3rd Quarter Results

5th Nov 2008 07:00



5 November 2008 

LIBERTY INTERNATIONAL PLC

INTERIM REPORT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2008

Attached is the interim report for the nine months ended 30 September 2008:

Highlights
Summary of Investment and Development Properties
Operating and Financial Review
Unaudited Financial Information

Enquiries:

Liberty International PLC:
David Fischel	Chief Executive	+44 (0)20 7960 1207
Ian Durant	Finance Director	+44 (0)20 7960 1210
Kate Bowyer	Investor Relations	+44 (0)20 7960 1250
Public relations:
UK:	Michael Sandler, Hudson Sandler	+44 (0)20 7796 4133
SA:	Nicholas Williams, College Hill Associates	+27 (0)11 447 3030

A copy of this announcement is available for download from our website at www.liberty-international.co.uk, and hard copies can be requested via the website or by contacting the company (email [email protected] or telephone +44 (0)20 7960 1406).

A conference call with analysts and investors will be held at 9.30 am.

This announcement includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Liberty International PLC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any information contained in this announcement on the price at which shares or other securities in Liberty International PLC have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.

  HIGHLIGHTS OF NINE MONTH PERIOD ENDED 30 SEPTEMBER 2008

Net rental income increased by 4.0 per cent to £281.3 million (30 September 2007 - £270.5 million)

Occupancy levels at CSC's UK regional shopping centres unchanged at 98.7 per cent, 97.9 per cent excluding units occupied by tenants in administration and not yet re-let or under offer

Encouragingly, 44 out of 78* units which have gone into administration in 2008 now re-let or under offer.  Bad debt provisions and associated lease incentive write-offs by Capital Shopping Centres ("CSC") in nine month period of £10.2 million (30 June 2008 - £7.0 million, 30 September 2007 - £4.5 million)

Underlying profit before valuation items and tax reduced from £96.7 million to £77.8 million, particularly impacted by one-off internal reorganisation expenses of £8.8 million

Income Statement reflects loss before tax for the nine month period of £1,059 million after including £1,083 million deficit on property revaluations and £26 million deficit on valuation of derivative financial instruments

Overall valuation fall for nine month period of 12.1 per cent (7.4 per cent for six months ended 30 June 2008), reflecting rising valuation yields

ERV growth from CSC shopping centres contributes positive 1.2 per cent to valuation outcome (30 June 2008 - positive 0.7 per cent)

Substantial out-performance since 30 June 2007 of IPD UK monthly property index capital value falls

Six months ended 31 December 2007 - 6.1 per cent (IPD - 11.7 per cent)

Nine months ended 30 September 2008 - 12.1 per cent (IPD - 14.3 per cent)

Debt to assets ratio 50 per cent (30 June 2008 - 46 per cent) with debt mostly asset-specific and non-recourse; £335 million cash and undrawn committed facilities; no significant debt maturities until second half of 2010

Total return for the nine month period ended 30 September 2008** of minus 20.5 per cent with net asset value per share (diluted, adjusted) reduced from 1264p to 975p

* CSC has 1,998 units in total across 14 regional shopping centres

** Dividend income and change in net asset value per share (diluted, adjusted)

Patrick Burgess, Chairman, commented as follows:

"The third quarter of 2008 and the period since the end of September will long be remembered for the extreme turbulence in financial markets, which has had a marked impact on the UK commercial property sector.

However, Liberty International has always focused on assets of the highest quality, with our ownership including 8 of the UK's top 21 regional shopping centres and Central London assets such as Covent Garden; MetroCentre, Gateshead, is the UK's largest covered shopping centre while Lakeside, Thurrock, is at the heart of the UK's largest aggregation of retail floor space.

The benefit of this approach becomes most obvious in more difficult periods, with our assets performing well on a relative basis and occupancy at high levels.

After 15 months of falling market values, our assets are now more defensively stated with limited transactional evidence available to our valuers.

The scarcity value and strong competitive position of our UK regional shopping centres is unlikely to be substantially further challenged for a sustained period, given the sharp reduction we anticipate in the potential supply pipeline of UK shopping centre space.

We look forward to addressing the changing environment as the consequences of recent events unfold."

  FINANCIAL HIGHLIGHTS

			Restated**
		Nine months	Nine months	Year
		ended	ended	ended
		30 September	30 September	31 December
		2008	2007	2007
Net rental income		£281m	£271m	£374m
Profit before tax (underlying*)		£78m	£97m	£129m
(Deficit)/gain on revaluation and sale of
investment and development property		£(1,088)m	£192m	£(279)m
(Loss)/profit before tax		£(1,059)m	£442m	£(125)m
Total properties		£7,878m	£9,018m	£8,666m
Net external debt ***		£4,040m	£3,622m	£3,625m
Net assets (diluted, adjusted)		£3,666m	£5,156m	£4,757m
Basic (loss)/earnings per share		(266.5)p	112.4p	(29.0)p
Adjusted earnings per share		20.1p	26.7p	36.0p
Dividend per share		16.5p	16.5p	34.1p
Net assets per share (diluted, adjusted)****		975p	1370p	1264p
*	Before property trading and valuation items
**	Restated numbers for nine months ended 30 September 2007 now include 100 per cent of the
	long leasehold interest in MetroCentre, Gateshead rather than the 60 per cent previously
	reported
***	The net external debt excludes the £118 million (31 December 2007 - £43 million) compound
	financial instrument relating to 40 per cent third party interest in the MetroCentre (see note 14)
****	Net assets per share (diluted, adjusted) would increase by 94p per share to 1069p at 30
	September 2008 (30 September 2007 - by 109p to 1479p, 31 December 2007 - by 104p to
	1368p) if adjusted for notional acquisition costs amounting to £353 million (30 September 2007 -
	£409 million, 31 December 2007 - £390 million)

  

Background on Liberty International  LIBERTY INTERNATIONAL PLC is one of the UK's largest listed property companies and a constituent of the FTSE-100 Index of the UK's leading listed companies. Liberty International converted into a UK Real Estate Investment Trust (REIT) on 1 January 2007. Liberty International owns 100 per cent of Capital Shopping Centres ("CSC"), the premier UK regional shopping centre business, and of Capital & Counties, a retail and commercial property investment and development company. At 30 September 2008, Liberty International held £7.9 billion of total properties of which UK regional shopping centres comprised 73 per cent and retail property in aggregate 86 per cent. Shareholders' funds (diluted, adjusted) amounted to £3.7 billion. Assets of the group under control or joint control amounted to £10.4 billion at that date. CAPITAL SHOPPING CENTRES has interests in 14 UK regional shopping centres amounting to 12.6 million sq.ft. in aggregate including 8 of the UK's top 21 regional shopping centres with a market value of £5.7 billion at 30 September 2008. CSC's largest centres are Lakeside, Thurrock; MetroCentre, Gateshead; Braehead, Renfrew, Glasgow; The Harlequin, Watford; and Manchester Arndale. In addition, CSC has major development projects in progress in Cardiff and Newcastle. CAPITAL & COUNTIES owned assets of £2.15 billion at 30 September 2008 amounting to 7.4 million sq.ft. in aggregate. Capital & Counties had £615 million invested in the Covent Garden area including the historic Covent Garden Market, and £542 million in Central London, primarily through the Great Capital Partnership, a joint venture with Great Portland Estates plc, and a 50 per cent interest in Empress State, an office investment adjacent to Earls Court. Capital & Counties also owns 50 per cent of EC&O Venues (Earls Court and Olympia Group) which has assets valued at £372 million. In addition, Capital & Counties had interests in the USA amounting to £422 million (2.6 million sq.ft.), predominantly comprising retail assets in California, including the 850,000 sq.ft. Serramonte Shopping Centre, Daly City, San Francisco.

  SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES

UK investment property valuation data

		Market
		value			Initial
		30	Nominal equivalent yield		yield
	September		31	30	30
		2008	December	September	September
		£m	2007	2008	2008
UK regional shopping centres
Lakeside, Thurrock		1,107.2	4.90%	5.65%	5.34%
MetroCentre, Gateshead (including Retail Park)		952.0	5.03%	5.80%	5.47%
Braehead, Glasgow		637.2	5.02%	5.79%	4.75%
The Harlequin, Watford		432.2	4.95%	5.80%	5.26%
Victoria Centre, Nottingham		394.7	5.00%	5.75%	5.40%
Arndale, Manchester		358.0	5.13%	5.86%	5.48%
Chapelfield, Norwich		283.1	5.20%	6.00%	5.70%
Cribbs Causeway, Bristol		257.4	5.06%	5.82%	5.57%
The Potteries, Stoke-on-Trent		250.4	5.50%	6.25%	5.75%
Eldon Square, Newcastle upon Tyne		239.5	5.24%	6.10%	3.92%
The Chimes, Uxbridge		230.2	5.35%	6.15%	6.10%
The Glades, Bromley		220.3	5.40%	6.35%	5.47%
St. David's, Cardiff		85.8	5.26%	6.17%	5.56%
Xscape, Braehead		33.4	6.21%	7.43%	5.00%
Like-for-like capital		5,481.4	5.08%	5.86%	5.34%
Other		231.4
Total UK regional shopping centres		5,712.8
UK non-shopping centre properties
Capco Covent Garden		611.8	4.63%	4.94%	4.36%
Capco London (inc. Great Capital Partnership)		285.2	5.68%	5.72%	5.02%
Capco Opportunities		49.9	6.56%	8.17%	8.19%
Capco Urban		65.8	5.57%	6.35%	6.58%
		1,012.7	5.09%	5.42%	4.89%
Exhibition		350.2
Like-for-like-capital		1,362.9
Exhibition - Acquisitions		21.5
Other		342.7
Total UK non-shopping centre properties		1,727.1

Glossary

ERV (Estimated Rental Value)

The external valuers' estimates of the group's share of the current annual market rent of all lettable space net of any non-recoverable charges, before bad debt provision and adjustments required by International Accounting Standards regarding tenant lease incentives.

Initial Yield

Annualised net rents on investment properties expressed as a percentage of the market value.

Like-for-like capital and income

The category of investment properties which have been owned throughout both periods without significant capital expenditure in either period, so both income and capital can be compared on a like-for-like basis.

Like-for-like capital

The category of investment properties which includes like-for-like income properties, plus those which have been owned throughout the current period but not the whole of the prior period, without significant capital expenditure in the current period, so capital values but not income can be compared on a like-for-like basis.

Net rental income

The group's share of net rents receivable as shown in the Income Statement, having taken due account of non-recoverable charges, bad debt provisions and adjustments to comply with International Accounting Standards regarding tenant lease incentives.

Nominal equivalent yield

Effective annual yield to a purchaser from the assets individually at market value after taking account of notional acquisition costs but assuming rent is receivable annually in arrears rather than reflecting the actual rental cash flows.

Passing Rent

The group's share of contracted annual rents receivable at the balance sheet date. This takes no account of accounting adjustments made in respect of rent free periods or tenant incentives, the reclassification of certain lease payments as finance charges or any irrecoverable costs and expenses, and does not include excess turnover rent, additional rent in respect of unsettled rent reviews or sundry income such as from car parks etc.

Property analysis by use and type

						Net
						rental	Revaluation
	Market value					income	deficit
	31 December	30 September		Passing		30 September
	2007	2008	% of total	rent	ERV	2008	Increase/
	£m	£m	properties	£m	£m	£m	(Decrease)
Regional shopping centres
and other retail
UK regional shopping centres	6,481.1	5,712.8	72.7%	284.8	360.8	207.0	(13.5)%
UK other retail	807.7	719.3	9.1%	31.7	42.9	19.0	(8.5)%
US regional shopping centres	138.6	151.5	1.9%	8.2	10.7	5.8	(3.9)%
US other retail	130.0	146.5	1.9%	8.1	8.9	4.9	(1.2)%
Total regional shopping
centres and other retail	7,557.4	6,730.1	85.6%	332.8	423.3	236.7	(12.6)%
Office
UK business space	583.8	636.1	8.1%	31.5	46.6	19.0	(10.9)%
US business space	78.6	88.7	1.1%	6.9	7.4	3.8	0.7%
Total office	662.4	724.8	9.2%	38.4	54.0	22.8	(9.7)%
Exhibition
UK Exhibition	381.4	371.7	4.8%	-	-	20.8	(9.5)%
Residential
US residential	33.7	35.2	0.4%	1.7	1.7	1.0	(6.0)%
Total investment properties	8,634.9	7,861.8	100.0%	372.9	479.0	281.3	(12.1)%

   

Investment property like-for-like income and revaluation analysis

	Market value			Revaluation deficit				Net rental income
	31	30						30	30
	December	September						September	September
	2007	2008						2007	2008	Increase/
	£m	£m		£m		(Decrease)		£m	£m	(Decrease)
UK regional shopping centres
Like-for-like capital and income	5,916.8	5,184.4		(755.8)		(12.7)%		199.8	193.0	(3.4)%
Other	335.0	297.0		(56.5)		(16.9)%		8.0	11.0
Like-for-like capital	6,251.8	5,481.4		(812.3)		(12.9)%		207.8	204.0	(1.8)%
Redevelopments and developments	229.3	231.4		(76.9)		(25.0)%		2.7	3.0
Total UK regional shopping
centres	6,481.1	5,712.8		(889.2)		(13.5)%		210.5	207.0	(1.7)%
UK non-shopping centre
properties
Like-for-like capital and income	591.2	531.8		(61.4)		(10.4)%		19.7	16.4	(16.8)%
Like-for-like capital only	870.5	831.1		(79.0)		(8.6)%		10.2	37.8
Like-for-like capital	1,461.7	1,362.9		(140.4)		(9.3)%		29.9	54.2
Acquisitions	-	247.0		(13.6)		(5.2)%		-	2.1
Redevelopments and developments	115.8	117.2		(29.8)		(19.9)%		1.4	(0.1)
Disposals	195.5	-		-				14.3	2.6
Total UK non-shopping centre
properties	1,773.0	1,727.1		(183.8)		(9.6)%		45.6	58.8	28.9%
US properties*
Like-for-like capital and income	373.8	414.4		(9.2)		(2.2)%		14.4	15.2	5.6%
Like-for-like capital only	7.0	7.5		(0.3)		(3.4)%		-	0.3
Total US properties	380.8	421.9		(9.5)		(2.2)%		14.4	15.5	7.6%
Total investment properties	8,634.9	7,861.8		(1,082.5)		(12.1)%		270.5	281.3	4.0%

 

*Like-for-like percentage changes are in local currency

Analysis of UK non-shopping centres and US properties by location and type

	Market value			Revaluation deficit			Net rental income
	31	30		30			30	30
	December	September	September			September		September
	2007	2008		2008	Increase/		2007	2008
	£m	£m		£m	(decrease)		£m	£m
UK non-shopping centre properties
Capco Covent Garden	663.6	614.7		(55.0)	(8.2)%		18.5	17.9
Capco Earls Court	381.4	371.7		(38.8)	(9.5)%		2.5	20.8
Capco London (inc. Great Capital Partnership)	353.2	541.5		(49.1)	(8.2)%		10.0	10.9
Capco Opportunities	220.5	73.9		(19.0)	(21.3)%		9.3	6.1
Capco Urban	154.3	125.3		(21.9)	(15.1)%		5.3	3.1
Total UK non-shopping centre properties	1,773.0	1,727.1		(183.8)	(9.6)%		45.6	58.8
US properties
US retail	268.6	298.0		(7.8)	(2.6)%		10.7	10.7
US business space	78.6	88.7		0.6	0.7%		2.9	3.8
US residential	33.6	35.2		(2.3)	(6.0)%		0.8	1.0
Total US properties	380.8	421.9		(9.5)	(2.2)%		14.4	15.5
	2,153.8	2,149.0		(193.3)	(8.6)%		60.0	74.3

  OPERATING AND FINANCIAL REVIEW

Introduction

The third quarter of 2008 and the period since the end of September will long be remembered for extreme turbulence in financial markets and particularly within the banking sector resulting in widespread central government intervention around the globe.

The consequences of these events and the corrective responses will not be fully appreciated for many years to come.

The general impact on the UK property market has been very marked with further declines in property valuations in the third quarter, widespread market evidence of difficult conditions for achieving property disposals or obtaining bank finance and greater reluctance by tenants to make decisions in respect of new lettings.

In the circumstances, footfall and car parking figures from our UK regional shopping centres have shown considerable overall resilience.  Retail sales at our centres have reflected trends in ONS non-food retail sales, which showed three month year-on-year growth of 1.1 per cent for the quarter ended 30 September 2008.

Central London retail, where we have a strong presence through the Covent Garden Estate and our 50 per cent share of the Great Capital Partnership, has weakened but has continued to perform more strongly than other UK regions.

One favourable consequence of the difficult property market conditions has been a sharp reduction in the potential supply pipeline of UK shopping centre space, with projects which have not already started unlikely now to be opening for some years, given the timescales involved in bringing major shopping centre projects to fruition. The prime quality, scarcity value and strong competitive position of our UK regional shopping centre assets is therefore unlikely to be substantially further challenged for a sustained period.

Underlying profit

Underlying profit before tax for the nine month period to 30 September 2008 amounted to £77.8 million (2007 - £96.7 million), resulting in adjusted earnings per share of 20.1p (2007 - 26.7p).

The third quarter's results reflect the seasonally weak summer period at Earl's Court and Olympia and, as advised to shareholders in the half year results, a one-off £2.5 million cost of outsourcing the group's IT infrastructure.

For the nine month period, net rental income increased by £10.8 million (4.0 per cent) to £281.3 million compared to the comparative nine month period ended 30 September 2007. This was offset by a £13.9 million increase in finance costs resulting from net capital expenditure.

The operational overhead of Earls Court was £6.1 million for the nine months ended 30 September 2008 (2007 - £1.8 million, third quarter only from the July 2007 acquisition date). The balance of the increase in administration expenses of £11.3 million principally resulted from the £3.7 million year-to-date IT outsourcing costs and other reorganisation costs of £5.1 million as the group takes active steps to reduce costs and improve efficiency while increasing the strength and depth of the senior management team. 

Schedule 1 provides further analysis of the year to date results by quarter.

 

Capital Shopping Centres ('CSC') 

CSC's prime regional centres aim to provide variety, diversity and volume of shops in a single location containing the most attractive flagship and department stores, offering the best services and providing a safe, stress-free and rewarding experience.

We are continually looking to upgrade and refresh our centres to provide the optimum shopping environment for our retailers and to be the most compelling destinations of choice for our shoppers. Value enhancing projects are underway or at design or feasibility stage at most of our shopping centres. 

We have relatively little exposure to the most difficult sectors of the retail market, particularly big ticket items, bulky goods and the household goods sector.

Our retailer tenant mix is diverse. The top 20 tenants account for 38 per cent of CSC's rent roll and national or international multiple retailers represent over 90 per cent of the rent roll.

CSC's occupancy rate remains unchanged from 31 December 2007 and 30 June 2008 at 98.7 per cent, which includes 0.8 per cent at 30 September 2008 where tenants are subject to administration proceedings and re-letting has not yet been agreed (30 June 2008 - 1.7 per cent).

The table below indicates the impact in 2008 on CSC's net rental income from bad and doubtful debts and lease incentive adjustments:

	Nine months		Nine months
	ended		ended
	30 September		30 September
	2008		2007
	£m		£m
Underlying like-for-like net rental income	200.7		198.7	+1.0%
Surrender premiums received	2.5		5.6
Bad and doubtful debts	(7.2)*		(4.5)
Lease incentive adjustments	(3.0)*		-
Reported like-for-like net rental income	193.0		199.8	-3.4%

* For the six months ended 30 June 2008 bad and doubtful debts amounted to £4.6 million and lease incentive adjustments amounted to £2.4 million with an overall reported 2.5% like-for-like net rental income decline.

During 2008, 31 tenants affecting 78 units (7 tenants and 16 units in the quarter ended 30 September 2008) have gone into administration out of 1,998 units overall; we have made good re-letting progress, with 44 re-let or under offer.

These tenancies also contributed to an increase in non-recoverable outgoings of £3.7 million, including £1.1 million on empty rates, compared with the nine months ended 30 September 2007.

We have continued to make progress with the 2008 rent reviews, primarily at Cribbs Causeway, where agreements are in line with expectations. Rent reviews next year and in 2010 amount to 18 per cent and 27 per cent respectively of CSC rental income.

Over 95 per cent of the September quarter rent has now been collected. This collection rate is in line with previous quarters. 

 

Capital & Counties

Capital & Counties has concentrated on creating large business units with an emphasis on Central London, where it now has investment properties of £1.53 billion, 71 per cent of its total assets of £2.15 billion. Capital & Counties has three primary Central London business units, Covent Garden London, the Great Capital Partnership and Earls Court & Olympia, each of which is performing well given the current economic uncertainty. 

Occupancy across the 750,000 sq.ft. Covent Garden estate at the quarter end was 88 per cent by area and 87 per cent by rental. Like-for-like income from the estate has been restrained by planned vacancy and marketing costs.

Total vacancy at the end of September in Covent Garden was 90,500 sq.ft., of which 31,000 sq.ft. was retail, reflecting our objective of creating an enhanced tenancy mix. 22,600 sq.ft. of the vacant retail accommodation was committed, leaving a working retail vacancy of 4.8 per cent and a total vacancy across the estate of 4.7 per cent.

Since the quarter end, planning consent has been granted for a new flagship store for an iconic international brand fronting the Covent Garden Piazza which kick-starts the overall enhancement process.

The Great Capital Partnership recorded occupancy of 90 per cent at the end of the quarter. Of the vacant areas, 6.2 per cent represents areas under refurbishment. The annual average passing rental of £28.34 per sq.ft. is well below current market levels.

Progress in Capital & Counties' other main business units, Capco Opportunities and Capco International, was satisfactory.

Disposals

We made no further disposals in the third quarter. The contracted forward sale of Broadgate, Leeds for £69 million is expected to take place in January 2009 but the disposal has not yet been recognised in our financial statements.

Additions

The principal addition in the three month period was a 50 per cent interest in the Empress State building in West London acquired for £113.5 million, with £79.5 million of the consideration provided by an asset-specific, non-recourse loan. As required by IAS 27 "Consolidated and Separate Financial Statements", this acquisition has been fully consolidated with the 50 per cent third party share adjusted through minority interest. This 470,000 sq.ft., 30 storey building is strategic to our plans at Earls Court and benefits from an index-linked lease with 11 years remaining to a government tenant, the Metropolitan Police.

Developments

Our committed development programme with £276 million remaining to be spent is of modest size in relation to the overall Liberty International group.

Our two major active development projects, the extensions at St David's, Cardiff and Eldon Square, Newcastle, have continued on time and on budget for opening in Autumn 2009 and Spring 2010 respectively. Lettings at St David's, Cardiff amount to 33 per cent by income, let or in solicitors' hands, and 47 per cent by floor area with a further 13 per cent in advanced negotiation. The Eldon Square extension is over 70 per cent let by income.

Letting conditions are expected to remain difficult until stability and a measure of confidence returns to financial markets and the general UK economy.

Property valuations

The valuation outcome for the nine month period was as follows:

			Nine months	Six months	Six months
			ended	ended	ended
			30 September	30 June	31 December
			2008	2008	2007
	-	UK regional shopping centres	-13.5%	-7.6%	-6.5%
	-	UK non-shopping centre properties	-9.6%	-5.5%	-3.4%
	-	USA	-2.2%	-0.8%	+2.7%
	-	Total	-12.1%	-7.4%	-6.1%

  Changes in valuation yields were as follows:

		Nominal Equivalent Yields
		30 September	30 June	31 December	30 June
		2008	2008	2007	2007
-	UK regional shopping centres	5.86%	5.51%	5.08%	4.77%
-	UK non-shopping centre properties	5.42%	5.25%	5.09%	4.95%

The movement on valuations has been largely due to adverse yield shift. Encouragingly, the estimated rental value ("ERV") of CSC's centres as determined by our external valuers has increased slightly in the nine month period contributing a positive 1.2 per cent to the valuation outcome for the nine month period (30 June 2008 - positive 0.7 per cent). 

Valuations have outperformed comparable IPD capital returns (IPD UK monthly property index) which are as follows:

		Nine months	Six months	Six months
		ended	ended	ended
		30 September	30 June	31 December
		2008	2008	2007
-	All property	-14.3%	-8.6%	-11.7%
-	Retail	-14.4%	-9.0%	-12.4%

The fall, as measured by the IPD monthly index, of over 25 per cent (11.7 per cent in the second half of 2007 and a further 14.3 per cent in 2008), in UK commercial property capital values since the peak of the UK property market at the end of June 2007 represents an exceptionally steep fall for a major developed economy.

By comparison, Liberty International has substantially outperformed with an overall fall in our investment properties of 6.1 per cent in the second half of 2007 and 12.1 per cent in 2008.

Indications from our valuers are that valuations have continued to decline since 30 September 2008 reflecting financial market turbulence, although transactional evidence is very limited. 

After property revaluations and the 16.5p per share dividend payment in the quarter, net asset value per share (adjusted, diluted) has declined from 1095p at 30 June 2008 to 975p per share at 30 September 2008.

Financial position

Reflecting the falls in property valuations, the debt to assets ratio has increased to 50 per cent at 30 September 2008 (30 June 2008 - 46 per cent).

The group's debt is principally asset-specific and non-recourse as illustrated in the table below: 

	Consolidated
	balance		Secured
	sheet		non-recourse		Unsecured
	£m		£m		£m
Investment properties	7,846		6,660		1,186
Other fixed assets	126		-		126
Trading properties	32		-		32
	8,004		6,660		1,344
Non-recourse debt	3,846		4,066		(220)**
Corporate debt	294		-		294
Cash	(100)		-		(100)
Net debt/(cash)*	4,040		4,066		(26)
Debt to assets ratio	50%		61%		(2)%

* excludes £118 million MetroCentre compound financial instrument (see note 14)

** internally held commercial mortgage backed securities ('CMBS')

Cash and unutilised committed bank facilities amounted to £335 million, providing the resources to complete our committed development programme.

Further details of the group's debt structure including debt repayment profile and major covenants are set out in Schedule 2.

Prospects

Liberty International has always focused on assets of the highest quality, with our ownership including 8 of the UK's top 21 regional shopping and Central London assets such as Covent Garden. The benefit of this approach becomes most obvious in more difficult periods when secondary assets tend to under-perform markedly.

With continued high occupancy levels and defensive income streams, the directors consider the business of Liberty International to continue to be sound notwithstanding the relatively unfavourable UK economic and property background.

However, reflecting the adverse conditions in both property and debt markets, the group has been taking active steps to minimise further capital expenditure commitments and to reduce administrative expenses. In the latter case, some additional costs have been incurred in 2008 with the benefits to emerge in 2009 and beyond.

As our business is 73 per cent UK regional shopping centres and 86 per cent retail property overall, the continued health of our retail tenant base is of overriding importance to our long term success. We expect to be pro-active and deal positively with tenant issues which will undoubtedly continue to emerge from difficult trading conditions.

Our Board, management team and staff look forward to addressing the new challenges. 

5 November 2008

  SCHEDULE 1

UNDERLYING PROFIT STATEMENT (unaudited)

For the nine months ended 30 September 2008

				Nine months	Restated nine
	Quarter ended	Quarter ended	Quarter ended	ended	months ended
	30 September	30 June	31 March	30 September	30 September
	2008	2008	2008	2008	2007
	£m	£m	£m	£m	£m
UK shopping centres	66.9	65.6	74.5	207.0	210.5
Other commercial properties	20.2	24.3	29.8	74.3	60.0
Net rental income	87.1	89.9	104.3	281.3	270.5
Other (expense)/income	(0.2)	(0.1)	0.6	0.3	0.5
	86.9	89.8	104.9	281.6	271.0
Administration expenses	(16.8)	(13.7)	(14.5)	(45.0)	(29.4)
Operating profit (underlying*)	70.1	76.1	90.4	236.6	241.6
Interest payable	(55.3)	(57.0)	(58.4)	(170.7)	(149.6)
Interest receivable and other finance income	5.9	5.0	1.0	11.9	4.7
Net finance costs (underlying*)	(49.4)	(52.0)	(57.4)	(158.8)	(144.9)
Profit before tax (underlying*)	20.7	24.1	33.0	77.8	96.7
Property trading profits	(0.7)	-	0.9	0.2	0.7
Write down of trading property	(2.5)	-	-	(2.5)	-
Tax on adjusted profit	(0.6)	(2.0)	(0.5)	(3.1)	(0.4)
Minority interests	5.5	(2.3)	(3.0)	0.2	(0.4)
Earnings used for calculation
of adjusted earnings per share	22.4	19.8	30.4	72.6	96.6
Adjusted earnings per share	6.2p	5.5p	8.4p	20.1p	26.7p

* before property trading and valuation items

  UNDERLYING PROFIT STATEMENT (unaudited)

For the nine months ended 30 September 2007

	Restated	Restated		Restated nine
	Quarter ended	Quarter ended	Quarter ended	months ended
	30 September	30 June	31 March	30 September
	2007	2007	2007	2007
	£m	£m	£m	£m
UK shopping centres	69.4	69.3	71.8	210.5
Other commercial properties	22.3	18.2	19.5	60.0
Net rental income	91.7	87.5	91.3	270.5
Other income/(expense)	0.2	(0.1)	0.4	0.5
	91.9	87.4	91.7	271.0
Administration expenses	(12.4)	(9.6)	(7.4)	(29.4)
Operating profit (underlying*)	79.5	77.8	84.3	241.6
Interest payable	(53.1)	(46.8)	(49.7)	(149.6)
Interest receivable	1.3	2.1	1.3	4.7
Net finance costs (underlying*)	(51.8)	(44.7)	(48.4)	(144.9)
Profit before tax (underlying*)	27.7	33.1	35.9	96.7
Property trading profits	-	0.7	-	0.7
Tax on adjusted profit	(0.5)	0.6	(0.5)	(0.4)
Minority interests	1.2	(1.6)	-	(0.4)
Earnings used for calculation	28.4	32.8	35.4	96.6
of adjusted earnings per share
Adjusted earnings per share	7.9p	9.0p	9.8p	26.7p

* before property trading and valuation items

  SCHEDULE 2

Maturity profile of non-recourse secured debt

			Total
		Principal	externally
	Amortisation	at maturity	held debt
Maturity profile	£m	£m	£m
2008	11	-	11
2009	46	8	54
2010	51	10	61
2011	58	570	628
2012	54	236	290
2013	53	514	567
2014	45	26	71
2015	28	960	988
2016	7	789	796
2017	-	118	118
2027	-	231	231
	353	3,462	3,815
Internally owned CMBS			220
Gross secured debt* - 61% of secured assets of £6,660 million			4,035

* represents actual debt repayments and excludes the unamortised transaction costs that are included in financial statements.

Maturity profile of unsecured debt with recourse to Liberty International PLC

			Drawn
			revolving
	Unsecured	Convertible	credit	Total
	bonds	bonds	facilities	debt
Maturity profile	£m	£m	£m	£m
2009	31	-	-	31
2010	-	111	70	181
2011	-	-	55	55
2013	27	-	-	27
	58	111	125	294
Internally owned CMBS				(220)
Cash and cash equivalents				(100)
Net cash - (2%) of unsecured assets of £1,344 million				(26)

*includes investment and development properties, trading properties and other investments.

Unsecured revolving credit facilities

				Undrawn at
		Total		30 September
		facility		2008
Maturity profile		£m		£m
2010		210		140
2011		100		45
2012		50		50
		360		235

Facilities mature in December in the year of maturity, with the exception of a £50 million facility that matures in June 2011.

  Principal Covenants

CMBS debt

				Loan to		Interest
			Loan to	value	Interest	cover *
		Drawn	value	30 September	cover	30 September
Facility	Maturity	£m	covenant	2008	covenant	2008
Lakeside	2011	639	90%	58%	120%	135%
MetroCentre	2015	574	90%	64%	120%	143%
Braehead	2015	389	-	N/A	120%	143%
Watford	2015	291	-	N/A	120%	129%
		1,893

* calculated in accordance with the loan agreements

Non-recourse bank loans

In respect of the balance of the group's non-recourse secured debt of approximately £2.1 billion, group companies have entered into a number of non-recourse bank loans secured on specific assets of the group, which have financial covenants.

The two main financial covenants are Loan to Value (LTV) and Interest Cover (IC). The actual requirements are specific to each loan agreement. Where they do apply, the LTV covenants range from 70% to 90%. All loan agreements have IC covenants ranging from 100% to 120%. The group is in compliance with all the financial covenants at 30 September 2008.

In the case of CMBS debt and non-recourse bank loans, covenant breaches can be rectified by a number of remedies such as additional security, temporary cash deposit or partial repayment before an event of default occurs.

Unsecured revolving credit facilities

The principal covenant is an IC covenant of 125% of group interest cover, the same as the minimum required for REIT status.

The group is in compliance with this covenant at 30 September 2008.

  CONSOLIDATED INCOME STATEMENT (unaudited)

For the nine months ended 30 September 2008

		Nine months	Restated nine	Year
		ended	months ended	ended
		30 September	30 September	31 December
		2008	2007	2007
	Notes	£m	£m	£m
Revenue	2	449.1	426.3	574.6
Rental income		440.7	396.7	546.7
Rental expenses		(159.4)	(126.2)	(172.4)
Net rental income	2	281.3	270.5	374.3
Other income		0.5	1.2	2.0
(Deficit)/gain on revaluation and sale of investment and
development property	3	(1,087.8)	192.1	(279.1)
Profit on sale of subsidiary		0.8	-	-
Write down of trading property		(2.5)	-	-
		(807.7)	463.8	97.2
Administration expenses
Ongoing expenses		(45.0)	(29.4)	(45.2)
Impairment of goodwill		(21.6)	-	-
Operating (loss)/profit		(874.3)	434.4	52.0
Interest payable	4	(170.7)	(149.6)	(209.3)
Interest receivable		5.4	4.7	8.8
Other finance income/(costs)	4	6.5	(1.9)	(3.3)
Change in fair value of derivative financial instruments		(26.3)	154.1	27.0
Net finance (costs)/income		(185.1)	7.3	(176.8)
(Loss)/profit before tax		(1,059.4)	441.7	(124.8)
Current tax		(2.4)	(1.3)	(2.7)
Deferred tax		31.2	(33.6)	(23.8)
REIT entry charge		(2.7)	(3.0)	(3.9)
Taxation		26.1	(37.9)	(30.4)
(Loss)/profit for the period		(1,033.3)	403.8	(155.2)
Loss attributable to minority interests	5	70.0	2.9	50.2
(Loss)/profit for the period attributable to equity shareholders		(963.3)	406.7	(105.0)
Basic (loss)/earnings per share	13	(266.5)p	112.4p	(29.0)p
Diluted (loss)/earnings per share	13	(255.6)p	109.1p	(26.6)p

  CONSOLIDATED BALANCE SHEET (unaudited)

As at 30 September 2008

		As at	Restated as at	Restated as at
		30 September	31 December	30 September
		2008	2007	2007
	Notes	£m	£m	£m
Non-current assets
Goodwill		5.3	26.6	5.7
Investment and development property	7	7,845.7	8,622.8	8,971.9
Plant and equipment		1.2	1.2	2.5
Investments		125.2	51.0	34.9
Trade and other receivables		88.4	78.5	69.2
		8,065.8	8,780.1	9,084.2
Current assets
Trading property	8	31.9	43.7	45.8
Derivative financial instruments	11	45.7	25.4	82.0
Trade and other receivables		120.6	134.9	193.2
Cash and cash equivalents		99.9	188.4	150.7
		298.1	392.4	471.7
Total assets		8,363.9	9,172.5	9,555.9
Current liabilities
Trade and other payables		(354.2)	(341.7)	(263.6)
Tax liabilities		(5.3)	(5.7)	(3.1)
Borrowings excluding finance leases	9	(44.7)	(146.2)	(127.5)
Borrowings - finance leases	9	(3.1)	(6.1)	(6.1)
Derivative financial instruments	11	(139.9)	(97.8)	(24.9)
		(547.2)	(597.5)	(425.2)
Non-current liabilities
Borrowings excluding finance leases and partnership debt	9	(4,045.0)	(3,609.9)	(3,595.7)
Borrowings - finance leases and partnership debt	9	(165.8)	(94.1)	(86.0)
Deferred tax provision		(42.1)	(73.7)	(83.1)
Other provisions		(1.4)	(1.4)	(0.7)
Other payables		(65.7)	(87.0)	(134.1)
		(4,320.0)	(3,866.1)	(3,899.6)
Total liabilities		(4,867.2)	(4,463.6)	(4,324.8)
Net assets		3,496.7	4,708.9	5,231.1
Equity
Amounts attributable to equity shareholders	14	3,412.2	4,507.0	5,018.3
Minority interests	14	84.5	201.9	212.8
Total equity		3,496.7	4,708.9	5,231.1
Diluted, adjusted net assets per share	13	975p	1264p	1370p
Basic net assets per share	13	944p	1246p	1388p

  CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited)

For the nine months ended 30 September 2008

		Nine  months	Restated nine	Year
		ended	months ended	ended
		30 September	30 September	31 December
		2008	2007	2007
	Note	£m	£m	£m
(Loss)/profit for the period as per the consolidated income
statement before minority interest		(1,033.3)	403.8	(155.2)
Other recognised income and expense in the period:
Actuarial losses on defined benefit pension schemes		-	-	(2.0)
Tax on items taken directly to equity		2.2	-	0.5
(Losses)/gains on revaluation of investments, net exchange
translation differences and other movements		(9.1)	5.4	6.4
Net (loss) recognised in equity due to minority interests (on the
above)		-	-	(0.7)
Net (losses)/gains recognised in equity		(6.9)	5.4	4.2
Total recognised (expense) and income for the period		(1,040.2)	409.2	(151.0)
Total recognised expense attributable to minority interests	14(b)	70.0	2.9	50.9
Total recognised (expense) and income for the period
attributable to equity shareholders	14(a)	(970.2)	412.1	(100.1)

A summary of changes in group equity is shown in note 14.

  CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

For the nine months ended 30 September 2008

		Nine  months	Restated nine	Restated
		ended	months ended	year ended
		30 September	30 September	31 December
		2008	2007	2007
	Note	£m	£m	£m
Cash generated from operations	10	271.2	85.6	266.8
Interest paid		(190.9)	(160.2)	(222.0)
Interest received		5.4	4.7	9.8
Tax paid		(3.9)	(0.4)	2.7
REIT entry charge		(41.0)	(7.8)	(15.6)
Cash flows from operating activities		40.8	(78.1)	41.7
Cash flows from investing activities
Purchase and development of property		(204.1)	(453.2)	(575.5)
Sale of property		100.9	409.3	416.2
Purchase of subsidiary companies		(31.6)	(54.6)	(80.0)
Sale of subsidiary companies		5.0	-	-
Purchase of non-current asset investments		(89.9)	(29.5)	(39.2)
Cash flows from investing activities		(219.7)	(128.0)	(278.5)
Cash flows from financing activities
Partnership loan capital introduced		3.5	-	-
Issue and repurchase of shares		(1.6)	(4.1)	(3.1)
Borrowings drawn		416.6	384.9	425.6
Borrowings repaid		(216.7)	(236.1)	(197.0)
Equity dividends paid		(112.1)	(109.7)	(122.1)
Cash flows from financing activities		89.7	35.0	103.4
Effect of exchange rate changes on cash and cash
equivalents		0.7	-	-
Net decrease in cash and cash equivalents		(88.5)	(171.1)	(133.4)
Cash and cash equivalents at beginning of period/year		188.4	321.8	321.8
Cash and cash equivalents at end of period/year		99.9	150.7	188.4

  FINANCIAL INFORMATION (unaudited)

1 Basis of preparation

The financial information for the nine months ended 30 September 2008 is unaudited and does not constitute statutory accounts within the meaning of s240 of the Companies Act 1985 and has been prepared on a basis consistent with previous quarters. 

The financial information was approved by the Board on 5 November 2008

2 Segmental analysis

	Nine months ended 30 September 2008
	UK	Other
	shopping	commercial		Other	Group
	centres	properties	Exhibition	activities	total
	£m	£m	£m	£m	£m
Revenue	309.6	84.3	45.8	9.4	449.1
Rental income including service charge and other income	303.8	81.8	45.8	9.3	440.7
Rent payable and other outgoings	(96.8)	(29.6)	(25.0)	(8.0)	(159.4)
Net rental income	207.0	52.2	20.8	1.3	281.3
Property trading profits	0.3	(0.1)	-	-	0.2
Other income	-	0.2	-	0.1	0.3
Deficit on revaluation and sale of investment and
development property	(889.9)	(159.1)	(38.8)	-	(1,087.8)
Profit on sale of subsidiary	-	0.8	-	-	0.8
Write down of trading property	-	(2.5)	-	-	(2.5)
Segment result before overheads and finance costs	(682.6)	(108.5)	(18.0)	1.4	(807.7)

Administration costs in respect of the Exhibition business amount to £6.1 million for the nine months ended 30 September 2008 (£1.8 million to 30 September 2007). 

	Restated nine months ended 30 September 2007
	UK		Other
	shopping		commercial		Other	Group
	centres		properties	Exhibition	activities	total
	£m		£m	£m	£m	£m
Revenue	315.2	103.4		7.4	0.3	426.3
Rental income including service charge and other income	308.2	81.1		7.4	-	396.7
Rent payable and other outgoings	(97.7)	(23.6)		(4.9)	-	(126.2)
Net rental income	210.5	57.5		2.5	-	270.5
Property trading profits	-	0.7		-	-	0.7
Other income	-	0.2		-	0.3	0.5
Gain/(deficit) on revaluation and sale of investment and
development property	117.1	83.1		(8.1)	-	192.1
Segment result before overheads and finance costs	327.6	141.5		(5.6)	0.3	463.8

	Year ended 31 December 2007
	UK	Other
	shopping	commercial		Other		Group
	centres	properties	Exhibition	activities		total
	£m	£m	£m	£m		£m
Revenue	424.8	126.3	24.7		(1.2)	574.6
Rental income including service charge and other income	411.7	110.3	24.7		-	546.7
Rent payable and other outgoings	(122.9)	(34.9)	(14.6)		-	(172.4)
Net rental income	288.8	75.4	10.1		-	374.3
Property trading profits	1.5	1.4	-		-	2.9
Other income	-	0.3	-		(1.2)	(0.9)
(Deficit)/gain on revaluation and sale of investment and
development property	(284.5)	0.6	4.8		-	(279.1)
Segment result before overheads and finance costs	5.8	77.7	14.9		(1.2)	97.2

3 (Deficit)/gain on revaluation and sale of investment and development property

		Restated
	Nine  months	Nine months	Year
	ended	ended	ended
	30 September	30 September	31 December
	2008	2007	2007
	£m	£m	£m
(Deficit)/gain on revaluation of investment and development property	(1,082.5)	148.8	(316.5)
(Deficit)/gain on sale of investment property	(5.3)	43.3	37.4
(Deficit)/gain on revaluation and sale of investment and development property	(1,087.8)	192.1	(279.1)

 

4 Finance costs

			Restated
	Nine  months		Nine months		Year
	ended		ended		ended
	30 September		30 September		31 December
	2008		2007		2007
	£m		£m		£m
Gross interest payable - recurring	183.7		159.2		224.4
Interest capitalised on developments	(13.0)		(9.6)		(15.1)
Total interest payable	170.7		149.6		209.3
Interest payable to partner	(4.6)		-		(3.0)
External interest payable	166.1		149.6		206.3
Costs of termination of financial instruments	6.6		0.8		2.0
Profit on repurchase of CMBS notes	(13.1)		-		-
Issue costs written off on redemption of loans	-		1.1		1.3
Other finance (income)/costs	(6.5)		1.9		3.3

5 Minority interests

Income Statement	Nine months ended 30 September 2008
	Earls Court		Empress
	& Olympia	MetroCentre	State	Other	Total
	£m	£m	£m	£m	£m
Net rental income	10.4	15.6	0.7	0.4	27.1
Administration costs	(3.1)	-	-	(0.2)	(3.3)
Net finance costs	(8.0)	(14.5)	(0.6)	(0.3)	(23.4)
Valuation and other non-operating items	(16.3)	(55.8)	(2.4)	-	(74.5)
Tax on adjusted earnings	(0.6)	-	-	-	(0.6)
Tax on valuation	4.7	-	-	-	4.7
Net loss for the period	(12.9)	(54.7)	(2.3)	(0.1)	(70.0)

6 Dividends 

An interim dividend of 16.5p per share was paid in the third quarter of 2008.

  7 Investment and development property

	UK	Other
	shopping	commercial
	centres	properties	Total
	£m	£m	£m
At 31 December 2007	6,466.0	2,156.8	8,622.8
Additions	121.9	334.8	456.7
Transfers from trading properties	4.9	-	4.9
Disposals	(2.2)	(198.5)	(200.7)
Foreign exchange fluctuations	-	44.5	44.5
Deficit on valuation	(889.2)	(193.3)	(1,082.5)
At 30 September 2008	5,701.4	2,144.3	7,845.7

The group's interests in investment and development properties were valued as at 30 September 2008, 31 December 2007 and 30 September 2007 by independent 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.

	As at	As at	As at
	30 September	31 December	30 September
	2008	2007	2007
	£m	£m	£m
Balance sheet carrying value of investment and development property	7,845.7	8,622.8	8,971.9
Adjustment in respect of tenant incentives	66.7	69.3	74.4
Adjustment in respect of head leases	(50.6)	(57.2)	(49.1)
Market value of investment and development property	7,861.8	8,634.9	8,997.2

8 Trading property

The estimated replacement cost of trading properties based on market value amounted to £32.3 million (31 December 2007 - £46.1 million, 30 September 2007 - £45.8 million). A provision of £2.5 million has been made for a reduction in the estimated net realisable value for one of the properties. 

  9 Borrowings, including finance leases

			Restated
	As at	As at	As at
	30 September	31 December	30 September
	2008	2007	2007
	£m	£m	£m
Amounts falling due within one year:
Secured borrowings - non-recourse
Bank loans and overdrafts	11.2	118.8	105.4
Commercial mortgage backed securities ("CMBS") notes	33.5	27.4	22.1
Borrowings excluding finance leases	44.7	146.2	127.5
Finance lease obligations	3.1	6.1	6.1
Amounts falling due within one year	47.8	152.3	133.6
Amounts falling due after more than one year:
Secured borrowings - non recourse
CMBS notes 2011	585.9	633.7	636.2
CMBS notes 2015	1,044.4	1,131.4	1,138.3
Bank loans 2012	226.1	207.9	239.2
Bank loans 2013	722.0	406.1	399.6
Bank loans 2014	24.4	27.4	27.4
Bank loans 2016	804.4	652.2	709.8
Bank loans 2017	117.2	117.2	-
	3,524.4	3,175.9	3,150.5
Other secured borrowings
Debentures 2027	226.2	226.1	226.0
	3,750.6	3,402.0	3,376.5
Unsecured borrowings
CSC bonds 2009	31.5	31.4	31.3
CSC bonds 2013	26.6	26.6	26.6
Other bank loans	125.0	38.6	50.1
	3,933.7	3,498.6	3,484.5
£111.3 million 3.95% convertible bonds due 2010	111.3	111.3	111.2
Borrowing excluding finance leases and partnership debt	4,045.0	3,609.9	3,595.7
MetroCentre compound financial instrument	118.3	43.0	43.0
Finance lease obligations	47.5	51.1	43.0
Borrowings - finance leases and partnership debt	165.8	94.1	86.0
Amounts falling due after more than one year	4,210.8	3,704.0	3,681.7
Total borrowings, including finance leases	4,258.6	3,856.3	3,815.3
Cash and cash equivalents	(99.9)	(188.4)	(150.7)
Net borrowings	4,158.7	3,667.9	3,664.6
Deduct:
- MetroCentre compound financial instrument (see note 14)	(118.3)	(43.0)	(43.0)
Net external debt	4,040.4	3,624.9	3,621.6

  10 Cash generated from operations

			Restated
		Nine months	Nine months	Year
		ended	ended	ended
		30 September	30 September	31 December
		2008	2007	2007
	Notes	£m	£m	£m
(Loss)/profit before tax		(1,059.4)	441.7	(124.8)
Adjustments for:
Deficit/(gain) on revaluation of investment and
development property	3	1,082.5	(148.8)	316.5
Deficit/(gain) on sale of investment property	3	5.3	(43.3)	(37.4)
Profit on sale of subsidiary		(0.8)	-	-
Write down of trading property		2.5	-	-
Depreciation		0.2	0.2	0.3
Amortisation of lease incentives and other direct costs		14.0	3.9	(1.6)
Impairment of goodwill		21.6	-	-
Interest payable	4	170.7	149.6	209.3
Interest receivable		(5.4)	(4.7)	(8.8)
Other finance (income)/costs	4	(6.5)	1.9	3.3
Change in fair value of derivative financial instruments		26.3	(154.1)	(27.0)
Changes in working capital:
Change in trading properties		6.9	(0.7)	8.5
Change in trade and other receivables		(4.9)	(74.2)	(6.4)
Change in trade and other payables		18.2	(85.9)	(65.1)
Cash generated from operations		271.2	85.6	266.8

  11 Fair values of financial instruments

	As at 30 September 2008			As at 31 December 2007			As at 30 September 2007
	Balance			Balance			Balance
	sheet value	Fair value		sheet value	Fair value		sheet value	Fair value
	£m	£m		£m	£m		£m	£m
Debentures and other fixed rate loans
Sterling
C&C 5.562% debenture 2027	226.2	299.0		226.1	342.0		226.0	326.5
CSC 6.875% unsecured bonds 2013	26.6	25.0		26.6	26.2		26.6	26.1
CSC 5.75% unsecured bonds 2009	31.4	31.4		31.4	31.5		31.3	31.5
US dollars
Fixed rate loans	179.2	178.4		161.0	160.6		154.2	152.1
	463.4	533.8		445.1	560.3		438.1	536.2
Convertible bonds - fixed rate	111.3	126.2		111.3	152.7		111.2	159.7

The adjustment in respect of the above, after credit for tax relief, to the diluted net assets per share (which does not require adjustment for the fair value of convertible bonds) would amount to 13p per share (31 December 2007 - 21p, 30 September 2007 - 18p).

All other financial assets and liabilities included in the balance sheet are stated at fair values. 

Derivative financial instruments

	As at	As at	As at
	30 September	31 December	30 September
	2008	2007	2007
	£m	£m	£m
Current assets	45.7	25.4	82.0
Current liabilities	(139.9)	(97.8)	(24.9)
	(94.2)	(72.4)	57.1

Interest rate swaps

	Notional principal			Average contracted rate
	30 September	31 December	30 September	30 September	31 December	30 September
	2008	2007	2007	2008	2007	2007
	£m	£m	£m	%	%	%
Effective on or after:
1 year	3,607	3,319	2,935	5.28	5.27	5.26
5 years	3,192	3,220	2,893	5.16	5.16	5.11
10 years	2,425	2,543	2,425	4.69	4.72	4.69
15 years	2,100	2,100	2,100	4.58	4.58	4.58
20 years	2,100	2,100	2,100	4.58	4.58	4.58
25 years	1,625	1,625	1,700	4.40	4.40	4.42

12 Capital commitments

At 30 September 2008, the group was contractually committed to £276.0 million of future expenditure for the purchase, construction, development and enhancement of investment property and £47.1 million in respect of overseas investments (31 December 2007 - £317.0 million, 30 September 2007 - £309.0 million).

  13 Per share details

 (a) (Loss)/earnings per share

	Nine months	Nine months	Year
	ended	ended	ended
	30 September	30 September	31 December
	2008	2007	2007
	millions	millions	millions
Weighted average ordinary shares in issue for calculation of
basic earnings per share	361.4	361.7	361.7
Weighted average ordinary shares to be issued on conversion of bonds and
under employee incentive arrangements	14.6	14.8	14.7
Weighted average ordinary shares in issue for calculation of
diluted earnings per share	376.0	376.5	376.4

		Restated
	Nine months	Nine months	Year
	ended	ended	ended
	30 September	30 September	31 December
	2008	2007	2007
	£m	£m	£m
(Loss)/earnings used for calculation of basic earnings per share	(963.3)	406.7	(105.0)
Reduction in interest charge from conversion of bonds, net of tax	2.3	4.2	5.0
(Loss)/earnings used for calculation of diluted earnings per share	(961.0)	410.9	(100.0)
Basic (loss)/earnings per share (pence)	(266.5)p	112.4p	(29.0)p
Diluted (loss)/earnings per share (pence)	(255.6)p	109.1p	(26.6)p
(Loss)/earnings used for calculation of basic earnings per share	(963.3)	406.7	(105.0)
Add back/(less) deficit/(gain) on revaluation and sale of investment and
development property	1,087.8	(192.1)	279.1
Less profit on sale of subsidiary	(0.8)	-	-
Add back impairment of goodwill	21.6	-	-
Add back other finance costs	-	1.9	3.3
Add back/(less) change in fair value of derivative financial instruments	26.3	(154.1)	(27.0)
(Less)/add back deferred tax in respect of investment and development
property	(11.6)	1.9	4.2
(Less)/add back deferred tax in respect of derivative financial instruments	(10.4)	32.0	15.6
(Less)/add back deferred tax on capital allowances	(9.9)	0.6	4.5
Add back REIT entry charge	2.7	3.0	3.9
Less amounts above due from minority interests	(69.8)	(3.3)	(48.3)
Earnings used for calculation of adjusted earnings per share	72.6	96.6	130.3
Adjusted earnings per share (pence)	20.1p	26.7p	36.0p
Earnings used for calculation of adjusted earnings per share	72.6	96.6	130.3
Reduction in interest charge from conversion of bonds, net of tax	2.3	4.2	5.0
Earnings used for calculation of adjusted, diluted earnings per share	74.9	100.8	135.3
Adjusted, diluted earnings per share (pence)	19.9p	26.8p	35.9p

(b) Net assets

			Restated
	As at	As at	As at
	30 September	31 December	30 September
	2008	2007	2007
	£m	£m	£m
Basic net asset value used for calculation of basic net assets per share	3,412.2	4,507.0	5,018.3
Fair value of derivative financial instruments (net of tax)	69.0	57.7	(57.3)
Deferred tax on revaluation surpluses	23.1	35.8	33.1
Deferred tax on capital allowances	42.9	49.9	46.9
Unrecognised surplus on trading properties (net of tax)	0.6	1.7	-
Minority interests on the above	(5.0)	(15.9)	(6.7)
Adjusted net asset value	3,542.8	4,636.2	5,034.3
Effect of dilution:
On conversion of bonds	111.3	111.3	111.3
On exercise of options	11.4	9.7	10.8
Diluted, adjusted net asset value used for calculation of diluted,
adjusted net assets per share	3,665.5	4,757.2	5,156.4
Basic net assets per share	944p	1246p	1388p
Diluted, adjusted net assets per share	975p	1264p	1370p

(c) Shares in issue

	As at	As at	As at
	30 September	31 December	30 September
	2008	2007	2007
	millions	millions	millions
Shares in issue, excluding those held by ESOP trust and treated as
cancelled	361.3	361.5	361.5
Effect of dilution:
On conversion of bonds	13.9	13.9	13.9
On exercise of options	0.7	1.0	1.1
Diluted shares in issue	375.9	376.4	376.5

(d) Convertible debt

3.95 per cent convertible bonds due 2010 

At 30 September 2008, 31 December 2007 and 30 September 2007 3.95 per cent convertible bonds with a nominal value of £111.3 million were in issue.

The holders of the 3.95 per cent bonds have the option to convert their bonds into ordinary shares at any time on or up to 23 September 2010 at 800p per ordinary share. The 3.95 per cent bonds may be redeemed at par at the company's option after 14 October 2008 subject to the Liberty International ordinary share price having traded at 120 per cent of the conversion price of 800p per share for a specific period.

  14 Summary of changes in equity

								Restated
				Nine months		Year		Nine months
				ended		ended		ended
				30 September		31 December		30 September
				2008		2007		2007
		Note		£m		£m		£m
(a) Equity shareholders
Opening equity shareholders' funds				4,507.0		4,732.4		4,732.4
Issue of shares				2.0		4.7		3.7
Cancellation of shares				(3.6)		(7.9)		(7.8)
				4,505.4		4,729.2		4,728.3
Total recognised (expense) and income for the
period attributable to equity shareholders				(970.2)		(100.1)		412.1
				3,535.2		4,629.1		5,140.4
Dividends		6		(123.0)		(122.1)		(122.1)
Closing shareholders' equity				3,412.2		4,507.0		5,018.3
(b) Minority interest
Balance Sheet	Nine months ended 30 September 2008
	Earls Court				Empress**
	& Olympia		MetroCentre*		State		Other		Total
	£m		£m		£m		£m		£m
At 31 December 2007	47.9		151.1		-		2.9		201.9
Net loss for the period	(12.9)		(54.7)		(2.3)		(0.1)		(70.0)
Transfer on disposal	-		-		-		(2.8)		(2.8)
Capital introduced	-		3.5		27.2		-		30.7
MetroCentre compound financial instrument *	-		(75.3)		-		-		(75.3)
At 30 September 2008	35.0		24.6		24.9		-		84.5

* The proceeds from the investment by a third party of a 40 per cent interest in the MetroCentre Partnership in 2007 are required under IFRS to be allocated between debt and minority interest. The amount included in debt at 30 September 2008 is £118.3 million (31 December 2007 - £43.0 million, 30 September 2007 - £43.0 million). The balance of the proceeds are included in minority interest. The movement in the amount allocated as debt from 31 December 2007 is due to a refined valuation methodology.

** As required by IAS 27 "Consolidated and Separate Financial Statements", this acquisition has been fully consolidated with the 50 per cent third party share adjusted through minority interest.

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ENDQRTQZLFBVFBEFBV

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