##### 



TRIZEC CANADA INC.CONSOLIDATED FINANCIAL STATEMENTSFor The Years Ended December 31, 2005 and 2004




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AUDITORS REPORT
 To the Shareholders of Trizec Canada Inc.
    /s/ PricewaterhouseCoopers LLP
 Chartered Accountants




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As at December 31(US$ millions)
    
    Note
    
    2005
    
    
    2004(restated Note 3)AssetsCurrent assetsCash and cash equivalents
    
    
    
    $
    73.5
    
    
    
    56.0Restricted cash
    
    
    
    
    7.9
    
    
    
    7.9Other assets
    
    2
    
    
    17.9
    
    
    
    19.699.3
    
    
    
    83.5Investment in Trizec Properties, Inc.
    
    3
    
    
    797.7
    
    
    
    760.1Investments and other assets
    
    4
    
    
    401.4
    
    
    
    435.0Future income taxes
    
    10
    
    
    112.5
    
    
    
    103.8$
    1,410.9
    
    
    
    1,382.4LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities
    
    5
    
    $
    24.1
    
    
    
    31.3Exchangeable debentures
    
    6Carrying amount
    
    
    
    
    844.4
    
    
    
    733.9Deferred amount
    
    
    
    
    46.5
    
    
    
    157.0890.9
    
    
    
    890.9915.0
    
    
    
    922.2Shareholders Equity
    
    8
    
    
    495.9
    
    
    
    460.2$
    1,410.9
    
    
    
    1,382.4
   /s/ Howard L. Beck

Director
    
    
    
    /s/ Robert B. Wickham

Director
 TRIZEC CANADA INC.
    
    1
    
    FINANCIAL STATEMENTS




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For the years ended December 31(US$ millions, except per share amounts)
    
    Note
    
    2005
    
    
    2004(restated Note 3)Share of earnings of Trizec Properties
    
    3
    
    $
    22.3
    
    
    
    20.4Expenses and other incomeGeneral and administrative expense
    
    
    
    
    (11.4
    )
    
    
    (7.6
    )Exchangeable debentures interest expense, net
    
    
    
    
    (12.4
    )
    
    
    (12.4
    )Interest and other income
    
    
    
    
    6.1
    
    
    
    8.4Dilution gains
    
    3
    
    
    6.7
    
    
    
    Foreign exchange gains, net
    
    8
    
    
    4.2
    
    
    
    20.3Gain on sale of properties
    
    9
    
    
    
    
    
    
    4.6Interest expense
    
    
    
    
    
    
    
    
    (0.5
    )Income before taxes and discontinued operations
    
    
    
    
    15.5
    
    
    
    33.2Income and other corporate taxes
    
    10
    
    
    9.8
    
    
    
    29.6Income from continuing operations
    
    
    
    
    25.3
    
    
    
    62.8Share of income
from discontinued operations of Trizec Properties
    
    3
    
    
    61.0
    
    
    
    28.0Net income
    
    
    
    $
    86.3
    
    
    
    90.8Income per share
    
    11Basic and dilutedContinuing operations
    
    
    
    $
    0.42
    
    
    
    1.05Discontinued operations
    
    
    
    $
    1.02
    
    
    
    0.47Net income
    
    
    
    $
    1.44
    
    
    
    1.52
  TRIZEC CANADA INC.
    
    2
    
    FINANCIAL STATEMENTS




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For the years ended December 31(US$ millions)
    
    Note
    
    2005
    
    
    2004(restated Note 3)Retained Earnings (Deficit), beginning of year, as
previously reported
    
    
    
    $
    37.8
    
    
    
    (5.4
    )Accounting Change
    
    3
    
    
    (1.6
    )
    
    
    (1.3
    )Retained
Earnings (Deficit) beginning of year, as restated
    
    
    
    
    36.2
    
    
    
    (6.7
    )Net income
    
    
    
    
    86.3
    
    
    
    90.8Dividends
    
    
    
    
    (48.0
    )
    
    
    (47.9
    )Retained Earnings, end of year
    
    
    
    $
    74.5
    
    
    
    36.2
  TRIZEC CANADA INC.
    
    3
    
    FINANCIAL STATEMENTS




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For the years ended December 31(US$ millions)
    
    2005
    
    
    2004(restated Note 3)Cash flow from (applied to)Operating ActivitiesNet income
    
    $
    86.3
    
    
    
    90.8Adjustments to reconcile net income to total operating cash flows:Share of earnings of Trizec Properties (less dividends)
    
    
    (30.9
    )
    
    
    4.4Dilution gains
    
    
    (6.7
    )
    
    
    Foreign exchange gains
    
    
    (4.2
    )
    
    
    (20.3
    )Gain on sale of properties
    
    
    
    
    
    
    (4.6
    )Future income taxes
    
    
    (4.9
    )
    
    
    0.2Amortization of deferred financing costs
    
    
    0.6
    
    
    
    1.1Net change in working capital
    
    
    (1.9
    )
    
    
    9.7Total operating cash flows
    
    
    38.3
    
    
    
    81.3Financing ActivitiesDividends paid
    
    
    (48.0
    )
    
    
    (47.9
    )Total financing cash flows
    
    
    (48.0
    )
    
    
    (47.9
    )Investing ActivitiesPurchase of marketable securities
    
    
    (6.9
    )
    
    
    (112.8
    )Maturities of marketable securities
    
    
    28.4
    
    
    
    3.7Decrease in other investments
    
    
    5.7
    
    
    
    17.9Change in restricted cash
    
    
    
    
    
    
    9.9Total investing cash flows
    
    
    27.2
    
    
    
    (81.3
    )Increase (decrease) in cash and cash equivalents
    
    
    17.5
    
    
    
    (47.9
    )Cash and cash equivalents, beginning of the year
    
    
    56.0
    
    
    
    103.9Cash and cash equivalents, end of the year
    
    $
    73.5
    
    
    
    56.0
  Supplementary
cash flow information
 Cash flow from (applied to)Other receivables
    
    $
    0.6
    
    
    
    37.3Prepaid expenses and other assets
    
    
    
    
    
    
    1.2Other accrued liabilities
    
    
    3.8
    
    
    
    3.1Taxes payable
    
    
    (6.3
    )
    
    
    (31.9
    )Net change in working capital
    
    $
    (1.9
    )
    
    
    9.7Cash paid during the year forExchangeable debenture interest
    
    $
    (18.4
    )
    
    
    (18.4
    )Taxes
    
    $
    (1.0
    )
    
    
    (2.1
    )
 TRIZEC CANADA INC.
    
    4
    
    FINANCIAL STATEMENTS




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1. PLAN OF ARRANGEMENT AND SIGNIFICANT ACCOUNTING POLICIES
   Significant Accounting Policies
 a. Variable interest entities
   TRIZEC CANADA INC.
    
    5
    
    FINANCIAL STATEMENTS




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b. Principles of consolidation
  c. Revenue recognition
  d. Reporting currency and foreign currency translation
     e. Discontinued operations
  f. Cash and cash equivalents
  TRIZEC CANADA INC.
    
    6
    
    FINANCIAL STATEMENTS




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g. Restricted cash
  h. Investments
     i. Exchangeable debentures
   j. Income taxes
   k. Financial instruments
  TRIZEC CANADA INC.
    
    7
    
    FINANCIAL STATEMENTS




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l. Hedge accounting
  m. Stock-based compensation arrangements
   n. Use of estimates
  o. Comparative figures
  TRIZEC CANADA INC.
    
    8
    
    FINANCIAL STATEMENTS




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2. OTHER ASSETS
 2005
    
    
    2004Dividends receivable from Trizec Properties
    
    $
    12.7
    
    
    
    13.8Other receivables, net
    
    
    4.7
    
    
    
    5.3Prepaid expenses and other assets
    
    
    0.5
    
    
    
    0.5$
    17.9
    
    
    
    19.6
 3. INVESTMENT IN TRIZEC PROPERTIES, INC.
 Accounting Change
     TRIZEC CANADA INC.
    
    9
    
    FINANCIAL STATEMENTS




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2005
    
    
    2004Investment in Trizec Properties, Inc.Beginning of year
    
    $
    760.1
    
    
    
    765.8Share of earnings of Trizec Properties
    
    
    83.3
    
    
    
    48.4Dilution gains
    
    
    6.7
    
    
    
    Dividends from Trizec Properties
    
    
    (52.4
    )
    
    
    (52.8
    )Recognition of historical foreign currency translation adjustment
    
    
    
    
    
    
    (1.3
    )End of year
    
    $
    797.7
    
    
    
    760.1
  Balance SheetsDecember 31,
    
    2005
    
    
    2004Properties
    
    $
    4,472.8
    
    
    
    4,205.7Cash and short-term investments
    
    
    36.5
    
    
    
    194.3Restricted cash
    
    
    105.0
    
    
    
    116.9Other assets
    
    
    454.5
    
    
    
    372.2$
    5,068.8
    
    
    
    4,889.1Long-term debt
    
    $
    2,624.0
    
    
    
    2,639.4Other liabilities
    
    
    362.6
    
    
    
    319.9Shareholders equity
    
    
    2,082.2
    
    
    
    1,929.8$
    5,068.8
    
    
    
    4,889.1
 Results of OperationsFor the years ended December 31
    
    2005
    
    
    2004Rental income
    
    $
    440.6
    
    
    
    412.1Income from continuing operations
    
    
    59.1
    
    
    
    42.0Discontinued operations
    
    
    157.0
    
    
    
    71.2Net income
    
    
    216.1
    
    
    
    113.2
   December 31,
    
    2005
    
    
    2004number held
    
    
    % of outstanding
    
    
    Number held
    
    
    % of outstandingShares of common stock
    
    
    59,922,379
    
    
    
    38
    %
    
    
    59,922,379
    
    
    
    39
    %Shares of Class F convertible stock
    
    
    100,000
    
    
    
    100
    %
    
    
    100,000
    
    
    
    100
    %Special voting stock
    
    
    100
    
    
    
    100
    %
    
    
    100
    
    
    
    100
    %Warrants to purchase common stock
    
    
    905,042
    
    
    
    69
    %
    
    
    905,042
    
    
    
    38
    %
 TRIZEC CANADA INC.
    
    10
    
    FINANCIAL STATEMENTS




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Common Stock
   Class F Convertible Stock
   Special Voting Stock
   Warrants
  Related party transactions
  TRIZEC CANADA INC.
    
    11
    
    FINANCIAL STATEMENTS




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4.
    
    INVESTMENTS AND OTHER ASSETS
 2005
    
    
    2004Marketable securities (market value at
December 31, 2005  approximately $83.5
million; December 31, 2004  approximately
$106.3 million)
    
    $
    83.4
    
    
    
    106.1Notes receivable and mortgages
    
    
    21.8
    
    
    
    32.1Deferred financing costs
    
    
    10.0
    
    
    
    10.6Investment in Barrick  at cost
    
    
    286.2
    
    
    
    286.2$
    401.4
    
    
    
    435.0
    
 Investment in Barrick
  5.
    
    ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 2005
    
    
    2004Accrued interest expense
    
    $
    6.6
    
    
    
    6.6Other accrued liabilities
    
    
    16.7
    
    
    
    17.6Taxes payable
    
    
    0.8
    
    
    
    7.1$
    24.1
    
    
    
    31.3
 TRIZEC CANADA INC.
    
    
    12
    
    
    FINANCIAL STATEMENTS




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6.
    
    EXCHANGEABLE DEBENTURES
 2005
    
    
    2004Carrying amount:$409 million, due 2024
    
    $
    597.2
    
    
    
    519.0$275 million, due 2021
    
    
    247.2
    
    
    
    214.9844.4
    
    
    
    733.9Deferred amount
    
    
    46.5
    
    
    
    157.0$
    890.9
    
    
    
    890.9
   a.
    
    $409 million exchangeable debentures
    b.
    
    $275 million exchangeable debentures
  TRIZEC CANADA INC.
    
    
    13
    
    
    FINANCIAL STATEMENTS




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c.
    
    Deferred amount
 1 4 1 4 1 4
 1 4
  7.
    
    LINE OF CREDIT
  8.
    
    SHAREHOLDERS EQUITY
 2005
    
    
    2004Share capital
    
    $
    376.5
    
    
    
    376.5Contributed surplus
    
    
    30.2
    
    
    
    30.2Foreign currency translation adjustment
    
    
    14.7
    
    
    
    17.3Retained earnings
    
    
    74.5
    
    
    
    36.2$
    495.9
    
    
    
    460.2
 TRIZEC CANADA INC.
    
    
    14
    
    
    FINANCIAL STATEMENTS




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\



a. Share capital


At December 31, 2005 and 2004, the authorized share capital of the Corporation consisted of: 
    
    an unlimited number of subordinate voting shares without par value, carrying one vote per share; and
    
    7,522,283 multiple voting shares without par value, carrying 50 votes per share. Pursuant
to a trust agreement, the holder of all of the multiple voting shares has agreed not to vote
more than that number of multiple voting shares carrying votes in the aggregate that
represent a simple majority of all votes entitled to be cast on a matter by all holders of
voting securities of Trizec Canada in the aggregate.
 b.
    
    Right of redemption
  c.
    
    Issued and outstanding share capital
  Voting
SharesAt December 31
    
    Subordinate
    
    
    Multiple
    
    
    Total
    
    
    Amount2005, 2004 and 2003
    
    
    52.4
    
    
    
    7.5
    
    
    
    59.9
    
    
    $
    376.5
 d.
    
    Foreign exchange gains, net
  For the years ended December 31
    
    2005
    
    
    2004Foreign exchange translation gains on monetary assets and
liabilities denominated in Canadian dollars and European
currencies
    
    $
    1.6
    
    
    
    12.2Recognition of historical foreign currency translation
adjustments resulting from reductions of net investments
in Canada and Europe
    
    
    2.6
    
    
    
    8.1$
    4.2
    
    
    
    20.3
   TRIZEC CANADA INC.
    
    
    15
    
    
    FINANCIAL STATEMENTS




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9.
    
    GAIN ON SALE OF PROPERTIES
  10.
    
    INCOME AND OTHER CORPORATE TAXES
  For the years ended December 31
    
    2005
    
    
    2004Recovery (Expense)Income taxesCurrent- withholding taxes on REIT distributions
    
    $
    3.3
    
    
    
    30.2- other
    
    
    1.6
    
    
    
    Future- operations and sales
    
    
    4.9
    
    
    
    (0.2
    )Capital and other tax
    
    
    
    
    
    
    (0.4
    )$
    9.8
    
    
    
    29.6
   a.
    
    The provision for taxes on income differs from the provision computed at statutory rates as
follows:
 For the years ended December 31
    
    2005
    
    
    2004Income tax provision computed at Canadian
combined federal and provincial statutory
rates
    
    $
    (27.6
    )
    
    
    (22.1
    )Foreign operations taxed at lower rates
    
    
    25.5
    
    
    
    12.6Non-taxable portion of capital gains and losses
    
    
    
    
    
    
    1.4Reduction of withholding tax liability
    
    
    7.8
    
    
    
    34.8Capital and other taxes
    
    
    
    
    
    
    (0.4
    )Other
    
    
    4.1
    
    
    
    3.3Total tax recovery
    
    $
    9.8
    
    
    
    29.6
 TRIZEC CANADA INC.
    
    
    16
    
    
    FINANCIAL STATEMENTS




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b.
    
    Components of future income tax assets and (liabilities) of the Corporation at December 31
are as follows:
 2005
    
    
    2004Provision for losses and operating and capital losses
    
    $
    242.6
    
    
    
    209.4Investments and other
    
    
    (130.1
    )
    
    
    (105.6
    )$
    112.5
    
    
    
    103.8
 11.
    
    PER SHARE AMOUNTS
  For the years ended December 31
    
    2005
    
    
    2004Numerator:Income from continuing operations
    
    $
    25.3
    
    
    
    62.8Discontinued operations
    
    
    61.0
    
    
    
    28.0Net income
    
    
    86.3
    
    
    
    90.8Denominator for income per share (in millions):Weighted average shares outstanding
    
    
    59.9
    
    
    
    59.9Impact of dilutive potential shares resulting from share purchase options
    
    
    
    
    
    
    Denominator for diluted per share amounts
    
    
    59.9
    
    
    
    59.9Income per shareBasic and dilutedContinuing operations
    
    $
    0.42
    
    
    
    1.05Discontinued operations
    
    
    1.02
    
    
    
    0.47Net income
    
    
    1.44
    
    
    
    1.52
  12.
    
    SHARE-BASED COMPENSATION ARRANGEMENTS
 a.
    
    Share purchase options
  TRIZEC CANADA INC.
    
    
    17
    
    
    FINANCIAL STATEMENTS




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##### 



millions of optionsOutstanding and Exercisable at end of year consists ofPrice range C$22.75  C$24.29, weighted average price of
C$23.74, weighted average remaining life of 2.0 years
    
    
    0.4Price range C$24.40  C$28.62, weighted average price of
C$25.01, weighted average remaining life of 1.5 years
    
    
    0.4Weighted average price of C$24.33
    
    
    0.8
 b.
    
    Stock-based compensation
  13.
    
    CONTINGENCIES
  
  TRIZEC CANADA INC.
    
    
    18
    
    
    FINANCIAL STATEMENTS