06/11/2007 - 22:00

Diploma buys CWA House

06/11/2007 - 22:00

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The 40-year-old CWA House in Hay Street, West Perth, has been bought by Belmont-based construction company Diploma Group Ltd, which has a 30-apartment luxury residential development for the site in its float plans.

The 40-year-old CWA House in Hay Street, West Perth, has been bought by Belmont-based construction company Diploma Group Ltd, which has a 30-apartment luxury residential development for the site in its float plans.

Looking to cash in on the booming property sector, Diploma has revealed plans in its prospectus to seek approval for up to 4,500 square metres of A-grade office space in the mixed-use development, which it claims will generate total revenue of $70 million.

The price for the site was not disclosed in the prospectus which said it was still under contract. A price of around $16 million was expected in the market.

Operating for more than 30 years, Diploma is forecasting dramatic growth, with the directors’ unaudited forecasts nearly doubling revenue and almost quadrupling profit, as it seeks up to $9 million for a stock market float.

Adam Rankine-Wilson’s advisory firm Capital Investment Partners is lead manager to the float, which will sell up to 15 per cent of Diploma to value the company at $60 million.

According to its prospectus, the company’s historical net assets at June 30 were about $2 million.

Diploma turned a profit of more than $1.9 million on turnover of $53.5 million in the financial year ending June 30 2007, a big leap from $806,000 profit on $23.2 million in revenue the previous year.

But that rise is dwarfed by its forecast to deliver a $7.1 million net profit on $100.4 million in turnover this financial year.

A significant component of the company’s current construction portfolio, two Adelaide Terrace developments involve joint ventures with related parties – companies controlled by founder Dominic Di Latte, his son Nick, who has been managing director since 2005, and engineer John Norup, who joined the group two years ago after being a director of Broad Construction Services Pty Ltd.

Diploma has an 80 per cent participating interest in the two projects, the 22-level Sky Apartments project at 148 Adelaide Terrace and the 25-level Rise Apartments project at 155 Adelaide Terrace. Under the arrangements, Diploma also has some liability for security and completion delays.

Two months ago, Diploma ended another joint venture arrangement it had with Probuild Constructions (Aust) Pty Ltd. The prospectus said Probuild would complete the projects in exchange for $7.6 million, which represents Diploma’s share of the profits.

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