O TWELVE ESTATES LIMITED

("O Twelve" / the "Company")

RESULTS FOR THE YEAR ENDED 31 MARCH 2010

O Twelve Estates Limited today announces results for the year ended 31 March 2010. The Company's objective is to generate an attractive return for Shareholders through the assembly of a portfolio of investment properties in its Target Area, which comprises the Thames Gateway and the adjacent areas of east London, Essex, south Hertfordshire and north Kent.

Key points

·      Portfolio valuation of £170.2 million (2009: £173.6 million) after £25.9 million of sales

·      Portfolio return 20.3% (31 March 2010) vs the IPD benchmark average return of 17.4%

·      Group net profit of £21.0 million (31 March 2009: loss of £92.3 million), representing a profit per Ordinary Share of 17.14p (31 March 2009: loss of 75.34p)

·      The major contributors to this were the unrealised gain of £15.6 million on the revaluation of investment properties and realised gains on disposal of investment properties of £5.5 million

·      Debt restructuring successfully completed

·      Consolidated net assets of £13.6 million, 11.11 pence per share (2009: net liabilities of £7.4 million, 6.03p)

·      Contracted annual rental income of £12.3 million

·      The estimated rental value ("ERV") is £14.6 million per annum

·      Additional potential rental income from reversions and letting vacant units is £2.3 million per annum

·      Weighted average unexpired lease term is 6.4 years with 52% of income from leases with more than 5 years to expiry

·      Portfolio initial yield of 7.0%

Commenting on the results, Phillip Rhodes, Chairman of O Twelve, said:

"The uplift in property values during the second half of the financial year was a welcome bright spot after what has been the deepest and furthest reaching property downturn in recent times. However, the extent and duration of this upturn remains uncertain. Therefore, with the assistance of our Property Adviser and the continued support of our Lenders, cash preservation and generation coupled with strong asset management continue to be the key focus of the Board."

David Tye of Rugby Asset Management added:

"Prospects for the real estate market have improved. We believe that O Twelve's Target Area of activity is well placed to take advantage of this optimism. The Olympic Games are fast approaching and the unprecedented public and private investment that is driving Europe's largest single regeneration project around Stratford, London's East End and the Thames Gateway is gathering momentum and this should result in a strengthening of occupational demand."

For further information please contact:

David Tye / Andrew Wilson

Rugby Asset Management Limited

Tel: +44 (0)20 7016 0050

Simon Bennett / Katy Birkin / Laura Littley

Fairfax I.S. PLC

Tel: +44 (0)20 7598 5368

Stephanie Highett / Rachel Drysdale

Financial Dynamics

Tel: +44 (0)20 7831 3113

CHAIRMAN'S STATEMENT

I am pleased to present the results of O Twelve Estates Limited together with its subsidiaries (the "Group") for the year ended 31 March 2010.

The steep and substantial falls in the capital value of UK properties generally, which started in June 2007, bottomed-out in July 2009, with a significant recovery in property values in the latter months of 2009 and the first quarter of 2010. I am pleased to report that the Group's property portfolio was valued at the year end at £170.2 million. Investment Property Databank ("IPD") has calculated the Group's total portfolio return for the year at 20.3%, which compares favourably with IPD's benchmark for March-valued funds of 17.4%. IPD has calculated our capital growth for the year at 12.6% (benchmark 9.7%) and income return at 6.9% (benchmark 7.0%). This is a creditable result and reflects well on our asset managers and the quality and location of the Group's portfolio.

The transaction of note during the year was the sale on 30 March 2010 of The Interchange, a prime industrial estate in Swanley, Kent which realised £24.4 million, a significant increase on the September 2009 valuation of this property of £17.8 million.

Results

The Group reported a net profit for the year of £21.0 million (31 March 2009: loss of £92.3 million), representing a profit per Ordinary Share of 17.14p (31 March 2009: loss of 75.34p). The major contributors to this result were the unrealised gain of £15.6 million on revaluation of investment properties and realised gains on disposal of investment properties of £5.5 million. Consolidated net assets at 31 March 2010 were £13.6 million (31 March 2009: net liabilities of £7.4 million), and net asset value per Ordinary Share increased in the year to 11.11p (31 March 2009: net liability per Ordinary Share of 6.03p).

Financing

In my last report, for the half year ended 30 September 2009, I noted that the loan facility with Nationwide Building Society and the other lenders (the "Lenders") had been successfully renegotiated and the revised terms took effect from 14 October 2009. Under the revised terms, the loan facility will reduce from £170 million to £140 million on 31 March 2011. The sale of The Interchange has enabled the Group to make very substantial progress towards this target with the loan principal outstanding at 31 March 2010 reduced to £144.7 million (31 March 2009: £170.0 million).

In order to achieve this reduction, and to continue to meet the minimum interest cover ratio covenant of 115%, the Group repaid part of the fixed rate loan which incurred a break cost of £3.7 million.

The Board is actively exploring opportunities to raise additional equity capital in order to reduce borrowings and gearing and to take advantage of new opportunities. In the absence of such an injection of new cash, and provided property values remain stable over the next year, the Board expects to be able to meet the loan covenant requirements over the next year by making modest property disposals.

Dividend

Given the ongoing economic uncertainty and in view of the Group's financial position, the Board does not recommend the payment of a dividend (31 March 2009: nil).

Outlook

The uplift in property values during the second half of the financial year was a welcome bright spot after what has been the deepest and furthest reaching property downturn in recent times. However, the extent and duration of this upturn remains uncertain. Therefore, with the assistance of our Property Adviser and the continued support of our Lenders, cash preservation and generation coupled with strong asset management continue to be the key focus of the Board. There is every reason to continue to believe that the Group's Target Area to the east of London will benefit strongly from the effects of the Olympic Games to be held there just two years from now.

P B Rhodes

Chairman

PROPERTY ADVISER'S REPORT

Rugby Asset Management

Rugby Asset Management Limited ("RAM"), a member of the Rugby Estates Plc group, was appointed Property Adviser to O Twelve Estates Limited ("O Twelve", the "Company", or the "Group") on its admission to AIM on 27 March 2006.  We undertake, on a day to day basis, under delegated authority from the Board, all aspects of assembling, managing and financing O Twelve's property portfolio.  Rugby Estates Plc group holds a 5.5% interest in the share capital of O Twelve Estates Limited.

Market Comment

Since mid-2007, the property market has experienced an unprecedented correction, deeper and more far reaching than any other property downturn to date. From the peak of the market in June 2007 to July 2009, a period of just 25 months, the IPD All Property Monthly Index recorded a 44% decline in capital values. In the last property downturn of any significance, October 1989 to June 1993, a period of 44 months, the fall was just 27%.

In last year's report, we anticipated that at some point in late 2009 or early 2010 values would stabilise and some market activity would resume. The latter months of 2009 did indeed see a strong rally in capital values driven by investor demand, particularly for good quality investment properties. This positive demand has continued into 2010, although values are now stabilising as the perception that capital values were over-discounted recedes. The key uncertainties remain, however, namely the strength of the economic recovery, the possibility of a double-dip recession and the corresponding impact on tenant demand and rental values. The effect of the recession so far on tenant demand, voids and rental values, whilst undoubtedly adverse, has not been as bad as might have been feared at the start of 2009. Generally, conditions for most tenants, and hence property investors, are difficult but not disastrous. However, economic growth for the next year or two is likely to be anaemic and, with the overshoot on the downside now largely corrected, expectations for capital and rental value growth for the property sector as a whole for the immediate future must be modest.

Portfolio Performance

The Company's portfolio is now included within the Investment Property Databank ("IPD"), the accepted industry standard for benchmarking the relative performance of property funds.  We are delighted to report that for the year ended 31 March 2010, the Company's portfolio produced a total return of 20.3%, as calculated by the IPD, ranking it as equivalent to 74th best performing fund out of the 238 funds that are monitored by the benchmark over the period.  This compares with a total return of 17.4% for the property sector generally and reflects both the quality and investor appeal of many of the properties acquired for O Twelve's portfolio and the results of our "hands on" active management initiatives.  Retail was the best performing sector within the portfolio producing a total return of 28.6%, followed closely by industrial where a 22.9% total return was achieved.

The portfolio was again externally valued at 31 March 2010 at £170.2 million.  Capital growth for the portfolio over the year, as calculated by IPD (taking into account sales), was 12.6% which compares favourably with the 9.7% increase in capital values shown by the IPD benchmark.

The key driver of the valuation movement was the positive yield compression during the final quarter of 2009 and the first quarter of 2010 as the market reacted to a perceived over-correction on pricing, a limited supply of available investment stock and the weight of money looking to be invested in the property sector.  The equivalent yield for the portfolio reduced by 142 basis points over the year to 7.5%, in line with the IPD All Property equivalent yield which reduced by 139 basis points to 7.23%. A successful letting campaign, particularly within the industrial and retail sectors, further improved performance.  During the period 156,000 sq ft of industrial space was let adding circa £730,000 of annual rental income once initial rent free periods have expired.  Despite the difficult economic conditions we have also been able to complete eight new leases with our various shopping centre schemes.

Capital Value Movement compared to IPD Monthly Index

Rental values within the portfolio have generally moved in line with the IPD Monthly Index, falling by a total of 6.7% over the period.

Rental Value Movement compared to IPD Monthly Index

Source: IPD

Portfolio Review as at 31 March 2010

·      Valuation of £170.2 million

·      21 properties

·      Average lot size of £8.1 million

·      194 lettable units let to 134 tenants

·      Capital value by sector : retail 44%, industria1 34%, offices l8%, residential 4%

·      Contracted annual rental income of £12.3 million

·      The ERV is £14.6 million per annum. Thus additional potential rental income from reversions and letting vacant units is £2.3 million per annum

·      52% of income is from leases with more than 5 years to expiry

·      Weighted average unexpired lease term is 6.4 years

·      Portfolio initial yield of 7.0% before acquisition costs

Rental Value Analysis - 31 March 2010

Activity

Three sale transactions took place during the year.  The most significant sale was of The Interchange, an industrial estate in Swanley where, following a comprehensive refurbishment, the estate was sold to an institutional investor for a net price of £24.4 million; a premium of 39% over the March 2009 valuation.  The two remaining sales were both part disposals at Redwing Court, Romford where newly refurbished units were sold to owner occupiers.  Aggregate sales proceeds from these three disposals were £25.9 million.  There were no acquisitions during the year.

Once again, our focus has been on asset management and maximising cashflow.  We are delighted to report that fifteen new leases were completed over the year, accounting for 174,000 sq ft and nearly £1.1 million of rental income after the expiry of rent free periods.  Eight rent reviews have also been completed, realising reversionary income of £138,000 per annum.

Void Analysis

At 31 March 2010 the void rate in the portfolio stood at 14.1% by rental value.  While the rental value of vacant space is £2.0 million, approximately £0.1 million of this is currently under offer and assuming these potential lettings complete the void rate will fall to 13.3%. Since 31 March 2010 we have also placed under offer and completed a further lease to All Saints Retail on a distribution unit of 49,000 sq ft at Larkfield Mill in Aylesford.  Following this letting the void rate has reduced to 13.0%.

Income Security

Given the continuing uncertainty in the economy we continue to focus closely on rent collection, minimising irrecoverable outgoings, security of income and tenant covenant strength.  Within the portfolio approximately 52% of the contracted rent is secure for more than five years.  Where leases are for less than five years, opportunities exist to refurbish or consider changes of use, subject to planning in order to maximise value.  In our view, the portfolio offers a good balance between income security and such opportunities to add value.

Income Expiry Profile - 31 March 2010

Of the portfolio's 134 tenants, 20 account for 53% of the contracted rental income with the top 10 accounting for 39%.  Tenants of, in our view, undoubted or "national" standard account for 83% of the contracted rent while smaller regional and local companies account for 17% of the contracted rent.

Outlook

Prospects for the real estate market have improved. We believe that O Twelve's Target Area of activity is well placed to take advantage of this optimism. The Olympic Games are fast approaching and the unprecedented public and private investment that is driving Europe's largest single regeneration project around Stratford, London's East End and the Thames Gateway is gathering momentum and this should result in a strengthening of occupational demand. The medium term prospects for the Target Area remain unchanged, especially as we are now emerging from the cyclical downturn of the last two years. Rental and capital value growth prospects are therefore good.

David Tye

Andrew Wilson

Rugby Asset Management Limited

INVESTMENT OBJECTIVE

The objective of O Twelve Estates Limited and its subsidiaries is to generate an attractive return for Shareholders through the assembly of a portfolio of investment properties in its Target Area, which comprises the Thames Gateway and the adjacent areas of east London, Essex, south Hertfordshire and north Kent.  The Board believes capital and rental values will react favourably to the major regeneration initiatives and infrastructure improvements taking place in these areas.  The Olympic and Paralympic Games to be held in and around Stratford, east London, in 2012 are a major catalyst for these improvements which the Board believes will result in a significant structural, economic and cultural repositioning of the Target Area.

INVESTMENT POLICY

The investment policy of the Group is to establish a property portfolio that is diverse by sector (whether industrial, retail, office, or residential), by tenant and by capital value. The Group's key criterion for property acquisitions is the potential for rental and capital value growth through active property management and/or through a re-characterisation of the acquired real estate. Re-characterisation may arise purely as a result of the so called "Olympic effect" on the location, or it may need to be actively encouraged. Bringing about such re-characterisation may range from a simple image improvement programme for a previously neglected industrial estate to attract better quality tenants, to a full redevelopment scheme following the grant of planning consent for a change of use (for example from commercial to a residential or mixed-use project).

Whilst the majority of properties acquired are income-producing, the creation of further value through development or refurbishment is actively pursued. Development may be undertaken selectively across the sectors either by the acquisition of sites, with or without the benefit of planning consent, or through the management of income-producing properties into development opportunities. In certain locations a site assembly programme may be pursued with a view to obtaining planning consent for a comprehensive re-development. Joint ventures may also be entered into in circumstances where the continuing involvement of existing landowners, local authorities or central government agencies is necessary, or for large projects where a sharing of financial risk is appropriate. The Group may also pursue other indirect investments through property investment partnerships or unit trusts or investments in the equities of other property investment or property holding companies.

The structure used for each property acquisition is reviewed at purchase. Accordingly, the Company may, without limit, incorporate further subsidiaries to hold property or may acquire the share capital of companies, units in unit trusts, or partnership interests in partnerships which own one or more properties.

Investment Restrictions

No property acquisition or new letting will be made if, immediately after the proposed acquisition or letting:

·      less than 75% of Gross Property Asset Value will be situated within the Target Area; or

·      any single tenant, other than any government or governmental (central or local), quasi-governmental, supranational statutory or regulatory body will account for more than 20% of contracted rental income.

Provided that these restrictions will not apply if Gross Property Asset Value is less than £100 million.

Life span of the Company

There are no specific provisions for the life span of the Company, although the Directors estimate it to be up to 12 years.

In accordance with the Articles of Incorporation, a resolution will be proposed at the Annual General Meeting of the Company to be held in 2014 and at each Annual General Meeting held every two years thereafter giving Shareholders the opportunity to vote on whether the Company should continue as an investment company or to call for a winding up of the Company and a return of its distributable assets to Shareholders.

Dividend Policy

The initial focus of the Company is the delivery of capital growth for Shareholders and therefore the Company will only consider the payment of dividends as and when it is appropriate to do so. To the extent that any dividends are paid they will be paid in accordance with any applicable laws and the regulations to which the Company is subject.

Borrowings

Borrowings will not normally exceed 65% of the value of the Group's property portfolio at the time new borrowings are drawn down. Interest rate hedging is considered in the light of prevailing conditions at that time.