LXB.L Regulatory News (LXB)

 For immediate release 12 January 2011

LXB Retail Properties Plc

RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2010

LXB Retail Properties Plc, a closed-ended real estate investment company focused on edge of town and out of town retail assets, today announces results for the period ended 30 September 2010.

Highlights

·; Listed on AIM and CISX on 23 October 2009.

·; £105.3m (net) raised from the Initial Placing.

·; £4.2m (net) raised from the over allotment of shares in November 2009.

·; £38.0m (net) raised from the Second Placing in August 2010.

·; Cash deposits and liquid investments at 30 September 2010: £52.5m.

·; NAV per share* at 30 September 2010: 94.19p.

·; Loss per share: 1.39p.

·; Loss per share pre fair value adjustment on derivative financial instruments: 0.11p.

Acquisitions completed:

·; February 2010: two retail units and development land in Greenwich, for £19.19m (including direct costs).

·; March 2010: Bugsby's Way Retail Park in Greenwich, for £10.82m (including direct costs).

·; April 2010: retail units and development land at London Road Trading Estate in Biggleswade, for £16.83m (including direct costs).

·; May 2010: further retail units and development land at London Road Trading Estate in Biggleswade, for £24.56m (including direct costs).

·; July 2010: Maritime Industrial Park and Wickes Unit in Greenwich, for £20.1m (including direct costs).

Post period end:

·; Acquired Stone Lake Retail Park in Greenwich, for £27.84m (including direct costs) in December 2010.

·; At the period end the Group had acquired a total of 466,273 sq ft of unrestricted retail planning consent and 60,699 sq ft of 'Bulky Goods' consent. At the date of this report the Group has acquired a total of 625,875 sq ft of retail space at a total cost of £122m.

*NAV is measured on a basis consistent with guidance given by the European Public Real Estate Association ("EPRA").

Phil Wrigley, Chairman of LXB Retail Properties Plc commented:

"The first year of LXB Retail Properties Plc's existence as a listed group has been a very successful one. In our Admission Document the Board outlined its assessment of the market and why we felt the market offered opportunities to generate significant income and capital returns for shareholders. We stated that there was a real appetite for the right space at the right price and in the right locations from the winning retailers; additionally we thought that the Investment Manager had the skills to be able to combine all these factors and deliver acquisitions which would significantly enhance shareholder value. Experience to date shows that our confidence was well placed. I am very pleased with all that has been achieved towards building a portfolio of prime retail investment properties. Even though the UK's economy may experience further turbulence before anything approaching normality returns, I believe we will be announcing more value creating acquisitions and developments over the course of the next 12 months."

12 January 2011

For further information please contact:

LXB Manager LLP Tel: 020 7432 7900

Tim Walton, CEO

Brendan O'Grady, FD

Buchanan Communications Tel: 020 7466 5000

Charles Ryland / Suzanne Brocks

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

The Company was listed in October 2009 and raised additional funds by way of a placing in August 2010. We are grateful for the continuing support of our shareholders and I am pleased to report that during the first period, some £92.7m of the net proceeds of the share issues have been invested in property assets. Further investments have been made since the balance sheet date which means that we have now invested over £122m, which is 83% of the net funds raised from the equity issues to date.

Our sites at Biggleswade and Greenwich offer excellent opportunities to create the prime retail property investments which were anticipated in the Company's Admission Document and we are making good progress with these. I anticipate some significant announcements on both planning and pre-lets during the course of 2011.

The Investment Manager has looked in detail at a number of other opportunities. After rigorous review by the Investment Manager, some of these failed to meet the criteria which your Board has laid down for acceptable investments and have not been pursued by the Investment Manager. The Investment Manager is actively pursuing a number of others and I anticipate further additions to the portfolio in the near future.

Results and financial position

The results for the Group's first period reflect limited rental income because income yielding assets have not been held for the entire period of account. Already the Group is approaching critical mass in that projected annualised rent is expected to cover the running costs of the Group in the next financial year. During the period, costs have been in line with budget and there have been no material changes from our projected results.

During the period the Group entered into four purchaser swaptions, to cap our maximum cost of funds whilst retaining flexibility should debt be undrawn or market rates remain low. Long term swap rates have remained depressed due to general market uncertainty and concerns over the strength of the UK economic recovery. Consequently, the Group's results for the period have been significantly affected by the accounting requirement to mark to market the derivative instruments and reflect the change in their fair value in the income statement.

At the period end total cash deposits and liquid investments were £52.5m with no debt. The careful and secure management of these funds continues to be a key priority. These funds were held with or through eight different banks at 30 September 2010 with no single bank holding more than 19.5% of the total.

Events since the balance sheet date

Progress continues to be made at Biggleswade and Greenwich with several planning applications having been submitted to local authorities since the balance sheet date. As well as the Stone Lake Retail Park purchase, the Group has continued to make strategic, small-scale peripheral acquisitions.

Outlook

I remain confident about the prospects for LXB Retail Properties Plc notwithstanding a somewhat negative economic backdrop - and partly because of it.

We continue to see a good flow of opportunities, many of which are 'off market' or self-generated propositions. Indeed, the profile following the acquisitions at Biggleswade and Greenwich served as a catalyst for a number of other opportunities.

Our Investment Manager's skill is in:

·; finding (or creating) opportunities;

·; undertaking thorough due diligence to really understand potential tenant appetite and the local authority's attitude;

·; identifying the true planning status of target sites;

·; assessing the potential for additional or enhanced planning consents; and

·; bringing all those factors together to recommend acquisitions to your Board.

These skills are central to ensure that each new investment will enhance our portfolio of high quality retail investments.

The approach of staying close to the needs of the growth-dependent retailers as they search for new space will, I believe, continue to create shareholder value. These tenants want to work with landlords who will provide the space they need to deliver their business plans. The other key stakeholders in our developments are the relevant local authorities and the communities they serve. Even in times of real uncertainty about funding from local government and in a changing planning policy environment, we continue to meet and work with local authorities who have the vision and drive to support redevelopment which improves the quality of their retail offer, creates significant employment opportunities and makes a very positive contribution to the local economy.

The first year of LXB Retail Properties Plc's existence as a listed group has been a very successful one. In our Admission Document the Board outlined its assessment of the market and why we felt the market offered opportunities to generate significant income and capital returns for shareholders. We stated that there was a real appetite for the right space at the right price and in the right locations from the winning retailers; additionally we thought that the Investment Manager had the skills to be able to combine all these factors and deliver acquisitions which would significantly enhance shareholder value. Experience to date shows that our confidence was well placed. I am very pleased with all that has been achieved towards building a portfolio of prime retail investment properties. Even though the UK's economy may experience further turbulence before anything approaching normality returns, I believe we will be announcing more value creating acquisitions and developments over the course of the next 12 months.

Phil Wrigley

Chairman

12 January 2011

Report of the Investment Manager, LXB Manager LLP

LXB Manager LLP advises LXB Retail Properties Plc and is pleased to report on the Group's first year of operations.

Fund raising and share placing

LXB Retail Properties Plc was successfully launched on AIM and CISX on 23 October 2009 raising net proceeds of £105.3m from the Initial Placing and then further net proceeds of £4.2m from the over allotment of shares on 23 November 2009.

A further £38m of net proceeds were raised from a Second Placing on 3 August 2010.

Existing portfolio

At the date of this report the Group has a current portfolio of property investment assets where existing retail consents total over 625,000 sq ft. We continue to progress the asset management opportunities that these investments present. These opportunities are long term in nature as in many instances revised planning applications are required to deliver a scheme encompassing the kind of retail format the Group aims to deliver. Progress continues to be made and several planning applications have been submitted to local authorities since the balance sheet date.

Greenwich

The Group has acquired several investment properties around Bugsby's Way in Greenwich. The assembly of these disparate ownerships has allowed us to explore a wide range of potential asset management opportunities and has confirmed that tenant interest in the area is far reaching. The individual sites are discussed further below:

30-59 Bugsby's Way

The acquisition of Matalan and Lidl stores at Bugsby's Way was the Group's first property acquisition. The two existing units comprise "first generation" retail warehouse units together with associated car parking and servicing. These occupy the eastern two-thirds of the property and enjoy substantial frontage to Bugsby's Way, directly opposite the majority of the out of town retail provision in the Greenwich / Charlton / Woolwich area. The second segment of the property is an undeveloped area located at the western end of the site. This potential development site has little prominence in isolation however under the Investment Manager's proposals this site will be incorporated into a more comprehensive development. Since the balance sheet date a planning application has been submitted for the development of a retail unit with a 20,000 sq ft footprint.

Gallions Road

The property comprises a small, three unit, "first generation" retail warehouse park totalling circa 37,000 sq ft of accommodation, together with associated car parking and servicing. The entire site is held freehold and is subject to two existing leases which are in a fairly standard format together with a further short term occupational letting in respect of a unit which was previously let to Allied Carpets. The existing retail park has Open A1 planning consent (i.e. unrestricted retail planning consent allowing the sale of both food and non-food).

Maritime Industrial Estate

The site comprises a primarily vacant site which has planning permission for the development of approximately 45,000 sq ft of Open A1 planning consent together with permission for the development of circa 72,000 sq ft of light industrial space and 20 residential units.

Wickes Unit

The property is an existing "first generation" retail warehouse of circa 36,750 sq ft which is let, by way of assignment, to Wickes for a further 9 years. This property has the benefit of Open A1 (non-food) planning consent.

Stone Lake Retail Park

The property comprises an existing retail warehouse park constructed within the last 15 years, providing a total of about 92,000 sq ft of accommodation in six retail units. The park is let to Currys, PC World, Carpetright, Halfords and Harveys on leases with an average unexpired lease term of 11 years and which currently produce an aggregate initial rent of £1,654,597 p.a.

Biggleswade

The Group has successfully assembled a site just off the A1 on the outskirts of Biggleswade which presents an excellent opportunity for development. The potential scheme could incorporate the existing retail park and the Homebase unit (taking advantage of their Open A1 (non-food) planning consents) and the London Road Trading Estate to the north of these properties. However, a variety of options are being explored.

London Road Trading Estate

The site contains a carpet retailer, a Matalan unit, a vacant re-clad warehouse unit and a cleared site. The carpet retailer building is approx 30,000 sq ft and has a restricted retail planning consent although it should be possible to expand to at least a 'bulky goods' use. The Matalan unit has an Open A1 (non-food) planning consent. The vacant warehouse unit, which has Open A1 (non-food) planning consent, extends to 32,500 sq ft at ground floor level and also has the benefit of a mezzanine. The cleared site extends to circa 2.5 acres and has Open A1 (non-food) planning consent.

London Road Retail Park

The retail park is the only purpose-built retail warehouse scheme in the town. The park has the benefit of an Open A1 (non-food) planning consent and extends to about 35,000 sq ft. Tenants include Laura Ashley, Brantano, Harveys, Argos, Pets at Home and Halfords. Passing rents are circa £21 psf, and most of the leases have in excess of 10 years unexpired.

Homebase

This site is occupied by a single unit which extends to about 43,000 sq ft and is let to Homebase for a further 14 years. The passing rent is £471,460 p.a. (£11 psf) and the unit benefits from an Open A1 (non-food) planning consent.

"Plot S"

The property is a relatively small, but strategically important, undeveloped site located directly opposite the larger proposed retail redevelopment site on the southern fringe of Biggleswade. The site, which comprises about 1.75 acres (0.70 hectares) is located on the eastern side of London Road and is currently zoned, in planning terms, for 'employment use'.

Revaluation uplift

The Group's property portfolio was valued by independent property valuers, King Sturge LLP, as at 30 September 2010. In their opinion, the open market value of the investment property portfolio at that date was £93m, resulting in a revaluation surplus of £0.26m.

General administrative expenses

The Group's running costs principally comprise the management fee payable to the Investment Manager, LXB Manager LLP, which amounted to £1.4m in the period. Other principal components of the Group's £2.2m running costs in the period were costs necessarily incurred by virtue of the Company being a listed company, such as listing fees and Non-Executive Directors' fees.

Cash flow

The Group's operating cash flows have been impacted by the Group's limited rental income in the period, with properties acquired not being held for the entire period of account. Projected annualised rent is forecast to exceed the annualised running costs in the current financial year.

During the period £92.7m has been deployed in the acquisition of investment properties.

Tax

The tax charge for the period is £34,343. Tax is payable at a rate of 20% on the net rental surplus after deduction of interest costs. The difference between the income tax rate of 20% and the effective tax rate is discussed in note 7 to the Group Financial Statements.

Property portfolio

The following table comprises a full list of all properties owned by the Group at the balance sheet date. It should be read in conjunction with the notes on the existing portfolio above.

Notes

* lease expires 22 May 2011

** includes Homebase Unit

Tim Walton

On behalf of LXB Manager LLP

12 January 2011

All amounts relate to continuing activities.

There were no items of other comprehensive income or expense and therefore the loss for the period also reflects the Group's total comprehensive loss.

Notes to the preliminary announcement

The following notes are an extract from the Company's Annual Report and Financial Statements for the period to 30 September 2010 which has been prepared in accordance with International Financial Reporting Standards and upon which an unqualified audit report has been given.

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. 

The Group Financial Statements include 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 can be found on its website: www.lxbretailproperties.com.

2. Accounting policies 

Statement of compliance 

The Group Financial Statements have been prepared in accordance with the International Financial Reporting Standards ('IFRS') adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation. 

Basis of preparation 

The financial statements have been prepared on a going concern basis and are presented in pounds sterling. 

The financial statements have been prepared on the historical cost basis except that investment properties (defined below), investments and derivative financial instruments are stated at fair value. 

The accounting policies have been applied consistently to the results, other gains and losses, assets, liabilities and cash flows of entities included in the consolidated financial statements. 

Any revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period. If the revision affects both current and future periods, the change is recognised over these periods. 

The preparation of financial statements often requires the Directors to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. However, the nature and scale of the Group's business in the period since listing has meant that there has been a limited requirement for the Directors to make such judgements or estimates to date. For example, the single most significant line item in the financial statements, "Investment Properties" (comprising completed investment properties and development properties held for investment) have been supported by external valuations. Similarly, the value of derivative financial instruments have been independently assessed on the basis of market rates as at the balance sheet date. 

The Group's accounting policies for these matters together with other policies material to the Group, are set out below. 

Standards and interpretations effective in the current period 

No new standards or interpretations issued by the International Accounting Standards Board (IASB) or the IFRS Interpretations Committee (IFRIC) have led to any changes in the Group's accounting policies during the period.

Standards and interpretations in issue not yet adopted 

The IASB have issued the following standards and interpretations that are mandatory for later accounting periods and which have not been adopted early. These are:

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application, other than on presentation and disclosure. 

The IASB and IFRIC have also issued or revised IFRS 1, IFRS 2, IAS 32, IFRIC 14 and IFRIC 19, which are not relevant to the operations of the Company or the Group.

Basis of consolidation 

Subsidiaries 

Subsidiaries are those entities controlled by the Group. Control is assumed when the Group has the power (directly or indirectly) to govern the financial and operating policies of an entity, or business, to benefit from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All intragroup transactions, balances, income and expenses are eliminated on consolidation. 

Property portfolio 

Investment properties 

Investment properties are properties owned or held leasehold by the Group which are held for capital appreciation, rental income or both. Investment properties include property that is being constructed, developed or redeveloped for future use as an investment property. Investment properties are initially recorded at cost and subsequently valued at each published balance sheet date at fair market value on an open market basis as determined by professionally qualified independent external valuers. 

Gains or losses arising from changes in the fair value of investment properties are recognised in the income statement in the period in which they arise. 

In accordance with IAS 40 "Investment Property", no depreciation is provided in respect of investment properties. 

Acquisitions and disposals of investment properties are recognised on unconditional exchange of contracts where it is reasonable to assume that completion will occur. 

All costs directly associated with the purchase and construction of an investment property are capitalised.

Occupational leases 

The Board exercises judgement in considering the potential transfer of the risks and rewards of ownership in accordance with IAS 17 "Leases", for all investment properties that are leased to tenants by the Group and determines whether such leases are operating leases or finance leases. Where the Group substantially retains all the risks and rewards of ownership the lease is classified as an operating lease. In the event that substantially all of the risks and rewards of ownership are transferred to the lessee under the terms of a lease then such a lease would be classified as a finance lease. All tenant leases that have been entered into by the Group to date have met the criteria for classification as operating leases. 

Net rental income

Rental income from investment properties leased out under operating leases is recognised in the income statement on a straight-line basis over the lease term. 

Contingent rents, such as turnover rents, rent reviews, and indexation, are recorded as income in the periods in which they are earned. Rent reviews are recognised when such reviews have been agreed with tenants. 

Lease incentives and costs associated with entering into tenant leases are amortised over the period to the first break option or, if the probability that the break option will be exercised is considered low, over the lease term.

Property operating expenses are expensed as incurred and any property operating expenditure not recovered from tenants through service charges is charged to the income statement. 

Profits on sale of investment properties 

Profits on the sale of investment properties are calculated by reference to the carrying value at the previous published balance sheet date, adjusted for subsequent capital expenditure. 

Financial assets and liabilities

Financial assets and liabilities are recognised in the balance sheet when a member of the Group becomes a party to the contractual terms of the relevant instrument. Unless otherwise indicated, the carrying values of the Group's financial assets and liabilities will be a reasonable estimate of their fair values.

Business receivables and payables 

Business receivables and payables are initially measured at fair value, subsequently measured at amortised cost and, where material, discounted to reflect the time value of money. If there is objective evidence that the recoverability of an asset is at risk, appropriate allowances for any estimated irrecoverable amounts are recognised in the income statement. 

Cash and cash equivalents and Money Market Fund investments

Cash and cash equivalents comprise cash in hand, deposits held at call with banks and financial institutions and other highly liquid investments with original maturities of three months or less. Money Market Fund investments are short-term equity investments held with mutual funds that invest in the "money markets". 

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 

Finance income

Finance income includes interest receivable on funds invested. 

Derivative financial assets

Derivative financial instruments which are not capable of being designated as effective hedges are recognised at fair value, with changes in fair value being included in the income statement.

The Group's financing strategy is to hedge interest rate exposures. The Group intends to use derivative financial instruments to hedge its exposure to cash flow interest rate risks.

Provisions

A provision is recognised when a legal or constructive obligation exists as a result of an event that has occurred prior to the balance sheet date and where it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the best estimate of the expenditure required to settle that obligation as at the balance sheet date, and will be discounted to present value if the effect is material. 

Distributions

Distributions on equity shares will be recognised when they become legally payable. 

Management fees and incentive arrangement payments 

Management fees and incentive arrangement payments are recognised in the income statement in the period to which they relate. Amounts that are reasonably likely to become payable in the future will be provided for in the financial statements and balances will be discounted to reflect the deferred nature of the payment. 

Tax 

Tax is included in the income statement except to the extent that it relates to items recognised directly in equity, in which case the related tax is recognised in equity.

Current tax is the expected tax payable on taxable income for the reporting period, using tax rates enacted or substantively enacted at the balance sheet date, together with any adjustment in respect of previous years. 

Deferred tax is provided for using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The tax effect of the following differences are not provided for:

·; the initial recognition of goodwill;

·; goodwill for which amortisation is not tax deductible;

·; the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

·; investments in subsidiaries, associates and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. 

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates that are expected to apply in the period in which the liability is to be settled or the asset is to be realised.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. 

3. Segmental information

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

For the period to 30 September 2010, 42% of the Group's gross rental income was receivable from one tenant, reflecting the fact that properties were acquired at varying times during the period. At the date of this report no one tenant accounted for more than 20% of the Group's gross rental income. 

4. Operating loss 

Included in auditors' remuneration for other services was £150,502 in relation to services provided in connection with the flotation. These costs have been treated as issue costs and charged directly to the stated capital reserve. 

The Group has no employees. 

Fees payable to the Directors in the period were as follows:

5. Operating leases 

The Group enters into operating leases with tenants on its investment properties. 

Future minimum rents receivable under non-cancellable operating leases as at 30 September 2010 are set out in the table below. The rents receivable shown in the table are calculated on the assumption that any tenant with a break option chooses to exercise that option. 

Leases are generally for fixed terms of between 5 and 15 years and include periodic rent reviews and may include tenant and / or landlord break options. 

6. Finance income and costs 

Further information about the derivative financial instruments, including details of their valuation at the balance sheet date, is included in note 10. 

7. 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 £116,675 available to carry forward to utilise against applicable future revenue profits.

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 of 20%. 

8. Loss per share 

The loss per share is calculated on a weighted average of 120,734,012 ordinary shares in issue for the period from the Company's listing on 23 October 2009 to 30 September 2010 and is based on a loss attributable to ordinary shareholders for the period of £1,681,423. 

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. 

International Financial Reporting Standards require that the effects of unrealised revaluation gains and losses on the Group's investment properties are reported through the income statement. Adjusting the loss for the period to strip out any unrealised property valuation movements, the loss per share for the Group would be 1.61p for the period. 

Adjusting the loss per share to eliminate the effects of the fair value adjustment on derivative financial instruments would result in an attributable loss of £134,859 or 0.11p per share. 

9. Investment properties 

The properties were valued as at 30 September 2010 by King Sturge LLP, Chartered Surveyors, in their capacity as external valuers. The valuation was undertaken in accordance with the Royal Institution of Chartered Surveyors' Valuation Standards 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. A deduction is made to reflect an estimate of the purchasers' acquisition costs. 

The historic cost of the Group's investment properties as at 30 September 2010 was £92,740,217. 

10. Derivative financial assets 

On 8 January 2010, the Group entered into four purchaser swaptions in order to protect the Group against potential future interest rate rises. The following table provides a summary of the purchaser swaptions and their bid values at 30 September 2010.

The purchaser swaptions have been fair valued at the close of business on 30 September 2010 by J.C. Rathbone Associates Limited. 

The Group had no borrowings and no other derivative financial instruments in place at 30 September 2010. 

11. Business and other receivables

All amounts above are due within one year. 

12. Cash and cash equivalents and Money Market Fund investments 

Total cash deposits held at 30 September 2010 amounted to £45,020,822. 

At 30 September 2010 a further £7,504,620 was invested in shares in a Money Market Liquidity Fund with instant access. This is disclosed in the balance sheet as a current asset investment. 

13. Business and other payables

All amounts above are due within one year.

14. Financial assets and liabilities 

Derivative financial instruments 

The derivative financial instruments have been valued by reference to interbank bid values as at the close of business on 30 September 2010 by J.C. Rathbone Associates Limited, and include the full LIBOR basis spread. This is a "level 2" fair value movement as defined in IFRS7, Derivative Financial Instruments Disclosures. Details of the Group's derivative financial instruments are shown at note 10.

All financial assets and liabilities are measured at amortised cost, except for derivative financial instruments and Money Market Fund investments, which are measured at fair value. 

Financial risk management 

Through the Group's operations it is exposed to a variety of risks. The principal risks that are potentially material to the Group and the policies for managing these risks are summarised below. 

i) Liquidity risk 

The Group ensures that surplus cash is managed with the following objectives: (i) to ensure efficient cash and liquidity management; (ii) to deliver appropriate returns on all cash balances having regard to the Group's policy not to expose cash to significant risk; and (iii) to limit exposures through counterparty diversification. 

Generally returns on cash deposits reflect the notice period required to release the deposit back to the Group. With that in mind the Group holds cash with various institutions at varying dates of maturity. 

ii) Credit risk

The Group's credit risk is attributable to its cash and short-term deposits and its business and other receivables. 

The credit risk on cash and short-term deposits is limited because the counterparties are banks with credit ratings of AA- or higher. As at the period end deposits were spread across 8 different banks. The credit ratings of the banks are monitored by J.C. Rathbone Associates Limited and reported to the Board at least quarterly with changes made as necessary to manage risk. The Board does not consider that there is a significant concentration of counterparty risk. 

Rigorous credit control procedures are applied to facilitate recovery of business receivables. The majority of tenant leases are long-term contracts with rents payable quarterly in advance. Penal interest is charged on outstanding rents in accordance with the applicable lease terms and legal action would be taken to recover any substantial arrears.

The credit risk relating to counterparties transacting with the Group for property acquisitions and disposals are managed through appropriate contractual protection in the relevant agreements. 

iii) Capital risk management 

The Group monitors the Group's equity position with reference to committed expenditure and the ability to continue to operate as a going concern. 

15. Stated capital 

Since incorporation the Company has issued a total of 154,907,536 ordinary shares of no par value for a total cash consideration of £153,279,835. In arriving at the stated capital of the Company of £147,583,939, as disclosed in the balance sheet at 30 September 2010, total share issue costs of £5,695,896 have been deducted from this amount. 

Analysis of share capital: 

On incorporation two ordinary shares of no par value were issued for cash at a subscription price of £1 per share. 

On 23 October 2009, a further 109,999,998 ordinary shares of no par value were issued for cash, pursuant to the Initial Placing, at the placing price of £1 per share. 

On 23 November 2009, a further 4,215,000 ordinary shares of no par value were issued for cash, under the Over-allotment Arrangement referred to in the Admission Document, at the placing price of £1 per share. Issue costs in relation to the Initial Placing and the Over-allotment Arrangement were £4,664,014. 

On 3 August 2010, a further 40,692,536 ordinary shares of no par value were issued for cash, pursuant to the Second Placing, for cash at the placing price of 96p per share. Issue costs were £1,031,882. 

16. Reserves 

The Group Statement of Changes in Equity is shown as a primary financial statement. 

The nature and purpose of each reserve within equity is as follows: 

Stated capital

This represents the excess of the value of shares issued over their nominal value (which is zero), net of issue costs. 

Retained earnings

This represents the cumulative profits and losses recognised in the income statement. 

17. 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 subsidiary, LXBRP GP Limited, is a related party of the Company. LXBRP GP Limited acts as the sole corporate general partner of LXB Retail Properties Fund LP, a significant, indirectly controlled, subsidiary of the Company (see the paragraph headed "subsidiary entities" below) and LXB Manager LLP is the Investment Manager to the Group. At 30 September 2010, LXB3 Partners LLP and its members held an aggregate total of 13,563,335 ordinary shares in the Company. 

There have been no changes to any of the above shareholdings between 30 September 2010 and the date of this report. 

Fees 

Directors' fees of £252,888 were payable for the period ended 30 September 2010 (note 4). As at 30 September 2010, £61,250 of fees remained outstanding and are included within other accruals (note 13). 

Management fees of £1,425,280 were payable to the group headed by LXB3 Partners LLP by the Group in respect of the period ended 30 September 2010, of which £475,293 (net of VAT) was payable as at the balance sheet date and is included within business payables and other accruals (note 13).

Subsidiary entities

LXB Retail Properties Plc is the ultimate controlling party of the Group. 

All of the Group's investment properties are held by entities that are subsidiary undertakings of LXB Retail Properties Fund LP ("the Fund").

The consolidated financial statements include the financial statements of the Company and the following principal subsidiary entities, all of which are wholly-owned unless otherwise stated:

Notes 

* LXBRP CommCo Limited and LXBRP LP Limited are directly owned by LXB Retail Properties Plc. All other entities are indirectly owned.

** LXB3 Partners LLP and LXBRP GP Limited (see the paragraph headed "Interests in shares" above) have partnership interests in LXB Retail Properties Fund LP ("the Fund") with LXB3 Partners LLP being entitled to certain incentives that may become payable, as described below. The Group has the power, indirectly, to govern the financial and operating policies of the Fund so as to benefit from its activities as a result of having the authority to appoint and remove members of the Investment Committee. The Investment Committee, which has approval rights over certain significant matters pertaining to the business of the Fund, was originally constituted as a committee of LXBRP GP Limited. On 11 January 2011, the Investment Committee was reconstituted as a committee of the Fund. The registered office of the Fund is 15 Atholl Crescent, Edinburgh, EH3 8HA. Advantage has been taken of the exemption conferred by regulation 7 of the Partnership (Accounts) Regulations 2008 in presenting information about the Fund.

Incentives - carried interest arrangements with LXB3 Partners LLP 

At a future date, when the £147,449,175 of net funds raised from the share issues to date (being the stated capital of the Company, as disclosed in note 15, less £134,764 of listing related costs expensed in the income statement in the period) 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 30 September 2010, no provision for future incentive payments has been recognised in these financial statements.

Other transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. 

18. Post balance sheet events 

On 21 December 2010, the Group completed the acquisition of Stone Lake Retail Park in Greenwich for £27.84m, including costs of acquisition.

Glossary 

Admission Document 

The application for admission to listing and trading on AIM and the Daily Official List of CISX. 

AIM 

The Alternative Investment Market of the London Stock Exchange. 

CISX 

The Daily Official List of the Channel Islands Stock Exchange. 

EPRA 

European Public Real Estate Association. 

Investment Manager 

LXB Manager LLP. 

NAV 

Net asset value. 

Placing / Initial Placing 

The initial placing of 109,999,998 shares at 100 pence per share on AIM and CISX on 23 October 2009.

Second Placing 

The second placing of 40,692,536 shares at 96 pence per share on 3 August 2010.