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CONSOLIDATED INCOME STATEMENT (Unaudited)
For the six months ended 30 June 2006
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Notes
Revenue 2 246.8 202.5 434.3
Rental income 244.2 201.1 417.1
Rental expenses (82.5) (57.3) (117.0)
Net rental income 161.7 143.8 300.1
Other income 0.3 1.3 14.2
Gain on revaluation and
sale of investment 3 258.0 195.2 565.5
properties
2 420.0 340.3 879.8
Administration expenses (15.2) (13.4) (29.2)
Operating profit 404.8 326.9 850.6
Interest payable 4 (90.7) (84.9) (171.7)
Interest receivable 2.9 7.6 7.5
Exceptional finance
costs 4 (2.0) (5.2) (13.7)
Change in fair value of
derivative financial 175.5 (114.3) (145.8)
instruments
Net finance costs 85.7 (196.8) (323.7)
Profit before tax 490.5 130.1 526.9
Current tax on ordinary
items (18.6) (12.8) (25.5)
Deferred tax on
ordinary items 5 (120.3) (26.8) (139.8)
Tax on exceptional items 0.5 1.2 4.7
Taxation charge (138.4) (38.4) (160.6)
Profit for the period
attributable to equity 352.1 91.7 366.3
shareholders
Ordinary dividends -
paid and proposed 46.3 41.6 98.8
- pence per share 13.75p 13.00p 28.25p
Basic earnings per share 12 104.7p 28.8p 114.8p
Diluted earnings per
share 12 101.0p 27.8p 107.4p
Adjusted earnings per share are shown in note 12
CONSOLIDATED BALANCE SHEET (Unaudited)
As at 30 June 2006
As at As at As at
30 June 31 December 30 June
2006 2005 2005
Notes GBPm GBPm
GBPm
Non-current assets
Investment property 6 7,097.2 6,913.6 6,167.1
Development property 6 27.9 24.2 56.7
7,125.1 6,937.8 6,223.8
Plant and equipment 0.7 0.6 1.0
Trade and other
receivables 8 61.0 65.7 57.8
7,186.8 7,004.1 6,282.6
Current assets
Trading property 7 146.4 132.6 128.1
Trade and other
receivables 8 70.7 78.7 84.3
Investments 14.0 3.0 -
Cash and cash equivalents 117.7 70.8 163.4
348.8 285.1 375.8
Total assets 7,535.6 7,289.2 6,658.4
Current liabilities
Trade and other payables (186.4) (212.4) (181.7)
Tax liabilities (17.1) (10.0) (13.8)
Borrowings, including
finance leases 9 (64.8) (173.5) (26.9)
Derivative financial
instruments (13.1) (21.6) (11.2)
(281.4) (417.5) (233.6)
Non-current liabilities
Borrowings, including
finance leases 9,10 (2,911.7) (2,810.2) (2,830.1)
Derivative financial
instruments (94.2) (259.5) (236.5)
Deferred tax provision 5 (981.1) (856.2) (745.6)
Other provisions (7.7) (6.8) (19.8)
Other payables (10.5) (5.9) (1.7)
(4,005.2) (3,938.6) (3,833.7)
Total liabilities (4,286.6) (4,356.1) (4,067.3)
Net assets 3,249.0 2,933.1 2,591.1
Equity
Called up share capital
and reserves 13 3,249.0 2,933.1 2,591.1
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
(Unaudited)
For the six months ended 30 June 2006
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Profit for the period 352.1 91.7 366.3
Actuarial losses on defined
benefit pension schemes - - (2.6)
Surplus/(deficit) on revaluation
of development properties 17.0 1.2 (15.7)
Tax on items taken directly to
equity (5.1) (0.4) 5.5
(0.1)
Net exchange translation
differences and other movements (2.2) 0.5
Total recognised income and
expense for the period 361.8 93.0 353.4
A summary of changes in group equity is shown in note 13.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Cash flows from operating
activities
Operating profit before
exceptional items 404.8 326.9 850.6
Adjustments for non-cash items:
Unrealised net revaluation gains
on investment properties (234.6) (195.2) (562.9)
Profit on sale of investment
properties (23.4) - (2.6)
Depreciation and amortisation 0.2 0.3 0.8
Amortisation of lease inducements
and other direct costs (0.1) 2.5 (4.6)
Cash flows from operations before
changes in working
146.9 134.5 281.3
capital
Change in trade and other
receivables 5.5 (14.5) (24.2)
Change in trading properties 8.4 (15.7) (18.1)
Change in current asset
investments (11.0) - (3.0)
Change in trade and other payables 4.7 4.9 17.1
Cash generated from operations 154.5 109.2 253.1
Interest paid (113.7) (80.0) (168.2)
Interest received 1.9 6.2 9.7
Tax paid (8.4) (14.3) (24.5)
Cash flows from operating
activities 34.3 21.1 70.1
Cash flows from investing
activities
Purchase and development of
property (66.1) (688.1) (1,081.5)
Sale of property 126.0 - 43.7
Purchase of interests in joint
ventures and subsidiary
companies - (6.1) -
Increase in long term loans
receivable, before amortisation - (0.3) -
Cash flows from investing
activities 59.9 (694.5) (1,037.8)
Cash flows from financing
activities
Issue and repurchase of shares 5.3 7.4 10.1
Borrowings drawn 471.0 1,694.7 1,944.8
Borrowings repaid (472.4) (1,259.4) (1,268.9)
Equity dividends paid (51.2) (44.7) (86.3)
Cash flows from financing
activities (47.3) 398.0 599.7
Net increase/(decrease) in cash
and cash equivalents 46.9 (275.4) (368.0)
Cash and cash equivalents at 1
January 70.8 438.8 438.8
Cash and cash equivalents at
closing 117.7 163.4 70.8
NOTES TO THE ACCOUNTS (Unaudited)
1. Basis of preparation
The Interim Report is unaudited and does not constitute statutory accounts
within the meaning of s240 of the Companies Act 1985. The statutory accounts
for 2005, which were prepared in accordance with International Financial
Reporting Standards, as endorsed by the European Union ("IFRS"), and with
those parts of the Companies Act 1985 applicable to companies reporting under
IFRS, have been delivered to the Registrar of Companies. The auditors" opinion
on these accounts was unqualified and did not contain a statement made under
s237 (2) or s237(3) of the Companies Act 1985.
The financial information comprises the consolidated balance sheets as at 30
June 2006 and 30 June 2005 and 31 December 2005 and related consolidated
statements of income, cash flow and recognised income and expense and the
related notes for periods then ended hereinafter referred to as `financial
information".
The financial information has been prepared in accordance with the Listing
Rules of the Financial Services Authority and the principal accounting
policies set out on pages 34 and 35 of the Annual Report 2005 dated 15
February 2006 which is available on the company"s website (www.liberty-
international.co.uk).
It has been prepared under the historical cost convention as modified by the
revaluation of properties, available for sale investments and financial assets
and liabilities held for trading.
2. Segmental analysis
Six months ended 30 June 2006
UK Other
Shopping Commercial Other Group
Centres Properties Activities Total
GBPm GBPm GBPm
GBPm
Revenue 200.4 46.4 - 246.8
Rental income 199.3 44.9 - 244.2
Rental expense (69.8) (12.7) - (82.5)
Net rental income 129.5 32.2 - 161.7
Property trading profits 0.3 0.4 - 0.7
Other income - 0.2 (0.6) (0.4)
Gain on revaluation and
sale of investment
properties 163.5 94.5 - 258.0
Segment result 293.3 127.3 (0.6) 420.0
Six months ended 30 June 2005
UK Other
Shopping Commercial Other Group
Centres Properties Activities Total
GBPm GBPm GBPm
GBPm
Revenue 154.4 47.3 0.8 202.5
Rental income 154.4 46.7 - 201.1
Rental expense (43.9) (13.4) - (57.3)
Net rental income 110.5 33.3 - 143.8
Property trading profits - 0.6 - 0.6
Other income - (0.1) 0.8 0.7
Gain on revaluation and
sale of investment
properties 159.7 35.5 - 195.2
Segment result 270.2 69.3 0.8 340.3
Year ended 31 December 2005
UK Other
Shopping Commercial Other Group
Centres Properties Activities Total
GBPm GBPm GBPm
GBPm
Revenue 328.7 103.4 2.2 434.3
Rental income 327.2 89.9 - 417.1
Rental expense (91.6) (25.4) - (117.0)
Net rental income 235.6 64.5 - 300.1
Property trading profits 1.2 10.4 - 11.6
Other income - 0.4 2.2 2.6
Gain on revaluation and
sale of investment
properties 459.4 106.1 - 565.5
Segment result 696.2 181.4 2.2 879.8
The segmental result is shown before administrative expenses.
3. Gain on revaluation and sale of investment properties
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Gain on revaluation of investment
properties 237.0 195.2 562.9
Loss on revaluation of development
properties (2.4) - -
234.6 195.2 562.9
Gain on sale of investment
properties 23.4 - 2.6
Income statement gain on
revaluation and sale of investment
properties 258.0 195.2 565.5
4. Finance costs
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Gross interest payable - recurring 95.2 88.2 180.3
Interest capitalised on
investment properties under
development (4.5) (3.3) (8.6)
Interest payable 90.7 84.9 171.7
Exceptional finance costs 2.0 5.2 13.7
Exceptional finance costs of GBP2.0m represents unamortised issue costs
written
off on redemption of loans (30 June 2005 - GBP4.5m, 31 December 2005 -
GBP4.5m). In the year ended 31 December 2005, GBP8.4m was incurred in the
early conversion of GBP128.7m of the 3.95% convertible bonds (30 June 2005 -
nil) and GBP0.8m (30 June 2005 - GBP0.7m) was incurred on the repurchase of
CSC unsecured bonds.
5. Taxation
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Deferred tax:
On investment property 72.5 61.8 183.3
On derivative financial
instruments 53.0 (34.4) (43.7)
On other temporary differences (5.2) (0.6) 0.2
Deferred tax on ordinary items 120.3 26.8 139.8
Under IAS 12, provision is made for the deferred tax liability associated with
the revaluation of investment properties. The group does not provide for
deferred tax on investment properties by reference to the tax that would be
due on the sale of the investment properties as the group has no current
intention to dispose of these properties. Instead the group treats the value
of the investment properties as being recovered through use, and so provides
for deferred tax on the revaluation of investment properties by applying the
corporation tax rate of 30% to the revaluation surplus without indexation
allowance.
The deferred tax provision on the revaluation of investment properties
calculated under IAS 12 is GBP893.5m at 30 June 2006 (31 December 2005 -
GBP817.4m, 30 June 2005 - GBP712.6m). This IAS 12 calculation does not reflect
the expected amount of tax that would actually be payable if the assets were
sold. On a disposal basis, the estimated liability is GBP671.4m at 30 June
2006 (31 December 2005 - GBP642.5m, 30 June 2005 - GBP538.4m).
If upon sale of the properties the group retained all the capital allowances,
which is within the control of the group, the deferred tax provision in
respect of capital allowances of GBP96.7m would also be released, and further
capital allowances of GBP26.0m would be available to reduce the amount of tax
payable on sale.
Under IFRS where gains, such as revaluation of development properties and
other assets, and actuarial movements on pension funds are dealt with in
reserves the deferred tax is also dealt with in reserves.
Movements in the provision for deferred tax:
As at As at
31 December Recognised in Recognised in 30 June
2005 income equity 2006
GBPm GBPm GBPm
GBPm
Revaluation of
investment
properties 817.4 71.4 4.7 893.5
Capital
allowances 95.7 1.1 (0.1) 96.7
Derivative
financial
instruments (83.4) 53.0 - (30.4)
Other temporary
differences 26.5 (5.2) - 21.3
Net deferred
tax provision 856.2 120.3 4.6 981.1
6. Investment and development property
Other
UK shopping commercial
centres properties Total
GBPm GBPm
GBPm
Investment property:
At 31 December 2005 5,813.0 1,100.6 6,913.6
Additions 28.1 11.3 39.4
Disposals - (102.6) (102.6)
Reclassification - from developments 33.6 - 33.6
Foreign exchange fluctuations - (23.8) (23.8)
Surplus on valuation 165.4 71.6 237.0
At 30 June 2006 6,040.1 1,057.1 7,097.2
Development property:
At 31 December 2005 24.2 - 24.2
Additions 22.2 0.5 22.7
Reclassification - to investment
property (33.6) - (33.6)
Surplus/(deficit) on valuation 15.0 (0.4) 14.6
At 30 June 2006 27.8 0.1 27.9
The group"s interests in investment properties were valued as at 30 June 2006
by external valuers in accordance with the Appraisal and Valuation Manual of
RICS, on the basis of Market Value. Market Value represents the figure that
would appear in a hypothetical contract of sale between a willing buyer and a
willing seller.
Regional shopping centres in the UK were valued by either DTZ Debenham Tie
Leung, Chartered Surveyors or CB Richard Ellis. Other commercial properties in
the UK were valued by either Knight Frank LLP or CB Richard Ellis. In the
United States, properties were valued by Cushman and Wakefield California Inc.
7. Trading property
The market value of trading properties was GBP188.8 million (31 December 2005
-
GBP156.0 million, 30 June 2005 - GBP157.1 million).
8. Trade and other receivables
As at As at As at
30 June 31 December 30 June
2006 2005 2005
GBPm GBPm
GBPm
Amounts falling due within one year:
Rents receivable 18.1 20.8 20.3
Other debtors 10.7 21.5 30.7
Derivative financial instruments 2.7 0.9 0.6
Prepayments and accrued income 39.2 35.5 32.7
70.7 78.7 84.3
Amounts falling due after more than one
year:
Other debtors 12.6 13.7 10.1
Prepayments and accrued income 48.4 52.0 47.7
61.0 65.7 57.8
9. Borrowings, including finance leases
As at As at As at
30 June 31 December 30 June
2006 2005 2005
GBPm GBPm
GBPm
Amounts falling due within one year:
Bank loans and overdrafts 36.3 151.6 14.9
Commercial Mortgage Backed Security
("CMBS") Notes 21.8 15.0 6.0
Finance lease obligations 6.7 6.9 6.0
Total amounts falling due within one
year 64.8 173.5 26.9
Amounts falling due after more than one
year:
Secured borrowings - non recourse
CMBS Notes 2015 1,133.3 1,141.9 1,158.8
CMBS Notes 2011 544.9 547.5 548.8
Bank loans 2016 460.1 - -
Bank loans 2014 177.3 384.9 385.8
Bank loan 2013 - 98.4 -
Bank loan 2007 - 40.0 40.0
2,315.6 2,212.7 2,133.4
Other secured borrowings
Debentures 2021 and 2027 230.0 230.0 230.0
Other loans 144.3 147.0 124.3
2,689.9 2,589.7 2,487.7
Unsecured borrowings
CSC bonds 2013 26.6 26.5 26.5
CSC bonds 2009 41.2 41.0 40.9
2,757.7 2,657.2 2,555.1
GBP111.3m 3.95% convertible bonds due
2010 (31 December 2005
- GBP111.3m, 30 June 2005 - GBP240m) 107.0 105.4
224.0
2,864.7 2,762.6 2,779.1
Finance lease obligations 47.0 47.6 51.0
Amounts falling due after more than one
year 2,911.7 2,810.2 2,830.1
Total borrowings, including finance
leases 2,976.5 2,983.7 2,857.0
Cash and cash equivalents (117.7) (70.8) (163.4)
Net borrowings 2,858.8 2,912.9 2,693.6
10. Fair value of financial instruments
As at 30 June As at 31 December
2006 2005
Balance Balance
sheet Fair sheet Fair
value value value value
GBPm GBPm GBPm
GBPm
Debentures and other fixed rate
loans
Sterling
C&C 9.875% debenture 2027 150.0 225.2 150.0 233.1
C&C 11.25% debenture 2021 80.0 124.1 80.0 126.9
CSC 6.875% unsecured bonds 2013 26.6 25.0 26.5 28.0
CSC 5.75% unsecured bonds 2009 41.2 41.2 41.0 41.0
US dollars
Fixed rate loans 147.1 145.6 156.7 162.4
444.9 561.1 454.2 591.4
Bank loans and loan notes -
LIBOR linked 2,370.9 2,370.9 2,369.6 2,369.6
Finance lease obligations 53.7 53.7 54.5 54.5
Derivative instruments 107.3 107.3 281.1 281.1
2,976.8 3,093.0 3,159.4 3,296.6
Convertible debt 107.0 150.9 105.4 141.0
As at 30 June
2005
Balance
sheet
value Fair value
GBPm GBPm
Debentures and other fixed rate loans
Sterling
C&C 9.875% debenture 2027 150.0 226.4
C&C 11.25% debenture 2021 80.0 122.8
CSC 6.875% unsecured bonds 2013 26.5 24.6
CSC 5.75% unsecured bonds 2009 40.9 40.5
US dollars
Fixed rate loans 118.8 124.8
416.2 539.1
Bank loans and loan notes - LIBOR linked 2,159.8 2,159.8
Finance lease obligations 57.0 57.0
Derivative instruments 247.1 247.1
2,880.1 3,003.0
Convertible debt 224.0 233.2
The fair value adjustment in respect of financial instruments, after credit
for
tax relief, would amount to 23p per share diluted (31 December 2005 - 27p, 30
June 2005 - 24p).
All other financial assets and liabilities included in the balance sheet are
stated at fair values.
11. Capital commitments
At 30 June 2006 the group was contractually committed to GBP51.0 million of
future expenditure for the purchase, construction, development and enhancement
of investment property (31 December 2005 - GBP69.9 million, 30 June 2005 -
GBP311.1 million).
In addition the group"s share of joint ventures" commitments at 30 June 2006
was GBP9.0 million (31 December 2005 - GBP13.6 million, 30 June 2005 - GBP23.9
million).
12. Per share details
(a) Number of shares used in the calculation of earnings per share
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
millions millions millions
Weighted average shares (basic) 336.2 318.0 319.0
Effect of dilution 15.1 32.2 31.5
Weighted average shares (diluted) 351.3 350.2 350.5
(b) Earnings used in the calculation of earnings per share
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Earnings used for calculation of
basic earnings per share 352.1 91.7 366.3
Effect of dilution 2.6 5.5 10.2
Earnings used for calculation of
diluted earnings per share 354.7 97.2 376.5
Basic earnings per share (pence) 104.7p 28.8p 114.8p
Diluted earnings per share (pence) 101.0p 27.8p 107.4p
Earnings used for calculation of
basic earnings per share 352.1 91.7 366.3
Less gain on revaluation and sale
of investment properties (258.0) (195.2) (565.5)
(Less)/add back fair value
movement on derivative financial
instruments (175.5) 114.3 145.8
Add back deferred tax in respect
of investment properties 72.5 61.8 183.3
Add back/(less) deferred tax in
respect of derivative financial
instruments 53.0 (34.4) (43.7)
Add back exceptional items, net
of tax 1.5 4.0 9.0
Add back tax on sale of
investment properties 1.3 - -
Earnings used for calculation of
adjusted earnings per share 46.9 42.2 95.2
Adjusted earnings per share
(pence) 14.0p 13.3p 29.8p
Earnings used for calculation of
adjusted earnings per share 46.9 42.2 95.2
Effect of dilution 2.6 5.5 10.2
Earnings used for calculation of
adjusted, diluted earnings per
share 49.5 47.7 105.4
Adjusted, diluted earnings per
share (pence) 14.1p 13.6p 30.1p
(c) Other share information
(i) 3.95% convertible bonds due 2010
At 30 June 2006 and 31 December 2005 3.95% convertible bonds with a nominal
value of GBP111.3m were in issue. The holders of the bonds have options to
convert their bonds into ordinary shares at 800p per share at any time until
23 September 2010 or to redeem their bonds at par on 30 September 2007. The
company has the option to redeem the bonds at par after 14 October 2008.
Number
(ii) Ordinary share capital millions
At 30 June 2006 337.8
Of which, held by ESOP trust and treated as cancelled 1.4
(iii) Dividends Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Prior period final dividend paid
of 15.25p (2005 - 14.1p) per
share 51.2 44.7 44.7
Interim dividend paid of 13.0p
per share - - 41.6
51.2 44.7 86.3
Proposed dividend of 13.75p (31
December 2005 - 15.25p,
30 June 2005 - 13.0p) per share
(not provided for) 46.3 41.5 51.1
13. Summary of changes in group equity
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2006 2005 2005
GBPm GBPm
GBPm
Opening equity shareholders" funds 2,933.1 2,534.2 2,534.2
Bond conversions - - 121.7
Issue of shares 6.2 9.7 11.2
Cancellation of shares (0.9) (1.1) (1.1)
2,938.4 2,542.8 2,666.0
Total recognised income and
expense for the period 361.8 93.0 353.4
3,300.2 2,635.8 3,019.4
Dividends paid (51.2) (44.7) (86.3)
Closing equity shareholders" funds 3,249.0 2,591.1 2,933.1
Date: 27/07/2006 08:04:53 AM Produced by the JSE SENS Department
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