AM (Amstelland MDC NV), developer of urban centres, shopping centres, offices and housing estates, achieved growth in net result of 58.2% in 2002. The net result rose from â⬠33.0 million (2001) to â⬠52.2 million. Operating income was up 14.2% from â⬠741.4 million (2001) to â⬠846.8 million. Earnings per share grew by 20.6% to â⬠0.76 (2001: â⬠0.63). The dividend proposal to shareholders is â⬠0.33 per share, an increase of 32.0% compared with 2001 (â⬠0.25). AM expects to achieve growth in earnings per share of 10% to 15% in 2003.
Much of the growth in result is attributable to the development of shopping centres. AM, created in August 2002 on Amstellandââ¬â¢s acquisition of MDC, is increasingly active in this sector on a European scale. In Southern Europe for instance, there is a significant backlog of demand for large shopping centres with leisure facilities. These projects have higher margins than are normal in ââ¬Ëmatureââ¬â¢ markets in Western Europe. Development of residential properties also contributed to the growth in results.
Spread of the contribution to result
In 2002, residential development accounted for â⬠452 million, about 54%, of total operating income. Its operating result (operating profit plus results of unconsolidated participating interests), at â⬠37 million, was 38% of the total operating result. This activity generated an operating margin (operating result as a percentage of operating income) of over 8%, which is significantly above the average for the Dutch residential market.
At â⬠206 million, office development represented 24% of operating income. With an operating result of almost â⬠10 million (10% of the total), the operating margin was 4.7%. This figure illustrates the current poor conditions in the office development market in the Netherlands. Rent guarantees for offices which had not been fully let at the end of 2002, depressed the result.
The development of shopping centres generated â⬠188 million, 22% of the operating income. The operating result on this activity was over â⬠41 million, or 43% of the total operating result. This activity, therefore, had an operating margin of over 22%.
The operating margin on all activities increased from 7.2% in 2001 to 11.4% in 2002. MDCââ¬â¢s activities have been consolidated from 1 July 2002. Although total operating income rose by over 14%, Amstellandââ¬â¢s operating income on an autonomous basis fell by 16%. It had been announced during the presentation of the half-year figures in August 2002 that the operating income was expected to fall by about 9%. Despite the fall in operating income, the organic growth in Amstellandââ¬â¢s net result was, as projected, 15%.
Strong financial position
As a result of the acquisition of MDC, the balance sheet total rose to â⬠1,115 million at the end of 2002. Since the acquisition was financed to a significant extent by shares, shareholdersââ¬â¢ equity and the capital base rose in line with each other, doubling to â⬠498 million and â⬠510 million respectively. The capital ratio (capital base as a percentage of the balance sheet total) was 45.8% at the end of 2002. Goodwill, which has been capitalised since 2001 and is being amortised over 20 years, was â⬠209 million at the end of 2002. The capital ratio excluding goodwill is 32%.
Dividend proposal
AM proposes to distribute a dividend to its shareholders of â⬠0.33 per share, payable at the shareholderââ¬â¢s option in cash or shares. This means that 53.8% of the net result is being distributed as dividend, based on the number of shares outstanding at the end of 2002. Share capital rose to 85.088 million ordinary shares in issue at the end of 2002 (year-end 2001: 52.442 million) as a result of the share issue in connection with the acquisition of MDC and opting for a stock dividend, which was the preference of almost half of the shareholders in 2002. The pay-out on the basis of the weighted average number of shares in issue is 43.4%.
