Interim Results

5 March 2003 Freeport announces record first half Freeport plc, owner, developer and operator of factory outlet retail villages in Europe, today published its interim results for the 27 weeks ended 4 January 2003. Results · Pre-tax profits up 11% to £6.02m (2002: £5.44m) · Group turnover up 3% to £9.32m (2002: £9.08m) · Fully diluted earnings per share up 5% to 8.91p (2002: 8.51p) · Fully diluted net assets per share up by 3% to 534p from 520p at 29 June 2002 Highlights · Freeport Excalibur (on Czech/Austrian border) to open early Autumn 2003 · Freeport Lisbon to open Spring 2004 · Planning consent received to expand Freeport Talke, Stoke-on-Trent · Opening of 'Leisure Box' at Braintree complements the retail offer Commenting on today's results, Sean Collidge, Chief Executive, said: "The first half-year has shown credible progress in a difficult trading environment which has continued this year. Our strong balance sheet and agreed banking facilities give us the ability to continue with our planned expansion programme with confidence" For further information: Freeport plc 020 7299 9360 Sean Collidge, Chief Executive Edelman Financial 020 7344 1200 Michael Henman/James Horsman CHAIRMAN'S INTERIM STATEMENT RESULTS During the 27 weeks ended 4 January 2003, pre-tax profit increased by 11% to £6.0 million and group turnover rose 3% to £9.3 million compared with the corresponding period last year. Post-tax profit grew by 29%, assisted by the release of prior years' tax provisions. Following the two for seven Rights Issue in March 2002, fully diluted earnings per share increased by 5% to 8.91p per share. Fully diluted net assets per share increased by 3% to 534p from 29 June 2002. DIVIDEND As in previous years, the Board does not intend paying an interim dividend. Your Board will recommend a final dividend to shareholders at the year-end. OPERATIONS AND SITE DEVELOPMENT Our operating portfolio continued to perform profitably in the first half-year against the background of a difficult marketplace, with all sites contributing to Group profitability, including Freeport Kungsbacka, our Swedish development. Swedish market conditions have continued to prove difficult but our site has made progress with management replacing under-performing tenants for those with stronger financial covenants. Occupancy levels have remained constant during this process. In the UK, we have received planning consent to expand the Freeport Talke Outlet Mall, near Stoke-on-Trent, by approximately 2,200 sq. metres (23,800 sq. ft) and our planning applications to expand our villages at Fleetwood and Castleford are in the planning process. The "Leisure Box" at our Braintree Designer Outlet Village opened last Autumn complementing the Freeport retail offer. In the last statement to shareholders, it was reported that advanced negotiations and Heads of Terms representing approximately 49% of the lettable space were in place for our new designer outlet mall on the Czech Republic/Austrian border. We have now agreed terms for more than 60% of the space with a further 10% under negotiation and with other tenancy interest ongoing. However, the legal system and protracted legal processes in the Czech Republic have slowed the formal exchange of leases and we have, therefore, re-scheduled the opening of the outlet mall to early Autumn 2003. The launch will coincide with the opening by the Czech authorities of the significant highway improvements serving the border crossing/outlet mall. These roadworks were originally scheduled for 2004/5 but their acceleration to Autumn 2003 should considerably assist a successful site opening. Construction of our major investment in Portugal - the Freeport Lisboa Designer Outlet Resort - is proceeding and a Spring 2004 opening is still planned. Our European leasing team is actively pre-leasing the retail and leisure elements of the scheme and have made good progress since our last report to shareholders in September. The retail space will provide consumers with a strong mix of international brands which will be complemented by exciting leisure and entertainment facilities designed to make the outlet resort an attractive daytime and nightime destination. FUNDING The Group's gearing position at 12% at the half-year remains conservative. However, this will increase as the Group develops its sites in mainland Europe and the UK. In the current economic climate we have suspended marketing of The Freeport Limited Partnership. We have, however, agreed terms for a syndicated ?75 million loan representing the balance of the funds required to complete our Lisbon development. The Group's financial position is strong, with further bank facilities of #87 million available for development and the Group has the financial ability to complete its planned development programme. CURRENT TRADING AND PROSPECTS Our current trading figures for January and February 2003 indicate a continuation of last year's overall trading levels with little growth. The economy's resilience through to December 2002 may now be under threat with a slowdown in consumer spending now emerging. However, with our development programme progressing well in mainland Europe and with new planning applications in process in the UK, your directors continue to view the Group's prospects with confidence. Sir Michael Pickard Chairman 5 March 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the 27 weeks ended 4 January 2003 Reviewed Reviewed Audited 27 27 Year weeks weeks ended ended ended Not 4 5 29 e January January June 2003 2002 2002 £000 £000 £000 TURNOVER Group and share of joint 9,918 9,803 18,803 venture Less: share of joint (599) (719) (1,262) venture GROUP TURNOVER 2 9,319 9,084 17,541 Cost of sales (1,563) (1,472) (2,895) Gross profit 7,756 7,612 14,646 Administrative expenses (2,138) (2,000) (3,814) GROUP OPERATING PROFIT 5,618 5,612 10,832 Share of operating profit 537 668 1,177 in joint venture TOTAL OPERATING PROFIT 6,155 6,280 12,009 Interest receivable and 200 390 523 similar income Interest payable and (331) (1,230) (2,318) similar charges PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 6,024 5,440 10,214 Tax on profit on ordinary 3 (1,193) (1,686) (2,835) activities PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 4,831 3,754 7,379 Final dividend on equity 4 - - (1,084) shares RETAINED PROFIT FOR THE 4,831 3,754 6,295 PERIOD/YEAR Undiluted earnings per 5 8.91p 8.61p 16.16p share (pence) Fully diluted earnings per 5 8.91p 8.51p 16.01p share (pence) All activities derive from continuing operations CONSOLIDATED BALANCE SHEET As at 4 January 2003 Reviewed Reviewed Audited as at as at as at Note 4 5 29 January January June 2003 2002 2002 £000 £000 £000 FIXED ASSETS Tangible assets 6 315,624 297,646 301,049 Investments 373 242 373 Investment in joint venture: Share of gross assets 17,650 17,265 17,736 Share of gross (13,599) (13,878) (13,896) liabilities 4,051 3,387 3,840 320,048 301,275 305,262 CURRENT ASSETS Development property held 10,758 - 9,081 for sale Debtors 7 11,068 9,948 8,874 Cash at bank and in hand 4,634 444 1,875 26,460 10,392 19,830 CREDITORS: amounts falling due within one year 8 (10,091) (28,853) (10,060) NET CURRENT 16,369 (18,461) 9,770 ASSETS/(LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES 336,417 282,814 315,032 CREDITORS: amounts falling due after more than one year 8 (38,000) (41,350) (21,000) PROVISIONS FOR LIABILITIES AND CHARGES (9,018) (4,573) (9,018) NET ASSETS 289,399 236,891 285,014 CAPITAL AND RESERVES Called up share capital 13,555 10,556 13,576 Capital redemption 9 21 reserve - - Share premium account 115,659 69,550 115,659 Revaluation reserve 131,730 137,033 131,730 Profit and loss account 28,434 19,752 24,049 EQUITY SHAREHOLDERS' 10 289,399 236,891 285,014 FUNDS STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the 27 weeks ended 4 January 2003 Reviewed Reviewed Audited 27 weeks 27 weeks Year ended ended ended 4 January 5 January 29 June 2003 2002 2002 £000 £000 £000 Profit for the period/year 4,831 3,754 7,379 Unrealised gain/(deficit) on revaluation of investment properties - Group - - (5,784) - Share of joint venture - - 481 Foreign exchange translation differences on foreign currency net investments (192) 847 2,603 in subsidiaries (note 10) Total recognised gains and losses 4,639 4,601 4,679 in the period/year RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS For the 27 weeks ended 4 January 2003 Reviewed Reviewed Audited 27 weeks 27 weeks Year ended ended ended 4 January 5 January 29 June 2003 2002 2002 £000 £000 £000 Profit for the period/year 4,831 3,754 7,379 Dividends - - (1,084) Issue of ordinary share capital - - 49,129 Purchase of shares for (254) - cancellation (note 9) - Deficit on revaluation - - (5,303) 4,577 3,754 50,121 Foreign exchange translation differences on foreign currency net investments (192) 847 2,603 in subsidiaries (note 10) Net addition to shareholders' 4,385 4,601 52,724 funds Opening shareholders' funds 285,014 232,290 232,290 Closing shareholders' funds 289,399 236,891 285,014 CONSOLIDATED CASH FLOW STATEMENT For the 27 weeks ended 4 January 2003 Reviewed Reviewed Audited 27 weeks 27 weeks Year ended ended ended 4 January 5 January 29 June 2003 2002 2002 £000 £000 £000 Net cash inflows from operating 2,061 5,136 3,494 activities (note i) Returns on investments and servicing of (529) (1,275) (2,329) finance Taxation (225) (862) - Capital expenditure and financial (14,208) (17,556) (25,290) investment Equity dividends paid (1,086) (735) (739) Cash outflow before financing (13,987) (14,430) (25,726) Financing 16,746 17,675 33,144 Increase in cash in the period/year 2,759 3,245 7,418 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT For the 27 weeks ended 4 January 2003 Reviewed 27 weeks ended 4 January 2003 £000 Increase in cash in 2,759 period Cash inflow from increase in debt (17,000) Change in net debt resulting from (14,241) cashflows Net debt at start of (19,125) period Net debt at end of (33,366) period NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT For the 27 weeks ended 4 January 2003 i) RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Reviewed Reviewed Audited 27 weeks 27 weeks Year ended ended ended 4 January 5 January 29 June 2003 2002 2002 £000 £000 £000 Group operating profit 5,618 5,612 10,832 Depreciation 148 158 333 Amortisation - 101 (30) Loss on disposal of fixed assets 15 10 22 Increase in development property held (1,677) - (9,081) for sale (Increase)/decrease in debtors (2,244) 248 1,301 Increase/(decrease) in creditors 201 (993) 117 Net cash inflow from operating 2,061 5,136 3,494 activities ii) ANALYSIS OF NET DEBT At Cash At 29 June Flow 4 January 2002 2003 £000 £000 £000 Cash in hand and at 1,875 2,759 4,634 bank Debt due after one year (21,000) (17,000) (38,000) Total (19,125) (14,241) (33,366) NOTES TO THE INTERIM ACCOUNTS For the 27 weeks ended 4 January 2003 1. BASIS OF PREPARATION The reviewed interim financial statements, which have been approved by the Board of Directors, have been prepared on the basis of accounting policies set out in the Group's financial statements for the year ended 29 June 2002. This Interim Report does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. These results are unaudited but have been reviewed by the auditors. The comparative figures for the 27 weeks ended 5 January 2002 are unaudited and are derived from the Interim Report for the 27 weeks ended 5 January 2002, which was also reviewed by the auditors. The comparative figures for the year ended 29 June 2002 are not the Company's statutory accounts for that financial year, but are an abridged version of the financial statements for that year, as filed with the Registrar of Companies. The auditors report on the statutory accounts for the year ended 29 June 2002 was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. 2. TURNOVER The total turnover of the Group for the period has been derived from its principal activity in the UK and mainland Europe. The Directors consider that the operations in mainland Europe do not represent a specific segment as their results are not currently significant. 3. TAXATION The interim taxation charge is calculated by applying the Directors' best estimate of the annual tax rate of 31% (27 weeks ended 5 January 2002: 31%; year ended 29 June 2002: 30%) to the profit for the period. The Group has also released £675,000 (27 weeks ended 5 January 2002: £nil; year ended 29 June 2002: £589,000) of tax provisions relating to previous years that are now no longer required. 4. EQUITY DIVIDEND The Directors have not declared a dividend for the 27 weeks ended 4 January 2003 (27 weeks ended 5 January 2002: £nil; year ended 29 June 2002: £1,084,000). 5. EARNINGS PER SHARE The calculation of undiluted earnings per Ordinary Share is based on profits after tax and on the weighted average number of shares in issue during the period of 54,198,554 (27 weeks ended 5 January 2002: weighted average of 43,599,684 as restated; year ended 29 June 2002: weighted average of 45,657,565), after deduction for own shares held by the company. The calculation of fully diluted earnings per Ordinary Share is based on profits after tax and on the weighted number of shares in issue during the period of 54,198,554 (27 weeks ended 5 January 2002: weighted average of 44,096,109 as restated; year ended 29 June 2002: weighted average of 46,094,559), after deduction for own shares held by the company. Any difference in the number of Ordinary Shares between the earnings and diluted earnings per share is due to the effect of outstanding warrants and options being exercised. 6. TANGIBLE FIXED ASSETS Investment properties are stated at the professional valuation carried out as at 29 June 2002 of £279,250,000, together with subsequent additions at cost. 7. DEBTORS Included within debtors is a loan of £6,500,000 to the joint venture Freeport Stoke Limited (5 January 2002: £6,570,000; 29 June 2002: £6,549,000). 8. CREDITORS Included within creditors falling due within one year are bank loans and overdrafts of £nil (5 January 2002: £16,052,000; 29 June 2002: £nil). Creditors falling due after more than one year relate to bank loans of £38,000,000 (5 January 2002: £41,350,000; 29 June 2002: £21,000,000). 9. CAPITAL REDEMPTION RESERVE This represents the nominal value of 85,000 Ordinary Shares which were purchased for cancellation during the 27 weeks ended 4 January 2003. The total cost of the purchase of £254,000 has been charged to the profit and loss reserve. 10. EQUITY SHAREHOLDERS' FUNDS A loss of £192,000 on foreign exchange translation differences on foreign currency net investments in subsidiaries which arose during the 27 week period (27 weeks ended 5 January 2002: gain £847,000; year ended 29 June 2002: gain £2,603,000) has been charged against the profit and loss reserve. 11. INTERIM REPORT The interim report will be sent to all registered shareholders. Further copies will be available from the Company's registered office: 9-13 George Street, London W1U 3FL. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2003/03/04/20030304BIT01430/wkr0001.doc http://www.waymaker.net/bitonline/2003/03/04/20030304BIT01430/wkr0002.pdf