Interim Results

FOR IMMEDIATE RELEASE 27th September 2006 LONDON & ASSOCIATED PROPERTIES PLC: INTERIM RESULTS FOR THE SIX MONTHS TO 30TH JUNE 2006 HIGHLIGHTS London & Associated Properties PLC is fully listed and is focussed on the acquisition of, and long-term management of, well-located shopping centres and other retail investments. Today it owns and manages £265m of retail investments. * Sale of Church Square, St Helens for £75m since period end - showing net return on capital of 256% * £50.2m acquisition of Central London mainly retail portfolio - since the period end * Net assets advance to £89.3m (net assets would have been £103.4m under UK GAAP) * Gross property assets now total £265m * Pre-tax profits at £1.27m down from £1.85m as a result of: * + Impact of reduced rents at Sheffield following development of new River Island flagship store + Sale of Brierley Hill centre + Acquisition of further development site at Sheffield - non-income producing * Estimated Rental Value now £17.9m against current rent roll of £15.6m * Interim dividend of 0.6p a share declared * Strong tenant demand for existing portfolio - £439,000 of annualised incremental income generated over period "The first nine months of the year have been an exceptionally busy period for the company. We have realised a substantial profit on our interest in Church Square, St Helens and invested meaningfully for the first time in Central London. In the coming months we will be able to report further on progress within this recently acquired portfolio, and I look forward to updating shareholders accordingly. The current year has been both exciting and productive and I feel confident about the remainder of 2006," Michael Heller, Chairman. Contact: John Heller, Chief Executive, LAP Tel: 020 7415 5000 Robert Corry, Finance Director, LAP Tel: 020 7415 5000 Baron Phillips, Baron Phillips Associates. Tel: 020 7920 3161 27 SEPTEMBER 2006 LAP INTERIM RESULTS FOR SIX MONTHS TO 30TH JUNE 2006 CHAIRMAN'S STATEMENT The past eight months have been some of the most exciting and positive in the company's history. During the period we completed our largest acquisition to date, and our joint venture with Bank of Scotland, Analytical Properties, has sold Church Square shopping centre in St Helens for a substantial profit. We have also been active on our existing shopping centre portfolio where we continue to see strong demand for our units, and our £25 million development programme is making excellent progress. For the six months to 30th June 2006, profits before tax were £1.27 million compared to £1.85 million for the same period a year ago. This reduction reflects a number of factors. These include the vacating of a number of units at Sheffield with a combined rent of over £532,250 per annum to enable construction of a new flagship store for River Island, as well as the sale of a shopping centre at Brierley Hill and the acquisition and funding costs of The Stonehouse at Sheffield, which is currently non-income producing. Indeed, we contracted in our directly owned property portfolio over the period a net £439,000 of annualised incremental income. This figure includes the letting to River Island at Sheffield at an annual rent of £667,000 per annum. Today our Estimated Rental Value is now £17.9 million per annum compared to an annualised contracted rent roll of £15.6 million. Net assets as at 30th June 2006 increased to £89.3 million from £88.3 million at the end of December 2005. Under UK GAAP, our net assets would have been £ 103.4 million while our gross assets, including those of Analytical Properties, Bisichi Mining plc and Dragon Retail Properties, are £265 million. We are declaring an interim dividend of 0.6p payable on 26th January 2007 to shareholders on the register as at 5th January 2007. Over the last few years we have explored numerous opportunities to acquire shopping centre investments. However, we have been unable to justify the prices paid for them while maintaining our rigorous investment criteria. We also believe that one of the areas with the strongest potential for future growth is prime central London, particularly where there are residential opportunities over the medium and longer term. This results from demand from overseas investors who now view London as Europe's undisputed premier financial centre. The London Portfolio Since 30th June 2006 we have completed our largest acquisition to date, a £50.3 million Central London-based mainly retail portfolio. It comprises a wide range of retail properties in prime locations such as Chelsea and Notting Hill. The properties include a number of well-established and well-known antiques centres, as well as traditional shops. The purchase price reflects a net initial yield of 5.7% although we believe that there is considerable scope to greatly enhance the income stream and cut irrecoverable costs over the medium term. Two of the properties are well-known Kings Road landmarks: the antiques centre Antiquarius and Chenil House, the building which is adjacent to Chelsea Town Hall and which has at ground floor children's toy and clothing retailer Daisy and Tom. Both properties have significant Kings Road frontage and cover substantial areas. There is considerable scope to improve the income from the upper parts of the Daisy and Tom property, which currently comprise multi-let office suites that occupy only a relatively small portion of the site. There is an existing planning consent to extend the offices element over the flat roof of the ground floor shop and we are considering the best configuration for the property. At nearby Antiquarius there are five shop units fronting one of the best sections of the Kings Road, as well as 110 antique stallholders and two well-let office suites above. There is also a 1,300 sq ft vacant flat in need of refurbishment. We will bring this flat up to tenantable condition in the short term and we estimate that, having done so, it will command an annual income of around £50-60,000. In Notting Hill we have acquired a freehold antiques centre on Portobello Road and an adjoining freehold house in the exclusive residential street, Chepstow Villas. There is some scope for improving the antiques market which runs into the basement of the house in Chepstow Villas. However, we intend to return the basement of the house to residential use once we have vacant possession next year. We estimate that this will cost some £250,000. We will then have the option of selling the freehold of the extended house. Residential values in this part of London are now in excess of £1,000 a sq ft and the house will have a gross internal area of some 3,200 sq ft. The portfolio also includes two famous and well-established markets in Brixton, South London: Market Row and Brixton Village. Market Row is successful with high occupancy levels and we intend to grow the rents there on the back of strong tenant demand. Brixton Village, covering a site of approximately 40,000 sq ft, is not as successful, particularly in its less prime parts. We believe there may be better ways of extracting value from this site than is achievable in its current configuration. The final element of this portfolio is three properties in Upper Street, Islington, the area's prime retailing location. These comprise a freehold Grade II listed antiques arcade with offices and a restaurant above. This building offers several opportunities to enhance both income and value over the medium term. Adjacent to the antiques arcade, there is a freehold detached listed house in need of internal refurbishment. We believe that by investing approximately £ 200,000 in the residential property, it will have a rental value of £40- 50,000 a year. Finally, there is a newly developed office building let to Foxtons, the estate agents, at £230,000 a year. Church Square, St Helens, Since the half year end, Analytical Properties has sold the Church Square shopping centre in St Helens for £75 million. The sale comes almost exactly three years to the day since Analytical acquired this property for £50 million, and a disposal at this level shows a net return on capital of 256% and is £10 million above last December's valuation. We will receive cash proceeds from the sale from Analytical Properties amounting to approximately £11.8 million. This will be added to our existing cash resources and used to expand our portfolio when suitable opportunities arise. Remaining Portfolio Within the rest of our portfolio I am pleased to report satisfactory progress and continued demand for vacant space that becomes available. At Windsor our partial redevelopment of King Edward Court which includes a new Waitrose supermarket, a net 57,000 sq ft of large shops and a 113 bedroom hotel, is progressing smoothly. Ground works, the riskiest part of any development, are finished and the above ground construction is proceeding according to plan. We are hopeful of achieving a straightforward run through to completion early next year. Elsewhere in the Centre, I am pleased to report that we continue to benefit from exceptional retailer demand for units within King Edward Court on the back of the redevelopment. Over the period we have let the last vacant unit shop to Polarn O. Pyret, a Swedish children's clothing chain which has opened its first UK store in our shopping centre. At Orchard Square, Sheffield, development of a new flagship store for River Island is progressing well and we anticipate completion early in 2007. Zone A rents in adjacent shops on Fargate continue to grow and we expect to benefit from this as rent reviews occur on our own units in Fargate. Latest shop rents achieved opposite our Centre are £250 per square foot Zone A compared to the £ 230 we negotiated on the River Island unit and £200 at our adjacent Virgin unit. A planning application to amalgamate the Stonehouse Pub into Orchard Square will be submitted shortly. Demand from retailers for this space remains strong, and I look forward to updating shareholders once we achieve a satisfactory outcome at this part of the scheme. We continue to experience good levels of interest from retailers at all of our centres. There is good demand for well-located and well configured shops. Our experience and successful track record of creating space in line with the specific needs of prospective tenants has led to high occupancy levels and unsatisfied demand that we are working hard to meet. The first nine months of the year have been an exceptionally busy period for the company. We have realised a substantial profit on our interest in Church Square, St Helens and invested meaningfully for the first time in Central London. In the coming months we will be able to report further on progress within this recently acquired portfolio, and I look forward to updating shareholders accordingly. The current year has been both exciting and productive and I feel confident about the remainder of 2006. Michael Heller Chairman 27th September 2006 Consolidated income statement for the six months ended 30 June 2006 6 months 6 months Year ended ended ended 30 June 30 June 31 2006 2005 December (unaudited) (unaudited 2005 and (audited) restated) Notes £'000 £'000 £'000 Gross rental income Group and share of joint 5,798 6,229 12,392 ventures Less: joint ventures - (2,281) (2,354) (4,525) share of rental income 3,517 3,875 7,867 Less: property overheads: Direct property expenses (670) (485) (1,918) Attributable overheads (1,189) (1,115) (2,829) (1,859) (1,600) (4,747) Less: joint ventures - 389 190 1,337 share of overheads Property overheads (1,470) (1,410) (3,410) Net rental income 2,047 2,465 4,457 Listed investments held for 32 50 169 trading Operating profit before 2,079 2,515 4,626 adjustments Lease surrender - (173) (173) Profit on sale of - 436 1,230 investment properties Net gain on revaluation of - - 10,078 investment properties Net increase in value of 225 260 831 investments held for trading Operating profit after 2,304 3,038 16,592 adjustments Share of profit of joint 387 264 3,659 ventures Share of profit of 120 301 1,232 associate 2,811 3,603 21,483 Interest receivable 1 350 451 820 Interest payable 1 (1,888) (2,201) (4,408) Profit before taxation 1,273 1,853 17,895 Income tax 2 417 (268) (3,046) Profit for the period 1,690 1,585 14,849 Basic earnings per share 3 2.22p 1.96p 18.83p Diluted earnings per share 3 2.22p 1.95p 18.79p Consolidated balance sheet at 30 June 2006 30 June 30 June 31 2006 2005 December (unaudited) (unaudited) 2005 (audited) Notes £'000 £'000 £'000 Non current assets Value of properties 117,913 104,743 116,971 attributable to group Present value of head 8,582 9,103 8,582 leases Property 4 126,495 113,846 125,553 Plant and equipment 964 529 975 Investments in joint 18,398 14,638 18,033 ventures Investments in associated 6,294 5,430 6,495 company Held to maturity 3,784 3,784 3,784 investments 155,935 138,227 154,840 Current assets Trade and other receivables 4,212 2,651 4,608 Financial 4,761 4,411 4,586 assets-investments held for trading Cash and cash equivalents 6,397 8,011 6,212 15,370 15,073 15,406 Total assets 171,305 153,300 170,246 Current liabilities Financial (3,138) (2,197) (2,446) liabilities-borrowings Trade and other payables (6,764) (7,999) (6,724) Current tax liabilities - (337) (177) (9,902) (10,533) (9,347) Non current liabilities Financial (52,502) (49,838) (52,494) liabilities-borrowings Present value of head (8,582) (9,103) (8,582) leases on properties Deferred tax (11,049) (8,832) (11,482) (72,133) (67,773) (72,558) Total liabilities (82,035) (78,306) (81,905) Net assets 89,270 74,994 88,341 Equity Share capital 8,232 8,232 8,232 Share premium account 5,228 4,919 5,228 Translation reserve (261) (49) 81 Capital redemption reserve 47 47 47 Other reserves 429 429 429 Retained earnings 82,227 67,911 80,956 Treasury shares (6,632) (6,495) (6,632) Total shareholders' equity 89,270 74,994 88,341 Net assets per share 5 117.26p 98.38p 116.04p Diluted net assets per 5 117.10p 98.26p 115.88p share Consolidated statement of changes in recognised income and expense for the six months ended 30 June 2006 30 June 30 June 31 2006 2005 December (unaudited) (unaudited) 2005 (audited) £'000 £'000 £'000 Profit for the period 1,690 1,585 14,849 Currency translation in (342) (165) (35) associate Translation adjustment on - 948 948 adoption of IAS 39 Deferred tax thereon - (311) (311) Total recognised income 1,348 2,057 15,451 and expense for the year Consolidated statement of changes in shareholders' equity for the six months ended 30 June 2006 Share Share Translation Other Treasury Retained Total capital premium reserve reserves shares earnings equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 8,232 5,226 116 476 (581) 67,131 80,600 2005 Acquisition of own - (307) - - (5,914) - (6,221) shares Value of financial - - - - - 727 727 assets less deferred tax Joint venture share - - - - - (186) (186) of financial liabilities Currency exchange - - (165) - - - (165) adjustment in associate Dividend - - - - - (1,346) (1,346) Profit for the period - - - - - 1,585 1,585 Balance at 30 June 8,232 4,919 (49) 476 (6,495) 67,911 74,994 2005 * The retained earnings are adjusted for amendments to balances at 1 January 2005 on adoption of IAS 39, as stated Balance at 1 January 8,232 5,226 116 476 (581) 67,131 80,600 2005 Value of financial - - - - - 732 732 assets less deferred tax Associate share of - - - - - 91 91 financial assets Joint venture share - - - - - (186) (186) of financial liabilities Issue expenses of own - (1) - - - - (1) shares Acquisition of own - - - - (6,721) - (6,721) shares Disposal of own - - - - 670 - 670 shares Gain/(loss) on - 3 - - - (306) (303) disposal of own shares Currency exchange - - (35) - - - (35) adjustment in associate Dividend - - - - - (1,355) (1,355) Profit for the year - - - - - 14,849 14,849 Balance at 31 8,232 5,228 81 476 (6,632) 80,956 88,341 December 2005 Currency exchange - - (342) - - (342) adjustment in associate Dividend - - - - - (419) (419) Profit for the period - - - - - 1,690 1,690 Balance at 30 June 8,232 5,228 (261) 476 (6,632) 82,227 89,270 2006 Consolidated cash flow statement for the six months ended 30 June 2006 6 months 6 months Year ended ended ended 30 June 30 June 31 2006 2005 December 2005 (unaudited) (unaudited (audited) and restated) £'000 £'000 £'000 Operating activities Operating profit after 2,304 3,038 16,592 adjustments Depreciation 80 52 125 Gain on disposal of (7) (9) (1) non-current assets Profit on sale of - (436) (1,230) investment properties Net gain on revaluation of - - (10,078) investment properties Net increase in value of (225) (260) (831) investments held for trading Increase in net current (1,036) (812) (695) assets Cash generated from 1,116 1,573 3,882 operations Net Interest paid (1,972) (1,804) (3,825) Income tax paid (243) (75) (843) Cash flows after interest (1,099) (306) (786) and tax Investing activities Cash flows from investing 761 987 786 activities Financing activities Cash flow from financing (169) (6,213) (7,580) activities Net decrease in cash and cash (507) (5,532) (7,580) equivalents Cash and cash equivalents at 3,766 11,346 11,346 beginning of period Cash and cash equivalents at end 3,259 5,814 3,766 of period Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents comprise the following balance sheet amounts: 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000 Cash and cash equivalents 6,397 8,011 6,212 Bank overdraft (3,138) (2,197) (2,446) Cash and cash equivalents at end 3,259 5,814 3,766 of period Notes to the interim report 1.Finance costs 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 (restated) £'000 £'000 £'000 Interest receivable 350 451 820 Interest payable - Interest on bank loans and overdrafts (960) (928) (1,923) Other loans (1,052) (1,052) (2,106) Interest on obligations under finance leases (220) (221) (442) Total borrowing costs (2,232) (2,201) (4,471) Less : amounts included in the cost of 344 - 63 qualifying assets (1,888) (2,201) (4,408) (1,538) (1,750) (3,588) 2.Income tax 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 (restated) £'000 £'000 £'000 Current tax 16 52 524 Deferred tax (433) 216 2,522 (417) 268 3,046 3.Earnings per share 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 Group profit after tax (£'000) 1,690 1,585 14,849 Weighted average number of shares in issue for the period ('000) 76,129 80,804 78,839 Basic earnings per share 2.22p 1.96p 18.83p Diluted number of shares in issue ('000) 76,230 81,261 79,021 Fully diluted earnings per share 2.22p 1.95p 18.79p 4.Property Properties at 30 June 2006 are included at valuation as at 31 December 2005 plus additions in the period. 5. Net assets per share 30 June 30 June 31 December 2006 2005 2005 '000 '000 '000 Shares in issue ('000) 76,129 76,229 76,129 Net assets per balance sheet 89,270 74,994 88,341 Basic net assets per share 117.26p 98.38p 116.04p Shares in issue diluted by outstanding share 76,279 76,379 76,279 options ('000) Net assets after issue of share options 89,322 75,046 88,393 Fully diluted net assets per share 117.10p 98.26p 115.88p 6.Changes to the consolidated income statement for the six months ended 30 June 2005 The following changes have been made to the last interim report figures to make them comparable to the IFRS accounts published for the full year to 31 December 2005. The amendments relate to the allocation of joint venture and associate interest and tax to the appropriate income statement heading in order to show a minimum of netting off. Amended Original Variance Gross rental income £'000 £'000 £'000 Group and share of joint ventures 6,229 6,229 - Less: joint ventures - share of rental (2,354) (2,354) - income 3,875 3,875 - Less: property overheads: Ground rents - (796) 796 Direct property expenses (485) (485) - Attributable overheads (1,115) (1,115) - (1,600) (2,396) 796 Less: joint ventures - share of overheads 190 765 (575) Property overheads (1,410) (1,631) 221 Net rental income 2,465 2,244 221 Listed investments held for trading 50 50 - Operating profit before adjustments 2,515 2,294 221 Lease surrender (173) (173) - Profit on sale of investment properties 436 436 - Net gain on revaluation of investment - - - properties Associate/jv profit on sale of investment - 55 (55) properties Net increase in value of investments held 260 260 - for trading Operating profit after adjustments 3,038 2,872 166 Share of profit of joint ventures 264 (181) 445 Share of profit of associate 301 267 34 3,603 2,958 645 Interest receivable 451 499 (48) Interest payable (2,201) (1,980) (221) Profit before valuation gains 1,853 1,477 376 Profit before taxation 1,853 1,477 376 Income tax (268) 108 (376) Profit for the period 1,585 1,585 - 7.Financial information The above financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The figures for the year ended 31st December 2005 are based upon the latest statutory accounts, which have been delivered to the Registrar of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The six months ended 30 June 2006 uses the same accounting policies as for the year ended 31 December 2005, and the interim results have not been audited or subject to review by the company's auditors. 8.Board approval These interim results were approved by the Board of London & Associated Properties PLC on 27 September 2006. 9.Posting to shareholders The interim report will be sent to shareholders by mail. Copies are now available at the company's registered office: Carlton House, 21a St James's Square, London, SW1Y 4JH and may also be downloaded from the company's website: www.lap.co.uk.

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