Fraser and Neave's 9 months profit up 60%

Group divested glass manufacturing unit for a $310mln cash consideration as it garners 8% revenue growth.

Fraser and Neave, Limited (“F&N”) reported strong sales and profit performance for the third quarter ended 30th June 2010. Revenue rose 8 per cent to $1,409 million while profit before interest, taxation, discontinued operations, fair value adjustment and exceptional items (“PBIT”) for the same period jumped 10 per cent over a strong quarter last year, to $252 million. Most business units contributed to the Group’s positive performance. Strong rental income, progressive recognition of pre-sold projects and recovery in our core residential markets led Properties to its strong revenue and earnings performance, to $459 million and $130 million respectively.

Similarly, healthy consumer demand helped Food & Beverage (“F&B”) maintain its strong growth momentum. Breweries earnings soared 25 per cent to $74 million on a 29 per cent jump in revenue; in tandem with strong revenue growth, Soft Drinks earnings rose nearly 50 per cent to $20 million. For the nine months ended 30th June 2010, Group revenue improved 16 per cent to $4,150 million. Supported by healthy revenue growth in Properties and F&B, strong margins from pre‐sold residential properties, lower input costs and improved profitability in Publishing & Printing, PBIT jumped 44 per cent to $813 million.

Profit after taxation from continuing operations reported a gain of 81 per cent, to $643 million, exceeding FY2009 full year profit after taxation by 45 per cent. The Group’s earnings per share for the period improved to 31.5 cents, and net asset value per share grew to $4.19. Key developments (01st April to 30th June 2010), according to a Fraser & Neave report.

The Group successfully acquired the Starhub Centre for a cash consideration of $380 million. This prime 330,000 square feet, 10‐storey commercial building is located near the Somerset MRT station in the heart of Orchard Road, the pulsating prime shopping, dining and entertainment belt of Singapore. This site offers exciting potential, for re-development into a mixed high-end residential and retail development that can be integrated with The Centrepoint, our retail mall, which is currently connected to Starhub Centre via a second‐storey link bridge.

To cater to the growing needs of the upgrader segment, the Group continued to actively participate in tenders for residential sites under the Government Land Sales programme. This quarter, in a joint venture with Far East Organisation, the Group picked up its second residential site, in Yishun, for the development of approximately 660 units for $229 million, or $321 per square foot per plot ratio of the 714,000 square feet permissible gross floor area. Following these acquisitions, the Group now has a healthy gross land bank of over 2.2 million square feet of potential gross floor area to build more than 2,000 homes over the next couple of years in Singapore.

Overseas, the Group strengthened its position in Australasia with the acquisition of a 13.7-hectare site in Sydney, on the border of Ryde and Putney, for A$83 million ($98 million). This acquisition boosts the Group’s land bank in this key market to nearly 8.5 million square feet, for the development of over 5,800 homes. In China, the Group also reached a preliminary settlement with the local authorities on the future development plans of the 550,000 square feet phase 3 site of Vision Shenzhen Business Park project located in Shenzhen. This site, which is strategically located near the 5.5‐kilometer bridge connecting Shenzhen and the Hong Kong Western Corridor, has a developable gross floor area of about 2.5 million square feet, the bulk of which will be developed into a high quality business park.

In Food & Beverage, the Group expanded our presence in Indonesia with the launch of 100PLUS, the Number One isotonic beverage in Malaysia and Singapore. Launched in 1983, 100PLUS, the Group’s flagship brand in the Non-Beer business, has presence in 17 countries and is proud to add Indonesia to this growing list.

Following an exhaustive review of the glass manufacturing business, the Group decided the best way to enhance value for shareholders was by divesting this business. Consequently, the glass manufacturing business was sold for a cash consideration of US$222 million ($310 million), with a gain of RM370 million ($155 million). The deal was completed on 16 July 2010.