The highlights are:
- net income increased by 13% to € 44.9m
- shareholders´ equity increased by 7% to € 707m
- total assets increased by 13% to € 1,417m
The board of Eurocommercial Properties N.V. announced today that as a result of higher earnings in the financial year to 30 June 2004 it proposes increasing the Company´s annual dividend by 5% to € 1.50 per depositary receipt (10 ordinary shares) from € 1.43 in 2003. Shareholders will again be offered the option of taking new shares from the Company´s share premium reserve if they wish, instead of the cash dividend. The price for these shares will be announced on 29 October 2004.
Net property income for the year rose to € 76.5 million from € 66.3 million largely as a result of property purchases. The overall net income after interest and other expenses was € 44.9 million for 2003/2004 and represents an increase of approximately 13% over € 39.6 million last year. All overhead expenses are now charged to income. Previously, 30% of these costs were charged against the revaluation reserve, as had been the normal practice with similar Dutch property companies. The previous comparative numbers have been adjusted to reflect the accounting change in order to show underlying earnings.
Net asset value
Net asset value before income appropriation improved by 3% to € 23.16 per depositary receipt as a result of an increase of independent property valuations and after allowing for an appropriate increase in the provision for potential future capital gains taxes. An amount of € 40 million has been released from this provision to pay Italian capital gains tax in December 2004 at the concessionary reduced rate of 19% compared with the current corporate income tax rate of 37%. As a result of this concession the tax book values of the majority of the Italian property portfolio have been stepped up to 96% of market values. The net asset value in June 2003 was € 22.53 per depositary receipt.
The Company´s property portfolio performed well over the year with a total return of 8.9%. The overall property occupancy rate is 99%. Average retail sales in the galleries of the Company´s shopping centres were up 1.8% on 2003 but individual centres have shown increases of up to 10%.
The Company´s independently assessed property values increased 2.3% overall compared with 2003.
Application for new French tax regime
The Company has decided to apply for the new French tax regime for real estate property investment companies listed on the Paris Stock Exchange (Euronext Paris) as from 1 July 2005. As from that date the revenues and capital gains from the French portfolio of the Company will be tax exempt. As a counterpart of this exemption, real estate property investment companies, which have elected for this new tax system - so called ´Sociétés d´investissements immobiliers cotées´ (SIIC) - will have to pay, over four years, an exit tax equal to 16.5% of the latent capital gains amount relating to French property. The Company has included in its provision for potential future capital gains taxes an amount of € 19.6 million for exit tax based on the market value of the French property portfolio as per 30 June 2004. The Company expects to be listed on Euronext Paris in the first half year of 2005.
Italian property management
The Company has changed its organisation in Italy to separate the management of its own properties from the third party work undertaken by its subsidiary Larry Smith Italia, the prominent specialist retail property consultant it purchased in 2001. The Company has transferred to its own office in Milan management and accounting staff who will be responsible for its portfolio of 8 shopping centres. The Company has also changed its involvement in Larry Smith Italia by selling the shares in the underlying company and leasing the trademark to five of its directors. ECP will, in return for the use of the Larry Smith name, the rights to which ECP retains,