Mollybendium When I wrote that building a bottom-up model was...

Mollybendium

When I wrote that building a bottom-up model was not useful, I meant not useful to me, because I had no plans to either sell or buy FRI shares. Anyhow, I have not been able build a bottom-up model, because even if I were able to postulate reasonable property sales metrics for each of the next four years starting with FY2016, other metrics bounce around so much, that I would not be able to guesstimate NPAT with any confidence.

In figures provided below, you can see how various one-offs and accounting treatments make guesstimating FRI's reported NPAT difficult. In the figures below, the percentage for Cost of Sales relates to Property Development Sales. The other percentages in those columns related to Revenue Total. Notice the following:

• A large increment in Management Fees boosted Revenue Total in FY2015.
• A similarly large increase in Management Fees is included in Other Income in FY2015, and I do not know why they were not in one spot. The Management Fees increase summed to $8,137,806.
• The “Advertising expense” was low for bonanza FY2014 – suggesting one may have to derive an estimate of that line item from sales commencement information, not settlements-expected information.

• The value of “Accounted Investees (net of income tax)” increased substantially. That may explain the circa $5m of tax offsets in FY2015.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7
0	​	FY2015​	​	FY2014​	​	FY2013​	​
1	Property Development Sales​	67,618,486​	​	259,947,369​	​	123,310,250​	​
2	Rental Income​	15,290,902​	​	13,569,804​	​	12,229,593​	​
3	Supervision and Mngmnt fees​	6,451,019​	​	1,730,657​	​	870,297​	​
4	Revenue Total​	89,360,407​	​	275,247,830​	​	136,410,140​	​
5	Cost of sales​	-59,638,825​	88.20%​	-204,631,575​	78.72%​	-84,553,069​	68.57%​
6	Gross Profit​	29,721,582​	33.26%​	70,616,255​	25.66%​	51,857,071​	38.02%​
7	​	​	​	​	​	​	​
8	Other income [incl another Management Fee}​	4,511,357​	​	1,812,865​	​	3,723,306​	​
9	Loss on disposal of investment property​	-828,628​	​	​	​	​	​
10	Loss on disposal of shareholdings​	-614,390​	​	​	​	​	​
11	​	​	​	​	​	​	​
12	Loss on disposal of property, plant & equipment​	​	​	-582​	​	31,778​	​
13	Administrative expenses​	-7,588,853​	​	-7,228,044​	​	-5,898,731​	​
14	Advertising expenses​	-1,680,183​	​	-741,461​	​	-2,016,314​	​
15	Other expenses​	-6,891,635​	​	-5,010,837​	​	-4,515,322​	​
16	Results from Operating Activities​	16,629,250​	18.61%​	59,448,196​	21.60%​	43,181,788​	31.66%​
17	Finance income​	4,912,617​	​	3,417,023​	​	3,685,360​	​
18	Finance costs​	-3,236,964​	​	-3,616,022​	​	-3,434,672​	​
19	Share of profit/(loss) of Equity Accounted Investees (net of income tax)​	13,394,563​	​	-577,302​	​	1,128,023​	​
20	Profit before Income Tax​	31,699,466​	35.47%​	58,671,895​	21.32%​	44,560,499​	32.67%​
21	Income tax expense​	-5,580,669​	​	-17,857,793​	​	-13,003,551​	​
22	Profit for the year​	26,118,797​	29.23%​	40,814,102​	14.83%​	31,556,948​	23.13%​
23	​	​	​	​	​	​	​
24	Income tax percentage​	17.60%​	​	30.44%​	​	29.18%​	​

The most recent EUROZ analysis on FRI's webpage may be useful.