Dutch developer AM NV saw the operating result fall by 45% to €27.4 million in the first half of 2004. The operating margin (operating result as a proportion of operating income) for the first half of 2004 came in at 5.3% (first half 2003: 10.5%). The lower result is largely due to planning delays affecting the development of retail parks.
In addition, most of the planned disposals of shopping centres that are currently either in preparation or under construction are expected to take place in the second half of the year. AM also made upfront investments in retail development projects in the ‘new’ countries, such as Poland, Hungary and Turkey, in the first six months. These investments in growth markets depressed the half-year results but are expected to make significant contributions to AM’s profitability in the medium term.
The operating income showed marked growth, increasing by 8% to €516.5 million. In the first half of 2004, shopping centre development activities generated €190 million in operating income, the same amount as in the first half of 2003, and accounted for 37% of the total operating income. The office development volume shrank to €26 million (first half 2003: €87 million), representing 5% of the total operating income. Operating income generated by the residential and land development sector increased to €301 million (first half 2003: €201 million), meaning that this activity accounted for 58% of the total operating income.
Earnings per share
Earnings per share after amortisation of goodwill fell in the first half of 2004 to €0.12 (first half 2003: €0.29). Earnings per share before amortisation of goodwill came in at €0.19 (first half 2003: €0.35). The weighted average number of shares in issue increased from 85.7 million in the first half of 2003 to 88.8 million in the first half of 2004.
The capital ratio (capital base as a proportion of balance sheet total) remained well above the targeted minimum of 35% and amounted to 40.5% as at 30 June 2004 (30 June 2003: 42.5%). The capital base (shareholders’ equity including minority interests + subordinated loans) increased to €554 million (30 June 2003: €521 million).
The net cash flow in the first half of 2004 was €132 million positive. In the first half of 2003, there was a negative cash flow of €74 million. The positive cash flow in the first six months of this year resulted from sizeable project revenues plus the contracting of a medium-term loan of €110 million.
AM has projects under construction in the Netherlands, Belgium, Germany, France, the United Kingdom, Portugal, Spain and the Czech Republic. Projects are also under preparation in Poland, Hungary and Turkey.
In the first half of 2004, AM sold the Les Quatre Chemins shopping centre in Vichy (France) to Bail Investissement and the Forum Viseu shopping centre (Portugal) to ING Real Estate Investment Management. The company also signed a contract with Rodamco Europe to develop Centrum Chodov in Prague (Czech Republic). Centrum Chodov will be part of the Rodamco Europe investment portfolio. These sold shopping centres together extend to around 100,000 m2 of retail space and represent a turnover of approximately €225 million. With Olympia Plzen, AM opened its first shopping centre in the Czech Republic. The company also took over the remaining 50% held by Ahold in Retail Development Company (RDC).
In Amsterdam, the Bos en Lommerplein shopping centre, which also includes the Bridge Buildings spanning the A10 motorway, was opened.
Following hard on the heels of the start of work on the major inner-city project Victoria Square in Belfast at the end of 2003, AM was awarded the contract to redevelop the centre of Wolverhampton early this year. This second AM project in the United Kingdom involves 45,000 m2 of retail space, representing a turnover volume of around €315 million.
AM is concentrating on custom developments for off