This article is from the Australian Property Journal archive
APN Property Group has blamed a lack of opportunities for its lower profit expectations for the FY08.
The profit downgrade saw APD’s shares fall 10 cents or 10.64% to close at 84 cents.
The group also said yesterday it could potentially write down $4 million worth investments in its managed vehicle APN/UKA European Retail Property, due to the trust’s poor performance on the Australian Stock Exchange.
Company Secretary Peter Nicholson said the group expects to deliver a profit after tax for the year to fall within the range of $9.5 million to $11.0 million, likely to be $10.1 million.
The $10.1 million result will be lower when compared to $17.4 million posted in full year to June 2007.
The group is expected to record a dismal 2008 second half, with a profit after of $100,000. The first half will make up almost all of FY08’s result, contributing $10 million. In the first half of this financial year, APD recorded a profit from the sale of its interest in a Melbourne city development site to one of its wholesale development funds.
Nicholson APD has been able to generate a regular stream of “one off” fees in recent years, such as property acquisition fees, debt arrangement fees and equity raising fees.
But he said in the present climate, limited opportunities exist to generate these fees.
“Accordingly this forecast assumes no further upfront fees or other “one off” revenues except those already earned,”
The current market climate has also impacted on APD’s ability to generate revenue from management fees.
“Though not reliable, a rough guide to the sensitivity of APD earnings to the market can be determined by reference to the ASX/S&P 200 A-REIT index. Based on the current size and investment profile of APD’s listed securities funds, a movement of 1% in this index can, in the absence of other factors, change profit before tax by approximately $0.130 million,”
Nicholson said APD currently owns 4.637 million stapled securities in AEZ which was purchased for $1.26 per stapled security.
“APD will write down the value of these securities when it determines its full year profit, unless the value of AEZ securities has recovered to approximate the carrying value.
“At the close of business on March 31 the market value of these listed securities was $0.37. This forecast assumes the market value for AEZ securities at June 30 remains at $0.37, though every change of $0.10 in the market price of these securities will have a pre-tax impact of $$0.464 million on the final result,”
Looking ahead, beyond FY08, the group expects to a profit after tax of around $10 million to $12 million in the financial year ending June 2009.
“APD has built a solid platform in the retail, listed and wholesale funds management industry and continues to broaden its revenue base with the establishment of new funds in these markets.
“It currently manages 16 funds with total funds under management of $4.3 billion. APD has no debt, and as previously announced, directors have no margin loans against their shares,” Nicholson concluded.
Australian Property Journal
