Stock to Watch: CITY PACIFIC LIMITED 08:58, Thursday, 12 August...

Stock to Watch: CITY PACIFIC LIMITED
08:58, Thursday, 12 August 2004

A COMPANY WITH A STUNNING RESULT AND GROWTH PLANS

Sydney - Thursday - August 12: (RWE)
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OVERVIEW:
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A company can't do much better than this along with a dividend
for the year which yields you more than 6.4 per cent.

The City Pacific Ltd result was going to be good and chief
executive Mr Phil Sullivan has been flagging the improvement throughout
the year.

It's the company's third record year in a row and showed a
stunning 251 per cent rise in profit to $43.8 million on revenue of $59
million.

The question on analysts lips now is how can the company improve
on the latest result.

It could well come from the possible team up with S8 with City
Pacific now preparing the bidders statement soon to go out to
shareholders.

Both partiers have expressed confidence in the move which is a
"tremendous opportunity" and will accelerate future growth.

Back on the latest result, Mr Sullivan said the company's core
business of financial services had contributed around $35 million to the
result, or an increase of around 190 per cent on the previous year.

"The financial services division has powered City Pacific on to
new heights and we believe this growth will continue through 2005 and
beyond," he said.

Mr Sullivan said the result included a one-off $8.3 million
profit brought to account from the company's 25 per cent investment in
recently floated company Indigo Pacific Capital Ltd.

He said revenue had increased by 159 percent to $59 million from
$22.7 million as the company's loan book expanded in line with City
Pacific's increase in funds under management.

"City Pacific now has over $800 million funds under management
and we are targeting $1.1 billion FUM by the end of this financial year
with inflows expected to continue at $30 million a month," he said.

Mr Sullivan said earnings per share had increased 131 per cent
to 48.3c based on the 90.6 million shares on issue.

City Pacific will pay a final dividend of 23c to make 33c (fully
franked) for the year, up from 15c in the previous year.


SHARE PRICE MOVEMENTS
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Shares of the company yesterday sold 16c higher at $5.14. The
rolling year high has been $5.19 and the low at $2.76. RWE made City
Pacific a Stock to Watch on May 20 when the shares stood at $4.75.

Dividend has been increased to 33c to yield an attractive 6.42 per cent.

In July City Pacific Limited and S8 Limited announced plans to
merge their businesses through an offmarket takeover bid by City Pacific
for S8's shares and options.

The bid, which is on the basis of 307 City Pacific shares for
every 1,000 S8 shares, has been valued at $1.40 per S8
share, based on the sale price of City Pacific shares on the ASX at the
close of the market on July 9, 2004, being $4.56 per City Pacific share.

City Pacific offered 5 City Pacific shares for every 228 S8
options.

This values S8 options at 10c per option and is calculated on the
same basis as the shares.

The bid is subject to certain conditions annexed to this
announcement, including a 90 per cent minimum acceptance
level.

Phil Sullivan, managing director and CEO of City Pacific, said
together City Pacific and S8 would create a dynamic organisation with
greater opportunities for the S8 business and an element of
diversification for City Pacific.

S8 Chairperson Jenny Hutson said, "The combination of S8 and City
Pacific would represent a tremendous opportunity for S8 investors to
benefit from City Pacific's success.

The merger of City Pacific and S8 would provide a platform for
significant acceleration of S8's growth strategy".

City Pacific provides funds for quality residential, resort and
holiday accommodation throughout Australia and in particular in South
East Queensland.

The company is looking to expand its business to encompass the
property management sector.

S8 is one of Australia's leading property management services
companies, managing apartments including the luxurious Chevron
Renaissance and the Phoenician on the Gold Coast, the South Pacific
Resort at Noosa and the Sirocco and Zanzibar Resorts at Mooloolaba on the
Sunshine Coast.

The deal has still to be completed but there doesn't appear to be
anything standing in its way other than the nod from shareholders.

BACKGROUND
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Founded in 1997, City Pacific Limited is an Australian based
public company listed on the Australian Stock Exchange.

The company's objective is to provide investors with consistent
returns whilst providing a high level of security.

It has a strong and experienced Board and a management team that
has a proven track record.

City Pacific Ltd is rated in the top 50 Queensland companies by
Deloittes, based on market capitalisation of the company.

It is an independent financial investment manager and an
Australian Financial Services Licensee.

The Mortgage Trust has continually provided above average returns
on secure mortgage investments.

Based on returns over the last three years, Morningstar has
consistently ranked the City Pacific Mortgage Trust in the top two funds
in its sector.

The Mortgage Trust is designed to provide investors with secure,
regular income from a pool of high yielding and secure first mortgage
loans.

All money provided by investors is placed in a single pool and
subject to stringent lending approval procedures, City Pacific advances
funds to borrowers which are secured by a registered first mortgage over
the security property.

Since starting business in 1997, City Pacific has maintained zero
capital loss and zero default loss.

All cash and securities are held by the Public Trustee of
Queensland as Custodian.

There are no entry fees to become an investor. There are no exit
fees, except where an investor who invests for a fixed term period is
allowed to withdraw early.

Management fees are not paid by investors.

Interest rates paid to investors are net.

ENDS

Copyright © 2004 RWE Australian Business News. All rights reserved.

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