Eurocommercial Properties N.V. (âthe Companyâ or âECPâ) announced its December 2004 half year results today, showing an increase of 14.5% in the Direct Investment Result to EUR 24.4 million compared to the December 2004 half year figure of EUR 21.3 million.
Adoption of new Dutch accounting principles
The Company has adopted the recent changes in Dutch accounting principles so that the profit and loss account includes realised and unrealised revaluation results and movements in provisions, which were previously part of movements in equity. These ex balance sheet items are now separately shown as âIndirect Investment Resultâ. âDirect Investment Resultâ therefore is the equivalent of Net Income after Taxation under the old GAAP rules, with which a direct comparison can be made.
The Company has decided to publish its detailed interim report by way of this statement and will no longer print a separate interim report to follow later. This enables the Company to provide the market earlier with more detailed information.
Direct Investment Result and dividend
The Direct Investment Result for the six months to 31 December 2004 was EUR 24.4 million compared with EUR 21.3 million for the same period in 2003, an increase of 14.5%. The Direct Investment Result for the three months to 30 September 2004 was EUR 11.7 million. The Direct Investment Result per depositary receipt increased by 9.9% to EUR 0.79 compared to the previous corresponding period. Under current circumstances the Board expects that the annual dividend per depositary receipt for 2005 will be no less than the dividend for 2004.
Net asset value
The net asset value per depositary receipt at 31 December 2004 was EUR 22.59 which compares with EUR 21.82 at 31 December 2003. The net asset value at the full year end at 30 June 2004 was EUR 23.16 but this figure included the annual dividend of EUR 1.50 per depositary receipt paid in November.
The Company´s properties have not been revalued since the regular annual valuations in June 2004 and will be independently revalued next in June 2005. The reported revaluation result of EUR 1.2 million is due to currency movements (Swedish Kroner).
The Company increased its share capital by 2.7% in November 2004 by issuing bonus depositary receipts for a total amount of EUR 21.6 million to those investors who opted for depositary receipts instead of the cash dividend. The 5.7% stock dividend option (2 for every 35 held) was taken up by 47% of holders of depositary receipts. Last year the take up was also 47%.
European retail property markets have strengthened further in the last six months reflecting lower long term interest rates and continued strong demand from local and international institutional investors.
Initial net yields for prime retail properties in France and Italy are now in the range of 5.5% to 6% and 6.25% to 6.50% in Sweden, representing a hardening of around twenty five basis points in all three countries. Few transactions have taken place in any major European market, however, because of the scarcity of sellers, a situation that is unlikely to change in the near future.
The supply of new shopping centres has increased in Italy after a late start compared with France and Sweden, but density levels remain lower than in those countries with, in the North of Italy, higher disposable incomes.
The shop leasing markets in France, Italy and Sweden remain strong and Eurocommercial Propertiesâ centres continue to enjoy over 99% occupancy with every prospect of quite reasonable rental growth.
Retail sales turnover growth in ECP centres has been rather better than expected earlier in the year, given lacklustre economies, with November and December being particularly good months in France. Overall, average turnover for the half year to December 2004 was 2.7% higher than for 2003 on a like for like basis. Eurocommercial Properties French shopping centres showed an average increase of 4.0% and those in Italy and Sweden 2.0% and 2