12/03/2009 - 12:34

Diploma's interim net profit slumps

12/03/2009 - 12:34

Bookmark

Save articles for future reference.

Belmont-based property developer Diploma Group has booked an interim net profit of $941,000, a dramatic fall from the previous corresponding period's profit of $4.8 million.

Diploma's interim net profit slumps

Belmont-based property developer Diploma Group has booked an interim net profit of $941,000, a dramatic fall from the previous corresponding period's profit of $4.8 million.

In its belated report released today, the company said the previous year's earnings included a significant profit from the settlement of the Diploma Construction (WA) and Probuild Constructions (Aust) joint venture.

The net profit for the six months to the end of December 2008 also included an $832,000 foreign exchange loss and an insurance cost of $268,000.

Meantime revenue for the construction division, before intercompany eliminations, jumped 80 per cent to $89.4 million and profit before interest and tax was down 21 per cent to $6.4 million.

The construction portfolio currently consists of 18 projects with a total contract value of some $315 million.

The company had $9.7 million in cash and cash equivalents at the end of the reporting period.

 

 

Part of the interim report is below:

 

 

REVIEW AND RESULTS OF OPERATIONS

Diploma Group Limited (the Group) recorded a net profit after tax of $941K for the period ended 31 December 2008. The result for the current period and comparison to the prior period is a function of the solid performance by the construction division and a reflection that the prior period result includes a significant profit from the settlement of the Diploma Construction (WA) Pty Ltd and Probuild Constructions (Aust) Pty Ltd Joint Venture.


Revenue for the construction division, before intercompany eliminations was up 80% to $89,352K and profit before interest and tax was down 21% to $6,381K. After adjusting for the prior year JV settlement discussed above, profit before tax and intercompany eliminations, the construction division profit grew 280% from last year demonstrating the strong underlying performance of the construction division.

The construction portfolio consists of 18 projects with a total contract value estimated at approximately $315,000K across a variety of sectors including residential, commercial and industrial and the construction division is investigating further opportunities in the UAE and east coast of Australia.

The property division contributed $nil EBIT to the Group as no developments were completed during the period to 31 December 2008. The recognition of both profit and revenue is at settlement of the development.

The Sky and Rise developments are on track for completion this calendar year, while the first stage of the Joondalup development has been fast tracked and is expected to be completed by 30 June 2009.

The net cash out flow from operations of $22,624K includes $25,926K 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. After adjusting for the property development expenditure, the net cash inflow from operations was $3,302K.

While the property markets are expected to continue to feel the effects of the global financial crisis for some time due to the lack of credit and an easing of demand from the economic slowdown, the Company is well placed to capitalise on a recovery of the property market due to lower interest rates and the ongoing imbalance in the supply and demand for housing. The Company will also look to capitalise on future infrastructure spending programs announced by the Federal and State Governments.

There have been no significant changes to the Group's capital or debt profile during the period. As outlined elsewhere in this report there have been no significant changes in the state of affairs of the consolidated entity during the period, and all changes to the consolidated balance sheet since 30 June 2008 reflect the normal manner of the group's operations during the period.

DIVIDENDS

A fully franked dividend totalling $2,400K was paid on 1 December 2008 (2007: $1,925K paid on 22 October 2007).

EVENTS SUBSEQUENT TO BALANCE DATE

On 27 February 2009, Messrs D. Di Latte and N. Di Latte have agreed to provide a bank with security of $10,000K over their personal assets for the Sky Development project. As a result the bank has agreed to extend the facility until completion of the project on terms and conditions that it customarily includes in financing of this nature.

On 9 March 2009, the Company received a waiver of a breach of a financial covenant from another bank funding the Rise development.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options