If ever there were a single indicator of the strength of Western Australia’s economic good fortune, tycoon Stan Perron’s private investment empire would be it, having basically trebled its profits in just four years.
If ever there were a single indicator of the strength of Western Australia’s economic good fortune, tycoon Stan Perron’s private investment empire would be it, having basically trebled its profits in just four years.
Revealed in the latest annual report of Mr Perron’s key operating entity, Perron Investments Pty Ltd, net profit for the business grew 35 per cent in the year ending June 30, to $258.9 million from $191.3 million in the previous corresponding period.
If adjustments for valuations on investments reflected in the past two years’ accounts due to changes in accounting standards are removed, the net profit would be almost $180 million, compared with about $130 million the year before and $60 million in 2003-04.
The growth in profitability of Perron Investment’s property-biased portfolio has outstripped the rise in value of assets recorded in the balance sheet.
In the same four-year period, net assets have nearly doubled, to $1.15 billion from around $600 million.
The company, which also receives income from the successful WA Toyota franchise, owns significant amounts of retail shopping space, including Belmont Forum and Mirrabooka Square Shopping Centre.
It also has a big office exposure, including a half share of Perth’s tallest building, Central Park, which it bought for $150 million in October 2003 and is now valued at $300 million.
The 2006-07 accounts show Perron Investments, led by Perron Group general manager Ian Armstrong, has been prepared to borrow during this heady period, more than doubling bank loans in the period to $685 million in 2006-07 from $333 million in the previous corresponding period.
Total borrowings rose to $982.5 million from $630.3 million.
A significant amount of the bank debt was used in the $340 million acquisition of half shares in two Sydney shopping centres in a joint venture with Mirvac Group, which bought the assets from Walker Corporation Pty Ltd, helping push total assets to $2.42 billion in 2006-07, up from $1.69 billion in the previous financial year.
Mr Armstrong said the purchase of assets in Sydney was not a strategic move to diversify geographically from WA, which represents 50 per cent of the A-grade property portfolio.
“We would buy good value shopping centre assets wherever they are,” he said.
Mr Armstrong said much of the portfolio had reweighted back to WA due to strong asset revaluations in the recent past.
Perron Investments has also increased the value of its exposure to traded securities.
Share investments grew almost 30 per cent to $78 million in 2006-07 from $60.2 million the previous financial year, while unit trust investments leapt almost 32 per cent to $449.7 million from $335.4 million.
Total revenue for the company was $573.7 million, up from $457.2 million, including fair value adjustments for investment property of $166.3 million and financial assets held for trading of $38.1 million.
Total operating revenue was $340.9 million, up from $245.8 million, with rental income alone up almost 18 per cent to $106.5 million from $90.5 million.
Along with the rise in profitability came an even steeper increase in tax. Perron Investments revealed its income tax attributable to profit was $123.9 million, up 44 per cent from $85.9 million.
