(THG) Terrace Hill

6 January 2011

Terrace Hill Group PLC

("Terrace Hill" or the "Group")

FULL YEAR RESULTS SHOW CONTINUED PROGRESS IN DEVELOPMENT BUSINESS AND INCREASED FOCUS ON FOODSTORES

Terrace Hill Group plc (AIM: THG), a leading UK property investment and development group, today announces results for year to 30 September 2011.

Financial Highlights:

§ Revenue profit* of £5.6 million (30 September 2010: loss of £3.0 million)

§ Revenue of £67.8 million (30 September 2010: £30.7 million)

§ Loss before tax (IFRS) of £10.2 million (30 September 2010: profit of £17.9 million)

§ EPRA Net Asset Value per share decreased by 23.9% to 25.4p (30 September 2010: 33.4p as restated) while EPRA Triple Net Asset Value per share decreased by 23.0% to 26.6p (30 September 2010: 34.5p as restated)

§ Balance sheet gearing reduced to 95.1% (30 September 2010: 127.6%, on a restated basis)with net debt reduced by £39.3 million to £51.4 million (30 September 2010:  £90.7 million)

Operational highlights:

§ Foodstore business maturing very well and growing rapidly, with the committed programme of development now standing at 652,000 sq ft, with a projected end value of £240.0 million

§ Good progress with other developments, including two central London office led mixed use schemes at Howick Place in Victoria, and Savile Row / Conduit Street, W1

§ Orderly disposal of residential portfolio underway with a 12-18 month sales process expected

Commenting, Robert Adair, Chairman of Terrace Hill, said:  "In the last year there have been some very positive aspects to our business, most particularly the strong growth in our foodstore development programme and reduction in debt. We believe that the greatest potential for the business lies in focusing on our key strengths of commercial property development and trading, and as we execute this strategy I remain confident we will perform well over the medium term and add value to the business for our shareholders."

*See Chairman's Statement below for definition of revenue profit

For further information, please visit www.terracehill.co.uk, or contact:

Will Henderson

Chairman's Statement

I am pleased to report our financial results for the twelve months ended 30^th September 2011 where we have witnessed good progress in our foodstore development programme.  However our financial results have been affected by falling asset values and the decision to sell our residential investment assets.

It has become clear that the longer term investment horizon of holding and managing residential investment property is not well suited to a property development and trading business like ours and that our capital can generate far higher returns through deployment in carefully selected commercial developments, in particular within the foodstore sector. We have therefore decided to sell the residential investment assets owned directly by us and through our associate Terrace Hill Residential PLC, a process which we expect to complete over the next 12 - 18 months. The result of selling portfolios of let residential investments is that the prices achieved often reflect a discount to the individual vacant possession values of the properties.  We have decided to reflect the discounted prices we are likely to achieve on sale by changing the basis of valuation of the properties from their individual vacant possession value to their discounted investment value which we now consider to be more appropriate. This has been reflected as a prior year adjustment so that comparisons can be readily made with earlier periods. The cumulative impact of this change in valuation basis on the Group's NAV at 30 September 2011 has been a reduction of £22.5 million.  Further details of this can be found in the Finance Review below.

As a result of this change in our valuation methodology and movement in the value of our legacy development properties, our EPRA Net Asset Value has decreased by 23.9% to 25.4 pence per share (30 September 2010: 33.4 pence per share as restated) and our EPRA Triple Net Asset Value has decreased by 23.0% to 26.6 pence per share (30 September 2010: 34.5 pence per share as restated). The EPRA Triple Net Asset Value takes account of contingent tax on prospective gains and other fair value adjustments.

The Group's revenue profit (which is stated before valuation movements on investment and development properties and contributions from our joint venture and associated undertakings but after normal financing costs) improved to £5.6 million for the period, compared with a loss of £3.0 million for the restated comparative 11 month period. Our loss before tax, measured under IFRS, was £10.2 million for the period compared with a profit before tax of £17.9 million for the restated comparative 11 month period.

Our net debt has continued to reduce at a very satisfactory rate and is now £51.4 million, £39.3 million lower than at 30 September 2010, when it was £90.7 million, reflecting our success in realising developments and managing our cash flow. Despite the change in basis of valuing our residential assets as noted above, our net gearing has also reduced and was 95.1% at 30 September 2011 compared to 127.6% at 30 September 2010 (on a restated basis).

We continue to review the Group's position as regards the payment of dividends and reluctantly have concluded that we should not resume payment of dividends and should remain prudent in this respect until market conditions allow.

Our foodstore development programme is maturing and growing rapidly. We have recently gained detailed planning consents covering a total of 194,000 sq ft of new floor space at our sites in Sunderland, Whitchurch and Skelton where we also have pre-letting or freehold sale agreements in place with retailers. In addition we have recently received a resolution to grant planning consent for a foodstore of 48,786 sq ft at Sedgefield, Co Durham, and have pre-planning discussions and occupier negotiations on-going at four other sites bringing our committed programme to a total of 652,000 sq ft with a projected end value of £240.0 million. With the help of teams dedicated to this sector working in all our offices we have a lengthening pipeline of new foodstore development proposals and I see this as the main driver of sustainable growth in our business for some time to come.  The impact of this programme on the Group's EPRA NAV        is modest at this stage.  We have included 3.3 pence per share in our EPRA NAV reflecting a conservative view of the anticipated profits from our eight current committed sites.

In central London we are managing two office led mixed use schemes at Howick Place in Victoria and Conduit Street in Mayfair. I expect these to show good returns as they reach completion over the next 12- 24 months, however the competitive nature of site acquisitions in central London makes the timing of similar further deals uncertain.

I reported in my interim report the resignation of Julie Green, our most recently appointed independent non-executive director, for reasons connected with her appointment with Ernst & Young and we are seeking to appoint her replacement as soon as possible. Also, I would like to thank everyone at Terrace Hill for their hard work and commitment during the last year.

Outlook

In the last year there have been some very positive aspects to our business most particularly the strong growth in our foodstore development programme and reduction in debt. I see these trends continuing into the current year, notwithstanding the current economic uncertainty. I remain confident we will perform well over the medium term and add value to the business for our shareholders.

Robert FM Adair

Chairman

6 January 2012

Business Review - Operations

Commercial Property

Foodstore Development

We have recently reported that the main area of our commercial property development activity is currently in the foodstore sector. This is a sector where demand from occupiers remains unabated, with all the main foodstore retailers rapidly expanding their trading footprint in the UK. This demand is fuelled not only by a desire of the retailers to grow market share, but also their expansion into new product areas, in particular comparison non-food items and household goods. In some cases up to 50% of sales space in new stores is dedicated to non-food items. There is also a strong push by certain retailers to fill geographic gaps in their portfolios with Waitrose and Sainsbury's expanding in the north and Morrisons in the south of the country.

At Terrace Hill we have a team dedicated to this sector with specialists in each of our regional offices. This gives us a unique insight into local markets which is essential in terms of site finding, planning, and fulfilling the retailer's specific requirements. Our focus is entirely on large format foodstore development, usually over 40,000 sq ft, and not in the small "convenience" shop sector where we cannot justify our time being spent on the smaller returns.

Our focus is paying off handsomely. Over the past 24 months we have completed three large foodstore schemes at Bishop Auckland, Manchester and Helston which together generated in excess of £14.0 million of profit before tax.  We also have eight new committed projects with sites under contract, four of which have recently received detailed planning consent or a resolution to grant planning and all of which have commitments or discussions on-going with retail occupiers.

Our foodstore development transactions are structured in a way that ensures the associated risks are relatively small. We usually hold the sites under options or conditional contracts and only commit to the acquisition once we have received detailed planning permission and commitment from an occupier, often sharing the uplift in value with the landowner. This means that our financial risk is limited to the costs and fees associated with gaining planning consents and legal agreements. Furthermore there is great demand for the subsequent property investments from a wide range of purchasers attracted by the long, usually 25 year plus, lease terms and secure income. This allows us to raise equity finance through a forward sale to an investor which reduces the need to seek bank debt or use our own equity in the development phase.  The typical margin we achieve on these developments is in the region of 15-20% of gross development value.

We have a substantial pipeline of further foodstore development sites and we are confident that this is a sustainable area of business for us for the foreseeable future. The planning system in the UK remains challenging, however, so far we have achieved a 100% success rate in winning planning for our foodstore schemes and have found that, in general, the uncertainty lies around the timing of the consents.

Highlights from our foodstore development programme include:

London Offices

We have two central London office led mixed use development schemes in progress at the moment, both of which we expect to perform strongly as they complete over the next 12 - 24 months. New acquisitions are, however, hard to achieve with strong competition for a limited supply of sites and almost no debt available to help purchasers.

Other Developments

We have also made considerable progress with a number of our other sites and assets. These include: the pre-sale of a substantial part of a small unit industrial development in Christchurch, the construction, funding and forward sale of the Northern Design Centre at Baltic Business Quarter in Gateshead and the sale of the Hudson Quay office development, which had been let to Middlesbrough Primary Care Trust on Teesside.

Residential Investment

We stated earlier that we have decided to exit the residential investment sector through the sale of our properties and those owned by our associate, Terrace Hill Residential PLC. The portfolios have shown good growth in rental values and occupancy rates are at record levels, however we believe that Terrace Hill is better suited to and can generate significantly better returns from its core commercial real estate development and trading activities than from the longer term management of residential investment portfolios. Since January 2011 Terrace Hill Residential PLC has sold £50.1 million of assets and we are now overseeing an orderly disposal of the balance of the Group's residential properties which we expect to take 12 -18 months to complete.

Business Review - Finance

Financial results and net asset value

The results for the year and the Group's NAV at 30 September 2011 have been impacted by the adoption of the investment value basis of valuation for the residential investment properties, in which we have interests both on our balance sheet and through our investment in Terrace Hill Residential PLC. Until this year we had valued residential investment properties at fair value, which we interpreted as the market value of the properties with the special assumption of vacant possession. As a consequence of prices achieved on sales of residential properties during the year and following the decision by Terrace Hill Residential PLC to place its portfolio on the market, we have concluded that the more appropriate valuation basis for the residential properties is market value on the basis of their current, largely let status. Accordingly, the investment value basis has been adopted for residential property held by the Group and Terrace Hill Residential PLC in the current year and has been retrospectively applied to prior years. The cumulative impact of this change in basis on the Group's NAV at 30 September 2011 has been a reduction of £22.5 million. More information is included in Note 1 to the financial statements.

The Group's NAV decreased by 16.8% in the year ended 30 September 2011 to £48.1 million (22.7 pence per share) from £58.4 million (27.5 pence per share) as restated at 30 September 2010 and our EPRA NAV decreased by 23.9% to £54.1 million (25.4 pence per share) from £71.1 million (33.4 pence per share) as restated at 30 September 2010.

The decrease in our EPRA NAV was caused principally by the following:

The Group's EPRA triple NAV, which takes into account any tax payable on profits arising if all the Group's properties were sold at the values used for EPRA NAV, the write-off of goodwill and any other fair value adjustments, decreased by 23.0% to £56.5 million (26.6 pence per share) from £73.4 million (34.5 pence per share) as restated at 30 September 2010.

Calculation of EPRA NAV and EPRA Triple NAV (unaudited)

Statement of comprehensive income

Revenue for the year ended 30 September 2011 includes rental income of £3.2 million, recognition of revenue under the foodstore construction contract at Bishop Auckland of £7.4 million, revenue from site sales at Farnborough, Christchurch and Bishop Auckland of £8.4 million and revenue from the sales of completed buildings at Middlehaven and Wilton Road, Victoria amounting to £34.6 million. We also sold five residential units during the year, for a total of £0.8 million.

The statement of comprehensive income also includes movements in the valuation of our properties. Included in cost of sales is £6.1 million of write downs to the carrying value of our development properties (2010: write back £3.7 million). Our wholly owned residential properties fell in value by £3.6 million (2010 as restated: increase £0.9 million), and our share of the fall in value of the residential properties owned by Terrace Hill Residential PLC was £1.2 million (2010 as restated: £15.1 million increase).

Administrative expenses for the year ended 30 September 2011 amounted to £4.3 million (2010: £4.7 million), reflecting continued tight control over our overheads.

Net finance costs for the year ended 30 September 2011 were £4.6 million (2010: £1.8 million). Included in the 2011 figure is a provision for £2.0 million relating to an interest shortfall guarantee (in respect of which £1.0 million was provided in 2010), and £1.3 million relating to interest expensed on development projects where the Directors have assessed that interest should not be capitalised as work is not currently underway.

Our share of the results of our joint ventures and associated undertakings was a loss of £2.6 million in the year ended 30 September 2011 (2010 as restated: profit £16.1 million) of which as noted above £1.2 million related to movements in the value of the underlying properties (2010 as restated: £15.1 million increase).

Balance Sheet

The Group's net assets at 30 September 2011 were £48.1 million, a decrease of 17.5% on the restated amount reported at 30 September 2010 of £58.4 million. The Group's gearing has improved since 30 September 2010 and net debt as a percentage of adjusted net assets is 95.1% at 30 September 2011 compared to 127.6% as restated at 30 September 2010. The amount of net debt has also reduced to £51.4 million at 30 September 2011 from £90.7 million at 30 September 2010.

Financial resources and capital management

As mentioned above, our net debt at 30 September 2011 was £51.4 million, a reduction of £39.3 million in the year. Sale proceeds of £45.2 million were the largest contributor to this reduction, offset by expenditure on our developments and the net effect of our trading activities.

The Group funds itself and its projects with a combination of cash and bank debt. Bank debt is secured either against assets wholly and ultimately owned by Terrace Hill Group plc, or assets owned by joint ventures. Several loans falling into each of the above categories were refinanced during the year. In particular, a loan of £33.7 million that matured in September 2011 has been re-financed for a further two years on market terms. In addition to this, termsheets have been received for several loan extensions which have not been documented as at the time of writing and which we expect to finalise in the next few weeks.

The average maturity of Group debt is now 15.4 months with a weighted average margin of 2.83%, both of which measures change to 19.7 months and 3.04% if we take into account loans where terms have been commercially agreed but not yet documented. The average maturity of joint ventures and associated undertaking debt is now 15.9 months with a weighted average margin of 2.96%.

In order to benefit from the low interest rate environment, which is not forecast to change significantly for the foreseeable future, at 30 September 2011 the Group had no hedging arrangements in place. Interest rate exposure is actively monitored. 50% of joint ventures and associated undertaking debt is hedged with an average interest rate of 2.95%.

In order to determine whether the Group has adequate resources to maintain its strategy for the foreseeable future, the Group monitors its forecast cashflow movements for the next 24 months on a rolling basis and robustly and regularly updates the fundamental assumptions.

Summary of debt position

The net gearing and loan to value percentages shown above are in relation to our adjusted NAV. The majority of joint venture and associated undertaking debt is of limited recourse to the Group.

Debt expiry profile

*     Group share

Summary of loan to value ratios of Group property

Philip Leech                                                                                           Jon Austen

Chief Executive                                                                                      Group Finance Director

6 January 2012

Consolidated statement of comprehensive income

for the year ended 30 September 2011

*    See Note 1 Restatement of prior years

The notes below form part of these financial statements.

Consolidated statement of changes in equity

for the year ended 30 September 2011

*   See Note 1 Restatement of prior years

Consolidated balance sheet

at 30 September 2011

*    See Note 1 Restatement of prior years

The financial information was approved and authorised for issue by the board of directors on 6 January 2012 and was signed on its behalf by:

P A J Leech          J M Austen

Director                                Director

Consolidated cash flow statement

for the year ended 30 September 2011

*    See Note 1 Restatement of prior years

1 Accounting policies

Basis of preparation

The financial information set out in this announcement does not constitute the Group's statutory accounts for the year ended 30 September 2011 under the meaning of s434 Companies Act 2006, but is derived from those accounts.  Statutory accounts for the year ended 30 September 2011 have been reported on by the Independent Auditors. Their report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.  The statutory accounts for the year ended 30 September 2011, prepared under IFRS, will be delivered to the Registrar in due course.

The financial information set out in this announcement does not constitute the Group's statutory accounts for the period ended 30 September 2010 under the meaning of s434 Companies Act 2006, but is derived from those accounts, subject to audited restatement as disclosed in note 1.  Accounts for the period ended 30 September 2010 have been reported on by the Independent Auditors. Their report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the period ended 30 September 2010 have been filed with the Registrar of Companies.

Changes in accounting policies

The Group has not adopted any new or amended IFRS and IFRIC interpretations in the year.

New standards and interpretations not applied

IASB and IFRIC have issued the following standards and interpretations relevant to the group. These standards and interpretations are mandatory for accounting periods beginning on or after the date of these financial statements and will become effective for future reporting periods:

IAS 12                    Income Taxes

IAS 24                    Related Party Disclosures - revised definition of related parties

IAS 27                    Consolidated and Separate Financial Statements

IAS 28                    Investments in Associates and Joint Ventures

IFRS 9                    Financial Instruments

IFRS 10                 Consolidated Financial Statements

IFRS 11                 Joint Arrangements

IFRS 12                 Disclosure of interests in Other Entities

None of the new standards and interpretations noted above, which are effective for accounting periods beginning on or after 1 October 2011 and which have not been adopted early are expected to have a material effect on the group's future financial statements.

Going concern

The directors are required to make an assessment of the Group's ability to continue to trade as a going concern. The directors have given this matter due consideration and have concluded that it is appropriate to prepare the Group financial statements on a going concern basis. The two main considerations were as follows:

Cash flow - the Group maintains a rolling 24-month cash forecast that takes account of all known inflows and outflows. The cash flow is regularly stress tested to ensure that the Group can withstand reasonable changes in circumstances that could adversely affect its cash flow. The key potential changes that the Group has considered include: the timing of planned property sales and possible reductions in anticipated cash flows from re-financing properties after planning permission has been obtained.

Bank facilities - the Group maintains a regular dialogue with its lenders and keeps them informed of how the Group is trading. A consequence of the nature of the Group's business is that it has a relatively large number of discrete bank facilities, each secured on the project they finance. Consequently, the Group always has some debt to refinance and during the year refinanced £34.6 million of Group debt and £20.4 million of joint venture and associated undertaking debt. The Group has a further £26.8 million of debt facilities to be re-financed by 30 September 2012. In the normal course of business, developments will be completed and assets disposed of and so the actual requirement to renew financing is expected to be at a lower level than this. Of the £26.8 million, terms are largely agreed in respect of £19.1 million and discussions with regards the balance will be commenced closer to their maturities. The Group maintains a good dialogue with a sizeable number of banks and believes that the remaining loans that require refinancing will be refinanced on acceptable terms.

Having considered the headroom in the Group's cash forecasts and its previous success in extending finance terms when required, the Group believes that it has sufficient resources to continue trading for the foreseeable future.

Investment property and inventory

In relation to the investment and development properties, the directors have relied upon the external valuations and advice provided by professionally qualified valuers in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors.

The Group uses the valuation performed by its independent valuers as the fair value of its investment properties and in assessing the net realisable values of its development properties. The valuation is based upon assumptions including future rental income, anticipated maintenance costs, future development costs and the appropriate discount rate. The valuers also make reference to market evidence of transaction prices for similar properties.

Restatement of prior years

The Group's investment properties are revalued annually to fair value, with changes in fair value being recognised in the Consolidated Statement of Comprehensive Income. The same accounting policy is applied to residential investment properties held by the Group's associate, Terrace Hill Residential Plc, which is reflected in the Group's share of the associate's profits or losses recognised in the Consolidated Statement of Comprehensive Income and reflected in the Group's share of the associate's net assets in the Consolidated Balance Sheet. In prior years the fair value of residential investment properties owned by the Group and its associate has been interpreted as the Market Value applying the special assumption of vacant possession in accordance with RICS Valuation Standards VS 3 Appendix 4.

As a consequence of prices achieved on sales of residential properties during the financial year ended 30 September 2011 and following the stated intention to place the residential portfolio owned by Terrace Hill Residential PLC on the market, the board has reviewed the valuation basis to be adopted for the purposes of fair value for residential investment property in the financial statements both in the current and prior years.

The board concluded that fair value, as required by IAS 40 "Investment Property", should be determined by adopting an investment value basis of valuation, as defined by RICS Valuation Standards VS 4, as it better reflects the price at which the residential properties could be exchanged between knowledgeable, willing parties in arm's length transactions and is more appropriate for inclusion in financial statements than the previous valuation basis. Accordingly, the investment value basis has been adopted for residential property held by the Group and the associate in the current year and has been retrospectively applied to prior years. The impact of the restatement on 30 September 2010 is to:

•     increase the Group's share of the associates profit for the period by £8,549,000;

•     increase the profit on revaluation of investment properties by £948,000;

•     increase the profit attributable to equity holders of the parent by £9,497,000;

•     decrease the fair value of the Group's investment properties by £5,832,000;

•     decrease the investment in associates by £6,425,000;

•     decrease the trade and other receivables by £13,485,000; and

•     decrease the Group's net assets by £25,742,000.

The impact on the Group's balance sheet at 1 November 2009 is to decrease the Group's investment property by £6,780,000, decrease the Group's investment in associates by £147,000, decrease the trade and other receivables by £13,602,000, increase creditors by £14,710,000 and decrease the Group's net assets by £35,239,000.

The impact on the Group's basic earnings per share for 2010 is an increase from 2.64p to 7.14p and an increase in the diluted earnings per share from 2.64p to 7.14p.

2 Revenue

Sales of development properties includes £16,030,000 (2010: £17,777,000 for one investor) of revenue recognised on two construction contracts for investors. Construction contract revenue is recognised in the accounts in line with contract stage of completion determined by stage valuations. The costs incurred on these construction contracts totalled £12,878,000 (2010: £13,139,000). Revenue was generated from two sales of development properties to individual investors of £7.9 million and £26.75 million.

3 Segmental information

The operating segments are identified on the basis of internal financial reports about components of the Group that are regularly reviewed by the chief operating decision maker (which in the Group's case is its executive board comprising the three executive directors) in order to allocate resources to the segments and to assess their performance. The internal financial reports received by the Group's executive board contain financial information at a Group level as a whole and there are no reconciling items between the results contained in these reports and the amounts reported in the financial statements.

The Group operates in two principal segments being commercial property development and investment and residential property investment. The Group does not operate outside the UK.

The segmental results that are monitored by the board include all the separate lines making up the segmental IFRS operating profit. This excludes central overheads and taxation which are not allocated to operating segments.

4 Finance costs and finance income

Interest is capitalised at the same rate as the Group is charged on the respective borrowings. Fair value adjustments to financial liabilities totalled £177,000 gains (2010: £785,000 gains) on interest rate swaps included in finance income.

5 Administrative expenses

Is arrived at after charging/(crediting):

6 Tax on (loss)/profit on ordinary activities

(a) Analysis of charge in the year

(b) Factors affecting the tax charge for the year

The tax assessed for the period is higher than the standard rate of corporation tax in the UK of 27% (2010: 28%). The differences are explained below:

(c) Associates and joint ventures

The Group's share of tax on the associates and joint ventures is £Nil (2010: £Nil).

7 Earnings per ordinary share

The calculation of basic earnings per ordinary share is based on a loss of £10,423,000 (2010 profit: £15,060,000) and on 210,951,299 (2010: 210,951,299) ordinary shares, being the weighted average number of shares in issue during the year.

The calculation of diluted earnings per ordinary share for 2011 is the same as that for basic earnings per share. The calculation of diluted earnings per share for 2010 is based on earnings of £15,060,000 and on 210,952,880 ordinary shares being the weighted average number of shares in issue during the year adjusted to allow for the issue of ordinary shares in connection with a share award.

8 Property, plant and equipment

At the year end there were no assets held under finance leases.

9 Investment properties

The commercial investment properties situated in England owned by the Group have been valued as at 30 September 2011 by qualified valuers from CB Richard Ellis, an independent firm of Chartered Surveyors, on the basis of open market value. The valuations were carried out in accordance with guidance issued by the Royal Institution of Chartered Surveyors.

Residential investment properties owned by the Group have been valued as at 30 September 2011 by qualified valuers from Allsop LLP, an independent firm of Chartered Surveyors, on the basis of open market value. The valuations were carried out in accordance with guidance issued by the Royal Institution of Chartered Surveyors.

Rental income generated from investment property in the year was £560,000 and direct operating costs on this was £240,000.

10 Investments

Associates and joint ventures

The Group's interest in its principal associates which have been equity accounted in the consolidated financial statements were as follows:

Terrace Hill Residential PLC is incorporated in Scotland.

Summarised information 2011

Two Orchards Limited was placed into administration on 19 May 2011. The Group has fully provided for its investment in this company.  Provision of £1.0 million was made against the Group's investment in Terrace Hill Development Partnership based on a valuation deficit of that entity's investment properties.

Summarised information 2010 restated

The Group's interest in its joint venture which has been equity accounted in the consolidated financial statements was as follows:

11 Development properties

No amounts are held in development properties in respect of construction contracts and retentions on such contracts is £Nil.

12 Trade and other receivables

Included in other receivables and prepayments and accrued income is a balance due from Howick Place JV S.a.r.l. totalling £4.3 million (2010: £4.5 million) that has a final maturity date of 31 December 2014.

At 31 October 2009, trade and other receivables of £22.7 million have been restated and decreased by £13.6 million being an additional provision against amounts due from associates and joint ventures.

The ageing of trade and other receivables was as follows:

No amounts were overdue at the year end.

The movement in the allowance for impairment in respect of amounts due from associates and joint ventures during the year was as follows:

The allowance is based on falling asset values in the associates.

13 Trade and other payables

At 31 October 2009, trade and other payables of £32.5 million

 have been restated and increased by £14.9 million relating to an increase in accruals.

14 Other payables (non-current)

15 Bank overdrafts and loans

An analysis of interest rates and information on fair value and security is given in note 17.

16 Deferred tax

Details of the deferred tax charged/(credited) to the Consolidated statement of comprehensive income are as follows:

The Consolidated balance sheet deferred tax assets and liabilities are as follows:

Under IAS 12, deferred tax is recognised for tax potentially payable on the realisation of investment properties at fair values at the balance sheet date. No deferred tax asset is recognised in respect of losses if there is uncertainty over future recoverability.  A deferred tax asset has not been recognised for tax losses of £9,140,000 (2010: £4,200,000).

17 Financial instruments

The Group's principal financial instruments comprise loans, overdrafts, cash and short-term deposits. The main purpose of these financial instruments is to provide finance for the Group's operations. Further information on the Group's financial resources and capital management is given in the Financial review above.

The Group has various other financial instruments such as trade receivables and trade payables that arise directly from its operations, listed and unlisted investments.

The main risks arising from the Group's financial instruments are interest rate risk, credit risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised below. The magnitude of

the risk that has arisen over the year is detailed below.

Interest rate risk

The Group holds cash balances on short-term deposit. The Group's policy is to monitor the level of these balances to ensure that funds are available as required, recognising that interest earnings will be subject to interest rate fluctuations.

The Group borrows cash in the form of loans and overdrafts, which are subject to interest at floating rates, recognising that rates will fluctuate according to changes in LIBOR and the bank base rate. The Group is cognisant at all times of movements in interest rates and will, as appropriate, enter into interest rate swaps to maintain a balance between borrowings that are subject to floating and fixed rates.

Credit risk

The Group's principal financial assets are cash and trade receivables. Our cash deposits are placed with a range of banks to minimise the risk to the Group. The principal risk therefore arises from trade receivables. Trade receivables from the sale of properties are secured against those properties until the proceeds are received. Rental receivables are unsecured but the Group's exposure to tenant default is limited as no tenant accounts for more than 10% of total rent. Rental cash deposits and third party guarantees are obtained as a means of mitigating financial loss from defaults.

Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank balances and loans. Cash flow and funding needs are regularly monitored. Further information is given in note 1.

Categories of financial assets and financial liabilities

Financial assets measured at fair value amount to £6,000 (2010: £182,000).

Financial liabilities measured at amortised cost

The maximum exposure to credit risk in financial assets is £23,112,000 (2010: £19,568,000). The maximum amount due from any single party is £14,943,000 (2010: £14,948,000) included in amounts due from associates and joint ventures.

Financial liabilities designated at fair value amount to £Nil (2010: £177,000) in respect of financial derivatives.

All the Group's financial liabilities designated at fair value through the statement of comprehensive income are defined as level 2, in accordance with IFRS 7, as they are derived from inputs other than quoted prices.

Interest rate risk profile of financial assets and liabilities

The interest rate profile of financial assets and liabilities of the Group at 30 September 2011 was as follows:

Floating rate financial liabilities bear interest at LIBOR or base rate plus margins of between 1% and 4%.

There are no amounts included in floating rate financial liabilities that are subject to interest rate swaps (2010: £20,795,000).

The interest rate profile of financial assets and liabilities of the Group at 30 September 2010 was as follows:

The floating rate financial assets comprise:

•     cash on deposit.

The floating rate financial liabilities comprise:

•     Sterling denominated bank loans that bear interest based on LIBOR and bank base rates; and

•     Sterling denominated bank overdrafts that bear interest based on bank base rates.

The fair value of the financial assets and liabilities is equal to the book value.

Borrowings

The Group's bank borrowings and overdrafts are repayable as follows:

The bank overdraft is secured by way of debenture and cross guarantee from certain subsidiaries and legal charges over properties.

The bank loans are secured by legal charges over the Group's investment and development properties together with guarantees from certain subsidiary undertakings with a limited guarantee from the parent company and in one case a floating charge from the parent company.

Borrowing facilities

The Group has the following undrawn committed bank borrowing facilities available to it at the year end: