07/12/2015 - 15:27

Perron reports $241m profit

07/12/2015 - 15:27

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Stan Perron’s vast private business group has reported a solid lift in revenue and profit, with strong returns from land development projects and international equities offsetting write-downs on the Central Park office tower and its iron ore royalties.

Perron reports $241m profit
Stan Perron

Stan Perron’s vast private business group has reported a solid lift in revenue and profit, with strong returns from land development projects and international equities offsetting write-downs on the Central Park office tower and its iron ore royalties.

Perron Investments, which is the main operating company below holding company Perron Group, lifted net profit to $241.2 million for the year to June 2015, up from $150.8 million in the prior year, according to returns lodged with the Australian Securities and Investments Commission.

That was on the back of a 10.3 per cent lift in revenue to $524.9 million.

Chief executive Ross Robertson said the group - which has total assets of $4.3 billion - benefited from its diversification.

“We had good contributions from land development and the equities portfolio,” Mr Robertson told Business News.

“Our property portfolio has been very solid.”

The group’s higher profit was helped by an $83 million revaluation of its investment properties, where were worth $2.87 billion at June 30.

In the prior year there was a $32.6 million write-down.

Mr Robertson said the value of the group’s shopping centres – which include Morley Galleria and Mirrabooka Square – had increased, partly offset by a write-down of the group’s 50 per cent stake in Central Park.

He said these changes were reflective of broader market trends, with contracting yields in retail and higher vacancies in the office market.

Mr Robertson said the group achieved an 18 per cent return on its equities portfolio in the year to June 30.

About half its equities are international, and therefore returns benefited from the weaker Australian dollar.

The group wrote down the value of its future iron ore royalties by $29 million to reflect lower iron ore prices.

Its iron ore royalty agreement – which dates from the 1960s, when Mr Perron co-invested with Gina Rinehart’s late father Lang Hancock – is in the balance sheet as an intangible asset valued at $290 million.

The lift in operating revenue was mainly due to extra sales from its land development estates, including Holland Park at Piara Waters and Vasse Newtown near Busselton.

Revenue from sale of land was $49 million, up from $18 million in the prior year.

Rental revenue, from shopping centres and office towers, was up slightly to $241 million.

Iron ore royalty income was $25 million, down from $31 million.

The group had received an expression of interest for its half-owned office tower at 201 Elizabeth Street in central Sydney, for a reported $430 million.

However, Mr Robertson said the proposed sale of the 38-level tower would not go ahead.

Perron and co-owner DEXUS Property Group plan to retain the property as commercial offices while working on a development approval for conversion to apartments.

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