LOOKING BRIGHT FOR SUNLAND
Written on the 27 February 2015
THE group behind two of the Gold Coast's most iconic destinations - the Q1 and the Palazzo Versace - has seen development activities generate strong earnings for the first half of FY15.
Sunland Group (ASX: SDG) has reported the consolidated profit after income tax for the half year was $3.3 million, an increase of 10 per cent on the previous half year results.
SDG managing director Sahba Abedian says SDG's design-driven residential portfolio continues to be delivered in line with the improving market conditions to deliver a strong operational performance across its core segments of residential housing and urban development.
"Nationally, sales volumes and values continued to increase during the first half of the financial year, providing a strong foundation for future earnings," he says.
"SDG completed 474 sales across all core segments to the value of $284 million during the period, representing an increase in value of 119 per cent compared to the previous corresponding period (1H 2014: 281 sales for value of $130 million).
"Contracts on hand currently total 653, with a combined value of $479 million."
Abedian says SDG's development pipeline received a significant boost during the first half of the financial year following three major strategic site acquisitions totalling $97 million.
These include the $61 million purchase of the 41.9 hectare Lakeview site at Mermaid Waters, the $18 million acquisition of a 4.7 hectare site in Palm Beach (both on the Gold Coast) and the $18 million purchase of a three hectare site in Warriewood in Sydney's northern beaches.
The Lakeview and Warriewood acquisitions are on deferred terms, settling during June and September 2015.
"Combined, these three acquisitions have delivered an additional yield of 1650 allotments with an end grow realisation of $1 billion," says Abedian.
"SDG's national portfolio currently compromises in excess of 6800 residential housing, urban development and multi-storey products with a total end value of approximately $3.8 billion, providing a sustainable pipeline of premium developments to be delivered primarily over the next five years."
Directors of the company have declared an interim dividend of 2.0 cents per share fully franked, to be paid 27 March 2015. The suspension of the group's dividend reinvestment plan continues.
Looking forward, SDG's capital management strategy remains focused on enhancing operational efficiencies across the business and reducing risk through product and geographic diversification.
SDG says other capital management initiatives include the utilisation of various structures that spread the project and funding risks associated with the group's development pipeline.
A strong balance sheet, access to capital and cash flow forecast continue to provide a stable platform from which to improve profitability and deliver sustainable shareholder returns, says Abedian.
"SDG's national development pipeline provides a sustainable medium to long-term earnings profile for the group and our return to the multi-story sector is expected to make significant contributions to revenue during the next five years as medium and high-rise projects are delivered," says Abedian.
"Similarly, the group's residential housing and urban development segment along Australia's eastern seaboard is forecast to perform in line with market conditions."
Abedian says based on the current market conditions and project delivery timeframes, SDG expects to achieve an estimated 280 settlements during the second half of the year.