LXB.L Regulatory News (LXB)

LXB Retail Properties Plc

INTERIM RESULTS FOR THE PERIOD ENDED 31 MARCH 2012

LXB Retail Properties Plc, a closed-ended real estate investment company focused on edge of town and out of town retail assets, today announces interim results for the period ended 31 March 2012.

Highlights

31 March 30 September

2012 2011

·; Cash deposits and liquid investments: £97.1m £112.7m

·; NAV per share: 111.00p 107.97p

·; EPRA* NAV per share: 111.63p 108.19p

·; Earnings per share: 3.39p 10.31p

·; The portfolio is taking shape and now includes 6 foodstore led and 3 fashion park led projects, with opportunities in employment, leisure and residential too

·; October 2011: entered into a pay fixed 1.6675% receive LIBOR on a notional amount of £100m interest rate swap facility with the Royal Bank of Scotland Plc effective from 25 March 2013 until 25 September 2015

·; November 2011: acquired Andrews Sykes unit in Greenwich for a net cash outflow of £1.08m

·; November 2011: exchanged agreements for lease, on a subject to planning basis, with Marks & Spencer at Banbury, Biggleswade, Greenwich, and Stafford for new stores covering, in total, over 300,000 sq ft

·; December 2011: obtained a resolution to grant planning permission for a retail and mixed-use development at Metz Way, Gloucester

·; January 2012: exchanged contracts on an option to acquire 8 acres of land at Kingsmead, Stafford town centre for £16.9m on a subject to planning basis and exchanged contracts with Morrisons subject to planning for a 25 year lease on a new 71,500 sq ft foodstore on the majority of the site

·; February 2012: obtained planning permission for retail developments at Riverside and Kingsmead in Stafford

·; February 2012: completed site assembly at Biggleswade with acquisition of Exhaust Centre site for £3.2m (including purchase costs)

·; March 2012: obtained a resolution to grant planning permission for the Banbury Gateway Retail Park, Banbury

·; March 2012: acquired a site at Woolwich Road, Greenwich for £2.4m (including purchase costs)

Post period end:

·; April 2012: obtained a resolution to grant planning permission for the London Road Retail Park, Biggleswade

* excluding fair values of financial instruments and deferred tax.

Phil Wrigley, Chairman of LXB Retail Properties Plc commented:

"During the current financial year we have secured planning consent (or resolution to grant planning consent subject to signing S.106 agreements) at Sheppey, Banbury, Biggleswade, Gloucester, Stafford, and for our hotel scheme at Greenwich. We are also expecting planning committee decisions at Rushden and for the Sainsbury's/Marks & Spencer at Greenwich shortly. Since the IPO the Group has obtained new planning consents for over 1.1m sq ft of new retail space and 0.3m sq ft for other employment uses and secured an anchor tenant at each of those locations. If the Rushden and Greenwich applications are successful, we will have achieved consent for new space totalling approximately 2.1m sq ft."

22 May 2012

For further information please contact:

LXB Manager LLP Tel: 020 7432 7900

Tim Walton, CEO

Brendan O'Grady, FD

Buchanan Tel: 020 7466 5000

Charles Ryland / Nicola Cronk

Forward looking statements

This document includes forward looking statements which are subject to risks and uncertainties. You are cautioned that forward looking statements are not guarantees of future performance and that if risks and uncertainties materialise, or if assumptions underlying any of these statements prove incorrect, the actual results of operations and financial condition of the Group may materially differ from those made in, or suggested by, forward looking statements. Other than in accordance with its legal or regulatory obligations, the Company undertakes no obligation to review, update or confirm expectations or estimates or to release publicly any revisions to any forward looking statements to reflect events that occur or circumstances that arise after the date of this document.

Chairman's statement

Dear Shareholder,

I am pleased to present the Group's results for the six months ended 31 March 2012.

In the period since my last report to shareholders the Group has continued to make good progress. In assembling a portfolio of high quality retail investment properties, we are embarked on a long term project but I am pleased to report on significant advances which we have made during the half year, reflected in a further improvement in EPRA net asset value.

During the current financial year we have secured planning consent (or resolution to grant planning consent subject to signing S.106 agreements) at Sheppey, Banbury, Biggleswade, Gloucester, Stafford, and for our hotel scheme at Greenwich. We are also expecting planning committee decisions at Rushden and for the Sainsbury's/Marks & Spencer at Greenwich shortly. Since the IPO the Group has obtained new planning consents for over 1.1m sq ft of new retail space and 0.3m sq ft for other employment uses and secured an anchor tenant at each of those locations. If the Rushden and Greenwich applications are successful, we will have achieved consent for new space totalling approximately 2.1m sq ft.

Last November we announced the pre-letting of 4 stores to Marks & Spencer. Since then we have agreed terms for another household name occupier to take 100,000 sq ft (of which 50,000 sq ft is on mezzanine) in 3 stores at Banbury, Rushden and Biggleswade subject to normal conditionality and lawyers are instructed. More details will be announced when Agreements for Lease are signed. We are also in advanced discussions for pre-lettings on a number of other sites including 2 additional foodstores and a second anchor tenant for the Riverside scheme at Stafford.

In our last Annual Report I anticipated that by now we would have started building the Morrisons foodstore at Sheppey but, as explained in the Investment Manager's Report, this is the subject of a legal challenge. Although that creates an inevitable delay there is ample time within the terms of the pre-letting agreement with Morrisons and the option over the site to ensure that this Judicial Review can run its course. We do, as a matter of course, anticipate the possibility of such challenges, so seeking to ensure that delays cannot undermine pre-agreed lease commitments or options to acquire land.

Results and Financial Position

For the half year to 31 March 2012, we report EPRA net asset value per share of 111.63p, up 3.18% since 30 September 2011.

As I have commented previously, establishing a high quality retail portfolio is a long term project, and there are a number of drivers of value creation: securing the site, obtaining satisfactory planning consent, agreeing pre-lets with anchor tenants, and obtaining vacant possession so that we can start on site. Value is enhanced as these milestones are achieved and projects move towards the point where investments are open for trading. Your Board adopts a conservative approach to value recognition. In practice this means that we anticipate significant further value appreciation from within the existing portfolio as individual investments move closer to Practical Completion. Once investments reach that stage, we intend to include individual asset valuations in Annual and Interim Reports but it is not commercially advisable for disclosure to be made at an earlier stage, however, the significant amount of activity on the portfolio demonstrates that we are achieving the business objectives we set out at the time of the IPO.

We have completed the first development in Greenwich, a Wickes DIY store that will facilitate the proposed Sainsbury's/Marks & Spencer at Greenwich which is awaiting a planning decision. We anticipate further construction activity on several of our other schemes as the financial year progresses, starting in Gloucester and Stafford.

At the balance sheet date we had cash and other liquid resources totalling £97.1m all of which has been allocated to existing projects or pipeline opportunities. To maximise returns we will use debt finance to support the development phase of our investments. We are currently negotiating facilities to cover the construction phase of several projects and are pleased to report substantial appetite from lenders.

Outlook

There is much discussion and commentary about the outlook for the UK economy and a major focus within that debate is the impact on the retail sector. It was always our strategy to focus on those retailers who have the ambition and resources to be able to grow their footprint. I believe this strategy is vindicated by the results and the progress we report to you today.

We continue to work very closely with the key retailers to maintain the best possible understanding of their location strategies. They want to trade where people are choosing to shop and at the same time the evolving multi channel trading environment influences their physical space needs. We invest a considerable amount of time meeting retailers to understand how they are responding to changing consumer behaviours and expectations to ensure that we continue to offer space for retailers where they want it, and at rents they can afford.

All of these emerging trends inevitably lead into a debate about the future of the High Street. Whilst that debate has some way to run, we are very pleased to be playing our part in creating new jobs in sustainable locations which will make a significant long term contribution to the local economies in which we invest. It has been encouraging to listen to councillors debating our proposals and acknowledging that out of town large footprint formats can complement traditional High Streets and attract well known brands who would not take small 'in town' units. We have seen growing awareness that our projects create employment and retain expenditure within local catchment areas, offering major sustainable benefits to the local economy. And this can be done in a way which is sensitive to the impact on the town centre. We have committed to a number of initiatives to link the town centre and our edge of town schemes. These include bus links at Rushden, Biggleswade and Banbury, funding a Town Centre Manager for Rushden, and facilitating improved town centre car parking at Biggleswade.

A more positive feature of today's market is that we continue to meet local authority members and officers who have real passion to see significant change for their communities and who understand that constructive relationships with well capitalised developers are the best way to make that happen. Our retail schemes are making a major contribution to several local communities, although the reality is that the opportunities are not confined to retail. We see this with schemes like Ayr with its residential aspects or at Gloucester with its employment space angles and I believe that these mixed use opportunities are likely to increase as more communities see that the 'Localism' agenda offers them so much more influence.

We continue to look at possible additions to the portfolio. For the time being, the Board is encouraged with the progress that has been made notwithstanding the wider economic climate, and believe we remain on track to deliver a very high quality portfolio of investments.

Phil Wrigley

Chairman

22 May 2012

Report of the Investment Manager, LXB Manager LLP

LXB Manager LLP advises LXB Retail Properties Plc ('LXB' or 'the Group') and is pleased to report on the Group's Interim Report for the six months ended 31 March 2012.

Investment portfolio

There have been a number of significant steps forward across the portfolio since the year end. The portfolio is taking shape and now includes 6 foodstore led and 3 fashion park led projects, with opportunities in employment, leisure and residential too. Having completed site assemblies at Biggleswade and Greenwich in the period, the Group's current priorities across the portfolio are to secure further planning permissions, continue to secure pre-lets, and in due course start building out the retail investments.

Since IPO the Group has pre-let 797,300 sq ft (of which 156,500 sq ft is mezzanine space) across the portfolio and at the time of this report is engaged in meaningful discussions concerning pre-lets on a further 506,250 sq ft (of which 163,250 sq ft is mezzanine space) as well as two 120 bed hotels.

The Group's most significant investments are discussed in greater detail below.

Property details

Ayr

This 118 acre site forms part of a wider masterplan for a comprehensive development south east of Ayr. LXB already has a resolution to grant planning consent (subject to signing a S.75 legal agreement) for a district shopping centre including a foodstore and complementary retail, a business park, and 750 private and affordable homes.

The Group continues to make progress and documents are in solicitors' hands for a pre-let for a major foodstore. In addition, discussions with the local council on the Masterplan for the district centre and first phase continue to be positive. It is hoped that work will start on the groundworks and first phase in 2013.

Banbury

This site, currently the headquarters of Prodrive, one of the world's leading motorsport and automotive technology businesses, fronts the M40 motorway at junction 11 and in March the Group obtained a resolution to grant planning permission for a 295,000 sq ft shopping park development. The resolution to grant planning permission is subject to the usual planning conditions and the signing of a S.106 agreement.

The retail park, "Banbury Gateway", will comprise 10 retail and 3 restaurant/cafe units, including a 100,000 sq ft anchor store on two floors which has been pre-let to Marks & Spencer for a 20 year lease. LXB has agreed heads of terms with a second major anchor tenant and continues to receive interest from other retailers seeking representation at this location.

In discussions with the local community one of the key concerns was to ensure that this prominent out of town investment did not adversely impact Banbury town centre. Marks & Spencer have confirmed their intention to retain their town centre presence for a number of years. In addition, to encourage the free flow of shoppers between the two retail areas, LXB has agreed to provide funding for a bus service to and from Banbury town centre.

Banbury Gateway will be a new retail destination targeting the spending power of the M40 corridor. The new jobs created will obviously provide a boost to the local economy but there is also huge awareness that LXB has worked closely with Prodrive and the local authority to ensure that the Group's proposals facilitate Prodrive's relocation to new state of the art premises in Banbury, ensuring the retention of high quality employment within the town.

Biggleswade

Following the completion of the site assembly in February, a resolution to grant planning permission was achieved in April for a 315,000 sq ft fashion led shopping park on the main 14.6 acre site and for 15,000 sq ft of retail space on the "Plot S" land. The overall site has direct roundabout access to the A1 and one of the key features for potential tenants is the huge catchment this offers. Already, LXB has pre-let a 60,000 sq ft anchor unit on two floors to Marks & Spencer for a 25 year lease (with a tenant's break option after 15 years) and a second major pre-let is in lawyers' hands.

This flagship development will provide the sort of shopping opportunity that it is not possible to replicate in a historic market town like Biggleswade, and LXB is showing that this can be done in a complementary fashion. One of the major issues for Biggleswade's town centre retailers is the shortage of convenient parking facilities. The proposed new development includes more than 800 parking spaces and the Group is working closely with Biggleswade Town Council to encourage public transport links which will allow easy movement between the 2 retail centres, with shoppers being encouraged to leave their vehicles at the new retail park and take the bus to the smaller, more specialised, shopping available in the town centre. The Group is also contributing to town centre regeneration funds and town centre car park improvement schemes. 

The retail park will deliver major economic benefits for the local area, additional jobs will be created, incremental retail spending will be attracted, and the focus on more effective public transport links should ensure that these benefits are enjoyed by town centre traders too.

LXB is in discussions with a number of other retailers seeking representation here as well as maintaining a dialogue with existing tenants, many of whom want to relocate on to the new retail park. The Group expects to be able to meet their aspirations and, crucially for them, to provide continuity of trade.

Gloucester

The development at Metz Way will comprise a 71,300 sq ft foodstore pre-let to Morrisons for a 25 year lease, 140,000 sq ft of employment space, an 11,000 sq ft car showroom and 8,000 sq ft of restaurant units. A resolution to grant planning permission was obtained in December of last year which is subject to a number of the usual planning conditions and the signing of a S.106 agreement.

LXB has had major political support locally for this proposal, undoubtedly in recognition of the significant benefits which the scheme will bring to Gloucester. These include job creation but this investment is also unlocking a key land holding that will act as the catalyst for further regeneration.

LXB is currently tendering for the enabling works contract and construction work is due to commence shortly.

Greenwich

The Group's investments at Greenwich are spread over several locations and there has been substantial progress at each:

On Bugsby's Way the new Wickes warehouse is nearing Practical Completion and Wickes will move from their old store on Gallions Road in the next few months. A lease surrender has been agreed with Matalan which will allow the Group to pursue the next stage of the Brocklebank redevelopment, which has full open consent for 50,000 sq ft of retail space.

At Stone Lake Retail Park, the unit which was vacant on the acquisition in December 2010 has been subdivided into two smaller units. Dreams have relocated from their old store on Gallions Road to take one of the new units and the Group is in advanced negotiations with another retailer to take the other unit. At a time when vacant retail space is an all too common sight, it is pleasing to report that Stone Lake will shortly be a fully let scheme. The increased rent and capital value, which follows the letting of the vacant units, further strengthens the Group's bank covenants.

Along with the relocation of Wickes and Dreams and following the acquisition of the Andrews Sykes site on Gallions Road, the site assembly of this 12 acre prime development site in Greater London is complete with vacant possession. Sainsbury's have signed a pre-let for the 145,000 sq ft foodstore on this site for a 25 year lease and Marks & Spencer have signed a pre-let for an 80,000 sq ft unit on two floors for a 20 year lease, so this element of the Greenwich investment is approximately 94% pre-let.

The Group recently submitted a planning application for the Sainsbury's/Marks & Spencer scheme and a decision is expected in June 2012. Demolition works are underway to improve site security and safety and to prepare the site for ground works and the construction phase.

Finally, LXB recently acquired a development site on Woolwich Road adjacent to the Sainsbury's and Marks & Spencer which has planning permission to construct a 120 bed hotel above 14,300 sq ft of retail space.

Rushden

This 244 acre site lies alongside the A45 between the A1 and the M1 at Rushden in East Northamptonshire, opposite an existing Waitrose Food and Home store, a Wickes and a Lidl. Most of the land forms part of a Site of Special Scientific Interest ('SSSI') however it includes 31 brownfield acres which are developable.

The "Rushden Lakes" development plans include 430,000 sq ft of retail, anchored by a garden centre, together with a 112 bed hotel and a leisure club. 1,300 car parking spaces are planned and it is estimated that the combined leisure, tourism and retail offer will attract over 3 million visitors per year.

The SSSI will be integrated with the retail scheme to promote increased 'dwell time' by visitors and the combined retail and leisure destination will include a visitors' centre, a marina and boathouse, footpaths and cycle routes through the SSSI, and access into neighbouring tourist attractions such as Stanwick Lakes. LXB is working closely with the Wildlife Trust who will take on long term management of the remainder of the SSSI for future generations. On completion, the Group's £50m investment should create approximately 1,500 new jobs.

The Group's investment plans for Rushden incorporate a public transport strategy which not only provides access to the site from a social inclusion perspective, but also provides a practical alternative for those who may otherwise travel to the site by car. A subsidised bus link will operate 6 days a week between the site and the town centre with a schedule designed to encourage use by both shoppers and staff. The Group is also in discussions about providing funding for a dedicated Town Centre Manager for Rushden.

A detailed planning application has been submitted and a decision is expected in the next few months. Positive discussions continue with potential anchor store retailers.

Sheppey

The last Annual Report included details of the proposed foodstore led development on the Isle of Sheppey. The Group has planning permission for the scheme which is anchored by a 55,000 sq ft foodstore, which is pre-let to Morrisons on a 25 year lease and is in advanced negotiations with a building contractor.

The Group is ready to start on site, however a developer with an interest in another site in the area has challenged the local authority's processes under Judicial Review procedures. Both LXB and the local authority have very strong advice - including QC opinions - that the existing planning permission will be upheld without amendment; but it is obviously inadvisable to incur further costs until any uncertainty is removed. It is anticipated that, even if the Judicial Review proceedings run their full course, the matter will be successfully concluded by spring 2013.

Stafford

Both sites at Stafford have seen substantial progress since the year end.

The Riverside site will be an edge of town centre, fashion led retail scheme comprising c.200,000 sq ft of retail accommodation and 1,200 car parking spaces. Marks & Spencer have signed a pre-let for a 65,000 sq ft two storey unit for a 25 year lease (with a tenant's break option after 15 years) which will anchor the scheme and negotiations are ongoing with a number of other potential tenants.

In January of this year the Group exchanged contracts on an option to acquire 8 acres of land, which is currently in use as a surface car park at Kingsmead on the north-eastern edge of Stafford town centre. The plans for Kingsmead include a 71,500 sq ft foodstore and petrol filling station, 14,000 sq ft of associated retail space and 460 car parking spaces. Morrisons signed a pre-let for a 25 year lease of the foodstore, also in January 2012.

These developments will significantly enhance the retail offering in Stafford town centre and provide a major boost to the local economy. LXB has signed S.106 agreements and planning permission was granted in February for both schemes. Work will start on the Riverside site later this year and negotiations to award the building contract are in progress.

Sutton

Over the past six months, the Group has been working with the London Borough of Sutton to prepare a Development Brief for a foodstore led mixed-use regeneration of this brownfield town centre site at the northern end of the high street. The Development Brief is currently out to public consultation and will become planning policy in September. A planning application will then be submitted. The Group has assembled the majority of the site already through a number of acquisitions. Terms have been agreed with Southern Gas Networks for the decommissioning of the gas holders on the remaining part of the site and, whilst the exact timescales are still to be confirmed, the intention is that the decommissioning will be complete and vacant possession of the whole site achieved during 2013.

An Agreement for Lease has been signed with Sainsbury's for a 116,000 sq ft foodstore and solicitors have been instructed in connection with a 20 year lease on a 120 bedroom hotel. Both the foodstore and the hotel pre-lets are conditional on completion of the site assembly (which is in solicitors' hands) and on securing satisfactory planning approvals.

Revaluation surplus

As described in note 7 to the Interim Report the investment properties held by the Group at 31 March 2012 were valued by independent property valuers, Jones Lang LaSalle Limited, as at that date. In their opinion the open market value of these investment properties at that date was £222.4m resulting in a revaluation surplus for the period of £10.0m.

Cash position and future expenditure

During the 6 months to the 31 March 2012, £17.6m of cash has been deployed in the purchase of and capital expenditure on investment properties.

At the balance sheet date the Group had £97.1m of cash and other liquid resources and this is all allocated to existing projects or pipeline opportunities. The Group maintains regular dialogue with a range of banks and is confident that it will be able to secure the development and investment finance required to supplement the cash on hand and facilitate delivery of the portfolio. With that in mind, as reported in the last Annual Report, the Group entered into an interest rate swap in October 2011, covering £100m from 25 March 2013 until 25 September 2015. Further details are given in note 12 to the Interim Report.

Tim Walton

On behalf of LXB Manager LLP

22 May 2012

Group income statement

for the period ended 31 March 2012

All amounts relate to continuing activities.

Group statement of comprehensive income

for the period ended 31 March 2012

Group statement of changes in equity

for the period ended 31 March 2012

Group balance sheet

at 31 March 2012

Group cash flow statement

for the period ended 31 March 2012

Notes to the interim report

1. General information about the Group

LXB Retail Properties Plc was listed on the AIM and CISX markets on 23 October 2009. It is a closed-ended real estate investment company that was incorporated in Jersey on 27 August 2009.

This Interim Report includes the results and net assets of the Company and its subsidiaries, together referred to as the Group, on a consolidated basis.

Further general information about the Company and the Group can be found on its website:

www.lxbretailproperties.com.

2. Basis of preparation

The financial information contained in this report has been prepared in accordance with IAS 34, "Interim Financial Reporting", as adopted by the European Union and on a going concern basis.

The condensed set of financial statements for the half year are unaudited and do not constitute statutory accounts for the purposes of The Companies (Jersey) Law 1991. They should be read in conjunction with the Group's statutory financial statements for the year ended 30 September 2011, which were prepared under International Financial Reporting Standards adopted for use in the European Union and upon which an unqualified auditors' report was given.

The accounting policies adopted in this report are consistent with those applied in the Group's Annual Report and financial statements for the year ended 30 September 2011 (the 2011 Annual Report) and are expected to be consistently applied in the year ending 30 September 2012. The 2011 Annual Report is available from the "Investor relations" page of the Company's website, www.lxbretailproperties.com, or by writing to the Company Secretary at Ogier Fund Administration (Jersey) Limited, Ogier House, The Esplanade, St Helier, Jersey, JE4 9WG.

The Group's financial performance is not subject to material seasonal fluctuations.

3. Segmental information

During the current period and prior periods, the Group operated in and was managed as one business segment, being property investment, with all investment properties located in the United Kingdom.

4. Finance and income costs

The average interest rate incurred by the Group on its bank borrowings for the period ended 31 March 2012, including the effects of hedging instruments and the lender's margin but excluding amortisation of capitalised finance costs was 3.8% (31 March 2011: 5.1%, 30 September 2011: 4.1%).

Further information about the derivative financial instruments, including details of their valuation at each balance sheet date is included in note 12.

5. Taxation

The tax assessed for the period varies from the standard rate of income tax in the UK of 20%. The differences are explained below:

The Group has revenue related losses of £902,830 (31 March 2011: £253,776; 30 September 2011: £503,710) available to carry forward to utilise against applicable future revenue profits, for which no deferred tax asset is currently recognised.

Tax status of the Company and its subsidiaries

All group undertakings are either tax resident in Jersey or are tax transparent entities owned by Jersey resident entities. Jersey has a corporate tax rate of zero, so the Company and its subsidiaries have no liability to taxation on their income or gains in Jersey. The Company is not subject to UK Corporation tax on any dividend or interest income it receives.

The Group's investment properties are located in the United Kingdom and therefore the net rental income earned less deductible items is subject to UK income tax, currently at a rate applicable to the relevant group undertakings of 20%.

6. Earnings per share

Earnings per share is calculated on 254,099,895 ordinary shares (31 March 2011: 154,907,536 ordinary shares; 30 September 2011: weighted average of 184,529,364 ordinary shares) in issue for the period and is based on earnings attributable to shareholders for the period of £8,603,524 (31 March 2011: earnings of £9,455,753; 30 September 2011: earnings of £19,031,998).

There are no share options or other equity instruments in issue and therefore no adjustments need to be made for dilutive or potentially dilutive equity arrangements.

The European Public Real Estate Association ("EPRA") issues guidelines aimed at providing a measure of earnings per share designed to present underlying earnings from core operating activities only. The adjusted EPRA earnings per share figure is calculated as follows:

7. Investment properties

A reconciliation of the carrying values of the investment properties to their market values is provided below:

At 31 March 2012, all of (31 March 2011: all of; 30 September 2011: the majority of) the Group's investment properties were valued by Jones Lang LaSalle Limited, Chartered Surveyors, on a fixed fee basis, in their capacity as external valuers. The total external valuation of these properties at 31 March 2012 is £222,400,000 (31 March 2011: £134,215,000; 30 September 2011: £182,800,000). The carrying value of these properties includes a further £nil (31 March 2011: £nil; 30 September 2011: £4,630,174) in respect of mostly accrued land acquisition costs which were not treated as part of the historical cost of the relevant properties in determining the external valuation. The external valuers' valuation was undertaken in accordance with the Royal Institution of Chartered Surveyors' Valuation Standards Seventh Edition on the basis of market value. Market value represents the estimated amount for which a property would be expected to exchange at the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Costs to complete of £1,071,000 (31 March 2011: £nil; 30 September 2011: £3,999,632) have been offset against the external valuation.

Properties that were acquired by the Group on 18 August 2011 at a cost of £882,185 and on 29 September 2011 at a cost of £10,649,802 were carried at the Directors' total valuation of £11,531,987 as at 30 September 2011. These properties were included in the external valuation at 31 March 2012.

The historic cost of the Group's investment properties as at 31 March 2012 was £191,273,152 (31 March 2011: £124,623,103; 30 September 2011: £175,440,387).

8. Business and other receivables

Other than £750,403 (31 March 2011: £nil; 30 September 2011: £172,497) of fixed or guaranteed rent reviews and lease incentives given to tenants which are due in more than one year, all amounts above are due within one year. No business receivables were overdue or impaired at the end of any of the above periods.

9. Cash and cash equivalents and current asset investments

Current asset investments comprise Money Market Fund investments and a portfolio of UK Government Gilts.

The Money Market Fund investment is an investment in a liquidity fund with instant access and is therefore disclosed in the balance sheet as a current asset investment. The value of the Money Market Fund investment at 31 March 2012 was £19,242,564 (31 March 2011: £8,943,697; 30 September 2011: £19,164,395).

The UK Government Gilts mature in less than one year and are therefore disclosed in the balance sheet as current asset investments. The value of the portfolio at 31 March 2012 was £39,636,719 (31 March 2011: n/a; 30 September 2011: n/a).

Included within the Group's cash and cash equivalents balance as at 31 March 2012 is £3,033,942 (31 March 2011: £485,679; 30 September 2011: £775,799) in bank accounts held as security by the providers of the Group's secured bank debt and hedging facilities.

10. Business and other payables

Accruals and other amounts payable includes £9,357,998 (31 March 2011: £nil; 30 September 2011: £8,965,565) of costs included as additions to the Group's investment properties either in the current period or in a prior period.

All of the above amounts are due within one year and none incur interest.

11. Borrowings

On 11 February 2011 a group entity entered into an agreement with Deutsche Hypothekenbank (Actien-Gesellschaft) for a five year debt facility. A loan amounting to £25,950,000 was drawn on 17 February 2011, secured against certain investment properties held within a ring-fenced sub-group beyond which the loan is non-recourse. The loan to value financial covenant is 70%. At 31 March 2012 the secured properties have been externally valued at £54,200,000 (31 March 2011: £49,280,000; 30 September 2011: £51,000,000). The loan is due for repayment on 30 April 2016 with only interest payable, subject to covenant compliance, until the repayment date.

There have been no defaults or other breaches of financial covenants under the terms of the loan agreement during the current or prior periods, or in the period since the balance sheet date.

The Group has no undrawn, committed borrowing facilities at 31 March 2012 (31 March 2011: £nil; 30 September 2011: £nil).

There was no difference between the book value and the fair value of the borrowings disclosed above.

12. Derivative financial liabilities

On 22 February 2011, the Group entered into an interest rate swap and floor to provide protection against interest rate fluctuations in respect of the Group's bank borrowings set out in note 11. The following table provides a summary of the instruments and their fair values at 31 March 2012:

The total net increase in the valuation of the above interest rate derivatives during the period of £17,068 (31 March 2011: net decrease of £288,881; 30 September 2011: net decrease of £697,500) has been split and charged to the income statement and the statement of other comprehensive income as appropriate. The intrinsic value portion of their net position (being an interest rate capped at 3.25% if LIBOR was at 2.28%) is designated as the hedging instrument for hedge accounting purposes with movements thereon recognised in other comprehensive income.

On 11 October 2001, the Group entered into a pay fixed 1.6675% receive LIBOR on a notional amount of £100m interest rate swap facility with the Royal Bank of Scotland Plc, effective from 25 March 2013 until 25 September 2015 at £nil initial cost. This interest rate swap has been entered into in anticipation of hedging needs for future investments. The fair value of this instrument at 31 March 2012 was a liability of £1,047,512.

The Group's investment strategy and business plans indicate that it is highly probable that variable rate bank facilities will be entered into, the critical terms of which are expected to match the swap's profile reasonably closely. As a result, in accordance with its risk management objectives and policies, the Group has decided to adopt hedge accounting for this forecast cash flow hedging relationship. Accordingly, the fair value movement on the swap to 31 March 2012 has been recognised in full in other comprehensive income. If the envisaged circumstances change such that the hedge accounting for this relationship is no longer permitted under IAS 39 then amounts previously deferred in equity will be reclassified to profit and loss.

All interest rate derivative financial instruments have been fair valued by reference to interbank bid market rates as at the close of business on 31 March 2012 by J.C. Rathbone Associates Limited and include the full LIBOR basis spread.

All derivative financial instruments are classed as 'level 2' as defined in IFRS 7 as their fair value measurements derive from inputs that are observable either directly or indirectly, rather than from quoted prices in active markets for identical assets and liabilities.

Derivative financial instruments are categorised as follows:

The market values of hedging instruments change constantly with interest rate fluctuations, but the cash flow exposure of the Group to movements in interest rates is protected by way of the hedging products listed above. These valuations do not necessarily reflect the cost or gain to the Group of cancelling its interest rate protection, which is generally a marginally higher cost or smaller gain than a market valuation.

13. Stated capital

On 14 June 2011, 99,192,359 shares were issued for cash, pursuant to a placing, at the placing price of 114p per share. Issue costs were £3,161,870.

14. Net asset value per share

Net asset value per share is calculated as the net assets of the Group attributable to shareholders at each balance sheet date, divided by the number of shares in issue at that date (see note 13).

There are no share options or other equity instruments in issue and therefore no adjustments need to be made for dilutive or potentially dilutive equity arrangements.

The European Public Real Estate Association ("EPRA") has issued guidelines aimed at providing a measure of net asset value ("NAV") on the basis of long term fair values. The EPRA measure excludes items that it considers have no impact in the long term, such as the fair value of derivative financial instruments and deferred tax balances. The Group's EPRA NAV is calculated as follows:

15. Related party transactions and balances

Interests in shares

The interests of the Directors and their families in the share capital of the Company are as follows:

The interests disclosed above include both direct and indirect interests in shares.

The group headed by LXB3 Partners LLP, which includes LXB Manager LLP and its wholly owned subsidiaries, LXBRP GP Limited and LXB DH Limited, is a related party of the Company. LXB Manager LLP is the Investment Manager to the Group. LXBRP GP Limited and LXB DH Limited act as the sole corporate general partners of LXB Retail Properties Fund LP and LXB DH LP respectively, which are significant, indirectly controlled subsidiaries of the Company. At 31 March 2012, LXB3 Partners LLP and its members held an aggregate total of 11,703,637 (31 March 2011: 13,563,335; 30 September 2011: 12,902,982) shares in the Company.

There have been no changes to any of the above shareholdings between 31 March 2012 and the date of this report.

Fees

Directors' fees of £122,500 (31 March 2011: £122,500; 30 September 2011: £245,000) were payable for the period ended 31 March 2012. As at 31 March 2012 £61,250 (31 March 2011: £61,250; 30 September 2011: £61,250) of fees remained outstanding and are included within business and other payables (note 10).

Management fees of £2,403,398 (31 March 2011: £1,273,805; 30 September 2011: £3,120,007) were payable to the group headed by LXB3 Partners LLP by the Group in respect of the period ended 31 March 2012, of which £94,631 was outstanding at the period end (31 March 2011: £nil; 30 September 2011: £nil).

The Investment Manager, LXB Manager LLP, is under the terms of the Investment Advisory Agreement, permitted to recharge certain costs and expenses incurred in the discharge of its duties. During the period it has recharged costs totalling £25,843 (31 March 2011: £21,195; 30 September 2011: £43,151).

Incentives - carried interest arrangements with LXB3 Partners LLP

At a future date, when the £257,501,358 of net funds raised from the share issues to date (being the stated capital of the Company, as disclosed in note 13, less £148,189 of share issue related costs expensed in the income statement to date) have been returned in cash to shareholders (assuming no further share issues), cash returns over and above that figure may ultimately be shared between shareholders (80%) and LXB3 Partners LLP (20%), subject to shareholders having first received the net proceeds of all share issues in cash together with a 12% per annum preferred return thereon (together referred to as "the cumulative hurdle amount" as at the relevant reporting date).

As the net assets of the Group are less than the cumulative hurdle amount as at 31 March 2012, no provision for future incentive payments has been recognised in these financial statements.

16. Post balance sheet events

On 26 April 2012 the Group secured a resolution to grant planning permission for the redevelopment of its land holdings at London Road, Biggleswade. The permission is for 330,000 sq ft of non food open A1 retail consent, of which 10,500 sq ft can be used for food sales.

Glossary