Written on the 20 April 2012


SUNLAND Group is counting on sales yet to be finalised to boost full-year net profit to a predicted $15 million after a dull half year result of $185,000.

The company has been bogged down by a sluggish property sector with net profit dropping 97.6 per cent from $7.8 million on the corresponding period.

“It really has become a one-third, two-third split result, skewed to the second half,” says Sunland managing director Sahba Abedian (pictured).

“Our outlook is never short-term. We have never looked at it in six-month reporting cycles. Our focus is to ensure shareholders are receiving the greatest benefit. We went into the global financial crisis with strong balance sheets.”

Revenue from settlements over the six months to December 2011 was $59.4 million, after 263 settlements. That figure expected to more than double in the second half to $130 million. Total revenue was down 25.3 per cent to $78 million, but the company still has $19.2 million in cash and $65.9 million in undrawn credit lines.

Sales activity slowed over the period, with the group completing 219 sales totalling $102 million. The company has 470 unconditional presales across its land and housing portfolio, worth $200 million, including joint venture projects.

Company secretary Grant Harrison says a number of factors influenced the company’s poor start to the year.

“The relatively low value of settlements, revised programming surrounding the projects, together with the timing of expensing the marketing costs (ahead of recognising revenue from settlements of various projects) have all contributed to lower margins in the first half,” he says.

Sunland retains what Harrison says is a robust Australian housing and land pipeline with an inventory of 3635 allotments with a combined end value of $1.6 billion, but the tough times are forecast to continue.

“The international financial markets continue to experience ongoing volatility with restricted liquidity in the banking sector and continued price moderation,” says Harrison.

“Accordingly, the group envisages the sentiment of the Australian economy to continue to reflect a lack of confidence in the real estate sector, compounded by purchasers experiencing further difficulty in accessing bank funds.”

New acquisitions totalled $39.6 million, with purchases at University Hill and Springvale in Melbourne and Mariners Cove at Gold Coast for $13 million.

Abedian says further acquisitions are possible and that the group is ‘continually assessing opportunities’.

“We need to mitigate any headwinds; it’s a balancing act,” he says.

“Organically we need to replenish the portfolio and maintain gearing levels. We are very mindful of conditions and we don’t expect them to appease anytime soon.”

The first stage of The Address, where it is developing residential lots at Sanctuary Cove, is now 50 per cent sold totalling $65 million in sales.

“We positioned the homes in a very unique offering,” says Abedian.

Last year the company distanced itself from operations in Dubai by exchanging its UAE projects for 100 per cent ownership of Palazzo Versace on the Gold Coast. It concluded the relationship with its UAE partner – Enshaa PSC/Emirates Investment Holdings Limited. The asset swap was Palazzo Versace Dubai and D1 residential tower for Versace Gold Coast.

It meant the return of Sunland founder Soheil Abedian to the Australian operation, where he is now listed as a director.

“It has been very positive, we have a wonderful relationship,” says Sahba of his father’s return to Sunland’s Royal Pines Marina headquarters.

Sunland also plans to undertake a fourth and final buy-back tranche of 48 million shares.






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