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Singapore GLC Australand profit drops 79%
Monday, 28 July 2008
Daily Telegraph
Ausraland Property has reported a 79 per cent fall in first half profit after the company wrote down the value of some projects due to the downturn in the residential real estate market.
To help it through the downturn, the property developer and investor will now raise between $302 million and $557 million through an entitlement offer and use some of the proceeds to pay down debt.
Net profit for the six months ended June was $25.55 million, down from $119.6 million in the same period the year before.
The company wrote down a total of $34.7 million on the value of some projects, in light of the downturn in the residential market in New South Wales.
Australand follows companies such as Mirvac and GPT Group in being hurt by the downturn in the real estate market, as higher interest rates, stemming from the credit crisis and Reserve bank of Australia rate hikes, hurt the demand for property.
Contributing to the profit decline, the company also revalued down investment property assets by $7.3 million in the first half.
Before the writedown and revaluations, Australand's operating profit was $67.5 million, up six per cent.
"Despite the volatile market and difficult trading conditions, Australand delivered solid operating performances from each of its businesses,'' chief executive Bob Johnston said.
Australand is forecasting its full-year net profit to fall at least 34 per cent to between $171.6 million and $176.6 million, excluding property revaluations and one-off non cash items. Profit in 2007 was $269.2 million.
Its full-year operating profit will be around the lower end of February's guidance of two per cent to three per cent growth, it said.
"Australand took the decision to write down because there's absolutely no liquidity in the market at the moment,'' Aegis Equities Research analyst Sam Haddad said.
"The raising is positive for their capital position and will put them in a better position to fund developments.''
Australand will raise will funds through a renounceable one-for-one share entitlement offer, which won't be underwritten, at 60 cents per stapled security.
Australand's key security holder CapitaLand has committed to take up its full entitlement.
Mr Haddad said investors were likely to be confidant in taking part because the major shareholder was taking up the offer.
Mr Johnston said the capital raising was a "pre-emptive move by Australand to strengthen its balance sheet and enable future development.''
It will cut the company's gearing to between 29.9 per cent and 36.3 per cent, from 43.8 per cent, depending on investor takeup.
Australand chief financial officer Tiernan O'Rourke said the company is operating within all its debt covenants.
Australand also said revenue from continuing operations increased six per cent to $436 million in the half.
Mr Johnston said the commercial and industrial division, which increased profit before tax by 93 per cent to $46.4 million, was a standout.
The investment property division grew 20 per cent to $64 million while the residential division, excluding the writedown, was flat at $34.2 million.
Meanwhile, Australand has also cut the payout ratio of its development business zero to strengthen its capital management position, a policy to be reviewed at the end of 2009. It will maintain full distribution of its property trust earnings.
Australand maintained its interim distribution per stapled security at eight cents. Net tangible assets per security fell two per cent to $1.66.
Australand shares are in a trading halt after last trading at 97.5 cents. They reached a record low 89 cents on July 17, and have fallen 58 per cent this year.
Aegis's Mr Haddad said the share price may fall further in the short term, to then recover over the longer term.
"The company has a good pipeline of projects. The business and the management are sound,'' he said.
Monday, 28 July 2008
Daily Telegraph
Ausraland Property has reported a 79 per cent fall in first half profit after the company wrote down the value of some projects due to the downturn in the residential real estate market.
To help it through the downturn, the property developer and investor will now raise between $302 million and $557 million through an entitlement offer and use some of the proceeds to pay down debt.
Net profit for the six months ended June was $25.55 million, down from $119.6 million in the same period the year before.
The company wrote down a total of $34.7 million on the value of some projects, in light of the downturn in the residential market in New South Wales.
Australand follows companies such as Mirvac and GPT Group in being hurt by the downturn in the real estate market, as higher interest rates, stemming from the credit crisis and Reserve bank of Australia rate hikes, hurt the demand for property.
Contributing to the profit decline, the company also revalued down investment property assets by $7.3 million in the first half.
Before the writedown and revaluations, Australand's operating profit was $67.5 million, up six per cent.
"Despite the volatile market and difficult trading conditions, Australand delivered solid operating performances from each of its businesses,'' chief executive Bob Johnston said.
Australand is forecasting its full-year net profit to fall at least 34 per cent to between $171.6 million and $176.6 million, excluding property revaluations and one-off non cash items. Profit in 2007 was $269.2 million.
Its full-year operating profit will be around the lower end of February's guidance of two per cent to three per cent growth, it said.
"Australand took the decision to write down because there's absolutely no liquidity in the market at the moment,'' Aegis Equities Research analyst Sam Haddad said.
"The raising is positive for their capital position and will put them in a better position to fund developments.''
Australand will raise will funds through a renounceable one-for-one share entitlement offer, which won't be underwritten, at 60 cents per stapled security.
Australand's key security holder CapitaLand has committed to take up its full entitlement.
Mr Haddad said investors were likely to be confidant in taking part because the major shareholder was taking up the offer.
Mr Johnston said the capital raising was a "pre-emptive move by Australand to strengthen its balance sheet and enable future development.''
It will cut the company's gearing to between 29.9 per cent and 36.3 per cent, from 43.8 per cent, depending on investor takeup.
Australand chief financial officer Tiernan O'Rourke said the company is operating within all its debt covenants.
Australand also said revenue from continuing operations increased six per cent to $436 million in the half.
Mr Johnston said the commercial and industrial division, which increased profit before tax by 93 per cent to $46.4 million, was a standout.
The investment property division grew 20 per cent to $64 million while the residential division, excluding the writedown, was flat at $34.2 million.
Meanwhile, Australand has also cut the payout ratio of its development business zero to strengthen its capital management position, a policy to be reviewed at the end of 2009. It will maintain full distribution of its property trust earnings.
Australand maintained its interim distribution per stapled security at eight cents. Net tangible assets per security fell two per cent to $1.66.
Australand shares are in a trading halt after last trading at 97.5 cents. They reached a record low 89 cents on July 17, and have fallen 58 per cent this year.
Aegis's Mr Haddad said the share price may fall further in the short term, to then recover over the longer term.
"The company has a good pipeline of projects. The business and the management are sound,'' he said.
