Interim Results - Part 2

Land Securities Group Plc 16 November 2005 16 November 2005 Land Securities Group PLC ('Land Securities' / 'the Group') Interim results for the six months ended 30 September 2005 Unaudited consolidated income statement for the six months ended 30 September 2005 Six Six Six Six Six Six Year Year Year months months months months months months ended ended ended ended ended ended ended ended ended 31/03/ 31/03/ 31/03/ 30/09/ 30/09/ 30/09/ 30/09/ 30/09/ 30/09/ 2005 2005 2005 2005 2005 2005 2004 2004 2004 Notes Before Except- Total Before Excep- Total Before Except- Total £m exceptional ional £m excep- tional £m except- ional items items tional items ional Items £m £m items £m items £m £m £m Income: Group 3 997.3 - 997.3 962.7 - 962.7 1,858.2 - 1,858.2 and share of joint ventures Less: share of 3 (122.6) - (122.6) (132.4) - (132.4) (249.1) - (249.1) joint ventures revenue _______ _______ _______ _______ _______ ______ _______ _______ _______ Group revenue 3 874.7 - 874.7 830.3 - 830.3 1,609.1 - 1,609.1 Costs (618.0) - (618.0) (593.4) (5.2) (598.6) (1,120.8) (14.8) (1,135.6) ______ _______ _______ _______ _______ _____ ______ ______ ______ 256.7 - 256.7 236.9 (5.2) 231.7 488.3 (14.8) 473.5 Profit on 3 16.3 - 16.3 9.0 - 9.0 112.0 - 112.0 disposal of fixed asset properties Profit on 3 - 293.0 293.0 - - - - - - disposal of joint venture Net gain on 3 726.0 - 726.0 407.8 - 407.8 827.9 - 827.9 revaluation of investment properties Goodwill 3 - (64.5) (64.5) - - - - (12.7) (12.7) impairment ______ _______ _______ _______ _______ _____ ______ ______ ______ Operating profit 3 999.0 228.5 1,227.5 653.7 (5.2) 648.5 1,428.2 (27.5) 1,400.7 Interest expense 4 (101.8) - (101.8) (99.3) - (99.3) (203.2) (49.8) (253.0) Interest income 4 9.6 - 9.6 9.0 - 9.0 18.3 - 18.3 ______ _______ _______ _______ _______ _____ ______ ______ ______ 906.8 228.5 1,135.3 563.4 (5.2) 558.2 1,243.3 (77.3) 1,166.0 Share of the 12 37.4 - 37.4 43.3 - 43.3 76.1 - 76.1 profits of joint ventures (post tax) Distribution 12 11.7 - 11.7 24.4 - 24.4 65.4 - 65.4 received from joint venture ______ _______ _______ _______ _______ _____ ______ ______ ______ Profit before tax 3 955.9 228.5 1,184.4 631.1 (5.2) 625.9 1,384.8 (77.3) 1,307.5 Income tax expense 5 (265.2) (90.0) (355.2) (174.9) 1.5 (173.4) (265.8) 19.2 (246.6) ______ _______ _______ _______ _______ _____ ______ ______ ______ Profit for the 690.7 138.5 829.2 456.2 (3.7) 452.5 1,119.0 (58.1) 1,060.9 financial period ====== ====== ====== ====== ====== ==== ====== ====== ====== Earnings per share Basic earnings 7 177.26p 97.06p 227.32p per share * Diluted 7 176.46p 96.75p 226.45p earnings per share * * adjusted earnings per share is given in note 7 Unaudited consolidated statement of recognised income and expense for the six months ended 30 September 2005 Six Six months months Year ended ended ended 30/09/05 30/09/04 31/03/05 £m £m £m Actuarial profits / (losses) on defined benefit pension schemes (net of deferred tax) 3.6 1.2 (3.2) Fair value movement on cash flow hedges taken to equity (net of deferred tax) - Group (3.7) - - - joint ventures (5.1) - - _______ _______ ______ Net (loss) / gain recognised directly in equity (5.2) 1.2 (3.2) Profit for the financial period 829.2 452.5 1,060.9 _______ _______ ______ Total gains and losses recognised since the last financial statements 824.0 453.7 1,057.7 ====== ====== ====== The notes below form an integral part of these financial statements. Unaudited Unaudited Unaudited Unaudited Consolidated Consolidated Consolidated consolidated balance sheet balance sheet balance sheet balance sheet at at at at 30 September 30 September 30 September 30 September 2005 2005 2005 2005 Notes 30/09/05 30/09/04 31/03/05 £m £m £m Non-current assets Investment properties 9 10,140.4 7,960.7 8,240.1 Property, plant and equipment Operating properties 9 554.9 766.9 546.3 Other property, plant and equipment 9 64.9 56.6 57.9 Net investment in finance leases 10 221.5 192.5 161.1 Goodwill 11 34.3 34.3 34.3 Investments in joint ventures 12 697.3 631.7 854.9 _______ _______ ______ 11,713.3 9,642.7 9,894.6 _______ _______ ______ Current assets Trading properties and long-term development 13 220.2 120.0 164.0 contracts Trade and other receivables 14 409.3 423.1 515.8 Short-term investments 8.2 111.5 - Cash and cash equivalents 20.0 5.8 5.0 _______ _______ ______ Total current assets 657.7 660.4 684.8 _______ _______ ______ Total assets 12,371.0 10,303.1 10,579.4 _______ _______ ______ Current liabilities Short-term borrowings and overdrafts 15 (55.4) (25.4) (50.8) Trade and other payables 16 (738.9) (607.8) (595.5) _______ _______ ______ Total current liabilities (794.3) (633.2) (646.3) _______ _______ ______ Non-current liabilities Non-current payables 17 (76.8) (52.2) (61.6) Borrowings 18 (3,055.0) (2,885.2) (2,392.3) Pension deficit 19 (4.9) (5.8) (10.9) Deferred tax liabilities 20 (1,713.6) (1,237.4) (1,418.0) _______ _______ ______ Total non-current liabilities (4,850.3) (4,180.6) (3,882.8) _______ _______ ______ Total liabilities (5,644.6) (4,813.8) (4,529.1) _______ _______ ______ Net assets 6,726.4 5,489.3 6,050.3 ======== ======== ======== Equity Ordinary shares 21 46.9 46.7 46.8 Own shares acquired 21 (4.0) (2.1) (2.1) Share based payments 21 4.5 1.7 3.3 Share premium 21 37.9 24.3 31.4 Capital redemption reserve 21 30.5 23.8 30.5 Retained earnings 21 6,610.6 5,394.9 5,940.4 _______ _______ ______ Total shareholders' equity 6,726.4 5,489.3 6,050.3 ======== ======== ======== Unaudited consolidated cash flow statement for the six months ended 30 September 2005 Six months Six months Year ended ended ended 30/09/05 30/09/04 31/03/05 £m £m £m Net cash generated from operations Cash generated from operations 178.7 201.4 524.4 Interest paid (96.2) (102.4) (398.4) Interest received 9.6 9.0 18.3 Taxation (corporation tax paid) 7.8 4.4 3.6 ________ ________ ________ Net cash inflow from operations 99.9 112.4 147.9 Cash flows from investing activities ________ ________ ________ Investment property development expenditure (85.4) (74.0) (215.3) Acquisition of investment properties (785.9) (185.5) (311.9) Other investment property related expenditure (18.4) (31.3) (40.6) Capital expenditure associated with property outsourcing (16.5) (23.9) (122.5) ________ ________ ________ Capital expenditure on properties (906.2) (314.7) (690.3) Sale of fixed asset investment properties 433.2 32.2 337.8 Sale of fixed asset operating properties 1.2 22.7 355.3 ________ ________ ________ Net expenditure on properties (471.8) (259.8) 2.8 Net expenditure on non-property related fixed assets (12.1) (5.6) (19.3) ________ ________ ________ Net cash outflow from capital expenditure (483.9) (265.4) (16.5) Loans (made to) / repaid by joint ventures (5.3) (244.0) (266.5) Distributions from joint ventures 206.9 206.2 245.8 Proceeds from sale of joint venture 293.0 - - Slough Estates (net of cash acquired) - - (5.4) Tops Estates (net of cash acquired) (321.2) - - ________ ________ ________ Net cash used in investing activities (310.5) (303.2) (42.6) Cash flows from financing activities ________ ________ ________ Issue of shares 6.6 8.5 15.7 Purchase of own share capital (1.9) (2.1) (2.1) Increase / (decrease) in debt 640.8 186.8 (180.2) Debt repaid on acquisition of Tops Estates (257.9) - - Dividend paid to ordinary shareholders (153.8) (126.9) (175.5) ________ ________ ________ Net cash from / (used) in financing activities 233.8 66.3 (342.1) ________ ________ ________ Increase / (decrease) in cash and cash equivalents at end of 23.2 (124.5) (236.8) the period ======== ======== ======== Reconciliation of cash generated from operations Profit for the financial period 829.2 452.5 1,060.9 Income tax expense 355.2 173.4 246.6 ________ ________ ________ Profit before tax 1,184.4 625.9 1,307.5 Distribution received from joint venture (11.7) (24.4) (65.4) Share of the profits of joint ventures (post tax) (37.4) (43.3) (76.1) ________ ________ ________ 1,135.3 558.2 1,166.0 Interest income (9.6) (9.0) (18.3) Interest expense 101.8 99.3 253.0 ________ ________ ________ Operating profit 1,227.5 648.5 1,400.7 Adjustments for: Depreciation 13.0 10.5 38.4 Profit on disposal of fixed assets (16.3) (9.0) (112.0) Profit on disposal of joint venture (293.0) - - Net gain on revaluation of investment properties (726.0) (407.8) (830.7) Goodwill impairment 64.5 - 12.7 Changes in working capital Decrease / (increase) in stock (40.2) 10.1 (31.2) Increase in debtors (12.2) (51.1) (48.9) (Increase) / decrease in creditors (38.6) 0.2 95.4 ________ ________ ________ Net cash generated from operations 178.7 201.4 524.4 ======== ======== ======== 1. Interim results The financial information contained in this report does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The Annual Report and Accounts for the year ended 31 March 2005, which were prepared under UK GAAP and which received an unqualified auditors' report and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985 and have been filed with the Registrar of Companies. Prior year comparatives have been restated for IFRS conversion adjustments and remain unaudited. The unaudited financial information contained in this report has been prepared on the basis of the accounting policies set out in note 23. These interim accounts have been prepared, in so far as applicable, as to measurement and presentation in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) up to the date of this announcement and applicable to the Group for the period under review. All such standards have been endorsed by the European Union ('the EU'), with the exception of an amendment to IAS 19 'Retirement Benefits' allowing actuarial gains and losses to be recognised immediately within equity, the endorsement of which is in process. These standards are also collectively referred to as IFRS. The Interim Results for the six months ended 30 September 2005 were approved by the Directors on 15 November 2005. 2. Transition to International Financial Reporting Standards (IFRS) All listed companies in the EU are required to present their consolidated financial statements for accounting periods beginning on or after 1 January 2005 in accordance with IFRS as adopted by the EU. The Group's consolidated financial statements for the year ending 31 March 2006 will therefore be presented on this basis with IFRS comparatives. This Interim Report has been prepared on the basis of the IFRS accounting policies expected to be adopted in the consolidated financial statements for the year ending 31 March 2006. The Group's transition date for the adoption of IFRS is 1 April 2004. The Group has also adopted IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement' from 1 April 2004. This transition date has been selected in accordance with IFRS 1 'First-time adoption of International Financial Reporting Standards'. The principal differences for the Group between reporting under IFRS as compared to UK GAAP are: (i) Recognising revaluation surpluses and deficits in the income statement; (ii) Providing in full for deferred tax on revaluations and charging movements on this provision through the income statement; (iii) Restating the financial effects of the November 2004 debt refinancing; (iv) Showing the Group's share of the profit after tax and net assets of all its joint ventures and joint arrangements as single lines in the income statement and balance sheet respectively; (v) Ceasing to amortise goodwill but instead testing for impairment; and (vi) No longer recognising dividends payable to shareholders prior to their approval by the Annual General Meeting in the case of the final dividend and by the board in the case of the interim dividend. The application of IFRS has also changed the presentation of the cash flow statement which now shows cash flows derived from three types of activities - operating, investing and financing. In addition, under IFRS, the cash flow statement includes all cash flows in respect of cash and cash equivalents. This is a broader definition of cash than under UK GAAP. At this stage in the development of IFRS, matters such as the interpretation and application of IFRS are continuing to evolve. In addition, standards currently in issue and endorsed by the EU are subject to interpretation by the International Financial Reporting Interpretations Committee ('IFRIC') and further standards may be issued and endorsed by the EU before 31 March 2006. These uncertainties could result in the need to change the basis of accounting or presentation of certain financial information from that applied in the preparation of this document. As a general rule, the Group is required to establish its IFRS accounting policies for the year ending 31 March 2006 and apply these retrospectively to determine its opening IFRS balance sheet at the transition date of 1 April 2004 and the comparative information for the year ended 31 March 2005. However, advantage has been taken of certain exemptions afforded by IFRS 1 'First-time adoption of IFRS' as follows: • Business combinations prior to 1 April 2004; and • The Group has applied IFRS 2 'Share-based payment', retrospectively only to awards made after 7 November 2002 that had not vested at 1 January 2005. The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates. 3. Segmental information Six months ended 30/09/2005 Six months ended 30/09/2004 Retail London Other Property Total Retail London Other Property Total portfolio portfolio investment outsourcing £m portfolio portfolio investment outsourcing £m £m £m portfolio £m £m £m portfolio £m £m £m ______ _______ ______ _______ _______ ______ _______ _______ ______ ______ Group 115.9 131.9 2.4 - 250.2 96.5 121.2 10.4 - 228.1 Share of 27.3 - - - 27.3 20.3 - - - 20.3 joint ventures ______ _______ ______ ______ _______ ______ ______ _______ ______ ______ Total rental 143.2 131.9 2.4 - 277.5 116.8 121.2 10.4 - 248.4 income ______ _______ ______ ______ _______ ______ ______ _______ ______ ______ Group 19.0 19.2 0.1 - 38.3 15.7 14.5 0.9 - 31.1 Share of joint 9.0 - - - 9.0 6.3 - - - 6.3 ventures ______ _______ ______ ______ _______ ______ ______ _______ ______ ______ Total service 28.0 19.2 0.1 - 47.3 22.0 14.5 0.9 - 37.4 charge income ______ _______ ______ ______ _______ ______ ______ _______ ______ ______ Group - - - 439.2 439.2 - - - 390.6 390.6 Share of joint - - - 80.8 80.8 - - - 81.6 81.6 ventures ______ _______ ______ ______ _______ ______ ______ _______ ______ ______ Total - - - 520.0 520.0 - - - 472.2 472.2 property services income ______ _______ ______ ______ _______ ______ ______ _______ ______ ______ Group - 41.7 3.6 - 45.3 - - 0.1 85.2 85.3 Share of joint - - - 5.5 5.5 - - - 24.2 24.2 ventures ______ _______ ______ ______ _______ ______ ______ _______ ______ ______ Total trading - 41.7 3.6 5.5 50.8 - - 0.1 109.4 109.5 property sale proceeds Long-term - 52.6 49.1 - 101.7 - 28.1 67.1 - 95.2 development contract income ______ _______ ______ ______ _______ ______ _______ _______ ______ ______ Gross 171.2 245.4 55.2 525.5 997.3 138.8 163.8 78.5 581.6 962.7 property income Less: share (36.3) - - (86.3) (122.6) (26.6) - - (105.8) (132.4) of joint ventures ______ _______ ______ ______ _______ ______ _______ _______ ______ ______ Revenue 134.9 245.4 55.2 439.2 874.7 112.2 163.8 78.5 475.8 830.3 Rents payable (4.1) (1.0) - (91.0) (96.1) (3.7) (0.8) - (88.2) (92.7) Other direct (25.1) (22.4) (0.4) (293.2) (341.1) (14.2) (21.7) (2.4) (238.8) (277.1) property or contract expenditure Indirect (11.8) (9.6) (4.8) (4.0) (30.2) (11.2) (8.7) (4.0) (2.4) (26.3) property or contract expenditure Long-term - (42.4) (48.6) - (91.0) - (28.1) (67.1) - (95.2) development contract expenditure Bid costs - - - (2.8) (2.8) - - - (0.7) (0.7) Costs of - (34.9) (2.7) - (37.6) - - - (81.8) (81.8) sales of trading properties Depreciation (0.4) (0.1) (0.1) (11.3) (11.9) - (0.5) (0.1) (13.3) (13.9) ______ _______ ______ ______ _______ ______ _______ _______ ______ ______ 93.5 135.0 (1.4) 36.9 264.0 83.1 104.0 4.9 50.6 242.6 Profit on 2.3 14.4 (0.2) (0.2) 16.3 1.7 1.5 0.1 5.7 9.0 sale of fixed asset properties Net gain on 312.4 412.7 0.6 0.3 726.0 197.4 178.4 32.0 - 407.8 revaluation of investment properties Goodwill (64.5) - - - (64.5) - - - - - impairment Exceptional - - - 293.0 293.0 - - - - - income ______ _______ ______ ______ _______ ______ _______ _______ ______ ______ Segment 343.7 562.1 (1.0) 330.0 1,234.8 282.2 283.9 37.0 56.3 659.4 result ====== ======= ======== ======= ====== ======= ======= ======= Unallocated (7.3) (5.7) expenses Exceptional - (5.2) costs ______ ______ Operating 1,227.5 648.5 profit before net financing costs Net financing costs - ordinary (92.2) (90.3) - exceptional - - ______ ______ 1,135.3 558.2 Share of the profits of joint 37.4 43.3 ventures (post tax) Distribution received from joint 11.7 24.4 venture ______ ______ Profit before tax 1,184.4 625.9 ====== ====== Unallocated expenses are costs incurred centrally which are neither directly attributable nor reasonably allocatable to individual segments. Year ended Year ended Year ended Year ended Year ended 31/03/2005 31/03/2005 31/03/2005 31/03/2005 31/03/2005 Retail London Other Property Total portfolio portfolio investment outsourcing 2005 £m £m portfolio £m £m £m _______ _______ ______ _______ _____ Group 200.6 249.2 16.5 - 466.3 Share of joint ventures 44.3 - - - 44.3 _______ _______ ______ _______ _____ Total rental income 244.9 249.2 16.5 - 510.6 _______ _______ ______ _______ _____ Group 30.9 33.3 1.3 - 65.5 Share of joint ventures 13.8 - - - 13.8 _______ _______ ______ _______ _____ Total service charge income 44.7 33.3 1.3 - 79.3 _______ _______ ______ _______ _____ Group - - - 763.6 763.6 Share of joint ventures - - - 165.3 165.3 _______ _______ ______ _______ _____ Total property services income - - - 928.9 928.9 _______ _______ ______ _______ _____ Group - 1.0 21.3 100.2 122.5 Share of joint ventures - - - 25.7 25.7 _______ _______ ______ _______ _____ Total trading property sale - 1.0 21.3 125.9 148.2 proceeds Long-term development contract - 64.4 126.8 - 191.2 income _______ _______ ______ _______ _____ Gross property income 289.6 347.9 165.9 1,054.8 1,858.2 Less: share of joint ventures (58.1) - - (191.0) (249.1) _______ _______ ______ _______ _____ Revenue 231.5 347.9 165.9 863.8 1,609.1 Rents payable (7.7) (1.4) - (183.6) (192.7) Other direct property or contract (38.4) (45.6) (3.9) (446.5) (534.4) expenditure Indirect property or contract (21.0) (16.9) (8.0) (8.1) (54.0) expenditure Long-term development contract - (53.2) (126.4) - (179.6) expenditure Bid costs - - - (2.6) (2.6) Costs of sales of trading - (0.8) (15.1) (96.3) (112.2) properties Depreciation - (1.1) (0.1) (29.0) (30.2) _______ _______ ______ _______ _____ 164.4 228.9 12.4 97.7 503.4 Profit on sale of fixed asset 42.3 29.2 10.0 30.5 112.0 properties Net gain on revaluation of 397.4 412.1 18.4 - 827.9 investment properties Goodwill impairment (12.7) - - - (12.7) Exceptional income - - - - - _______ _______ ______ _______ _____ Segment result 591.4 670.2 40.8 128.2 1,430.6 ======== ======= ======= ======= Unallocated expenses (15.1) Exceptional costs (14.8) _______ Operating profit before net 1,400.7 financing costs Net financing costs - ordinary (184.9) - exceptional (49.8) _______ 1,166.0 Share of the profits of joint 76.1 ventures (post tax) Distribution received from joint 65.4 venture _______ Profit before tax 1,307.5 ======= 4. Net finance costs Six months Six months Year ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m Interest expense Bond and debenture debt (72.4) (71.7) (149.9) Bank borrowings (21.1) (36.1) (55.5) Other interest payable (0.6) (0.5) (0.9) Loans from joint ventures - (0.3) (0.3) Fair value (losses) / gains on interest rate swaps (7.9) 6.7 (0.8) Amortisation of bond exchange de-recognition (note 18) (13.3) - (11.2) _______ ______ _______ Expected return on pension scheme assets 3.9 3.3 6.4 Interest on pension scheme liabilities (3.7) (3.4) (6.7) _______ ______ _______ Net return on pension scheme 0.2 (0.1) (0.3) Finance leases (2.1) (2.3) (4.4) B-share dividends - (0.1) (0.1) _______ ______ _______ (117.2) (104.4) (223.4) Interest capitalised in relation to properties under development 15.4 5.1 20.2 _______ ______ _______ Total interest and similar charges payable - ordinary (101.8) (99.3) (203.2) ======= ======= ======= Cost of purchase and redemption of bonds and debenture debt - - (49.8) _______ ______ _______ Total interest and similar charges payable - exceptional - - (49.8) ======= ======= ======= Interest income Short-term deposits 0.2 3.7 7.1 Other interest receivable 1.7 1.5 2.7 Interest receivable from joint ventures 2.6 - - Finance leases 5.1 3.8 8.5 _______ ______ _______ Total interest receivable 9.6 9.0 18.3 ======= ======= ======= Net finance costs (92.2) (90.3) (234.7) ======= ======= ======= 5. Income tax expense Six months Six months Year ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m Current tax expense Corporation tax charge / (credit) for the period 123.4 36.5 (66.8) Adjustment for prior years (0.6) 0.7 (26.0) Tax in respect of property disposals 10.3 4.8 46.7 _______ ______ _______ Total current tax 133.1 42.0 (46.1) _______ ______ _______ Deferred tax expense Origination and reversal of timing differences 19.5 13.6 148.6 Released in respect of property disposals (15.0) (4.7) (104.2) On valuation surplus 217.6 122.5 248.3 _______ ______ _______ Total deferred tax 222.1 131.4 292.7 _______ ______ _______ Total income tax expense in the income statement 355.2 173.4 246.6 ======= ======= ======= The tax for the period is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below: Profit on ordinary activities before taxation 1,184.4 625.9 1,307.5 _______ ______ _______ Profit on ordinary activities multiplied by rate of corporation tax in the UK 355.3 187.8 392.2 of 30% (2004: 30%) Effects of: Deferred tax released in respect of property disposals (15.0) (4.7) (104.2) Corporation tax on disposal of fixed assets 5.9 2.2 13.6 Goodwill impairment 19.3 - 3.8 Joint venture accounting adjustments (8.0) (17.0) (37.7) Prior year corporation tax adjustments (0.6) 0.7 (26.0) Prior year deferred tax adjustments - (0.7) (3.4) Non-allowable expenses and non-taxable items (1.7) 5.1 8.3 _______ ______ _______ 355.2 173.4 246.6 ======= ======= ======= 6. Dividends Six months Six months Year ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m Ordinary dividends paid Final dividend for the year ended 31 March 2005 (32.85p per share) 153.8 - - Final dividend for the year ended 31 March 2004 (27.20p per share) - 126.9 126.9 Interim dividend for the year ended 31 March 2005 (10.40p per share) - - 48.6 _______ ______ _______ 153.8 126.9 175.5 ======= ======= ======= The board has proposed an interim dividend of 18.15p per share (interim dividend for the year ended 31 March 2005: 10.40p) As required under IFRS, this dividend is not recognised in the financial statements as it had not been approved by the board at the balance sheet date. 7. Earnings per share Earnings Six Six Year months months ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m Profit for the financial period 829.2 452.5 1,060.9 Revaluation surpluses net of deferred taxation - Group (508.3) (285.4) (579.6) - joint ventures (25.1) (31.8) (48.7) Fixed asset property disposals after current and deferred tax (24.6) (12.9) (178.4) Goodwill impairment 64.5 - 12.7 Deferred tax arising from capital allowances on investment properties 4.5 4.1 9.3 Mark-to-market adjustment on interest rate swaps (net of deferred tax) 5.5 (3.3) 1.9 Eliminate amortisation of bond exchange de-recognition (net of deferred tax) 9.3 - 7.8 Deferred tax arising from capitalised interest on investment properties 4.4 1.5 5.2 Exceptional costs of debt restructuring - 3.7 45.4 Profit on disposal of joint venture (net of taxation) (203.0) - - Adjustment to restate the Group's share of Telereal's earnings from an equity 5.0 0.8 (23.2) to a distribution basis _______ ______ _______ Adjusted earnings 161.4 129.2 313.3 ======= ======= ======= Weighted average number of ordinary shares Six Six Year months months ended ended ended 31/03/05 30/09/05 30/09/04 No. m No. m No. m Weighted average number of ordinary shares 468.1 466.3 466.9 Effect of owned shares (0.3) (0.1) (0.2) _______ ______ _______ Weighted average number of ordinary shares after adjusting for owned shares 467.8 466.2 466.7 Effect of dilutive share options 2.1 1.5 1.8 _______ ______ _______ Weighted average number of ordinary shares adjusted for dilutive instruments 469.9 467.7 468.5 ======= ======= ======= Earnings per share Six Six Year months months ended ended ended 31/03/05 30/09/05 30/09/04 pence pence pence Basic earnings per share 177.26 97.06 227.32 Diluted earnings per share 176.46 96.75 226.45 Adjusted earnings per share 34.50 27.71 67.13 Adjusted diluted earnings per share 34.35 27.62 66.87 ======= ======= ======= Adjusted earnings per share is disclosed in order to provide a better indication of the Group's underlying business performance. Accordingly, it excludes the effect of all exceptional items, revaluation surpluses and deficits, mark-to-market adjustments on financial instruments used for hedging purposes and the adjustment to interest payable resulting from the amortisation of the bond exchange de-recognition. In addition, the deferred tax arising on capital allowances in respect of investment properties has been eliminated as experience has shown that these allowances are not in practice repayable. Deferred tax on capitalised interest is also added back as this is effectively a permanent timing difference. 8. Net assets per share Shareholders' equity 30/09/05 30/09/04 31/03/05 £m £m £m Net assets attributable to equity shareholders 6,726.4 5,489.3 6,050.3 Deferred tax arising on revaluation surpluses - Group 1,332.8 1,074.1 1,117.9 - joint 54.6 36.7 43.8 ventures - acquired 83.3 - 19.0 Cumulative mark-to-market adjustment on interest rate swaps (net of deferred tax) 11.5 26.5 2.3 - Group - joint ventures 6.4 1.3 1.3 Deferred tax arising from capital allowances on investment properties 125.8 104.4 112.7 Deferred tax arising from capitalised interest on investment properties 25.6 29.6 32.3 Reverse bond exchange de-recognition adjustment (net of deferred tax) (note 18) (385.7) - (395.0) _______ ______ _______ Adjusted net assets attributable to equity shareholders 7,980.7 6,761.9 6,984.6 ======= ======= ======= 30/09/05 30/09/04 31/03/05 Number of ordinary shares No. m No. m No. m Number of ordinary shares 468.6 466.9 467.8 Effect of dilutive share options 2.4 1.5 1.7 _______ ______ _______ Number of ordinary shares adjusted for dilutive instruments 471.0 468.4 469.5 ======= ======= ======= Net assets per share 30/09/05 30/09/04 31/03/05 pence pence pence Net assets per share 1435 1176 1293 Diluted net assets per share 1428 1172 1289 Adjusted net assets per share 1703 1448 1493 Adjusted diluted net assets per share 1694 1444 1488 ======= ======= ======= Adjusted net assets per share excludes the deferred tax arising on revaluation surpluses, mark-to-market adjustments on financial instruments used for hedging purposes and the bond exchange de-recognition adjustment as this is felt to better represent the real liabilities of the Group. In addition, the deferred tax arising on capital allowances in respect of investment properties is excluded as experience has shown that these allowances do not in practice crystallise. Deferred tax on capitalised interest is also added back as this is effectively a permanent timing difference. 9. Non-current assets Property Property Property Property Property Property Investment investment investment outsourcing outsourcing outsourcing Investment Investment Investment properties properties properties Portfolio Development Total Operating Other Total management programme £m and property £m £m £m investment ,plant and properties equipment £m £m Market value at 1 April 2005 8,618.2 747.6 9,365.8 - Group and share of joint ventures - less: share of joint ventures (993.9) - (993.9) _______ ______ _______ Market value at 1 April 2005 - Group 7,624.3 747.6 8,371.9 Less amount included in prepayments in (59.1) (3.7) (62.8) respect of lease incentives Less properties treated as finance leases (138.9) - (138.9) Plus head leases capitalised 69.9 - 69.9 _______ ______ _______ Net book value at 1 April 2005 7,496.2 743.9 8,240.1 546.3 57.9 8,844.3 Properties transferred from portfolio (37.2) 37.2 - - - - management into the development programme during the period (at 1 April 2005 valuation) Developments completed, let and 205.4 (205.4) - - - - transferred from the development programme into portfolio management during the period Property acquisitions 1,378.5 - 1,378.5 - - 1,378.5 Capital expenditure 18.4 124.9 143.3 16.5 12.6 172.4 Capitalised interest - 12.8 12.8 - - 12.8 Sales (330.0) (1.3) (331.3) (1.2) (0.5) (333.0) Transfer to inventories (16.0) - (16.0) - - (16.0) Surrender premiums received (11.8) - (11.8) - - (11.8) Depreciation (0.9) - (0.9) (7.0) (5.1) (13.0) _______ ______ _______ _______ ______ _______ 8,702.6 712.1 9,414.7 554.6 64.9 10,034.2 Surplus on revaluation 542.3 183.4 725.7 0.3 - 726.0 _______ ______ _______ _______ ______ _______ Net book value at 30 September 2005 9,244.9 895.5 10,140.4 554.9 64.9 10,760.2 ======= ======= ======= ======= ======= ======= Reconciliation of net book value to market value: Net book value at 30 September 2005 9,244.9 895.5 10,140.4 Plus amount included in prepayments in 62.0 7.6 69.6 respect of lease incentives Less head leases capitalised (57.3) - (57.3) Plus properties treated as finance leases 191.9 - 191.9 _______ ______ _______ Market value at 30 September 2005 - Group 9,441.5 903.1 10,344.6 - plus: 1,119.6 30.0 1,149.6 share of joint ventures (note 12) _______ ______ _______ Market value at 30 September 2005 - Group 10,561.1 933.1 11,494.2 and share of joint ventures ======= ======= ======= 10. Net investment in finance leases 30/09/05 30/09/04 31/03/05 £m £m £m Net investment in finance leases 224.2 194.9 165.9 Less: amount recoverable in one year (note 14) (2.7) (2.4) (4.8) _______ ______ _______ 221.5 192.5 161.1 ======= ======= ======= 11. Goodwill Six months Six months Year ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m At beginning of period 34.3 34.3 34.3 Acquired during the period (note 22) 64.5 - 12.7 Impaired during the period (64.5) - (12.7) _______ ______ _______ At end of period 34.3 34.3 34.3 ======= ======= ======= The goodwill acquired in the period arose on the acquisition of Tops Estates (see note 22), and is principally attributable to the provision of full deferred tax on the revaluation of the investment properties of that Group. As required, the goodwill has been subjected to an impairment review and full provision has been made. 12. Investment in joint ventures Six months ended 30 September 2005 and at 30 September 2005 Summary Scottish Metro Buchanan A2 Limited Martineau Bullring Bristol Other* Telereal Total financial Retail Retail Galleries Partnership Galleries Limited Alliance £m £m £m information Property Limited Limited £m Limited Partnership £m of Group's Limited Partnership Partnership Partnership £m share of Partnership £m £m £m joint £m ventures Income statement Rental 9.3 5.1 4.2 0.2 0.5 6.1 1.9 - - 27.3 income Service 3.4 1.0 1.1 - 0.2 3.3 - - - 9.0 charges and other recoveries Property - - - - - - - - 80.8 80.8 services income Proceeds of - - - - - - - - 5.5 5.5 sales of trading properties _______ ______ _______ _______ ______ _______ _______ ______ _______ _______ Revenue 12.7 6.1 5.3 0.2 0.7 9.4 1.9 - 86.3 122.6 Rents (0.1) - - - - - - - (17.1) (17.2) payable Other direct (4.5) (1.2) (1.2) - (0.4) (3.2) (0.2) - - (10.7) property or contract expenditure Indirect (0.4) (0.4) (0.1) - (0.1) (0.4) - - (7.6) (9.0) property or contract expenditure Costs of - - - - - - - - (1.3) (1.3) sales of trading properties Depreciation - - - - - - - - (7.1) (7.1) _______ ______ _______ _______ ______ _______ _______ ______ _______ _______ 7.7 4.5 4.0 0.2 0.2 5.8 1.7 - 53.2 77.3 Profit on - - - - - - - 0.2 0.9 1.1 sale of fixed asset properties Net gain / 13.1 7.4 2.5 (0.1) (0.4) 13.7 (0.4) - - 35.8 (loss) on revaluation of investment properties _______ ______ _______ _______ ______ _______ _______ ______ _______ _______ Operating 20.8 11.9 6.5 0.1 (0.2) 19.5 1.3 0.2 54.1 114.2 profit / (loss) Net finance (5.1) (4.0) (2.5) (0.1) - - - 0.1 (32.9) (44.5) costs _______ ______ _______ _______ ______ _______ _______ ______ _______ _______ 15.7 7.9 4.0 - (0.2) 19.5 1.3 0.3 21.2 69.7 Taxation (3.9) (2.4) (0.8) - 0.1 (4.2) 0.1 - (4.5) (15.6) _______ ______ _______ _______ ______ _______ _______ ______ _______ _______ 11.8 5.5 3.2 - (0.1) 15.3 1.4 0.3 16.7 54.1 Adjustment - - - - - - - - (16.7) (16.7) due to net liabilities _______ ______ _______ _______ ______ _______ _______ ______ _______ _______ Share of 11.8 5.5 3.2 - (0.1) 15.3 1.4 0.3 - 37.4 profits / (losses) of joint ventures after tax ======= ======= ======= ======= ======= ======= ======= ====== ======= ======= Distribution received 11.7 from Telereal ======= Balance sheet _______ ______ _______ _______ ______ _______ ______ ______ _______ _____ Investment 328.2 257.8 161.8 10.6 22.4 278.3 87.0 13.0 - 1,159.1 properties ** Operating - - - - - - - - - - properties Current assets 16.0 10.1 5.2 0.2 2.6 9.4 7.9 1.3 - 52.7 _______ ______ _______ _______ ______ _______ _____ _____ _______ ______ 344.2 267.9 167.0 10.8 25.0 287.7 94.9 14.3 - 1,211.8 _______ ______ _______ _______ ______ _______ _____ _____ _______ ______ Current (14.3) (9.9) (3.4) (4.1) (0.6) (4.1) (3.0) (0.8) - (40.2) liabilities Non-current (228.5) (187.2) - - - - (2.3) - - (418.0) liabilities Deferred tax (10.0) (5.0) 0.2 - (1.3) (38.1) (2.1) - - (56.3) _______ ______ _______ _______ ______ _______ _____ _____ _______ ______ (252.8) (202.1) (3.2) (4.1) (1.9) (42.2) (7.4) (0.8) - (514.5) Adjustment due - - - - - - - - - - to net liabilities Transferred from - - - - - - - - - - other receivables _______ ______ _______ _______ ______ _______ _____ _____ _______ _______ 91.4 65.8 163.8 6.7 23.1 245.5 87.5 13.5 - 697.3 ======= ======= ======= ======= ======= ======= ===== ===== ======= ======= Market value of 319.8 256.0 165.7 10.6 23.4 284.5 89.6 - - 1,149.6 investment properties ** ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= Net investment At 1 April 2005 293.6 39.6 163.5 - 23.5 238.2 82.0 14.5 - 854.9 Properties - - - - - - - - - - contributed Cash contributed - 19.8 - - - - - - - 19.8 Cost of - - - 6.7 - - - - - 6.7 acquisition Share of post 11.8 5.5 3.2 - (0.1) 15.3 1.4 0.3 16.7 54.1 tax profits Transferred from - - - - - - - - (5.0) (5.0) other receivables Distributions (190.1) - (2.9) - (0.9) - - (1.3) (11.7) (206.9) Fair value (4.0) (1.1) - - - - - - - (5.1) movement on cash flow hedges taken to equity Loan advances - 2.0 - - 0.6 - 7.1 - - 9.7 Loan repayments (19.9) - - - - (8.0) (3.0) - - (30.9) _______ ______ _______ _______ ______ _______ _____ ______ _______ ______ At 30 September 91.4 65.8 163.8 6.7 23.1 245.5 87.5 13.5 - 697.3 2005 ======= ======= ======= ======= ======= ======= =====.. ======= ======= ======= * Other includes the Martineau Limited Partnership and the Ebbsfleet Limited Partnership ** The difference between the book value and the market value is the amount included in prepayments in respect of lease incentives, head leases capitalised and properties treated as finance leases. Six months ended 30 September 2004 and at 30 September 2004 Summary Scottish Metro Buchanan A2 Limited Martineau Bullring Bristol Other Telereal Total financial Retail Retail Galleries Partner-ship Galleries Limited Alliance £m £m £m information Property Limited Limited £m Limited Partner- £m of Group's Limited Partner- Partner-ship Partner- ship share of Partner- ship £m ship £m joint ship £m £m ventures £m Income statement Rental 8.5 2.8 - - 0.8 6.4 0.9 0.9 - 20.3 income Service 2.7 0.4 - - 0.1 2.9 - 0.2 - 6.3 charges and other recoveries Property - - - - - - - - 81.6 81.6 services income Proceeds of - - - - - - - - 24.2 24.2 sales of trading properties _______ ______ _______ _______ ______ _______ _____ ______ _______ ______ Revenue 11.2 3.2 - - 0.9 9.3 0.9 1.1 105.8 132.4 Rents (0.6) - - - - - - - (18.2) (18.8) payable Other direct (3.5) (1.2) - - (0.3) (3.1) - (0.2) - (8.3) property or contract expenditure Indirect (0.2) - - - - (0.3) - - (6.6) (7.1) property or contract expenditure Costs of - - - - - - - - (8.7) (8.7) sales of trading properties Depreciation - - - - - - - - (6.6) (6.6) _______ ______ _______ _______ ______ _______ _____ ______ _______ ______ 6.9 2.0 - - 0.6 5.9 0.9 0.9 65.7 82.9 Profit on - - - - - - - (1.7) 5.1 3.4 sale of fixed asset properties Net gain on 13.7 4.9 - - 0.5 26.4 - - - 45.5 revaluation of investment properties _______ ______ _______ _______ ______ _______ _____ ______ _______ ______ Operating 20.6 6.9 - - 1.1 32.3 0.9 (0.8) 70.8 131.8 profit / (loss) Net finance (0.3) (3.2) - - - 0.1 - 0.1 (33.1) (36.4) costs _______ ______ _______ _______ ______ _______ _____ ______ _______ ______ 20.3 3.7 - - 1.1 32.4 0.9 (0.7) 37.7 95.4 Taxation (6.1) (1.2) - - (0.2) (7.9) - 1.0 (12.5) (26.9) _______ ______ _______ _______ ______ _______ _____ ______ _______ ______ 14.2 2.5 - - 0.9 24.5 0.9 0.3 25.2 68.5 Adjustment - - - - - - - - (25.2) (25.2) due to net liabilities _______ ______ _______ _______ ______ _______ _____ ______ _______ ______ Share of 14.2 2.5 - - 0.9 24.5 0.9 0.3 - 43.3 profits of joint ventures after tax ======= ======= ======= ======= ======= ====== ===== ====== ======= ======= Distribution received 24.4 from Telereal ======= Balance sheet _______ ______ ______ ______ ______ _______ _____ ______ ______ _______ Investment 271.6 143.5 - - 22.1 264.1 71.1 13.0 - 785.4 properties Operating - - - - - - - - 1,025.5 1,025.5 properties Current assets 5.4 4.5 - - 2.2 9.8 5.7 2.9 76.0 106.5 _______ ______ ______ ______ ______ _______ _____ ______ ______ _______ 277.0 148.0 - - 24.3 273.9 76.8 15.9 1,101.5 1,917.4 _______ ______ ______ ______ ______ _______ _____ ______ ______ _____.. Current (10.0) (3.4) - - (0.4) (8.7) (0.6) (1.2) (65.2) (89.5) liabilities Non-current (8.4) (108.6) - - - - (2.4) - (1,088.9) (1,208.3) liabilities Deferred tax (6.0) (1.0) - - (1.3) (32.2) - - - (40.5) _______ ______ ______ ______ ______ _______ _____ ______ ______ _______ (24.4) (113.0) - - (1.7) (40.9) (3.0) (1.2) (1,154.1) (1,338.3) Adjustment due to - - - - - - - - 38.0 38.0 net liabilities Transferred from - - - - - - - - 14.6 14.6 other receivables _______ ______ ______ ______ ______ _______ _____ ______ ______ _______ 252.6 35.0 - - 22.6 233.0 73.8 14.7 - 631.7 ======= ======= ====== ====== ====== ====== ===== ====== ====== ======= Market value 262.9 141.7 - - 23.1 270.0 73.8 - - 771.5 of investment properties ======= ======= ====== ====== ====== ====== ===== ====== ====== ======= Net investment At 1 April 2004 250.2 - - - 21.7 209.9 - 44.4 - 526.2 Properties - 92.1 - - - - 85.6 - - 177.7 contributed Cash contributed - 87.2 - - - - - - - 87.2 Cost of - - - - - - - - - - acquisition Share of post 14.2 2.5 - - 0.9 24.5 0.9 0.3 24.4 67.7 tax profits Transferred from - - - - - - - - 5.5 5.5 other receivables Distributions - (146.3) - - - - - (30.0) (29.9) (206.2) Fair value - - - - - - - - - - movement on cash flow hedges taken to equity Loan advances - 86.2 - - - 4.5 8.7 - - 99.4 Loan repayments (11.8) (86.7) - - - (5.9) (21.4) - - (125.8) _______ ______ ______ ______ ______ _______ _____ ______ ______ _______ At 30 September 252.6 35.0 - - 22.6 233.0 73.8 14.7 - 631.7 2004 ======= ======= ====== ====== ====== ====== ===== ====== ====== ======= 13. Trading properties and long-term development contracts 30/09/05 30/09/04 31/03/05 £m £m £m Trading properties 132.2 120.0 108.9 Amount recoverable under long-term development contracts less payments on 88.0 - 55.1 account _______ _______ ______ 220.2 120.0 164.0 ======= ======= ======= 14. Trade and other receivables 30/09/05 30/09/04 31/03/05 £m £m £m Trade receivables - property investment 35.5 28.2 18.4 - property outsourcing 98.7 117.0 186.8 Property sales receivables 3.2 17.8 77.0 Other receivables 61.6 82.1 49.2 Prepayments and accrued income 207.6 175.6 179.6 Amounts receivable under finance leases within one year (note 10) 2.7 2.4 4.8 _______ _______ ______ 409.3 423.1 515.8 ======= ======= ======= 15. Short-term borrowings and overdrafts 30/09/05 30/09/04 31/03/05 £m £m £m Borrowings falling due within one year (note 18) 76.3 24.5 76.3 Bond exchange de-recognition adjustment falling due within one year (note (21.8) - (26.5) 18) Amounts payable under finance leases falling due within one year (note 18) 0.9 0.9 1.0 _______ _______ ______ 55.4 25.4 50.8 ======= ======= ======= 16. Trade and other payables 30/09/05 30/09/04 31/03/05 £m £m £m Trade creditors 39.5 47.6 42.7 Taxation and social security 197.9 130.7 119.8 Capital creditors 119.4 77.5 82.5 Other creditors 37.1 38.6 34.7 Accruals and deferred income 345.0 313.4 315.8 _______ _______ ______ 738.9 607.8 595.5 ======= ======= ======= Capital creditors represent amounts due under contracts to purchase properties, which were unconditionally exchanged at the period end, and for work completed on investment properties but not paid for at the financial period end. Deferred income principally relates to rents received in advance. 17. Non-current payables 30/09/05 30/09/04 31/03/05 £m £m £m Dilapidations 33.4 15.5 17.7 Deferred income 19.5 15.8 18.0 Other payables 23.9 20.9 25.9 _______ _______ ______ 76.8 52.2 61.6 ======= ======= ======= 18. Borrowings 30/09/05 30/09/04 31/03/05 £m £m £m Unsecured _______ _______ ______ 9.500 per cent Bonds due 2007 - 200.0 - 5.875 per cent Bonds due 2013 - 394.9 - 9.000 per cent Bonds due 2020 - 197.1 - 6.375 per cent Bonds due 2024 - 198.0 - B shares - 6.7 - Amounts payable under finance leases 57.3 73.7 69.9 Money market borrowings 70.4 700.6 73.0 _______ _______ ______ 127.7 1,771.0 142.9 Secured _______ _______ ______ 5.016 per cent Notes due 2007 181.6 - 181.6 5.292 per cent Notes due 2015 392.4 - 392.4 5.425 per cent Notes due 2022 256.3 - 256.3 5.391 per cent Notes due 2026 209.6 - 209.6 5.391 per cent Notes due 2027 610.5 - 610.7 5.376 per cent Notes due 2029 316.1 - 316.1 5.396 per cent Notes due 2032 321.3 - 321.3 7.750 per cent Mortgage 2008 - 5.4 - 6.375 per cent Mortgage 2008/13 - 32.3 - Acquisition loan notes 2015 129.8 - - 10.000 per cent First Mortgage Debenture Stock 2025 - 400.0 - 10.000 per cent First Mortgage Debenture Stock 2027 - 200.0 - 10.000 per cent First Mortgage Debenture Stock 2030 - 200.0 - Syndicated bank debt 848.2 - 318.0 DWP term loan 251.4 264.1 255.2 _______ _______ ______ 3,517.2 1,101.8 2,861.2 _______ _______ ______ 3,644.9 2,872.8 3,004.1 Bond exchange de-recognition adjustment (551.0) - (564.3) Fair value of interest rate swaps 16.5 37.8 3.3 _______ _______ ______ 3,110.4 2,910.6 2,443.1 Less: borrowings falling due within one year (note 15) (76.3) (24.5) (76.3) Add: bond exchange de-recognition falling due within one year (note 21.8 - 26.5 15) Less: amounts payable under finance leases (note 15) (0.9) (0.9) (1.0) _______ _______ ______ Falling due after one year 3,055.0 2,885.2 2,392.3 ======= . ======= ======= On 3 November 2004 a debt refinancing was completed resulting in the Group exchanging all of its outstanding bond and debenture debt for new bonds. The new Notes do not meet the IAS39 requirement to be substantially different from the debt that it replaced. Consequently the book value of the new Notes is reduced to the book value of the original debt ('the bond exchange de-recognition adjustment'). The adjustment will be amortised to zero over the life of the new Notes. Borrowings Borrowings Borrowings Undrawn Undrawn Undrawn committed committed committed facilities facilities facilities 30/09/05 30/09/04 31/03/05 30/09/05 30/09/04 31/03/05 £m £m £m £m £m £m The maturity profiles of the Group's borrowings, and the expiry periods of its undrawn committed borrowing facilities are: One year or less, or on demand 55.4 25.4 50.8 - - - More than one year but no more than two 180.5 699.0 (7.8) - 1,410.0 - years More than two years but no more than five 861.8 234.1 513.7 1,150.0 - 1,680.0 years More than five years 2,012.7 1,952.1 1,886.4 - - - _______ _______ ______ _______ _______ ______ 3,110.4 2,910.6 2,443.1 1,150.0 1,410.0 1,680.0 ======= . ======= ======= ======= ======= ======= The fair value of the Group's borrowings are: 30/09/05 30/09/04 31/03/05 £m £m £m Book value 3,110.4 2,910.6 2,443.1 Fair value 3,808.2 3,500.7 3,074.1 _______ _______ ______ Excess of fair value over book value (697.8) (590.1) (631.0) ======= ======= ======= 19. Pension deficit Six months Six months Year ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m At beginning of period 10.9 17.2 17.2 Charge to operating profit 2.0 2.0 3.7 Expected return on pension scheme assets (3.9) (3.3) (6.4) Interest on pension scheme liabilities 3.7 3.4 6.7 Employer contributions (2.6) (11.8) (15.2) Actuarial (gains) / losses (5.2) (1.7) 4.9 _______ _______ ______ At end of period 4.9 5.8 10.9 ======= ======= ======= 20. Deferred taxation Six months Six months Year ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m At beginning of period 1,418.0 1,105.5 1,105.5 Net charge for the period 237.1 136.1 396.9 Deferred tax charged to equity on movement in the fair value of swaps (1.6) - - Deferred tax credited / (charged) to equity on movement in the pension 1.6 0.5 (1.5) deficit Deferred tax released in respect of property disposals during the period (15.0) (4.7) (104.2) Deferred tax on disposal of a company - - (4.1) Deferred tax on acquisition of a company - in respect of revaluation 64.3 - 19.0 surpluses - other 9.2 - 6.4 _______ _______ ______ At end of period 1,713.6 1,237.4 1,418.0 ======= ======= ======= Deferred tax is provided as follows: 30/09/05 30/09/04 31/03/05 £m £m £m Excess of capital allowances over depreciation - investment properties 125.8 104.4 112.7 26.0 36.1 22.9 - operating properties Capitalised interest - investment properties 21.3 25.3 28.0 - operating properties 1.0 4.2 0.9 Revaluation surpluses - own 1,332.8 1,074.1 1,117.9 - acquired 83.3 - 19.0 Tax losses (23.1) - (37.8) Other temporary timing differences 146.5 (6.7) 154.4 _______ _______ ______ 1,713.6 1,237.4 1,418.0 ======= ======= ======= Tax on capital gains that would become payable by the Group, if it were to 773.1 570.0 626.0 dispose of all of its investment properties at the amount stated in the balance sheet Potential reduction in tax on contingent capital gains if properties were (31.6) (73.0) (90.4) sold within their owning companies _______ _______ ______ Tax on contingent capital gains assuming no further mitigation 741.5 497.0 535.6 ======= ======= ======= 21. Shareholders' equity Ordinary Own shares Share Share Capital Profit and Total shares acquired based premium redemption loss £m £m £m payments account reserve account £m £m £m £m At 1 April 2004 46.6 - 0.8 15.9 22.1 5,066.8 5,152.2 Repayment of B shares - - - - 8.4 (8.4) - Exercise of options 0.2 - - 15.5 - - 15.7 Fair value movement on cash flow hedges - Group - - - - - - - - joint ventures - - - - - - - Fair value of share based payments - - - - - - - Own shares acquired - (2.1) 2.5 - - - 0.4 Actuarial losses on defined benefit - - - - - (3.4) (3.4) pension schemes Dividend paid (note 6) - - - - - (175.5) (175.5) Profit for the financial period - - - - - 1,060.9 1,060.9 _______ _______ ______ _______ _______ ______ ______ At 31 March 2005 46.8 (2.1) 3.3 31.4 30.5 5,940.4 6,050.3 ======= ======= ======= ======= ====== ======= ====== Ordinary Own shares Share Share Capital Profit and Total shares acquired based premium redemption loss £m £m £m payments account reserve account £m £m £m £m At 1 April 2005 46.8 (2.1) 3.3 31.4 30.5 5,940.4 6,050.3 Repayment of B shares - - - - - - - Exercise of options 0.1 - - 6.5 - - 6.6 Fair value movement on cash flow hedges - - - - - (3.7) (3.7) - Group - joint ventures - - - - - (5.1) (5.1) Fair value of share based payments - - 1.2 - - - 1.2 Own shares acquired - (1.9) - - - - (1.9) Actuarial profits on defined benefit - - - - - 3.6 3.6 pension schemes Dividend paid (note 6) - - - - - (153.8) (153.8) Profit for the financial period - - - - - 829.2 829.2 _______ _______ ______ _______ _______ ______ ______ At 30 September 2005 46.9 (4.0) 4.5 37.9 30.5 6,610.6 6,726.4 ======= ======= ======= ======= ====== ======= ====== At 30 September 2005 the Group owned 327,629 shares in respect of its commitment to the deferred bonus scheme. 22. Acquisition of Tops Estates PLC The Group acquired Tops Estates PLC on 10 June 2005 for a consideration of £334.1m, including costs. This has been accounted as a business combination. Book value Fair value Fair value at adjustments acquired acquisition £m £m £m Fair value of assets acquired Investment properties 573.0 19.6 592.6 Debtors 21.9 (7.0) 14.9 Cash at bank 12.9 - 12.9 Creditors falling due within one year (19.4) - (19.4) Creditors falling due after one year (230.6) (27.3) (257.9) Deferred taxation (9.2) (64.3) (73.5) _______ _______ ______ Net assets acquired 348.6 (79.0) 269.6 _______ _______ ______ Fair value of consideration Cash 325.3 Costs 8.8 _______ 334.1 Goodwill (Note 11) (64.5) _______ 269.6 ======= 22. Significant accounting policies (a) Basis of consolidation The consolidated financial statements of the Group include the financial statements of Land Securities Group PLC ('the Company') and its subsidiaries made up to 30 September 2005. Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases. Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement. Interests in joint ventures are accounted for using the equity method of accounting as permitted by IAS 31 ' Interests in joint ventures' and following the procedures for this method set out in IAS 28 'Investments in associates'. The equity method requires the Group's share of the joint venture's profit or loss for the period to be presented separately in the income statement and the Group's share of the joint venture's net assets to be presented separately in the balance sheet. Joint ventures with net liabilities are carried at zero value in the balance sheet where there is no commitment to fund the deficit and any distributions received are included in the consolidated profit for the year. Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the Group's interest in the joint venture concerned. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment. (b) Goodwill At the date of the Group's transition to IFRS, 1 April 2004, the goodwill in the Group balance sheet represented that arising on the acquisition of Land Securities Trillium less amortisation to that date. In accordance with IFRS 1 ' First-time adoption of IFRS', this amount has been adopted as the carrying amount of the goodwill for IFRS accounting purposes and the goodwill was reviewed for impairment at both 31 March 2004 and 31 March 2005. In accordance with IFRS 3 'Business combinations', the goodwill is not amortised but is reviewed for impairment at each reporting date. The Group's policy on impairment is set out in (k) below. (c) Derivative financial instruments ('derivatives') The Group uses interest rate swap derivatives to help manage its interest rate risk. In accordance with its treasury policy, the Group does not hold or issue derivatives for trading purposes. Derivatives are recognised initially at cost. Subsequent to initial recognition, derivatives are stated at fair value. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss unless the derivatives qualify for hedge accounting, in which case recognition depends on the nature of the item being hedged. Where a derivative is designated as a hedge of the variability of a highly probable forecasted transaction, i.e. an interest payment, the element of the gain or loss on the derivative that is an effective hedge is recognised directly in equity. When the hedge of a forecasted transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss, i.e. when interest income or expense is recognised. The gain or loss on any ineffective element of any potential hedge is recognised in the income statement immediately. (d) Investment properties Investment properties are those properties, either owned by the Group or where the Group is a lessee under a finance lease, that are held either to earn rental income or for capital appreciation or both. In addition, properties held under operating leases are accounted for as investment properties when the rest of the definition of an investment property is met. In such cases, the operating leases concerned are accounted for as if they were finance leases. Investment properties are measured initially at cost, including related transaction costs. After initial recognition at cost, investment properties are carried at their fair values based on a professional valuation made as of each reporting date. Properties are treated as acquired at the point when the Group assumes the significant risks and returns of ownership and as disposed when these are transferred to the buyer. Investment property is measured on initial recognition at cost, including related transaction costs. Additions to investment properties consist of costs of a capital nature and, in the case of investment properties under development, capitalised interest. Certain internal staff and associated costs directly attributable to the management of major schemes during the construction phase are also capitalised. The difference between the fair value of an investment property at the reporting date and its carrying amount prior to re-measurement is included in the income statement as a valuation gain or loss. When the Group begins to redevelop an existing investment property for continued future use as an investment property, the property remains an investment property and is accounted for as such. When the Group begins to redevelop an existing investment property with a view to sale, the property is transferred to trading properties and held as a current asset. The property is re-measured to fair value as at the date of the transfer with any gain or loss being taken to profit or loss. The re-measured amount becomes the deemed cost at which the property is then carried in trading properties. Property that is being constructed or developed for future use as an investment property, but which has not previously been classified as such, is classified as investment property under development within property, plant and equipment. This is recognised initially at cost but is subsequently re-measured to fair value at each reporting date. Any gain or loss on re-measurement is taken direct to equity unless any loss in the period exceeds any net cumulative gain previously recognised in equity. In the latter case, the amount by which the loss in the period exceeds the net cumulative gain previously recognised is taken to profit or loss. On completion, the property is transferred to investment property with any final difference on re-measurement accounted for in accordance with the foregoing policy. Gross borrowing costs associated with direct expenditure on properties under development or undergoing major refurbishment are capitalised. The interest capitalised is calculated using the Group's weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amount capitalised is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Interest is capitalised as from the commencement of the development work until the date of practical completion. The capitalisation of finance costs is suspended if there are prolonged periods when development activity is interrupted. Interest is also capitalised on the purchase cost of a site or property acquired specifically for redevelopment in the short term but only where activities necessary to prepare the asset for redevelopment are in progress. (e) Property, plant and equipment Operating properties These are properties owned and managed by Land Securities Trillium, the Group's property outsourcing business, and which do not satisfy the definition of an investment property. Operating properties are stated at cost less accumulated depreciation. Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the properties concerned. The estimated useful lives are as follows: Freehold land - Not depreciated Freehold buildings - Up to 50 years Leasehold properties - Shorter of the unexpired lease term and 50 years Other property, plant and expenditure This category comprises computers, motor vehicles, furniture, fixtures and fittings, and improvements to Group offices. These assets are stated at cost less accumulated depreciation and are depreciated on a straight-line basis over their estimated useful lives of between two and five years. The residual values and useful lives of all property, plant and equipment are reviewed, and adjusted if appropriate, at least at each financial year-end. (f) Leases A Group company is the lessee i) Operating lease - leases in which substantially all risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. ii) Finance lease - leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's commencement at the lower of the fair value of the property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current borrowings. The finance charges are charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The investment properties acquired under finance leases are subsequently carried at their fair value. A Group company is the lessor i) Operating lease - properties leased out to tenants under operating leases are included in investment properties in the balance sheet. ii) Finance lease - when assets are leased out under a finance lease, the present value of the minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return. Where only the buildings element of a property lease is classified as a finance lease, the land element is shown within operating leases. (g) Trading properties Trading properties are those properties held for sale and are shown at the lower of cost and net realisable value. (h) Long-term construction contracts Revenue on long-term contracts is recognised according to the stage reached in the contract by reference to the value of work completed using the percentage of completion method. An appropriate estimate of the profit attributable to work completed is recognised once the outcome of the contract can be estimated reliably. The gross amount due from customers for contract work is shown as a receivable. The gross amount due comprises costs incurred plus recognised profits less the sum of recognised losses and progress billings. Where the sum of recognised losses and progress billings exceeds costs incurred plus recognised profits, the amount is shown as a liability. (i) Trade and other receivables Trade and other receivables are recognised initially at fair value. A provision for impairment of trade receivables is established where there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables concerned. (j) Cash and cash equivalents Cash and cash equivalents comprises cash balances, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. (k) Impairment The carrying amounts of the Group's non-financial assets, other than investment property (see (d) above), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated (see below). An impairment loss is recognised in profit or loss whenever the carrying amount of an asset exceeds its recoverable amount. For the purposes of assessing impairment, assets are grouped together at the lowest levels for which there are separately identifiable cash flows. The recoverable amount of an asset is the greater of its net selling price and its value in use. The value in use is determined as the net present value of the future cash flows expected to be derived from the asset, discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount after the reversal does not exceed the amount that would have been determined, net of applicable depreciation, if no impairment loss had been recognised. (l) Share capital Ordinary shares are classed as equity. External costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. (m) Borrowings Borrowings other than bank overdrafts are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, borrowings are stated at amortised cost with any difference between the amount initially recognised and redemption value being recognised in the income statement over the period of the borrowings, using the effective interest method. Where existing borrowings are exchanged for new borrowings and the terms of the existing and new borrowings are not substantially different (as defined by IAS 39), the new borrowings are recognised initially at the carrying amount of the existing borrowings. The difference between the amount initially recognised and the redemption value of the new borrowings is recognised in the income statement over the period of the new borrowings, using the effective interest method. (n) Pensions The Group accounts for pensions under IAS 19 'Employee benefits'. In respect of defined benefit pension schemes, obligations are measured at discounted present value while scheme assets are measured at their fair value. The operating and financing costs of such plans are recognised separately in the income statement. Service costs are spread systematically over the working lives of the employees concerned with the charge for the period included in operating costs in the income statement. Financing costs are recognised in the periods in which they arise and are included in interest expense. Actuarial gains and losses arising from either experience differing from previous actuarial assumptions or changes to those assumptions are recognised immediately in the statement of recognised income and expense. Contributions to defined contribution schemes are expensed as incurred. 22. Significant accounting policies continued (o) Provisions A provision is recognised in the balance sheet when the Group has a constructive or legal obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Provision is made for dilapidations that will crystallise in the future where, on the basis of the present condition of the property, an obligation exists at the reporting date and can be reliably measured. The estimate is revised over the remaining period of the lease to reflect changes in the condition of the building or other changes in circumstances. The estimate of the obligation takes account of relevant external advice. (p) Trade and other payables Trade and other payables are stated at cost. (q) Revenue Revenue comprises rental income, service charges and other recoveries from tenants of the Group's investment and trading properties, property services income earned by its property outsourcing business, proceeds of sales of its trading properties and income arising on long-term contracts. Rental income includes the net income from managed operations such as car parks, food courts, serviced offices and flats. Service charges and other recoveries include income in relation to services charges and directly recoverable expenditure together with any chargeable management fees. Property services income represents unitary charges and the recovery of other direct property or contract expenditure reimbursable by customers. Where revenue is obtained from the rendering of services, it is recognised by reference to the stage of completion of the relevant transactions at the reporting date. Rental income from investment property leased out under operating lease is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the net consideration for the use of the property and are therefore also recognised on the same, straight-line basis. When property is let out under a finance lease, the Group recognises a receivable at an amount equal to the net investment in the lease at inception of the lease. Rentals received are accounted for as repayments of principal and finance income as appropriate. Minimum lease payments receivable on finance leases are apportioned between finance income and reduction of the outstanding receivable. Finance income is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining net investment in the finance lease. Contingent rents, being those lease payments that are not fixed at the inception of a lease, for example increases arising on rent reviews, are recorded as income in the periods in which they are earned. Where revenue is obtained by the sale of assets, it is recognised when the significant risks and returns have been transferred to the buyer. In the case of sales of properties, this is generally on unconditional exchange except where payment or completion is expected to occur significantly after exchange. For conditional exchanges, sales are recognised as the conditions are satisfied. Sales of investment and other fixed asset properties, which are not included in revenue, are recognised on the same basis. (r) Expenses Property and contract expenditure, including bid costs incurred prior to the exchange of a contract, is expensed as incurred with the exception of expenditure on long-term contracts (see (h) above). Rental payments made under operating lease are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the net consideration for the use of the property and also recognised on a straight-line basis. Minimum lease payments payable on finance leases and operating leases accounted for as finance leases under IAS 40 are apportioned between finance expense and reduction of the outstanding liability. Finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining liability. Contingent rents (as defined in (q) above) are charged as expense in the periods in which they are incurred. (s) Share-based payments The cost of granting share options and other share-based remuneration to employees and directors is recognised through the income statement. The Group has used the Black-Scholes option valuation model to establish the relevant costs. The resulting values are amortised through the income statement over the vesting period of the options and other grants. The charge is reversed if it appears probable that applicable performance criteria will not be met. Own shares held in connection with employee share plans or other share-based payment arrangements are treated as treasury shares and deducted from equity. No profit or loss is recognised in the income statement on their sale, re-issue or cancellation. (t) Exceptional items Items which are sufficiently material by either their size or nature to require separate disclosure are disclosed as exceptional items within the relevant consolidated income statement category. Items that management consider fall into this category are presented separately in the consolidated income statement in the column headed 'Exceptional items'. Events that may give rise to exceptional items include gains or losses on the disposal of fixed asset properties, joint ventures or other investments, impairment of assets including goodwill and financial restructurings. (u) Income tax Income tax on the profit for the year comprises current and deferred tax. Current tax is the tax payable on the taxable income for the year and any adjustment in respect of previous years. Deferred tax is provided in full using the balance sheet liability method on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. No provision is made for temporary differences (i) arising on the initial recognition of assets or liabilities that affect neither accounting nor taxable profit and (ii) relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future. In particular, deferred tax is provided on the full difference between the original cost of investment properties and their carrying amounts at the reporting date without taking into account deductions and allowances which would only apply if the properties concerned were to be sold, except where such properties are classified as held for sale. Reconciliation of UK GAAP to IFRS In preparing the IFRS accounts, the Group has adjusted amounts reported previously in the financial statements prepared in accordance with UK GAAP. An explanation of how the transition has affected the Group's financial performance and position is set out in the following tables and accompanying narrative. Reconciliation of equity Notes 30/09/05 31/03/05 30/09/04 31/03/04 £m £m £m £m Equity shareholders' funds under UK GAAP * 7,758.2 6,636.6 6,570.2 6,030.1 IFRS adjustments Deferred tax on revaluations - Group (i) (1,332.8) (1,117.9) (1,074.1) (953.5) - joint ventures (i) (54.6) (43.8) (36.7) (24.0) - on acquisitions (i) (83.3) (19.0) - - Dividend (ii) 85.1 153.7 48.6 126.8 Finance leases - Group 1.4 8.5 (3.7) (9.2) - joint ventures (0.3) (0.3) (0.2) (0.2) Pension deficit (net of deferred tax) (iii) (13.0) (17.7) (14.8) (16.2) Tenant lease incentives (iv), (v) (15.2) (16.5) (15.2) (13.6) Fair value of interest rate swaps - Group (vi) (11.5) (2.3) (26.5) (31.1) - joint ventures (vi) (6.4) (1.3) (1.3) - Non-amortisation of goodwill (Land Securities Trillium) (vii) 3.6 2.4 1.2 - Share based payments (viii) 3.4 3.0 1.7 1.4 Write off negative goodwill arising 6.1 6.3 - - Negative investment adjustment (Telereal) - Investment (ix) - 71.1 52.6 47.9 - taxation (ix) - (10.6) (16.1) (10.6) Bond exchange de-recognition (x) 385.7 395.0 - - Other - 3.1 3.6 4.4 _______ _______ ______ ______ Equity shareholders' funds under IFRS 6,726.4 6,050.3 5,489.3 5,152.2 ======= ======= ======= ======= * 'UK GAAP' referred to in these reconciliations is that existing as at 31 March 2005 Notes (i) Deferred tax is required to be provided in full on all differences between carrying values for accounts purposes and those for taxation. In particular, deferred tax is now provided on revaluation surpluses. (ii) Dividends are now only provided when finally approved, either by the Annual General Meeting in the case of final dividends or by the Board for interim dividends. (iii) The actuarial deficit in the Group's defined benefit pension schemes is now recognised as a liability in the consolidated balance sheet. (iv) Tenant leases which transfer substantially all of the risks and rewards of ownership to the tenant are treated as finance leases. The property is derecognised from the balance sheet and a receivable recognised in its place. (v) The cost of tenant lease incentives, such as rent free periods, are now amortised over the term of the leases concerned rather than over the period to the first review to market rents. (vi) The fair value of all derivatives such as interest rate swaps is now recognised in the Group balance sheet at each reporting date. (vii) Goodwill arising on acquisition is no longer amortised but kept on the balance sheet and reviewed regularly for impairment. (viii) The cost of share-based payments is now recognised through the income statement. (ix) Joint ventures cease to be consolidated once their net assets become negative. This is the case with Telereal during the period under review. (x) The bond exchange which took place in November 2004 qualified as an extinguishment of the existing debt and an issue of new debt under UK GAAP. Under IFRS, this is not the case and the existing debt is reinstated with the difference in redemption amounts being amortised over the life of the new debt. Reconciliation of profit Notes Six months Six months Year ended ended ended 31/03/05 30/09/05 30/09/04 £m £m £m Profit / (loss) attributable to ordinary shareholder's under UK GAAP 438.2 135.9 (35.8) IFRS adjustments Revaluation surplus on investment properties - Group (xi) 726.0 407.8 827.9 - joint ventures (xi) 35.8 45.5 69.5 Deferred tax on revaluations - Group (xii) (214.9) (120.6) (164.4) - joint ventures (xii) (10.8) (12.7) (19.8) Taxation on revaluation surpluses realised on disposals of (xiii) (8.5) (2.2) (40.3) investment properties Finance leases - Group 3.4 (3.7) (9.4) - joint ventures (0.1) - (0.1) Pension deficit (net of deferred tax) 1.1 0.2 1.9 Tenant lease incentives (1.6) (0.8) (3.0) Fair value of non-qualifying interest rate swaps (net of deferred (5.5) 3.3 27.5 tax) Non-amortisation of Goodwill (Land Securities Trillium) 1.2 1.2 2.4 Share based payments (0.8) (0.6) (0.9) Write off goodwill arising on the acquisition of businesses (64.5) - (12.7) Negative investment adjustment (Telereal) (60.5) (0.8) 23.2 B-share dividends - - (0.1) Bond exchange de-recognition - originating adjustment - - 402.8 - adjustment in (9.3) - (7.8) period _______ _______ ______ Profit attributable to ordinary shareholder's under IFRS 829.2 452.5 1,060.9 ======= ======= ======= Notes (xi) The surpluses and deficits arising on the periodic revaluation of the investment property portfolio are now taken through the income statement. (xii) Deferred tax is provided in full on the revaluation surpluses and deficits and also taken through the income statement. (xiii) Deferred tax provided on revaluation surpluses does not become payable on disposal of the properties concerned and so has to be written back through the income statement. This information is provided by RNS The company news service from the London Stock Exchange

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