29/02/2008 - 12:45

Peet profit down 21%, maintains full yr target

29/02/2008 - 12:45


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Peet Ltd has announced an after tax profit of $15.3 million for the half year ended December 2007, down 21.4 per cent on the previous half-year result.

Peet profit down 21%, maintains full yr target

Peet Ltd has announced an after tax profit of $15.3 million for the half year ended December 2007, down 21.4 per cent on the previous half-year result.

Revenue for the period was down 5.9 per cent to $57.8 million compared to the previous half year.

The company has maintained an interim dividend per share of 9 cents fully franked, and a full year earnings growth target of 10 per cent in 2007/08.

Managing director and chief executive Brendan Gore said the result for the half-year was in line with expectations and that the performance of the company's Victorian and Queensland operations was particularly pleasing.

Final results are expected to be heavily weighted in the second half of the year due to the large number of lots under contract and due to settle.

"Our eastern states operations have performed well, delivering 61 per cent of EBIT and reflecting the strong property markets and improved volume and lot prices in those states and we expect that trend to continue in the second half of the year," said Mr Gore.

As well as strong demand resulting in volume growth from east coast developments, the company's results show an increase in the average sale price of lots in Queensland and Victorian estates of 21 per cent and 10 per cent respectively, compared with the same period last year.

However, revenue from syndicated land developments totalled $16.6 million, was down from $23.4 million in the same period last year due to timing of settlements and a partial recognition of capital raising fees associated with Peet Tri State Syndicate.

The large number of sales still under contract at the end of the period and further sales to 30 June 2008 are expected to result in a strong second half of FY08 for this business area.

The EBIT margin for syndicated projects was 68 per cent for the half year compared with 74 per cent for FY07. The
Company expects this margin to be in line with the FY07 figure at 30 June 2008.

The company has two additional syndicated projects commencing development and sales in the second half of
FY08 and a further five projects are expected to come on line in FY09.

Of these seven projects, five are located in improving east coast markets.

"The Western Australian market has eased and while the company expects further easing in the WA market in the months ahead, the medium and long-term fundamentals including population and economic growth remain strong," Mr Gore said.

The company is currently managing in excess of 70 projects across Australia, well over half of which are on the east coast.

In the next 18 months, sales at a further 17 developments (with a total of 6,026 lots) in Victoria, Queensland and Western Australia are scheduled to commence with 12 of these estates in the growth markets of Victoria and Queensland.

"We have been very strategic in allocating capital and making key acquisitions during the first half of the year," said Mr Gore.

"The establishment of the Peet Wholesale Land syndicate and its acquisition of a land parcel with the potential to yield 2,800 rare coastal lots at Alkimos, a northern suburb of Perth, was achieved with the backing of major institutions including MTAA Super and The Myer Family Company Pty Ltd," said Mr Gore. "We look forward to delivering sound returns on that investment in the years to come.ent in the years to come.

"Preparations for the launch of a Peet Alkimos retail syndicate in the first quarter of FY09 are underway and it has already received strong national interest from potential investors," he added.

The company also acquired a parcel of potential industrial land in Victoria - Peet's third in the region, expanding the Company's capacity in this area.

The second half of the 2007/08 financial year is expected to deliver the balance of the targeted growth for Peet Ltd with a large number of lots already under contract and due to settle during the period.

The company achieved sales of some 1,025 lots in the first half of 2007/08 and as at the end of the period there were 1,370 lots (an increase of 23 per cent since 30 June 2007), with an estimated on completion value of $281 million, sold and awaiting settlement.

Peet had net debt at December 31, 2007 of $220 million and a gearing level of 41 per cent. Peet management expects this level of gearing to come within its target range of 30 per cent-40 per cent over the next 12 months based on positive operating cash flows and annual property revaluations.

Mr Gore said that the group had a three-year evergreen corporate facility, with a current maturity profile of 2.6 years which, was 21 per cent protected by fixed interest rate hedges as at December 31, 2007.

Since half-year end, the level of interest rate hedging had been extended to 36 per cent of the group's debt.

The average cost of debt for the half was approximately 7.4 per cent and the interest cover was 4.6 times.

The company's cash at bank position at 31 December 2007 was $21.6 million and has since increased to around $60 million.

The company - with its operations weighted in favour of the east coast - maintains its full year earnings growth target of 10 per cent for 2007/08. This assumes settlements are achieved as scheduled and a reasonable level of consumer confidence is maintained.

Peet shares remained even at $3.03 each by 14:56 AEDT.


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