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30 April 2009        

RUGBY ESTATES PLC

Final Results for the year ended 31 January 2009

Rugby Estates Plc ('Rugby'/ 'Group'/ 'Company'), the property and asset management group, today announces results for the year ended 31 January 2009.

Highlights:

• Loss before tax £15.8 million (31 January 2008: £5.8 million profit), due largely to unrealised losses on the property portfolio and impairment losses on co-investments. Group profit before unrealised items was £2.7 million;

• Triple net assets per share 371p (31 January 2008: 498p);

• Cash balances of £10.9 million and no borrowings 

• Ongoing focus on the growth of Rugby Asset Management, with its low capital requirements and an ongoing reduction in the capital employed in direct property holdings; 

• Following completion of a strategic review in December, the Company intends to return surplus cash of 50p per share to shareholders shortly;

David Tye, Chairman, commented:

'In a year of significant volatility in both financial and real estate markets, Rugby has focussed on delivering value to its shareholders. Our efficient management structure and financial strength is enabling us to reshape the business and return cash to shareholders. Following our strategic review, we are now seeking opportunities to grow the Rugby Asset Management brand through the addition of third party mandates and the creation of new revenue-generating business streams.'  

For further information:-

David Tye, Chairman	Rugby Estates	020 7016 0050
Andrew Wilson, Chief Executive	Rugby Estates
		www.rugbyestates.plc.uk
Stephanie Highett / Dido Laurimore/ Rachel Drysdale	Financial Dynamics	020 7831 3113

 

Simon Bennet/ Jeremy Porter	Fairfax IS PLC	020 7598 5368

  CHAIRMAN'S REVIEW 

Results

As a consequence of the unprecedented falls in the market values of commercial properties over the past 18 months, I have to report a net loss before taxation of £15.8 million for the year ended 31 January 2009 (2008: profit of £5.8 million). The principal contributors to this loss were a write-down of the property portfolio of £11.2 million and impairment losses on the Group's co-investments of £7.3 million. The Group's profit before these unrealised items ('revenue profit') was £2.7 million (2008: £11.1 million).

Triple net assets per share ('NNNAPS') at 31 January 2009, based on the Group's underlying share of the estimated net assets of co-investment vehicles, were 371p (2008: 498p). This figure is calculated on a basis which is consistent with the corresponding figures reported in prior years. Under IFRS our two quoted vehicles, O Twelve Estates Limited ('O Twelve') and Rugby Estates Investment Trust Plc ('REIT Plc'), are carried in the balance sheet at their respective share prices. This year, for the first time, a downward adjustment has been made to the balance sheet carrying value of our holding in ING Covent Garden Limited Partnership ('CGLP') to reflect the lack of liquidity and uncertainty as to when property values will stabilise. NNNAPS calculated on the balance sheet value, rather than on share of underlying net assets, of these vehicles was 354p (2008: 480p).

The property market is experiencing a once in a lifetime correction, deeper and more far reaching than any other property downturn. From the peak of the market in June 2007 to January 2009, a period of just 19 months, the IPD All Property Monthly Index recorded a 38% decline in capital values, of which 28% was in the year under review. In the last property downturn of any significance, October 1989 to June 1993, a period of 44 months, the fall was just 27%. 

As we reported in the announcement of 11 December 2008, the Board believes that, with its small capital base, Rugby will be better placed to enhance shareholder value by using the expertise of its highly focused management team to develop further its successful asset management business and reduce the capital employed in direct property holdings. The Group's directly owned property portfolio will continue to be managed to maximise net rental income and, in due course, capital receipts through disposals. The Group's key focus will be to grow its asset management business, which has relatively low capital requirements, under the Rugby Asset Management ('RAM') brand. RAM currently manages the portfolios of O Twelve, REIT Plc and CGLP.

The market value of our total portfolio at 31 January 2009 was £70 million (2008: £93 million). This comprises £46 million (2008: £59 million) of directly held property and £24 million (2008: £34 million) attributable to our share of the property portfolios held by our co-investment vehicles. 

Rugby Capital 

Rugby Capital is the division of the Group which deals with our directly-owned property portfolio. Rugby Capital made one acquisition and one disposal during the period. At the start of the year a retail holding in Maidenhead was acquired for £2.2 million. In the second half year, we sold a development site in Chelmsford for £2.4 million, crystallising a profit of £0.9 million since its acquisition in 2007.

Rugby Capital's total portfolio return for the year, as calculated by the directors pending receipt of the analysis from IPD, was minus18.0%, comprising minus 24.6% capital reduction and 6.6% income return. The corresponding figures for the IPD annual index for 2008 for all properties were minus 22.1%, minus 26.3% and 5.6% respectively. 

The market value of our directly-owned portfolio as at 31 January 2009 was £46 million (2008: £59 million), of which 62% were industrial properties, 33% were offices and 5% was mixed-use office/retail. South east England including London accounted for 46% of capital value with 27% in the Midlands, 18% in northern England and 9% in the south west.

Since 31 January 2009, a vacant office property in Birmingham and part of our holding in Bridgwater have been sold for £1.3 million.

Rugby Asset Management 

Rugby Asset Management is the division of the Group which deals with our co-investment and asset management activities. 

Fee income for the year increased by 5% to £4.2 million (2008: £4.0 million), reflecting a full year's contribution from REIT Plc which was established in 2007. Fee income is expected to reduce next year as a result of falling property values and following the change in the management fee arrangements for O Twelve which became effective from 1 April 2009.

In view of market conditions, transactions on behalf of co-investment vehicles were modest, with a total of £15 million of disposals in two transactions. 

In common with property sector equities generally, the share prices of REIT Plc and O Twelve fell sharply during the year and continue to trade at substantial discounts to net asset value. These reductions in share price, although unrealised, have given rise to a charge to the income statement for the year of £4.3 million. The carrying value of our investment in CGLP fell by £4.7 million to £2.0 million. The original cost of this investment was £5.0 million; accordingly £1.7 million has been charged direct to reserves and £3.0 million to the income statement. The reduction in the Group's share of the estimated underlying net assets of these co-investments in the year was approximately £9.4 million.

At 31 January 2009, our three co-investment funds held approximately £380 million of property assets. Our target over the next few years is to achieve £1 billion of assets under management. This will be achieved primarily through the establishment of new co-investment vehicles.

Financing

During the year, the Group repaid all of its outstanding borrowings. Cash balances at 31 January 2009 amounted to £10.9 million, of which £10.4 million was freely available to the Group. At 31 January 2008, the Group had total debt of £15m which was matched by cash balances of £15 million. The Company intends to return surplus cash to shareholders, subject to working capital requirements, and it is not expected that the Group will take on any material borrowings in the foreseeable future.

Personnel

The adverse market conditions, the very low level of transactional activity, which is expected to continue for at least the next year, and the decision to wind down Rugby Capital's directly-owned portfolio have necessitated a thorough review of overheads and staffing levels. As a consequence, in the last few months of the year a redundancy programme was implemented with the result that the total number of employees, including executive directors, has been reduced from 21 to 13. The office space occupied by the Group's staff at Farm Street has been reduced accordingly and is being sublet. With effect from 1 April 2009, the Executive Chairman, Chief Executive and Finance Director have agreed to reductions in their basic salaries of  20%, 20% and 13% respectively.

The Board expresses it thanks and best wishes for the future to our former directors and employees. 

  

Dividend

An interim dividend in respect of the year of 3.8p per share was paid on 27 November 2008.

On 11 December 2008, following a strategic review, the Board announced its intention that the Company should make a return of cash to shareholders of approximately 50p per share. The Board intends to despatch a circular to shareholders convening a General Meeting to consider measures to enable this as soon as practicable. Subject to both shareholder and Court approval, the Company intends to make a return of cash of 50p per share. It is intended that this, and subsequent returns of capital as the Rugby Capital properties are sold, will be in place of the half yearly dividends which have historically been paid.

Future Prospects

Whilst we have not yet seen a major reduction in tenant demand, the global economy is still suffering from the effects of the banking crisis and is now largely in recession. 

Our immediate priority continues to be to protect shareholder value. To date this has been achieved by the de-gearing of our balance sheet, largely accomplished before the financial crisis, which has greatly mitigated the impact of falling property values on shareholders' funds, and by building up a substantial net cash position. Our focus is on maintaining a positive cash flow from our asset management business and from our directly-owned portfolio. 

With interest rates at their current levels and likely to stay low for some time, and other traditional investment areas yielding low or uncertain returns, property as an investment asset class is beginning to look an interesting play on a medium term view. The gap between high yields and low interest rates should create wider margins for both banks and investors, leading to a stabilisation in capital values and increasing market activity The key uncertainty, of course, is the depth and length of the economic recession. The risk for 2009 and beyond is that, whilst there is a general consensus that yields have little further to drift, the downward trend in capital values could be maintained by declining rental values, increasing voids and an increasing number of tenants facing difficulties in meeting their financial commitments. To date, across the portfolios we manage, tenant default has been limited and we are seeing tenant demand for those units which do become vacant, albeit lettings are taking longer to complete and greater incentives are required.

Against this backdrop, there is every reason to believe that, with our management expertise, in-depth market knowledge, ability to source and execute transactions and our track record, the Group has a promising future as a property-based asset manager. 

Following our strategic review, the Directors intend to realise the value of Rugby Capital's portfolio through sales over the next three to five years. However, since the year end property capital values generally have continued to fall  and  it is not possible to forecast with any degree of confidence where the bottom of the market will be, nor the time scale and extent of any recovery. The Directors do not consider there to be any need to dispose of properties in the next year and the planned disposal period is intended to allow time for market conditions to stabilise before seeking to make substantial sales. Individual sales of properties will be made as specific opportunities arise. Strategic flexibility will be essential in what may remain a rapidly changing business environment.

Subject to the needs of the asset management business, which is not expected to be capital intensive, the capital released from property disposals will be returned to shareholders in as tax-efficient a manner as possible. This will leave the Group as an earnings-focused business without the drawback of the substantial discount of share price to net assets which has traditionally dogged the quoted property sector, particularly for smaller companies.

DAVID TYE

Chairman

30 April 2009

  BUSINESS AND FINANCIAL REVIEW 

The extraordinary adverse market conditions have meant that the Group's principal financial key performance indicators (KPIs) have been negative for the year. For measuring performance at Group level these are:

• profit or loss before tax, which was a loss for the year of £15.8 million, against a profit of £5.8 million last year;

• change in triple net assets per share (NNNAPS), which reduced by 26% to 371p (2008: 498p); and

• return on net assets (RONA), which was minus 23% for the year (2008: plus 0.4%).

NNNAPS takes into account the market value of properties (before deducting any selling expenses), uncrystallised tax liabilities, the Group's share of the estimated underlying net assets of co-investment vehicles and the effect of share schemes.  The calculation of NNNAPS is set out in note 10. RONA is measured as the increase in diluted NNNAPS plus dividends expressed as a percentage of diluted NNNAPS at the start of the year. 

Rugby Capital

Rugby Capital is the division of the Group which deals with the directly-owned property portfolio. Rugby Capital made one acquisition and one disposal during the period. At the start of the year a retail holding in Maidenhead was acquired for £2.2 million. In the second half year, we sold a development site in Chelmsford for £2.4 million, crystallising a profit of £0.9 million since its acquisition in 2007. Two further disposals in Birmingham and Bridgwater, which realised £1.3 million, have been made since the year end.

The Group's directly-owned property portfolio comprises 124 lettable units in 24 properties which are let to 87 tenants. The market value of this portfolio as at 31 January 2009 was £46 million (2008: £59 million), of which 62% were industrial properties, 33% were office and 5% was mixed-use office/retail. South east England including London accounted for 46% of capital value with 27% in the Midlands, 18% in northern England and 9% in the south west.

The current annual rental income from the directly-owned portfolio as at 31 January 2009 was £3.8 million. The estimated rental value ('ERV') was £4.5 million, of which vacant units accounted for 10%, which is the current average void rate for commercial property generally. However, the sale of a vacant property in Birmingham since the year end has reduced the void rate to 6%. Industrial uses accounted for 57% of ERV, with office use accounting for 40% and retail use 3%. Excluding income from subletting the Group's own offices, gross rental income for the year under review was £3.7 million and net income after direct expenses was £3.4 million. Fifty four per cent of rental income is from leases expiring within five years, with 23% from leases with between five and ten years to expiry and 23% from leases with more than ten years unexpired.

The KPI for the performance of our directly owned property portfolio is total portfolio return. We

have calculated this for our directly owned portfolio at minus 18.0% for the year, compared with IPD's all property total return for 2008 of minus 22.1%. 

The Directors intend to realise the value of Rugby Capital's portfolio through sales over the next three to five years. Since the year end, property capital values generally have continued to fall. It is not possible to forecast with any degree of confidence where the bottom of the market will be, nor the time scale and extent of any recovery. The estimated net realisable value of properties held as inventory at the balance sheet date has been based on valuations of the properties as at that date. The Directors do not consider there to be any need to dispose of properties in the next year and the planned disposal period is intended to allow time for market conditions to stabilise before seeking to make substantial sales. Individual sales of properties will be made as specific opportunities arise. 

Rugby Asset Management

Rugby Asset Management is the division of the Group which manages our co-investing asset management activities. RAM's principal appointments as Property Adviser are:

Rugby Estates Investment Trust Plc ('REIT Plc')

REIT Plc's objective is to assemble a portfolio of investment properties in the UK principally through the acquisition of privately owned property investment companies.  REIT Plc raised £50 million of new equity and its shares commenced trading on the London Stock Exchange on 15 May 2007. 

REIT Plc successfully achieved its initial objectives of converting to Real Estate Investment Trust ('Reit') status, which took effect from 1 January 2008, and establishing its initial portfolio. Acting on behalf of REIT Plc, in 2007 RAM identified, negotiated and managed the acquisition of three private property companies. All of the companies acquired had significant latent tax liabilities which were extinguished once Reit status was achieved. This tax arbitrage worked to the advantage of both REIT Plc and the owners of the private companies and was reflected in the price agreed. 

The substantial falls in property values in 2008 have reduced, but not necessarily eliminated, the latent tax liabilities in property companies generally and the owners of the long-established, lowly geared private companies which are REIT Plc's acquisition targets are not willing vendors in current conditions. Accordingly, it is not expected that any transactions, whether corporate or in direct property holdings, will be undertaken until there is a significant degree of stabilisation in both property and financial markets. This is unlikely to be seen until 2010. Nevertheless REIT Plc's proven business model remains sound and we expect to be able to identify further corporate acquisitions for REIT Plc when a more favourable environment returns.

At 31 December 2008, REIT Plc held a diversified portfolio of 34 properties let to 124 tenants with a valuation of £60.3 million. Net assets per share at that date were 64p. Applying the IPD monthly all property capital value index movement for January 2009 of minus 3.0% gives the Group's share of REIT Plc's estimated underlying net assets as at 31 January 2009 of £3.0 million, which is £1.7 million more than the Group's balance sheet value of £1.3 million based on the share price as at 31 January 2009 of 27p. 

The Group holds 4,990,200 shares in REIT Plc, representing 8.47% of its issued share capital.

O Twelve Estates Limited ('O Twelve')

In 2005, we conceived the idea of a focused investment fund to take advantage of real estate opportunities to the east of London arising as a result of the 2012 Olympic Games and the major regeneration and infrastructure initiatives taking place in the Thames Gateway area. In March 2006, O Twelve raised £122.5 million of new equity and its shares commenced trading on AIM. RAM is Property Adviser to O Twelve and the Group holds a 5.46% equity interest.

Following the acquisition programme implemented by RAM in 2006 and 2007, O Twelve has now assembled a balanced portfolio of 22 properties across the retail, industrial, office and residential sectors in its target area. 

Notwithstanding the adverse market conditions generally, the rationale for the creation of O Twelve Estates continues to be soundly based.  The implementation of regeneration projects, particularly in and around Stratford with its knock-on effect on surrounding areas, is helping to maintain occupier demand and rental values.  O Twelve's target area is still relatively under-researched compared to other areas of London and, coupled with the regeneration initiatives currently in progress, promises to be attractive to both tenants and investors once market conditions stabilise. 

At 30 September 2008, the latest date for which O Twelve has announced results, the portfolio was valued at £233 million and net asset value per share was 55p. Applying the IPD monthly all property capital value index movement for October 2008 to January 2009 of minus 17.5%, and also taking into account the estimated adverse movement in the fair value of O Twelve's fixed rate debt over that period, gives the Group's share of O Twelve's estimated underlying net assets as at 31 January 2009 of £0.7 million, which is £0.4 million more than the Group's balance sheet value of £0.3 million based on the share price as at 31 January 2009 of 5p. 

In its interim results for the 6 months ended 30 September 2008, which were published on 13 December 2008, O Twelve reported it was probable that at some point it would be in breach of its banking covenants and that RAM, acting on behalf of the Board of O Twelve, is maintaining a close dialogue with the lenders with the expectation that a sustainable solution to minimise the risk of future loan covenant breaches will be achieved.

On 17 February 2009, the Group announced that it had agreed to reduce its management fee to O Twelve from 1.0% to 0.6% per annum of gross property asset value and that O Twelve had agreed not to exercise its right to terminate the agreement as a result of failure to achieve the minimum performance target of 5% per annum growth in net assets per share (with dividends added back) for the period ending 31 March 2009. The minimum performance target will next be tested for the three years to 31 March 2012 with net assets per share at 31 March 2009 deemed to be 50p. Changes to the basis of calculation of any future performance fees were also agreed.

ING Covent Garden Limited Partnership ('CGLP')

RAM has been Property Adviser to CGLP since its creation in March 2002 and the Group holds a 6.46% interest.

Office and retail rental values in central London, including Covent Garden, have fallen significantly in the past year. However, tenant demand, especially for smaller office suites, is still positive and CGLP's portfolio void rate currently stands at just over 3% of ERV, which compares favourably to a wider void rate for London WC2 of just under 7%. Lease renewals on expiry and new lettings are generally for shorter terms and higher levels of tenant incentive are required than in recent years. A sale during the year realised £10 million. The major mixed-use redevelopment at St Martins Lane and New Row is due to be completed in late 2009. CGLP's property portfolio was valued at £135 million as at 31 December 2008 and £125 million as at 31 March 2009. 

When established in 2002, CGLP was intended to have a seven year term. However, it would not be in investors' best interests to attempt major sales in present conditions and an extension of the life of the partnership is presently under consideration. If this is approved by investors, RAM expects that its management appointment will be extended accordingly.

The Group's estimated share of CGLP's net assets as at 31 January 2009 (after applying the IPD monthly capital value index for January of minus 3.0% to CGLP's audited accounts as at 31 December 2008) was £2.8 million. Taking into account the lack of liquidity for the Group's minority partnership interest and the uncertain market conditions, the Directors consider the best estimate of the fair value of the Group's interest as at 31 January 2009 to be £2 million.

Fee Income

Fee income for the year increased by 5% to £4.2 million (2008: £4.0 million), reflecting a full year's contribution from REIT Plc. Fee income is expected to reduce next year as a result of falling property values and following the change in the management fee arrangements for O Twelve which became effective from 1 April 2009.

Total Portfolio

At 31 January 2009, the Group's total portfolio, including our attributable share of properties held by co-investment vehicles, was £69.8 million (31 January 2008: £92.6 million). This comprises:

• £46.0 million (2008: £58.5 million) being the Group's directly-owned portfolio which was valued as at 31 January 2009;

• £8.4 million (2008: £12.6 million) being the Group's 6.46% share of CGLP's portfolio valuation as at 31 December 2008, adjusted for market indexation;

• £10.5 million (2008: £14.6 million) being the Group's 5.46% share of O Twelve's portfolio valuation as at 30 September 2008, adjusted for market indexation; and

• £4.9 million (2008: £6.9 million) being the Group's 8.47% share of REIT Plc's portfolio valuation as at 31 December 2008, adjusted for market indexation. 

On the basis of ERV, 49% of the total portfolio is in the industrial sector, 40% in offices and 11% in retail. By capital value, 37% is located in London, 25% elsewhere in south east England, 18% in the Midlands, 13% in northern England, and 7% in the south west. 

Financing

During the year, the Group repaid all of its outstanding borrowings. Cash balances at 31 January 2009 amounted to £10.9 million, of which £10.4 million was freely available to the Group. At 31 January 2008, the Group had total debt of £15 million which was matched by cash balances of £15 million. The Company intends to return surplus cash to shareholders, subject to working capital requirements, and it is not expected that the Group will take on any material borrowings in the foreseeable future.

Principal Risks and Uncertainties

Investment and financial markets have not yet stabilised and property values may decline further in the foreseeable future. The UK and many global economies are in recession, which is likely to increase the risk of tenant default. These factors increase the risk that our co-investment vehicles, which all have net bank borrowings, may breach loan covenants or have difficulty in arranging additional or alternative financing. This in turn would adversely affect the value of the Group's holdings in those vehicles and future management fee income. 

The recession may adversely affect the rental income from and the capital value of the Group's directly-owned properties. This in turn would reduce the amount of cash available to be returned to shareholders, or delay the realisation period beyond the three to five years currently expected.

Lack of investor appetite for managed property funds may make growth of the Group's asset management business difficult to achieve. Competitive pressures on management fees may inhibit the profitability of the asset management business.  

Future Prospects

Our strategy is to maximise shareholder value by focusing on asset management as the driver of future value and by returning to shareholders the cash realised through the disposals of directly held properties.

ANDREW WILSON                  STEPHEN JONES

Chief Executive                            Finance Director

30 April 2009

  

GROUP INCOME STATEMENT			Year ended  31 January 2009		Year ended  31 January  2008
	Notes		£'000		£'000
Sales of properties			2,400		29,829
Rental income			3,852		3,622
Fees receivable			4,213		3,992
Revenue	3		10,465		37,443
Direct costs of:
Sales of properties			(1,487)		(18,635)
Net realisable value adjustment to inventory			(11,178)		(1,355)
Rental income			(415)		(534)
Fees receivable			(24)		(54)
Direct costs			(13,104)		(20,578)
Income from investments			163		129
Administrative expenses:
- ongoing			(6,170)		(6,928)
- unrealised impairment losses on financial assets			(7,320)		(3,989)
Share of post tax results of associates accounted for using the equity method			-		(283)
Finance costs			(829)		(1,322)
Finance income			991		1,314
(Loss)/profit before unrealised impairment losses on financial assets			(8,484)		9,775
Unrealised impairment losses on financial assets			(7,320)		(3,989)
(Loss)/profit before taxation	3		(15,804)		5,786
Taxation			687		(3,040)
(Loss)/profit for the year attributable to equity shareholders			(15,117)		2,746
Basic (loss)/ earnings per share	5		(89.7)		16.3p
Diluted (loss)/earnings per share	5		(89.7)		16.3p

GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE 

									Year ended  31 January  2009	Year ended  31 January  2008
									£'000	£'000
Fair value gains and losses on financial assets									(1,725)	(1,464)
(Loss)/profit for the year									(15,117)	2,746
Total recognised income and expense for the year attributable to equity shareholders									(16,842)	1,282

GROUP BALANCE SHEET
				31 January  2009				31 January  2008
		Notes		£'000				£'000
Non-current assets
Investment in associates		6			51			51
Available for sale financial assets		6			3,682			12,727
Total co-investments					3,733			12,778
Property, plant, equipment and motor vehicles					363			443
Receivables					1,194			1,147
Deferred tax assets					-			409
Total non-current assets					5,290			14,777
Current assets
Property inventories		7			44,108			54,106
Trade and other receivables					1,366			18,293
Current tax assets					1,114			-
Cash and short term deposits					10,862			15,129
Total current assets					57,450			87,528
Total assets					62,740			102,305
Current liabilities
Trade and other payables					2,757			6,352
Income tax payable					-			1,734
Financial liabilities - interest-bearing borrowings					-			13,668
Total current liabilities					2,757			21,754
Non-current liabilities
Financial liabilities - interest-bearing borrowings					-			1,382
Deferred taxation					18			-
Total non-current liabilities					18			1,382
Total liabilities					2,775			23,136
Net assets		3			59,965			79,169
Equity
Called up share capital					3,427			3,427
Own shares - held for treasury					(709)			(709)
- held for AESOP					(222)			(234)
Share premium account					39,370			39,370
Capital redemption reserve					1,504			1,504
Unrealised gains and losses					-			1,725
Retained earnings					14,912			32,681
LTIP reserve					1,683			1,405
Shareholders' equity		9			59,965			79,169

  

GROUP STATEMENT OF CASH FLOWS 

			Year ended 31 January 2009	Year ended 31 January 2008
		Notes	£'000	£'000
Cash flows from operating activities before changes in  working capital		11	(7,612)	11,009
Decrease/(increase) in property inventories			9,998	(10,883)
Decrease/(increase) in receivables			16,842	(15,108)
(Decrease) in payables			(3,491)	(404)
Cash generated from/(used in) by operations			15,737	(15,386)
Income from investments			179	136
Finance costs			(835)	(1,234)
Finance income			1,013	1,391
Tax paid			(1,734)	(3,468)
Cash inflow/(outflow) from operating activities			14,360	(18,561)
Cash flows from investing activities
Purchase of interests in financial assets			-	(5,991)
Loans to associates repaid			-	1,847
Dividends received from associates			-	141
Purchase of property, plant, equipment and motor vehicles			(37)	(98)
Sale of property, plant, equipment and motor vehicles			38	-
Cash inflow/(outflow) from investing activities			1	(4,101)
Cash flows from financing activities
Issue costs of borrowings paid			-	(4)
Borrowings repaid			(15,148)	(3,537)
Redemption of own shares			-	(407)
Purchase of own shares for treasury			(1,324)	(114)
Purchase of own shares by AESOP			(45)	(146)
Equity dividends paid			(2,111)	(1,710)
Cash outflow from financing activities			(18,628)	(5,918)
Net decrease in cash and cash equivalents			(4,267)	(28,580)
Cash and cash equivalents at beginning of period			15,129	43,709
Cash and cash equivalents at end of period			10,862	15,129

  NOTES TO THE FINANCIAL STATEMENTS

1. Status of Financial Information

The financial information set out in this announcement is abridged and does not constitute the Company's consolidated financial statements for the year to 31 January 2009 but is derived from those financial statements. The financial statements for the year ended 31 January 2009 will be delivered to the Registrar of Companies following the Company's annual general meeting.  The auditors have reported on those financial statements; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under Section 237(2) or (3) of the Companies Act 1985.

The comparative financial information for the year ended 31 January 2008 was derived from information extracted from the annual report and accounts for that period, which was prepared under IFRS and which has been filed with the UK Registrar of Companies. The auditors have reported on those IFRS accounts, their report was unqualified and did not contain statements under sections 237(2) or (3) of the Companies Act 1985.

2. Basis of Preparation

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 January 2009 and applied in accordance with the Companies Act 1985. The Group's financial statements are also consistent with International Financial Reporting Standards as issued by the IASB.

The financial statements are prepared using historical cost, except that investments and derivative financial instruments are stated at fair value.

 

3. Segmental Analysis

The Group operates in two principal business segments. Rugby Capital is responsible for the Group's directly owned property trading and development activities. Rugby Asset Management is responsible for the group's co-investment and asset management activities. The Group does not operate outside the United Kingdom.

Year ended 31 January 2009		Rugby Capital	Rugby Asset Management	Unallocated items	2009
		£'000	£'000	£'000	£'000
Income Statement
Sale of properties		2,400	-	-	2,400
Rental income		3,852	-	-	3,852
Fees receivable		-	4,213	-	4,213
Revenue		6,252	4,213		10,465
Profit on sales of properties		913	-	-	913
Net realisable value adjustment to inventory		(11,178)	-	-	(11,178)
Net rental income		3,437	-	-	3,437
Income from investments		-	163	-	163
Net fees receivable		-	4,189	-	4,189
Administrative expenses		-	-	(6,170)	(6,170)
Finance costs		(824)	(5)	-	(829)
Finance revenue		-	47	944	991
Unrealised impairment losses on financial assets		-	(7,320)	-	(7,320)
Loss before taxation		(7,652)	(2,926)	(5,226)	(15,804)
31 January 2009		Rugby Capital	Rugby Asset Management	Unallocated items	2009
		£'000	£'000	£'000	£'000
Balance Sheet
Investment in associates		-	51	-	51
Financial assets		-	3,682	-	3,682
Property, plant, equipment and motor vehicles		-	-	363	363
Receivables-non current		1,194	-	-	1,194
Property inventories		44,108	-	-	44,108
Receivables-current		657	559	150	1,366
Current tax assets		-	-	-	1,114
Cash and short term deposits		-	-	10,862	10,862
Current liabilities		(2,236)	(10)	(511)	(2,757)
Non-current liabilities		-	-	(18)	(18)
Net assets		43,723	4,282	11,960	59,965

  

Other Segment information		Rugby Capital	Rugby Asset Management	Unallocated items	2009
		£'000	£'000	£'000	£'000
Additions to property, plant, equipment and motor vehicles		-	-	37	37
Depreciation		-	-	72	72

Year ended 31 January 2008					Rugby Capital	Rugby Asset Management	Unallocated items	2008
					£'000	£'000	£'000	£'000
Income Statement
Sale of properties					29,829	-	-	29,829
Rental income					3,622	-	-	3,622
Fees receivable					-	3,992	-	3,992
Revenue					33,451	3,992		37,443
Profit on sales of properties					11,194	-	-	11,194
Net realisable value adjustment to inventory					(1,355)	-	-	(1,355)
Net rental income					3,088	-	-	3,088
Income from investments					-	129	-	129
Net fees receivable					-	3,938	-	3,938
Share of post tax results of associates					-	(283)	-	(283)
Administrative expenses					-	(29)	(6,899)	(6,928)
Finance costs					-	-	(1,322)	(1,322)
Finance revenue					-	-	1,314	1,314
Unrealised impairment losses on financial assets					-	(3,989)	-	(3,989)
Profit before taxation					12,927	(234)	(6,907)	5,786

31 January 2008		Rugby Capital	Rugby Asset Management	Unallocated items	2008
		£'000	£'000	£'000	£'000
Balance Sheet
Investment in associates		-	51	-	51
Financial assets		-	12,727	-	12,727
Property, plant, equipment and motor vehicles		-	-	443	443
Receivables-non current		1,147	-	-	1,147
Deferred tax assets		-	-	409	409
Property inventories		54,106	-	-	54,106
Receivables-current		17,150	751	392	18,293
Cash and short term deposits		-	-	15,129	15,129
Current liabilities		(3,807)	(201)	(17,746)	(21,754)
Non-current liabilities		-	-	(1,382)	(1,382)
Net assets		68,596	13,328	(2,755)	79,169
Other Segment information		Rugby Capital	Rugby Asset Management	Unallocated items	2008
		£'000	£'000	£'000	£'000
Additions to property, plant, equipment and motor vehicles		-	-	98	98
Depreciation		-	-	85	85

4. Dividends Paid

Period	Payment date	Per share		Amount absorbed
		(pence)		£'000
Year ended 31 January 2009	27 June 2008	8.7p		1,469
	27 November 2008	3.8p		642
					2,111
Year ended 31 January 2008	29 June 2007	9.46p		1,067
	29 November 2007	3.8p		643
					1,710

5. (Loss)/earnings per share

The calculation of basic (loss)/earnings per share is based on the loss of £15,117,000 (2008: £2,746,000) earnings and 16,854,448 ordinary shares (2008: 16,835,784), the weighted average number of shares in issue during the period. Diluted earnings per share are calculated after adjusting for shares issuable under share option schemes. There is no dilutive effect for the year in respect of the employee share option schemes as a result of the loss per share.

  

6. Co-investments

The group's co-investments represent investments in undertakings for which the group is also the principal property adviser. The group has investments in, and is property adviser to, London Industrial Partnership Limited, ING Covent Garden Limited Partnership, O Twelve Estates Limited and Rugby Estates Investment Trust PLC.

		31 January  2009	31 January  2008
		£'000	£'000
Investment in associates
London Industrial Partnership Limited (11.8% interest)
At 31 January 2008		51	2,322
Share of results		-	(283)
Dividends received		-	(141)
Loan stock repaid		-	(1,847)
At 31 January 2009		51	51
Financial assets
ING Covent Garden Limited Partnership (6.5% interest)
At 31 January 2008		6,725	8,019
Fair value adjustment		(1,725)	(1,294)
Impairment charge		(3,000)	-
At 31 January 2009		2,000	6,725
O Twelve Estates Limited (5.5% interest)
At 31 January 2008		2,946	4,170
Acquisition of ordinary shares		-	1,001
Fair value adjustment		-	(170)
Impairment charge		(2,611)	(2,055)
At 31 January 2009		335	2,946
Rugby Estates Investment Trust PLC (8.5% interest)
At 31 January 2008		3,056	-
Subscription for ordinary shares		-	4,990
Impairment charge		(1,709)	(1,934)
At 31 January 2009		1,347	3,056
Total financial assets at 31 January 2009		3,682	12,727
Total co-investments		3,733	12,778

The Group's investments in ING Covent Garden Limited Partnership, O Twelve Estates Limited and Rugby Estates Investment Trust PLC are classified as 'available-for-sale financial assets' in accordance with IAS 39.

  

7. Property Inventories

			2009 £'000	2008 £'000
Properties held for trading and development work in progress			44,108	54,106
Properties held for trading and development work in progress are shown at the lower of cost and net realisable value. The carrying value of the property inventories are intended to be realised over the next three to five years. This has been taken into account in assessing net realisable value.
The aggregate value of these properties on an open market basis as at 31 January 2009 was:
	Market value 2009 £'000	Book value 2009 £'000	Market value 2008 £'000	Book value 2008 £'000
Valued by CB Richard Ellis Limited	45,004	43,169	57,120	52,701
Valued by the directors	953	939	1,427	1,405
	45,957	44,108	58,547	54,106
All properties held as trading stock, with the exception of those valued by the directors, were externally valued as at 31 January 2009 by CB Richard Ellis Limited in accordance with the Appraisal and Valuation Standards of RICS on the basis of market value. Market value represents the figure that would appear in a hypothetical contract of sale between a willing buyer and a willing seller. Market value is estimated without regard to costs of sale. Such costs are taken into account when assessing net realisable value. Where CB Richard Ellis Limited have made the assumption that there is an annual rent top-up in place until the next rent review, an adjustment to the valuation has been made to reflect the additional income to the purchaser. Properties valued by the directors comprise development projects which are valued by the directors at their estimated net realisable value.
If all properties were realised or deemed to be realised at market value there would be additional liabilities as follows:
			2009 £'000	2008 £'000
Taxation			518	1,332

  

8. Issued share capital

Ordinary Shares of 20p		31 January  2009	31 January 2008
		No.	No.
Number of ordinary shares in issue
At 1 February 2008 and 31 January 2009		17,137,489	17,137,489
Treasury shares		(249,869)	(249,869)
Shares held by AESOP* - unawarded		(4,112)	(4,060)
Number of ordinary shares for calculating cost of dividends payable		16,883,508	16,883,560
Shares held by AESOP* - conditionally awarded but not yet earned by employees		(29,305)	(30,970)
Number of ordinary shares for calculating basic earnings per share and net assets per share
- at period end		16,854,203	16,852,590
- weighted average during the period		16,854,448	16,835,784
Weighted average number of ordinary shares for calculating diluted earnings per share		16,854,448	16,872,052

*AESOP - the Group's All Employee Share Ownership Plan. 

9. Reconciliation of changes in equity

		31 January 2009	31 January 2008
		£'000	£'000
Opening equity		79,169	79,286
Total recognised income and expense		(16,842)	1,282
Purchase of own shares - for treasury		(1,324)	(114)
Purchase of own shares - for AESOP		(45)	(146)
Share based payment charge - AESOP		57	84
Share based payment charge - LTIP		1,061	894
LTIP grant vested		-	(407)
Dividends paid		(2,111)	(1,710)
Closing equity		59,965	79,169

  

10. Net assets per share

		31 January 2009	31 January  2008
		£m	£m
Net assets per balance sheet		60.0	79.2
Market value of property inventories*		46.0	58.5
Less: book value of property inventories		(44.1)	(54.1)
Share of underlying net assets of co-investments		6.5	15.9
Less: co-investments per balance sheet		(3.7)	(12.7)
LTIP obligation		(1.7)	(1.4)
Tax payable if property inventories are sold at market value		(0.5)	(1.3)
Triple net assets		62.5	84.1
Number of ordinary shares in issue		16,854,203	16,852,590
Triple net assets per share - undiluted		371p	499p
Dilution effect if all share options were exercised		-	(1p)
Triple net assets per share - diluted		371p	498p

* At 31 January 2009, £45.0 million of properties were valued by CB Richard Ellis Ltd and £0.95 million were valued by the directors.

** The directors consider the Group's share of the underlying net assets of co-investment vehicles to be an appropriate indicator of performance and of value to the Group. If the adjustment in respect of co-investments were excluded, triple net assets per share as at 31 January 2009 would be 354p.

  

11 . Notes to Statement of Cash Flows 

Reconciliation of cash flows from operating activities
					31 January 2009	31 January  2008
					£'000	£'000
(Loss)/profit before taxation					(15,804)	5,786
	Income from investments				(163)	(129)
	Finance costs				829	1,322
	Finance revenue				(991)	(1,314)
	Share of results of associates				-	283
	Share based payment charge - LTIP				1,061	894
	Share based payment charge - AESOP				57	84
	Depreciation				72	85
	Loss on disposal of property, plant and equipment				7	9
	Unrealised impairment losses on financial assets				7,320	3,989
Cash flows from operating activities  before changes in working capital					(7,612)	11,009

Annual General Meeting 

The Annual General Meeting (AGM) will be held on Wednesday, 24th June 2009 at 10.30am.  

The presentation to analysts will be available at www.rugbyestates.plc.uk later today, 30 April 2009. 

Telephone: 020 7016 0050

Fax:     020 7016 0080

Email:  assets@rugbyestates.plc.uk

The financial statements for the year ended 31 January 2009 will be posted to shareholders in due course and will also be available on the Company's website http://www.rugbyestates.plc.uk/

ENDFR ILMRTMMMTBIL