Diploma Group has released its first results as a listed company, offering half year returns that its says show the builder and developer is on track to meet prospectus forecasts, with a big boost from the decision to end its joint venture with Probuild.
Diploma Group has released its first results as a listed company, offering half year returns that its says show the builder and developer is on track to meet prospectus forecasts, boosted by the decision to end its joint venture with Probuild.
Net profit for the Belomont-based company was $4.8 million on revenue of $39.2 million for the half year ending December 31, which Diploma says puts it on track to deliver a $7.1 million net profit on $100.4 million in turnover this financial year.
In the previous corresponding period, net profit for $1 million for the first half of 2006-07 on revenue of $20.3 million.
Gross profit on its construction, interest and contracting busienss dropped to $2.1 million from $2.6 million the previous corresponding period.
The net profit for the half was positively impacted by $7.6 million gross profit contribution gained from the early settlement of a joint venture between Diploma Constructions (WA) Pty Ltd and Probuild Constructions (Aust) Pty Ltd which was dismantled ahead of the company's listing. The settlement represented the discounted amount of Diploma Group's forecast final profit on these projects
Diploma also said it is to pay $10 million for CWA House at 1174 Hay Street, West Perth, with settlement to occur in October 2008.
Below is the announcement from Diploma:
The Diploma Group has released outstanding half year results that support the company's aggressive growth strategy, as the WA resources boom continues to sustains Perth's property development market.
Highlights include:
- 146% rise in first half revenue to $49.700 million
- 378% rise in first half EBIT to $6.901 million
- 195% rise in net assets to $5.971 million
- 379% increase in EPS to 4.07 cents per share
- Solid cash balance of $7.258 million
- 13 projects completed during the first half
- 10 new projects secured totalling $210 million
- Construction work book in excess of $340 million
- On track to meet prospectus forecast of NPAT of $7.085 million
- Sky & Rise projects on track for completion in FY 2009 and 2010
- Just awarded Joondalup Village Apartment Project - which will consist of 187 multiple dwellings and 5 commercial tenancies with final construction stage expected to be complete by the end of 2009
Below is a copy of the directors' statement from the half yearly:
Diploma Group Limited (the Group) recorded a net profit after tax of $4.810 million for the period ended 31 December 2007. This compares favourably to the previous corresponding period result of $1.006 million for 31 December 2006 and represents an increase of 378% during the period.
Looking ahead to 30 June 2008 the Directors believe that Diploma Group Limited is on track to meet its Prospectus forecast of $7.085 million profit after tax.
The key highlights of the Group for the period are:
- Successful IPO and admission to the Official List of the ASX on 5 December 2007. 18 million shares were offered to the public with the offer being oversubscribed;
- Continued strong performance in the construction division with a number of new projects secured during the period;
- Early settlement of the Diploma Constructions (WA) Pty Ltd and Probuild Constructions (Aust) Pty Ltd Joint Venture. This settlement contributed $7.600 million in gross profit to the Group; and
- Good progress on existing property development projects with development approval having been received on the Joondalup Village Project.
Key financial highlights of the Group for the period are:
- Net profit after tax was $4.810 million (December 06: $1.006 million);
- Revenue increased 93% to $39.199 million (December 06: $20.265 million);
- Earnings before interest and tax (EBIT) of $6.901 million (December 06: $1.443 million);
- Earnings per share (EPS) of 4.07 cents (December 06: 0.85 cents); and
- As at 31 December 2007 net assets were $5.971 million (June 07: $2.026 million);
- As at 31 December 2007 net tangible assets per security was $0.05 (Dec 06: $0.02).
At 31 December 2007, the Group had current assets of $32.687 million and current liabilities of $37.593 million, which results in negative working capital of $4.906 million. This has come about because an existing project specific debt facility used to finance the purchase of a piece land relating to our Joondalup Village Apartment development has been classified as current while the land (or inventory) has been classified as non-current.
This mismatch in classification occurred due to delays in receipt of appropriate development approvals which in turn delayed the refinancing of this project specific debt.
The required development approvals have now been received, (received on 19 February 2008), along with an offer from the existing debt provider regarding the refinancing of this debt as long term. Once negotiations are concluded the Group will be in a positive working capital position.
The net cash out flow from operations of $18.882 million includes $17.965 million in cash outflows from property development expenditure. This property development expenditure has been funded primarily by debt and the cash inflow from this debt finance is classified as a financing activity.
Construction Division
The construction division contributed EBIT to the Group of $8.115 million (December 06: $1.423 million). Operating revenue was $49.700 million (December 06: $20.238 million) before intercompany eliminations.
The construction portfolio consists of 22 projects with a total contract value estimated at approximately $340 million across a variety of sectors including residential, commercial and industrial.
The construction division continues to target negotiated contracts with the majority of the current workbook having been negotiated.
13 projects with a value of approximately $60 million were completed during the period.
The work-in-hand was replenished by securing 10 new projects with a value of approximately $210 million, including Durack Stage 2 office building, Zenith - a 24 residential tower and Joondalup Village apartment project.
Development Division
The property division contributed $nil EBIT to the Group as no developments were completed during the period to 31 December 2007. The recognition of both profit and revenue is at settlement of the development.
The Sky and Rise apartment developments are on track for completion by December 2008 and July 2009 respectively.
Development approval was received on 19 February 2008 for the Joondalup Village Apartment project. A sales and marketing campaign will commence immediately along with refinancing of the project which will impact favourably on the current working capital of the Group.
Dividends
A fully franked dividend totalling $1,925,000 was paid on 22 October 2007. This dividend
was declared and paid by a subsidiary company of the Group prior to the Group's
admission to the Official List of the ASX.
Below is a copy of the release regarding Joondalup:
Diploma Properties announces the commencement an official project sales launch in early March 2008 for Joondalup Village, a new high quality and affordable residential and commercial development consisting of 187 multiple dwellings and 5 commercial tenancies located in the heart of The City of Joondalup.
Joondalup Village will provide a range of affordable housing choices for Joondalup City's growing population as well as commercial opportunities to support local business development.
Diploma Group Managing Director Nick Di Latte said the Joondalup Village Apartments will meet the needs of WA residents seeking affordable living within established Perth suburbs.
"There is an increasing demand for high quality, affordable accommodation in the city. The locality of Joondalup Village will supply housing that supports The City of Joondalup's vision to be a sustainable City and community that are recognised as innovative, unique and diverse."
Joondalup Village will be centrally located, on a unique parcel of land to one side of the Campus District; its prominent location at the southern gate way to Joondalup City Centre lends Joondalup Village to be developed as a landmark, which is reflected in it's architectural design.
Joondalup Village will consist of 3 separate villages: Gateway, Edge and Cove, which are located at Walsh Loop, Deakin Gate and Molly Promenade, respectively.
The official sales launch will commence in March 2008 with the release of Gateway and Edge, which will supply 122 one, two and three-bedroom, architecturally designed residential apartments, and 5 commercial tenancies to the market.
Prices will begin at $310,000 for a 1-bedroom apartment, with total building height ranging from three to six stories.
The Diploma Group anticipates construction of Joondalup Village to be completed towards the later part of 2009.
