Grainger PLC GRI Final Results

  Grainger PLC (GRI) - Final Results

RNS Number : 7452R
Grainger PLC
22 November 2012




22 November 2012

                                 Grainger plc

                        ("Grainger"/"Group"/"Company")

           Preliminary Results for the year ended 30 September 2012

                                      

                          NET ASSET VALUE INCREASED

              OPERATING PERFORMANCE MAINTAINED AND DEBT REDUCED

                                      

                             Financial Highlights

· Gross net asset value per share up 3.2% to 223p (2011: 216p)

· Net debt of £1.19bn, a reduction in the year of £260m (£376m since March
2011) with a plan to reduce net debt to £1bn by end of 2013, a further
reduction of £190m



· Group loan to value reduced to 55% (2011: 61%)

· Operating profit (before valuation movements and non-recurring items) of
£126.4m (2011: £126.2m). Recurring profit before tax of £34.6m (2011:
£48.3m). Loss before tax of £1.7m, after derivative movements of £31.2m (30
September 2011: profit £26.1m)

· Final dividend increased to 1.37p per ordinary share (2011: 1.30p) to
give a total dividend for the year of 1.92p per ordinary share (2011: 1.83p),
an increase of 4.9%

                                      

                            Operational highlights

· Continued outperformance - UK Residential and Retirement Solutions
valuations up 3.9% from September 2011

· Margins on normal trading sales maintained at 44%

· Gross fee income increased by 45% to £10.0m

· German joint venture formed with global asset manager, Heitman which
will lead to increased fee income and reduced investment. Grainger will hold a
25% equity stake

Robin Broadhurst, Chairman of Grainger plc, commented:

"The value of our  UK reversionary assets continues  to outperform the  market 
indices and  our overall  net asset  values have  again increased  due to  our 
active asset management and our long-term  strategy to have greater weight  in 
economically stronger areas. We have also made good progress on debt reduction
and have set ourselves  a target to reduce  debt to below £1bn  by the end  of 
2013 which will  further demonstrate our  evolution into a  more lowly  geared 
business. The  headroom  generated  will  give  us  the  flexibility  to  take 
advantage of attractive opportunities that may arise. We will also continue to
strive to improve efficiency in the  business and have set ourselves the  goal 
of reducing our cost run rate by at least 5% by the end of 2013.



"Grainger remains uniquely placed  to take a leading  role in, and to  benefit 
from, opportunities currently arising in all parts of the residential property
market, many of which have clear Government support. Over a period of time, we
will increase our exposure  to rental property through  our build to rent  and 
affordable housing initiatives.  We will  also take advantage  of our  strong 
operating platform to continue to  expand our management activities on  behalf 
of third  parties and  our strategic  alliances with  excellent partners,  the 
latest being our joint  venture with Heitman  in Germany, announced  following 
our year-end."





Analyst presentation



Grainger plc will be holding a  presentation for analyst and investors  today, 
Thursday, 22  November  2012  at FTI  Consulting,  26  Southampton  Buildings, 
London, WC2A 1PB at 9.15am (GMT).



The meeting can be accessed through the following dial-in facility and a  copy 
of  the  presentation  slides  will   be  available  on  Grainger's   website, 
www.graingerplc.co.uk.





Conference call details:

Toll Number      0208 817 9301
Toll-Free Number 0800 634 5205
Participant PIN  9319637

Webcast details: To view a webcast of the presentation, please register by
visiting the following website:
http://www1.axisto.co.uk/webcasting/investis/grainger/full-year-2012/





For further information, please      
contact:


Grainger plc                         FTI Consulting


Andrew Cunningham / Mark Greenwood / Stephanie Highett / Dido Laurimore / Will
Kurt Mueller                         Henderson


Telephone: +44 (0) 207 795 4700      Telephone: +44 (0) 207 831 3113

Chairman's Statement



Grainger remains uniquely  placed to take  a leading role  in, and to  benefit 
from, opportunities arising in  all parts of  the residential property  market 
using our core skills in property and asset management. The recently published
Montague Review,  the  Government  commissioned "Review  of  the  barriers  to 
institutional investment in private  rented homes" reiterates the  requirement 
for more homes and a  diverse range of tenure types  in the UK. This has  been 
reinforced  by  recent  Government  announcements  and,  while  the   report's 
recommendations will take time to translate into reality, it demonstrates  the 
major opportunities that are available to us.



Grainger is  at  the forefront  of  these changes  and  we are  reshaping  the 
business to reflect long  term changes in the  market. We have rebalanced  the 
portfolio to  have  greater weight  in  economically strong  areas  and  this, 
together with our active management, has enabled us to build a track record of
out-performance against the market. Over a period of time we will increase our
exposure to rental property through our  build to rent and affordable  housing 
initiatives. We are also taking advantage of our strong operating platform  to 
build strategic alliances with excellent partners, the latest being our  joint 
venture with Heitman in Germany in which we will hold a 25% equity stake.



Results

Operating profit  before valuation  movements and  non-recurring items  to  30 
September 2012 has marginally improved to £126.4m (2011: £126.2m).  Recurring 
profit before tax was £34.6m (2011: £48.3m). We incurred a loss before tax  of 
£1.7m (2011: £26.1m profit) which is  after a charge of £31.2m (2011:  £28.0m) 
relating to mark to market movements  on our interest rate derivatives.  Gross 
net asset value (NAV) increased by over  3% to 223p per share (2011: 216p  per 
share).



Dividends

The Directors have recommended  a final dividend of  1.37p per ordinary  share 
(2011: 1.30p). The  total dividend for  the year will  therefore be 1.92p  per 
ordinary share  (2011: 1.83p),  an  increase of  4.9%, following  the  interim 
dividend of  0.55p per  ordinary share  (2011: 0.53p  equivalent by  way of  a 
tender offer). Before  the effect of  charges for  the change in  the mark  to 
market of derivatives (which is a  non-cash item) the dividend is covered  3.2 
times.



Board changes

Robert Hiscox  retired from  the board  at  the annual  general meeting  on  8 
February 2012 and I would like to  take this opportunity to thank him for  his 
significant contribution over the years. Tony Wray, Chief Executive of  Severn 
Trent plc was appointed to  the board on 24 October  2011 and we have  already 
benefitted from  his  considerable  operational and  corporate  knowledge  and 
experience during the course  of the year. Henry  Pitman will retire from  the 
board at the next annual general meeting on 6 February 2013. Henry has been  a 
director since  May  2007 and  we  thank him  for  his invaluable  advice  and 
contribution to the business over that period.



I am pleased to  announce the appointment of  Simon Davies as a  Non-Executive 
Director (subject to normal FSA confirmations) Simon retired from the role  of 
Executive Chairman at Threadneedle earlier this  year after five years in  the 
position,  having  previously  been  Chief  Executive  (1999-2007)  and  Chief 
Investment Officer (1995-1998). His long and wide experience in the  financial 
sector and within wider industry will be a valuable supplement to our board.



Outlook

The major  housing market  indices show  that UK  national house  prices  have 
declined slightly over the  last twelve months  and liquidity and  transaction 
volumes remain low. The UK economy is likely to remain fragile in the short to
medium term, exacerbated by  the continuing lack of  resolution of the  issues 
around the  Euro. We  anticipate  that these  subdued market  conditions  will 
persist through 2013.



Against this background however, through strategic acquisitions and disposals,
we have successfully repositioned  Grainger to be  more focused on  geographic 
locations where  economic  activity is  more  robust and  on  activities  less 
reliant on trading Grainger assets which has continued to show benefits. At 30
September 2012, 62% of the  UK portfolio was located  in London and the  South 
East (September  2009: 54%).  In Germany,  82% (September  2011: 81%)  of  our 
properties  lie  in  four  of  the   more  affluent  areas  of  the   country: 
Baden-Württemberg, Hesse, Northrhine-Westphalia and Bavaria.



As a  result of  the specialist  nature of  our UK  properties  (predominantly 
second hand,  low average  value  and un-refurbished)  along with  our  active 
value-added management,  we  continue to  outperform  general UK  house  price 
indices. We are  maintaining both  sales velocity and  prices, achieving  good 
rental growth and growing our fee income.



Strategy and Financial Position

As we have stated previously, our  two key strategic objectives for 2012  have 
been firstly to  increase the proportion  of profit generated  from rents  and 
fees and secondly to reduce our overall net debt within the business. We  have 
made good progress in both regards.  In the twelve months ended 30  September 
2012 the proportion of operating profit  composed of rents and fees was  48.4% 
(2011: 46.1%). Our fee income  has increased from £6.9m  to £10.0m, up 45%  in 
the year.



This focus on  the composition  of profit  will be  maintained in  2013 as  we 
continue to build  sustainable sources  of income and  further strengthen  and 
diversify the Company's platform.



Group net debt fell by  £260m to £1.19bn from  the September 2011 position  of 
£1.45bn. This  includes the  effect of  the transfer  of a  proportion of  our 
German assets into the joint venture with Heitman announced recently. On  this 
basis, since March 2011, we have  reduced net debt by £376m whilst  increasing 
gross net asset  value by £54m.  This degearing has  therefore been  performed 
without any overall loss of value as our gross net asset value has improved by
6.2% over that eighteen month period.



We have now set ourselves the target  of reducing Group debt to below £1bn  by 
the end of  2013. Assuming  no changes  to valuation  this would  result in  a 
consolidated loan to value  approaching 50% from its  September 2012 level  of 
55% (September 2011: 61%).

In conjunction with this  financial degearing we have  also set ourselves  the 
goal of reducing our cost run rate by at least 5% by the end of 2013.



The actions we have taken in 2012  and those we anticipate taking in 2013  has 
given us the confidence to increase our dividend by 5% until we reach a target
net debt of £1bn, at which point we will reappraise the policy.



By changing the profiles of our asset base and income streams and by  reducing 
gearing, we  have been  repositioning our  business for  the future.  We  will 
retain  this  focus  which  will  enable  the  Group  to  take  advantage   of 
opportunities as they arise.



As we close our centenary  year we continue to  evolve our brand and  maintain 
our reputation as  a professional  and caring  landlord. To  have reached  100 
years as a  company is  a tremendous  achievement and  this is  thanks to  the 
enthusiasm, skill and commitment of all our staff over the years. I would like
to extend my continuing thanks to them all.



Robin Broadhurst

Chairman

22 November 2012

Chief Executive's Review

Market Overview

The residential market in 2012 continued to show marked regional variations in
valuation movements. In London,  where 50% of our  assets by market value  are 
located, we saw year on  year growth of 7.4%  with Central London showing  the 
highest growth at 12.0% and Inner  and Outer London showing increases of  6.4% 
and 3.0% respectively. Our assets in some Northern regions of the country  saw 
further falls in value (Scotland -1.7%  and North East -1.7%) compared to  the 
smaller falls/marginal increases in other  regions (South West -0.3% and  East 
Anglia 1.0%). More recently, however, there are some signs of stability in the
regions as confidence improves at  the lower end of  the market where much  of 
Grainger's stock is priced.



One significant area  of growth in  the housing market  is the private  rented 
sector (PRS). The sector comprises 3.65m households, a rise of over a  million 
in the last 10 years and in London  the PRS is estimated to now exceed 25%  of 
households or 800,000 homes, with the sector expected to continue to grow.



The Montague  Review,  set  up  by the  Housing  Minister  in  December  2011, 
highlighted the need to build more homes for rent and to increase the level of
institutional  investment  in  the  sector.  The  Review  made  a  number   of 
recommendations including  better  use of  public  land, the  creation  of  an 
enabling fund to bridge the gap  between conception and completion of  purpose 
built rental stock  and a reduction  in the requirement  for the provision  of 
affordable housing  on build  to rent  schemes. The  Government embraced  the 
report and shortly  afterwards announced  a £200m  enabling fund  for the  PRS 
specifically and a £10bn loan guarantee for the acquisition of new homes built
for rent (private or affordable). Local Planning Authorities already have the
power to determine the amount of affordable housing each development  proposal 
should build  and there  are already  signs that  some Local  Authorities  are 
considering the opportunities  the recommendations  provide on  land in  their 
ownership.



These changes  in  tenure mix,  development  focus and  attitudes  to  renting 
provide a  huge opportunity  for multi-disciplined  residential investors  and 
developers such as Grainger. Indeed  we are already creating opportunities  as 
evidenced by our innovative agreement with the Royal Borough of Kensington and
Chelsea, announced recently, and our ongoing development of activities in  the 
build to rent sector.



The final area  of the  residential market that  is growing  with central  and 
local government support is  the affordable housing  or Social Housing  Sector 
which  is   owned  by   Local  Authorities   47%  and   Registered   Providers 
(RP'sformerly called  Housing Associations)  53%. The  Government's  Welfare 
Reform Act, in its desire to see the delivery of more new affordable housing,
includes an ability for RP's to charge 'Affordable Rents' of up to 80% of open
market rents  (subject  to  caps  that impact  some  London  Boroughs)  making 
affordable housing  much more  viable  than previously.  The Act  also  allows 
private sector companies to become 'For Profit Registered Providers' (FPRP) of
social housing in the hope that the private sector can assist in the  building 
of new stock.  This blurring  of the dividing  lines between  the private  and 
public sector provides  opportunities for  organisations such  as Grainger  to 
build on  its  existing  infrastructure  and  expertise  to  operate  in  this 
arena.Consequently, as announced on 9 November,  we have formed our own  FPRP 
by re-incarnating the  name Grainger  Trust as  a subsidiary  of Grainger  plc 
which was formally registered  by the Homes and  Community Agency in  November 
2012. Its first properties will be the 77 affordable units in the first phase
of Berewood, our  2,500 unit  development site in  Hampshire, currently  being 
built by Bloor Homes.

Business Overview

Grainger operates as owner, manager  and trader of residential properties  and 
has three main sources of income:-



- Receipts from the sale of assets (profit from sales: £78m; 2011: £81m)

- Rents (net rents: £63m; 2011: £62m)

- Fees from co-invested and/or  managed vehicles (total fees: £10m;  2011: 
£6.9m)



We have repositioned the  business over the last  two years to reduce  gearing 
and to increase the proportion of our income from rents and fees.



We have continued to  outperform the general residential  market. In the  year 
ended 30  September 2012  the average  of the  two major  housing indices  (as 
provided by Halifax and the Nationwide)  showed a fall of 1.3%. By  contrast, 
Grainger's UK  portfolio  increased  in  value by  3.9%.  The  valuations  are 
supported by  sales  results  in  the year.  Sales  of  property  with  vacant 
possession were made 6.1% above last year's valuation.



On a vacant possession basis, since  2004 our residential portfolio in the  UK 
has shown  cumulative valuation  increases of  14.5% compared  to the  average 
index increase of 2.5%.

This outperformance has come from active management of the portfolio:



· Geographic weighting to areas of stronger economic activity

- At 30 September 2012 62% of our UK portfolio was situated in London  and 
the South-East of England. In Germany, 82%  of our properties were in four  of 
the more affluent areas of the country before the Heitman transaction and  90% 
after it



· Strategic sales

- During the  year lower  performing assets or  assets in  areas of  lower 
expected economic activity were disposed of, generating £83m in sales and £11m
in profit, which further assists the geographic re-weighting of the  Company's 
portfolio



· Refurbishment, development and other added value projects

- During the year we sold  refurbished, high value and development  assets 
totalling £54m, generating £19.6m profit



· Leveraging people and processes as well as our assets

- We manage assets largely or entirely owned by third parties to the value
of £706m which generated £10.0m of fees during the year

The three income streams in our business have the following characteristics:



·The trading  element  comprises  sales  of  largely  reversionary  assets 
(including home reversion  assets), a  long-term strategic land  bank and  low 
risk development  schemes. The  UK residential  portfolio has  a  reversionary 
surplus of £500m.  This represents a  'pipeline' of future  added value  which 
does not carry any planning, development or construction risk. The total value
of these assets, including  the reversionary surplus,  amounts to £1,917m.  In 
addition to this, there is a  development pipeline of gross development  value 
with current planning permission of £243m. This increases to £496m to  include 
schemes progressing to planning permission



·The rental element comprises a market rented portfolio of £743m of assets
(UK and Germany), producing an overall gross  yield of 6.6%. This part of  the 
business incorporates market-focused but multiple tenure types. (This value is
before a reversionary surplus of £44m)



·Fees primarily arise from co-investment vehicles or where our returns are
based upon portfolio performance which enhance recurring profits and  increase 
our overall return on capital. The joint venture with Heitman announced  after 
the year end which will be managed  by our German platform is our most  recent 
example



On 9 November 2012, we announced that  we had signed an agreement with  global 
real estate investment firm  Heitman to create a  joint venture, to invest  in 
c.3,000 German rented residential  units which are  currently wholly owned  by 
Grainger. The  JV will  be  75:25 owned  by Heitman,  on  behalf of  a  global 
institutional  investor,  and  Grainger,  respectively.  The  JV's   long-term 
strategy is aimed at maximising returns through income growth and active asset
management. The  deal is  subject to  a  set of  Conditions Precedent  and  is 
expected to complete soon.



Our accounts for the year ended  30 September 2012 recognise this  transaction 
with the assets of £182m and liabilities of £130m classified as  held-for-sale 
and we have written down the  investment property assets to be transferred  by 
£6.9m (£5.2m net of tax).



Strategy and Future Outlook

Historically  Grainger's  business   was  in  the   trading  of   reversionary 
residential assets, primarily those subject to regulated tenancies.The  scale 
and quality of this portfolio will continue to provide healthy cash flows  and 
opportunities to  produce  added  value  for  many  years  to  come.  We  are 
constantly seeking ways to maintain and maximise returns from this portfolio.

The expertise and infrastructure  that Grainger has  built up in  accumulating 
and managing this  portfolio also  has ensured that  we have  the platform  in 
place  that  positions   the  business   strongly  in  terms   of  long   term 
sustainability and the  potential for  accretive growth. The  Grainger of  the 
future will have a greater proportion  of its activities in the rented  sector 
and will  supplement these  by leveraging  its asset  and property  management 
capabilities to manage and  expand its co-investment  vehicles and fee  income 
business.

This reflects  the  changing  nature  of the  housing  market.  The  continued 
imbalance between supply and demand has  led to pressure points. For  example, 
in value terms, areas of strong economic performance such as London, the South
East and parts  of Germany show  resilience and growth,  with demand for  good 
quality, well priced rental  property continuing to climb.  In these areas  we 
see particular opportunities in the build to rent sector including  affordable 
housing.

These business  activities together  with the  prevailing economic  conditions 
dictate that we will operate at lower levels of gearing. In the last 18 months
we have  reduced  debt  by £376m  in  a  controlled and  managed  way,  whilst 
increasing the net asset value of the business by £54m. We intend to continue
this policy of debt  reduction so that  by the end of  2013 our overall  Group 
debt  will  fall  below  £1bn.  At  equivalent  levels  of  value  our  group 
loan-to-value (LTV) at that point will approach 50%.

Once we reach  these targeted  levels we  will consider  further our  dividend 
policy. In the meantime we intend to continue our recent policy of  increasing 
dividends by 5% per annum.

Alongside this debt reduction programme  we plan to remove  5% of costs, on  a 
run rate basis, from across the business by the end of 2013.

Sales

                                  Full Year 2012           Full Year 2011
                                         Sales Profit             Sales Profit

                              Units sold    £m     £m  Units sold    £m     £m
Trading Stock - Sales on             605 113.9   49.6         561 106.5   46.8
vacancy
Development                            -  18.9    3.4           -  22.1   15.1
Sales of tenanted and other          395  68.8   21.0         607  63.2   17.2
Investment Property/CHARM            504  56.8    3.6         517  31.5    1.9
sales
Overall total                      1,504 258.4   77.6       1,685 223.3   81.0



Profit from  sales  of property,  was  £77.6m,  compared to  £81.0m  in  2011, 
generated from gross sales proceeds of £258.4m compared to £223.3m in 2011.



Margins on our normal sales of vacant trading properties in 2012 of 43.6% were
in line with the 44.0% achieved in 2011.



During the year the first sales were generated within our development business
from our Berewood scheme in Hampshire. This is a scheme where we own 460 acres
of land near West Waterlooville representing a pipeline of 2,550 houses to  be 
built out by housebuilders. The scheme is expected to generate sales over  the 
next fifteen years and will be a source of both profit and cash.



Sales of tenanted trading stock  and other sales rose  from £63.2m in 2011  to 
£68.8m in 2012. Sales included £38.7m of tenanted sales, £18.5m from the sale
of high value elements from our central London stock and £7.1m of agricultural
sales.



Sales of investment properties and CHARM were £56.8m (2011: £31.5m) generating
profits of £3.6m (2011: £1.9m).



As at 16 November our total  Group sales pipeline (completed sales,  contracts 
exchanged and  properties in  solicitors' hands)  amounted to  £61.5m with  UK 
normal sales values  4.1% above September  2012 valuations. (£58.7m  as at  18 
November 2011). In addition to this pipeline, and further sales of property as
it becomes vacant, we have  identified potential additional tenanted sales  of 
c.£68m as at 30 September 2012.



Rents

Total net rents in the year amounted to £63m (2011: £62m).



UK Residential net  rental income in  the year increased  to £42.5m from  last 
year's figure  of £38.4m,  assisted by  the strategic  portfolio  acquisitions 
during the previous  year of  HI Tricomm and  the Grainger  Invest LLPs.  This 
represents an annual gross yield of 4.1% (net yield of 3.0%).



The German business delivered net rents, before property management  expenses, 
of €22.8m  (2011: €25.3m)  at an  annual gross  yield of  7.0% (net  yield  of 
4.23%). The decrease is  due to strategic  sales made at the  end of 2011  and 
during 2012 including the sale of our portfolio in Berlin in 2011 for €16m and
sales of Frankfurt property in 2012 for €21m.



Certain assets in the Retirement Solutions portfolio also produce a net rental
income and this amounted to £3.7m in the year (2011: £3.8m).

Fees and Other Income

Gross fee income increased by 45%  to £10.0m (2011: £6.9m) derived from  asset 
and property management  fees from our  co-investment vehicles and  management 
contracts. In addition, the Group earned other income of £1.0m (2011: £1.1m).



The progress seen in the fee earning  element of this business in the year  to 
September 2011,  with the  agreement with  Lloyds Banking  Group to  establish 
G:RAMP, has  continued and  the numbers  of properties  under management  have 
risen,  with  no  requirement  for  Grainger  to  invest  in  this  particular 
arrangement. By 30  September 2012,  G:RAMP had 1,595  units under  management 
and, even more importantly, had sold 1,110 units on behalf of Lloyds since the
start of the agreement.



The UK Residential division generated £0.2m in service charge management  fees 
and £0.8m in sundry other income.



In Retirement Solutions,  management fees  of £1.1m were  earned. These  fees 
relate to  the management  both of  the assets  owned by  our Sovereign  joint 
venture and the third party assets managed under external management contracts
with Sovereign.



During 2011 the Development business was appointed as development partner  for 
the  Aldershot  Urban  Extension  working  with  the  Defence   Infrastructure 
Organisation.  Although  this  scheme  is  at  an  early  stage  it  generated 
management fee income of £0.3m in 2012.



The recently  announced joint  venture in  Germany will  further increase  fee 
generation for the group as Grainger will provide asset management services to
the joint venture.



Asset Performance

Valuations in our UK Residential portfolio were  up 4.8% at the year end  from 
the previous September  compared to  decreases in the  Nationwide and  Halifax 
House Price indices of  1.4% and 1.2%  respectively. This clearly  illustrates 
the specific characteristics of  our property assets and  the value we add  to 
them through expert asset and property management. One of the features of  our 
business, given  its  trading  nature,  is that  carrying  values  are  tested 
throughout the  year  by sales.  Vacant  (normal)  sales were  at  values,  on 
average, 4.5%  above September  2011 vacant  possession valuations.  Selective 
refurbishment works prior to sale can improve returns and when these are taken
into account we have sold at 8.9% above September 2011 vacant possession. The
liquidity of the properties was again demonstrated by the time taken for sale,
measured from  the  date  of  vacancy  to receipt  of  cash,  being  a  slight 
improvement at 98 days (99 days in 2011).



We have  been  extremely  selective  as regards  buying  property  in  the  UK 
residential business in 2012 acquiring 86 units for £13.0m (2011: 1,950  units 
for £402m including  assets acquired  in the  Grainger Invest  and HI  Tricomm 
transactions).



The assets  in  the Retirement  Solutions  portfolio are  more  geographically 
widespread than the UK Residential portfolio and do not benefit from the  bias 
they have towards  London and the  South East. This  geographic difference  is 
reflected in the valuation results for the year, which showed a small increase
of 1.0% in market value, although this is still above the average decrease  of 
1.3% in the Nationwide and  Halifax House Price indices. Retirement  Solutions 
sales were at values, on average, 0.6% above September 2011 vacant  possession 
values.



Overall, combining UK Residential and Retirement Solutions, valuations were up
3.9% from September  2011, and sales  were at values,  on average, 6.1%  above 
September 2011 vacant possession values.



We bought £8.8m of home reversion assets in the year (2011: £14.0m).



In the year ended  30 September 2012  the market value  of the UK  Development 
portfolio increased by  £7.8m after  allowing for  the disposal  of the  first 
tranche of  land at  Berewood. This  increase primarily  relates to  Berewood 
given the greater certainty over values at this scheme after the signing  this 
year of the Section 106 Agreement and the first sales of land with  associated 
infrastructure.



Grainger's equity investment of £41.2m in its fund and Third Party  Management 
division comprises our 21.96% stake in G:res, which is a market rented fund of
1,677 units. G:res  is subject to  a full external  valuation in December  and 
June of each  year and  for the  twelve months ended  30 June  2012 showed  an 
increase in market values of 5.8%, producing an increase in net asset value in
the fund of 18.9% in the year ended 30 September 2012. Operational results  at 
G:res provide  a continuing  insight into  the current  UK residential  rental 
market. Rental increases on  renewals amounted to 4.6%  for the year ended  30 
September 2012 and increases on new lets  for the same period were 8.1%.  Both 
results indicate a continued strengthening of the rental market. The investors
in this  fund voted  to extend  its  duration by  two years  to 2013  and  its 
controlled liquidation  is under  way as  planned. In  2013 the  German  joint 
venture referred to above will form part of this element of the Group.



In summary,  our UK  assets continue  to outperform  the market  indices;  the 
proportion of profit  derived from  rents and  fees has  increased; our  sales 
margins on  normal  sales has  been  maintained;  our net  asset  values  have 
increased and our gearing has reduced.



Andrew R. Cunningham

Chief Executive

22 November 2012



Financial Review

Total shareholder returns in the year  amounted to 26.5%. This comprises  1.85 
pence in dividends received and a movement  from 86.6p to 107.7p in the  share 
price from 30 September 2011 to 30 September 2012.



Our key performance indicators are:

                                                                  2012    2011
Operating profit before valuation movements and  non-recurring £126.4m £126.2m
items (OPBVM)
Recurring Profit                                                £34.6m  £48.3m
(Loss) / Profit before tax                                     £(1.7m)  £26.1m
Gross net asset value per share (pence)                           223p    216p
Triple net asset value per share (pence)                          157p    153p
Excess on sale of normal sales to previous valuation              6.1%    6.7%
Return on capital employed *                                      5.9%    6.5%
Return on shareholder equity **                                   3.8%   11.1%



*Operating profit after net valuation movements on investment properties  plus 
share of results from joint venture/associates plus the movement on the uplift
of trading stock  to market  value as a  percentage of  opening gross  capital 
defined as investment property, financial interest in property assets (CHARM),
investment in joint venture/associates and trading stock at market value.

**Growth in net net net  asset value ('NNNAV') in  the year plus the  dividend 
per share relating to each year as a percentage of opening NNNAV.



Income Performance

The table below  summarises our  Operating Profit  before valuation  movements 
(OPBVM), recurring profit and loss before tax.



                                            2012   2011

                                              £m     £m

                                                    £m
Profit on sale of assets                    77.6   81.0
Net Rents                                   63.5   62.4
Fees/ other income                          11.0    8.0
CHARM                                        7.1    7.1
Overheads /other expenses                 (32.8) (32.3)
OPBVM                                      126.4  126.2
Finance costs, net                        (90.7) (76.3)
JV's and associates                        (1.1)  (1.6)
Recurring Profit before tax                 34.6   48.3
Valuation movements including derivatives (24.6) (14.0)
Non-recurring items                       (11.7)  (8.2)
(Loss)/profit before tax                   (1.7)   26.1



We  have  three  income  streams  within  operating  profit  before  valuation 
movements and  non-recurring items  (OPBVM). These  are sales  of  residential 
properties, rental income and fees or  other income, net of property  expenses 
and overheads and before valuation and non-recurring items. The rebalancing of
the three  sources of  income  has continued  and  operating profit  has  been 
maintained.



In the year, net  rents rose by  1.8% from £62.4m to  £63.5m primarily due  to 
contributions from our acquisitions  in the previous  year of Grainger  Invest 
and HI Tricomm which are both performing in line with expectations.



Profit from sales of  property was £77.6m, compared  to £81.0m 2011. This  was 
generated from gross sales  proceeds of £258.4m compared  to £223.3m in  2011. 
This movement  in  volume  was driven  mainly  by  an increase  of  £11.1m  in 
Retirement Solutions  sales and  also in  value added  and agricultural  sales 
which totalled £25.6m in  2012 (2011: £1.8m). Margins  on normal vacant  sales 
were maintained.



Fees have risen to £10.0m from £6.9m assisted by increased income from G:RAMP.
Other income at £1.0m was similar to last year's figure of £1.1m.



Divisional Analysis of Operating Profit before valuation movements

                                                                        

                  Profit      Management                                  
                 on sale       Fees/other
                           Net     income Overheads/ Total Total
                     of Rents                 Other            2012      2011
                  assets
                      £m    £m         £m         £m              £m        £m
UK Residential      59.8  42.5        1.0      (8.6)            94.7      86.0
Portfolio
Retirement          13.3   3.7        1.1        4.2            22.3      18.7
Solutions
Portfolio
Fund and third        -     -        8.3      (6.4)             1.9       1.8
party management
Development          3.4   0.2        0.5      (1.3)             2.8      14.4
Assets
German               1.1  17.1        0.1      (2.6)            15.7      18.3
Residential
Portfolio
Group and other        -     -          -     (11.0)          (11.0)    (13.0)
OPBVM 2012          77.6  63.5       11.0     (25.7)           126.4
OPBVM 2011          81.0  62.4        8.0     (25.2)                     126.2



Main movements within OPBVM                            £m
2011 OPBVM                                          126.2
Increase in gross rents                               3.5
Increase in residential trading profit                6.5
Increase in gross management fees and other income    3.0
Decrease in interest income from CHARM              (0.2)
Decrease in development trading profit             (11.7)
Increase in property expenses/ overheads/ other     (0.9)
2012 OPBVM                                          126.4



The major movements within OPBVM are:

· An increase of £3.5m in gross rents. A full year's gross rent from  our 
2011 acquisition of  HI Tricomm  and Grainger  Invest has  added £9.1m.  Rent 
increases in the  year, including an  average increase in  regulated rents  of 
12.6%, added £2.0m. These increases were negated by net sales of assets which
resulted in a reduction  of £6.0m, and  a reduction of  £1.6m due to  exchange 
movements on rent in Germany.

·An increase of  £6.5m in  residential trading profits.  This arose  from 
value added sales in UK Residential and additional margin from higher sales of
£11m in Retirement Solutions.

·An increase in gross  management fees and other  income of £3.0m  arising 
primarily from G:RAMP which commenced during the second half of 2011.

·A reduction of £11.7m in development profits.



Interest expense

Net recurring interest charge has increased  by £14.4m from £76.3m in 2011  to 
£90.7m at  30 September  2012. The  interest charge  increased following  debt 
either assumed or raised in connection with the acquisitions of HI Tricomm and
Grainger Invest. These acquisitions were made at the end of the first half  of 
2011. There is  also an increase  in the  average cost of  debt following  the 
refinancing activities of 2011 and our increasing proportion of hedged debt.



Joint ventures and associates

Joint ventures and associates contributed a loss of £1.1m to recurring  profit 
in the year (2011:  loss of £1.6m). Included  within valuation movements is  a 
profit of £4.6m derived  from our share of  the G:res revaluation surplus.  In 
2011 our share of revaluation surplus  was £8.1m which derived from G:res  and 
Grainger Invest  (Grainger  Invest was  wholly  owned by  Grainger  throughout 
2012).

Valuation and non-recurring

The movement in valuation and non-recurring items is analysed as follows:



                                  30 September 2012 30 September 2011

                                                 £m                £m Movement
Gain on acquisition of                            -              16.1   (16.1)
subsidiaries
Goodwill impairment                               -             (2.2)      2.2
Write down of inventories to net              (0.1)             (1.8)      1.7
realisable value
Impairment provisions against                     -             (4.2)      4.2
loans
Valuation gain/(deficit) on                     2.1             (2.0)      4.1
investment property
Write down of investment property             (6.9)                 -    (6.9)
in disposal group
Change in fair value of                      (31.2)            (28.0)    (3.2)
derivatives
Valuation gains on investment
property in joint venture and                   4.6               8.1    (3.5)
associates
Other non-recurring costs                     (4.8)             (8.2)      3.4
                                             (36.3)            (22.2)   (14.1)



In 2011 the gain on acquisition arose from our acquisition of HI Tricomm which
provided a gain of £14.9m, and in the case of Grainger Invest, £1.2m.



Other than  movements on  derivatives the  major  items in  2012 are  a  £2.1m 
valuation gain on our  investment property compared to  a £2m deficit in  2011 
and a £6.9m write down applied to the net assets in Germany being sold as part
of the  Heitman  transaction  to  their  agreed value  (see  note  22  to  the 
accounts).



Fair value movements on derivatives is  a charge of £31.2m. This comprises  a 
£24.6m adverse movement on the yield curve  in the year and £6.6m in  relation 
to the settlement of swap contracts in both the current and prior years.



Including an amount of £21.7m relating to an agreed swap settlement value  and 
£4.8m included in liabilities related to assets held-for-sale, the fair  value 
of swaps at 30 September 2012 is a liability of £171.9m compared to £154.3m at
30 September 2011.



Loss before tax

Having taken account  of interest and  derivative movements and  our share  of 
profits from joint ventures and associates of £3.5m, loss before tax was £1.7m
compared to a profit of £26.1m in 2011.



Tax

The Group has an overall  tax credit of £2.1m.  In achieving this credit,  the 
Group has released certain overseas tax provisions following a  reorganisation 
within the Group.  In addition,  there is a  £1.7m reduction  in deferred  tax 
liabilities relating  to the  assets in  Germany  being sold  as part  of  the 
Heitman transaction.



Earnings per share

Basic earnings per share is a profit of 0.1p (2011: a profit of 9.5p). A  year 
on year comparison is shown below:



                                                         £m Pence per share
2011 Profit/earnings per share                         39.1             9.5
Movements in:
OPBVM                                                   0.2               -
Contribution from joint ventures and associates       (2.8)           (0.7)
Fair value of derivatives                             (3.2)           (0.8)
Revaluation of investment properties                    4.1             1.0
Provisions against trading stock values and loans       5.9             1.5
Gain on acquisition of subsidiaries                  (13.9)           (3.4)
Net interest payable                                 (13.3)           (3.2)
Write down of investment property in disposal group  (6.9)           (1.7)
Taxation and other                                    (8.8)           (2.1)
2012 Profit/ earnings per share                         0.4             0.1



Dividend for the year

After considering the investment  and working capital  needs of the  business, 
the Directors have recommended  a final dividend of  1.37p per ordinary  share 
(2011: 1.30p). This is in addition to  the dividend at the half year of  0.55p 
per ordinary share  (2011: 0.53p) equivalent  by way of  a tender offer).  The 
total dividend for the year will therefore be 1.92p per ordinary share  (2011: 
1.83p), an increase of 4.9%.



Asset Performance

Net asset value

We set out two measurements to enable shareholders to compare our  performance 
year on year.



                                 30 September 2012 30 September 2011        

                                                                      Movement
Gross net assets per share (NAV)               223p              216p     3.2%

- Market value of net assets
per share  before deduction  for 
deferred   tax    on    property 
revaluations     and      before 
adjustments for  the fair  value 
of derivatives
Triple net asset value per share               157p              153p     2.5%
(NNNAV)

-  Gross   NAV   per   share 
adjusted   for   deferred    and 
contingent  tax  on  revaluation 
gains and for the fair value  of 
derivatives



The European Public Real Estate Association ('EPRA') Best Practices  Committee 
has recommended the calculation and use of an EPRA NAV and an EPRA NNNAV.  The 
definitions of these measures are consistent with Gross NAV and Triple NAV  as 
described and shown in this document.



A reconciliation  between the  statutory balance  sheet and  the market  value 
balance sheets for both Gross NAV and NNNAV is set out below.



Reconciliation of Gross NAV to NNNAV

                                                    £m Pence per share
Gross NAV                                          929             223
Deferred and contingent tax                      (120)            (29)
Fair value of derivatives adjustments net of tax (155)            (37)
NNNAV                                              654             157



The major movements in Gross NAV in the year are:-

                                                        £m Pence per share
Gross NAV at 30 September 2011                         900             216
Profit after tax                                         -               -
Revaluation gains                                       67              16
Elimination of previously recognised surplus on sales (47)            (11)
Dividends paid                                         (8)             (2)
Derivatives movement net of tax                         25               6
Others                                                 (8)             (2)
Gross NAV at 30 September 2012                         929             223



The major movements in NNNAV in the year are:

                                                        £m Pence per share
NNNAV at 30 September 2011                             638             153
Profit after tax                                         -               -
Revaluation gains                                       67              16
Elimination of previously recognised surplus on sales (47)            (11)
Dividends paid                                         (8)             (2)
Cashflow hedge reserve net of tax                       10               2
Contingent tax                                           2               1
Others                                                 (8)             (2)
NNNAV at 30 September 2012                             654             157



Market value analysis of property assets



                                           
                                                                            
                                          
               Shown as                                       Investment     
               stock at              Market property/financial interest
                   cost                value          in property assets Total
                         Market value
                     £m adjustment £m     £m                          £m    £m
Residential         953           364  1,317                         843 2,160

Development          70             -     70                           -    70
Total  at   30    1,023           364  1,387                         843 2,230
September 2012
Total  at   30    1,105           344  1,449                         922 2,371
September 2011



Financial resources

We have  reduced net  debt by  a further  £260m in  the year  from £1,454m  to 
£1,194m and  maintained  headroom  at appropriate  levels.  Included  in  the 
reduction is net debt to be transferred to the new joint venture with  Heitman 
of £118m.



The Group  significantly  refreshed and  diversified  its sources  of  finance 
during 2011. A total  of £1.2bn of  new debt was secured  for the purposes  of 
refinancing existing debt and in connection with acquisitions.



Our core group syndicated facility  - with RBS, Lloyds, Barclays,  Nationwide, 
HSBC and Allied Irish  - agreed in  September 2011 and  drawn during the  year 
provides £840m  of  committed  facilities.  Of  this,£606m  matures  in  July 
2016.The balance  of the  facilities  mature in  three stages,  with  £166.5m 
maturing in December 2014,  £7.5m maturing in July  2018 and £60m maturing  in 
July 2020. Given  the cash  generative capabilities  of the  business we  will 
consider  whether  to  repay,  rather   than  refinance,  the  December   2014 
maturity.



Subsequent to  the year-end  we  also refinanced  the  element of  our  German 
operations that were transferred  to the new joint  venture with Heitman.  The 
financing of €164.9m  was achieved  at attractive  interest rates  with a  new 
lender. In the UK  we attracted development finance  of £23m for our  Macaulay 
Road development  scheme in  Clapham again  at competitive  rates. Both  these 
examples evidence our continued  ability to raise  finance for our  activities 
and lenders' confidence in our business model.



As at  30  September 2012,  the  average  maturity of  the  Group's  committed 
facilities was 5.1 years (September 2011: 5.5 years) and the average  maturity 
of the Group's drawn debt was 5.5 years (September 2011: 5.9 years). 



The Group has free cash balances of £26m plus available overdraft of £5m along
with undrawn committed facilities of £117m.  Thus headroom totals £148m as  at 
30 September 2012 (2011: £214m).



The Group's average  interest rate  excluding costs  as at  30 September  2012 
(based on current  Libor/Euribor rates and  on current debt  hedging was  6.0% 
(September 2011: 5.3%).



The Group's average  cost of  debt, including costs,  through the  year to  30 
September was 6.1% (September 2011: 5.4%).



The business has produced £267m of cash from its operating activities  derived 
from net rents  and other  income, property  sales and  other working  capital 
movements net  of  overheads.The largest  outflow  of  cash is  £77m  of  net 
interest.



At 30 September  2012 and taking  into account  the reduction in  net debt  of 
£118m arising from the  Heitman transaction, net debt  levels had fallen  from 
£1,454m at September 2011 to £1,194m which  is a decrease of £260m. Net  debt 
is now £376m lower than eighteen months ago at 31 March 2011 when net debt was
£1,570m.



At 30 September 2012 gross debt was 85% hedged (September 2011: 73%) of  which 
4%  was  subject  to  caps.  This  reduces  to  84%  following  the   Heitman 
transaction.



At the year-end LTV on the core  facility was 48% (September 2011: 52%).  This 
compares to a minimum  required LTV covenant of  75%. Taking into account  the 
reduction in net  debt of  £118m arising  from the  Heitman transaction  Group 
consolidated LTV was 55% (September 2011: 61%) and upon receipt of proceeds on
completion the LTV will fall to 54%.



At 30 September 2012 the  interest cover ratio on  the core facility stood  at 
3.0 times  (September 2011:  3.1 times).This  compares to  an interest  cover 
covenant of 1.35 times.



Given the progress already made and our objective of materially reducing  debt 
and gearing we have set ourselves the specific target of attaining a Group net
debt figure of less than £1bn by the end of 2013.



On the basis  of the Group's  current trading, cash  flow generation and  debt 
reduction the Directors have concluded that  it is appropriate to prepare  the 
Group financial statements on a going concern basis.



Mark Greenwood

Finance Director

22 November 2012

Consolidated income statement (unaudited)

                                                                 2012     2011

                                                                     restated

For the year ended 30 September 2012                     Notes     £m       £m
Group revenue                                              3,4  311.4    296.2
                                                             5
Net rental income                                            5   62.8     62.4
Profit on disposal of trading property                       6   74.0     79.1
Administrative expenses                                      8 (31.0)   (33.1)
Other income                                                 9   11.0      8.0
Other expenses                                              10  (3.4)    (3.8)
Net gain on acquisition of subsidiary                               -     16.1
Goodwill impairment                                                 -    (2.2)
Profit on disposal of investment property                    7    3.0      1.1
Finance income from financial interest in property
assets                                                      16    7.7      7.9
Write down of inventories to net realisable value               (0.1)    (1.8)
Provision for impairment of loans receivable net of
write backs                                                         -    (4.2)
Operating profit before net valuation gains/(deficits)
on investment property                                          124.0    129.5
Net valuation gains/(deficits) on investment property       13    2.1    (2.0)
Write down of investment property in disposal group        22  (6.9)        -
Operating profit after net valuation gains/(deficits) on
investment property                                             119.2    127.5
Change in fair value of derivatives                         20 (31.2)   (28.0)
Finance costs                                                  (95.3)   (82.6)
Finance income                                                    2.1      2.7
Share of profit of associates after tax                     14    4.5      4.4
Share of (loss)/profit of joint ventures after tax          15  (1.0)      2.1
(Loss)/profit before tax                                        (1.7)     26.1
 Tax credit before exceptional item                             2.1      2.8
 Exceptional tax credit                                           -     10.2
 Tax credit for the year                                  19    2.1     13.0
Profit for the year attributable to the owners of the
company                                                           0.4     39.1



Consolidated statement of comprehensive income (unaudited)

                                                                    2012  2011

For the year ended 30 September 2012                         Notes    £m    £m
Profit for the year                                                  0.4  39.1
Actuarial (loss)/gain on BPT Limited defined benefit pension
scheme                                                             (2.0)   1.2
Fair value movement on financial interest in property assets    16 (0.4) (0.3)
Exchange adjustments offset in reserves                            (0.6) (0.9)
Changes in fair value of cash flow hedges                           14.1  13.2
Other comprehensive income and expense for the year before
tax                                                                 11.1  13.2
Tax relating to components of other comprehensive income        19 (2.4) (4.5)
Other comprehensive income and expense for the year                  8.7   8.7
Total comprehensive income and expense for the year
attributable to the owners ofthecompany                            9.1  47.8
Basic earnings per share                                        11  0.1p  9.5p
Diluted earnings per share                                     11  0.1p  9.4p

Included within comprehensive income is £5.0m (2011: £8.8m) relating to
associates and joint ventures accounted for under the equitymethod.

Consolidated statement of financial position (unaudited)

                                                                  2012    2011
As at 30 September 2012                                  Notes      £m      £m
ASSETS
Non-current assets
Investment property                                         13   525.9   819.9
Property, plant and equipment                                      0.8     1.2
Investment in associates                                    14    41.2    34.6
Investment in joint ventures                                15    19.2    23.9
Financial interest in property assets                       16    99.0   102.3
Deferred tax assets                                         19    44.5    42.7
Goodwill                                                           5.3     5.3
                                                                 735.9 1,029.9
Current assets
Inventories - trading property                                 1,023.4 1,105.1
Trade and other receivables                                 17    35.6    18.3
Derivative financial instruments                                     -     0.2
Cash and cash equivalents                                         73.3    90.9
Assets classified as held-for-sale                          22   222.1       -
                                                               1,354.4 1,214.5
Total assets                                                   2,090.3 2,244.4
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings                       18 1,240.1 1,428.0
Trade and other payables                                             -     4.0
Retirement benefits                                                5.8     4.5
Provisions for other liabilities and charges                       0.5     0.6
Deferred tax liabilities                                    19    37.8    47.7
                                                               1,284.2 1,484.8
Current liabilities
Interest-bearing loans and borrowings                       18    27.3   116.7
Trade and other payables                                    21    88.4    76.4
Current tax liabilities                                     19    24.4    24.6
Derivative financial instruments                            20   145.4   154.5
Liabilities associated with assets classified as
held-for-sale                                               22   129.7       -
                                                                 415.2   372.2
Total liabilities                                              1,699.4 1,857.0
Net assets                                                       390.9   387.4
EQUITY
Capital and reserves attributable to the owners of the
company
Issued share capital                                              20.8    20.8
Share premium                                                    109.8   109.8
Merger reserve                                                    20.1    20.1
Capital redemption reserve                                         0.3     0.3
Cash flow hedge reserve                                         (24.5)  (34.4)
Equity component of convertible bond                               5.0     5.0
Available-for-sale reserve                                         3.9     4.1
Retained earnings                                                255.4   261.6
Equity attributable to the owners of the company                 390.8   387.3
Non-controlling interests                                          0.1     0.1
Total equity                                                     390.9   387.4



Consolidated Statement of changes in equity (unaudited)

                                                                  Equity
                                                        Cash   component
                   Issued                    Capital    flow          of Available-                                 
                    share   Share  Merger redemption   hedge convertible   for-sale Retained                  Total
                  capital premium reserve    reserve reserve        bond    reserve earnings Non-controlling equity
                       £m      £m      £m        £m      £m          £m         £m       £m    interests £m     £m
Balance as at
1October2010       20.8   109.8    20.1        0.3  (43.0)         5.0        4.2    228.0             0.1    345.3
Profit for the                                                                                                      
year                    -       -       -          -       -           -          -     39.1               -   39.1
Actuarial gain on
BPT Limited                                                                                                         
defined benefit
pension scheme          -       -       -          -       -           -          -      1.2               -    1.2
Fair value
movement on
financial                                                                                                           
interest in
propertyassets         -       -       -          -       -           -      (0.3)        -               -  (0.3)
Exchange
adjustments                                                                                                         
offset in
reserves                -       -       -          -       -           -          -    (0.9)               -  (0.9)
Changes in fair
value                                                                                                               
ofcashflow
hedges                  -       -       -          -    13.2           -          -        -               -   13.2
Tax relating to
components of
other                                                                                                               
comprehensive
income                  -       -       -          -   (4.6)           -        0.2    (0.1)               -  (4.5)
Total
comprehensive
income and                                                                                                          
expense for
theyear                -       -       -          -     8.6           -      (0.1)     39.3               -   47.8
Purchase of own                                                                                                     
shares                  -       -       -          -       -           -          -    (2.8)               -  (2.8)
Share-based                                                                                                         
paymentscharge         -       -       -          -       -           -          -      2.0               -    2.0
Dividends paid          -       -       -          -       -           -          -    (4.9)               -  (4.9) 
Balance as at                                                                                                       
30September2011    20.8   109.8    20.1        0.3  (34.4)         5.0        4.1    261.6             0.1  387.4
                                                                                                                    
Profit for the                                                                                                      
year                    -       -       -          -       -           -          -     0.4               -    0.4
Actuarial loss on
BPT Limited                                                                                                         
defined benefit                                                                          
pension scheme          -       -       -          -       -           -          -    (2.0)               -  (2.0)
Fair value
movement on
financial                                                                                                           
interest in
property assets         -       -       -          -       -           -      (0.4)        -               -  (0.4)
Exchange
adjustments                                                                                                         
offset in                                                                           
reserves                -       -       -          -       -           -          -    (0.6)               -  (0.6)
Changes in fair
value of                                                                                                           

cash flow hedges        -       -       -          -    14.1           -          -    -               -   14.1
Tax relating to
components of
other                                                                                                               
comprehensive
income                  -       -       -          -   (4.2)           -        0.2      1.6               -  (2.4)
Total
comprehensive
income and                                                                                                          
expense for the
year                    -       -       -          -     9.9           -      (0.2)    (0.6)               -    9.1
Purchase of own                                                                                                     
shares                  -       -       -          -       -           -          -    (0.5)               -  (0.5)
Proceeds from                                                                                                      
SAYE shares             -       -       -          -       -           -          -      0.4               -    0.4
Share-based                                                                                                         
paymentscharge         -       -       -          -       -           -          -      2.1               -    2.1
Dividends paid          -       -       -          -       -           -          -    (7.6)               -  (7.6) 
Balance as at                                                                                                       
30September2012    20.8   109.8    20.1        0.3  (24.5)         5.0        3.9    255.4             0.1  390.9
                                                                                                                    



Consolidated statement of cash flows (unaudited)

                                                                  2012    2011
For the year ended 30 September 2012                     Notes      £m      £m
Cash flow from operating activities
Profit for the year                                                0.4    39.1
Depreciation                                                       0.4     0.6
Net gain on acquisition of subsidiary                                -  (16.1)
Goodwill impairment                                                  -     2.2
Write down of investment property in disposal group        22     6.9       -
Net valuation (gains)/ deficits on investment property      13   (2.1)     2.0
Net finance costs                                                 93.2    79.9
Share of profit of associates and joint ventures         14,15   (3.5)   (6.5)
Profit on disposal of investment property                    7   (3.0)   (1.1)
Provision for impairment of loans receivable net of
write-backs                                                          -     4.2
Share-based payment charge                                         2.1     2.0
Change in fair value of derivatives                               31.2    28.0
Interest income from financial interest in property
assets                                                      16   (7.7)   (7.9)
Taxation                                                    19   (2.1)  (13.0)
Operating profit before changes in working capital               115.8   113.4
Increase in trade and other receivables                         (13.5)   (0.8)
Decrease in trade and other payables                             (3.8)   (4.8)
Decrease in provisions for liabilities and charges               (0.1)   (0.2)
Decrease in trading property                                      78.3    71.7
Cash generated from operations                                   176.7   179.3
Interest paid                                                   (78.1)  (73.1)
Taxation paid                                               19  (12.0)   (4.4)
Net cash inflow from operating activities                         86.6   101.8
Cash flow from investing activities
Proceeds from sale of investment property                    7    48.3    24.6
Proceeds from financial interest in property assets         16    10.6     9.2
Proceeds from redemption of equity units in associate       14       -     0.1
Dividend and loan repayment from joint venture              15     3.5       -
Interest received                                                  0.7     1.9
Proceeds from disposal of interest in subsidiary                     -    17.5
Acquisition of subsidiaries, net of cash acquired                    -  (23.1)
Investment in associates and joint ventures                 15   (0.5)   (2.4)
Acquisition of investment property and property, plant
and equipment                                               13   (5.5)   (5.9)
Net cash inflow from investing activities                         57.1    21.9
Cash flows from financing activities
Proceeds from SAYE options                                         0.4       -
Purchase of own shares                                           (0.5)   (2.8)
Proceeds from new borrowings                                      79.0   220.0
Payment of loan costs                                           (10.5)       -
Settlement of derivative contracts                               (1.2)       -
Repayment of borrowings                                        (215.5) (335.1)
Dividends paid                                              12   (7.6)   (4.9)
Payments to defined benefit pension scheme                       (1.0)   (0.6)
Net cash outflow from financing activities                     (156.9) (123.4)
Net (decrease)/increase in cash and cash equivalents            (13.2)     0.3
Cash and cash equivalents at the beginning of the year            90.9    91.5
Net exchange movements on cash and cash equivalents              (1.8)   (0.9)
Total cash and cash equivalents at the end of the year            75.9    90.9
Cash held in assets classified as held-for-sale             22   (2.6)       -
Cash and cash equivalents at the end of the year                  73.3    90.9



Notes to the Preliminary Announcement of unaudited results



1a.  Basis of Preparation

The Board approved this preliminary announcement on 22 November 2012.

The  financial  information  included  in  this  preliminary  announcement  is 
unaudited and does not constitute the Group's statutory accounts for the years
ended 30 September 2011 or 30 September 2012. Statutory accounts for the  year 
ended 30 September 2011 have been delivered to the Registrar of Companies. The
statutory accounts for the year ended  30 September 2012 will be delivered  to 
the Registrar of Companies following the company's annual general meeting.

The auditors have reported on the 2011 accounts; their report was unqualified,
did not include any references to any  matters by way of emphasis and did  not 
contain statements under section 498 (2) or (3) of the Companies Act 2006.

These financial statements  for the  year ended  30 September  2012 have  been 
prepared under the historical cost convention except for the following  assets 
and liabilities which  are stated  at their fair  value; investment  property, 
derivative financial instruments  and financial interest  in property  assets. 
The accounting  policies  used are  consistent  with those  contained  in  the 
Group's last annual report and accounts for the year ended 30 September 2011.

The financial information included in  this preliminary announcement has  been 
prepared in  accordance with  EU  endorsed International  Financial  Reporting 
Standards ('IFRS'), IFRIC interpretations and those parts of the Companies Act
2006 applicable to companies reporting under IFRS.

1b.   Adoption  of  new and  revised  international  Financial  Reporting 
Standards

New standards and interpretations in the year

At  the  date  ofapproval  of  these  financial  statements,  the   following 
interpretations and  amendments  were  issued,  endorsed by  the  EU  and  are 
mandatory for the group for the first  time for the financial year beginning
1 October 2011.



 Amendments to existing standards

· Amendment to IFRS 1 'First time adoption' was updated to clarify that  a 
first-time adopter that changes its accounting  policies or its use of IFRS  1 
exemptions after  publishing a  set ofIAS  34 interim  financial  information 
should explain those changes  and include the effects  of such changes in  its 
opening reconciliations within the first annual IFRS reporting.

· Amendments to  IFRS 1 'First  time adoption' was  updated to extend  the 
exemption to use a  'deemed cost' arising from  a revaluation triggered by  an 
event such  as  a  privatisation  that  occurred at  or  before  the  date  of 
transition to IFRS, to  revaluations that occur during  the period covered  by 
the first IFRS financial statements.

· Amendments  to IFRS  1  'First time  Adoption'  amends fixed  dates  and 
includes guidance on implementations affected by hyperinflation.

· Amendments to IFRS 1 'First  time adoption' was updated to clarify  that 
entities subject to rate regulation are allowed to use previous GAAP  carrying 
amounts of property, plant and

· equipment or intangible assets as deemed cost on an item-by-item basis.

· Amendments to IFRS 3 'Business  combinations' was updated to extend  the 
application guidance to all share-based payment transactions that are part  of 
a  business  combination,  including  un-replaced  and  voluntarily   replaced 
share-based payment awards.

· Amendments to IFRS 3 'Business combinations' was updated to clarify that
the choice of  measuring non-controlling  interests at  fair value  or at  the 
proportionate share of the acquiree's  net assets applies only to  instruments 
that represent  present ownership  interests and  entitle their  holders to  a 
proportionate share of the net assets  in the event of liquidation. All  other 
components of  non-controlling  interest are  measured  at fair  value  unless 
another measurement basis is required by IFRS.

·Amendments  to  IFRS  7  'Financial  Instruments:  Disclosures'  includes 
changes to promote transparency in the reporting of transfer transactions  and 
improve users' understanding of the  risk exposures of transfers of  financial 
assets.

·Amendments to IFRS 7 'Financial Instruments: Disclosures' was updated  to 
include  multiple  clarifications  related  to  the  disclosure  of  financial 
instruments.

· Amendments to IAS 24  (revised) 'Related party disclosures' was  updated 
to remove the requirement for government related entities to disclose  details 
of all  transactions with  government-related entities  and it  clarifies  and 
simplifies the definition of a related party.

· Amendment to IAS 27 'Consolidated and Separate Financial Statements' was
updated to clarify that the consequential amendments to IAS 21, IAS 28 and IAS
31 following the 2008 revisions to IAS 27 are to be applied prospectively.

· Amendment to IAS 34 'Interim  Financial Reporting' was updated to  place 
greater emphasis on the disclosure principles involving significant events and
transactions, including changes to  fair value measurements,  and the need  to 
update relevant information from the most recent annual report.

   International  Financial Reporting  Interpretations  Committee 
  ('IFRIC') interpretations

·IFRIC 15 'Arrangement  for construction of  real estates' clarifies  when 
IAS 18 'Revenue  Recognition' and IAS 11 'Construction contracts' should be
applied to particular transactions.

· IFRIC 18 'Transfer  of assets from  customers' clarifies the  accounting 
for arrangements  where an  item  of property,  plant  and equipment  that  is 
provided by the customer is used to provide an ongoing service.

· IFRIC 19 'Extinguishing  financial liabilities with equity  instruments' 
clarifies the accounting  when an entity  renegotiates the terms  of its  debt 
with the  result  that the  liability  is extinguished  through  the  creditor 
issuing its own equity instruments to the debtor.

   Amendments to existing interpretations

· Amendment to IFRIC  13 'Customer loyalty programmes'  to clarify the  term 
'fair value' in the context of measuring award credits under customer  loyalty 
programmes.

· Amendment  to IFRIC  14  'Prepayments of  a minimum  funding  requirement' 
applies  only  to  entities  that   are  required  to  make  minimum   funding 
contributions to a defined benefit pension plan.



These standards and amendments to these standards and interpretations have had
no material financial impact on these financial statements.



1c.Group risk factors

As with all  businesses, the Group  is affected by  certain risks, not  wholly 
within our control, which could have a material impact on the Group and  could 
cause  actualresults  to  differ  materially  from  forecast  and  historical 
results. The most significant of these, all of which are macro-economic,  are 
as follows:-



· A negative impact  on Germany and  the UK from  a deterioration of  the 
Eurozone

· Long term flat or negative growth in value of group assets

· Availability of sufficient funds at the right price

· A rapid, cataclysmic decline in house prices.



The principal risks facing  the Group will  be set out in  more detail in  the 
2012 Annual Report and Accounts.



2 Analysis of profit after tax

The results for the years ended 30 September 2011 and 2012, respectively, have
been affected by valuation movements and non-recurring items. The table  below 
provides further analysis  of the  consolidated income  statement showing  the 
results of tradingactivities separately from these other items.



                                   2012                              2011 (restated)
                  Trading Valuation Non-recurring  Total  Trading Valuation Non-recurring  Total
                       £m        £m           £m     £m       £m        £m            £m     £m
Group revenue       311.4         -             -  311.4    296.2         -             -  296.2
Net rental income    63.5         -         (0.7)   62.8     62.4         -             -   62.4
Profit on
disposal of
trading property     74.0         -             -   74.0     79.1         -             -   79.1
Administrative
expenses           (31.0)         -             - (31.0)   (32.3)         -         (0.8) (33.1)
Other income         11.0         -             -   11.0      8.0         -             -    8.0
Other expenses      (1.8)         -         (1.6)  (3.4)        -         -         (3.8)  (3.8)
Net gain on
acquisition of
subsidiary              -         -             -      -        -      16.1             -   16.1
Goodwill
impairment              -         -             -      -        -     (2.2)             -  (2.2)
Profit on
disposal of
investment
property              3.0         -             -    3.0      1.1         -             -    1.1
Finance income
from financial
interest
inproperty
assets                7.7         -             -    7.7      7.9         -             -    7.9
Write down of
inventories
tonetrealisable
value                   -     (0.1)             -  (0.1)        -     (1.8)             -  (1.8)
Provision for
impairment of
loans receivable
net of
write-backs             -         -             -      -        -     (4.2)             -  (4.2)
Operating profit
before net
valuation
gains/(deficits)
on investment
property            126.4     (0.1)         (2.3)  124.0    126.2       7.9         (4.6)  129.5
Net valuation
gains/(deficits)
on investment
property                -       2.1             -    2.1        -     (2.0)             -  (2.0)
Write down of
investment
property in
disposal group         -         -         (6.9)  (6.9)        -         -             -      -
Operating profit
after net
valuation
gains/(deficits)
on investment
property            126.4       2.0         (9.2)  119.2    126.2       5.9         (4.6)  127.5
Change in fair
value of
derivatives             -    (31.2)             - (31.2)        -    (28.0)             - (28.0)
Finance costs      (92.8)         -         (2.5) (95.3)   (79.0)         -         (3.6) (82.6)
Finance income        2.1         -             -    2.1      2.7         -             -    2.7
Share of profit
of associates
after tax           (0.1)       4.6             -    4.5      0.2       4.2             -    4.4
Share of
(loss)/profit of
joint ventures
after tax           (1.0)         -             -  (1.0)    (1.8)       3.9             -    2.1
(Loss)/profit
before tax           34.6    (24.6)        (11.7)  (1.7)     48.3    (14.0)         (8.2)   26.1
Tax                 (6.3)       6.7           1.7    2.1    (7.9)      10.7          10.2   13.0
Profit after tax     28.3    (17.9)        (10.0)    0.4     40.4     (3.3)           2.0   39.1



3. Segmental information

IFRS 8  'Operating  Segments'  (IFRS  8) requires  operating  segments  to  be 
identified based upon the  Group's internal reporting  to the Chief  Operating 
Decision Maker ("CODM") so that the CODM can make decisions about resources to
be allocated to segments  and assess their performance.  The Group's CODM  is 
the Chief Executive Officer.



The Group  has  identified five  segments  and is  treating  all of  these  as 
reportable segments. The segments are: UK Residential; Retirement  Solutions; 
Fund and  third  party management;  UK  and European  development  and  German 
Residential. The Group has a segment director responsible for the performance
of each of these five segments and the Group reports key financial information
to the CODM on the basis of these five segments. Each of these five  segments 
operates within the different part of the overall residential market.



The title  "All other  segments" has  been  included in  the tables  below  to 
reconcile the segments to the figures reviewed by the CODM.



The key operating performance measure  of profit or loss  used by the CODM  is 
the trading profit or  loss before valuation gains  or deficits on  investment 
property and excluding all revaluation and non-recurring items (OPBVM) as  set 
out in Note 2. The CODM reviews by segment two key balance sheet measures  of 
net asset value. These are Gross Net Value and Triple Net Asset Value.



2012 Income statement

                                          Fund and
                                             third     UK and                  All
                          UK Retirement      party    European      German    other
(£m)             residential  solutions management development residential segments  Total
Group revenue
Segment
revenue-external       211.4       35.5        8.3        19.6        36.6        -  311.4
Net rental
income                  42.5        3.7          -         0.2        17.1        -   63.5
Profit on
disposal of
trading property        57.6       12.7          -         3.4         0.3        -   74.0
Administrative
expenses               (8.6)      (2.9)      (4.6)       (1.3)       (2.6)   (11.0) (31.0)
Other income and
expenses                 1.0        1.1        6.5         0.5         0.1        -    9.2
Profit on
disposal of
investment
property                 2.2          -          -           -         0.8        -    3.0
Finance income
from financial
interest in
property assets            -        7.7          -           -           -        -    7.7
Operating profit
before net
valuation
deficits
oninvestment
property                94.7       22.3        1.9         2.8        15.7   (11.0)  126.4
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