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28 October 2009

RUGBY ESTATES PLC 

("Rugby", the "Group" or the "Company"),

Half Yearly Results for the six months ended 31 July 2009

Rugby Estates Plc, the property and asset management group, today announces half yearly results for the six months ended 31 July 2009.

 

Highlights:

• Property market showing signs of stabilisation translating to modest loss before taxation of £116,000 (31 July 2008: loss £4,410,000)

• Profit from net revenue items £1,085,000 (31 July 2008: £1,068,000) and profits realised on property disposals of £123,000 (31 July 2008: £29,000 loss) were offset by unrealised impairment losses on co-investment vehicles of £1,117,000 (31 July 2008: £2,350,000) and the costs associated with the return of capital 

• Triple net asset value per share 354p (31 January 2009: 464p (restated); 31 July 2008: 579p (restated))

• Freely available cash balances stand at £1.5 million with no borrowings

• 50 pence per share, (equal to 62.5p per share post share consolidation, representing £8.5 million), returned to shareholders as part of the Group's strategy to focus its activities on asset management

• Successful restructuring of O Twelve and REIT Plc's borrowing facilities underpins asset management mandates

David Tye, Chairman, commented:

"There are strong signs that the unprecedented fall in UK commercial property values over the past two years has now bottomed out, with strong demand leading to value increases in some areas. 

"Well located properties let to good tenants are attracting strong investor interest. Whilst the disposal of Rugby Capital properties will take three to five years, some sales are currently under negotiation and completion of these would enable a further return of capital to be made in the early months of 2010.

"We are delighted with the recent successful restructuring of O Twelve and REIT Plc's borrowing facilities, strengthening both vehicles and also providing a platform for the future expansion of our asset management business, Rugby Asset Management."

For further information:-

David Tye, Chairman	Rugby Estates	020 7016 0050
Andrew Wilson, Chief Executive	Rugby Estates	020 7016 0050
		www.rugbyestates.plc.uk
Jeremy Porter / Simon Bennett	Fairfax I.S. PLC	020 7598 5368
Stephanie Highett / Dido Laurimore /  Rachel Drysdale	Financial Dynamics	020 7831 3113

CHAIRMAN'S REVIEW 

Financial Performance

I am pleased to report a solid performance for the six months ended 31 July 2009 which saw a modest loss before taxation of £116,000 (31 July 2008: loss £4,410,000). Profit from net revenue items of £1,085,000 (31 July 2008: £1,068,000) and profits realised on property disposals of £123,000 (31 July 2008: £29,000 loss) were offset by unrealised impairment losses on our co-investment vehicles of £1,117,000 (31 July 2008: £2,350,000) and the costs associated with the return of capital to shareholders of £207,000 (31 July 2008: £nil).

In the financial statements for the year ended 31 January 2009, the Group confirmed its intention to dispose of its property inventory over the next three to five years. The Group has no borrowings and is under no pressure to dispose of properties in these depressed market conditions. The assessment of the net realisable value of property inventories at 31 July 2009 and 31 January 2009 takes into account the intended realisation period. Accordingly, no adjustment has been made to the carrying values of property inventories as a result of the reductions in the valuations of certain properties during the period.  If the carrying value of property inventories as at 31 July 2009 had been written down to the lower of cost or market value at that date, the result for the period would have been a loss of £3,187,000.

During the period, the Company returned 50 pence per share (representing £8.5 million) to shareholders. This return of capital represents an initial payment as part of the Group's strategy to focus its activities on asset management and, over time, to return the cash from realisations of the Group's directly held property portfolio to shareholders. As part of the return of capital process and in order to maintain comparability of share price, the share capital was consolidated on the basis of four new ordinary shares of 12.5p for every five old ordinary shares of 20p.

A review by the external valuers and your Directors of the value of the properties held by the Group, together with those held indirectly, indicates that triple net asset value per share ("NNNAPS") at 31 July 2009 was 354p (31 January 2009: 464p (restated); 31 July 2008: 579p (restated)). The comparative figures have been restated to take into account the share consolidation. In accordance with the basis adopted in previous periods, NNNAPS has been calculated on the market value of the property portfolio and the share of the estimated value of the underlying net assets of co-investment vehicles, not the respective balance sheet carrying values. O Twelve Estates Limited ("O Twelve") has negative net assets and the Group's holding is therefore included in NNNAPS at nil value. NNNAPS calculated on the balance sheet value of co-investment vehicles at 31 July 2009 would be 338p (31 January 2009: 443p (restated); 31 July 2008: 549p (restated)). Taking into account the share consolidation, the reduction in NNNAPS in the period which is attributable to the return of capital to shareholders is 62.5p per share. The calculation of NNNAPS is set out in note 10 to the interim financial statements. 

Rugby Capital

Rugby Capital is the division of the Group which deals with our directly-owned property portfolio. As previously reported, the Group's strategy is to manage the portfolio to maximise net rental income and, in due course, capital receipts through disposals.

During the period, property disposals realised £1.6 million, attributable principally to the sale of a vacant office building in Birmingham for £1.2 million.

The market value of the Group's directly-owned portfolio was £41.5 million as at 31 July 2009 (31 January 2009: £46.0 million; 31 July 2008: £57.7 million). Of this, £40.7 million was valued by CB Richard Ellis and £0.8 million was valued by the directors. On a like-for-like basis the overall reduction in values during the period was 7.1%. This compares favourably with the commercial property market as a whole for the same period which recorded a fall of 10.6% in capital values. Careful initial stock selection and our value enhancing initiatives have been key to mitigating the effects of the falling market and will be important in realising the best value during the rationalisation process.

At 31 July 2009, 62% of the rental value of Group's directly-owned portfolio was in the industrial sector, with 32% in offices and 6% in retail. London and South-East England accounted for 46% of the portfolio by capital value, with 27% in the Midlands, 18% in Northern England and 9% in the South West. Contracted annual rental income as at 31 July 2009 was £3.7 million and the estimated rental value for the portfolio is £4.1 million, providing an 11% reversionary potential.

Rugby Asset Management ("RAM")

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

Fee income for the period was £1.2m (31 July 2008: £2.1 million). As we reported with the last annual results, the reduction was expected and is a result of falling property values and the change in the management fee arrangement for O Twelve Estates Limited which became effective from 1 April 2009. 

RAM's principal appointments as Property Adviser to vehicles in which the Group is also a co-investor 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 in May 2007. REIT Plc has successfully achieved its initial objectives of converting to real estate investment trust status, which took effect from 1 January 2008, and establishing its initial portfolio through the acquisition of three private property companies. The Group holds 4,990,200 ordinary shares in REIT plc, representing 8.47% of its share capital.

REIT Plc holds a diverse portfolio of 34 commercial investment properties valued, according to its most recently published results as at 30 June 2009, at £57.1 million. Its net asset value as at that date was 60p per share. At 31 July 2009, REIT Plc's share price was 29.75p and our estimate of underlying net assets at that date, based on indexing its portfolio, was 60p per share. 

REIT Plc has recently completed restructuring its debt facilities and is in a strong position to seek growth opportunities as market conditions improve.

REIT Plc is currently the subject of an unsolicited mandatory bid from Terra Investments Limited. 

O Twelve Estates Limited ("O Twelve")

O Twelve was launched in 2006 as an AIM quoted investment fund focused on real estate opportunities to the east of London where the 2012 Olympic Games is the catalyst for major regeneration and infrastructure initiatives. Over the past two years, RAM has assembled a balanced portfolio of 21 properties for O Twelve across the retail, industrial, office and residential sectors in its target area. In addition to RAM acting as Property Adviser to O Twelve, the Group holds 6,694,502 ordinary shares representing a 5.46% equity interest. 

At 31 March 2009, the latest date for which O Twelve has announced results, its portfolio was valued at £174 million and net asset value per share was minus 6p. At 31 July 2009, O Twelve's share price was 3.25p and our estimate of underlying net assets at that date, based on indexing its portfolio, was minus 13p per share.  

 

The fundamental rationale for the creation of O Twelve Estates continues to be supported by the positive activity in its target area.  Letting activity in recent months has been very positive, resulting in a reduction in O Twelve's void rate over the past six months to 10.5%. Further significant lettings have been agreed and are in solicitors' hands. This activity confirms the underlying resilience of O Twelve's target area. 

O Twelve has now completed its loan restructuring, demonstrating the confidence its lenders have in O Twelve's strategy and future.

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.

Whilst office rental values in Covent Garden have moved down, retail rental values have remained stable during the period. There is reasonable occupier demand and accordingly void rates in CGLP's portfolio remain low. The portfolio remained unchanged during the period and the major redevelopment at St Martins Lane and New Row is now well underway with completion due shortly. During the period, capital values continued to fall and, at 30 June 2009, CGLP's property portfolio was valued at £121 million and the Group's share of CGLP's net assets was £1.8 million. The valuation of the portfolio as at 30 September 2009 was £123 million. CGLP's net assets at 31 July 2009, after indexing its portfolio, do not differ materially from those at 30 June 2009. 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 at 31 July 2009 to be £1 million. 

CGLP is now in the disposal period which had been planned for when it was established in 2002. The majority of its portfolio is now being marketed for sale into a market in which investor interest has strengthened substantially in recent weeks. RAM will be entitled to a disposal fee of 0.75% of CGLP's disposal proceeds. 

Financing

At 31 July 2009, Group cash balances amounted to £4.3 million and the Group had no borrowings.

Cash freely available to the Group was £1.5 million and the restricted balances of £2.8 million relate to security deposits. The significant reduction in freely available cash balances of £10.5 million as at 31 January 2009 is due principally to the return of capital to shareholders of £8.5 million and the requirement to place £2.3 million on a restricted deposit account in order to obtain Court approval for the associated capital reduction. 

Dividend

It is intended that further returns of capital to shareholders will be made as the Rugby Capital portfolio properties are sold. This will be in place of the regular half yearly dividends which have been paid historically.

Principal Risks and Uncertainties

The risks and uncertainties facing the Group for the remaining six months of the financial year are consistent with those outlined on page 10 of the Annual Report and Accounts for the year ended 31 January 2009. In summary these are:

• Tenant default due to the economic recession

• Further increases in investment yields

• Risk of loan covenant breaches or inability to secure debt finance in co-investment vehicles

• Lack of investor appetite for managed investment funds

• Competitive pressures on management fees

• Investment markets have not yet stabilised and property values may decline further in the foreseeable future. This would adversely affect the realisation of the Group's property portfolio and further returns of capital to shareholders.

Prospects 

There are strong signs that the unprecedented fall in UK commercial property values over the past two years has now bottomed out, with strong investor demand leading to capital value increases in some areas of the market. Across all the properties which we own or manage, we have not yet experienced widespread tenant default and there is generally reasonable occupier demand for properties which do fall vacant. This is not to say that conditions are not difficult for property owners but, so far at least for the portfolios we own and manage are concerned, they are certainly not as bad as some may have feared.

Given the low returns on other investment classes, well located properties let to good tenants are attracting strong investor interest. Whilst the realisation of the Rugby Capital properties will take three to five years, sales of certain properties are currently under negotiation. Some successful sales in the next few months would enable a further return of capital to be made in the early months of 2010.

RAM's appointment as property adviser to O Twelve and REIT Plc includes dealing with their financing arrangements. Considerable time and effort deployed by our management team have resulted in a satisfactory conclusion with the successful restructuring of those vehicles' borrowing facilities. Retention of these mandates, coupled with new asset management initiatives under consideration, provides a platform for the future growth and development of our asset management business

David Tye

Chairman 

28 October 2009

GROUP STATEMENT OF COMPREHENSIVE INCOME 

for the six months ended 31 July 2009

		31 July 2009		31 July 2008		31 January 2009
	Notes	Unaudited		Unaudited		Audited
		£'000		£'000		£'000
Sales of properties		1,624		-		2,400
Rental income		1,808		1,842		3,852
Fees receivable		1,200		2,083		4,213
Revenue		4,632		3,925		10,465
Direct costs of:
Sales of properties		(1,501)		(29)		(1,487)
Net realisable value adjustment to inventory		-		(3,128)		(11,178)
Rental income		(145)		(185)		(415)
Fees receivable		(11)		(14)		(24)
Direct costs		(1,657)		(3,356)		(13,104)
Income from investments		-		100		163
Administrative expenses:
- ongoing		(2,016)		(2,806)		(6,170)
- unrealised impairment losses on financial assets		(1,117)		(2,350)		(7,320)
Finance costs		(1)		(568)		(829)
Finance revenue		43		645		991
Loss before taxation		(116)		(4,410)		(15,804)
Income tax (charge)/ credit		(258)		360		687
Loss for the period		(374)		(4,050)		(15,117)
Other comprehensive income
Fair value gains and losses on financial assets Other comprehensive income for the period (net of tax) Total comprehensive expense for the period		138 138 (236)		(780) (780) (4,830)		(1,725) (1,725) (16,842)
Basic loss per share	4	(2.8)p		(30.0)p		(112.1)p
Diluted loss per share	4	(2.8)p		(30.0)p		(112.1)p

GROUP STATEMENT OF FINANCIAL POSITION

as at 31 July 2009

		31 July 2009		31 July 2008		31 January 2009
	Notes	Unaudited		Unaudited		Audited
		£'000		£'000		£'000
Non-current assets
Investment in associates	6	2		51		51
Financial assets	6	2,703		9,597		3,682
Total co-investments	6	2,705		9,648		3,733
Property, plant, equipment and motor vehicles		346		381		363
Receivables		-		1,170		1,194
Deferred tax assets		-		338		-
Total non-current assets		3,051		11,537		5,290
Current assets
Property inventories		43,002		53,232		44,108
Trade and other receivables		2,874		3,077		1,366
Current tax assets		1,161		243		1,114
Cash and short term deposits		4,320		21,665		10,862
Total current assets		51,357		78,217		57,450
Total assets		54,408		89,754		62,740
Current liabilities
Trade and other payables Current tax liabilities Financial liabilities - interest-bearing borrowings		2,607 258 -		3,207 - 13,708		2,757 - -
Total current liabilities		2,865		16,915		2,757
Non-current liabilities Financial liabilities - interest-bearing borrowings		-		904		-
Deferred taxation		18		-		18
Total non-current liabilities		18		904		18
Total liabilities		2,883		17,819		2,775
Net assets		51,525		71,935		59,965
Equity
Called up share capital	7	1,714		3,427		3,427
Own shares - held for treasury		-		(709)		(709)
- held for AESOP		(278)		(287)		(222)
Share premium account		22,633		39,370		39,370
Capital redemption reserve		1,504		1,504		1,504
Retained earnings		24,952		27,566		14,912
LTIP reserve		1,000		1,064		1,683
Total equity	8	51,525		71,935		59,965

GROUP STATEMENT OF CASH FLOWS

for the six months ended 31 July 2009

		6 months to	6 months to	Year to
		31 July 2009	31 July 2008	31 January 2009
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Cash flows from operating activities before changes in  working capital	9	1,371	(1,705)	(7,612)
Decrease in property inventories		1,106	874	9,998
(Increase)/decrease in receivables		(369)	15,158	16,842
Decrease in payables		(150)	(3,137)	(3,491)
Cash generated from operations		1,958	11,190	15,737
Income from investments		36	117	179
Finance costs		(1)	(526)	(835)
Finance revenue		62	663	1,013
Tax paid		(47)	(1,546)	(1,734)
Cash flows from operating activities		2,008	9,898	(14,360)
Cash flows from investing activities
Dividends received from associates		49	-	-
Purchase of property, plant, equipment and motor vehicles		(16)	(16)	(37)
Sale of property, plant, equipment and motor vehicles		-	30	38
Cash flows from investing activities		33	14	1
Cash flows from financing activities
Borrowings repaid		-	(488)	(15,148)
LTIP grant vested		(51)	-	-
Purchase of own shares for treasury		-	(1,324)	(1,324)
Purchase of own shares by AESOP		(69)	(95)	(45)
Return of capital to shareholders	5	(8,463)	(1,469)	(2,111)
Cash flows from financing activities		(8,583)	(3,376)	(18,628)
Net(decrease)/increase in cash and cash equivalents		(6,542)	6,536	(4,267)
Cash and cash equivalents at start of period		10,862	15,129	15,129
Cash and cash equivalents at end of period		4,320	21,665	10,862

GROUP STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 July 2009

		6 Months to 31 July 2009		6 Months to 31 July 2008		Year to 31 January 2009
	Notes	Unaudited		Unaudited		Audited
		£'000		£'000		£'000
Opening shareholders' equity	8	59,965		79,169		79,169
Total comprehensive expense for the period		(236)		(4,830)		(16,842)
Return of capital to shareholders	5	(8,463)		-		-
Dividends paid Treasury shares purchased  Treasury shares utilised  Purchase of own shares - for AESOP  Share based payment charge - AESOP Share based payment charge - LTIP LTIP grants vested		- - 709 (86) 30 349 (743)		(1,469) (1,324) 1,324 (95) 42 442 (1,324)		(2,111) (1,324) 1,324 (45) 57 1,061 (1,324)
Closing total equity	8	51,525		71,935		59,965

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. Accounting Policies

The interim financial information for the periods ended 31 July 2009 and 31 July 2008 has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 January 2009, which were prepared in accordance with International Financial Reporting Standards as endorsed by the European Union ("IFRS") and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on those accounts was unqualified, did not include any references to any matters to which the auditors drew attention without qualifying their report, and did not contain a statement made under section 237(2) or section 237(3) of the Companies Act 1985.

The financial information in this report comprises the Group statement of financial position as at 31 July 2009, 31 January 2009 and 31 July 2008 and related statements of Group comprehensive income, cash flow and changes in equity and related notes for the period then ended ("financial information"). The financial information has been prepared in accordance with the Group's principal accounting policies expected to be set out in the Annual Report for the period ending 31 January 2010. It has been prepared under the historical cost convention. 

The endorsed IFRS that will be effective (or available for early adoption) in the financial statements for the year ending 31 January 2010 are still subject to change and to additional interpretation and therefore cannot be determined with certainty. Accordingly, the accounting policies for the period will only be determined finally when the consolidated financial statements are prepared for the year ending 31 January 2010.

The preparation of financial statements requires management to make judgements, assumptions and estimates that affect the application of accounting policies and amounts reported in the statements of comprehensive income and financial position. Such decisions are made at the time the financial statements are prepared and adopted based upon the best information available at the time. Actual outcomes may be different from initial estimates and are reflected in the financial statements as soon as they become apparent.

The measurement of fair value of available for sale financial assets and assessment of the net realisable value of property inventories constitute the principal areas of judgement exercised by the Board in the preparation of these financial statements. The underlying market valuations of property inventories and investment properties held by available for sale financial assets are carried out by directors and by external advisors whom the Board considers to be suitably qualified to carry out such valuations. 

In the financial statements for the year ended 31 January 2009, the Group confirmed its intention to dispose of its property inventory over a period of three to five years commencing 1 February 2009. The Group has no borrowings and no need to dispose of properties in depressed market conditions. The assessment of the net realisable value of property inventories at 31 July 2009 and 31 January 2009 takes into account the intended realisation period. Accordingly, no adjustment has been made to the carrying values of property inventories as a result of the reductions in the valuations of certain properties during the period.  

2. Segmental Analysis

The Group reports internally on two principal business segments. Rugby Capital deals with the Group's property trading and development activities including the Group's directly-owned portfolio and collaborative ventures substantially involving the Group's equity. Rugby Asset Management deals with the Group's co-investment and asset management activities. The Group does not operate outside the United Kingdom.

		Rugby Capital	Rugby Asset Management	Unallocated items	2009 Unaudited
Period ended 31 July 2009		£000	£000	£000	£000
Income Statement
Sale of properties Rental income		1,624 1,808	- -	- -	1,624 1,808
Fees receivable		-	1,200	-	1,200
Revenue		3,432	1,200	-	4,632
Profit on sales of properties		123	-	-	123
Net rental income		1,663	-	-	1,663
Net fees receivable		-	1,189	-	1,189
Administrative expenses		-	-	(2,016)	(2,016)
Finance costs		(1)	-	-	(1)
Finance revenue		-	7	36	43
Unrealised impairment losses on financial assets		-	(1,117)	-	(1,117)
Profit/(loss) before taxation		1,785	79	(1,980)	(116)
Balance Sheet
Investment in associates		-	2	-	2
Financial assets		-	2,703	-	2,703
Property, plant, equipment and motor vehicles		-	-	346	346
Property inventories		43,002	-	-	43,002
Receivables - current		2,014	655	205	2,874
Current tax assets		-	-	1,161	1,161
Cash and short term deposits		-	-	4,320	4,320
Current liabilities Current tax liabilities		(1,760)	(20)	(827) (258)	(2,607) (258)
Non-current liabilities		-	-	(18)	(18)
Net assets		43,256	3,340	4,929	51,525
Other Segment information
Additions to property, plant, equipment and motor vehicles					16
Depreciation					33

15% of Revenue is generated from one customer

		Rugby Capital	Rugby Asset Management	Unallocated items	2008 Unaudited
Period ended 31 July 2008		£000	£000	£000	£000
Income Statement
Rental income		1,842	-	-	1,842
Fees receivable		-	2,083	-	2,083
Revenue		1,842	2,083	-	3,925
Cost of sales of properties		(29)	-	-	(29)
Net realisable value adjustment to inventory		(3,128)	-	-	(3,128)
Net rental income		1,657	-	-	1,657
Income from investments		-	100	-	100
Net fees receivable		-	2,069	-	2,069
Administrative expenses		-	-	(2,806)	(2,806)
Finance costs		(568)	-	-	(568)
Finance revenue		-	1	644	645
Unrealised impairment losses on financial assets		-	(2,350)	-	(2,350)
(Loss) before taxation		(2,068)	(180)	(2,162)	(4,410)
Balance Sheet
Investment in associates		-	51	-	51
Financial assets		-	9,597	-	9,597
Property, plant, equipment and motor vehicles		-	-	381	381
Receivables - non current		1,170	-	-	1,170
Deferred tax assets		-	-	338	338
Property inventories		53,232	-	-	53,232
Receivables - current		606	1,408	1,063	3,077
Current tax assets		-	-	243	243
Cash and short term deposits		-	-	21,665	21,665
Current liabilities		(16,238)	(5)	(672)	(16,915)
Non-current liabilities		(904)	-	-	(904)
Net assets		37,866	11,051	23,018	71,935
Other Segment information
Additions to property, plant, equipment and motor vehicles				16	16
Depreciation				36	36

3. Distributions to Shareholders 

Period	Payment date	Per share	Amount absorbed
		(pence)	£000
Paid
6 months to 31 July 2009 (note 5)	22 July 2009	50p	8,463
6 months to 31 July 2008 (dividend)	29 June 2008	8.70p	1,469
Year ended 31 January 2009 (dividend)	29 June 2008	8.70p	1,469
	27 November 2008	3.80p	642
			2,111

4. Earnings per share

The calculation of basic earnings per share is based on the loss for the period of £374,000 (July 2008: £4,050,000; January 2009: £15,117,000) and 13,501,112 ordinary shares (July 2008: 13,479,538 (restated); January 2009: 13,483,558 (restated)), the weighted average number of shares in issue during the period. During the period there were 38,864 (31 July 2008: 58,296 (restated); 31 January 2009: 38,864 (restated))potentially dilutive ordinary shares. There was no dilutive effect in the period as a result of the loss per share. The number of ordinary shares in issue in prior periods has been restated to take into account the four for five share consolidation on 9 July 2009.

5. Reduction of Capital and return of cash to Shareholders

On 28 May 2009 the Company published a circular to shareholders convening a General Meeting to enable a return of capital to shareholders of 50p per share. The necessary resolutions were passed at the General Meeting on 15 June 2009. In order to ensure sufficient distributable reserves in the Company, application was made to the Court for a reduction of capital and this was confirmed by the Court on 8 July 2009.

In connection with this the following actions took place with respect to the Company's share capital:

On 15 June 2009, one ordinary share was issued for £2.21 cash, thus increasing the number of Ordinary Shares of 20p in issue to 17,137,490.

On 9 July 2009:

i.	the 17,137,490 Ordinary Shares of 20p each were subdivided into 17,137,490 Ordinary Shares of 10p, 12,050,837 B shares of 10p each and 4,186,653 C shares of 10p each. Shareholders had elected whether to take B shares or C shares;
ii.	the B shares were redeemed by the Company for 50p per share, to be paid to shareholders on 22 July 2009, and cancelled;
iii.	a dividend was declared of 50p per C share, to be paid to shareholders on 22 July 2009, and the C shares were cancelled. No dividend was paid on 211,542 C shares held in Treasury; and
iv.	the 17,137,490 Ordinary Shares of 10p were consolidated on a four for five basis into 13,709,992 Ordinary Shares of 12.5p each, of which 169,233 were held in Treasury.

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 July 2009	31 July 2008	31 January 2009
	£000	£000	£000
	Unaudited	Unaudited	Audited
Investment in associates
London Industrial Partnership Limited (11.76% interest)
At 31 January 2009	51	51	51
Dividend received	(49)	-	-
At 31 July 2009	2	51	51
Financial assets
ING Covent Garden Limited Partnership (6.46% interest)
At 31 January 2009	2,000	6,725	6,725
Fair value adjustment Impairment charge	- (1,000)	(780) -	(1,725) (3,000)
At 31 July 2009	1,000	5,945	2,000
O Twelve Estates Limited (5.46% interest)
At 31 January 2009	335	2,946	2,946
Impairment charge	(117)	(1,540)	(2,611)
At 31 July 2009	218	1,406	335
Rugby Estates Investment Trust Plc (8.47% interest)
At 31 January 2009	1,347	3,056	3,056
Impairment charge Fair value adjustment	- 138	(810) -	(1,709) -
At 31 July 2009	1,485	2,246	1,347
Total financial assets at 31 July 2009	2,703	9,597	3,682
Total co-investments	2,705	9,648	3,733

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. Issued share capital

Ordinary Shares of 20p	31 July 2009	31 July 2008	31 January 2009
	Unaudited	Unaudited	Audited
	No.	No.	No.
Number of ordinary shares in issue
At 31 January 2009 (shares of 20p)	17,137,489	17,137,489	17,137,489
Issued in period	1
Share capital consolidation At 31 July 2009 -shares of 12.5p (31 July 2008 and 31 January 2009: shares of 20p)	(3,427,498) 13,709,992	- 17,137,489	- 17,137,489
Treasury shares	-	(249,869)	(249,869)
Shares held by AESOP* - not yet earned by employees	(54,206)	(45,543)	(33,417)
Number of ordinary shares for calculating basic earnings per share and net assets per share
-  at period end -  (restated)	13,655,786	16,842,077 (13,473,661)	16,854,203 (13,483,362)
-  weighted average during the period -  (restated)	13,501,112	16,849,423 (13,479,538)	16,854,448 (13,483,558)
Weighted average number of ordinary shares	13,501,112	16,870,831	16,854,448
for calculating diluted earnings per share (restated)		(13,496,664)	(13,483,448)

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

8. Changes in equity

	Share capital	Share premium account	Capital redemption reserve	Retained earnings	Unrealised gains and losses	LTIP reserve	Own shares		Total Shareholders' Equity Unaudited
							held for treasury	held for AESOP
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 February 2009	3,427	39,370	1,504	14,912	-	1,683	(709)	(222)	59,965
									-
Total comprehensive expense				(236)					(236)
LTIP grants vested				289		(1,032)	692		(51)
LTIP charged to income statement
						349			349
AESOP shares purchased								(69)	(69)
Treasury shares to AESOP							17	(17)	-
AESOP shares charged to income statement								30	30
Cancellation of 'B' shares	(1,295)			1,295					-
Cancellation of 'C' shares	(418)			418					-
Reduction in share premium		(16,737)		16,737					-
Capital repayment on B shares				(6,475)					(6,475)
Dividend on C shares				(1,988)					(1,988)
At 31 July 2009	1,714	22,633	1,504	24,952	-	1,000	0	(278)	51,525

	Share capital	Share premium account	Capital redemption reserve	Retained earnings	Unrealised gains and losses	LTIP reserve	Own shares		Total shareholders' equity Audited
							held for treasury	held for AESOP
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 February 2008	3,427	39,370	1,504	32,681	1,725	1,405	(709)	(234)	79,169
Total comprehensive expense				(15,117)	(1,725)				(16,842)
LTIP grants vested				(541)		(783)	1324		-
LTIP charged to income statement						1061			1,061
Treasury shares purchased							(1324)		(1324)
AESOP shares purchased								(45)	(45)
AESOP shares charged to income statement								57	57
Dividend distribution				(2,111)					(2,111)
At 31 January 2009	3,427	39,370	1,504	14,912	-	1,683	(709)	(222)	59,965

	Share capital	Share premium account	Capital redemption reserve	Retained earnings	Unrealised gains and losses	LTIP reserve	Own shares		Total shareholders' equity Unaudited
							held for treasury	held for AESOP
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 February 2008	3,427	39,370	1,504	32,681	1,725	1,405	(709)	(234)	79,169
Total comprehensive expense				(4,050)	(780)				(4,830)
LTIP grants vested				(541)		(783)	1,324		-
LTIP charged to income statement						442			442
Treasury shares purchased							(1,324)		(1,324)
AESOP shares purchased								(95)	(95)
AESOP shares charged to income statement								42	42
Dividend distribution				(1,469)					(1,469)
At 31 July 2008	3,427	39,370	1,504	26,621	945	1,064	(709)	(287)	71,935

9. Notes to the Statement of Cash Flows 

Reconciliation of cash flows from operating activities		6 months to	6 months to	Year ended
		31 July 2009	31 July 2008	31 January 2009
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
(Loss)/profit before taxation		(116)	(4,410)	(15,804)
	Income from investments	-	(100)	(163)
	Finance costs	1	568	829
	Finance revenue	(43)	(645)	(991)
	Share based payment charge - LTIP	349	442	1,061
	Share based payment charge - AESOP	30	42	57
	Depreciation	33	36	72
	Loss on disposal of property, plant and equipment	-	12	7
	Unrealised impairment losses on financial assets	1,117	2,350	7,320
Cash flows from operating activities  before changes in working capital		1,371	(1,705)	(7,612)

10. Additional information for shareholders

Net assets per share	31 July 2009	31 July 2008	31 January 2009
	£m Unaudited	£m Unaudited (restated)	£m Unaudited (restated)
Net assets per balance sheet	51.5	71.9	60.0
Market value of property inventories (i)	41.5	57.7	46.0
Less: book value of property inventories	(43.1)	(53.2)	(44.1)
Tax payable if property inventories are sold at market value	(0.1)	(1.3)	(0.5)
LTIP obligation	(1.0)	(1.1)	(1.7)
PRIP obligation if property inventories are sold at market value (ii)	(2.6)	-	-
Share of underlying net assets of co-investments (iii)	4.8	13.8	6.5
Less: co-investments per balance sheet	(2.7)	(9.6)	(3.7)
Triple net assets	48.3	78.2	62.5
Number of ordinary shares (iv)	13,655,786	13,473,661	13,483,362
Triple net assets per share - undiluted	354p	580p	464p
Dilution effect if all share options were exercised	-	(1p)	-
Triple net assets per share - diluted	354p	579p	464p

(i)	At 31 July 2009, £40.7 million (January 2009: £45.0 million) of properties were valued by CB Richard Ellis and £0.8 million (January 2009: £1.0 million) were valued by the directors.
(ii)	At the General Meeting held on 15 June 2009 shareholders approved two executive incentive schemes. Under the Property Realisation Incentive Plan ("PRIP") the executive directors will receive up to 5% of distributions to shareholders arising from the realisation of the Group's property portfolio and capital returns from co-investments between 1 February 2009 and 31 January 2014. If the Group's properties were sold at market value and co-investments were realised at share of estimated net assets as at 31 July 2009, and the proceeds distributed to shareholders, the cost to the Group would be approximately £2.6 million. Under the Value Creation Plan ("VCP"), employees may receive benefits if certain performance targets relating to the value of the asset management business are achieved by 31 January 2014. This has no measurable effect on triple net assets as at 31 July 2009.
(iii)	The Group's share of the underlying net assets of co-investments as at 31 July 2009 has been estimated by applying the movement in the IPD Monthly All Property Capital Value index to the closest available independent valuation of each co-investment vehicle's property portfolio. The closest valuations for REIT Plc and CGLP were at 30 June 2009 and a discount factor of 0.1% has been applied. The Group's share of the estimated underlying net assets as at 31 July 2009 are £3.0 million for REIT Plc and £1.8 million for CGLP. O Twelve has negative net assets and as the Group has no obligation to contribute further monies to it; accordingly, this co-investment is assumed to have net assets of £nil for this purpose .
(iv)	The number of ordinary shares and net assets per share as at 31 July 2008 and 31 January 2009 have been restated to allow for the effects of the 4 for 5 share consolidation on 9 July 2009.

Copies of the interim report will be posted to all shareholders and will be available on request from the company at 4 Farm Street, London W1J 5RD from 30 November 2009. The interim report and analyst presentation, when available, may also be viewed on the company's website www.rugbyestates.plc.uk.

Telephone: 020 7016 0050

Fax: 020 7016 0080

Email:  assets@rugbyestates.plc.uk

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