RNS Number:4130L
Pillar Property PLC
22 May 2003

22 May 2003

                              PILLAR PROPERTY PLC
                                   ("Pillar")

              Preliminary Results for the Year Ended 31 March 2003

  Pillar, the property investment and development company, is the UK's largest
    retail park operator, with 4.7 million sq. ft. on 23 retail parks under
                                  management.

Financial Highlights
                                                      2003                2002
Profit / (Loss) before tax                           #15.9m            (#11.7 m)
Turnover*                                            #89.2m              #86.3m
Earnings / (loss) per share                           12.0p               (4.5p)
Dividend per share                                     8.0p                7.3p
Net asset value per share                              520p                433p
Funds under management                            #2,411.4m           #2,072.2m

*including share of joint ventures

Achievements

- Net asset value per share increased by 20%
- Pillar successfully led the consortium in the #695m bid for the Chartwell
  portfolio prime retail parks
- Acquisition of 11 retail parks (including four from Chartwell) and disposal of
  18 parks, in transactions worth a total of #820m
- #143m return of capital to shareholders in August 2002
- First investment in Europe, with acquisition of Nassica retail and leisure park,
  Madrid, the first step in the creation of a European retail park property fund
- Increased liquidity in units in Hercules ("HUT"), our retail park unit trust,
  with total unit sales of #136m (unit holders increased to nearly 50)

Raymond Mould, Chairman of Pillar, commented;

"This has been an extremely active year for the Group. We have completed the
acquisition of 11 parks, and disposals of 18, totalling #820m. In addition, we
have made significant progress towards increasing the liquidity of units in
Hercules, by achieving unit sales of #136m, thus reducing our holding to 42% and
bringing in new investors to the fund.

"During the year we invested in a number of prime retail park developments,
which, when completed, will be offered to Hercules. With this development
pipeline, we are well placed to build our management income in the short to
medium term, as these parks are completed, let and sold.

"We continue to focus on increasing funds under management and on the long term
earnings growth of the business, whilst identifying attractive development
opportunities in the UK and Continental Europe. At the same time, we are
considering ways in which we can accelerate the release of value from our asset
base and increase the focus on management income and earnings growth."

Enquiries:

Pillar Property PLC                               Tel: 0207 915 8000
Raymond Mould, Chairman
Humphrey Price, Finance Director
                                                                             
Further information can be found at www.pillarproperty.com
                                                                            
Gavin Anderson & Company                          Tel: 0207 554 1400
Neil Bennett/Charlotte Stone

CHAIRMAN'S STATEMENT

This has been another busy year for Pillar. Directly, or indirectly through the
Hercules Unit Trust ("HUT"), 11 retail parks have been acquired and 18 sold for
an aggregate of #820 million; we have sold all our remaining City offices other
than those properties held in The City of London Office Unit Trust ("CLOUT"); we
have made our first significant investment in continental Europe and we have
returned a further #143 million as part of our strategy of returning capital to
shareholders.

Profits

Profits before tax for the year to 31 March 2003 were #15.9 million compared
with a loss of #11.7 million for the previous year. Management and performance
fees from HUT and CLOUT amounted to #16.8 million compared to #16 million for
the year ended 31 March 2002.

Dividend

We are recommending a final dividend of 5.7p per share making a total for the
year of 8p, an increase of 9.6% over last year's total of 7.3p. The dividend
will be paid on 25 July 2003 to shareholders on the register on 11 July 2003.

Net assets - valuation

Net assets per share were 520p compared with 433p last year, an increase of 20%,
most of this increase coming from the strong performance of HUT. A contributing
factor was also the recent abolition of stamp duty on sites in regeneration
areas which is applicable to some of Pillar's and HUT's properties.

Investment strategy

As stated last year when we announced the return of capital to shareholders, our
focus was to reduce our unitholding in both trusts, particularly HUT, during the
year. As at 31 March 2003, Pillar's share in HUT was 42% compared with 48% at 31
March 2002. Whilst we had intended that our holding by now would have been
nearer our target of 35%, we had to ensure that the sale process was an orderly
one and accommodated unit sales being made by other core investors. During the
year to 31 March 2003, units to a total value of #136 million have been sold of
which Pillar's share was #55 million. HUT has nearly 50 unit holders and is now
one of the widest held specialist property unit trusts. This indicates its
increasing liquidity and broadening appeal to institutional investors and we and
the fund managers will be continuing to extend this wider ownership during the
forthcoming year.

The total return to HUT investors during the year to 31 March 2003 was 24.7%
compared with the IPD monthly benchmark of 17.9%.

HUT currently has 23 parks valued at #1.8 billion with a total floor area of 4.7
million sq ft, 89% of which is on parks in excess of 100,000 sq ft. The HUT
portfolio continues to be reversionary. As at 31 March 2003, its rental income
is expected to increase from the current level of #88 million to #109 million
when reviewed to current levels, this ignoring any future rental growth.

Retail parks

We continue to experience growth in the retail park sector. Although there has
been much recent comment about the current state of retailing in the UK and the
reduction in consumer spending, we are still seeing strong demand from occupiers
for the parks, particularly for those with full open planning consents.
Increasingly, more and more high street retailers are developing out-of-town
formats to take advantage of the lower occupational costs, free parking and easy
access that our parks offer by comparison with the high street or shopping
centres.

As it evolves, the retail park market is becoming more sophisticated, with
planning and unit flexibility increasingly important as retailers look for
smaller units with trading mezzanines to reduce the impact of rising rentals.

In January, Pillar led a consortium of four parties, including HUT, which
successfully bid for 19 parks being sold by Chartwell, a subsidiary of
Kingfisher, for a total consideration of #695 million. The strong competition
and interest shown in this prime portfolio indicates that there remains
considerable institutional demand in this sector. Of the parks acquired, four
were bought by HUT, two development sites by Pillar and the remainder by the
other consortium parties.

In addition to its investment in HUT, Pillar now has five parks in the course of
development, one of which is held in a joint venture. A further three parks are
being forward funded by Pillar. These developments, which are being or will be
developed when appropriate planning consents are received, will amount to nearly
1.6 million sq ft of space with a value in excess of #750 million and this is a
key element in ensuring that a pipeline of modern retail space can be offered to
HUT over the next few years.

City offices

At the beginning of 2002, Pillar's net investment in the City of London was #114
million comprising units in CLOUT, our share in the joint venture owning Cannon
Bridge and our ownership of an office building in Cheapside. During the year,
Cannon Bridge was sold as was the Cheapside property, these sales reducing our
exposure in the City by 25%. Our holding in CLOUT remains unchanged at 36%, but
the value has fallen by #14 million to #73 million. The City has been a very
difficult market and we believe that this situation will continue for some time
to come. However, although we have seen a considerable fall in the value of the
two development properties, the valuations of the investment properties which
constitute 90% of the CLOUT portfolio have been less affected as they have high
quality, long-term sustainable income. We remain actively committed to the
long-term prosperity of the City of London and believe that the current
difficulties in the market will in due course offer investment opportunities.

Retail & Leisure

Our two leisure schemes in Fulham and Edinburgh are now complete and are
virtually fully let. We will be putting both properties on the market later this
year. The Castle Quay shopping centre in Banbury, in which we have a 50%
interest, is also in the process of being sold.

Europe

Our initial expansion into retail parks in continental Europe has been slower
than we originally planned. The identification of suitable opportunities has
taken time and many prospects have been investigated but discarded. Our first
investment, a 530,000 sq ft park to the south of Madrid, was completed in
January. We now have in prospect some very attractive opportunities of which we
expect four, with an ultimate aggregate value of over #150 million, to have been
contracted by the end of June. It is our intention to involve a few major
co-investors at an early stage whilst we build up a European portfolio and in
time, we plan to set up a European fund along the lines of HUT, in which we
would have a meaningful stake and be the property adviser generating management
and performance fees.

Outlook

Last year, I advised of the proposed change in Pillar's strategy to concentrate
on assets under management and reduce our capital base by the return of capital.

We remain committed to the retail park sector and, as a result, have invested in
a number of prime retail park developments which will, when completed, be
offered to HUT. These schemes have required capital which, for the time being,
has prevented our making further returns to shareholders.

With an active HUT, opportunities for CLOUT in the longer term and a promising
new European portfolio, we shall be well placed to build up our management
income over the next few years. The one issue which we believe has yet to be
properly addressed is the lack of recognition of the value of this management
income. We are considering ways in which we can accelerate the release of value
from our asset base and increase the focus on management income and earnings
growth.

H R Mould
Chairman
22 May 2003

CONSOLIDATED PROFIT & LOSS

-----------------------------------------------------------------------------------------------
                                                   Joint     2003                Joint     2002
                                       Group    ventures    Total    Group    ventures    Total
Year ended 31 March 2003       Note       #m          #m       #m       #m          #m       #m
-----------------------------------------------------------------------------------------------

Turnover                          2     36.9        52.3     89.2     44.6        41.7     86.3
Cost of sales                     3    (15.0)      (10.9)   (25.9)    (3.0)      (12.4)   (15.4)
-----------------------------------------------------------------------------------------------

Gross profit                            21.9        41.4     63.3     41.6        29.3     70.9
-----------------------------------------------------------------------------------------------
Administrative expenses                (17.6)       (1.7)   (19.3)   (15.6)       (1.9)   (17.5)
-----------------------------------------------------------------------------------------------

Operating profit
- Group                           4      4.3                  4.3     26.0                 26.0
- Joint ventures                  4                 39.7     39.7                 27.4     27.4
-----------------------------------------------------------------------------------------------

Total operating profit                   4.3        39.7     44.0     26.0        27.4     53.4
Profit/(loss) on disposal of      5      9.9         8.7     18.6     (4.5)       (0.3)    (4.8)
investment properties and
units
-----------------------------------------------------------------------------------------------

Net interest payable and          6    (14.9)      (31.8)   (46.7)   (41.4)      (18.9)   (60.3)
similar charges
-----------------------------------------------------------------------------------------------

Profit/(loss) on ordinary               (0.7)       16.6     15.9    (19.9)        8.2    (11.7)
activities before taxation
===============================================================================================
Taxation (charge)/credit on       7                          (1.3)                          5.3
profit/(loss)
on ordinary activities
-----------------------------------------------------------------------------------------------

Profit/(loss) attributable                                   14.6                          (6.4)
to ordinary shareholders
-----------------------------------------------------------------------------------------------

Dividends paid and proposed       8                          (8.6)                        (10.4)
-----------------------------------------------------------------------------------------------

Retained profit/(loss)
for the year                      16      6.0                         (16.8)
===============================================================================================

Earnings/(loss) per share -       9                          12.0p                         (4.5)p
basic
Earnings/(loss) per share -       9                          12.0p                         (4.5)p
diluted 
-----------------------------------------------------------------------------------------------

All items in the current and previous year derive from continuing activities

BALANCE SHEET
                                                  Group                Group           Company
                                                   2003                 2002              2003
31 March 2003                 Note         #m        #m         #m        #m     #m         #m
----------------------------------------------------------------------------------------------

Fixed assets
Investment properties           10                476.6                353.1              76.5
Investment in subsidiaries                            -                    -             700.7
Investment in joint ventures:
- Share of gross assets               1,140.3              1,036.3                -
- Share of gross liabilities                      (619.7)              (543.5)               -
----------------------------------------------------------------------------------------------

                                11                520.6                492.8                 -
Other tangible assets                               0.4                  0.6                 -
----------------------------------------------------------------------------------------------

                                                  997.6                846.5             777.2
----------------------------------------------------------------------------------------------

Current assets
Development properties                   10.4                 14.1                -
Debtors                         12       77.7                101.7              0.1
Cash at bank and in hand                 19.6                 33.0                -
----------------------------------------------------------------------------------------------

                                                  107.7                148.8               0.1
----------------------------------------------------------------------------------------------

Creditors: Amounts falling      13               (342.5)              (233.8)           (212.8)
due
within one year
----------------------------------------------------------------------------------------------

Net current liabilities                          (234.8)               (85.0)           (212.7)
----------------------------------------------------------------------------------------------

Total assets less current                         762.8                761.5             564.5
liabilities
Creditors: Amounts falling      14               (197.0)              (139.7)                -
due after one year
----------------------------------------------------------------------------------------------

Provisions for liabilities       7                 (1.3)                (1.3)                -
and charges
- deferred taxation
----------------------------------------------------------------------------------------------

Net assets                                        564.5                620.5             564.5
==============================================================================================

Capital and reserves
Called up share capital         16                 10.9                 42.2              10.9
Share premium account           16                  0.1                    -               0.1
Revaluation reserve             16                234.2                184.5             104.6
Capital redemption reserve      16                    -                    -                 -
Merger reserve                  16                 60.0                172.2                 -
Profit and loss account         16                259.3                221.6             448.9
----------------------------------------------------------------------------------------------

Equity shareholders' funds                        564.5                620.5             564.5

==============================================================================================
Net assets per share                                520p                 433p              520p
----------------------------------------------------------------------------------------------


CONSOLIDATED CASH FLOW STATEMENT
                                                       2003               2002
Year ended 31 March 2003                        #m       #m        #m       #m
------------------------------------------------------------------------------

Net cash inflow/(outflow) from operating                1.9               (3.1)
activities                                  
------------------------------------------------------------------------------

Distributions received from joint                      19.7                6.2
ventures
Returns on investments and servicing of
finance
Interest received                              0.9                2.6
Interest paid                                (17.3)             (45.7)

------------------------------------------------------------------------------
                                                      (16.4)             (43.1)
Taxation                                               (1.9)             (17.0)
------------------------------------------------------------------------------
Capital expenditure
Purchase of investment properties           (247.7)            (226.4)
Sale of investment properties and            210.5              941.9
development expenditure
Purchase of tangible fixed assets             (0.2)                 -
------------------------------------------------------------------------------
                                                      (37.4)             715.5
------------------------------------------------------------------------------

Acquisitions and disposals
Purchase of subsidiaries                         -               11.5
Purchase of joint ventures                    (7.5)              (3.7)
Sale of joint ventures                        54.5                6.1
------------------------------------------------------------------------------
                                                       47.0               13.9
Equity dividends paid                                  (9.7)             (10.5)
------------------------------------------------------------------------------

Net cash inflow before financing                        3.2              661.9
------------------------------------------------------------------------------

Financing
Repurchase of ordinary share capital          (0.1)                 -
Return of capital                           (143.5)                 -
Bank loans                                   239.2             (728.8)
------------------------------------------------------------------------------
                                                       95.6             (728.8)
------------------------------------------------------------------------------

Increase/(decrease) in cash in the year                98.8              (66.9)
==============================================================================

NOTES TO THE ACCOUNTS


1 Segmental and geographical information

------------------------------------------------------------------------------------------------------------
                                                 Group         Group    Profit    Profit     Group     Group
                         Group       Group    Operating    Operating    before    before       Net       Net
                      Turnover    Turnover       profit       profit       tax       tax    assets    assets
                          2003        2002         2003         2002      2003      2002      2003      2002
                            #m          #m           #m           #m        #m        #m        #m        #m
------------------------------------------------------------------------------------------------------------

Business segments:
Fund management           16.8        16.0          9.0          7.1       9.0       7.1      18.3      13.8
Investment and            72.4        70.3         39.0         50.5      10.9     (14.6)    552.2     613.6
development
Corporate                    -           -         (4.0)        (4.2)     (4.0)     (4.2)     (6.0)     (6.9)
------------------------------------------------------------------------------------------------------------

                          89.2        86.3         44.0         53.4      15.9     (11.7)    564.5     620.5
------------------------------------------------------------------------------------------------------------

Geographical
segments:
United Kingdom            88.5        86.3         44.3         53.4      16.2     (11.7)    564.3     620.5
Europe                     0.7           -         (0.3)           -      (0.3)        -       0.2         -
------------------------------------------------------------------------------------------------------------

                          89.2        86.3         44.0         53.4      15.9     (11.7)    564.5     620.5
============================================================================================================

Share of turnover, operating profit, profit before tax and net assets of joint
ventures relate entirely to investment and development, wholly within the United
Kingdom.

2 Turnover

-------------------------------------------------------------------------------
                                   Joint     2003                Joint     2002
                       Group    ventures    Total    Group    ventures    Total
                          #m          #m       #m       #m          #m       #m
-------------------------------------------------------------------------------

Rental income           10.0        51.6     61.6     28.2        36.5     64.7
Sales of development     9.0         0.7      9.7      0.4         5.2      5.6
properties
Management and          16.8           -     16.8     16.0           -     16.0
performance fees
Commission earned        1.1           -      1.1        -           -        -
-------------------------------------------------------------------------------

Total turnover          36.9        52.3     89.2     44.6        41.7     86.3

===============================================================================

3 Cost of sales

-------------------------------------------------------------------------------
                                   Joint     2003                Joint     2002
                       Group    ventures    Total    Group    ventures    Total
                          #m          #m       #m       #m          #m       #m
-------------------------------------------------------------------------------

Direct property          0.8         1.8      2.6      1.1         1.2      2.3
costs
Costs of development    13.6         0.6     14.2      1.9         3.0      4.9
properties sold
Management and             -         8.5      8.5        -         8.2      8.2
performance fees
Commission paid          0.6           -      0.6        -           -        -
-------------------------------------------------------------------------------

Total cost of sales     15.0        10.9     25.9      3.0        12.4     15.4

===============================================================================

4 Operating profit

------------------------------------------------------------------------------

                                                                2003      2002
                                                                  #m        #m
------------------------------------------------------------------------------

The operating profit is stated after charging:
Directors' and staff remuneration including the CRISP and        8.2       9.7
STARs
Social security costs of directors and staff                     0.9       0.9
Pension costs of directors and staff                             0.5       0.4
Depreciation of owned assets                                     0.2       0.2
Depreciation of assets held under finance leases and hire          -       0.1
purchase agreements
------------------------------------------------------------------------------


Audit fees for the group were #89,000 (2002 - #84,000) and for the company were
#nil. Other fees paid to the auditors and its associates were as follows:

----------------------------------------------------------------------------

                                                            2003        2002
                                                           #'000       #'000
----------------------------------------------------------------------------

- advice in respect of scheme of arrangement                 190           -
- advice in connection with the disposal of                    -          87
properties to the Hercules Unit Trust
- tax compliance services and tax advice on property         531         601
disposals, joint ventures and other transactions
----------------------------------------------------------------------------

- secondment of specialist staff on IT and financial           -          74
analysis and recruitment consultancy services
----------------------------------------------------------------------------


KPMG LLP has been appointed as the group's tax adviser and agent as this is
considered to be the most cost-efficient means to access the specialist tax
advice which Pillar requires, given the size and complexity of the transactions
which the group undertakes; such advice necessarily requires a detailed
knowledge of the group's structure and corporate history. The Audit Committee
has reviewed the level of the fees paid to the auditors and its affiliates, to
ensure that the auditors' independence is not compromised.


5 Profit/(loss) on disposal of investment properties and units

------------------------------------------------------------------------------
                                                                 2003     2002
                                                                Total    Total
                                                                   #m       #m
------------------------------------------------------------------------------

Initial cost of acquisition                                      64.7    440.1
Additional capital expenditure                                   59.8     84.1
------------------------------------------------------------------------------

Total cost                                                      124.5    524.2
Revaluation surplus                                              44.2    204.5
------------------------------------------------------------------------------

Book value                                                      168.7    728.7
------------------------------------------------------------------------------

Net sales proceeds                                              178.6    724.2
Historical cost profit                                           54.1    200.0
------------------------------------------------------------------------------

Profit/(loss) on sale of investment properties - group            9.9     (4.5)
Profit/(loss) on sale of investment properties - share of         8.7     (0.3)
joint ventures 
------------------------------------------------------------------------------

                                                                 18.6     (4.8)
==============================================================================


6 Net interest payable and similar charges

--------------------------------------------------------------------------------------
                                          Joint     2003                Joint     2002
                              Group    ventures    Total    Group    ventures    Total
                                 #m          #m       #m       #m          #m       #m
--------------------------------------------------------------------------------------

Interest payable on:
Overdrafts and bank loans     (13.3)      (31.0)   (44.3)   (29.8)      (18.1)   (47.9)
Less: interest capitalised      2.0           -      2.0      2.1           -      2.1
--------------------------------------------------------------------------------------

                              (11.3)      (31.0)   (42.3)   (27.7)      (18.1)   (45.8)
Bank finance costs             (0.7)       (1.5)    (2.2)    (1.7)       (0.8)    (2.5)
amortised
Costs written off on           (3.8)          -     (3.8)   (14.6)          -    (14.6)
refinancing and sales 
--------------------------------------------------------------------------------------

Interest payable and other    (15.8)      (32.5)   (48.3)   (44.0)      (18.9)   (62.9)
similar charges
Interest receivable             0.9         0.7      1.6      2.6           -      2.6
--------------------------------------------------------------------------------------

Net interest payable          (14.9)      (31.8)   (46.7)   (41.4)      (18.9)   (60.3)
======================================================================================


7 Taxation

------------------------------------------------------------------------------
                                                              2003        2002
                                                                #m          #m
------------------------------------------------------------------------------

UK corporation tax (credit) on profit for the year            (0.2)       (3.4)
Adjustments in respect of previous periods                     1.5           -
Deferred taxation                                                -        (1.9)
------------------------------------------------------------------------------

Taxation charge/(credit)                                       1.3        (5.3)
==============================================================================

The tax assessed for the year is lower than the standard rate for corporation
tax in the UK (30%). The differences are explained below.

------------------------------------------------------------------------------

                                                              2003        2002
                                                                #m          #m
------------------------------------------------------------------------------

Profit/(loss) on ordinary activities before tax               15.9       (11.7)
------------------------------------------------------------------------------

Profit on ordinary activities at the standard rate             4.8        (3.4)
of corporation tax 30% (2002 - 30%)
Effects of:
Utilisation of tax losses                                     (5.7)          -
Current year taxable loss                                      0.5           -
Legal costs on share buy back disallowed                       0.9           -
Timing differences                                            (1.1)          -
Permanent disallowable expenditure                             0.4           -
------------------------------------------------------------------------------

Actual tax (credit)                                           (0.2)       (3.4)
==============================================================================

The group allocates the tax charge arising on the sale of investment properties
on a pro rata basis between the gain previously recognised in the revaluation
reserve and the further gain or loss arising on the sale in the profit and loss
account.
                                                                         Group
                                                                            #m
------------------------------------------------------------------------------
Provisions for liabilities and charges - deferred taxation
At 31 March 2002 and 31 March 2003                                         1.3
------------------------------------------------------------------------------

The full potential deferred taxation liability provided, and the amounts not
provided, in the financial statements are as follows:

------------------------------------------------------------------------------

                                 Amount      Amount   Amount not    Amount not
                               provided    provided     provided      provided
                                   2003        2002         2003          2002
                                     #m          #m           #m            #m
------------------------------------------------------------------------------

Group
Arising on revaluation of             -           -         23.8          10.4
investment properties
Arising on revaluation of             -           -         26.2             -
holding in unit trusts
Accelerated capital                 1.3         1.3            -             -
allowances 
------------------------------------------------------------------------------

                                    1.3         1.3         50.0          10.4
==============================================================================

The amount of deferred taxation not provided at 31 March 2003 has been reduced
due to the availability of substantial capital losses and capital allowances.

8 Dividends paid and proposed
-----------------------------------------------------------------------------
                                                              2003       2002
                                                                #m         #m
-----------------------------------------------------------------------------

Interim dividend paid of 2.3p (2002 - 2.2p) per share          2.4        3.1
Final dividend proposed of 5.7p (2002 - 5.1p) per share        6.2        7.3
-----------------------------------------------------------------------------

Total paid and proposed                                        8.6       10.4
=============================================================================

9 Earnings per share

The calculation of earnings/(loss) per ordinary share is based on the profit
attributable to ordinary shareholders of #14.6 million (2002 - loss #6.4
million) and on a weighted average number of ordinary shares in issue during the
year ended 31 March 2003 of 121,862,188 (2002 - 143,453,726). On a diluted basis
the weighted average number of ordinary shares was 122,338,875 (2002 -
143,805,232). The difference between weighted average number of shares on a
basic and diluted basis is due to the effect of unexercised share options.


10 Investment properties

---------------------------------------------------------------------------------
                                           Group
                              Group         Long               Company
                           Freehold    leasehold              Freehold
                           land and     land and    Group     land and    Company
                          buildings    buildings    Total    buildings      Total
                                 #m           #m       #m           #m         #m
---------------------------------------------------------------------------------

At 31 March 2002 at           311.4         41.7    353.1            -          -
valuation
Additions                     228.0            -    228.0         68.9       68.9
Disposals                     (74.8)       (41.7)  (116.5)           -          -
---------------------------------------------------------------------------------

Surplus on revaluation         12.0            -     12.0          7.6        7.6
of investment
properties
---------------------------------------------------------------------------------

At 31 March 2003 at           476.6            -    476.6         76.5       76.5
valuation  
=================================================================================

As at 31 March 2003, the group's investment portfolio was externally valued on
the basis of open market value by FPDSavills Commercial Limited and Montagu
Evans, Chartered Surveyors at #231.3 million. The directors have valued certain
properties, which are undergoing significant development which were not
completed at the year end at #248.1 million, based on formal external
assessments of gross development value (prior to adjustment for UITF28) given to
the directors by the group's valuers.

All of the above valuations were carried out in accordance with the Royal
Institution of Chartered Surveyors Statements of Asset Valuation Practice and
Guidance Notes. The historical cost of investment properties was #434.8 million
(2002 - #297.3 million).

11 Joint ventures
                                                                     Shares of
                                                                 joint ventures
                                                                            #m
--------------------------------------------------------------------------------
Group
At 31 March 2002 at valuation                                            492.8
Net equity divestments                                                   (59.2)
Surplus on revaluation of investment properties                           70.4
Share of profit for the year                                              16.6
--------------------------------------------------------------------------------

At 31 March 2003 at valuation                                            520.6
================================================================================


The group has the following interests in property investment partnerships all of
which operate in the United Kingdom with the exception of Hercules Unit Trust
and The City of London Office Unit Trust which operate in Jersey, Channel
Islands:

Hercules Unit Trust                               41.7%  interest
Hercules Limited Partnership                      40.7%  partnership interest
The City of London Office Unit Trust              35.9%  interest
The Auchinlea Partnership (a partnership            50%  partnership interest
with Capital & Regional plc)
Capability Green Development Joint Venture          50%  partnership interest
(a partnership with Haslemere Estates)
PillarCaisse Partnership (a partnership with
Caisse de Depot et Placement du Quebec)
PillarCaisse Management Limited                     50%  of ordinary shares
The PillarCaisse Partnership                        50%  partnership interest
The PillarCaisse (Banbury) Partnership              50%  partnership interest
Champneys CityPoint Limited                         50%  ordinary shares


11 Joint ventures continued

Summarised aggregated financial statements

-----------------------------------------------------------------------------------------------------------
                                        City of
                                         London
                         Hercules        Office                 Pillar-                 Total       Total
                       Unit Trust    Unit Trust    Auchinlea     Caisse    Others        2003        2002
                               #m            #m           #m         #m        #m          #m          #m
-----------------------------------------------------------------------------------------------------------

Profit and loss
account
Turnover                     74.4          38.2          0.8        4.7       3.3       121.4        99.4
-----------------------------------------------------------------------------------------------------------

Operating profit             56.2          34.3          0.6        4.0      (1.5)       93.6        68.8
Profit/(loss) on             20.0             -            -          -         -        20.0        (0.5)
disposal
of investment
properties
Interest payable            (42.1)        (29.4)        (0.7)      (3.1)     (0.1)      (75.4)      (47.1)
===========================================================================================================
Retained profit              34.1           4.9         (0.1)       0.9      (1.6)       38.2        21.2
for the year
===========================================================================================================

Balance sheet

Investment                1,784.4         627.0         79.0       88.6         -     2,579.0     2,183.1
properties
Current assets              162.9          28.4          2.7       10.0       6.6       210.6       127.6
Current liabilities         (56.9)        (21.7)        (1.7)     (69.3)     (3.3)     (152.9)     (190.3)
-----------------------------------------------------------------------------------------------------------

Borrowings due in          (910.5)       (432.0)       (31.2)         -      (2.0)   (1,375.7)   (1,031.6)
more
than one year
-----------------------------------------------------------------------------------------------------------

Net assets                  979.9         201.7         48.8       29.3       1.3     1,261.0     1,088.8
===========================================================================================================


Group share
-----------------------------------------------------------------------------------
                                                                   Total    Total
Percentage interest at      41.7%   35.9%    50%    50%     50%     2003     2002
year end                      #m      #m     #m     #m      #m        #m       #m
-----------------------------------------------------------------------------------

Group share of:
Turnover                    34.1    13.7    0.4    2.4     1.7      52.3     41.7
Management and performance  (7.6)   (0.9)     -      -       -      (8.5)    (8.2)
fees
Other costs                 (0.7)   (0.5)  (0.1)  (0.4)   (2.4)     (4.1)    (6.1)
-----------------------------------------------------------------------------------

Operating profit            25.8    12.3    0.3    2.0    (0.7)     39.7     27.4
Profit/(loss) on disposal    8.7       -      -      -       -       8.7     (0.3)
of investment properties
Interest payable           (19.3)  (10.5)  (0.3)  (1.6)   (0.1)    (31.8)   (18.9)
-----------------------------------------------------------------------------------

Retained profit for the     15.2     1.8      -    0.4    (0.8)     16.6      8.2
year
===================================================================================
Revaluation surplus for     75.3   (14.4)   8.3    1.2       -      70.4     24.6
the year
===================================================================================

Joint venture investment   743.4   225.3   39.5   44.3       -   1,052.5    979.3
properties
===================================================================================

Joint venture net assets   408.2    72.6   24.4   14.7     0.7     520.6    492.8
===================================================================================



As at 31 March 2003, the joint venture investment properties were externally
valued at an aggregate value of #2,579.0 million by Insignia Richard Ellis
Limited, CB Hillier Parker Limited and Montagu Evans, Chartered Surveyors. The
historical cost of investment properties was #2,282.9 million (2002 - #2,029.7
million).


In the year to 31 March 2003, the group received management fees of #5.8 million
(2002 - #5.3 million) and performance related fees of #11.0 million (2002 -
#10.7 million) from various joint ventures.


At 31 March 2003 the group was oweed #21.4 million (2002 - #26.1 million) by
joint ventures


12 Debtors
--------------------------------------------------------------------------------
                                                      Group    Group   Company
                                                       2003     2002      2003
                                                         #m       #m        #m
--------------------------------------------------------------------------------

Amounts receivable within one year:
Trade debtors                                           4.2     18.6         -
Amounts receivable on completion of property sales     19.1     64.9         -
Other debtors                                          28.3     14.0         -
Prepayments and accrued income                          8.6      4.0         -
--------------------------------------------------------------------------------

                                                       60.2    101.5         -
================================================================================
Amounts receivable after one year:
Amounts receivable on completion of property sales      3.7        -         -
Other debtors                                          12.4        -         -
Prepayments and accrued income                          1.4      0.2       0.1
--------------------------------------------------------------------------------

                                                       17.5      0.2       0.1
--------------------------------------------------------------------------------

                                                       77.7    101.7       0.1
================================================================================


13 Creditors: Amounts falling due within one year

--------------------------------------------------------------------------------

                                                      Group    Group   Company
                                                       2003     2002      2003
                                                         #m       #m        #m
--------------------------------------------------------------------------------

Bank loans and overdrafts - secured (note 14)         225.2    155.5      22.5
Trade creditors                                         0.8      6.7         -
Amounts owed to subsidiary undertakings                   -        -     142.9
Amount due on completion of property acquisitions      88.4     45.1      41.0
Proposed dividend                                       6.2      7.3       6.2
Corporation tax                                         7.5      8.1         -
Other taxation and social security                      0.1      0.1         -
Obligations under finance leases and hire                 -      0.1         -
purchase arrangements
Accruals and deferred income                           14.3     10.9       0.2
--------------------------------------------------------------------------------

                                                      342.5    233.8     212.8
================================================================================


14 Creditors: Amounts falling due after one year

--------------------------------------------------------------------------------

                                            Group         Group        Company
                                             2003          2002           2003
                                               #m            #m             #m
--------------------------------------------------------------------------------

Bank loans                                  181.1         112.9              -
Loan notes                                   15.9          26.8              -
--------------------------------------------------------------------------------

                                            197.0         139.7              -
================================================================================


Security is provided on bank loans and loan notes by way of fixed charges over
property and floating charges over the assets of certain subsidiary
undertakings.

15 Financial instruments

The group has taken advantage of the exemption under FRS13, that short term
debtors and creditors be excluded from the following disclosures.

The disclosures include the group's share of financial liabilities of its joint
venture partnerships and the associated financial instruments used to manage the
interest rate exposures arising therefrom.

Financial assets The group's only financial assets are short term debtors (note
12) and cash at bank and in hand.

Liquidity risk - The maturity profile of the group's financial liabilities is
set out below:

--------------------------------------------------------------------------------

                                                   Joint    Joint        Joint
                                      Group     ventures    Group     ventures
                                       2003         2003     2002         2002
                                         #m           #m       #m           #m
--------------------------------------------------------------------------------

In one year or less or on demand      225.2         30.0    155.5         30.0
In more than two years but            192.1         15.6    103.0          5.8
not more than five years
In more than five years                 4.9        534.6     36.7        447.7
--------------------------------------------------------------------------------
 Total                                422.2        580.2    295.2        483.5
================================================================================


The group has undrawn loan facilities which expire as set out below:

--------------------------------------------------------------------------------

                                              Joint                      Joint
                               Group       ventures       Group       ventures
                                2003           2003        2002           2002
                                  #m             #m          #m             #m
--------------------------------------------------------------------------------

In one year or less             37.2              -        10.7              -
In more than two years but      58.5           29.4        59.2              -
not more than five years
In more than five years            -           52.5        18.5           50.0
--------------------------------------------------------------------------------

                      Total     95.7           81.9        88.4           50.0
================================================================================


Interest rate risk - profile
----------------------------------------------------------------------------------------------------

                      Fixed rate    Floating rate               Fixed rate    Floating rate
                     liabilities      liabilities     Total    liabilities      liabilities    Total
                            2003             2003      2003           2002             2002     2002
                              #m               #m        #m             #m               #m       #m
----------------------------------------------------------------------------------------------------

Group                      145.9            276.3     422.2          126.3            168.9    295.2
Group share of             407.6            172.6     580.2          413.1             70.4    483.5
joint ventures
----------------------------------------------------------------------------------------------------

Total                      553.5            448.9   1,002.4          539.4            239.3    778.7
 ===================================================================================================


Hedge profile - type of protection
-------------------------------------------------------------------------------

                          Fixed rate    Fixed rate    Fixed rate    Fixed rate
                            Weighted      Weighted      Weighted      Weighted
                             average       average       average       average
                                rate        period          rate        period
                                2003          2003          2002          2002
                                   %         Years             %         Years
-------------------------------------------------------------------------------

Group                            4.8           2.8           6.2           2.3
Group share of joint             5.3           4.5           5.6           4.1
ventures 
===============================================================================




15 Financial instruments continued

Hedge profile - maturity of protection

--------------------------------------------------------------------------------
                                                 Joint                   Joint
                                    Group     ventures      Group     ventures
                                     2003         2003       2002         2002
                                       #m           #m         #m           #m
--------------------------------------------------------------------------------

In one year or less                  46.5         25.0       35.3         25.0
In more than one year but not         9.5            -       46.0         39.9
more than two years
In more than two years but not       89.9        270.8       45.0        222.9
more than five years
In more than five years                 -        111.8          -        125.3
-------------------------------------------------------------------------------

                                    145.9        407.6      126.3        413.1
===============================================================================


Fair values

The fair values of the group's financial liabilities, including its share of
financial liabilities in joint ventures are set out below:

-------------------------------------------------------------------------------

                               Notional     Fair     Fair value     Fair value
                              principal    value    adjustments    adjustments
                                   2003     2003           2003           2002
                                     #m       #m             #m             #m
-------------------------------------------------------------------------------
Derivative financial
instruments held to manage
the group's interest rate
exposure  
-------------------------------------------------------------------------------

Interest rate swaps               553.5     21.6          (21.6)          (2.2)
-------------------------------------------------------------------------------

Fair value adjustment             553.5     21.6          (21.6)          (2.2)
===============================================================================


The fair values as at 31 March 2003 were calculated by JC Rathbone Associates
Limited and reflect the replacement values of the financial instruments used to
manage the group's exposure to adverse interest rate movements.

All gains and losses arising from hedging instruments crystallised during the
year have been recognised in the profit and loss account.

Foreign exchange - profile
--------------------------------------------------------------------------------

                                                      Group                Group
                                                       2003               2002
                                                         #m                 #m
--------------------------------------------------------------------------------

Cash at bank and in hand
Denominated in Sterling                                17.8               33.0
Denominated in Euros                                    1.8                  -
--------------------------------------------------------------------------------

                                                       19.6               33.0
================================================================================
Bank loans and loan notes
Denominated in Sterling                               369.5              295.2
Denominated in Euros                                   52.7                  -
--------------------------------------------------------------------------------

                                                      422.2              295.2
================================================================================


16 Reserves
--------------------------------------------------------------------------------

                                             Share                      Capital
                                  Share    premium    Revaluation    redemption
                                capital    account        reserve       reserve
                                     #m         #m             #m            #m
--------------------------------------------------------------------------------

Group
At 31 March 2002                   42.2      169.0          184.5           0.3
--------------------------------------------------------------------------------

Merger adjustments to reflect               (169.0)                        (0.3)
scheme of arrangement
--------------------------------------------------------------------------------

At 31 March 2002 on a pro          42.2          -          184.5             -
forma basis
Scheme of arrangement -           417.9
return of capital
Court approval capital           (449.2)
reduction
On issue of ordinary share                     0.1
capital
Distribution on share
redemption
Retained profit for the year
Transfer on disposal of                                     (33.4)
properties
Surplus arising on revaluation                               12.0
of investment properties -
group
Surplus arising on revaluation                               70.4
of investment properties - joint
ventures 
Gross exchange differences                                    0.7
on retranslation of net
investments and related 
borrowings.
--------------------------------------------------------------------------------

At 31 March 2003                   10.9        0.1          234.2             -

================================================================================
Company
Issue of shares                   460.1
On issue of ordinary share                     0.1
capital
Court approved capital           (449.2)
reduction
Surplus arising on revaluation                                7.6
of investment properties
Surplus arising on revaluation                               97.0
of investment in subsidiaries
Distribution on share
redemption
Retained profit for the year
--------------------------------------------------------------------------------

At 31 March 2003                   10.9        0.1          104.6             -
================================================================================


--------------------------------------------------------------------------------

16 Reserves (Continued.)                      Merger      Profit and
                                             reserve    loss account     Total
                                                  #m              #m        #m
--------------------------------------------------------------------------------

Group
At 31 March 2002                                 2.9           221.6     620.5

Merger adjustments to reflect scheme of        169.3                         -
arrangement
--------------------------------------------------------------------------------

At 31 March 2002 on a pro forma basis          172.2           221.6     620.5
Scheme of arrangement - return of capital     (561.4)                   (143.5)
Court approval capital reduction               449.2                         -
On issue of ordinary share capital                                         0.1
Distribution on share redemption                                (1.7)     (1.7)
Retained profit for the year                                     6.0       6.0
Transfer on disposal of properties                              33.4         -
Surplus arising on revaluation of                                         12.0
investment properties - group
Surplus arising on revaluation of                                         70.4
investment properties - joint ventures
Gross exchange differences on                                              0.7
retranslation of net investments 
and related borrowings
-------------------------------------------------------------------------------- 

At 31 March 2003                                60.0           259.3     564.5
================================================================================
Company
Issue of shares                                                          460.1
On issue of ordinary share capital                                         0.1
Court approved capital reduction                               449.2         -
Surplus arising on revaluation of                                          7.6
investment properties
Surplus arising on revaluation of                                         97.0
investment
in subsidiaries
Distribution on share redemption                                (1.7)     (1.7)
Retained profit for the year                                     1.4       1.4
--------------------------------------------------------------------------------

At 31 March 2003                                   -           448.9     564.5
================================================================================

17 Financial information

The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 March 2002 or 2003. Statutory accounts
for 2002 have been delivered to the registrar of companies, and those for 2003
will be delivered following the company's annual general meeting. The auditors
have reported on those accounts; their reports were unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.









                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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