This article is from the Australian Property Journal archive
Melbourne’s CBD congestion levy and escalating fuel costs have had an adverse effect on car park and apartment owner Ariadne Australia, which booked a net profit after tax of $7.1 million for the 12 months to June 2006 – a fall of 42.3% when compared to $12.3 million a year ago.
The strongest contribution came from the investment division which chipped in $6.9 million up from $118,000 a year ago.
The company’s property division reported $3.7 million, down from $12.9 million in 2005. Ariadne said this was due to the impact of AIFRS.
“The majority of the group’s property development profits are now recognised on settlement. This fundamentally changes the way profits are brought to account as under the previous accounting rules, property developers were able to recognise profit on certain developments in accordance with the percentage of completion or emerging profit method of accounting.
“The move to AIFRS will increase the volatility property division profits, as profits on projects with long lead times will in most circumstances be deferred in full until completion of the project and settlement has occurred,” the company added.
Meanwhile, the company’s car parking division booked a profit of $241,000, down from $2.3 million in 2005.
Ariadne said the result for S&K Car Park Management Pty Ltd was adversely affected by tough trading conditions in Victoria due to the introduction of a congestion levy in Melbourne, the opening of additional carparks creating surplus capacity in the Melbourne CBD, and the adverse impact of rising fuel prices on vehicular traffic volumes.
Ariadne said while the contribution to profit by S & K of $2,334,000 is satisfactory, the issues in Melbourne detracted from strong operating performances in the New South Wales and Queensland regions.
In addition, the S & K profit result was further adversely impacted by expensing a number of one off costs in relation to brand development, new technology applications and information technology support.
Over the year, the company’s revenue also dipped 31.6% from $63.6 million to $43.5 million.
Looking ahead, the company said it is now in the early stages of developing recurring earnings streams in the areas of management rights and car park BOOT schemes.
“The year has been one of consolidation for the group’s car parking activities with a continued emphasis on building long term value from the group’s merged parking business. We expect improved performance from parking as the short term challenges in Victoria are addressed and the start-up losses at the Queens Plaza carpark in Brisbane are reduced.
“While the group’s profit result fell short of expectations, management is confident that the business strategies implemented in each of the group’s core activities will continue to deliver improved financial performance from Ariadne’s strong asset base,” the company said.
Ariadne has declared a final dividend of 1 cent per ordinary share.
By Adam Parsons
