Despite forecasting a profit growth in excess of $40 million for the 2008 financial year, Western Australian property developer Port Bouvard Ltd has reported an 88 per cent slump in net profit to $3.2 million.
Despite forecasting a profit growth in excess of $40 million for the 2008 financial year, Western Australian property developer Port Bouvard Ltd has reported an 88 per cent slump in net profit to $3.2 million.
In its preliminary report, the company said the full year net profit result was on the back of a 64 per cent fall in revenue from continuing operations to $23.5 million.
In its 2007 financial year report, Port Bouvard had forecast a profit growth of over $40 million, but was voided at a shareholders meeting as the company changed accounting policies.
The change now means revenue will be recorded once sales are settled as opposed to the percentage of completion basis which recognised revenue as developments were completed.
In a statement today, the company said it considered the results as "satisfactory" and in line with current circumstances of the company and the market.
Earnings per share fell 92.3 per cent to 2.48 cents, compared to the previous year's 31.95 cents.
Over the reporting period the company has undertaken a review of its organisation structure and identified a number of non core assets to be put up for sale, including the Marina and Hotel site.
Below is a statement from the report:
The profit for the year is in line with the expectations of the Board and considered satisfactory in the current circumstances of the Company and the market.
The planning process required to advance the status of all our development projects has proceeded satisfactorily. The company has acquired a number of development sites after the Board decided it would continue in the business of land development in July 2006 and is pleased with the acquisitions made and the process of development approvals gained to date.
The Board has taken the opportunity to review the organisational structure and the way in which the Company can best develop. A number of non core assets have been identified for sale and this is being actively pursued. These include assets such as the Marina and Hotel site that are not deemed essential to the core focus of the business.
When the Company acquired the Point Grey asset, it raised capital and as such with the sale of non core assets, it expects to have sufficient funds to continue its development process until there are lots available for sale and settlement.
The orders in hand for Oceanique and Eastport 5 are robust with the construction programs for both developments on time and opportunities are granted for purchasers to see the spectacular aspect which will be provided.
The Company has also switched its revenue recognition policy, in line with recent industry standards and as required by the changes in the accounting standards, to a settlements basis.
This means revenue will be recorded once sales are settled as opposed to the percentage of completion basis which recognised revenue as developments were completed.
The Board is mindful of the challenging short term outlook for the property industry and seeks to ensure the Company's financial position is as strong as possible. The Company continues in its rebuilding phase through seeking relevant approvals on all new acquisitions to increase the underlying value of its assets.
The Board believes that significant opportunity rests in Port Bouvard Limited with the continuing undersupply of housing in WA and a predicted softening in official interest rates keeping the medium term outlook for residential property sound.
It is important for the market to remember that 80% of the Company's land is currently moving through the required statutory approval processes and subsequently not yet available for sale. In light of this, the Board is satisfied with the results achieved in what is a challenging market but even more excited about the prospects that lie ahead.
