2015

Notes to the financial statements

For the year ended 30 September 2015

1. General information

Basis of preparation

The preliminary announcement does not constitute full financial statements.

The results for the year ended 30 September 2015 included in this preliminary announcement are extracted from the audited financial statements for the year ended 30 September 2015 which were approved by the directors on 24 November 2015. 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 2015 Annual Report is expected to be posted to shareholders in December 2015 and will be considered at the Annual General Meeting to be held on 5 February 2016. The financial statements for the year ended 30 September 2015 have not yet been delivered to the Registrar of Companies.

The auditors' report on the financial statements for the year ended 30 September 2014 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 2014 have been delivered to the Registrar of Companies.

Going concern

The Group's business activities, together with the factors affecting performance, financial position and future development are set out above. The financial position of the Group including cash flow, liquidity, borrowings, undrawn facilities and debt maturity analysis is set above. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis in preparing the financial statements.

Critical judgements, assumptions and estimates

The preparation of these financial statements requires the Board to make judgements, assumptions and estimates that affect 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. Actual outcomes may be different from initial estimates and are reflected in the financial statements as soon as they become apparent.

The directors consider the valuation of investment property to be critical because of the level of complexity, judgement or estimation involved and its impact on the financial statements. The Group uses the valuations performed by its external valuers, DTZ Debenham Tie Leung Limited, as the basis for the fair value of its investment properties. Knight Frank LLP value the investment properties owned by the Longmartin joint venture.

The valuation of the Group's property portfolio is inherently subjective due to, amongst other factors, the individual nature of each property, its location and the expected future rental income. As a result, the valuations the Group places on its property portfolio are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low transaction flow in the commercial property market. The investment property valuations contain a number of assumptions upon which DTZ Debenham Tie Leung Limited and Knight Frank LLP make a number of assumptions in forming their opinion on the valuation of our investment properties, which are detailed in the basis of valuation above. These assumptions are in accordance with the RICS Valuation Standards. However, if any assumptions made by the external valuers prove to be incorrect, this may mean that the value of the Group's properties differs from their valuation reported in the financial statements, which could have a material effect on the Group's financial position.

2. Accounting policies

New accounting standards and interpretations

a) The following new standards and amendments to standards are mandatory for the first time for the financial year ending 30 September 2015:

The only new standard or amendment to have a material impact on the Group is IFRS 11 Joint arrangements.

IFRS 11 Joint arrangements - IAS 31, Interests in Joint Ventures has been replaced by IFRS 11 Joint arrangements. The Group has joint control over Longmartin Properties Limited by virtue of its 50% share in the equity shares of the company and requirement for unanimous consent by both parties over decisions related to the relevant activities of the arrangement. As a result the Group has assessed Longmartin Properties Limited to be a joint venture under IFRS 11.

Under IAS 31 the Group accounted for its share of its joint venture's results and balance sheet using proportional consolidation. IFRS 11 precludes the use of proportional consolidation, with equity accounting being the only permitted option. The Group's net interest in its joint venture is now disclosed as a single line item in both the Group Statement of Comprehensive Income and Group Balance Sheet. Accompanied by this the Group Cash Flow Statement excludes cash flows generated by the joint venture but now includes loans received/(advanced) and dividends received in separate line items.

The impact on the Group Statement of Comprehensive Income and the Group Balance Sheet is purely presentational and does not affect the Group's reported net assets nor profit after tax. Cash and cash equivalents in the Group Cash Flow Statement are reduced by the Group's share of cash held in the joint venture.

As the impact of the transition to IFRS 11 has a material impact on the presentation of the Group's financial statements, the prior year figures have been restated. The tables below show the impact of the change in accounting policy on the Group Statement of Comprehensive Income, the Group Balance Sheet and Group Cash Flow Statement.

Apart from IFRS 11, no material changes to accounting policies arose as a result of these new standards and amendments.

Impact on Group Statement of Comprehensive Income

Impact on Group Balance Sheet

*Adjustment relates to the reclassification of cash held on deposit, see note 15 for further details.

Impact on Group Cash Flow Statement

*Adjustment relates to the reclassification of cash held on deposit, see note 15 for further details.

b) The following Annual Improvements that are relevant to the Group are not yet effective in the year ending 30 September 2015 and are not expected to have a significant impact on the Group's financial statements:

c) There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

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 a 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 segment.

The Board assesses the performance of the reportable segment based on 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 measures used in assessing the business are set out in the Group Statement of Comprehensive Income.

4. Revenue

Rents receivable includes lease incentives recognised of £2.4 million (2014 as restated £1.6 million).

5. Property charges

6. Charge in respect of equity settled remuneration

Included in the charge for share based remuneration is £2.2 million (2014: £2.7 million) for the fair value of share options.

7. Finance costs

8. Tax charge for the year

The Group's wholly-owned business is subject to taxation as a REIT. Under the REIT regime, income from its rental business (calculated by reference to tax rather than accounting rules) and chargeable gains from the sale of its investment properties are exempt from corporation tax.

9. Earnings per share

The calculations below are in accordance with the EPRA Best Practice Recommendations.

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

10. Dividends paid

A final dividend of 6.925p per share was recommended by the Board on 24 November 2015. Subject to approval by shareholders at the 2016 AGM, the final dividend will be paid on 12 February 2016 to shareholders on the register at 22 January 2016. The dividend will be paid entirely as an ordinary dividend. The dividend totalling £19.3 million will be accounted for as an appropriation of revenue reserves in the year ending 30 September 2016.

11. Investment properties

Property reconciliation

The investment properties valuation comprises:

External valuers

Investment properties were subject to external valuation as at 30 September 2015 by qualified professional valuers, being members of the Royal Institution of Chartered Surveyors, working for DTZ Debenham Tie Leung Limited, Chartered Surveyors, acting in the capacity of external valuers.

All properties were valued on the basis of fair value and highest and best use in accordance with the RICS Valuation Standards - Professional Standards 2014 and IFRS 13. When considering the highest and best use a valuer considers its actual and potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the valuer considers the use a market participant would have in mind when formulating the price it would bid and reflects the cost and likelihood of achieving that use.

The external valuations use information provided by the Group, such as tenancy information and capital expenditure expectations. The valuers, in forming their opinion make a series of assumptions. The assumptions are typically market related, such as yields and rental values, and are based on the valuers' professional judgement and market observations. The major inputs to the external valuation are reviewed by the senior management team. In addition, the valuers meet with external auditors and members of the Audit Committee.

Fair value measurements using unobservable inputs (level 3)

The Group's investment properties are reported under IFRS 13 'Fair value measurement' which uses the following hierarchy to determine the valuation basis of assets or liabilities:

The fair value of the Group's investment properties has primarily been determined using a Market Approach, which provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available. There are a number of assumptions that are made in deriving the fair value, including equivalent yields and ERVs. Equivalent yields are based on current market prices, depending on, inter alia, the location and use of the property. ERVs are calculated using a number of factors which include current rental income, market comparatives, occupancy and timing of rent reviews. Whilst there is market evidence for these inputs, and recent transaction prices for similar properties, there is still a significant element of estimation and judgement. As a result of adjustments made to market observable data, these significant inputs are deemed unobservable.

The Group considers all of its investment properties to fall within Level 3. The Group's policy is to recognise transfers between fair value hierarchy levels as at the date of the event or change in circumstances that caused the transfer. There have been no transfers during the year.

The key assumptions made by the valuers are set out in the basis of valuation above.

Sensitivity analysis

As noted in the critical judgements, assumptions and estimates section above, the valuation of the Group's property portfolio is inherently subjective. As a result, the valuations the Group places on its property portfolio are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low transaction flow in the commercial property market.

The Group's properties are all located in the West End and are virtually all multi-use buildings, usually configured with commercial uses on the lower floors and office and/or residential uses on the upper floors DTZ Debenham Tie Leung Limited value properties in their entirety and not by use. Consequently the sensitivity analysis below has been performed on the Group's portfolio as a whole.

These key unobservable inputs are inter-dependent. All other factors being equal, a higher equivalent yield would lead to a decrease in the valuation of a property, and an increase in the ERV would increase the capital value, and vice versa.

At 30 September 2015, the Group had capital commitments of £16.4 million (2014 as restated £15.0 million).

12. Accrued income

The unamortised amount of lease incentives is allocated between amounts to be charged against rental income within one year of the Balance Sheet date and amounts which will be charged against rental income in subsequent years.

13. Investment in joint venture