July to December 2010 HALf yeAr rePorT To …cedarwoods-com-au.s3-ap-southeast-2.amazonaws.com/pdf...report.pdfJuly to December 2010 HALf yeAr rePorT ... in presales already in place

July to December 2010

HALf yeAr rePorT To SHAreHoLDerSCedar Woods Properties Limited ABn 47 009 259 081

HIGHLIGHTS

Strong fi rst-half net profi t of $24.2m

forecasting a full-year net profi t of approximately $27m, up 57%

Interim dividend of 11 cents (fully franked) declared; full-year payout ratio to remain at 50% of net profi t

$30m in presales at projects completing in the second half

Net debt to equity ratio of 16% at 31 December, well below the company’s upper limit of 75%

$110m bank facility in place until August 2013

1 / CeDAr WooDS ProPerTIeS LIMITeD

Cedar Woods Properties Limited reported a first-half net profit of $24.2m (H1 2009 $9.9m) and is forecasting a full-year net profit of approximately $27m, an increase of 57% over the previous financial year.

The result reflects the improved profitability of Cedar Woods’ projects in Perth and Melbourne and the robust demand that has been experienced for the company’s projects during 2010, and which will continue to bolster earnings in 2011.

A significant number of development projects were completed during the first half and Cedar Woods is confident that $30m in presales already in place will underpin second-half earnings.

In light of the strong first half, the Board has decided to pay a fully franked interim dividend of 11 cents per share, more than double the interim dividend paid a year ago (5 cents). The Board will maintain the current policy of distributing approximately 50% of full-year net profit, with the balance to be paid as a final dividend.

Managing Director Paul Sadleir said that the outlook for Cedar Woods remains positive as the company’s Melbourne projects are performing well and its Perth projects continue to improve.

First HalF summary

“We are pleased to report a strong first-half result that underpins our full-year forecast and which has allowed us to more than double the interim dividend.”

“With over 95% of our sales budget achieved for this financial year, we have already started to lock away a significant number of presales for the 2012 financial year.”

“In addition, our debt came down significantly in the first half. The company has a $110m corporate facility in place until August 2013 which was drawn to only $21m at the end of the first half, providing a low net debt-to-equity ratio of 16%.”

“With a diverse portfolio of projects, the necessary approvals in place and ample funding, Cedar Woods is well placed to comfortably exceed its 10% per annum growth target in coming years, assuming reasonable market conditions.”

HALf yeAr rePorT To SHAreHoLDerS / 2

Cedar Woods’ joint venture project with the WA Department of Housing, Harrisdale Green, successfully launched in September 2010 with over 60% of Stage 1 sold over the fi rst week of sales. Strong enquiry has continued prompting the launch of Stage 2 early in 2011. once complete, the project will include an exciting mix of local shops, offi ces and showrooms with more than 450 new homes, townhouses and apartments built around several public open space areas. of the 450 new homes, around one in nine will be allocated to the Department of

Diversity the key in delivering results in WA

ProJeCT reVIeW: Western australia

Housing that will be integrated progressively throughout the estate over the life of the project.

With a number of new homes now complete, the fi rst residents have moved into Cedar Woods’ emerald Park estate in Wellard, located some 32 kilometres south of Perth. over 75% of the lots released in the fi rst two stages of this new estate have now sold, in an estate ultimately expected to yield over 600 lots. The 11 home display village successfully launched in late 2010 and has become a signifi cant driver of visitors to this new estate.

At The rivergums in Baldivis, construction has commenced on the State high school, and there are plans for a future primary school on an adjacent site. The estate boasts a network of lakes, wetlands and beautifully landscaped parks and with over 600 lots in the development now sold, the local community has become well established. The latest release, Stage 8, is in the northern part of the estate and adjoins wetlands and signifi cant areas of open space. The fi rst lots in this stage are anticipated to be delivered in late 2011.

The company has a limited number of premium apartments and townhouses remaining within the Mandurah region after a number of sales were completed in the fi rst half. All of the ‘fairways’ townhouses at Mandurah Country Club have successfully sold out with the last of the settlements occurring in early 2011. This joint venture with the Mandurah Country Club saw 25 prestigious townhouses constructed, with spectacular views overlooking the 8th green and 9th tee at the Club in Halls Head.


They were enthusiastically received by the market who appreciated the architecturally designed homes, providing an exclusive address and unique lifestyle. There are now 5 apartments remaining for sale at the prestigious Waterline Apartments at Halls Head and these are expected to sell over the remainder of 2011.

The Kestrels in Tapping continues to be very popular with buyers in the northern suburbs, with the final stage almost complete, bringing to a close this successful estate. The last 8 lots, situated on the most elevated site of the estate and overlooking the central parkland areas are due to be released to the market in the second half.

Coming soon

The proposed redevelopment of the former Carine TAfe site in Perth’s middle northern suburbs is progressing with public advertising of the Local Structure Plan taking place early in 2011. In cooperation with the Western Australian State Government, LandCorp, and the St Ives Group, the project is proposed to deliver retirement living, residential aged care, mixed use development and residential townhouses and apartments.

The company has been appointed by LandCorp to manage the Phase 2 environmental Approvals process for Mangles Bay, located in the City of rockingham. The Mangles Bay Marina Based Tourist Precinct aims to provide the community with improved marine, tourist, commercial and recreational facilities, while respecting and repairing the coastal

environment. The project is scheduled to undergo a Public environmental review in mid-2011.

Landholdings in Piara Waters, situated approximately 25km south-east of the Perth CBD, represent medium to long term prospects for further residential development. Planning is continuing for a 140-lot estate on Nicholson road, forecast for release over the course of 2011. This estate will be the first of two parcels expected to be developed over the next 2-5 years.


Unparalleled demand has continued at Cedar Woods’ fl agship Melbourne development, Williams Landing. over 775 lots have been sold since the launch in March 2008 with all recent releases selling out on the day of sale. over 160 residents now call Williams Landing home.

The Inspiration Display Village launched in September 2010 with much fanfare with over 500 visitors attending the launch. ‘Inspiration’ is one of Victoria’s largest display villages with 52 homes featuring 15 builders.

Cedar Woods’ Melbourne developments continue to deliver strong results

ProJeCT reVIeW: ViCtoria

The Ashcroft Neighbourhood is now complete with fi nal settlements completing in early 2011.The new Kingwell Neighbourhood was successfully launched in November 2010 with both Stage 1 and 2 releases sold out. The future Kingwell Display Village has also sold out, with a second 51 home display village anticipated to open mid 2012.

The 50ha Town Centre area is currently under design with anchor tenant negotiations well progressed for both Stage 1 of the Shopping Centre, and a major anchor in the homemaker retail precinct. The long awaited approval for an increase of the retail fl oor space cap from 15,000sqm to 25,000sqm of ‘shop’ has also recently been received, enabling development of a full sub-regional shopping centre in Stage 1.

environmental sustainability has been at the forefront of the development with the commissioning of storm-water harvesting in the 1.2 ha Ashcroft Park. Two underground storm-water tanks have been installed with a combined 250,000L capacity. The tanks are currently full and ensure the park is green all year round. Cedar Woods manages three conservation reserves in Williams Landing, protecting native grasslands and a wetland.

The nine hectare ‘Banbury Village’ site located in footscray has continued to receive strong interest from local residents and buyers alike. The residences are all architecturally designed and come with a 6-star energy rating. The recent release of Stage 9 in february also set new price benchmarks for Banbury Village, with a four-bedroom home achieving $775,000 and a three-bedroom townhouse fetching $670,000.


Substantial progress has been made with construction and the first five stages of homes now all complete. Work continues with stages 6-8 currently under construction, along with the olympus Heritage Apartments, which will provide contemporary living in heritage listed art deco buildings. A total of 144 homes have been sold to date with 53 residents now located at Banbury Village. The impressive Beaurepaire reserve opened to the public in November 2010.

At Carlingford estate over 380 allotments have now been sold, and approximately 120 residents have moved in to the new estate. The Carlingford display village has been completed and incorporates 11 homes open to the public.

Caring for the environment is a priority in the development of Carlingford. Natural stony knolls have been incorporated into protected reserves. Water sensitive urban design sees water run-off within the estate treated in a cleverly designed wetland system and then released into local waterways, helping to maintain and improve important habitats.

Coming soon

Boroondara City Council’s planning approval of 78 modern, architecturally designed houses and townhouses in Camberwell has affirmed Cedar Woods’ vision for a sustainable, contemporary, inner urban housing development.

Named “realm Camberwell” the project is an $80 million residential development to be built on 2.55 hectares of previously unused land in Cornell Street. residences at realm Camberwell have been carefully designed to

incorporate sustainable design features and to achieve a minimum 6-star energy rating.

The development has been designed to integrate with the adjacent Back Creek walking track and will include a park for community use. It is a short distance from local shops and cafes, Camberwell Junction and public transport facilities.

Civil construction is expected to commence by mid 2011 with home construction expected later this year.


EConomy

Nationally the economic outlook for 2011 is positive with strong employment and population growth anticipated.

The national residential property market experienced modest growth in 2010 after robust price growth in most major capitals in 2009. The wind-down of government housing/home buyer incentives and increases in interest rates by the reserve Bank of Australia and the retail banks have recently dampened growth in the market. However, business investment is expected to rise as new resource projects get under way and this is expected to feed positively into employment and wage growth. These factors and the ongoing undersupply of new dwellings are anticipated to provide upward pressure on demand and prices in due course.

ComPAny

Cedar Woods has a well-located portfolio with a diversity of product and its estates have continued to perform well in the current market. A large bank of presales is in place which will continue to underpin earnings for the balance of fy2011 and into fy2012. With plenty of land available with approvals in place and ample funding, the company is poised to capitalise on any upturn in the WA market.

As noted previously, the first half was very strong as a result of the number of stages completed during the period. Management is primarily focussed on full-year results and variability of earnings from half to half is not unusual. A lower number of settlements are expected in the second half and the second half result will be significantly lower than the first half.

Company outlook


Cedar Woods is anticipating a full-year net profit of approximately $27m, representing an increase of 57% on fy2010, and the company will provide further guidance at the end of the third quarter.

Looking out to fy2012, the company has significant presales in place for delivery in that year, and management is focused on supplementing that bank of presales over the remainder of the financial year. Strong demand for recent releases at the company’s estates is encouraging.

In the medium term, new projects at Camberwell, Piara Waters and Carine are anticipated to contribute to earnings from fy2013 onwards.

Work continues in planning the future town centre component of the Williams Landing project. This will comprise around 50

hectares of retail, bulky goods, commercial, high-density residential development and public space. The State Government has recently initiated construction of the Williams Landing train station and Palmers road freeway interchange and the train station is expected to open in 2012. The Williams Landing Town Centre provides an exciting medium-term development opportunity for the company and, subject to approvals, the first component, being the Williams Landing retail Centre, is expected to open in 2013.

With a diverse portfolio of projects, with approvals in place, the company is well placed, assuming reasonable market conditions, to comfortably exceed its 10% per annum earnings growth target in coming years.

Caption



FinanCial Commentary on tHe First HalF result

Group revenue rose 58% during the half as a result of the increase in settlement income during the period, mainly in Melbourne.

Due to increased settlement income, the company’s net debt reduced from $40.2m at 30 June to $20.4m at 31 December, providing a net bank debt / equity ratio of 16%, under the company’s target range of 20%-75%. Debt is expected to be in the range of $50-60m at 30 June 2011.

The company’s $110m corporate finance facility with ANZ is available until 30 August 2013, providing ample capacity to fund operations and growth.

The company has Net Tangible Assets (NTA) per share of $2.12, based on the carrying value of the properties disclosed in the half-year accounts, calculated at the lower of cost or net realisable value. The Board remains confident that the NTA per share is approximately $6, based on a market value basis, as disclosed in recent company announcements. This figure does not take into account corporate tax payable upon the sale of the properties, the value of any other projects under consideration or the value of the company’s available franking credits which are currently approximately $30m.

The excess of the market value-based NTA over book value NTA has been driven by the continued strong performance of a number of key projects, in particular Williams Landing, together with the fact that many of the company’s properties were acquired some time ago at much lower values than those now prevailing.


CoNSoLIDATeD STATeMeNT of CoMPreHeNSIVe INCoMe for the half-year ended 31 December 2010

Half Year Half Year2010

$’0002009

$’000

Revenue from operations 95,999 60,767

Cost of sales (49,028) (33,629)

Gross margin 46,971 27,138

other income 198 267

other expenses:

Project operating costs (5,656) (6,435)

occupancy (251) (258)

Administration (4,398) (3,472)

finance costs (851) (1,366)

Depreciation and amortisation expense (120) (116)

Write down of non-current assets (827) (1,533)

Share of net profits (losses) of associates accounted for using the equity method (325) 8

PROFIT BEFORE INCOME TAX 34,741 14,233

Income tax benefit (10,523) (4,294)

PROFIT FOR THE HALF-YEAR 24,218 9,939

Other comprehensive income

Changes in the fair value of available-for-sale financial assets, net of tax 1 -

Total comprehensive income for the half-year 24,219 9,939

Total comprehensive income for the half-year attributable to members of Cedar Woods Properties Limited 24,219 9,939

Earnings per share for profit attributable to the ordinary equity holders of the group:

Half Year Half Year2010

cents2009

cents

Basic and diluted earnings per share 39.8 16.9


CoNSoLIDATeD STATeMeNT of fINANCIAL PoSITIoNAs at 31 December 2010

31 December2010

$’000

30 June2010

$’000

CURRENT ASSETSCash and cash equivalents 464 527Trade and other receivables 2,097 751Inventories 39,576 39,650Deferred development costs 9,877 4,616Total current assets 52,014 42,544

NON-CURRENT ASSETSreceivables 8,131 7,362Inventories 127,612 148,124Investment accounted for using the equity method 3,432 3,757Available for sale fi nancial assets 16 15Derivative fi nancial instruments 678 510Property, plant and equipment 961 1,018Investment properties 2,069 2,094other 636 233Total non-current assets 143,535 163,113

TOTAL ASSETS 195,549 205,657

CURRENT LIABILITIESTrade and other payables 7,415 28,061other fi nancial liabilities 21,540 19,475Current tax liabilities 5,951 1,962Provisions 5,669 5,526Total current liabilities 40,575 55,024

NON-CURRENT LIABILITIESBorrowings 20,436 40,243Deferred tax liabilities 4,057 1,543Provisions 67 57Total non-current liabilities 24,560 41,843

TOTAL LIABILITIES 65,135 96,867

NET ASSETS 130,414 108,790

EQUITYContributed equity 42,894 40,447reserves 672 874retained profi ts 86,848 67,469TOTAL EQUITY 130,414 108,790


Six months ended31 December

201031 December

2009

Interim dividend per share (cents) 11 5

earnings per share (cents) 39.8 16.9

Interest cover (times) 12.9 8.3

As at31 December

201030 June

2010

Net bank debt to equity (%) 15.9 36.5

Number of shares on issue (m) 61.4 60.6

Net asset backing per share ($) 2.12 1.80

Share Price ($) 3.50 2.45

Interim dividend details

Dividend declared 11 cents per ordinary share

franking 100% franked

record date 8 April 2011

Payment date 29 April 2011

Dividend reinvestment plan (DrP) Available

Bonus share plan (BSP) Available (BSP record date 18 february 2011)

Discount on DrP and BSP 2.5%

key perFormanCe measures



ComPAny ConTACTs

Street Address: Level 4, 66 Kings Park road, West Perth WA 6005

Postal Address: Po Box 788, West Perth WA 6872

Telephone: 08 9480 1500 / facsimile: 08 9480 1599 email: [email protected] / Website: www.cedarwoods.com.au

Chairman: Mr. William G HamesManaging Director: Mr. Paul S SadleirCompany Secretary: Mr. Paul S freedman

EnQUiRiEsenquiries regarding the availability of lots or units within the company’s developments may be directed to the company initially by telephoning us on 08 9480 1500. Shareholders are also encouraged to take advantage of the shareholder discount scheme, details of which are summarised in the next section.

sHAREHoLDER DisCoUnT sCHEmEThe company operates a shareholder discount scheme, which offers a 5% discount off the listed purchase price of any residential lot in the company’s developments.

A summary of the main terms and conditions follows:

• shareholders must hold a minimum number of 5,000 shares for at least 12 months before purchasing a lot to qualify for the discount;

• there is no limit to the number of lots which a shareholder may purchase under the scheme, subject to any statutory restrictions;

• the shareholder discount scheme does not ordinarily apply to combined house and land packages or apartments.

The above is a summary of the main conditions and shareholders should apply to the company or visit the website www.cedarwoods.com.au for the full terms and conditions.

This shareholders’ update is not intended to be relied upon or used for investment purposes and is presented in a newsletter format, not as a prospectus. Shareholders should seek their own investment advice prior to transacting shares in the company. financial information presented herein is in summarised form. full copies of the company’s half year results are available to shareholders upon request, or may be accessed from the company website or the Australian Securities exchange.

Documents

July to December 2010 HALf yeAr rePorT To …cedarwoods-com-au.s3-ap-southeast-2.amazonaws.com/pdf...report.pdfJuly to December 2010 HALf yeAr rePorT ... in presales already in place