National property developer Peet has announced strong results in its year end profit statement, with an operating profit after tax of $31.2 million, excluding revaluation of assets.
National property developer Peet has announced strong results in its year end profit statement, with an operating profit after tax of $31.2 million, excluding revaluation of assets.
Peet chief executive Brendan Gore said the result was a strong performance in difficult market conditions, despite it being a 36.7 per cent reduction on the previous year's profit.
The group's statutory profit after tax was $12 million.
"The group's in a very strong position for growth, we're well capitalised and we've actually secured an extension for our core debt facilities for a further three years, which I think in this market is exceptional," Mr Gore told WA Business News.
"We're well hedged and our cost of debt is very low so in terms of capital adequacy we're certainly very well placed and we're looking forward to a bright future."
Mr Gore said Peet was in a good position to increase its presence in Western Australia, fundamentally through its 3,300 dwelling Alkimos development.
"We certainly think its an iconic asset and very well located, the northern corridor is a high growth area," Mr Gore said.
The ASX release is pasted below:
20 August 2009
Peet results show strong response to challenging market
Increase in revenue of 5.3% to $176.8 million
Operating net profit after tax of $31.2 million (excluding write-down in carrying value of
inventories)
Operating earnings per share of 13.2 cents (pre write-down)
Final dividend of 4 cps, fully franked – 7 cps, fully franked, for the full year
Write-down in carrying value of inventories of $19.2 million, net of tax
Statutory profit after tax of $12.0 million
More than 2,400 Company-owned and managed lots sold – up 6% compared with the
previous corresponding period – for a gross value of $447.0 million
A total of 1,048 lots under contract as at 30 June 2009, 11.3% more than at the same
time last year, for a gross value of $195.7 million
Successful institutional and retail capital raising of $77.7 million completed in May 2009
Gearing1 at 34%
Extension of the maturity date of the Group’s core debt facility for a further three (3) years
Announcement of a new retail land syndicate
Peet Limited today announced an operating profit after tax (excluding write-down in carrying value of
inventories) of $31.2 million for the year ended 30 June 2009.
It also announced its first new syndication in more than a year – the $22 million Peet Point Cook
Kingsford Syndicate – which will purchase a 40.2 hectare property immediately opposite Peet’s
successful Innisfail Estate, approximately 25 kilometres from the Melbourne CBD.
Managing Director and Chief Executive Officer, Brendan Gore, said that while the full year operating
result represented a 36.7% decrease on the previous corresponding period, it represented a solid
performance in what had been particularly difficult and challenging market conditions.
“The increase in revenue (up 5.3%) from strong sales, a significant reduction in net debt and relatively
low levels of gearing, evidence the underlying strength of Peet’s business and its management
strategy,” said Mr Gore.
“The Group’s statutory profit after tax for the year ended 30 June 2009 was $12 million, which includes
a write-down in the carrying value of inventories of $19.2 million, net of tax. Peet is a specialist
residential land developer and more than half of the write-downs were attributable to non-core assets
including industrial land holdings,” he said.
“There were more than 2,400 Company-owned and managed lots sold during the year with particularly
strong sales in the second half of the year driven by a range of government incentives for first home
buyers, low interest rates and competitive pricing – all contributing to increased affordability,” said Mr
Gore.
More than 30 Company-owned and managed projects in Western Australia, Victoria and Queensland
contributed to Peet’s revenue in FY09 and the Company is planning to commence development of up
to 5 new projects in FY10, including the 3,300-dwelling Alkimos project on Perth’s northern beaches.
As at 30 June 2009, Peet’s land bank stood at 34,400 lots with an estimated on-completion value of
$6.9 billion. This represents more than 15 years’ supply at the current rate of production. More than
18,640 of those lots make up the syndicated and joint venture development pipeline.
“The Group continues to benefit from its geographical diversity and range of titled stock available for its
core markets – and new projects getting underway in the year ahead will continue to target first and
second homebuyers with a variety of product in quality, master-planned communities,” he said.
Land portfolio metrics
FY09 FY08 Variation
Lot sales 1 2,409 2,274 6%
Lot settlements 1 2,282 2,445 (7)%
Lots under contract as at 30 June 09 1 1,048 942 11%
Syndicates / JVs contributing to earnings 18 14 29%
Company-owned projects contributing to earnings 14 10 40%
1 Refers to Company-owned and managed lots.
The Company’s Net Tangible Assets per share, adjusted for the market value of inventory, was $1.34
as at 30 June 2009. This measurement reflects assets on the Peet Limited balance sheet but does not
take into account the value of the funds management business which, in FY09, contributed pre-tax
earnings of $23 million.
Capital management
$77.7 million equity raising
Reduced gearing to 34%
Extension of the Group’s core $250 million Multi Option Facility for a further three (3) years to
October 2012
All other bank facilities extended to July 2011
An increase in the weighted average debt maturity profile from 2.2 years to 2.8 years
Group interest cover ratio covenant of 2.7 times, compared to a banking covenant of 2.0 times
A decrease in the weighted average cost of debt from 7.8% to 5.9% (including margins)
At 30 June 2009, Peet had interest bearing debt, net of cash, of $184 million, compared with $224
million at 30 June 2008. Gearing1 decreased during the period to 34% at year-end (FY08 37%). The
decrease was principally due to the $77.7 million equity raising and despite a pre-tax write-down of
inventories of $27.4 million.
Since year-end the Group has successfully negotiated the extension of the maturity of the Group’s core
$250 million Multi Option Facility until October 2012, with all other facilities extended to July 2011. The
Group’s weighted average debt maturity profile now stands at 2.8 years, compared with 2.2 years at
the same time last year.
Peet continued to comply with all of its debt covenants during the year.
“Peet has moved into FY10 with 100% of total debt secured by its quality asset portfolio, solid operating
cash flows and strong banking relationship,” said Mr Gore. “We are benefiting from a very disciplined
approach to capital management, which will continue in the year ahead.”
Dividends
The Board has declared a final dividend of 4.0 cents per share, fully franked, to be paid on 8 October
2009. This brings total dividends in respect of FY09 to 7.0 cents per share, fully franked.
The Board has activated the Company’s Dividend Reinvestment Plan, details of which will be
communicated to shareholders in due course.
New land syndicate
Peet is preparing for the imminent launch of a new syndicate opportunity with the release of the Peet
Point Cook Kingsford Syndicate.
The $22 million Syndicate will acquire and develop a residential community in the established suburb of
Point Cook, some 25 kilometres south-west of Melbourne’s CBD. Point Cook is within one of the five
growth areas identified by the Victorian Government for Melbourne and this new project will serve a
rapidly expanding local population.
Point Cook is within the Wyndham City Council, the fastest growing municipality in Victoria and fourth
fastest in Australia. The Kingsford residential community is expected to yield approximately 567
residential lots, with development expected to commence in 2010.
The Product Disclosure Statement will be available to investors in both printed and electronic formats at
www.peet.com.au/investing or by calling 9420 1111. Investors are encouraged to take appropriate
advice before completing and lodging an application.
The closing date for the Offer, which will be underwritten by Peet, is expected to be 30 October 2009.
Strategy and outlook
There are signs that the impact of the Global Economic Crisis on the Australian economy may not be
as severe as first thought.
The Group is cautiously optimistic about the year ahead, though challenging conditions are expected to
continue for at least the first half of FY10, requiring an ongoing, prudent approach to capital
management. Conditions are expected to improve by the start of the 2011 financial year.
Favourable factors underpinning this position include population growth in all key markets; resilience in
business and consumer confidence; continued downward revisions of the expected increase in
unemployment; a low interest rate environment; the positive impact of government incentives for first
home buyers; and improved housing affordability.
Peet’s management strategy continues to position it well for the year ahead and expected improved
conditions beyond, particularly as demand continues to outstrip supply.
The Group’s strategic priorities remain unchanged and are to:
focus on the core business of residential land development and funds management;
continue to meet the needs of its core markets – first and second homebuyers – with a range of
product at affordable prices;
remain proactive and prudent with capital management by recycling capital and managing gearing
levels; and
maintain a commitment to being environmentally responsible across its operations.
With credit conditions expected to remain somewhat challenging in the short-term, Peet will continue to
constrain development activities where appropriate and indicated by market conditions, and will
manage the business prudently, maintaining adequate liquidity levels for the business.
Longer-term indicators underpin Peet’s confidence given the sector’s sound fundamentals and the
Company’s underlying strength including a very experienced management team and significant land
bank – more than half of which is made up of the Group’s syndicated and joint venture pipeline.
“Peet looks forward to meeting the challenges of the year ahead and remaining flexible and responsive
to market conditions as they improve towards the end of the financial year,” said Mr Gore.
