Finbar flags profit slide, smaller payout

Perth-based apartment developer Finbar Group has flagged a near-70 per cent fall in net profit for FY16, on the back of investment property impairments.

Finbar told the market late last night that it expects to report a net profit of $8 million for the 2016 financial year, down 69 per cent from its $25.9 million result in FY15.

The severity of the profit slide was attributed to $13 million in investment property impairments.

Pre-sale contracts are expected to grow by about 10 per cent to $451 million, with the company’s project pipeline forecast to fall by $160 million to $1.84 billion.

 Finbar also expects to declare a final dividend of 4 cents per share to bring its total dividend payout for FY16 to 7 cents; that’s down by 3 cents on its payout in FY15.

Managing director Darren Pateman said FY16 had been a more subdued year due to the property market activity in Western Australia.

“However our projected result reflects a solid operating performance,” he said.

“Our focus this year has been to solidify our market share position amid reduced competitive activity and to drive pre-sales to ensure the continuation of project commencements for the benefit of future earnings.

“Notwithstanding the softer local economic and market conditions, we expect to deliver a respectable operating profit finishing the year with a strong balance sheet with no residual debt on stock completed and held for sale.

“The biggest anticipated negative impact on our reported net profit will be the non-cash effects of the revaluations of Finbar property held for investment income purposes.

“Whilst our property occupancy rates are high and rents achieved are above market, the impact of a reduction in prevailing market rents state-wide have had a negative impact on external valuations.”

Finbar’s current projects under construction include Aurelia in South Perth, Concerto in East Perth, and Motive in West Leederville.

Finbar shares were 2.4 per cent higher to 85 cents each at 10:20am.