Crisis savages Australand'sbottom line PHILIP HOPKINS February 10, 2010
PROPERTY manager and developer Australand, coming off a huge headline loss due to the economic crisis, is confident the worst is behind it, but expects growth will not get under way until next year.
Australand reported a formal loss of $298.2 million for calendar year 2009, reflecting the impact of extraordinary items totalling almost $420 million.
These included revaluation losses on investment properties of $249.4 million, impairment of development and joint-venture assets of $148.4 million, and non-recurring finance costs of $20.7 million.
Operating profit was $120.2 million, down 31 per cent on the previous year.
Managing director Bob Johnston said this year's profit would be similar. ''Investment property valuations are at, or near, trough levels in the cycle. We expect investment property earnings to grow steadily, primarily from embedded rental growth,'' he said.
He said Australand would push ahead with the final stage of Freshwater Place in Melbourne.
The residential division would be steady, with strong growth in Melbourne and Perth. Second and third home buyers would take up the slack from from an expected softening in first home buyer demand. New residential projects would start this year, leading to an improved performance next year.
The group will continue to distribute 80-90 per cent of trust income. No dividend will be paid this year from corporate earnings.
Australand will seek shareholder approval at the annual meeting in April for a 5 to 1 consolidation of the group's stapled securities.
Mr Johnston said following a strategic review, Australand aimed to generate 60-70 per cent of group earnings before interest and tax from recurrent earnings. Underperforming capital in the development divisions would be recycled, and gearing would be kept within a range of 25-35 per cent.
All going well, increased weighting to investment property would improve access to capital.
Australand's revenue last year fell by $145 million, or 17 per cent, to $686.76 million, with the final dividend of 2, paid on Monday, giving a total year dividend of 5.
Yesterday, Australand's stapled securities closed 1 higher at 45.5.
