Results for the year ended 31 December 2013

RNS Number : 9337A

SEGRO PLC

26 February 2014

26 february 2014

RESULTS FOR THE year ended 31 december 2013

Delivering on our strategic priorities; well positioned for growth

SEGRO plc ('SEGRO' / 'Company' / 'Group') today announces its results for the year ended 31 December 2013.

FINANCIAL SUMMARY

Income statement metrics	Year to 31 December 2013	Year to 31 December 2012	Change per cent
EPRA¹ profit before tax (£m)	134.1	144.9	(7.5)
IFRS profit before tax (£m)	212.1	(202.2)	-
EPRA¹ earnings per share (pence)	17.7	19.3	(8.3)
IFRS basic and diluted profit per share (pence)	28.4	(26.6)	-
Dividend per share (pence)	14.8	14.8	-

Balance sheet metrics	31 December 2013	31 December 2012	Change per cent
Portfolio valuation, SEGRO share (£m)	4,149	4,655	4.1²
EPRA¹ net asset value per share (pence)	312	294	6.1
IFRS net asset value per share (pence)	316	302	4.6
Net borrowings (£m)	1,459	2,090	(30.2)
Loan to value ratio (including joint ventures at share) ³ (per cent)	42	51	-

¹ Calculations for EPRA performance measures are shown in notes 2 and 13 to the consolidated financial information.

² Valuation movement during the period based on the difference between opening and closing valuations for completed properties, allowing for capital expenditure, acquisitions and disposals.

³ LTV ratio includes £131 million of deferred consideration receivable.

HIGHLIGHTS

Significant strategic progress in reshaping the portfolio, building critical mass in our target markets, reducing net debt and introducing third party capital

· Substantial reshaping of the portfolio:

o £591 million of disposals, on average 4.7 per cent above 31 December 2012 book values and at a topped-up net initial yield of 7.2 per cent.

o £141 million of acquisitions of modern warehouse assets (net initial yield of 7.1 per cent) and land in our core markets.

o £108 million of capital spent on development projects; 15 projects completed and 85 per cent let at year-end; anticipated yield on cost of approximately 10 per cent.

· Third party capital introduced:

o The SEGRO European Logistics Partnership ('SELP') joint venture completed in October 2013, providing capital for growth and enhancing our risk-adjusted returns on investment.

o Contracts exchanged since the year-end to purchase €472 million (our share: €236 million) of land and assets on behalf of SELP, further building critical mass in our key target markets.

· Significant reduction in net debt:

o Group net borrowings reduced by £631 million through net disposals and the creation of SELP.

o 'Look-through' LTV reduced to 42 per cent (31 December 2012: 51 per cent).

Positive valuations drive increase in net asset value

· 6.1 per cent increase in EPRA NAV per share to 312 pence (31 December 2012: 294 pence; 30 June 2013: 294 pence); 316 pence before swap close-out costs.

· Improving investor appetite for industrial and logistics assets, combined with asset management initiatives, contributed to a 4.1 per cent like-for-like growth in the value of our completed portfolio, almost all of which occurred in the second half (1H 2013: +0.3 per cent).

· UK completed portfolio capital return of 7.0 per cent outperformed IPD Quarterly UK Industrial index (+5.7 per cent capital return), reflecting the quality and location of SEGRO's assets and the on-going benefits of the strategic portfolio reshaping programme, partly offset by 3.1 per cent decline in value of Continental European assets.

· Stronger capital returns in the UK and from core assets in Germany and Central Europe, with weaker performance from non-core assets and properties in France and Benelux where economic growth continues to be subdued.

Encouraging operating performance

· Positive asset management momentum:

o £29.6 million of new rent contracted during the year (2012: £25.2 million), including £7.3 million (SEGRO share) of pre-lets signed (2012: £3.9 million).

o Customer retention levels remained high at 69 per cent (2012: 65 per cent).

o Weighted average lease length increased to 6.7 years to break (31 December 2012: 6.4 years).

o Marginal increase in Group vacancy rate to 8.5 per cent (31 December 2012: 8.2 per cent) due mainly to the impact of disposals (but an improvement from the half year position of 9.5 per cent)

· Net rental income reduced by 12.3 per cent, as expected, due to disposals, the creation of SELP and the insolvency of Neckermann; decline mitigated by increase in profits from joint ventures and a reduction in net finance costs and administrative expenses, leading to a 7.5 per cent reduction in EPRA profit before tax.

Well positioned for growth

· Repositioned portfolio now well placed to benefit from both general economic recovery and specific structural drivers:

o Ongoing growth in online retailing and increasing occupier demand for 'last mile delivery'.

o Shortage of new space available in most of our key markets.

o Rental growth beginning to reflect supply-demand imbalance in some core occupier markets.

· Strong momentum in our highly profitable development pipeline:

o 18 projects approved or underway, representing £16.9 million (our share) of potential future annualised rental income.

o Future developments on our land bank could total 1.5 million sq m of space with potential to deliver an additional £74 million (our share) of new rent over the next five years.

David Sleath, Chief Executive, said:

"2013 has been a strong year for SEGRO. We have made significant strategic progress in terms of reshaping the portfolio, building critical mass in our target markets, reducing Group net debt by 30 per cent and introducing third party capital through the creation of SELP.

"Our actions over the last two years have significantly improved the Group's property portfolio and financial position, and we have established a strong platform from which to deliver sustainable growth.

"The strategic portfolio reshaping programme will continue to have an earnings impact in 2014. However, we have started the year with good momentum from our acquisition, leasing and development programmes and we expect that the marked improvement in investor appetite for high quality warehouse and logistics assets, which has driven significant capital value growth in the second half of 2013, will be sustained in 2014."

webcast/CONFERENCE CALL FOR INVESTORS AND ANALYSTS

A live webcast of the results presentation will be available from 09.00 (UK time) at:

http://www.media-server.com/m/p/nkhugh4y

The webcast will be available for replay at SEGRO's website at: http://www.segro.com/investors by the close of business.

A conference call facility will be available at 09:00 (UK time) on the following numbers:		From midday the conference call will be available on a replay basis on the following number:
Toll:	+44 (0) 20 3427 0503	Toll:	+44 (0) 20 3427 0598
Access code:	6319308	Access code:	6319308

A video interview with David Sleath, Chief Executive, discussing the results is now available to view on www.segro.com, together with this announcement, the 2013 Property Analysis Report and other information about SEGRO.

CONTACT DETAILS FOR INVESTOR / ANALYST AND MEDIA ENQUIRIES:

SEGRO

Justin Read

(Group Finance Director)

Mob: +44 (0)7831 165 537

Tel: + 44 (0)20 7451 9110
(after 11am)

Harry Stokes

(Head of Investor Relations and Research)

Mob: +44 (0)7725 735 322

Tel: +44 (0)20 7451 9124
(after 11am)

FTI Consulting

Stephanie Highett / Nick Taylor

Tel: +44 (0) 207 831 3113

Dividend

The timetable for the 2013 final dividend is set out on page 12.

Forward-looking statements: This announcement contains certain forward-looking statements with respect to SEGRO's expectations and plans, strategy, management objectives, future developments and performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of SEGRO speak only as of the date they are made. SEGRO does not undertake to update forward-looking statements to reflect any changes in SEGRO's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance.

Neither the content of SEGRO's website nor any other website accessible by hyperlinks from SEGRO's website are incorporated in, or form part of, this announcement.

CHief executive's review

BUSINESS OVERVIEW

SEGRO is a UK Real Estate Investment Trust ('REIT'), and a leading owner, asset manager and developer of modern warehousing, light industrial property, as well as of higher value uses such as offices and data centres. We own or manage 5.3 million square metres of space in £5.2 billion of assets (our share of which totals £4.1 billion), serving 1,250 customers from a range of industry sectors. Our properties are located around major conurbations and at key transportation hubs across eight European countries, principally in the UK, France, Germany and Poland.

In the UK, we have a leading market position in Heathrow, with £0.7 billion of assets (including our share of joint venture assets) in some of the most sought after airside and off-airport locations. We have a £0.6 billion portfolio at Park Royal and Greenford in West London, which has become a primary focus for businesses seeking 'urban logistics' space to service Central London. We also own the £1.0 billion Slough Trading Estate, which is a well-established, modern commercial centre in the Thames Valley and which has also grown to become one of Europe's largest data centre hubs. In Continental Europe, we have £1.2 billion of assets, predominantly comprising logistics warehousing and light industrial assets concentrated in attractive sub-markets such as the Ile de France region around Paris, which shares similar characteristics to Greater London, the Rhine Rhür region in Germany and key markets in Poland.

ADVANCING OUR STRATEGY TO BECOME A LEADING INCOME-FOCUSED REIT

In November 2011, we set out our strategy to address areas of historical underperformance and deliver better future returns to our shareholders.

Our goal - to be the best owner-manager and developer of industrial properties and a leading income-focused REIT - rests on the two strategic pillars of Disciplined Capital Allocation and Operational Excellence which, if underpinned by an efficient and prudent capital structure and lean support functions, should generate attractive returns for our shareholders.

In order to achieve our goal, we are building a portfolio comprising modern warehousing, light industrial and 'higher value use' assets (including data centres, retail assets and offices) which are well specified and located, with good sustainability credentials, and which will benefit from a low structural void rate and relatively low-intensity asset management requirements. These assets will be concentrated in the strongest European sub-markets, which have attractive property market characteristics, including good growth prospects, limited supply availability, and where we already have, or can achieve, critical mass.

We believe that such a portfolio should deliver attractive, low-risk income-led returns with above-average rental and capital growth when market conditions are positive, and show resilience in a downturn.

We aim to enhance these returns through development, seeking to ensure that the income 'drag' associated with holding land does not outweigh the potential benefits. This should generate an attractive, income-oriented total property return ('TPR') which, if underpinned by an efficient overhead structure and relatively modest financial leverage through the cycle, should translate into attractive total shareholder returns.

In order to implement our strategy, we set out a plan which has four strategic priorities, against which we monitor our progress.

· Reshaping the existing portfolio by divesting non-core assets which do not meet our strategic and financial criteria and reducing non-income producing assets as a proportion of the total portfolio;

· Delivering profitable growth and reinvesting in core markets and asset types by taking advantage of attractive development and acquisition opportunities;

· Reducing net debt and financial leverage over time and introducing further third party capital where appropriate; and

· Driving our operational performance across the business through greater customer focus, knowledge sharing, efficiency improvements and cost reductions.

We have made significant progress against these priorities, exceeding our disposal target for the year, expanding our development programme and reducing our Group net debt by 30 per cent. The most significant transaction in the year was the creation of the SEGRO European Logistics Partnership ('SELP'), a €1 billion joint venture. This represented an important milestone in our objective to increase the use of third party capital whilst also leveraging our operating and investment expertise to expand our exposure to the growing European 'big box' logistics market on an attractive, risk-adjusted basis.

There remains progress to be made on all four of the priorities; however, having sold £1.1 billion of assets since the start of 2012, our focus is now shifting from portfolio reshaping and business restructuring towards growth.

Our development pipeline is rich with opportunities to deliver long-term attractive income and capital returns, and we believe the Group is well placed to benefit from both the improving economic environment and a number of structural drivers of demand, not least the growth in online retailing, as retailers seek real estate solutions to their 'last mile delivery' requirements.

1. RESHAPING THE EXISTING PORTFOLIO

DISPOSALS COMPLETED IN 2013¹
Month	Portfolio/Asset	Gross proceeds (£m)	Net initial yield (%)

January	Thales campus, UK	80.0	5.9 / 5.9²
February	MPM campus, Germany	56.0	7.9 / 7.9²
July	IQ Winnersh, UK	245.1	5.8 / 7.4²
September	West Cross Industrial Park, UK	75.0	5.4 / 6.8²
September	London industrial estates, UK	30.3	6.4 / 7.2²
December	Neckermann campus, Germany	38.3	n/a
Various	Other non-core assets	46.3	7.6 / 7.8²
Various	UK / Belgium land	20.0	n/a
	Total disposals during the year	591.0	6.2 / 7.2^{2 3}

1. Excludes disposal of assets into the SELP joint venture

2. Including the benefit of top-ups

3. Yield excludes land disposals

We disposed of £591 million of assets this year, exceeding our target of £300 million to £500 million, at an average 4.7 per cent above December 2012 book values.

The proceeds of the asset disposals reflect an average topped-up initial yield of around 7 per cent, similar to the average yield on the assets we acquired, but with the added benefit of having improved the overall quality of our portfolio.

£245 million of the disposal proceeds were from the sale of IQ Winnersh, an asset classed originally as core but which had a high office content. We took advantage of an improvement in investor demand for regional UK offices to crystallise an 11 per cent gain on the asset's December 2012 book value which allows us to recycle the proceeds into opportunities with a higher return profile.

Of the remaining £440 million of assets identified as non-core in November 2011, £74 million relates to assets in the UK and £366 million to assets in Continental Europe. We have now sold four of the six large, non-strategic assets we identified in November 2011, including three in 2013. The remaining two (Pegasus Park in Brussels and Energy Park outside Milan, which is still under construction) are valued at £163 million.

We continue to evaluate options for the remaining non-core assets and will seek to sell these within the next two to three years. In the meantime, our operations team will continue to manage the assets in order to maximise the income and returns from them prior to sale.

We expect the level of disposals in 2014 to be lower than in 2013. However, we will continue to recycle capital out of the remaining non-core assets and other assets as part of our ongoing strategy of actively managing the portfolio. In pursuing disposals we shall be mindful of the likely return profile of such assets as well as the availability of suitable opportunities for reinvestment.

2. DELIVERING PROFITABLE GROWTH THROUGH DEVELOPMENT AND ACQUISITION

In 2013, we invested £141 million into standing assets and land in our core markets, and another £108 million into our development pipeline, completing 15 projects during the year. We have 18 projects in our current development pipeline and the land acquisitions will enhance our development opportunities in the future.

Accretive acquisitions build scale in our core markets

We completed £114 million of acquisitions of logistics warehouses in our core markets. We expect the acquisitions to deliver resilient income-oriented total property returns, be accretive to earnings and improve our cost ratio as we build scale, particularly in Continental Europe.

In April, we acquired Zeran Park II, an asset 10 miles from the centre of Warsaw, used mainly for 'urban logistics' and ideally placed to accommodate demand for modern urban distribution space in this growing capital city.

In the UK, we purchased two 'urban logistics' warehouses: one in East London, an important regeneration area with limited supply of good quality logistics space, and one adjacent to our Premier Park estate in Park Royal. We also acquired two modern, long-leased logistics warehouses in the Midlands. Both assets are within the UK's logistics 'golden triangle', an area with strong transportation links and a limited supply of good quality 'big box' logistics warehousing. They were all acquired in off-market transactions, demonstrating our ability to source assets in an innovative and cost-effective manner.

In early 2014, we exchanged contracts to purchase a portfolio of 'big box' logistics assets in Continental Europe within the SELP joint venture for €472 million (our share €236 million). We expect the transaction to complete in the second quarter of 2014.

ACQUISITIONS COMPLETED IN 2013
Month	Property type	Location	Acquisition price (£m)	Net initial yield (%)

April	Urban logistics	Warsaw, Poland	36.9	7.5
August	Big box logistics	Midlands, UK	18.1	7.4
September	Urban logistics	Park Royal, UK	15.3	6.1
September	Urban logistics	East London, UK	30.0	6.9
November	Big box logistics	Northampton, UK	13.6	7.3
Various	Land	UK, Paris, Warsaw	27.0	n/a
	Acquisitions during the year		140.9	7.1¹

Post year-end	Big box logistics	Germany, Poland, France	196.7	7.1¹

1 Yield excludes land acquisitions

Successful and growing development pipeline

Development represents our most effective generator of capital and income growth and we invested £108 million in creating new space during 2013. The 15 developments we completed in 2013 should generate a yield on cost of 9.7 per cent when fully let.

Retailers and third party logistics providers are having to keep up with the rapidly changing pattern of consumer demand: purchases are increasingly made online for delivery to destinations other than traditional retail stores, at ever greater speeds. The shortage of suitable modern, well-located warehouses in our core markets, combined with a growing need for urban, regional and national distribution space, is driving strong demand for newly-developed space.

This is translating into higher demand for pre-let space which has also given us confidence to increase the element of speculative development in 2014 (although we are highly selective and only do so when we are confident that local occupier demand is sufficiently strong and supply is likely to remain limited). We entered 2014 with a strong and growing development pipeline and also have a number of encouraging discussions on-going about further projects.

The strong progress we have made with the development programme has encouraged us to add to our core land bank. In 2013, we acquired £27 million (74 hectares) of land in the strongest logistics markets in the UK, Poland and France.

Development projects completed in 2013

During the year, we completed 15 developments totalling 144,000 sq m, representing £6.6 million of new annualised income when fully let, an average profit on cost of 23 per cent and a yield on cost of 9.7 per cent. The projects were 73 per cent pre-let at commencement and were 85 per cent let at 31 December 2013.

In the UK, we completed 15,400 sq m of warehouse and logistics space, of which 11,400 sq m is now let. Within our Airport Property Partnership joint venture, we completed a 6,500 sq m UK headquarters building for Toll Global Forwarding in Feltham, in which Toll will consolidate and expand its Heathrow operations at a single site. On the Slough Trading Estate, Karl Storz Endoscopy doubled its research and development space in a new 2,300 sq m purpose-built facility.

In Germany, we completed 29,000 sq m of logistics space. We built an 11,700 sq m speculative project at Krefeld Logistics Park, near Düsseldorf, which was fully let to UPS two months before completion and which is used for the national and international distribution of online orders for Birkenstock. We also completed 17,400 sq m of logistics space in Alzenau, Frankfurt, of which 5,800 sq m was pre-let to textile company Sauerbrei.

In Central Europe, we completed 10 developments across our estates, totalling 99,500 sq m of space which is now fully let to a range of occupiers, including third party logistics operators such as DPD at Wroclaw and Geodis at Strykow, and an 18,500 sq m production facility for Dayco, a worldwide leader in the design and manufacture of engine components.

Active development projects

At 31 December 2013, we had 18 developments approved, contracted or under construction totalling 245,400 sq m, representing £16.9 million of annualised rental income (SEGRO share) when fully let and £89 million (SEGRO share) of future capital expenditure. The projects are 60 per cent pre-let.

In the UK, we have secured pre-lets equivalent to 34 per cent of prospective rental income from parcel delivery companies in Radlett, Reading and Slough (equating to 10,000 sq m), and from Premier Inn Hotels in Enfield (4,000 sq m).

All of the UK speculative projects are in locations where we are confident about levels of occupier demand, including 12,700 sq m on the Slough Trading Estate and 7,900 sq m of light industrial warehouse space adjacent to the hotel in Enfield. We are also building 8,600 sq m of industrial and logistics space at our Stockley Close estate less than two miles from Heathrow Airport.

Our largest development in Continental Europe is for a 74,000 sq m European distribution centre let to ASICS Europe BV, a leading international sportswear manufacturer, at Krefeld on the outskirts of Düsseldorf. The development is within the SELP joint venture and is our largest ever pre-let by space. Given the strength of occupier demand in this location, we will develop 18,000 sq m of 'big box' logistics space speculatively on a neighbouring site.

We are building 23,900 sq m of logistics space for Żabka in Gdansk, Poland in addition to the two sites completed for them in 2013 in Tychy and Warsaw.

Highlights from the broad range of active development projects, as well as our perspective on investor and occupier demand in our core markets, are detailed on pages 13 to 15.

Future development projects

At 31 December 2013, our land bank under management totalled 546 hectares (31 December 2012: 573 hectares). Of this, 341 hectares has been ear-marked for future development projects within the next five years, with the potential to generate £74 million of new annualised rental income. These sites include land in Park Royal, Rugby and at the Slough Trading Estate in the UK; land near Charles de Gaulle airport in France; in Düsseldorf, Germany; and key markets in Poland.

We sold 74 hectares of non-core land during the year, leaving 147 hectares where the potential for near-term development is less strong. We will seek either to dispose of this land or to identify development opportunities over the longer term.

Further detail on our completed and active development projects is presented in our 2013 Property Analysis Report, which is available to download at www.segro.com/investors.

3. REDUCING NET DEBT AND INTRODUCING THIRD PARTY CAPITAL

Group net debt fell by £631 million, or 30 per cent, during 2013 to £1,459 million at 31 December while 'look-through' net debt, incorporating our share of debt in joint ventures, was £499 million lower at £1,889 million.

The reduction in net debt was achieved through net divestments (disposals less acquisitions and development expenditure) of £342 million, and through the creation of the SEGRO European Logistics Partnership ('SELP').

SELP represents an important milestone in our objective of restructuring our capital base by attracting third party capital. On completion of the joint venture, we received £429 million of net cash proceeds and deferred an additional £131 million for up to two years at an annual coupon of 7 per cent to mitigate part of the dilutive earnings impact from the creation of the joint venture.

The combination of the net divestment, the SELP transaction and the value uplift of our properties reduced our 'look-through' LTV ratio (including our share of joint ventures' net debt and the deferred consideration) to 42 per cent at 31 December 2013 from 51 per cent a year earlier.

The reduction of our LTV ratio to around 40 per cent remains our longer term target, because we continue to believe that REITs with lower leverage offer a lower-risk investment proposition for shareholders. We expect to achieve this through selling assets, and from capital value uplifts from development and active management of standing assets.

We will balance our objective to reduce gearing at the right time in the cycle with the desire to take advantage of attractive growth opportunities that might arise. Where such opportunities arise before disposals, our LTV ratio may rise temporarily.

After the year-end, we exchanged contracts to acquire a €472 million portfolio of Continental European 'big box' logistics assets and land within SELP. SEGRO's 50 per cent share of the equity and debt will increase our 'look-through' LTV by around 2.5 percentage points. Funding an acquisition of this size ourselves would have been difficult to justify from a balance sheet perspective, so it is a good example of how we can partner with third party capital to build critical mass in our core markets without placing excessive strain on our capital structure.

4. DRIVING OPERATIONAL EXCELLENCE

We have made good progress in several areas and we are well placed to benefit from improving occupier demand from economic recovery and a number of structural drivers. However, as anticipated at the start of the year, the loss of Neckermann as a tenant early in 2013, the loss of rent from properties sold during the year and the creation of SELP meant that some of our operational metrics for the year declined compared with 2012.

Strengthening occupier markets

The UK and Continental European markets are slowly emerging from the malaise in the wake of the global financial crisis although the strength of occupier demand varies geographically.

The growth of online retailing is beginning to drive demand for more modern, efficient and often larger warehouses by retailers and third party logistics providers and for 'urban logistics' warehousing on the edge of towns and cities to facilitate the distribution of goods to their final destination ('last mile delivery') rapidly and cost-effectively.

Such warehouses, particularly Grade A stock, are often unavailable as speculative development was curtailed during the downturn and industrial uses compete with higher value uses, particularly residential, for available land. This has resulted in an improvement in occupier demand for less modern space and we are pleased to have made some progress in letting vacant space in some of our older estates, for example in Basingstoke and Heston.

There is also continued demand for data centre capacity, particularly in Slough due to its connectivity, proximity to London and power availability.

Trends in occupier demand are discussed further on pages 13 to 15.

Strong leasing and pre-letting activity

During 2013, we secured 196 new leases across the Group, totalling 300,500 sq m, which generated £26.8 million of new annualised rental income (2012: £35.3 million). The main difference compared to last year is in the level of take-up from completed developments which was £7.7 million in 2013 and £14.6 million in 2012. Take-back levels were in line with last year at £21.0 million (2012: £20.7 million) and were more than offset by new lettings.

Like-for-like net rental income fell 1.5 per cent due to £1.9 million of net take-backs of existing space and a bad debt expense related to Mory Ducros, discussed below.

The rent at risk from lease breaks or expiries in 2013 was £41.0 million and, during the year, we retained 69 per cent of these leases, slightly above the level achieved in the prior year of 65 per cent. The rent at risk in 2014 is lower than in 2013 at £28.2 million, albeit concentrated in the first half of the year.

Headline rental levels achieved on new leases and lease renewals were 5.2 per cent above the valuers' December 2012 estimated rental values ('ERVs') on average. The level of lease incentives given on new lettings during the year rose to 11.0 per cent on average, compared to 8.2 per cent in 2012. In part, this rise is due to regional office lettings early in 2013.

Summary of key leasing data, excluding Neckermann campus¹		FY 2013	FY 2012
Take-up of existing space² (A)	£m	19.1	20.7
Space returned³ (B)	£m	(21.0)	(20.7)
NET ABSORPTION OF EXISTING SPACE (A-B)	£m	(1.9)	0.0
Take-up of new developments² (C)	£m	7.7	14.6

TOTAL TAKE UP² (A+C)	£m	26.8	35.3
Less pre-lets completed²	£m	(4.5)	(14.0)
Pre-lets signed for delivery in later periods²	£m	7.3	3.9
RENTAL INCOME CONTRACTED IN THE PERIOD²	£m	29.6	25.2

Take-back of space for redevelopment³	£m	(3.0)	(0.8)
Neckermann site space returned, net of reletting³	£m	(9.4)	n/a
Transactional rental levels versus December 2012 estimated rental values⁴	%	5.2	2.9
Lease incentives⁴	%	11.0	8.2

1. All figures include joint ventures at share

2. Annualised rental income, after the expiry of any rent-free periods

3. Annualised rental income

4. Excluding developments and the Neckermann campus

Vacancy impacted by disposal programme

The vacancy rate at 31 December 2013 increased to 8.5 per cent compared with 8.2 per cent a year ago and 9.5 per cent at 30 June 2013. If we remove space let on a short-term basis, the vacancy rate rises to 10.0 per cent, from 9.8 per cent a year ago.

Asset disposals (with an average vacancy rate of 7 per cent) and the creation of SELP (6 per cent average vacancy) were an important driver of the increase in vacancy. The properties transferred into SELP, as well as IQ Winnersh, were within our core portfolio before disposal, so the core vacancy rate rose to 8.2 per cent from 7.6 per cent last year, whilst the non-core vacancy rate remained flat at 11.1 per cent.

The portfolio's weighted average lease length improved to 6.7 years to first break (8.9 years to expiry) at 31 December 2013, compared with 6.4 years (8.4 years to expiry) at 31 December 2012.

Lower rent at risk from insolvencies

SEGRO, and its joint ventures, service 1,250 customers across multiple sectors and actively monitor their credit-worthiness and any rent at risk from insolvency.

At 31 December 2013, we had £2.3 million (0.9 per cent) of annualised gross passing rent relating to customers in administration (31 December 2012: £13.3 million, £12.2 million of which related to Neckermann). £2.1 million of this related to Mory Ducros, the French third party logistics provider, which entered administration in November 2013. Rent lost from insolvency this year totalled £13.8 million, of which Neckermann was the largest single contributor, prior to the asset being sold in December 2013. Excluding Neckermann, rent lost to insolvency was £1.6 million.

Despite the generally improving economic environment, there are some Continental European economies where conditions remain challenging, and we remain vigilant to the risk of tenant insolvency. We seek to mitigate this risk through due diligence on the financial strength of potential customers as well as on-going discourse with existing customers throughout their lease.

Growing portfolio valuation

European property market returns improved in 2013 as investor confidence grew that interest rates would remain at their historic lows for the medium term. Investors are being attracted into prime (and, increasingly, well-located secondary) logistics assets by the combination of economic recovery, the impacts of online retailing, supply shortages, a relatively attractive yield profile and relatively stable, low-risk, income-oriented returns. Investors' risk appetite also appears to be improving although demand remains focused on the strongest European sub-markets.

The weight of money seeking exposure to the asset class, particularly in the UK, means that prime logistics yields have fallen and we have also seen strong institutional demand for multi-let, light industrial assets, especially in South East England. Although investor interest in Continental Europe is strong for the best assets, weakness in some occupier markets, particularly France, is causing investor demand for anything other than prime assets to remain muted.

These trends are reflected in the valuation of our portfolio at 31 December 2013. The total value of the Group's property portfolio, comprising completed properties (including our share of joint venture assets), land and development increased by £133 million (2012: £309 million decline). This mainly reflects a 4.1 per cent increase on a like-for-like basis of our completed properties.

Our completed UK portfolio increased in value by 7.0 per cent on a like-for-like basis, outperforming the IPD UK Industrial Quarterly Index which increased by 5.7 per cent in 2013. The capital return on our UK portfolio was driven by a reduction in the true equivalent yield to 7.2 per cent (31 December 2012: 7.6 per cent), while valuers' estimated rental values (ERV) were flat overall. The strongest performer in the UK was our Greater London portfolio, which increased by 7.3 per cent, reflecting a decline in equivalent yield to 7.0 per cent (from 7.4 per cent a year earlier) and a 0.9 per cent increase in valuers' ERVs.

In Continental Europe, the completed portfolio value declined by £31.6 million, or 3.1 per cent, reflecting a poor performance from the non-core assets, which fell £25.8 million, or 8.6 per cent, compared to a £5.8 million decline, or 0.8 per cent, in the core portfolio.

Our Central Europe portfolio increased in value by 4.5 per cent, reflecting development gains and improving investor demand. By contrast, weakness in the French market was the driver of a 7.1 per cent decline in our Southern Europe portfolio. Our German portfolio fell in value by 0.3 per cent (reflecting a 4.2 per cent rise in the core assets, offset by a 6.0 per cent decline in non-core assets), but continued weakness in Belgium and the Netherlands meant that our Northern Europe portfolio posted a 3.1 per cent decline overall.

summary of property portfolio analysis as at 31 DECEMBER 2013

		SEGRO share
BY GEOGRAPHY	Lettable area (100%) sq m	Completed £m	Owner occupied £m	Land & development £m	Combined property portfolio £m	Net initial yield² %	Net true equivalent yield² %	Valuation movement^{1 2} %	Vacancy by ERV^{2 3} %
UK
Greater London	1,367,244	1,521.4	-	83.5	1,604.9	5.3	7.0	7.3	8.7
Thames Valley and National Logistics	1,128,068	1,281.1	2.7	52.9	1,336.7	6.2	7.4	6.5	8.1
UK TOTAL	2,495,312	2,802.5	2.7	136.4	2,941.6	5.7	7.2	7.0	8.4

CONTINENTAL EUROPE
Germany	571,393	205.1	-	70.5	275.6	7.1	8.3	(0.3)	6.9
Belgium/ Netherlands	349,613	157.7	1.4	28.7	187.8	10.1	9.8	(6.4)	16.3
France	888,643	329.9	-	10.4	340.3	7.5	8.4	(8.1)	6.1
Italy	126,745	65.2	-	36.9	102.1	10.0	9.5	(1.8)	12.7
Poland	784,220	216.6	-	42.7	259.3	7.0	8.4	4.2	7.4
Czech Republic/ Hungary	75,949	19.7	-	22.3	42.0	6.9	8.8	8.0	0.9
CONTINENTAL EUROPE TOTAL	2,796,563	994.2	1.4	211.5	1,207.1	7.9	8.7	(3.1)	8.9

GROUP TOTAL	5,291,875	3,796.7	4.1	347.9	4,148.7	6.3	7.6	4.1	8.5

BY OWNERSHIP
Wholly owned	2,739,419	2,744.3	4.1	308.0	3,056.4	6.4	7.6	4.1	8.3
Joint ventures	2,552,456	1,052.4	-	39.9	1,092.3	5.9	7.4	4.3	9.2
GROUP TOTAL	5,291,875	3,796.7	4.1	347.9	4,148.7	6.3	7.6	4.1	8.5

1 The valuation movement percentage is based on the difference between the opening and closing valuations for completed properties, allowing for capital expenditure, acquisitions and disposals.

2 In relation to the completed properties only.

3 Vacancy rate excluding short term lettings for the Group at 31 December 2013 is 10.0%.

OUTLOOK

Although the European macro-economic environment is starting to improve, challenges remain for many businesses and the improvement in general occupier demand is likely to be gradual. Nevertheless, the structural changes in retailing towards online sales and convenience shopping are providing a catalyst for a wave of demand for warehouse space from a range of occupiers. These trends, along with the relatively high income yields still available, are also attracting the interest of real estate investors, causing values of both prime and, increasingly, secondary product to rise. These themes are still evolving and we expect that both occupational demand and investor appetite for such assets should be sustained in the medium term.

Operationally, we have delivered a good underlying performance in 2013 in what has been a challenging economic environment. As anticipated, SEGRO's headline earnings have been impacted by the execution of our strategy, some of which will continue to be felt in 2014. However, our focus has now turned more firmly towards exploiting opportunities which are accretive to earnings and capital values.

During the past two years we have substantially repositioned our business such that we now have a higher quality property portfolio, a more conservative financial structure, a more efficient cost base and a stronger platform from which to deliver attractive income-led total property returns and to achieve growth. Our portfolio is largely focused on the locations likely to benefit most from the improving demand outlook and the structural drivers referred to above. Furthermore, our well located land bank also provides the opportunity to accelerate our highly profitable, largely de-risked (through pre-lettings) development programme in 2014 and beyond.

Whilst investment market conditions are likely to become increasingly competitive in the year ahead, we are confident in our ability to continue sourcing attractive acquisition opportunities over time to offset the loss of income associated with the disposal of the remaining non-core assets.

There is more work to be done, but we look to the future confident in our ability to become the best owner-manager and developer of warehouse and industrial properties and a leading income-focused REIT.

FINAL DIVIDEND OF 9.9 PENCE PER SHARE

The Board has declared a final dividend of 9.9 pence per share (2012: 9.9 pence) which will be paid as an Property Income Distribution (PID). The Board is offering a Dividend Reinvestment Plan and the last date for DRIP elections will be on 15 April 2014.

The timetable for the 2013 final dividend will be as follows:

Record Date 28 March 2014

Payment Date 9 May 2014

The Board expects to maintain the dividend throughout the period of the strategic portfolio reshaping and is committed to a progressive dividend policy in the longer term.

OPERATING ACTIVITY IN OUR MARKETS

We manage our day to day operations through five geographic Business Units - two in the UK (Greater London, and Thames Valley and National Logistics), Northern Europe (principally Germany), Southern Europe (principally France) and Central Europe (principally Poland). Each Business Unit is tasked with achieving Operational Excellence in its local markets through its team's expertise in customer service, asset management, leasing and development.

The Business Units are supported by locally-based investment teams, responsible for Disciplined Capital Allocation by ensuring that we allocate our capital to the markets and assets likely to deliver the best risk-adjusted returns possible.

Greater London

The Greater London Business Unit includes our holdings around Heathrow Airport and in Park Royal. The occupier market has strengthened in 2013, reflecting the resilient London economy and demand for edge-of-town warehouse space.

We completed 83,700 sq m of new lettings, including 5,700 sq m to DHL in Premier Park, Park Royal to cater for increased demand for its parcel distribution services. Vacancy rose to 8.7 per cent from 8.0 per cent, reflecting the impact of disposals (particularly the Thales office campus which was fully let) and a reduction in short-term lets.

We completed development of 11,300 sq m of warehouse and logistics space, pre-letting 900 sq m to Warmup at Tudor Estate in Park Royal and thereby extending their presence on the estate, and 6,500 sq m to Toll Global Forwarding at Heathrow for their new UK headquarters. A letting to Williams & Hill Forwarding just prior to completion means that these developments are now 67 per cent let.

As at 31 December 2013, we are building 23,900 sq m of new space across three estates. At Radlett, we are building a 3,400 sq m cross-dock facility for Geopost/DPD and at Enfield, north London, we are undertaking 7,900 sq m of speculative development to create a 15 unit industrial estate suitable for businesses involved with urban distribution, trade counters, light industrial and storage facilities. The development will be anchored by a new hotel which we have pre-let to Premier Inn. We will also start an 8,600 sq m speculative development at Stockley Close, near Heathrow, suitable for 'urban logistics' space.

Around 70 per cent of the Greater London development pipeline is speculative, reflecting our confidence in increasing levels of occupier demand for Grade A space which is in limited supply. We also shortly expect to start development, partly on a speculative basis, at Origin, a 22 acre cleared site in the heart of Park Royal with detailed planning consent for 14,700 sq m and outline consent for a further 28,200 sq m of warehouse space.

We generated £194 million from asset disposals, the two most significant being the Thales campus in Crawley (one of the original six large, non-strategic assets) and the West Cross Industrial Park in West London, both sold due to their relatively high office content. We recycled £45 million of these proceeds into two prime logistics assets, both purchased in off-market transactions. In Barking, East London, we bought a 25,500 sq m 'urban logistics' warehouse let to a leading bonded warehousing and distribution company servicing the wines and spirits industry and, in Park Royal, we acquired an 8,750 sq m distribution warehouse in a prime position adjacent to London's inner ring road and to our Premier Park estate.

Thames Valley and National Logistics

The Thames Valley and National Logistics Business Unit is dominated by the £1 billion Slough Trading Estate which houses over 300 businesses in 575,000 sq m of floor space. The Business Unit also manages the £330 million Logistics Property Partnership portfolio in which we hold a 50 per cent stake. Occupier demand for smaller units on industrial estates and for larger logistics units has been steady but is still focused on high quality space in the best locations.

The Business Unit concluded leases during the year totalling 41,000 sq m, the largest of which was to UK Mail for a 4,300 sq m parcel distribution centre on the Slough Trading Estate. The Slough Trading Estate has also continued to be the location of choice in the UK for data centre operators, given its close proximity to London, dual power supply and excellent network connections. We have secured lettings to Gyron and Paragon and have sold a ground lease to Equinix to allow them to build their third data centre (18,300 sq m) on the Estate.

Overall, the Business Unit's vacancy rate was reduced significantly to 8.1 per cent from 10.3 per cent during the year, reflecting positive net lettings and space taken back in Reading being added to our development pipeline to build a new, 3,500 sq m cross-dock facility for Geopost/DPD.

We completed one development during the year, a 2,300 sq m warehouse pre-let to Karl Storz Endoscopy on the Slough Trading Estate. Our pipeline for 2014 completions has expanded and we have 19,300 sq m of new space approved or under construction, 36 per cent of which is pre-let.

Around 15,800 sq m is under development on the Slough Trading Estate alone, contributing to the on-going rejuvenation of the Estate, around 20 per cent of which is pre-let, including 3,100 sq m to Fedex which is relocating from elsewhere on the Estate and more than doubling its space.

Occupier demand for modern 'big box' logistics space is growing, particularly for 20,000 sq m to 25,000 sq m warehouses on a build-to-suit basis, and is most focused on Britain's logistics 'golden triangle' in the Midlands. We are well placed to capitalise on this demand, having established a joint venture with 'big box' logistics specialist Roxhill and purchased a 50 hectare site in Rugby which can accommodate up to 167,200 sq m of prime logistics assets in the heart of the 'golden triangle'.

We disposed of £273 million of assets and land during the year, dominated by the £245 million sale of IQ Winnersh in July at an 11 per cent premium to its December 2012 book value.

Northern Europe

The Northern Europe Business Unit manages our assets in Germany, Belgium and the Netherlands. Whilst occupier demand in Germany is improving, it is weaker in Belgium and the Netherlands but is stabilising.

We completed leases accounting for 77,800 sq m of existing space during the year, the largest of which was of a 25,500 sq m, speculatively-developed 'big box' warehouse to international logistics operator B+S Logistik in Alzenau, Frankfurt.

The vacancy rate increased to 11.2 per cent at 31 December 2013 from 10.7 per cent a year earlier, mainly reflecting the disposal of the fully-let MPM campus in Munich, one of the large non-strategic assets, in February 2013, and 79,000 sq m of take-backs.

We completed two developments during the year, creating 29,000 sq m of new logistics space. In Frankfurt, we pre-let 5,800 sq m to Sauerbrei, the textile logistics company and we also let an 11,700 sq m speculatively-developed warehouse at Krefeld, Düsseldorf, to international logistics company UPS shortly after completion.

We have a substantial committed development pipeline in Germany, with 134,000 sq m completing in 2014 and 2015, and we have pre-let 44 per cent of the pipeline by rent (our share). Around half of the space being developed (74,000 sq m), representing our largest ever pre-let, is for ASICS, the international sportswear manufacturer, at our Krefeld estate near Düsseldorf for its new European distribution centre. This development will be carried out within SELP.

We will develop 33,800 sq m of multi-let, light industrial space speculatively across three prime locations in Germany: 9,000 sq m near the new Brandenburg airport in Berlin and, in Düsseldorf, we will develop 24,700 sq m in Rhine Park and City Park. We will also develop 18,000 sq m of speculative 'big box' logistics space in Krefeld, adjacent to the new facility we are developing for ASICS.

During the year, we disposed of £108 million of non-core assets, including two of the six large, non-strategic assets: the MPM campus in Munich and the Neckermann campus in Frankfurt. However, £217 million of non-core assets remain in Germany and Belgium, including Pegasus Park, the large non-strategic asset in Brussels. Although we are working hard to dispose of these assets, the investment market remains challenging for more secondary properties.

Since year-end, as part of a wider portfolio acquisition, we have exchanged contracts to acquire 10 prime logistics assets in Germany. These acquisitions, made within the SELP joint venture and all in established logistics hubs, will more than double the joint venture's exposure to German logistics assets and allow us to extract economies of scale from managing a larger portfolio.

Southern Europe

Our Southern Europe Business Unit manages our assets in France and Italy. Economic growth in France was fairly weak in 2013 and this has been reflected in the increase in the vacancy rate to 7.6 per cent (2012: 4.3 per cent) due mainly to take-backs of 116,100 sq m being greater than the 53,600 sq m of new lettings of existing space. Of the new lettings, over 10,000 sq m was to parcel delivery companies, including a 5,100 sq m warehouse for La Poste in Garonor, Paris. Despite the quantum of take-backs, we retained 73 per cent of leases due to break or expire during the year.

The Business Unit has one development underway: at Vimercate, Italy, one of the two remaining large, non-strategic assets. The development is a 34,000 sq m office complex fully let to Alcatel and is due to complete in the first quarter of 2014.

Although we do not have development activity underway in France, in 2013 we took the opportunity to acquire a 12 hectare plot of land close to Charles de Gaulle airport, well located to service both the 'big box' logistics market and occupiers requiring proximity to the airport. Since year-end, we have also exchanged contracts to acquire a 112,075 sq m logistics unit in Marseille fully let to a leading furniture retailer, as part of the recently-announced portfolio purchase within the SELP joint venture.

Whilst economic conditions in France remain weak, we remain confident about the quality of our assets and the long-term potential of the market to deliver attractive returns.

Central Europe

The Central Europe Business Unit manages our assets in Poland and the Czech Republic. During the year, the team concluded leases for 44,300 sq m of space. The vacancy rate has risen to 6.7 per cent (2012: 4.9 per cent), although this is mainly a reflection of the transfer of assets into SELP during the year and 49,300 sq m of take-backs.

We completed 99,500 sq m of logistics and warehouse developments, primarily in Poland, all of which are now let. We completed an 18,500 sq m production facility for Dayco in Tychy, and distribution facilities for convenience food retailer Żabka (24,600 sq m) in Warsaw and for furniture retailer IKEA (6,600 sq m) in Prague. We have also seen improved demand from parcel delivery and third party logistics companies in Poland and have developed new space for DB Schenker in Gdansk, Geopost/DPD in Wroclaw and Geodis in Strykow.

Our pipeline comprises 34,200 sq m across three fully pre-let projects in Poland, including a 23,900 sq m distribution facility for Żabka in Gdansk. Since the year-end, we have also agreed to build a 32,000 sq m distribution centre for Volkswagen in Poznań.

The Business Unit sold one non-core asset, in the Czech Republic, for £9 million, and acquired 12 hectares of land at Ożarów for £7 million and Zeran Park in Warsaw for £37 million. Zeran Park is a modern, 49,900 sq m business park suitable for 'urban logistics' and light industrial occupiers.

Since the year-end, we have exchanged contracts to acquire three assets in Poland, on the outskirts of Warsaw, Lódź and Poznań, as part of the recently-announced SELP portfolio acquisition. These are all markets with which we are familiar, being well established, core locations for 'big box' logistics occupiers.

STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES

The Group recognises that its ability to manage risk consistently across the organisation is central to its success. Risk management ensures a structured approach to decision making that aims to reduce the uncertainty surrounding expected outcomes, balanced against the objective of creating value for our shareholders.

The Group's risk management process and risk mitigating actions are described in the 2013 Annual Report and Accounts. The Principal Risks facing the Group are summarised below.

Property Risks

· Market cycle. The property market is cyclical and there is an inherent continuous risk that the Group could either misinterpret the market or fail to react appropriately to changing market conditions, which could result in capital being invested or disposals taking place at the wrong price or time in the cycle.

· Portfolio strategy. The Group's Total Property and/or Shareholder Returns could underperform in absolute or relative terms as a result of an inappropriate portfolio strategy.

· Execution of investment plans. Decisions to buy, hold, sell or develop assets could be flawed due to uncertainty in analysis and assumptions, poor due diligence or unexpected changes in the economic, competitive or operating environment. Our investment decisions could be insufficiently responsive to implement our strategy effectively.

Financial Risks

· Solvency and covenant breach. A substantial fall in the Group's property asset values or rental income levels could lead to a breach of financial covenants within its debt funding arrangements. This could lead to a cancellation of debt funding which could, in turn, leave the Group without sufficient long-term resources (solvency) to meet its commitments.

· Eurozone economic environment. The risk of a significant adverse impact to the Group's earnings, net asset value or financial covenants arising from a disorderly default and partial or full break-up of the Euro zone.

· Financial leverage. The Group could maintain an inappropriate capital structure . If gearing is too high when property valuations are falling, net asset value movements can be exacerbated and financial covenants put at risk. Equally, if gearing is too conservative, there is a risk that attractive growth opportunities could be missed.

· Interest rates. A significant adverse movement in interest rates could have an unacceptable impact on the Group's earnings, on investment market conditions or on tenant covenant strength.

· Counterparty default. A bank or other counterparty could default while holding SEGRO deposits or derivative assets, resulting in a significant financial loss to the Group. This could also include the loss of solvency headroom from lost undrawn committed bank facilities.

Corporate Risks

· Operational Delivery. The Group's ability to protect its reputation, revenues and shareholder value could be damaged by operational failures such as: environmental damage; failing to attract, retain and motivate key staff; a breach of anti-bribery and corruption or other legislation; major customer default or supply chain failure.

· Health and safety. Health and safety management processes could fail, leading to a loss of life, litigation, fines and serious reputational damage to the Group.

· Regulatory environment. The Group could fail to anticipate legal or regulatory changes, leading to a significant un-forecasted financial or reputational impact.

FINANCIAL REVIEW

HIGHLIGHTS

	31 December 2013	31 December 2012
Total property return (%)	10.7	(0.1)
Net asset value (NAV) per share (p)	316	302
EPRA¹ NAV per share (p)	312	294
Realised and unrealised property gain/(loss) (£m)²	145.6	(353.2)
Profit/(loss) before tax (£m)	212.1	(202.2)
EPRA¹ profit before tax (£m)	134.1	144.9
Profit/(loss) per share (p)	28.4	(26.6)
EPRA¹ EPS (p)	17.7	19.3

1 EPRA NAV, EPRA Profit Before Tax and EPRA EPS are alternative metrics to their IFRS equivalents that are calculated in accordance with the Best Practices Recommendations of the European Public Real Estate Association (EPRA). SEGRO uses these alternative metrics as they highlight the underlying recurring performance of the property rental business, which is our core operational activity. The EPRA metrics also provide a consistent basis to enable a comparison between European property companies.

2 Includes the realised and unrealised property gain of £97.7 million for the wholly owned portfolio (see note 7 to the financial information) and the realised and unrealised property gain of £47.9 million from our share of joint ventures (see note 6 to the financial information).

TOTAL PROPERTY RETURN

Total property return is a measure of the ungeared combined income and capital return from the Group's property portfolio, excluding land, and is calculated in accordance with IPD.

Total property return for the year was 10.7 per cent, compared to a 0.1 per cent negative return for 2012. This reflects an income return of 6.4 per cent (2012: 6.5 per cent) and a capital return of 4.1 per cent (2012: 6.2 per cent negative). The capital return is driven by the UK assets, where a 7.6 per cent capital return is partially offset by a 2.9 per cent decline in Continental Europe. The income return is relatively consistent.

NAV AND EPRA NAV PER SHARE

A reconciliation of EPRA net assets to total net assets attributable to ordinary shareholders and the corresponding NAV and EPRA NAV per share calculations is provided in note 13 to the financial information.

EPRA NAV per share at 31 December 2013 was 312 pence, compared with 294 pence at 31 December 2012. As illustrated in the table below, the increase is largely as a result of investment property valuation increases which are covered in more detail below. This is partially offset by the cost of early close-out of interest rate swaps which are covered in more detail in the Financial Position and Funding section below. EPRA profit after tax generated during the year more than covers the dividend payments made during the year.

EPRA NAV	£m	Shares million	Pence per share
EPRA NET ASSETS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS AT 31 DECEMBER 2012	2,176.0	740.9	294
Realised and unrealised property gain	145.6		20
EPRA profit after tax	131.4		18
Dividends (2012 final and 2013 interim)	(109.7)		(15)
Early close-out of interest rate swaps	(27.2)		(4)
Exchange rate movement (net of hedging)	6.3		-
Other	(9.8)		(1)
EPRA NET ASSETS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS AT 31 DECEMBER 2013	2,312.6	741.2	312

REALISED AND UNREALISED PROPERTY LOSS

A total realised and unrealised gain on property for the wholly owned portfolio of £97.7 million (2012: £340.8 million loss) has been recognised in 2013, which includes an unrealised valuation surplus on investment properties of £94.4 million (2012: £283.2 million deficit).

A profit of £13.0 million arose in 2013 on disposal of investment properties and a further profit of £6.1 million arose on disposal of trading properties (2012: £28.9 million loss and £1.8 million loss, respectively). Impairment provisions of £15.2 million (2012: £24.9 million) were recorded on certain trading properties as their fair value is deemed to be less than the original cost. The total realised and unrealised property gain for the wholly owned portfolio is further analysed in note 7 to the financial information.

Our share of realised and unrealised property gains generated from joint venture interests was £47.9 million (2012: £12.4 million loss) and are further analysed in note 6 to the financial information.

The Group's trading property portfolio (including share of joint ventures) has an unrealised valuation surplus of £4.2 million at 31 December 2013 (2012: £7.9 million), which has not been recognised in the financial statements as it is recorded at the lower of cost or fair value.

EPS and EPRA EPS

EPS is 28.4 pence for 2013, compared to (26.6) pence in 2012. The main driver behind this was the higher realised and unrealised property gains in 2013 compared to losses in 2012. EPRA EPS of 17.7 pence per share is 1.6 pence lower than the 2012 equivalent (19.3 pence per share) as a result of a reduced EPRA profit primarily due to disposals, which is further analysed in the EPRA Profit table and following sections below.

EPRA PROFIT

A reconciliation between EPRA profit before tax and IFRS profit before tax is provided in note 2 to the financial information.

EPRA profit before tax decreased by £10.8 million compared to 2012. This is due to a £31.4 million reduction in net rental income, largely due to disposals, partially offset by reductions in EPRA net finance costs and increased income from joint ventures. These items are covered in more detail below.

EPRA PROFIT	2013 £m	2012 £m
Gross rental income	273.8	305.4
Property operating expenses	(50.4)	(50.6)
NET RENTAL INCOME	223.4	254.8
Joint venture management fee income	7.1	7.4
Administration expenses	(26.1)	(27.9)
Share of joint ventures' EPRA profit¹	26.3	20.2
EPRA OPERATING PROFIT BEFORE INTEREST AND TAX	230.7	254.5
Net finance costs (including adjustments)	(96.6)	(109.6)
EPRA PROFIT BEFORE TAX	134.1	144.9
Tax on EPRA profit	(2.7)	(1.9)
EPRA PROFIT AFTER TAX	131.4	143.0

1 Comprises net property rental income less administration expenses, net interest expenses and taxation.

NET RENTAL INCOME

Following the significant disposal of assets into the SELP joint venture, 'like-for-like' rental income has been analysed on a 'look-through' basis (with joint ventures included at share) to provide a more meaningful analysis. The 50 per cent of SELP assets owned throughout 2013 are included in the 'like-for-like' calculation, with the balance shown as disposals.

Including our share of joint ventures, net rental income in total has decreased by £24.4 million compared to 2012. This primarily arises from the impact from disposals (£51.8 million), and partially offset by the impact of income from developments (£11.2 million) and acquisitions (£12.4 million).

'Like-for-like' net rents have decreased by £2.8 million (1.5 per cent), driven by increased vacancy, as takebacks have exceeded lettings on standing stock and there has been an increase in bad debt expense. Excluding the bad debt expense relating to Mory Ducros (£1.0 million), the like-for-like rents would have decreased by £1.8 million (less than 1 per cent).

Lease surrenders include £4.5 million in respect of the surrender of a lease, part of which relates to a finance lease asset.

Following the insolvency of its principal tenant, the Neckermann campus contributed £0.3 million to net rental income in 2013 (2012: £11.6 million). The asset was sold in December 2013 and its net rental income contribution is included within 'Properties sold' in the table below. In January 2014 we received a one-off cash receipt from the Neckermann administrator in respect of a longstanding claim for unpaid rent. This £3.5 million receipt had not been anticipated with any degree of certainty at year-end 2013 and thus will be included within 2014 net rental income.

LIKE-FOR-LIKE NET RENTAL INCOME	2013 £m	2012 £m
Completed properties owned throughout 2013 and 2012 (like-for-like net rental income)	179.2	182.0
Development lettings	15.7	3.6
Properties taken back for development	0.5	1.4
LIKE-FOR-LIKE NET RENTAL INCOME PLUS DEVELOPMENTS	195.4	187.0
Properties acquired	24.3	11.9
Properties sold	29.0	80.8
NET RENTAL INCOME BEFORE SURRENDERS, DILAPIDATIONS AND EXCHANGE	248.7	279.7
Lease surrender premiums and dilapidations income	9.1	3.2
Rent lost from lease surrenders and other income	6.1	9.6
Impact of exchange rate difference between years	-	(4.2)
NET RENTAL INCOME PER INCOME STATEMENTS¹	263.9	288.3

1 Comprises Group net rental income of £223.4 million, and share of joint ventures of £40.5 million (2012: £254.8 million and £33.5 million respectively).

JOINT VENTURES

Joint venture management fee income is broadly in line with the prior year and includes a maiden £1.1 million contribution from SELP, which almost offsets a reduction in performance and development fees from APP. SEGRO's share of EPRA profit from joint ventures has increased by £6.1 million compared to 2012, primarily due to £4.8 million being recognised in relation to SEGRO's share of the SELP joint venture, which began trading in October 2013.

TOTAL COSTS

The Group is focused on carefully managing its cost base and regards the total cost ratio as a key measure of performance. The total cost ratio calculation is outlined in table 6 in the supplementary notes appended to the financial information.

The EPRA cost ratio (including vacant property costs) for 2013 was 24.2 per cent compared to 22.9 per cent in 2012. The increase in cost ratio is driven by a reduction in gross rental income, including joint ventures at share, of £23.1 million largely due to the net impact of capital recycling activities (gross rental income is the denominator in the calculation of this ratio).

On the cost side, costs included in the calculation of the cost ratio fell during the year by £1.2 million.

Vacant property costs have decreased by £1.1 million to £12.6 million (2012: £13.7 million) as a result of reduced vacancy in the UK where the majority of the vacant costs arise. The EPRA cost ratio (excluding vacant property costs) provides an indicator of the opportunity to reduce costs through vacancy reduction and was 19.7 per cent for 2013 (2012: 18.6 per cent).

NET FINANCE COSTS

Net finance costs (which exclude the fair value gains and losses on interest rate swaps and currency derivatives and realised gains or losses on debt buy-backs) decreased in 2013 by £13.0 million to £96.6 million. The decrease is mainly attributable to the impact of interest savings from disposal proceeds being used to reduce net debt, the repurchase of bonds in December 2012, interest income on deferred consideration due from the SELP transaction and lower euro short-term interest rates. These have offset the impact of higher interest costs resulting from both acquisitions and development activity, and the strengthening of the euro against sterling over the year.

A net fair value loss on interest rate swaps and other derivatives of £63.4 million has been recognised within IFRS net finance costs in 2013 (2012: £22.9 million gain), primarily as a result of the impact of the rise in medium-term sterling interest rates during the year on the fair value of the Group's pay floating, receive fixed sterling interest rate swap portfolio. The gains and losses discussed in this paragraph are not included in net finance costs (including adjustments), in accordance with EPRA Best Practices Recommendations.

TAX

A tax charge of £2.9 million has been recognised in 2013 (2012: £4.9 million credit). This combines a £2.7 million charge attributable to EPRA profit (2012: £1.9 million charge) and a £0.2 million charge in relation to EPRA adjustments (2012: £6.8 million credit). The tax charge on EPRA profit reflects an effective tax rate of 2.0 per cent (2012: 1.3 per cent), consistent with a Group target tax rate of less than 3 per cent.

The Group's target tax rate reflects the fact that over three quarters of its assets are located in the UK and France and qualify for REIT status in the UK, SIIC status for the wholly owned assets in France and SPPICAV status for the French assets owned through SELP. These regimes were introduced by the respective governments to remove inequalities between different real estate investors and to provide an opportunity for shareholders of all sizes to invest in property in a low-cost and tax efficient way. As a result, UK REIT and French SIIC/SPPICAV status means that income from rental profits and gains on disposals of assets (in the UK and France) are exempt from corporation tax, provided SEGRO meets a number of conditions including, but not limited to, distributing 90 per cent of profits from rental income. These distributions (PIDs) are subject to 20 per cent withholding tax unless the shareholder has tax exempt status. The distributions are then further taxed in the hands of the shareholder at their marginal rate of tax. SEGRO's profits in other countries remain taxable.

CASH FLOW AND NET DEBT RECONCILIATION

A summary of the cash flows and reconciliation of net debt for the year is set out in the table below:

CASH FLOW/NET DEBT RECONCILIATION	2013 £m	2012 £m
OPENING NET DEBT	(2,090.3)	(2,303.4)
Cash flow from operations	204.0	205.1
Finance costs (net)	(97.5)	(103.9)
Dividends received (net)	24.1	18.7
Tax paid (net)	(2.4)	(12.8)
FREE CASH FLOW	128.2	107.1
Dividends paid	(109.7)	(109.7)
Purchase and development of investment properties	(211.1)	(277.9)
Investment property sales (including joint ventures)	559.9	494.2
Repayment of finance lease receivables	8.1	-
Net costs to early close out of interest rate swaps	(27.2)	-
Net settlement of foreign exchange derivatives	(47.9)	56.0
Sale of SELP portfolio	402.8	-
Net investment in joint ventures	(52.2)	(51.8)
Other items	(1.9)	(15.2)
NET FUNDS FLOW	649.0	202.7
Non-cash movements	(4.3)	(5.3)
Exchange rate movements	(13.5)	15.7
CLOSING NET DEBT	(1,459.1)	(2,090.3)

Free cash flow generated from operations was £128.2 million in 2013, an increase of £21.1 million from 2012, primarily due to the decrease in net cash flows paid in respect of tax (where a large one-off payment was made to HMRC in 2012), higher dividends received particularly from joint ventures and lower finance costs, partially offset by slightly lower cash flows from operations owing mainly to the disposals in the year.

Capital expenditure on acquisitions and development of investment properties totalling £211.1 million is slightly below that of 2012 (£277.9 million).

The cash flow from the sale of the SELP portfolio relates to the disposal of pan-European logistics assets into a joint venture in which the Group retains a 50% interest. Gross proceeds of £583.6 million were partly due from PSP Investments, our equity partner, and part funded from debt that was raised by the joint venture itself (see Financial Position and Funding below). An element of the equity proceeds, €157.3 million (£133.3 million at average exchange rate - £1:€1.18; £131.1 million at closing exchange rate - £1:€1.20 (note 19)), was deferred at SEGRO's option for up to two years. On completion of the transaction, certain SELP entities were disposed of with cash (totalling £27.1 million) in order to allow them to fund their development pipeline and other working capital requirements.

The settlement of foreign exchange derivatives has led to an outflow of £47.9 million as the euro has strengthened in the year. Net debt has reduced in the year from £2,090.3 million to £1,459.1 million.

CAPITAL INVESTMENT/DIVESTMENT

As detailed more fully in the Chief Executive's Review, the Group has continued to make significant progress in its key strategic priority of reshaping the portfolio during the year. The disposal programme has successfully divested £1,376.9 million of assets in 2013, including £803.9 million of pan-European logistics assets to SELP (excluding movement in tenant incentives), in which the Group retains a 50 per cent interest (shown below within the £257.7 million investment in joint ventures). Other disposals include three large, non-strategic assets (the Thales, MPM and Neckermann campuses). The proceeds have been re-invested in the acquisition of assets more aligned with our strategy and into our largely pre-let development programme. The net divestment has also been used to reduce new borrowings as detailed in the Cash Flow and Net Debt Reconciliation section.

CAPITAL INVESTMENT/DIVESTMENT	2013 £m	2012 £m
INVESTMENT
Development expenditure on investment properties	114.0	130.3
Acquisitions of investment properties	123.2	153.0
Development expenditure on trading properties	6.7	12.9
Acquisitions of trading properties	60.9	-
TOTAL INVESTMENT¹	304.8	296.2
DIVESTMENT
Investment properties	(1,250.7)	(520.0)
Trading properties	(107.6)	(22.8)
Joint ventures	(18.6)	(3.9)
TOTAL DIVESTMENT¹	(1,376.9)	(546.7)
Net investment in joint ventures¹	257.7	65.7
NET CAPITAL DIVESTMENT	(814.4)	(184.8)

1 Values are stated on an accruals basis rather than a cash flow basis and exclude gains or losses on disposals and therefore can differ to the Cash Flow and Net Debt Reconciliation section above. Movements exclude the impact of tenant incentives.

TREASURY POLICIES AND GOVERNANCE

The Group Treasury function operates within a formal treasury policy covering all aspects of treasury activity, including funding, counterparty exposure and management of interest rate, currency and liquidity risks. Group Treasury policies are reviewed by the Board at least once a year, most recently in November 2013.

Group Treasury reports on compliance with these policies on a quarterly basis to the Finance Committee, which includes the Chief Executive and is chaired by the Group Finance Director.

FINANCIAL POSITION AND FUNDING

At 31 December 2013, the Group's net borrowings were £1,459.1 million (2012: £2,090.3 million) comprising gross borrowings of £1,692.9 million (2012: £2,106.9 million) and cash and cash equivalent balances of £233.8 million (2012: £16.6 million). Although it has similar economic characteristics to a cash equivalent, the deferred consideration of €157.3 million (£131.1 million) due from PSP Investments in connection with the SELP joint venture, has been classified as a debtor.

These cash and cash equivalent balances, together with the Group's interest rate and foreign exchange derivatives portfolio, are spread amongst a strong group of banks, all of which currently have long term credit ratings of A- or better, while PSP Investments is rated AAA.

As a result of the significant reduction in net borrowings of the Group during 2013, there was no requirement for any major on-balance sheet debt funding activity during the year.

The Group seeks to maintain, over the medium-term, an appropriate mix of debt funding between longer-dated core funding provided by bonds, and shorter-dated bank facilities providing funding headroom and flexible borrowings that can be repaid and redrawn to support capital recycling activity.

At 31 December 2013, £1,691.9 million of the borrowings of the Group (i.e. excluding debt funding arrangements within joint ventures) were long-term bonds, representing 116.0 per cent of net borrowings and 99.9 per cent of gross borrowings. This debt mix reflects the relative cost and difficulty of prepaying bond debt prior to scheduled maturities.

Net investment and forthcoming bond debt maturities (£208.3 million of bonds at face value mature in 2015) are likely to reduce the proportion of bond debt within the debt mix over time. We will continue to assess whether it is practical and cost effective to manage the debt mix more proactively.

The Group's debt portfolio (excluding debt funding arrangements within joint ventures) is predominantly unencumbered (secured borrowings at 31 December 2013 were £2.7 million, representing just 0.2 per cent of the Group's total gross borrowings), which provides additional flexibility to support the portfolio reshaping process within the wholly owned portfolio and supports the A- credit rating of the Group's unsecured bonds.

Group policy is that debt funding in joint ventures should be on a non-recourse basis to the Group. Given this requirement, and the size of joint ventures, secured funding is generally the most cost effective source of debt financing for joint ventures.

At 31 December 2013 the Group's share of the net borrowings in its joint ventures was £429.4 million. This amount includes 50 per cent of the €391.0 million (£325.8 million) of five to seven year bank term loans raised during 2013 in the SELP joint venture.

The key financing statistics of the Group are shown in the table below.

FINANCIAL KPIs	31 December 2013 £m	31 December 2012 £m
GROUP ONLY
Net borrowings (£m)	1,459	2,090
Available Group cash & undrawn facilities (£m)	982	449
Gearing (%)	62	93
Weighted average cost of debt¹ (%)	4.5	4.6
Average duration of debt (years)	8.7	8.3
Interest cover² (£m)	2.2	2.3
INCLUDING JOINT VENTURES AT SHARE
Net borrowings (£m)	1,889	2,388
LTV ratio - including joint ventures at share³ (%)	42	51
Weighted average cost of debt¹ (%)	4.2	4.4

1 Based on gross debt, excluding commitment fees and amortised costs.

2 Net rental income/EPRA net finance costs (before capitalisation).

3 Includes £131 million of deferred consideration receivable.

The market value of the gross borrowings of the Group (excluding debt funding arrangements within joint ventures) at 31 December 2013 was £1,951.4 million (2012: £2,409.9 million), £258.5 million (2012: £303.0 million) higher than the balance sheet carrying value. The decrease in the differential between the book value and the market value of gross borrowings during the year relates mainly to a decrease in the market value of the Group's sterling bonds, driven predominately by the bonds being a year closer to maturity. This differential, which typically fluctuates on a daily basis, but usually reduces as the maturity date approaches, would be crystallised as an exceptional cost and a reduction in EPRA NAV if these borrowings were repaid prior to their maturity date.

The Group uses derivative instruments, principally interest rate swaps, forward foreign exchange contracts and currency swaps, to manage interest rate and currency risk. These instruments are held at fair value on the Group balance sheet within debtors and creditors, depending on whether the market value is an asset or a liability.

The net market value of the Group's portfolio of interest rate swaps (excluding derivatives associated with debt funding arrangements within joint ventures) at 31 December 2013 was an asset (mainly within debtors due in more than one year) of £67.9 million (2012: £103.3 million). The £35.4 million decrease in the net positive market value of interest rate swaps during 2013 was driven by:

i) An £81.6 million decrease in the value of sterling denominated instruments (that swap some of the Group's sterling bonds from fixed to floating interest rates) from an asset of £145.9 million at 31 December 2012 to an asset of £64.3 million at 31 December 2013, due to an increase in medium-term sterling interest rates during 2013; partially offset by

ii) A £46.2 million increase in the value of euro denominated interest rate swaps from a liability of £42.6 million at 31 December 2012 to an asset of £3.6 million at 31 December 2013. This is mainly due to the close out in November 2013 of the Group's portfolio of €905.0 million (£754.2 million) euro interest rate swaps for a cash cost of €35.9 million (£29.9 million). €730.0 million (£608.3 million) of new euro interest rate swaps were put in place which, due to a slight increase in medium term euro interest rates in December 2013, had become (from £nil market value at inception) an asset of £3.6 million at 31 December 2013.

The net market value of the Group's forward foreign exchange and currency swap contracts at 31 December 2013 was an asset (mainly held within debtors due in less than one year) of £10.1 million (2012: a net liability of £13.8 million). These contracts are mainly short-dated (maturities of six months or less) instruments used to swap sterling liabilities into euros as part of the Group's currency translation hedging strategy (which is set out in further detail in the currency translation hedging section below). The slight weakening of the euro against sterling towards the end of 2013 resulted in an increase in the market value of these derivatives. This was, however, offset by a corresponding decrease in the sterling value of the euro denominated property assets that they are hedging.

GEARING AND FINANCIAL COVENANTS

The loan to value ratio of the Group at 31 December 2013 on a look-through basis (i.e. including the borrowings and property assets of the Group's share of joint ventures) was 42 per cent (2012: 51 per cent).

On a wholly owned basis, the loan to value ratio of the Group was 43 per cent at 31 December 2013 (2012: 52 per cent).

In both cases, the loan to value ratio treats the deferred consideration of €157.3 million (£131.1 million) as a deduction from net borrowings, on the basis that it has similar economic characteristics to a cash equivalent asset. The deferred consideration can be called by SEGRO giving three months' notice.

The reduction in our LTV ratio to around 40 per cent remains our target for the longer term. However, if attractive growth opportunities arise before disposals, our LTV ratio may rise temporarily. In this respect, it should be noted that completion of a recently announced acquisition by SELP would increase SEGRO's look-through LTV ratio by around 2.5 percentage points.

The gearing ratio of the Group at 31 December 2013, as defined within the principal debt funding arrangements of the Group (i.e. excluding debt funding arrangements within joint ventures), was 62 per cent (2012: 93 per cent). This is significantly lower than the Group's tightest financial gearing covenant within these debt facilities of 160 per cent. Property valuations would need to fall by around 35 per cent (2012: 21 per cent) from their 31 December 2013 values to reach the gearing covenant threshold of 160 per cent.

The Group's other key financial covenant within its principal debt funding arrangements is interest cover, requiring that net interest before capitalisation be covered at least 1.25 times by net property rental income. At 31 December 2013, the Group comfortably met this ratio at 2.2 times (2012: 2.3 times). On a 'look-through' basis, including joint ventures, this ratio was 2.3 times (2012: 2.3 times).

LIQUIDITY POSITION

Funds availability (excluding cash and undrawn facilities held in joint ventures) at 31 December 2013 totalled £982.1 million, comprising £233.8 million of cash and short-term investments and £748.3 million of undrawn bank facilities provided by the Group's relationship banks, of which only £15.0 million were uncommitted. This level of funds availability, in conjunction with the £131.1 million of deferred consideration which is payable on or before October 2015, provides substantial liquidity to fund upcoming debt maturities (£110.9 million of committed bank facilities mature before 31 December 2014 and a further £199.7 million of bank facilities and £208.3 million of bonds at face value mature during 2015), approved or committed development capital expenditure (£89.0 million at 31 December 2013), and the acquisition within the SELP joint venture (SEGRO planned equity share £118.0 million) announced since year-end, as well as providing additional liquidity headroom.

At 31 December 2013, the weighted average maturity of the gross borrowings of the Group (excluding borrowings within joint ventures) was 8.7 years (2012: 8.3 years). On a look-though basis, including borrowings in joint ventures at share, the weighted average maturity of gross borrowings was 7.6 years.

This relatively long average debt maturity translates into a favourable, well spread debt funding maturity profile which reduces future refinancing risk.

GOING CONCERN

The Group has realised substantial net proceeds during 2013 from capital recycling activity. As noted in the liquidity position section above, the Group has a very strong liquidity position, a favourable debt maturity profile and substantial headroom against financial covenants. It can reasonably expect to be able to continue to have good access to capital markets and other sources of funding.

Having made enquiries and having considered the principal risks and uncertainties facing the Group, including liquidity and solvency risks, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

INTEREST RATE EXPOSURE

The Group's interest rate risk policy is that between 50 and 100 per cent of net borrowings should be at fixed or capped rates both at a Group level and by major borrowing currency (currently euro and sterling), including the impact of derivative financial instruments.

At 31 December 2013, including the impact of derivative instruments, £1,102.2 million (2012: £1,231.1m) of borrowings (excluding borrowings within joint ventures) were at fixed rates, representing 76 per cent (2012: 59 per cent) of the net borrowings of the Group. By currency, 68 per cent of the euro denominated net borrowings of the Group of £896.4 million and 88 per cent of the remaining net borrowings (predominantly sterling) of £562.7 million were at fixed rates.

During November 2013 the Group's portfolio of €905.0 million (£754.2 million) euro interest rate swaps (excluding the share of interest rate swaps within joint ventures), which had a weighted average fixed rate of 2.5 per cent and a weighted average maturity of 1.7 years, were closed out for a cash cost of €35.9 million (£29.9 million), of which €3.2 million (£2.7 million) related to accrued interest. Derivative instruments are held in the Group balance sheet at fair value. The euro interest rate swap close-outs were transacted at fair value and, therefore, the cash settlement of these instruments had no impact on the income statement of the Group.

At the same time, €730.0 million (£608.3 million) of new euro interest rate swaps with an average fixed rate of 0.95 per cent and a weighted average maturity of five years were put in place.

The main reasons for the euro swap restructuring were: i) to lengthen the average maturity of the euro fixed interest cover of the Group; ii) to reduce the average interest cost of euro fixed interest cover from 2014 onwards; and iii) to reallocate swap transactions amongst banks to ensure, as far as possible, that swaps are held only with Group relationship banks.

The weighted average maturity of fixed rate cover of £1,102.2 million at 31 December 2013 was 9.9 years at an average fixed interest rate of 5.1 per cent. Including the impact of derivative financial instruments, floating rate gross borrowings at 31 December 2013 were £590.7 million, at an average interest rate (including margin) of 3.3 per cent. This translates into a weighted average interest rate for gross borrowings at that date, before commitment fees and amortised costs, of 4.5 per cent (2012: 4.6 per cent) or 4.9 per cent (2012: 4.9 per cent) after allowing for such items.

During 2013, the net proceeds from capital recycling activity were principally used to repay all of the borrowings under the unsecured committed bank facilities of the Group. These borrowings had a gross interest rate of around 2 per cent, significantly lower than the average interest rate of the Group, therefore increasing the average interest rate of gross borrowings during the year. However, this was more than offset by the positive impact of the restructuring of the Group's euro denominated interest rate swap portfolio in November 2013. Therefore, as noted above, the average interest rate of the Group (excluding borrowings within joint ventures and before amortised costs and commitment fees) at 31 December 2013 (4.5 per cent) was broadly unchanged from 31 December 2012 (4.6 per cent).

Including the impact, at share, of gross borrowings in joint ventures, the weighted average interest rate of the Group at 31 December 2013, before commitment fees and amortised costs, was 4.2 per cent (2012: 4.4 per cent).

As a result of fixed rate cover in place, if short‑term interest rates had been 1 per cent higher throughout the year to 31 December 2013, the adjusted net finance cost of the Group would have increased by approximately £7 million, representing around 5 per cent of EPRA profit after tax.

At 31 December 2013, the Group held cash balances of £233.8 million (excluding cash held within joint ventures), with an average interest rate of less than 0.5 per cent. Therefore, the impact of any net divestment of property assets during 2014 on the net finance costs of the Group will not be significant, as any such proceeds would increase these cash balances. Similarly, any net investment in property assets would be funded initially by utilising the available cash balances, so again the increase in net finance costs would be relatively small. If the available cash had been fully utilised, further net investment would be funded by drawing on the Group's unsecured bank facilities, which currently have a marginal funding cost (net of commitment fees) of around 1.5 per cent.

The Group has decided not to elect to hedge account its interest rate derivatives portfolio. Therefore, movements in its fair value are taken to the income statement but, in accordance with EPRA Best Practices Recommendations, these gains and losses are eliminated from EPRA profit after tax.

FOREIGN CURRENCY TRANSLATION EXPOSURE

The Group has negligible transactional foreign currency exposure, but does have a potentially significant currency translation exposure arising on the conversion of its substantial foreign currency denominated net assets (mainly euro) and euro denominated earnings into sterling in the Group consolidated accounts.

As at 31 December 2013, the Group had gross foreign currency assets amounting to £1,273.5 million, which were 78 per cent hedged by gross foreign currency denominated liabilities (including the impact of derivative financial instruments) of £995.8 million. Translation hedging has been maintained towards the upper end of the 50 to 90 per cent policy range in order to substantially reduce the impact of movements in the sterling/euro exchange rate on NAV and EPRA profit after tax of the Group.

Excluding the impact of forward foreign exchange and currency swap contracts, a 5 per cent strengthening against sterling in the value of the other currencies in which the Group operates at 31 December 2013 would have increased reported net assets by approximately £16 million and reduced reported gearing by less than 1 per cent. Including the impact of forward foreign exchange and currency swap contracts used to hedge foreign currency denominated net assets, there would have been an increase in gearing of approximately 2 per cent.

A 5 per cent strengthening against sterling in the value of the other currencies in which the Group operates at 31 December 2013, including the impact of forward foreign exchange and currency swap contracts used to hedge foreign currency denominated net assets, would have increased the loan to value ratio on a 'look-through' basis by 0.6 per cent.

The average exchange rate used to translate euro denominated earnings generated during 2013 into sterling within the consolidated income statement of the Group was €1.18: £1. Based on the hedging position at 31 December 2013, and assuming that this position had applied throughout 2013, if the euro had been 5 per cent stronger than it was against sterling throughout the year (€1.12: £1), EPRA profit after tax for the year would have been approximately £2.0 million (1.5 per cent) higher than reported.

RESPONSIBILITY STATEMENT

The Statement of Directors' Responsibilities below has been prepared in connection with the Company's full Annual Report and Accounts for the year ended 31 December 2013. Certain parts of the Annual Report and Accounts have not been included in this announcement as set out in note 1 of the financial information.

We confirm to the best of our knowledge:

· the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

· the strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

· the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

The responsibility statement was approved by the Board of Directors on 25 February 2014 and signed on its behalf by:

David Sleath Justin Read

Chief Executive Group Finance Director

Group income statement

FOR THE YEAR ENDED 31 DECEMBER 2013

	Notes	2013 £m	2012 £m

REVENUE	4	339.8	371.0
Gross rental income	4	273.8	305.4
Property operating expenses	5	(50.4)	(50.6)
NET RENTAL INCOME		223.4	254.8
Joint venture management fee income	4	7.1	7.4
Administration expenses		(26.1)	(27.9)
Share of profit from joint ventures after tax	6	70.6	2.7
Realised and unrealised property gain/(loss)	7	97.7	(340.0)
Gain on sale of investment in joint ventures		-	0.2
Other investment (loss)/income	8	(0.4)	2.4
Amounts written off on acquisitions	9	(0.2)	(0.6)
OPERATING PROFIT/(LOSS)		372.1	(101.0)
Finance income	10	54.2	66.1
Finance costs	10	(214.2)	(167.3)
PROFIT/(LOSS) BEFORE TAX		212.1	(202.2)
Tax	11	(2.9)	4.9
Profit/(LOSS) AFTER TAX		209.2	(197.3)

Attributable to equity shareholders		210.6	(197.3)
Attributable to non-controlling interests		(1.4)	-
		209.2	(197.3)
EARNINGS PER SHARE
Basic and diluted earnings/(loss) per share	13	28.4	(26.6)

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2013

	Notes	2013 £m	2012 £m

Profit/(loss) for the year		209.2	(197.3)
ITEMS THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Valuation deficit on owner occupied properties	7	-	(0.8)
Actuarial loss on defined benefit pension schemes		(1.2)	(4.9)
		(1.2)	(5.7)
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Foreign exchange movement arising on translation of international operations		4.4	(12.2)
Decrease in value of available-for-sale investments	15	(1.5)	-
Fair value movements on derivatives in effective hedge relationships		5.7	4.0
		8.6	(8.2)
Tax on components of other comprehensive income		-	-
OTHER COMPREHENSIVE PROFIT/(LOSS) BEFORE TRANSFERS		7.4	(13.9)
Transfer to income statement on sale of available-for-sale investments	8	0.3	(1.0)
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR		216.9	(212.2)

Attributable to equity shareholders		218.3	(212.2)
Attributable to non-controlling interests		(1.4)	-
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR		216.9	(212.2)

GROUP BALANCE SHEET

As at 31 December 2013

	Notes	2013 £m	2012 £m

ASSETS
NON-CURRENT ASSETS
Goodwill and other intangibles		3.5	4.0
Investment properties	14	2,910.0	3,795.7
Owner occupied properties		4.1	4.3
Plant and equipment		4.7	2.9
Investments in joint ventures	6	635.7	342.6
Finance lease receivables		-	8.1
Available-for-sale investments	15	12.1	15.5
Trade and other receivables	16	65.6	146.2
		3,635.7	4,319.3
CURRENT ASSETS
Trading properties	14	138.7	193.3
Trade and other receivables	16	243.3	118.2
Cash and cash equivalents	18	233.8	16.6
		615.8	328.1
TOTAL ASSETS		4,251.5	4,647.4
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings	18	1,690.3	2,052.1
Deferred tax liabilities	11	11.4	23.3
Provisions		8.8	11.3
Trade and other payables	17	15.6	45.6
		1,726.1	2,132.3
CURRENT LIABILITIES
Trade and other payables	17	175.0	219.0
Borrowings	18	2.6	54.8
Tax liabilities		2.9	4.7
		180.5	278.5
TOTAL LIABILITIES		1,906.6	2,410.8
NET ASSETS		2,344.9	2,236.6
EQUITY
Share capital		74.2	74.2
Share premium		1,069.9	1,069.9
Capital redemption reserve		113.9	113.9
Own shares held		(5.3)	(7.3)
Revaluation reserve		(3.2)	(2.6)
Other reserves		182.5	173.3
Retained earnings		912.7	813.6
TOTAL SHAREHOLDERS' EQUITY		2,344.7	2,235.0
Non-controlling interests		0.2	1.6
TOTAL EQUITY		2,344.9	2,236.6
NET ASSETS PER ORDINARY SHARE
Basic and diluted	13	316p	302p

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2013

	BALANCE 1 JANUARY 2013 £m	EXCHANGE MOVEMENT £m	RETAINED PROFIT £m	ITEMS TAKEN DIRECTLY TO RESERVES £m	SHARES ISSUED £m	OTHER £m	DIVIDENDS £m	TRANSFERS £m	BALANCE 31 DECEMBER 2013 £m

Ordinary share capital	74.2	-	-	-	-	-	-	-	74.2
Share premium	1,069.9	-	-	-	-	-	-	-	1,069.9
Capital redemption reserve	113.9	-	-	-	-	-	-	-	113.9
Own shares held	(7.3)	-	-	-	-	(0.5)	-	2.5	(5.3)
Revaluation reserve	(2.6)	-	-	-	-	-	-	(0.6)	(3.2)
Other reserves:
Share based payments reserve	5.1	-	-	-	-	1.6	-	(1.3)	5.4
Fair value reserve for AFS⁽¹⁾	4.5	-	-	(1.5)	-	0.3	-	-	3.3
Translation and other reserves	(5.4)	4.4	-	5.7	-	-	-	-	4.7
Merger reserve	169.1	-	-	-	-	-	-	-	169.1
Total other reserves	173.3	4.4	-	4.2	-	1.9	-	(1.3)	182.5
Retained earnings	813.6	-	210.6	(1.2)	-	-	(109.7)	(0.6)	912.7
Total equity attributable to equity shareholders	2,235.0	4.4	210.6	3.0	-	1.4	(109.7)	-	2,344.7
Non-controlling interests	1.6	-	(1.4)	-	-	-	-	-	0.2
TOTAL EQUITY	2,236.6	4.4	209.2	3.0	-	1.4	(109.7)	-	2,344.9

For the year ended 31 December 2012

	BALANCE 1 JANUARY 2012 £m	EXCHANGE MOVEMENT £m	RETAINED LOSS £m	ITEMS TAKEN DIRECTLY TO RESERVES £m	SHARES ISSUED £m	OTHER £m	DIVIDENDS £m	TRANSFERS £m	BALANCE 31 DECEMBER 2012 £m

Ordinary share capital	74.2	-	-	-	-	-	-	-	74.2
Share premium	1,069.5	-	-	-	0.4	-	-	-	1,069.9
Capital redemption reserve	113.9	-	-	-	-	-	-	-	113.9
Own shares held	(10.2)	-	-	-	-	(0.7)	-	3.6	(7.3)
Revaluation reserve	(0.6)	-	-	(0.8)	-	-	-	(1.2)	(2.6)
Other reserves:
Share based payments reserve	4.4	-	-	-	-	1.7	-	(1.0)	5.1
Fair value reserve for AFS⁽¹⁾	5.5	-	-	-	-	(1.0)	-	-	4.5
Translation and other reserves	10.2	(12.2)	-	4.0	-	-	-	(7.4)	(5.4)
Merger reserve	169.1	-	-	-	-	-	-	-	169.1
Total other reserves	189.2	(12.2)	-	4.0	-	0.7	-	(8.4)	173.3
Retained earnings	1,119.5	-	(197.3)	(4.9)	-	-	(109.7)	6.0	813.6
Total equity attributable to equity shareholders	2,555.5	(12.2)	(197.3)	(1.7)	0.4	-	(109.7)	-	2,235.0
Non-controlling interests	2.2	-	-	-	-	(0.6)	-	-	1.6
TOTAL EQUITY	2,557.7	(12.2)	(197.3)	(1.7)	0.4	(0.6)	(109.7)	-	2,236.6

1 AFS is the term used for "Available-for-sale investments" and is shown net of deferred tax.

GROUP CASH FLOW STATEMENT

For the year ended 31 December 2013

	Notes	2013 £m	2012 £m

CASH FLOWS FROM OPERATING ACTIVITIES	19	204.0	205.1
Interest received		58.6	49.3
Dividends received		24.1	18.7
Interest paid		(156.1)	(153.2)
Tax paid		(2.4)	(12.8)
NET CASH RECEIVED FROM OPERATING ACTIVITIES		128.2	107.1
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase and development of investment properties		(211.1)	(277.9)
Sale of investment properties		559.9	490.1
Repayment of finance lease recievables		8.1	-
Purchase of plant and equipment and intangibles		(3.2)	(3.0)
Sale of available-for-sale investments		1.8	3.5
Sale of investment in joint ventures		-	4.1
Sale of SELP portfolio	19	402.8	-
Investment in joint ventures		(45.4)	(50.6)
Net increase in loans to joint ventures		(6.8)	(1.2)
Purchase of non-controlling interests		-	(0.6)
NET CASH RECEIVED FROM INVESTING ACTIVITIES		706.1	164.4
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to ordinary shareholders		(109.7)	(109.7)
Repayment of bonds		-	(112.6)
Net decrease in other borrowings		(431.0)	(90.4)
Net costs to close out debt		-	(14.8)
Early close out of interest rate swaps		(27.2)	-
Net settlement of foreign exchange derivatives		(47.9)	56.0
Proceeds from the issue of ordinary shares		-	0.4
Purchase of ordinary shares		(0.5)	(0.7)
NET CASH USED IN FROM FINANCING ACTIVITIES		(616.3)	(271.8)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		218.0	(0.3)
Cash and cash equivalents at the beginning of the year		15.4	16.0
Effect of foreign exchange rate changes		0.4	(0.3)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR		233.8	15.4

Cash and cash equivalents per balance sheet		233.8	16.6
Bank overdrafts		-	(1.2)
CASH AND CASH EQUIVALENTS PER CASH FLOW		233.8	15.4

Notes to the condensed financial INFORMATION

1. FINANCIAL INFORMATION

The financial information set out in this announcement does not constitute the consolidated statutory accounts for the years ended 31 December 2013 and 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 (approved by the Board on 25 February 2014) will be delivered following the Company's annual general meeting. The external auditor, Deloitte LLP, have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) of the Companies Act 2006.

Given due consideration to the nature of the Group's business and financial position, including the financial resources available to the Group, the Directors consider that the Group is a going concern and this financial information is prepared on that basis.

The financial information set out in this announcement is based on the consolidated financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for the use by the European Union and complies with the disclosure requirements of the Listing Rules of the UK Financial Services Authority. The financial information is in accordance with the accounting policies set out in the 2012 financial statements except for the adoption of new accounting standards in 2013, none of which had a material impact on the current or prior year reported results.

The principal exchange rates used to translate foreign currency denominated amounts in 2013 are:
Balance sheet: £1 = €1.20 (31 December 2012: £1 = €1.23)
Income statement: £1 = €1.18 (31 December 2012: £1 = €1.23)

2. EPRA profit

	2013 £m	2012 £m

Gross rental income	273.8	305.4
Property operating expenses	(50.4)	(50.6)
NET RENTAL INCOME	223.4	254.8
Joint venture management fee income	7.1	7.4
Administration expenses	(26.1)	(27.9)
Share of joint ventures' EPRA profit after tax	26.3	20.2
EPRA OPERATING PROFIT BEFORE INTEREST AND TAX	230.7	254.5
Net finance costs (including adjustments)	(96.6)	(109.6)
EPRA PROFIT BEFORE TAX	134.1	144.9
ADJUSTMENTS:
Adjustments to the share of profit/(loss) from joint ventures after tax⁽¹⁾	44.3	(17.5)
Profit/(loss) on sale of investment properties	13.0	(28.9)
Valuation surplus/(deficit) on investment and owner occupied properties	93.8	(284.4)
Profit/(loss) on sale of trading properties	6.1	(1.8)
Increase in provision for impairment of trading properties	(15.2)	(24.9)
Gain on sale of investment in joint ventures	-	0.2
Other investment (loss)/income	(0.4)	2.4
Amounts written off on acquisitions	(0.2)	(0.6)
Loss on early close out of bonds	-	(16.8)
Gain on early close out of bank debt	-	2.3
Net fair value (loss)/gain on interest rate swaps and other derivatives	(63.4)	22.9
TOTAL ADJUSTMENTS	78.0	(347.1)
PROFIT/(LOSS) BEFORE TAX	212.1	(202.2)
TAX
On EPRA profits	(2.7)	(1.9)
In respect of adjustments	(0.2)	6.8
	(2.9)	4.9
PROFIT/(LOSS) AFTER TAX
EPRA profit after tax	131.4	143.0
Adjustments	77.8	(340.3)
PROFIT/(LOSS) AFTER TAX	209.2	(197.3)

1 A detailed breakdown of the adjustments to the share of profit from joint ventures is included in note 6.

The adjustments outlined above arise from adopting the Best Practices Recommendations of European Public Real Estate Association (EPRA). The EPRA profit measures highlight the underlying recurring performance of the property rental business, which is our core operational activity and also provide a consistent basis to enable a comparison between European property companies.

3. SEGMENTAL REPORTING

The Group's reportable segments are the geographical Business Units, Greater London, Thames Valley and National Logistics, Northern Europe (principally Germany), Southern Europe (principally France) and Central Europe (principally Poland), which are managed and reported to the Board as separate distinct Business Units.

31 DECEMBER 2013	GROSS RENTAL INCOME £m	NET RENTAL INCOME £m	SHARE OF JOINT VENTURES' EPRA PROFIT £m	EPRA PBIT £m	TOTAL DIRECTLY OWNED PROPERTY ASSETS £m	INVESTMENTS IN JOINT VENTURES £m	CAPITAL EXPENDITURE £m

Greater London	73.4	62.1	15.6	83.0	1,106.9	289.3	57.5
Thames Valley and National Logistics	89.2	79.0	5.4	84.6	1,160.0	84.6	55.7
Northern Europe	40.7	28.3	1.4	27.9	363.5	66.0	74.5
Southern Europe	46.2	39.7	1.8	40.4	301.0	84.3	41.5
Central Europe	24.3	21.4	2.2	23.3	121.4	103.7	75.6
Other⁽¹⁾	-	(7.1)	(0.1)	(28.5)	-	7.8	2.1
Total	273.8	223.4	26.3	230.7	3,052.8	635.7	306.9

31 DECEMBER 2012	GROSS RENTAL INCOME £m	NET RENTAL INCOME £m	SHARE OF JOINT VENTURES' EPRA PROFIT £m	EPRA PBIT £m	TOTAL DIRECTLY OWNED PROPERTY ASSETS £m	INVESTMENTS IN JOINT VENTURES £m	CAPITAL EXPENDITURE £m

Greater London	77.7	66.8	14.7	88.3	1,159.5	261.3	7.1
Thames Valley and National Logistics	110.1	95.2	4.8	100.1	1,305.0	62.8	40.5
Northern Europe	53.5	43.3	0.7	41.9	564.5	18.5	30.3
Southern Europe	40.5	35.9	-	34.5	574.2	-	170.4
Central Europe	23.6	20.7	-	19.8	390.1	-	47.9
Other⁽¹⁾	-	(7.1)	-	(30.1)	-	-	3.3
Total	305.4	254.8	20.2	254.5	3,993.3	342.6	299.5

1 Other includes the corporate centre, SELP holding companies and costs relating to the operational business which are not specifically allocated to a geographical business unit.

Revenues from the most significant countries within the Group were UK £184.2 million (2012: £212.1 million), France £49.9 million (2012: £45.1 million), Germany £34.1 million (2012: £54.3 million) and Poland £30.1 million (2012: £27.8 million).

4. REVENUE

	2013 £m	2012 £m

Rental income from investment properties	242.8	280.9
Rental income from trading properties	13.0	13.8
Rent averaging	10.2	8.8
Surrender premiums	7.4	1.4
Interest received on finance lease assets	0.4	0.5
GROSS RENTAL INCOME	273.8	305.4
Joint venture management fee income - property management fees	5.4	4.1
- performance and other fees	1.7	3.3
Service charge income	40.2	37.2
Proceeds from sale of trading properties	18.7	21.0
TOTAL REVENUE	339.8	371.0

5. PROPERTY OPERATING EXPENSES

	2013 £m	2012 £m

Vacant property costs	12.6	13.7
Letting, marketing, legal and professional fees	8.5	8.9
Bad debt expense	2.8	1.7
Other expenses, net of service charge income	11.0	11.2
PROPERTY MANAGEMENT EXPENSES	34.9	35.5
Property administration expenses¹	17.6	17.7
Costs capitalised²	(2.1)	(2.6)
TOTAL PROPERTY OPERATING EXPENSES	50.4	50.6

1 Property administration expenses predominantly relate to the employee staff costs of personnel directly involved in managing the property portfolio.

2 Costs capitalised relate to internal employee staff costs directly involved in developing the property portfolio.

6. INVESTMENTS IN JOINT VENTURES AND SUBSIDIARIES

6(i) Share of profit from joint ventures after tax

In October 2013, the Group completed the disposal of a portfolio of European logistics assets into the SEGRO European Logistics Partnership in which the Group retained a 50 per cent interest.

The table below presents a summary income statement of the Group's largest joint ventures.

	SEGRO EUROPEAN LOGISTICS PARTNERSHIP £m	LOGISTICS PROPERTY PARTNERSHIP £m	AIRPORT PROPERTY PARTNERSHIP £m	HEATHROW BIG BOX INDUSTRIAL AND DISTRIBUTION FUND £m	OTHER £m	2013 £m	2012 £m

Gross rental income	7.2	10.3	22.7	7.1	1.2	48.5	40.0
Property operating expenses:
- underlying property operating expenses	(0.3)	(0.3)	(0.8)	(0.1)	(0.1)	(1.6)	(0.8)
- vacant property costs	(0.1)	(0.3)	(1.4)	-	-	(1.8)	(1.1)
- property management fees	(0.6)	(0.5)	(2.2)	(0.2)	-	(3.5)	(2.9)
- performance and other fees	-	-	(1.1)	-	-	(1.1)	(1.7)
NET RENTAL INCOME	6.2	9.2	17.2	6.8	1.1	40.5	33.5
Administration expenses	(0.3)	-	-	-	(0.1)	(0.4)	-
EPRA net finance costs	(1.2)	(3.8)	(6.9)	(1.5)	(0.5)	(13.9)	(13.3)
EPRA PROFIT BEFORE TAX	4.7	5.4	10.3	5.3	0.5	26.2	20.2
Tax on EPRA profits	0.1	-	-	-	-	0.1	-
EPRA PROFIT AFTER TAX	4.8	5.4	10.3	5.3	0.5	26.3	20.2
ADJUSTMENTS:
Loss on sale of investment properties	-	-	-	-	-	-	(0.1)
Valuation surplus/(deficit) on investment properties	14.1	9.5	17.4	8.4	-	49.4	(11.8)
Profit on sale of trading properties	-	-	-	-	-	-	1.5
Increase in provision for impairment of trading properties	-	-	-	-	(1.5)	(1.5)	(2.0)
Net fair value gain/(loss) on interest rate swaps and other derivatives	-	0.7	(0.1)	0.3	-	0.9	(0.8)
Amounts written off on acquisitions	(0.2)	-	-	-	-	(0.2)	(3.4)
Tax in respect of adjustments	(4.3)	-	-	-	-	(4.3)	(0.9)
TOTAL ADJUSTMENTS	9.6	10.2	17.3	8.7	(1.5)	44.3	(17.5)
PROFIT/(LOSS) AFTER TAX	14.4	15.6	27.6	14.0	(1.0)	70.6	2.7

Trading properties held by joint ventures were externally valued resulting in an increase in the Group's share of provision for impairment of £1.5 million (2012: £2.0 million). Based on the fair value at 31 December 2013, the Group's share of joint ventures' trading property portfolio has an unrecognised surplus of £nil (2012: £3.7 million).

6. INVESTMENTS IN JOINT VENTURES AND SUBSIDIARIES continued

6(ii) Summarised balance sheet information of the Group's share of joint ventures

	SEGRO EUROPEAN LOGISTICS PARTNERSHIP £m	LOGISTICS PROPERTY PARTNERSHIP £m	AIRPORT PROPERTY PARTNERSHIP £m	HEATHROW BIG BOX INDUSTRIAL AND DISTRIBUTION FUND £m	OTHER £m	2013 £m	2012 £m

Investment properties	416.6	165.0	388.6	109.4	-	1,079.6	621.5
Other assets	0.1	-	8.2	-	-	8.3	9.3
TOTAL NON-CURRENT ASSETS	416.7	165.0	396.8	109.4	-	1,087.9	630.8

Trading properties	-	-	-	-	12.8	12.8	29.1
Other receivables	9.7	0.4	2.9	0.3	1.4	14.7	10.3
Cash	23.7	3.6	5.9	2.8	0.4	36.4	19.7
TOTAL CURRENT ASSETS	33.4	4.0	8.8	3.1	14.6	63.9	59.1
TOTAL ASSETS	450.1	169.0	405.6	112.5	14.6	1,151.8	689.9

Borrowings	(159.7)	(92.4)	(168.3)	-	(0.4)	(420.8)	(306.0)
Deferred tax	(12.3)	-	-	-	-	(12.3)	(1.3)
Other liabilities	(0.1)	-	-	-	-	(0.1)	(7.7)
TOTAL NON-CURRENT LIABILITIES	(172.1)	(92.4)	(168.3)	-	(0.4)	(433.2)	(315.0)

Borrowings	-	-	-	(45.0)	-	(45.0)	(11.0)
Other liabilities	(17.2)	(4.0)	(13.2)	(2.6)	(0.9)	(37.9)	(21.3)
TOTAL CURRENT LIABILITIES	(17.2)	(4.0)	(13.2)	(47.6)	(0.9)	(82.9)	(32.3)
TOTAL LIABILITIES	(189.3)	(96.4)	(181.5)	(47.6)	(1.3)	(516.1)	(347.3)
GROUP SHARE OF NET ASSETS	260.8	72.6	224.1	64.9	13.3	635.7	342.6

At 31 December 2013 the fair value of £465.8 million of borrowings was £469.4 million (2012: no difference).

6(iii) Investments by the Group

	2013 £m	2012 £m

COST OR VALUATION AT 1 JANUARY	342.6	298.8
Exchange movement	(3.2)	(0.6)
Acquisition	257.7	65.7
Disposals	(18.6)	(3.9)
Loan advances	6.9	1.2
Dividends received	(24.1)	(18.7)
Share of profit after tax	70.6	2.7
Items taken directly to reserves	3.8	(2.6)
COST OR VALUATION AT 31 DECEMBER	635.7	342.6

The amount of loans advanced by the Group to joint ventures is £260.7 million (2012: £172.1 million).

7. REALISED AND UNREALISED PROPERTY gain/(LOSS)

	2013 £m	2012 £m

Profit/(loss) on sale of investment properties	13.0	(28.9)
Valuation surplus/(deficit) on investment properties	94.4	(283.2)
Valuation deficit on owner occupied properties	(0.6)	(1.2)
Profit/(loss) on sale of trading properties	6.1	(1.8)
Increase in provision for impairment of trading properties	(15.2)	(24.9)
Total realised and unrealised property gain/(loss) - income statement	97.7	(340.0)
Valuation deficit on owner occupied properties - other comprehensive income	-	(0.8)
TOTAL REALISED AND UNREALISED PROPERTY GAIN/(LOSS)	97.7	(340.8)

8. OTHER INVESTMENT (LOSS)/INCOME

	2013 £m	2012 £m

Net (loss)/profit on available-for-sale investments	(0.1)	1.4
Transfer of fair value (deficit)/surplus realised on sale of available-for-sale investments	(0.3)	1.0
TOTAL OTHER INVESTMENT (LOSS)/INCOME	(0.4)	2.4

9. AMOUNTS WRITTEN-OFF ON ACQUISITIONS

	2013 £m	2012 £m

Acquisition of LPP	-	0.4
Amortisation of intangibles	0.2	0.2
TOTAL AMOUNTS WRITTEN OFF ON ACQUISITIONS	0.2	0.6

10. NET FINANCE COSTS

FINANCE INCOME	2013 £m	2012 £m

Interest received on bank deposits and related derivatives	34.3	29.6
Gain on early close out of bank debt	-	2.3
Fair value gain on interest rate swaps and other derivatives	19.0	33.8
Net interest income on defined benefit obligation	-	0.3
Exchange differences	0.9	0.1
TOTAL FINANCE INCOME	54.2	66.1

FINANCE COSTS	2013 £m	2012 £m

Interest on overdrafts, loans and related derivatives	(129.7)	(137.4)
Loss on early close out of bonds	-	(16.8)
Net interest expense on defined benefit obligation	(0.3)	-
Amortisation of issue costs	(4.3)	(5.6)
Total borrowing costs	(134.3)	(159.8)
Less amounts capitalised on the development of properties	2.5	3.4
NET BORROWING COSTS	(131.8)	(156.4)
Fair value loss on interest rate swaps and other derivatives	(82.4)	(10.9)
TOTAL FINANCE COSTS	(214.2)	(167.3)

NET FINANCE COSTS	(160.0)	(101.2)

The interest capitalisation rates for 2013 ranged from 4.3 per cent to 6.1 per cent (2012: 4.7 per cent to 6.2 per cent). Interest is capitalised gross of tax relief.

11. TAX

11(i) - Tax on profit

	2013 £m	2012 £m

TAX ON:
EPRA profits	(2.7)	(1.9)
Adjustments	(0.2)	6.8
TOTAL TAX (CHARGE)/CREDIT	(2.9)	4.9

CURRENT TAX

UNITED KINGDOM
Adjustments in respect of earlier years	-	0.2
	-	0.2
OVERSEAS
Current tax charge	(2.3)	(1.5)
Adjustments in respect of earlier years	1.8	4.7
	(0.5)	3.2
TOTAL CURRENT TAX (CHARGE)/CREDIT	(0.5)	3.4

DEFERRED TAX
Origination and reversal of temporary differences	1.1	(6.3)
On valuation movements	(2.1)	8.5
Total deferred tax in respect of investment properties	(1.0)	2.2
Other deferred tax	(1.4)	(0.7)
TOTAL DEFERRED TAX (CHARGE)/CREDIT	(2.4)	1.5

TOTAL TAX (CHARGE)/CREDIT ON LOSS ON ORDINARY ACTIVITIES	(2.9)	4.9

11(ii) - Factors affecting tax (charge)/credit for the year

The tax (charge)/credit is lower than the standard rate of UK corporation tax. The differences are:

	2013 £m	2012 £m

Profit/(loss) on ordinary activities before tax	212.1	(202.2)
Add back valuation (surplus)/deficit in respect of UK properties not taxable	(112.1)	100.0
	100.0	(102.2)
Multiplied by standard rate of UK corporation tax of 23.25 per cent (2012: 24.5 per cent)	(23.2)	25.0
EFFECTS OF:
Exempt SIIC & REIT gains	18.4	14.5
Permanent differences	(0.1)	(2.9)
Profit on joint ventures already taxed	5.2	(0.3)
Higher tax rates on international earnings	1.4	5.2
Adjustments in respect of earlier years and assets not recognised	(4.6)	(36.6)
TOTAL TAX (CHARGE)/CREDIT ON LOSS ON ORDINARY ACTIVITIES	(2.9)	4.9

11(iii) - Deferred tax liabilities

Movement in deferred tax was as follows:

	BALANCE 1 JANUARY 2013 £m	EXCHANGE MOVEMENT £m	ACQUISITION/DISPOSAL £m	RECOGNISED IN INCOME £m	BALANCE 31 DECEMBER 2013 £m

Valuation surpluses and deficits on properties	(36.5)	(1.0)	(6.8)	2.1	(42.2)
Accelerated tax allowances	65.4	1.5	(8.7)	(1.1)	57.1
Deferred tax asset on revenue losses	(5.0)	0.1	0.3	1.1	(3.5)
Others	(0.6)	0.1	0.2	0.3	-
TOTAL DEFERRED TAX LIABILITIES	23.3	0.7	(15.0)	2.4	11.4

The Group has recognised revenue tax losses of £11.6 million (2012: £19.1 million) available for offset against future profits. Further unrecognised tax losses of £586.9 million also exist at 31 December 2013 (2012: £470.4 million) of which £29.8 million (2012: £44.2 million) expires in 15 years.

11(iv) - Factors that may affect future tax charges

No deferred tax is recognised on the unremitted earnings of international subsidiaries and joint ventures. In the event of their remittance to the UK, no net UK tax is expected to be payable.

The standard rate of UK corporation tax is due to fall in stages to 20 per cent by April 2015. This is unlikely to significantly impact the Group's tax charge.

12. DIVIDENDS

	2013 £m	2012 £m

ORDINARY DIVIDENDS PAID
Interim dividend for 2013@4.9 pence per share	36.3	-
Final dividend for 2012@9.9 pence per share	73.4	-
Interim dividend for 2012@4.9 pence per share	-	36.4
Final dividend for 2011@9.9 pence per share	-	73.3
TOTAL DIVIDENDS	109.7	109.7

The Board recommends a final dividend for 2013 of 9.9 pence which will result in a distribution of £73.4 million. The total dividend paid and proposed per share in respect of the year ended 31 December 2013 is 14.8 pence (2012: 14.8 pence).

13. EARNINGS AND NET ASSETS PER SHARE

The earnings per share calculations use the weighted average number of shares in issue during the year and the net assets per share calculations use the number of shares in issue at year-end. Earnings per share calculations exclude 1.1 million shares (2012: 1.2 million) being the average number of shares held on trust for employee share schemes and net assets per share calculations exclude 1.0 million shares (2012: 1.2 million) being the actual number of shares held on trust for employee share schemes at year-end.

13(i) - Earnings per ordinary share (EPS)

	2013			2012
	EARNINGS £m	SHARES MILLION	PENCE PER SHARE	EARNINGS £m	SHARES MILLION	PENCE PER SHARE

BASIC EPS	210.6	741.0	28.4	(197.3)	740.7	(26.6)
Dilution adjustments:
Share options and save as you earn schemes	-	0.1	-	-	-	-
DILUTED EPS	210.6	741.1	28.4	(197.3)	740.7	(26.6)

Adjustments to profit before tax¹	(78.0)		(10.6)	347.1		46.8
Tax adjustments:
- deferred tax on investment property which does not crystallise unless sold	1.0		-	(2.2)		(0.3)
- other tax	(0.8)		-	(4.6)		(0.6)
Non-controlling interest on adjustments	(1.4)	-	(0.1)	-	-	-
EPRA EPS	131.4	741.0	17.7	143.0	740.7	19.3

1 Details of adjustments are included in note 2.

13(ii) - Net assets per share (NAV)

	2013			2012
	EQUITY ATTRIBUTABLE TO ORDINARY SHAREHOLDERS £m	SHARES MILLION	PENCE PER SHARE	EQUITY ATTRIBUTABLE TO ORDINARY SHAREHOLDERS £m	SHARES MILLION	PENCE PER SHARE

BASIC NAV	2,344.7	741.2	316	2,235.0	740.9	302

Dilution adjustments:
Share options and save as you earn schemes	-	0.1	-	-	-	-
DILUTED NAV	2,344.7	741.3	316	2,235.0	740.9	302
Fair value adjustment in respect of debt - Group	(258.5)		(35)	(303.0)		(41)
Fair value adjustment in respect of debt - Joint ventures	(3.6)		-	-		-
Fair value adjustment in respect of trading properties - Group	4.2		1	4.2		1
Fair value adjustment in respect of trading properties - Joint ventures	-		-	3.7		-
EPRA TRIPLE NET NAV (NNNAV)	2,086.8	741.2	282	1,939.9	740.9	262
Fair value adjustment in respect of debt - Group	258.5		35	303.0		41
Fair value adjustment in respect of debt - Joint ventures	3.6		-	-		-
Fair value adjustment in respect of interest rate swap derivatives - Group	(67.9)		(9)	(103.3)		(14)
Fair value adjustment in respect of interest rate swap derivatives - Joint ventures	2.8		-	7.5		1
Deferred tax in respect of depreciation and valuation surpluses - Group	14.9		2	28.9		4
Deferred tax in respect of depreciation and valuation surpluses - Joint ventures	13.9		2	-		-
EPRA NAV	2,312.6	741.2	312	2,176.0	740.9	294

14. PROPERTIES

14(i) - Investment properties

	COMPLETED £m	DEVELOPMENT £m	TOTAL £m

AT 1 JANUARY 2012	3,898.2	334.0	4,232.2

Exchange movement	(26.9)	(4.4)	(31.3)
Property acquisitions	149.8	3.2	153.0
Additions to existing investment properties	28.2	102.1	130.3
Disposals	(501.6)	(18.4)	(520.0)
Transfers on completion of development	153.3	(153.3)	-
Transfers from trading properties	19.3	8.1	27.4
Revaluation deficit during the year	(265.8)	(17.4)	(283.2)
AT 31 DECEMBER 2012	3,454.5	253.9	3,708.4
Add tenant lease incentives, letting fees and rental guarantees	87.3	-	87.3
TOTAL INVESTMENT PROPERTIES	3,541.8	253.9	3,795.7

	COMPLETED £m	DEVELOPMENT £m	TOTAL £m

AT 1 JANUARY 2013	3,454.5	253.9	3,708.4

Exchange movement	41.7	3.6	45.3
Property acquisitions	114.6	8.6	123.2
Additions to existing investment properties	15.6	98.4	114.0
Disposals	(1,212.9)	(37.8)	(1,250.7)
Transfers on completion of development	54.4	(54.4)	-
Transfers from trading properties	-	4.8	4.8
Revaluation surplus during the year	107.1	(12.7)	94.4
AT 31 DECEMBER 2013	2,575.0	264.4	2,839.4
Add tenant lease incentives, letting fees and rental guarantees	70.6	-	70.6
TOTAL INVESTMENT PROPERTIES	2,645.6	264.4	2,910.0

Investment properties are stated at fair value as at 31 December 2013 based on external valuations performed by professionally qualified valuers. The Group's wholly owned property portfolio is valued at 31 December 2013 by CBRE Ltd. Valuations for the joint venture properties within the UK were performed by Jones Lang LaSalle (APP and LPP) and CBRE Ltd (Big Box). Valuations for the joint venture properties in Continental Europe were performed by CBRE Ltd. The valuations conform to International Valuation Standards and were arrived at by reference to market evidence of the transaction prices paid for similar properties. In estimating the fair value of the properties, the highest and best use of the properties is their current use. There has been no change to the valuation technique during the year.

CBRE Ltd and Jones Lang LaSalle also undertake some professional and agency work on behalf of the Group, although this is limited in relation to the activities of the Group as a whole. Both firms advise us that the total fees paid by the Group represent less than 5 per cent of their total revenue in any year.

Completed properties include buildings that are occupied or are available for occupation. Development properties include land available for development, land under development and construction in progress.

Following the commencement of operating leases and change in strategy, £4.8 million (2012: £27.4 million) of trading properties were transferred to investment properties in line with the accounting policy.

All properties are freehold. In the prior year long-term leasehold values within investment properties amounted to £9.2 million.

Prepaid operating lease incentives at 31 December 2013 were £44.9 million (2012: £56.5 million).

14(ii) - Trading properties

	COMPLETED £m	DEVELOPMENT £m	TOTAL £m

AT 1 JANUARY 2012	193.7	67.2	260.9
Exchange movement	(4.3)	(1.6)	(5.9)
Additions	1.9	11.0	12.9
Disposals	(21.6)	(1.2)	(22.8)
Transfers on completion of development	5.5	(5.5)	-
Transfers to investment properties	(19.3)	(8.1)	(27.4)
Increase in provision for impairment during the year	(16.3)	(8.6)	(24.9)
AT 31 DECEMBER 2012	139.6	53.2	192.8
Add tenant lease incentives, letting fees and rental guarantees	0.5	-	0.5
TOTAL TRADING PROPERTIES	140.1	53.2	193.3

	COMPLETED £m	DEVELOPMENT £m	TOTAL £m

AT 1 JANUARY 2013	139.6	53.2	192.8
Exchange movement	4.1	1.4	5.5
Property acquisitions	43.6	17.3	60.9
Additions	0.8	5.9	6.7
Disposals	(84.4)	(23.2)	(107.6)
Transfers on completion of development	5.2	(5.2)	-
Transfers to investment properties	-	(4.8)	(4.8)
Increase in provision for impairment during the year	(13.1)	(2.1)	(15.2)
AT 31 DECEMBER 2013	95.8	42.5	138.3
Add tenant lease incentives, letting fees and rental guarantees	0.4	-	0.4
TOTAL TRADING PROPERTIES	96.2	42.5	138.7

Trading properties were externally valued, as detailed in note 14(i), resulting in an increase in the provision for impairment of £15.2 million (2012: £24.9 million). Based on the fair value at 31 December 2013, the portfolio has an unrecognised surplus of £4.2 million (2012: £4.2 million).

15. AVAILABLE-FOR-SALE INVESTMENTS

	2013 £m	2012 £m

VALUATION AT 1 JANUARY	15.5	18.3
Exchange movement	(0.1)	(0.7)
Fair value movement - other comprehensive income	(1.5)	-
Disposals and return of capital	(1.8)	(2.1)
VALUATION AT 31 DECEMBER	12.1	15.5

Available-for-sale investments comprise holdings in private equity funds investing in the UK, Continental Europe and USA.

16. TRADE AND OTHER RECEIVABLES

	2013 £m	2012 £m

CURRENT
Trade receivables	21.1	41.4
Other receivables	187.3	63.2
Prepayments and accrued income	6.5	9.4
Fair value of interest rate swaps - non hedge	13.8	-
Fair value of forward foreign exchange and currency swap contracts - non hedge	6.6	0.4
Fair value of forward foreign exchange and currency swap contracts - hedge	4.1	-
Amounts due from related parties	3.9	3.8
TOTAL CURRENT TRADE AND OTHER RECEIVABLES	243.3	118.2

NON-CURRENT
Other receivables	0.4	0.3
Fair value of interest rate swaps - non hedge	65.2	145.9
TOTAL NON-CURRENT TRADE AND OTHER RECEIVABLES	65.6	146.2

Included in other receivables (current) is £131.1 million (2012: £nil) in respect of deferred consideration due from PSP Investments in connection with the creation of the SELP joint venture.

Other receivables (current) also include tax recoverable of £0.1 million (2012: £0.1 million).

Group trade receivables are net of provisions for doubtful debts of £7.7 million (2012: £5.7 million).

17. TRADE AND OTHER PAYABLES

	2013 £m	2012 £m

DUE WITHIN ONE YEAR
Trade payables	6.5	7.0
Non-trade payables and accrued expenses	167.9	196.2
Fair value of interest rate swaps - non hedge	-	1.6
Fair value of forward foreign exchange and currency swap contracts - non hedge	0.6	13.5
Fair value of forward foreign exchange and currency swap contracts - hedge	-	0.7
TOTAL TRADE AND OTHER PAYABLES DUE WITHIN ONE YEAR	175.0	219.0

DUE AFTER ONE YEAR
Other payables	0.6	1.1
Fair value of interest rate swaps - non hedge	11.1	41.0
Amounts due to related parties	3.9	3.5
TOTAL OTHER PAYABLES DUE AFTER ONE YEAR	15.6	45.6

18. NET BORROWINGS

	2013 £m	2012 £m

SECURED BORROWINGS:
Euro mortgages (repayable within one year or less)	2.7	1.4
Euro mortgages (repayable in more than one year but less than two)	-	19.1
Euro mortgages (repayable in more than two years but less than five)	-	20.5
TOTAL SECURED (ON LAND, BUILDINGS AND OTHER ASSETS)	2.7	41.0
UNSECURED BORROWINGS:
BONDS
5.25% bonds 2015	106.9	106.2
6.25% bonds 2015	99.9	99.8
5.5% bonds 2018	199.0	198.9
6.0% bonds 2019	171.6	170.5
5.625% bonds 2020	248.1	247.9
6.75% bonds 2021	297.1	296.9
7.0% bonds 2022	149.2	149.1
6.75% bonds 2024	221.9	221.7
5.75% bonds 2035	198.2	198.1
	1,691.9	1,689.1
Bank loans and overdrafts	(1.7)	376.8
TOTAL UNSECURED	1,690.2	2,065.9
TOTAL BORROWINGS	1,692.9	2,106.9
Cash and cash equivalents	(233.8)	(16.6)
NET BORROWINGS	1,459.1	2,090.3

The maturity profile of borrowings is as follows:

MATURITY PROFILE OF BORROWINGS	2013 £m	2012 £m

In one year or less	2.6	54.8
In more than one year but less than two	206.5	100.2
In more than two years but less than five	197.7	468.7
In more than five years but less than ten	866.0	1,063.3
In more than ten years	420.1	419.9
In more than one year	1,690.3	2,052.1
TOTAL BORROWINGS	1,692.9	2,106.9
Cash and cash equivalents	(233.8)	(16.6)
NET BORROWINGS	1,459.1	2,090.3

Cash and cash equivalents comprise cash balances, call deposits held with banks and highly liquid short-term investments that are readily convertible to known amounts of cash within three months from acquisition and subject to an insignificant risk of changes in value.

Bank loans and overdrafts include capitalised finance costs on committed facilities which were undrawn at year-end.

MATURITY PROFILE OF UNDRAWN BORROWING FACILITIES	2013 £m	2012 £m

In one year or less	123.3	42.6
In more than one year but less than two	200.0	24.4
In more than two years but less than five	425.0	364.9
TOTAL AVAILABLE UNDRAWN BORROWING FACILITIES	748.3	431.9

19. NOTES TO THE CASH FLOW STATEMENT

19(i) - Reconciliation of cash generated from operations

	2013 £m	2012 £m

Operating profit/(loss)	372.1	(101.0)
Adjustments for:
Depreciation of property, plant and equipment	2.2	3.2
Share of profit from joint ventures after tax	(70.6)	(2.7)
(Profit)/loss on sale of investment properties	(13.0)	28.9
Gain on sale of investment in joint ventures	-	(0.2)
Amounts written off on acquisitions	0.2	0.6
Revaluation (surplus)/deficit on investment and owner occupied properties	(93.8)	284.4
Loss/(gain) on sale of available-for-sale investments	0.4	(2.4)
Pensions and other provisions	(3.8)	(3.1)
	193.7	207.7
CHANGES IN WORKING CAPITAL:
Decrease in trading properties	11.8	36.6
Increase in debtors and tenant incentives	(7.9)	(32.5)
Increase/(decrease) in creditors	6.4	(6.7)
NET CASH INFLOW GENERATED FROM OPERATIONS	204.0	205.1

19(ii) - Deposits

Term deposits for a period of three months or less are included within cash and cash equivalents.

19(iii) - Sale of SELP portfolio

The cash flow from the sale of the SELP portfolio is made up as follows:

	£m

Gross proceeds	583.6
Net costs	(10.2)
Property taxes	(6.4)
	567.0
Deferred consideration	(133.3)
Proceeds due	(4.8)
	428.9
Net cash disposed	(27.1)
Other	1.0
NET CASH INFLOW FROM SALE OF SELP PORTFOLIO	402.8

Further detail is given in the Financial Review.

19(iv) - Analysis of net debt

	AT 1 JANUARY 2013 £m	EXCHANGE MOVEMENT £m	CASH FLOW £m	NON-CASH ADJUSTMENTS1 £m	AT 31 DECEMBER 2013 £m

Bank loans and loan capital	2,130.1	13.9	(431.0)	-	1,713.0
Capitalised finance costs	(24.4)	-	-	4.3	(20.1)
Bank overdrafts	1.2	-	(1.2)	-	-
TOTAL BORROWINGS	2,106.9	13.9	(432.2)	4.3	1,692.9
Cash in hand and at bank	(16.6)	(0.4)	(216.8)	-	(233.8)
NET DEBT	2,090.3	13.5	(649.0)	4.3	1,459.1

1 The non-cash adjustments relate to the amortisation of issue costs offset against borrowings and gains on the early close out of bank debt.

SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL INFORMATION

Table 1: EPRA performance measures summary

		2013		2012
	Notes	£m	pence per share	£m	pence per share

EPRA earnings	Table 2	131.4	17.7	143.0	19.3
EPRA NAV	Table 3	2,312.6	312	2,176.0	294
EPRA NNNAV	13	2,086.8	282	1,939.9	262

EPRA net initial yield	Table 4		6.3%		6.8%
EPRA "topped up" net initial yield	Table 4		6.9%		7.7%
EPRA vacancy rate	Table 5		8.5%		8.2%

EPRA cost ratio (including vacant property costs)	Table 6		24.2%		22.9%
EPRA cost ratio (excluding vacant property costs)	Table 6		19.7%		18.6%

Table 2: EPRA income statement, proportional consolidation

		2013			2012
	Notes	Group £m	Joint Ventures £m	Total £m	Group £m	Joint Ventures £m	Total £m

Gross rental income	2,6	273.8	48.5	322.3	305.4	40.0	345.4
Property operating expenses	2,6	(50.4)	(8.0)	(58.4)	(50.6)	(6.5)	(57.1)
NET RENTAL INCOME		223.4	40.5	263.9	254.8	33.5	288.3
Joint venture management fee income	2,6	7.1	-	7.1	7.4	-	7.4
Administration expenses	2,6	(26.1)	(0.4)	(26.5)	(27.9)	-	(27.9)
EPRA OPERATING PROFIT BEFORE INTEREST AND TAX		204.4	40.1	244.5	234.3	33.5	267.8
Net finance costs (incl. adjustments)	2,6	(96.6)	(13.9)	(110.5)	(109.6)	(13.3)	(122.9)
EPRA PROFIT BEFORE TAX		107.8	26.2	134.0	124.7	20.2	144.9
Tax on EPRA profit	2,6	(2.7)	0.1	(2.6)	(1.9)	-	(1.9)
EPRA PROFIT AFTER TAX		105.1	26.3	131.4	122.8	20.2	143.0
Number of shares (million)	13			741.0			740.7
EPRA EPS (PENCE PER SHARE)	13			17.7			19.3

Table 3: Balance sheet, proportional consolidation

		2013			2012
	Notes	Group £m	Joint Ventures £m	Total £m	Group £m	Joint Ventures £m	Total £m

Investment properties	6, 14	2,910.0	1,079.6	3,989.6	3,795.7	621.5	4,417.2
Trading properties	6, 14	138.7	12.8	151.5	193.3	29.1	222.4
Owner occupied properties		4.1	-	4.1	4.3	-	4.3
TOTAL PROPERTIES		3,052.8	1,092.4	4,145.2	3,993.3	650.6	4,643.9
Investment in joint ventures	6	635.7	(635.7)	-	342.6	(342.6)	-
Other net assets/(liabilities)	6	115.3	(27.3)	88.0	(10.6)	(10.7)	(21.3)
Net debt	18, 6	(1,459.1)	(429.4)	(1,888.5)	(2,090.3)	(297.3)	(2,387.6)
TOTAL SHAREHOLDERS' EQUITY¹		2,344.7	-	2,344.7	2,235.0	-	2,235.0
EPRA adjustments	13			(32.1)			(59.0)
EPRA NET ASSET VALUE	13			2,312.6			2,176.0
Number of shares, million	13			741.2			740.9
EPRA NAV, PENCE PER SHARE	13			312			294

1 After minority interests.

Table 4: EPRA net initial yield and "topped-up" net initial yield

Combined property portfolio	Notes	UK £m	Continental Europe £m	2013 Total £m

TOTAL PROPERTIES PER FINANCIAL STATEMENTS	Table 3	2,941.9	1,203.3	4,145.2
Add valuation surplus not recognised on wholly owned trading properties¹		-	4.2	4.2
Other items		(0.3)	(0.4)	(0.7)
COMBINED PROPERTY PORTFOLIO PER EXTERNAL VALUERS' REPORTS		2,941.6	1,207.1	4,148.7
Less development properties (investment, trading and joint ventures)		(136.4)	(211.5)	(347.9)
Owner occupied properties		(2.7)	(1.4)	(4.1)
NET VALUATION OF COMPLETED PROPERTIES		2,802.5	994.2	3,796.7
Add notional purchasers' costs		161.9	91.5	253.4
GROSS VALUATION OF COMPLETED PROPERTIES INCLUDING NOTIONAL PURCHASERS' COSTS	A	2,964.4	1,085.7	4,050.1


INCOME
Gross passing rent²		172.1	86.2	258.3
Less irrecoverable property costs		(2.0)	(0.7)	(2.7)
NET PASSING RENT	B	170.1	85.5	255.6
Adjustment for notional rent in respect of rent frees		16.8	8.2	25.0
TOPPED UP NET RENT	C	186.9	93.7	280.6
Including fixed/minimum uplifts in lieu of rental growth		6.9	0.4	7.3
TOTAL TOPPED UP NET RENT		193.8	94.1	287.9
YIELDS		%	%	%
EPRA net initial yield³	B/A	5.7	7.9	6.3
EPRA topped up net initial yield³	C/A	6.3	8.6	6.9
Net true equivalent yield		7.2	8.7	7.6

1 Trading properties are recorded in the financial statements at the lower of cost and net realisable value, therefore valuations above cost have not been recognised.

2 Gross passing rent excludes short term lettings and licences.

3 In accordance with the Best Practices Recommendations of EPRA.

Table 5: EPRA vacancy rate

	2013 £m	2012 £m

Annualised potential rental of vacant premises	25.9	30.4
Annualised potential rental value for the completed property portfolio	304.3	369.4
EPRA VACANCY RATE	8.5%	8.2%

Table 6: EPRA cost ratio

EPRA cost ratio	Notes	2013 £m	2012 £m

COSTS
Property operating expenses¹	5	50.4	50.6
Administration expenses		26.1	27.9
Share of joint venture property operating expenses²	6	6.9	4.8
Less:
Joint venture property management income fee income	4	(5.4)	(4.1)
TOTAL COSTS (A)		78.0	79.2

Group vacant property costs	5	(12.6)	(13.7)
Share of joint venture vacant property costs	6	(1.8)	(1.1)
TOTAL COSTS EXCLUDING VACANT PROPERTY COSTS (B)		63.6	64.4

GROSS RENTAL INCOME
Gross rental income	4	273.8	305.4
Share of joint venture property gross rental income	6	48.5	40.0
TOTAL GROSS RENTAL INCOME (C)		322.3	345.4

TOTAL EPRA COST RATIO (INCLUDING VACANT PROPERTY COSTS) (A)/(C)		24.2%	22.9%
TOTAL EPRA COST RATIO (EXCLUDING VACANT PROPERTY COSTS) (B)/(C)		19.7%	18.6%

1 Property operating expenses are net of costs capitalised in accordance with IFRS of £2.1 million (2012: £2.6 million) (see note 5 for further detail on the nature of costs capitalised).

2 Share of joint venture property operating expenses after deducting costs related to performance and other fees.

GLOSSARY OF TERMS

APP

Airport Property Partnership, a 50-50 joint venture between SEGRO and Aviva Investors.

Completed portfolio

The completed investment and trading properties and the Group's share of joint ventures' completed investment and trading properties.

Development pipeline

The Group's current programme of developments authorised or in the course of construction at the balance sheet date, together with potential schemes not yet commenced on land owned or controlled by the Group.

EPRA

The European Public Real Estate Association, a real estate industry body, who have issued Best Practices Recommendations in order to provide consistency and transparency in real estate reporting across Europe.

Estimated cost to completion

Costs still to be expended on a development or redevelopment to practical completion (not to complete lettings), including attributable interest.

Estimated rental value (ERV)

The estimated annual market rental value of lettable space as determined biannually by the Company's valuers. This will normally be different from the rent being paid.

Gearing

Net borrowings divided by total shareholders' equity excluding intangible assets and deferred tax provision.

Gross rental income

Contracted rental income recognised in the period, including surrender premiums and interest receivable on finance leases. Lease incentives, initial costs and any contracted future rental increases are amortised on a straight line basis over the lease term.

Hectares (Ha)

The area of land measurement used in this analysis. The conversion factor used, where appropriate, is 1 hectare = 2.471 acres.

Investment property

Completed land and buildings held for rental income return and / or capital appreciation.

IPD

Investment Property Databank is a provider of real estate performance and risk analysis.

Joint Venture

An entity in which the Group holds an interest and which is jointly controlled by the Group and one or more partners under a contractual arrangement whereby decisions on financial and operating policies essential to the operation, performance and financial position of the venture require each partner's consent.

Loan to Value (LTV)

Net borrowings divided by the carrying value of total property assets (investment, owner occupied and trading properties). This is measured either on a look-through basis (including joint ventures at share) or wholly owned (which excludes joint ventures).

LPP

Logistics Property Partnership, a 50-50 joint venture between SEGRO and Moorfield Real Estate Fund II (MREF II).

Net true equivalent yield

The internal rate of return from an investment property, based on the value of the property assuming the current passing rent reverts to ERV and assuming the property becomes fully occupied over time. It assumes that rent is received quarterly in advance.

Net initial yield

Annualised current passing rent less non-recoverable property expenses such as empty rates, divided by the property valuation plus notional purchasers' costs. This is in accordance with EPRA's Best Practices Recommendations.

Net rental income

Gross Rental Income less ground rents paid, net service charge expenses and property operating expenses.

Passing rent

The annual rental income currently receivable on a property as at the balance sheet date (which may be more or less than the ERV). Excludes rental income where a rent free period is in operation. Excludes service charge income (which is netted off against service charge expenses).

Pre-let

A lease signed with an occupier prior to completion of a development.

REIT

A qualifying entity which has elected to be treated as a Real Estate Investment Trust for tax purposes. In the UK, such entities must be listed on a recognised stock exchange, must be predominantly engaged in property investment activities and must meet certain ongoing qualifications. SEGRO plc and its UK subsidiaries achieved REIT status with effect from 1 January 2007.

SELP

SEGRO European Logistics Partnership, a 50-50 joint venture between SEGRO and Public Sector Pension Investment Board (PSP Investments).

SIIC

Sociétés d'investissements Immobiliers Cotées are the French equivalent of UK Real Estate Investment Trusts (see REIT).

Speculative development

Where a development has commenced prior to a lease agreement being signed in relation to that development.

SPPICAV

A Société de Placement à Prépondérance Immobilière à Capital Variable is an alternative corporate means of owning real estate assets in France.

Rent roll

See Passing Rent.

Square metres (sq m)

The area of buildings measurements used in this analysis. The conversion factor used, where appropriate, is 1 square metre = 10.7639 square feet.

Takeback

Rental income lost due to lease expiry, exercise of break option, surrender or insolvency.

Topped up net initial yield

Net Initial Yield adjusted to include notional rent in respect of let properties which are subject to a rent free period at the valuation date. This is in accordance with EPRA's Best Practices Recommendations.

Total Property Return (TPR)

A measure of the ungeared return for the portfolio and is calculated as the change in capital value, less any capital expenditure incurred, plus net income, expressed as a percentage of capital employed over the period concerned, as calculated by IPD and excluding land.

Total Shareholder Return (TSR)

A measure of return based upon share price movement over the period and assuming reinvestment of dividends.

Trading property

Property being developed for sale or one which is being held for sale after development is complete.

Yield on cost

Yield on cost is the expected gross yield based on the estimated current market rental value (ERV) of the developments when fully let, divided by the book value of the developments at the balance sheet date plus future development costs and estimated finance costs to completion.

This information is provided by RNS

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