This article is from the Australian Property Journal archive
MELBOURNE’S Becton Property Group is continuing to explore recapitalisation initiatives whilst at same time booking a 76.3% fall in operation profits.
In the first half year ended December 31 2009, Becton announced an operational net profit after tax of $4.4 million, which reflects the 71.2% decline in revenue to $58.9 million.
Becton made a statutory loss of $19.96 million which reflects a 68.5% improvement from the previous half year. The result included:
• Property fund investment devaluations of $19.0 million;
• Devaluation of retirement village assets of $7.9 million;
• Write down of non-core development assets totalling $8.9 million below book value to reflect anticipated sale price;
• Refinancing and other restructuring costs of $5.9 million; and,
• Net tax benefit of $1.5 million.
Becton also recorded a mark-to-market improvement of $4.6 million relating to its interest rate swap portfolio.
Earnings per security was 2.2 cents down from 10.3 cents in December 2008.
Becton CEO Matthew Chun said reducing debt remains a priority.
Interest bearing debt as at December 2009 was $354 million compared to $355 million held at June 2009 and reflects a gearing level of 68 %. Becton has unconditionally contracted to sell a further $77 million of non-core development sites with proceeds expected to further reduce external debt.
The group’s net tangible assets has shrunk substantially to $0.16 compared $1.24 in December 2008, reflecting impairments to nonoperating items including net asset revaluations and non-core development asset writedowns.
Becton’s development and construction business contributed $4.9 million earnings before tax, compared to $10.2 million in the prior corresponding period. The prior half-year period included profit contributions from significant property settlements ($176 million), compared with FY10 settlements ($50 million).
The property funds management business contributed EBIT of $4.3 million, compared to $1.4 million in the prior corresponding period. At December 2009 the business had $1.45 billion funds under management, a decrease of $300 million (17 %) over the Half Year. This includes asset sales of $263 million and net asset devaluations of $37 million during the Half Year.
The retirement living business contributed EBIT of $2.5 million (excluding revaluations). In June 2009, Becton formed a joint venture with the Oman Investment Fund which now holds the majority of the retirement business assets operated and managed by Becton.
The property investment business contributed EBIT of $0.8 million (excluding revaluations and outside equity interests). This was significantly lower than the prior corresponding period due to reduced distributions from the underlying unlisted funds.
Chun said Becton continues to pursue initiatives to recapitalise the business.
He added that the discussions are ongoing and incomplete.
Australian Property Journal
