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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Alto Ingredients Inc | TG:FPR | Tradegate | Ordinary Share |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.01 | 0.82% | 1.232 | 1.195 | 1.268 | 0.00 | 22:50:14 |
Hot Features
Premium
16 September 2003
Freeport announces ninth successive record year
Freeport plc, a leading owner, developer and operator of factory outlet retail villages in
Europe, today published its preliminary results for the 52 weeks to 28 June 2003.
Results
* Pre-tax profits up 26% to £12.9m (2002: £10.2m)
* Post-tax profits up 42% to £10.5m (2002: £7.4m)
* Fully diluted earnings per share up 23% to 19.67p (2002: 16.01p)
* Fully diluted net assets per share maintained at 521p (520p at 29 June 2002 )
* Adjusted fully diluted net assets per share of 540p (536p at 29 June 2002)*
*after adding back deferred tax of £9.7m (29 June 2002: £9.0m)
Highlights
* Freeport Excalibur (on Czech/Austrian border) successfully opened September 2003
* Freeport Lisbon to open to coincide with Euro 2004 Football Championship in Portugal
* Group floorspace will more than double in year to June 2004
* Disposal of Braintree Leisure development, adjacent to Freeport Braintree shopping
village
* Remaining 50% stake in Freeport Talke purchased from joint venture partner in September
2003
Commenting on today's results, Sean Collidge, Executive Chairman, said:
"It has been a busy year for Freeport with two mainland European developments under
construction. We have made good progress in pursuing our strategy to develop outlet
villages in prime locations within key European markets. Going forward, it remains our
intention to dispose of fully mature assets to recycle capital whilst developing new
Freeport centres, in order to maximise shareholder value. Backed by a strong balance
sheet, we view the Group's prospects with confidence and expect Freeport to continue
delivering good returns to investors."
For further information:
Freeport plc 020 7299 9360
Sean Collidge, Executive Chairman
Edelman Financial 020 7344 1200
Stephen Benzikie
CHAIRMAN'S STATEMENT
Having founded the Freeport Group in 1994 and taken the Chair in April 2003, I am pleased
to report that the year ended 28 June 2003 was the ninth successive year of record results
for the Group. This would not have been achieved without the skills and dedication of all
of our employees and I thank them for their continued enthusiasm and valuable contribution
to the business.
Results and Dividend
Group pre-tax profit increased by 26% to £12.9 million and post-tax profit grew by 42% to
£10.5 million. Fully diluted earnings per share rose 23% to 19.67p which reflected the
full year's effect of the two for seven Rights Issue in March 2002 together with the
impact of the share buy-backs during the year which amounted to 7.1% of the issued share
capital.
The Group's investment properties were professionally revalued at the year-end and in line
with generally increasing yields on outlet centres, the revaluation surplus on our
properties (including our 50% share of Freeport Talke) was reduced by £27.6 million.
However, diluted assets per share moved to 521p from 520p at 29 June 2002 as this
revaluation adjustment was more than offset by the increase in retained profits combined
with the share buy-back programme.
The Board is recommending a dividend of 2.25p per share compared with 2.00p per share last
year.
Overview
The year to 28 June 2003 was busy for Freeport with two European developments under
construction (which will more than double Group floorspace in the current year to June
2004), the management restructuring, the disposal of the Braintree Leisure development and
the unsolicited approach by external individuals to purchase Freeport in April 2003.
After careful consideration, the Board rejected the conditional proposal as it failed to
reflect the full value of the Group's assets and prospects. The support for the Board
given by the Company's principal shareholders resulted in the proposal being withdrawn in
June 2003. However, it diverted management time and your Company incurred substantial
professional fees.
Following the flotation of the Group in July 1994, Freeport has pursued a strategy of
developing outlet villages throughout the UK and mainland Europe focusing on prime retail
developments within key European markets. The Group has a high quality portfolio which
provides a robust rental stream. Apart from the potential expansion programme from the
existing UK portfolio, we have a major project under development in mainland Europe at
Alcochete, Lisbon, in Portugal with a gross build of approximately 1.2 million sq. ft. The
Group is also looking to progress further new developments in mainland Europe as and when
market conditions are suitable.
We commissioned independent professional valuations of our two new centres in mainland
Europe which are classified within sites under development at the financial year-end. The
valuers based their indicative gross valuations on the centres being fully operational.
Our Freeport Designer Outlet Mall at Excalibur City on the Czech Republic/Austrian border
opened successfully on 1 September 2003. Terms have been agreed to lease 81% of the space
with a further 11% under negotiation. Our Freeport Lisboa Designer Outlet Resort in
Alcochete, Lisbon, is scheduled to open to coincide with the Euro 2004 Football
Championship being held in Portugal and the project continues to run on time and on
budget. Further progress has been made on leasing the scheme and terms have been agreed
for 59% of the space with a further 24% under negotiation.
The indicative valuation of the 240,000 sq ft Freeport Designer Outlet Mall at Excalibur
City undertaken by DTZ Debenham Tie Leung was Euro61.3 million (£42 million), compared with
an approximate cost of Euro45 million (£31 million). The Freeport Lisboa Designer Outlet
Resort was independently valued by CB Richard Ellis at Euro210 million (£145 million) and the
approximate cost is Euro170 million (£118 million). These sites are carried at cost in these
accounts and it is anticipated that both these valuations will increase further when
recognised in the 2004 annual accounts. These indicative additional revaluation surpluses
totalling £38 million would increase the diluted net assets per share from 521p at 28 June
2003 to approximately 600p on a proforma basis.
In June 2003, we exchanged contracts to dispose of our wholly owned subsidiary, Braintree
Leisure Limited, which owns and operates the leisure development adjacent to our designer
outlet village in Braintree, Essex. The sale price of £16.5 million represented full
value for this asset.
In September 2003, the Freeport Group acquired the outstanding share capital of its joint
venture with United Co-operatives Limited in respect of Freeport Talke by exercising its
option to acquire the remaining 50% shareholding for £1 million. The Freeport Talke
Outlet Mall, located near Stoke-on-Trent, has the benefit of unrestricted A1 retail use.
Management
In April 2003, the Freeport plc Board was reconfigured to deal more effectively with the
expansion of the Group and with management succession following Sir Michael Pickard's
retirement as Non-Executive Chairman on 31 March 2003. Having served as Chief Executive
for nine years, I was appointed Executive Chairman and Jonathan Rawnsley was appointed
Chief Executive, both appointments being effective from 1 April 2003. Michael Blackburn
joined the Board as Senior Independent Non-Executive Director on 9 June 2003 and we are
delighted to have the benefit of his experience. He was previously Chief Executive of
Halifax plc and Chief Executive of Leeds Permanent Building Society and is also a past
President of the Chartered Institute of Bankers.
It was announced at the time of my appointment as Executive Chairman, that the Board
recognised that the appointment did not accord with the proposals in the Higgs Report,
which have since been amended and incorporated into a revised Combined Code on Corporate
Governance. It was and remains the Board's view that this new structure was appropriate
to Freeport as it ensured a smooth succession plan and is considered to be in the
interests of shareholders.
Prospects
Tenants' sales and visitor numbers for the first two months of the current year have both
shown a 4% advance on last year and we have a continuing demand for space within our Group
properties. Freeport's financial position remains strong, the Group has a sound balance
sheet and it continues to have access to finance on attractive terms. At the year-end the
Group had cash and undrawn banking facilities of over £63 million. It remains our
intention to dispose of fully mature assets to recycle capital whilst developing new
Freeport centres, in order to maximise shareholder value. The capital not required for
the business will be returned to shareholders in the most efficient manner possible.
We, therefore, expect that Freeport will continue to deliver good returns for its
shareholders in the coming years and your Board views the Group's prospects with
confidence.
Sean Collidge
Executive Chairman
16 September 2003
JOINT OPERATIONAL AND FINANCIAL REVIEW
Operations and Trading
Overall trading across our centres during the financial year to 28 June 2003 showed an
increase in tenants' sales of 3% against a background of deflation in the clothing sector.
Visitor numbers were up 2% over last year, also reflecting the continued attraction of
outlet retailing.
Financial performance of the Group again moved forward during the year achieving a record
profit before tax of £12.9 million up 26% on the previous year. Profit after tax was
£10.5 million - an increase of 42%. In arriving at this figure, the Company incurred
administrative expenses of £5 million - an increase of 30% on the previous year. The
majority of the increase was due to costs incurred in defending the abortive and
unsolicited conditional proposal to acquire Freeport together with compensation payments
made to certain executive directors in order to bring their service contracts into line
with best practice in relation to the change in beneficial ownership provisions.
There was a continued focus during the year on improving the tenant mix of our centres
with the aim of increasing consumer satisfaction and average spend. New brands to the
Freeport Group have included Bose, Game, Crew Clothing, Coloroll, Autonomy and Jerem. The
year has also seen the full implementation of new I.T. systems introduced to efficiently
deal with the needs of the expanding Group. Freeport's strategy of highly active
management remains a key driver in the object of achieving maximum returns from all our
centres.
The average occupancy level of our UK sites increased over the year and is currently 98%,
excluding redevelopment. In Sweden, we have made further progress at Freeport Kungsbacka
in replacing under-performing tenants for those with stronger financial covenants and
enhanced recognition in the Swedish consumer market. We have strengthened our local
leasing team to accelerate progress in this area and the site is beginning to show its
trading potential. 73% of the floorspace is currently let with a further 17% in lawyers'
hands or under negotiation and trading during the first two months of this year is running
9% ahead of last year.
During the year, the completion of the Braintree Leisure development was achieved on
programme and within budget in October 2002. As forecast last year, this asset was
subsequently sold as part of our strategy of selling non-core or fully mature assets.
Prior to the year-end we exchanged contracts to sell the Braintree Leisure development for
£16.5 million. Completion took place on 8 September 2003 and, as a result, £16.5 million
is included within debtors at the year - end.
The investment valuations of the portfolio fell on average by 7.8% during the year,
largely as a result of the shift in yields experienced in the outlet sector.
While a fall in investment property values would normally entail a fall in the Group's net
asset value, we are pleased to report that the diluted net asset value per share for the
year increased from 520p to 521p. This increase was brought about in equal measure by
retained earnings and the share buy-back programme that the Company initiated during
November/December 2002 and March/April 2003.
UK Site Portfolio
Our strategy of expanding existing sites continues whilst also seeking new development
opportunities. Planning consent has recently been received to expand Freeport Talke by
approximately 2,200 sq. metres (23,800 sq. feet) and consents to further expand Freeport's
Castleford and Fleetwood sites are being progressed. The future development of our
surplus land at Braintree is being actively considered by the local council. The
attraction of Freeport Castleford as a shopping/leisure destination will be significantly
enhanced with the opening on 26 September 2003 of the adjacent 360,000 sq. ft. Xscape
leisure scheme which includes an indoor ski centre, a cinema and a bowling alley.
Following the relaxation of planning restrictions by the Scottish Executive, which
previously hampered progress of the expansion of Freeport Scotland, consent has now been
received for the partial redevelopment of that centre. Development options for this site
are now being considered and during this process the site has been classified within
Current Assets.
European Development Programme
With the outlet market reaching maturity in the UK, the Board identified at an early stage
the huge opportunities for the expansion of its business in mainland Europe where the
number of outlet centres per capita is approximately 20% of that in the UK. As the retail
format becomes more recognised in Europe, further opportunities are materialising. With
an established platform of open and emerging centres and an experienced European
management team, Freeport is well positioned to capitalise on these opportunities.
On the Czech/Austrian border, we completed the construction of our Freeport Designer
Outlet Mall at Excalibur City which opened on 1 September. Situated adjacent to an
existing trading destination, consumer awareness of this location is already established
in the catchment area of 2.6 million people. Our leasing team has agreed terms for 81% of
the 240,000 sq. ft. lettable space with a further 11% under negotiation. The tenant
profile, with lettings to Nike, Tommy Hilfiger, Adidas, Levi's, Calvin Klein, Cerruti,
Chevignon and Helly Hansen reflects the quality of this development.
In Portugal, our Freeport Lisboa Designer Outlet Resort remains on programme to open to
coincide with the Euro 2004 Football Championship. The main construction contract has
been let on a fixed price basis of Euro106 million to Somague/Edifer, a consortium of two of
Portugal's leading contractors. Construction of the concrete shell is nearing completion
with works starting on the more detailed aspects of the centre. Being marketed as
Europe's largest outlet leisure development, the Freeport leasing team has already agreed
terms for 59% of the lettable space.
Letting terms for both Excalibur and Lisbon remain within appraised levels and the form of
lease which has been agreed with ingoing tenants is generally similar to that in the UK.
The length of the Excalibur leases typically range from four to ten years whilst the
majority of retail and catering leases at Lisbon are for a ten year tenure, with the
cinema and other anchor tenants on longer terms. The average length of the Excalibur and
Lisbon leases is longer than the average UK portfolio lease. It is expected that this will
assist in underpinning the future performance of these centres and this also reflects the
strong retailer demand for these locations.
The Group is in active negotiations regarding a number of new development opportunities in
mainland Europe, including the site at Roppenheim, situated north of Strasbourg and west
of Baden-Baden on the French/German border, where a planning application has been lodged
for a 255,000 sq. ft. outlet centre. A decision is expected in 2004.
The Freeport Limited Partnership
As reported in the Interim Report 2003, we suspended the marketing of The Freeport Limited
Partnership due to the economic climate at that time. However, the Group has continued
to operate the Limited Partnership as a separate UK Division and is firmly committed to
the principle of the Limited Partnership with its attractive tax transparency for co-
investors. The disposal of equity stakes in the Limited Partnership is our most favoured
vehicle for achieving the recycling of capital, whilst retaining a minority equity stake
in the properties. However, we are also actively considering the outright disposal of
specific fully mature assets as an alternative strategy.
Development and Investment Finance
The Group enjoys a very conservative gearing level which was 26% at the financial year-
end. This level of gearing has increased to 29% following the acquisition of the
remaining 50% of the equity of Freeport Stoke Limited in September 2003, as the entity
will now be accounted for as a subsidiary in the current financial year.
In respect of the syndicated £125 million, 7-Year Revolving Credit Facility which The
Freeport Limited Partnership entered into in July 2002, only £63 million had been drawn
down at the year-end. The increase in the drawdown of the facility from £21 million to
£63 million is largely a result of financing development expenditure at Excalibur and
Lisbon. It is anticipated that this facility will be further utilised to finance the
various development opportunities within The Freeport Limited Partnership, and together
with other facilities, allow the Freeport Group to finance its development programme in
mainland Europe.
In addition, Freeport has agreed terms for a 7-year syndicated Euro75 million investment loan
on its development site at Lisbon, which will initially be utilised for meeting
development expenditure and then revert to an investment loan.
We have been successful in achieving a low gearing level during the Group's expansion over
the past nine years, due predominantly to the financing of major site acquisitions and
development through equity issues whilst growing Group profitability to a level sufficient
to service debt. Whilst our gearing ratio will gradually increase, as drawdown of the
banking facilities occurs, it will remain at prudent levels.
Taxation and Currency Exposures
The Group has historically enjoyed low taxation charges, largely as a result of capital
allowances achieved on expenditure on its investment properties and by maximising all
taxation allowances, wherever possible. Our finance team and our professional advisers
continually review our taxation affairs to maximise the return to shareholders. The Group
continues to provide for deferred tax on its capital allowances and other timing
differences in accordance with Accounting Standard FRS19. The result of this is that the
Group now has £9.7 million (2002: £9 million) of deferred tax liabilities in its balance
sheet, which are not expected to materialise.
We have minimised our currency exposures during the construction of the mainland European
developments, predominantly through the forward purchasing of currency contracts. Once
outlet centres are opened it is our policy, where commercially advantageous, to refinance
the developments with local currency loans to hedge both the gross asset position and the
profitability of the outlet centres.
Summary
The Group remains committed to expanding its operations across Europe while remaining
focussed on controlling overheads both centrally and at site level in order to deliver
maximum returns from its existing portfolio. Our policy of recycling capital through the
selective disposal of fully mature and non-core assets will continue.
Jonathan Rawnsley
Chief Executive
Peter Woolley
Finance Director
16 September 2003
Consolidated Profit and Loss Account
Year ended 28 June 2003
2003 2002
Note £'000 £'000
Turnover
Group and share of joint venture 34,833 18,803
Less: share of joint venture (1,120) (1,262)
_______ _______
Group turnover 33,713 17,541
Cost of sales (16,581) (2,895)
_______ _______
Gross profit 17,132 14,646
Administrative expenses (4,956) (3,814)
_______ _______
Group operating profit
12,176 10,832
Share of operating profit in joint 980 1,177
venture _______ _______
Total operating profit
13,156 12,009
Interest receivable and similar income 370 523
Interest payable and similar charges (663) (2,318)
_______ _______
Profit on ordinary activities before 12,863 10,214
taxation
Tax on profit on ordinary activities (2,409) (2,835)
_______ _______
Profit on ordinary activities after 10,454 7,379
taxation
Dividends 1 (1,133) (1,084)
_______ _______
Retained profit for the financial year 9,321 6,295
======= =======
Basic earnings per share (pence) 2 19.67p 16.16p
======= =======
Diluted earnings per share (pence) 2 19.67p 16.01p
======= =======
All activities derive from continuing
operations
Consolidated Balance Sheet
at 28 June 2003
2003 2002
£'000 £'000
Fixed Assets
Tangible assets 313,191 301,049
Investments 373 373
Investment in joint venture:
Share of gross assets 15,477 17,736
Share of gross liabilities (13,733) (13,896)
1,744 3,840
________ ________
315,308 305,262
Current Assets
Development property 10,067 9,081
Debtors due within one year 8,027 2,325
Debtors due after more than one year 20,907 6,549
Cash at bank and in hand 1,347 1,875
________ ________
40,348 19,830
Creditors: amounts falling due within one year (20,112) (10,060)
________ ________
Net Current Assets 20,236 9,770
________ ________
Total Assets less Current Liabilities 335,544 315,032
Creditors: amounts falling due after more than
one year (63,000) (21,000)
Provision for liabilities and charges (9,744) (9,018)
________ ________
Net Assets 262,800 285,014
======== ========
Capital and Reserves
Called up share capital 12,612 13,576
Share premium account 115,659 115,659
Capital redemption reserve 964 -
Revaluation reserve 109,884 131,730
Profit and loss account 23,681 24,049
________ ________
Equity Shareholders' Funds 262,800 285,014
======== ========
Statement of Total Recognised Gains and Losses
Year ended 28 June 2003
2003 2002
£'000 £'000
Profit for the financial year
10,454 7,379
Unrealised deficit on revaluation of investment properties
- Group (25,544) (5,784)
- Share of joint venture (2,034) 481
Foreign exchange translation differences on foreign
currency net investments in subsidiaries 4,328 2,603
________ _______
Total recognised (losses)/gains in the year (12,796) 4,679
======== =======
Reconciliation of Movements in Shareholders' Funds
Year ended 28 June 2003 2003 2002
£'000 £'000
Profit for the financial year 10,454 7,379
Dividends (1,133) (1,084)
Issue of ordinary share capital - 49,129
Purchase of own shares (8,285) -
Deficit on revaluation (27,578) (5,303)
________ _______
(26,542) 50,121
Foreign exchange translation differences on foreign currency net 4,328 2,603
investments in subsidiaries ________ _______
Net (reduction)/addition to shareholders' funds (22,214) 52,724
Opening shareholders' funds 285,014 232,290
________ _______
Closing shareholders' funds 262,800 285,014
======== =======
Consolidated Cash Flow Statement
Year ended 28 June 2003
Note 2003 2003 2002 2002
£'000 £'000 £'000 £'000
Net cash (outflow)/inflow from operating i (5,360)
activities 3,494
Returns on investments and servicing of finance
Interest received 362 512
Interest paid (2,056) (2,841)
_______ _______
Net cash outflow from returns on investments and
servicing of finance (1,694) (2,329)
Taxation
Corporation tax paid (200) (862)
Capital expenditure and financial investment
Reduction/(increase) in loan to joint venture 49 (117)
Payments to acquire tangible fixed assets (28,022) (25,241)
Proceeds of disposal of tangible fixed assets 67 68
________ ________
Net cash outflow from capital expenditure and (27,906) (25,290)
financial investment
Equity dividends paid (1,086) (739)
________ ________
Net cash outflow before use of liquid resources (36,246) (25,726)
and financing
Financing
Issue of ordinary share capital - 49,129
Purchase of own shares (8,285) -
Increase in borrowings 42,000 21,000
Repayment of borrowings - (36,985)
_______ ________
Net cash inflow from financing
33,715 33,144
_______ ______
(Decrease)/increase in cash (2,531) 7,418
======= ======
Reconciliation of Net Cash Flow to Movement in
Net Debt
Net debt at 28 June 2003
2003
Note £'000
Decrease in cash in period (2,531)
Cash inflow from increase in debt (42,000)
________
Change in net debt resulting from cashflows ii (44,531)
Net debt at start of year (19,125)
________
Net debt at end of year (63,656)
========
Notes to the Consolidated Cash Flow
Statement
Year ended 28 June 2003
i. Reconciliation of Operating Profit to Net Cash (Outflow)/Inflow from
Operating Activities
2003 2002
£'000 £'000
Operating profit 12,176
10,832
Depreciation 313 333
Amortisation - (30)
Loss on disposal 13 22
Increase in development property (986) (9,081)
(Increase)/decrease in debtors (20,109) 1,301
Increase in creditors 3,233 117
________ _______
Net cash (outflow)/inflow from operating (5,360) 3,494
activities ======== =======
ii. Analysis of Net Debt
At At
30 June Cash 28 June
2002 flow 2003
£'000 £'000 £'000
Cash in hand and at bank 1,875 (528) 1,347
Bank overdrafts - (2,003) (2,003)
________ ________ _______
1,875 (2,531) (656)
________ ________ _______
Debt due after one year (21,000) (42,000) (63,000)
________ ________ _______
Total (19,125) (44,531) (63,656)
======== ======== =======
Notes to the Accounts
Year ended 28 June 2003
1 Dividends
Subject to approval at the Annual General Meeting, the final dividend of 2.25p per
share will be payable on 12 December 2003 to shareholders on the register on 21
November 2003.
2 Earnings Per Share
The calculation of basic earnings per Ordinary Share is based on profits of
£10,454,000 (2002: £7,379,000) and on a weighted average of 53,159,872 Ordinary
Shares in issue during the year (2002: 45,657,565). The calculation of diluted
earnings per Ordinary Share is based on profits of £10,454,000 (2002: £7,379,000)
and on a weighted average of 53,159,872 Ordinary Shares in issue during the year
(2002: 46,094,559). The difference in the number of Ordinary Shares between the
basic earnings and diluted earnings per share is due to the effect of outstanding
warrants and share options.
3 Financial Information
The financial information set out in the release does not constitute the Company's
statutory accounts for the year ended 28 June 2003 and the year ended 29 June 2002.
Statutory accounts for 2002 have been delivered to the Registrar of Companies and
those for 2003 will be delivered following the Company's Annual General Meeting.
The financial information for the years ended 28 June 2003 and 29 June 2002 is an
abridged version of the audited accounts for those years, upon which the auditors
have issued unqualified reports which did not contain a statement under section 237
(2) or (3) of the Companies Act 1985. The financial information has been prepared by
the directors using the accounting policies of Freeport plc, which are consistent
with those set out in the 2002 Annual Report and Accounts.
4 Financial Statements
Audited financial statements and the annual report will be posted to shareholders on
7 October 2003 and thereafter may be obtained from the Company Secretary at Freeport
plc, 9-13 George Street, London W1U 3FL.
5 Annual General Meeting
The Annual General Meeting will be held on 13 November 2003 at 10.00am at the
offices of Dechert, 2 Serjeants' Inn, London, EC4Y 1LT.
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