This article is from the Australian Property Journal archive
Babcock & Brown has upgraded its EPS growth guidance for the 2006 year from 35% to at least 45% following its record net profit result of $163 million for the half year to June 30, 2006 – an increase of 48% over $110.2 million last year.
Continued growth in the real estate division and strong performances in infrastructure and corporate finance underpinned a 51% increase in revenue from $374 million in 2005 to $564.8 million.
Over the past six months, the strongest contribution came from the infrastructure division which posted $197.3 million up 211%, followed by real estate with $187 million up 10% and corporate finance with $105.3 million up 108%.
BNB chairman Jim Babcock the strong momentum in the business in the second half of 2005 has flowed through into 2006 and the work done in 2005 to broaden the company’s business base and lay the foundation for growth in revenue from specialised funds and asset management platform is reflected in this result.
As at June 2006, BNB’s specialised funds and assets under management increased to $31.2 billion – 85% higher when compared to $16.9 billion last year.
BNB’s chief executive Phil Green said the 36% increase in assets under management was the result of the IPO of Babcock & Brown Residential Land Partners in June, further acquisitions by Babcock & Brown Japan Property Trust and capital raisings by Babcock & Brown Environmental Investments, Babcock & Brown Wind Partners and Babcock & Brown Infrastructure to fund accretive acquisitions for investors in those funds.
In addition, Green said the 41% increase in AUM in unlisted funds was the result of the significant increase in invested capital in joint venture with General Property Trust.
“Revenue derived from our specialised funds and assets under management platform for the six month period increased 179% to $224 million over the previous corresponding period reflecting the benefits of the significant expansion in our platform over 2005. As a percentage of Net Revenue, fees increased from 22% to 40.5%.
“Our ability to grow this platform is dependent upon continuing to bring unique investment opportunities to investors that deliver superior performance over the medium term. We are focused on ensuring that our funds management platform is appropriately resourced and delivers on the investment fundamentals represented to investors,” he added.
BNB has upgraded its EPS growth guidance for the 2006 year from “at least 35%” growth, which was released in May this year, to 45% growth.
Green said this forecast assumes that interest in the investment opportunities presented by the group’s specialised funds and assets management platform continues and market conditions remain favourable.
“Importantly all transactions required to achieve our EPS growth forecast are identified and well progressed. Our forecast does not assume execution on all new fund initiatives planned for 2006. However, if we are successful in executing on all current fund initiatives we will exceed our revised forecast for 2006.
“The business is well positioned to continue its current rate of growth over the remainder of 2006. We are expecting further growth in Infrastructure, Corporate Finance and Real Estate in the second half of 2006. The bias towards the second half of the year in Operating Leasing is expected to continue this year with the 2006 full year result expected to be above 2005. The Structured Finance division should report a result in line with, or slightly below its 2005 result,” he added.
Looking beyond 2006, Green said the group is also starting to lay the foundation for growth in 2007 and beyond.
“The Executive Committee remains focused on maintaining the rigorous risk management culture embedded in Babcock & Brown through the many years as a partnership. We are focussed on capital management and diversification in expectation of continued market volatility. We are also on the look out for opportunities which these market conditions can present,” he concluded.
BNB will pay a dividend of 15 cents for the six months to June 30, 2006.
By Adam Parsons
