This article is from the Australian Property Journal archive
TRAFALGAR Corporate Group has downgraded its distribution guidance for FY2008, citing current market conditions.
Trafalgar’s chairman Richard Grellman said it is reducing its final distribution guidance for FY 2008 from 10 cents per security to 5 cents per security.
As a result, the group’s FY2009 distributions would be equivalent to its net property trust income which is expected to be at least 10 cents per stapled security before asset revaluations.
Grellman said the revision of the distribution policy had been influenced by the belief that it is prudent in the current environment for the group to retain working capital to invest in projects that enhance security holders’ value in the medium term.
Chief executive Braith Williams said new development division transactions would be directed towards funding projects with established specialist development partners.
“In future corporate development activities will leverage off its strengths in structuring transactions, debt management and working with delivery partners.
“This strategy will enable the group to continue to diversify its development division earnings, enable more timely profit recognition and improve its earnings profile, whilst constraining operating costs,” he added.
“The strategy involves Trafalgar engaging in financial partnering with third parties, often on the basis of preferred equity returns. Such arrangements will enable the group to undertake a larger number of projects and allow the development division to significantly reduce reliance on any individual project for profits.
“Generally, the project term will be less than three years and Trafalgar will seek to generate on-going risk managed returns, with development profit sharing,” Williams said.
Williams said the combination of the development division’s business focus for new transactions and management’s commitment to continuing its reduction of the group’s operating costs is expected to result in at least a 30% reduction from the levels incurred in FY2007, although the benefit of these cost savings will not be fully reflected until FY2009.
Grellman also confirmed that effective July 01, directors will allocate a minimum of 10% of their annual directors’ fees to acquire TGP stock on a monthly basis.
Trafalgar’s shares closed 11.5 cents or 9% lower at $1.15.
Australian Property Journal
