Fraser and Neave profit up 144% to $474mln

Revenue shores up to more than 20% as all business units contributed to group's strong performance.

Fraser and Neave, Limited (F&N) recorded accelerated profit growth in the second quarter ended 31st March 2010, outpacing the already strong growth achieved in the first quarter of the year as well as in the same period last year. Revenue surged over 20 percent to $1,367 million while profit before interest, taxation, fair value adjustment and exceptional items (PBIT) for the same period jumped 80 percent from the same period last year to nearly $300 million, marking its fifth successive quarterly profit increase. All business units contributed to the Group's positive performance. Strong rental income, progressive recognition of pre-sold projects and recovery in the company's core residential markets led Properties to its strong revenue and earnings performance, to $410 million and $159 million respectively. Similarly, strong consumer demand helped Food & Beverage (F&B) maintain its strong growth momentum. Breweries earnings soared 30 percent to $74 million on a 21 percent jump in revenue; in tandem with revenue growth, Soft Drinks earnings rose 19 percent to $22 million, according to a Fraser & Neave report.

For the half year ended 31st March 2010, Group revenue improved 19 percent to $2,828 million. Supported by healthy revenue growth in Properties and F&B, strong margins from pre-sold residential properties and lower input costs, PBIT jumped 66 percent to $564 million.

The Group's earnings per share for the period almost doubled to 21.9 cents, and net asset value per share also improved to $4.16.

Chairman of the Fraser and Neave, Limited, Mr Lee Hsien Yang said, "The Group is reaping the reward for our relentless efforts in brand building, product innovation and focus on our core competencies. The returning consumer confidence has not only helped to drive beverage sales, but also purchases of capital goods, such as homes. Our Food & Beverage unit gained strongly in key growth markets in Asia Pacific while Properties benefited from our strategy to reposition Development Property into the mass- and mid- market segment in Singapore, and to sharpen our focus on key overseas markets like China and Australia. Just as importantly, solid execution of our strategic initiatives by our experienced team is a critical contributor to these superior results.

Our winning combination puts us in the driving seat to capture value from the improving economic environment in Asia."

Directors have declared an interim dividend of 5 cents per share, up from 3 cents from the previous year, to be paid on 25th June 2010.

"In part due to the measures we undertook last year, our financial and liquidity positions have strengthened. We have reduced our gearing from 69 percent to 43 percent, and visibility into our future cash flow generation has allowed us to re‐instate our interim dividend to 5 cents," added Mr Lee.

Key developments
The Group's 39.7 percent‐owned joint venture, Asia Pacific Breweries Limited (APB) completed the acquisition of the Bintang brand, 80.6 percent interest in PT Multi Bintang Indonesia, Tbk, and 87.3 percent interest in Grande Brasserie de Novelle Caledonie S.A.. In exchange, it sold its Indian breweries to Heineken. The acquisitions of Indonesia's number one beer brand, and controlling interest in the market leader in Indonesia and New Caledonia, further consolidate APB's position in ASEAN and fit its
vision of being a leading brewery group in Asia Pacific. Following the completion of these transactions, the Group's regional brewing presence is enlarged to a network of 37 breweries in 14 countries.

In line with the strategy of unlocking value from the Group's investment properties, two recently completed malls, Northpoint Extension and YewTee Point, were sold to the Group's retail real estate investment trust, Frasers Centrepoint Trust (FCT), for a total cash consideration of $290 million. The sale in February 2010 further enhances the Group’s capital productivity, following the successful injection of Alexandra Technopark into Frasers Commercial Trust in August 2009. To part‐finance the acquisitions, FCT successfully placed 137 million new units at an issue price of $1.33 per unit. The Group did not subscribe to these new units and consequently, its stake in FCT was reduced to 42.7 percent, from 51.9 percent. This not only improved FCT's free float, but also aligned with the Group's stated objective to pursue an asset‐light business structure. FCT has since become an associated company and accounted for under the equity accounting rules.

The Group remains confident in the mass‐ and mid‐market residential segments in Singapore. To cater to the growing needs of the up‐grader segment, the Group tapped the government land sale programme and added 610,000 square feet of developable area ‐ the equivalent of 520 executive condominium units ‐ to our Singapore pipeline. Following this acquisition, the Group has a healthy land bank of approximately 2 million square feet of potential gross floor area to build approximately 1,700 homes over the next one and half years in Singapore.