Shopping Centres Australasia Property Group (ASX:SCP) released its financial results for the six months ended 31 December 2015.
The property management company recorded a statutory net profit after tax of $90.8 million, which is down 7.5% compared to the previous corresponding period (pcp). The lag was mainly due to a smaller increase in the value of investment properties and the market-to-market value of derivatives.
However, Funds from Operations (FFO) excluding cash increased 29.1% to $48.8 million, compared to the same period last year. Reduction in vacancy levels, along with an increase in rent per square metre, acquisitions and lower cost of debt were the main drivers.
Value of the Group’s investment properties increased to $2,076.1 million, from $1,895.4 million at 30 June 2015, due to a combination of acquisition and valuation uplifts. Acquisitions backed $115.2 million to the value of investment properties plus $8.5 million from stamp duty and other transaction costs. Developments added a further $3.3 million, while valuation uplifts contributed $38.0 million, along with another $11.0 million addition from the appreciation of the New Zealand dollar.
The Group’s net tangible assets (NTA) per unit was reported at $1.85, which is a 4.5% or 8 cpu increase from 30 June 2015.
In regard to the capital management strategies, the Group increased its gearing to 34.2% from 33.3% compared to the previous period. This is however within the company’s gearing policy range of 30% to 40%.
The Group renegotiated its bank facilities to extend maturity and increase facility limits, and as at December 2015, it has $108 million in cash and undrawn facilities. Additionally, it has entered into $150 million worth new fixed interest rate swaps. These initiatives reduced the average cost of debt down to 3.9%, from 4% during the pcp. The Group also raised $6.9 million in equity through the dividend reinvestment plan in August 2015.
The Group’s Chief Executive Officer commented on the results: “We are pleased to report another solid result for the 6 months to 31 December 2015. Our speciality tenants continue to perform strongly, again recording annual sales growth of over 5% despite the slowdown in sales growth from our supermarket anchors.”
The market reacted negatively to the earnings announcement, sending SCP down 1.8% to $2.17, as at 10:35 AM (AEDT).
Author: Simon Herrmann
Feb 09, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.