LXB.L Regulatory News (LXB)

For immediate release 4 December 2013

LXB Retail Properties Plc

RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2013

LXB Retail Properties Plc, a Jersey resident closed-ended real estate investment company focused on edge of town and out of town retail assets, today announces results for the year ended 30 September 2013.

Highlights

30 September 30 September

2013 2012

· Cash deposits and liquid investments: £20.0m £70.1m

· NAV per share: 115.93p 110.74p

· EPRA* NAV per share: 116.38p 111.98p

· Earnings per share: 4.64p 3.71p

· October 2012: obtained planning permission for 494,000 sq ft of mixed-use retail and leisure at Rushden Lakes (the decision remains under review by the Secretary of State)

· January 2013: obtained planning permission at Greenwich for a Sainsbury's and M&S led scheme with a combined total area of 236,000 sq ft

· January 2013: secured development finance facilities for foodstores at Gloucester and Sheppey

· January 2013: entered into a pre-let agreement with Asda for a 78,100 sq ft foodstore in Truro

· January 2013: exchanged contracts to sell 2 foodstores for a total consideration of £46m

· March 2013: undertook a share buy-back programme returning £25m of surplus funds to shareholders

· May 2013: completed sale of the foodstore in Sheppey

· June 2013: announced a number of transactions involving investment properties at Greenwich:

¨ Conditional sale of the Sainsbury's/M&S site

¨ Unconditional sale of Stone Lake Retail Park

¨ Conditional sale of the Wickes unit at Brocklebank Road

¨ Grant of an option for the remainder of the Brocklebank Road site

· June 2013: completed sale of Stone Lake Retail Park

· June/July 2013: undertook a share buy-back programme returning £19.9m of surplus funds to shareholders

· September 2013: secured enhanced planning permission at Biggleswade

Post year end:

· November 2013: completed sale of the foodstore in Gloucester

* excluding fair values of financial instruments and deferred tax.

Commenting on the recent activity, Tim Walton CEO of LXB Adviser LLP said:-

'This has been and continues to be, a period of enormous activity for the Group. In times when all parties are cautious before committing to long term leases, we are very pleased by the progress that has been made on the portfolio and the lettings that have been achieved. A positive decision on judicial review would represent a major boost to the retail offer at Banbury. That decision is expected shortly and, along with many of the other matters reported in this announcement which occurred after the end of the Group's financial year on 30 September 2013, its impact on net asset value will be evident in the current financial year.'

LXB Adviser LLP Tel: 020 7432 7900

Tim Walton, CEO

Brendan O'Grady, FD

Buchanan Tel: 020 7466 5000

Charles Ryland/Sophie McNulty/Helen Greenwood

www.buchanan.uk.com 

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 Annual Report and Financial Statements for the year to 30 September 2013.

In our interim report I noted the challenging environment within which the Group operates. Since then, there has been a general improvement in business confidence and we have seen a pickup in retailer interest in securing new trading space to meet the needs of their evolving formats. There are still major structural challenges facing the retail sector, prospective tenants are requiring significant incentive packages to commit to pre-lets and the planning system continues to be slow and costly, but it is pleasing to be able to report significant progress and achievements across the Group's investments.

As anticipated in the Group's announcement on 30 September 2013, significant activity in the second half of the financial year has resulted in several key contracts being signed since the year end and I am pleased to have this opportunity to provide shareholders with a comprehensive update.

The Investment Manager's Report looks at each of the Group's principal investments in detail and describes our progress in the key areas of planning applications and consents achieved, vacant possession, lettings, and realisation of investments. Here, I will focus on the portfolio as a whole.

Although some planning consents may need to be modified to reflect individual tenant requirements, the Group is very well advanced on planning permissions generally. The High Court decision on our planning consent at Banbury is imminent and we are optimistic that the consent will be upheld. Assuming that is the case, we will have planning permission for major schemes at Banbury, Biggleswade, Gloucester Phase 2, Greenwich Sainsbury's/M&S, Sheppey Phase 2 and Stafford.

We expect planning decisions in respect of Greenwich Brocklebank and Sutton in December 2013 and the outcome of the planning inquiry in respect of the scheme at Rushden is anticipated in February 2014. The planning application for the foodstore-led investment at Truro was submitted in November 2013 and the formal process to apply for planning permission at Ayr, also a mixed use scheme with a foodstore anchor, was initiated in October 2013 as a precursor to a formal application in the first quarter of 2014.

Securing vacant possession is obviously a vital precursor to developing our portfolio of investments, so the local authority's decision during the year to use Compulsory Purchase powers, if necessary, at Biggleswade gave a welcome boost to that project. Following this, I am pleased to be able to say we are now able to ensure that vacant possession will be available when we are ready to start on site at most of our key investments.

We have made progress on building our investments too, with site clearance or construction under way at Biggleswade, Greenwich, Sheppey Phase 2, and Stafford. In addition, the two Morrisons foodstores at Gloucester and Sheppey were completed during the year. We have seen increased occupational interest for the second phase at both locations since the foodstores opened for trade.

On lettings, we have contracts agreed with the anchor tenant at each of our key investments. The anticipated planning success at Banbury will remove a significant obstacle to the delivery of that high quality investment and give momentum to already strong letting interest at that location. We are hopeful of similar good news at Rushden in February 2014. Over 1,000 local residents wrote to the Planning Inspector in support of our proposals; that is virtually unheard of and demonstrates the level of recognition of the scheme's design and employment credentials.

The Investment Manager's report contains more detail on pre-let agreements by location, but the annual rent roll on pre-let agreements signed since the IPO (assuming all letting conditions are satisfied and excluding investments no longer owned at the balance sheet date) is currently £17.36m of which £6.71m results from agreements for lease signed since 30 September 2012.

The process leading to a signed pre-let can be lengthy and arduous so, as well as commenting on what has been signed, I would like to give shareholders a view of what is in the pipeline too. When all the key commercial terms surrounding a letting are agreed - a process which can take many months of negotiation - both parties instruct solicitors to prepare the legal documentation which, on signing, results in a pre-let which can be reported to shareholders. In addition to the contracted rents of £17.36m, the annual aggregate rent on all the prospective lettings which are currently in solicitors' hands is £2.81m. Where we have a credible offer from a prospective tenant and are actively engaged in detailed discussions but have not yet appointed solicitors to prepare the lease documentation, we regard that unit as 'under offer'. Of course, there is no certainty that all of those discussions will result in a pre-let, but the aggregate annual rent on units currently under offer (in addition to those actually in solicitors' hands) is in excess of £4m.

All this progress confirms that we have the right offer for today's retail needs but the environment we operate in means it takes time to deliver results. Although we report NAV per share growth of 4.69% for the year, taking NAV to 115.93p per share at the year end, most of that increase arose in the first six months of the financial year. The efforts of the second half are reflected in all of the developments since the year end and in the many initiatives currently in progress. That has already created, and will in the future create, additional value but shareholders will only see that reflected in reported NAV in the balance sheet when contracts are finalised. The achievements we have seen recently and the level of current activity gives me confidence that shareholders will see significant NAV growth during the first half of the current financial year.

During the year the Board accepted offers to buy the Group's foodstore investments at Gloucester and Sheppey and both sales have now completed. So too has the sale of Stone Lake Retail Park which was announced in June 2013. The sale of the Wickes store at Greenwich which was announced at the same time will complete in December 2013 and the conditions around the sale of the Sainsbury's/M&S investments at Greenwich ('the 'Maritime' transaction') which was also announced in June 2013 are now largely fulfilled. We expect to complete the sale during December 2013 releasing £58m of ungeared cash.

The Group set out to establish a portfolio of high quality retail investment properties; much has been achieved since the IPO and I am optimistic about what lies ahead. The quality of the portfolio has clearly been recognised by others who invest in prime retail investments. That is evident from the frequent approaches we receive from those interested in acquiring the Group's investments. Whilst that is not the Group's objective, the Board will always assess credible approaches in the light of what is in shareholders' best interests. In that regard, I can advise that, following approaches from three major institutional investors, we are in advanced discussions in connection with three potential disposals which place an end value on the investments in excess of £160m. Further announcements will be made, if appropriate, in due course.

In accepting offers to buy some of our investments, the Group has generated cash ahead of our original expectations. The Board remains determined to return surplus cash to shareholders and during the year to 30 September 2013, we spent £45m buying back the Company's shares. This is a cost effective and flexible means of returning surplus capital for which there is obvious shareholder support as shown at the Extraordinary General Meeting in October 2013 when 89% of all shareholders voted to give the Company further authority to buy back shares, and none voted against the resolution.

The Board has considered the Group's prospective cash position in light of the anticipated receipt of the Maritime sales proceeds and we expect to make an announcement in the near future confirming our intention to return a significant part of those proceeds to shareholders, when received, using the share buyback authority granted at the Extraordinary General Meeting in October 2013.

In my statement in the interim report, I commented on the opportunities we are encountering in connection with mixed use and residential investments. We see the scope for shareholder value to be created adopting a fresh and innovative approach which we brand as 'Living Villages'. Living Villages has been very well received whenever we have discussed it with planners, landowners and other interested parties; shareholders may find it interesting to look at the website www.livingvillages.com. Living Villages is opening the door to lots of new potential investment opportunities but, thus far, we have not made any significant land acquisitions. Instead, we have concentrated on bringing forward a detailed proposal for a Living Villages development at the site which the Group already owns at Higher Newham Farm in Truro. I expect to provide a further update to shareholders on Living Villages during the course of the coming year.

When the Company came to the market in 2009 we committed that shareholders would have the ability to vote on the Company's future strategy at the Annual General Meeting after the financial year end 30 September 2014. To inform that shareholder decision, the Board's objective has been to give a clear view on the potential value in each of our key investments by mid 2014; we remain on track to do that.

Phil Wrigley

Chairman

4 December 2013

Report of the Investment Manager, LXB Adviser LLP

LXB Adviser LLP advises LXB Retail Properties Plc ("LXB" or "the Group") and is pleased to report on the Group's financial statements for the year ended 30 September 2013.

Investment portfolio

Planning consents

New planning consents (including resolutions to grant planning) achieved since the Group's IPO in October 2009 (excluding properties sold at the balance sheet date) are as follows:

* Subject to judicial review challenge

New planning consents subject to review by the Secretary of State:

In addition, the Group has applications pending or intends to apply for planning consents on its remaining sites and to add to existing consented space due to tenant demand. The following table shows the additional applications that are envisaged:

* Application will also include a neighbourhood centre, 750 dwellings and offices.

** Application includes 186 residential units.

*** Application includes 435 dwellings.

Agreements for lease

The Group has also made good progress on signing pre-lets with prospective tenants. Many of the Group's developments include mezzanine space and, although this space is included in the planning consent, it is (for retail space) generally not rentalised; therefore any reference made to pre-let space in the table below is to rentalised space only. Agreements for lease signed (by sq ft) up to the date of this report (excluding properties sold at the balance sheet date):

The agreements for lease signed correspond to total rental income of £17.36m per annum. The Group anticipates further lettings in the near future and is currently in solicitors' hands to let a further 117,000 sq ft of ground floor space plus associated mezzanines which equates to further rental income of £2.81m per annum. Aggregate annual rent on units currently under offer is in excess of £4m.

Property details

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

Ayr

Following South Ayrshire Council's failure to approve the South East Ayr Masterplan, the Group has adopted an alternative planning strategy and has initiated the Planning Application Notice (PAN) procedure for the Corton site (the first phase of the overall Masterplan). The PAN seeks Planning Permission in Principle (outline planning) for 750 houses, a primary school, a neighbourhood centre, a business park and a new 101,000 sq ft foodstore which is pre-let to Sainsbury's. The public consultation will be completed by Christmas 2013 and the planning application will be submitted in the first quarter of 2014. Subject to planning consent being obtained, work is provisionally scheduled to commence on site in 2015.

Banbury Gateway

The judicial review challenge to the March 2013 planning permission came before the High Court of Justice in November 2013 and the decision is expected imminently. We are anticipating a positive decision which will remove a significant obstacle to the delivery of this high quality investment and will give momentum to already strong letting interest at the location. Pre-lets to M&S and Next are already in place, and lease terms covering 74,000 sq ft over two floors to two other well known fashion retailers are in solicitors' hands. When concluded, over 69% of the space at this investment will be pre-let and discussions are continuing with a number of other retailers. The Group expects to start on site when the scheme is 80% pre-let and anticipates achieving that level of pre-lets by March 2014.

Biggleswade

Pre-lets to M&S, Next and Matalan covering 60,000 sq ft (123,500 sq ft including mezzanine and second floors) on the A1 Shopping Park have been announced previously and in June 2013 planning permission was obtained to reflect these tenants' requirements. Together with the existing 43,000 sq ft Homebase, 49% of the ground floor space on A1 Shopping Park is now let or pre-let. A further 30,000 sq ft (46,000 sq ft including mezzanine) is under offer to a number of major retailers including both existing and new tenants.

The A1 Shopping Park will be constructed in three phases and demolition has commenced to enable the building out of phase 1 (63,000 sq ft) and the adjacent 'Plot S' site (15,000 sq ft). That will allow the relocation of Matalan and provide new retail space to accommodate the existing tenants wishing to remain in the location. Construction work will start in early 2014, subject to concluding pre-lets on the units currently under offer and finalising arrangements (which are in solicitors' hands) relating to the upgrade of London Road which provides access to the scheme.

Phases 2 and 3 will commence once vacant possession of the existing buildings has been secured and good progress is being made on that aided by the local authority's recent decision to use Compulsory Purchase powers, if necessary, to ensure that the scheme can proceed.

The Group owns two commercial properties opposite the main retail park ('Plot C') and intends to redevelop these to provide a relocation site for some of the tenants on the existing Biggleswade Retail Park. Planning permission was granted in September 2013 for 30,000 sq ft of Open A1 non-food retail space on that land and discussions with potential occupiers are ongoing.

Gloucester

The sale of the Morrisons foodstore for £28.86m completed in November 2013.

The land forming Phase 2 of this investment has outline planning permission for a car showroom, employment use, a trade park and restaurants and in June 2013 the Group concluded a pre-let with Costa Coffee. The Group also expects to exchange contracts for the sale of a three acre plot for a commercial vehicle dealership shortly. The sale for £1.25m will be conditional on the buyer receiving detailed planning permission which is expected in spring 2014. Interest has also been received from a number of other potential occupiers and discussions are continuing.

Greenwich

The sale of the Stone Lake Retail Park investment for £32.95m completed in June 2013 and completion of the sale of the Wickes investment for £6.39m is imminent. Receipt of £2m of the Stone Lake proceeds is deferred pending satisfaction of certain planning and letting conditions related to the Brocklebank investment; £0.34m of the Wickes proceeds are deferred on the same terms. In accordance with accounting standards, these deferred elements of the sales proceeds will not be recognised in the Group's financial statements until receipt is unconditional.

Good progress has been made on site assembly and lettings at Brocklebank. In October 2013 the site assembly was completed when the Group acquired several parcels of land from the Royal Borough of Greenwich. A pre-let to Next for a 38,500 sq ft unit on three floors (16,000 sq ft on ground floor) for a term of 15 years is expected to exchange shortly. This store, which will be the anchor tenant for the five unit scheme, will include the fashion offer, home furnishings and a coffee shop and planning consent is expected in December 2013. Pre-lets with two other major retailers are in solicitors' hands.

As announced in June 2013, contracts have been exchanged for the sale of the Sainsbury's/M&S investment conditional on fulfilment of certain conditions. These have been largely satisfied and the Group expects to complete on the sale and receive the £58m purchase proceeds in December 2013. Construction is scheduled to commence in January 2014 with practical completion (which substantially fulfils the Group's obligations to the purchaser) expected to occur in March 2015.

Under the terms of the letting of the new Sainsbury's at Maritime, the Group committed to purchase the existing foodstore at Greenwich Peninsula for £16m (plus costs) following Sainsbury's relocation. On 17 June 2013 the Group announced that it had received an offer to acquire its interest in the existing Sainsbury's, conditional on the buyer achieving a satisfactory planning consent. The Group's solicitors are currently finalising contracts for the sale of the freehold of both the current Sainsbury's and the adjacent former Comet store to IKEA, subject to IKEA obtaining satisfactory planning permission for a proposed new retail development. It is anticipated that contracts will be exchanged before the end of January 2014 and that a planning decision will be achieved by mid-2014.

Rushden

Although planning permission for 494,000 sq ft of mixed use retail and leisure was granted in October 2012, the project has been delayed following the Secretary of State's decision to call in the application. The Planning Inquiry was held in July 2013 and a decision is expected by mid-February 2014.

The Group's investment will comprise a 74,000 sq ft home and garden centre, 340,000 sq ft of retail units across three terraces, a drive-through restaurant, lakeside visitor centre and restaurants. On completion, this investment will create over 1,500 new direct and indirect jobs, and huge local support from the public and from other local bodies and organisations was evident during the Planning Inquiry.

In anticipation of a positive outcome on planning, contracts were exchanged with M&S in November 2013 to anchor one of the retail terraces taking 60,000 sq ft over two floors. The Group is in advanced discussions with other retailers to take space alongside M&S.

Sheppey

The sale of the first phase of the Neatscourt investment, a Morrison's foodstore and a KFC, for £17.9m completed in May 2013 and the Group is now progressing Phase 2 which comprises approximately 67,000 sq ft of retail warehousing, a pub and restaurant units. Now that the foodstore is open for trade, there has been good letting interest in Phase 2 and in October 2013 B&M signed a pre-let in respect of a 15 year lease on a unit of 22,000 sq ft. Two other lettings with national multiple retailers are in solicitors' hands. If they conclude satisfactorily, over 55% of the total consented retail warehouse space on Phase 2 will be pre-let.

Construction of the 34,500 sq ft first terrace in Phase 2 (comprising B&M and two further units) has commenced with practical completion expected in June 2014. The timing of construction of the final elements of Phase 2 will be contingent on securing further lettings.

Stafford

An important condition of the pre-let to Debenhams was satisfied in August 2013 when a revised planning permission reflecting the layout for the 56,000 sq ft department store at the Riverside investment was agreed. The pre-lets to two high quality anchor tenants in M&S and Debenhams has added momentum to occupier interest and in October 2013 pre-lets were signed in respect of two further units totalling 26,250 sq ft over two floors; Arcadia's Outfit format will occupy a 16,250 unit of which 10,000 sq ft is at ground floor level and an adjoining unit comprising 10,000 sq ft over two floors has been pre-let to River Island.

The Group is also in advanced negotiations with several other prominent retailers and, if these result in agreed contracts, the scheme will be approximately 83% pre-let within the next few months. At that level of pre-lets, bank development finance should be available and construction work will commence.

The Group intends that Riverside will incorporate a leisure offer to complement the high quality retail investment and additional land has been acquired adjacent to the site of the proposed multi-storey car park to allow for that. There is a strong local desire for a town centre multi-screen cinema and the Group is in advanced discussions with a potential occupier for a six screen cinema. Good interest has also been shown by restaurant operators for the retail units which would sit alongside the cinema at ground floor level of the multi-storey car park but the Group does not intend to commit to any lettings until terms are agreed with a cinema operator. Planning permission has already been secured for the restaurant/bar outlets although a separate planning application will be needed for the cinema.

At Kingsmead, the Group is in advanced discussions which might allow the development of the foodstore (which is pre-let to Morrisons) to be brought forward so that it can be built out in tandem with the construction of the multi-storey car park. If these discussions can be concluded satisfactorily, it will accelerate the development of the foodstore by 12 months compared to the Group's original plan.

Solicitors are instructed in connection with potential lettings of both the remaining retail units at Kingsmead. It is hoped that pre-lets of both will be formalised before the end of January 2014 and that construction work will commence early in 2014.

Sutton

A planning application was submitted in October 2013 for a major regeneration scheme on a six acre site on the northern fringe of Sutton town centre. The site currently comprises gas holders and a number of vacant or dilapidated commercial buildings. The plans include a 123,000 sq ft foodstore, 27,500 sq ft of retail and restaurant units and 186 apartments together with significant public realm and highways improvements. The planning application is to be considered by the London Borough of Sutton's planning committee on 18 December 2013 and, subject to securing consent, Sainsbury's is committed to occupy the foodstore. The Group is also in detailed discussions with a select number of key retailers and restaurant operators who are seeking representation at this prominent town centre site.

The Group has assembled many components of the proposed site and is due to complete on the purchase of a further parcel of land in December 2013. Terms have also been agreed with Southern Gas Networks (the owner and operator of the gas holder site) to purchase the final part of the site once the gas holders are decommissioned. It is anticipated that initial demolition and site clearance works will begin by spring 2014. These enabling works are expected to take nine months after which construction of the foodstore will begin with practical completion anticipated in late 2015.

Truro

The Group was not able to agree satisfactory terms for the proposed joint venture at Willow Green and has redesigned the scheme so that the development may go ahead on land wholly within its control. An outline planning application was submitted in November 2013 for a substantial mixed use development including a 78,100 sq ft foodstore which is pre-let to Asda, 435 houses, a pub, a care home and a primary school.

The site forms part of Cornwall Council's Strategic Housing Area as set out in the Truro and Threemilestone Development Brief, which also recommends a district centre being located here and planning permission has already been granted on land to the west of the site for a mixed use residential led scheme of approximately 1,500 houses. The site is a vital part of the Council's proposed relief road scheme and it is anticipated that the planning application will be determined by July 2014.

Investment property valuations

As described in note 9 to the Group Financial Statements the investment properties held by the Group at 30 September 2013 were valued by external property valuers, Jones Lang LaSalle Limited. In their opinion the open market value of these investment properties at that date was £215.3m resulting in a revaluation surplus for the year of £16.8m.

Until the developments are completed and rents are receivable, the annual change in the valuation of investment properties is the biggest single recurring item affecting the NAV of the Group. The investment property valuation undertaken by Jones Lang LaSalle Limited is in accordance with the Royal Institution of Chartered Surveyors' Valuation Standards Eighth Edition (the "Red Book") on the basis of market value as required by International Financial Reporting Standards for investment properties that are valued using the fair value model set out within those standards. More detail on the method of valuation can be found at note 9 to the Group Financial Statements but in summary, although the Group's strategy is to build its investment properties for long term income and capital gain, the Red Book states that market value represents the estimated sale price of a property at the date of valuation.

Where a development is considered sufficiently advanced, the valuation at market value reflects the net developed value less the costs to complete with an adjustment for risk. This adjustment for risk varies between projects, for example, the risk adjustment applied to the valuation of a project that has planning permission and 100% of space pre-let to tenants will be lower than the adjustment applied to a project that only has planning permission. This reflects the valuation theory that a less advanced project would mean more of the eventual uplift in value would have to be given away to a purchaser as compensation for risk.

Where actual construction of a property has started, or could feasibly start, the market valuation of that property reflects the net developed value less the costs to complete but with any contingency for risk likely to be minimal. The amount of valuation uplift attributable to a scheme accelerates when the project is at this stage. Reaching this stage generally also ties in with the ability to both obtain bank finance and sign a building contract. As the Group moves into the building phase of its developments, shareholders can therefore expect to see further increases in NAV.

Hedge accounting

In October 2011 the Group entered into a £100m interest rate swap facility in anticipation of hedging needs for future borrowings. Hedge accounting was adopted for this instrument which meant that where the derivative was matched by expected borrowings, any movement in the fair value of the instrument was not recognised in the Income Statement. As described in the 2013 Interim Report, it became apparent early in the current year that the Group's borrowings profile would be different to that previously projected. The Directors therefore decided to revoke hedge accounting in respect of that hedging relationship. This resulted in a one off non cash debit to the Income Statement of £2.65m which is shown on the face of the Income Statement and forms part of the Group's total finance costs. This reclassification of a loss previously recognised in Other Comprehensive Income is merely an accounting presentation issue; it has had no impact on NAV.

On 15 August 2013, due to a change in the projected future borrowings of the Group following the transactions announced in June 2013, £50m of this instrument was cancelled, at a cost of £1.027m.

Cash position and future expenditure

During the year to 30 September 2013, £40.8m of cash has been deployed in the purchase of and capital expenditure on investment properties.

At the balance sheet date the Group had £20.0m 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 in the process of negotiating funding for the Stafford Riverside and Stafford Kingsmead developments. The Group is confident that it will be able to secure further development and investment financing as and when required to supplement the cash on hand and facilitate delivery of the portfolio.

Tim Walton

On behalf of LXB Adviser LLP

4 December 2013

Group Income Statement

for the year ended 30 September 2013

All amounts relate to continuing activities.

Group Statement of Comprehensive Income

for the year ended 30 September 2013

Group Statement of Changes in Equity

for the year ended 30 September 2013

Group Balance Sheet

at 30 September 2013

The Group Financial Statements were approved and authorised for issue by the Board of Directors on 4 December 2013 and were signed on its behalf by:

Group Cash Flow Statement

for the year ended 30 September 2013

Notes to the Preliminary Announcement

The financial information set out in this preliminary announcement, which has been approved by the Board, does not constitute the Group's statutory financial statements for the year ended 30 September 2013 ("the 2013 accounts") or for the year ended 30 September 2012 ("the 2012 accounts"), but is derived from those audited statutory financial statements.

The 2013 accounts, included within the Company's Annual Report for the year ended 30 September 2013, have been prepared in accordance with International Financial Reporting Standards adopted for use in the European Union. The auditors have reported on the 2013 accounts and their report was unqualified and did not draw attention to any matters by way of emphasis. The 2013 accounts will be available from the Company's website in due course. The 2012 accounts, which also included an unqualified audit report, have been filed with the Registrar of Companies in Jersey.

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 financial information set out in this report covers the year to 30 September 2013 with comparative amounts relating to the year to 30 September 2012.

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 Group 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.

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 values of derivative financial instruments have been independently assessed on the basis of market rates as at the balance sheet date. Details of the current status of the Group's carried interest arrangements are set out in note 19 and show that no judgements or estimates have been required to be made in this area to date.

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

Adoption of new and revised standards

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

Standards and interpretations in issue not yet adopted

The IASB have issued or amended the following standards and interpretations that are mandatory for later accounting periods and which are relevant to the Group and 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 7, IAS 19, IAS 32, IFRIC 20 and IFRIC 21 but the changes either have no relevance to the current operations of the Group or are not expected to have a material impact on the Group's financial statements.

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 intra-group 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, including related transaction costs. They are subsequently carried at each published balance sheet date at fair value on an open market basis as determined by professionally qualified independent external valuers, adjusted for the carrying value of rents recognised in advance and lease incentives given to tenants.

The determination of the fair value of each property requires, to the extent applicable, the use of estimates and assumptions in relation to factors such as future rental income, current market rental yields, future development costs and the appropriate discount rate. In addition, to the extent possible, the valuers make reference to market evidence of transaction prices for similar properties.

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.

Investment property is recognised as an asset when:

• it is probable that the future economic benefits that are associated with the investment property will flow to the Group;

• there are no material conditions precedent which could prevent completion; and

• the cost of the investment property can be measured reliably.

All costs directly associated with the purchase of an investment property are capitalised. Capital expenditure that is directly attributable to the redevelopment or refurbishment of investment property, up to the point of it being completed for its intended use, is capitalised in the carrying value of the property.

Acquisitions and disposals of investment properties are recognised on unconditional exchange of contracts where it is reasonable to assume at the balance sheet date that completion of the acquisition or disposal will occur.

Occupational leases

The Board considers 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.

Rent free periods, other lease incentives and any costs associated with entering into tenant leases are amortised evenly over the period from lease commencement to the first break option or, if the probability that the break option will be exercised is considered sufficiently low, over the full lease term.

Rental income from fixed and minimum guaranteed rent reviews is recognised on a straight-line basis over the shorter of the entire lease term or the period to the first tenant break option.

Where such income or costs are recognised ahead of the related cash flow, an adjustment is made to ensure the carrying value of the related investment property including the accrued rent does not exceed the external valuation.

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 audited balance sheet date, adjusted for subsequent capital expenditure.

Financial instruments

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 are 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 current asset 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.

Current asset investments

The current asset investments held in the prior year, which were categorised as 'available-for-sale' assets on initial recognition, comprised Money Market Fund investments and investments in UK Government Gilts. These short-term equity investments were carried at fair value at previous balance sheet dates with movements in fair value taken to the other reserve and recognised in the statement of other comprehensive income until the assets were disposed, at which point the cumulative fair value gain or loss was reclassified to the income statement.

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.

Borrowings and finance charges

Borrowings are initially recognised at their fair value, net of any transaction costs directly attributable to their issue. Subsequently, loans are carried at their amortised value using the 'effective interest method', which spreads the interest expense over the period to maturity at a constant rate on the balance of the liability carried in the balance sheet for the relevant period.

Finance charges are accounted for on an accruals basis using the effective interest method and are added to or offset against the carrying amount of the loan instrument to the extent that they are not settled in the period in which they arise.

Derivative financial instruments

Derivative financial instruments are used to minimise the exposure of the Group to cash flow risks arising from interest rate fluctuations. Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. Derivatives are re-measured to fair value at each published balance sheet date.

Derivatives are classified either as derivatives in effective hedges or held for trading. It is anticipated that, generally, hedges will be 'highly effective' within the meaning of IAS 39 and that the criteria necessary for applying hedge accounting will be met. Hedges are assessed on an ongoing basis to ensure they remain effective.

The gains or losses arising on the re-measurement to fair value of the portion of derivative financial instruments that qualify as effective hedges of cash flow interest rate risk are recognised directly in other comprehensive income and accumulated in the hedging reserve. If hedges are no longer expected to remain effective as a result of forecast transactions no longer being expected to occur, then hedge accounting in respect of the relevant designated hedging relationship is revoked. Any amounts previously accumulated in the hedging reserve in respect of the relevant financial instrument are reclassified immediately from other comprehensive income to the income statement. The gains or losses on the re-measurement to fair value of the portion of derivative financial instruments deemed as ineffective are recognised in the income statement.

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 will be measured at the Board's 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 are 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. Any amounts relating to incentive arrangements that have been earned and 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 other comprehensive income.

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 periods.

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. If applicable to any financial period, the tax effect of the following differences will not be provided for:

• the initial recognition of goodwill;

• 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 expected to be 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 enacted or substantially enacted at the balance sheet date.

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 current year and prior year, the Group operated in and was managed as one operating segment, being property investment, with all investment properties located in the United Kingdom.

The Board, which is considered to be the chief operating decision maker of the Group for IFRS 8 purposes, receives quarterly management accounts that are prepared on an IFRS (EU) basis and which aggregate the performance of all the Group's investment properties and focus on total returns on shareholders' equity.

For the year ended 30 September 2013, 24% of the Group's gross rental income was receivable from one tenant (year ended 30 September 2012: 18%).

4. Operating profit

Included in the auditors' remuneration expensed in the income statement for other non-audit services was £nil (30 September 2012: £4,250) for reviews of certain internal controls and processes.

The Group has no employees.

Fees payable to the Directors in the year 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 2013 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.

There was no contingent rental income in the year (2012: £nil).

6. Finance income and costs

Net finance costs recognised in the income statement analysed by the classes of financial assets and liabilities shown in note 15b are as follows:

Sensitivity to changes in interest rates:

Movements in LIBOR impact the valuation of the Group's hedging instruments and the returns on its cash deposits and current asset investments. Increases in LIBOR impact positively on the valuation of effective hedging instruments and returns on current asset investments in the statement of comprehensive income, and on the interest receivable and valuation of ineffective hedging instruments in the income statement. A 1% increase or decrease in LIBOR would have the following maximum effects on the Group's results:

The average interest rate incurred by the Group on its bank borrowings for the year ended 30 September 2013, including the effects of hedging instruments and the lender's margin but excluding amortisation of capitalised finance costs was 3.9% (30 September 2012: 3.8%).

Further information about the derivative financial instruments, including details of their valuations at each balance sheet date is included in note 15.

7. Taxation

The tax assessed for the year 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 £1,667,751 (30 September 2012: £1,113,425) 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%.

8. Earnings per share

Earnings per share is calculated on a weighted average of 238,189,650 (30 September 2012: 254,099,895) ordinary shares in issue for the year and is based on earnings attributable to shareholders for the year of £11,053,762 (30 September 2012: earnings of £9,424,960).

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: