No wonder securities in Mirvac, the troubled property developer, investor and shopping centre group, failed to get any sort of traction from yesterday’s interim result.
The securities shed 1 cents to end at 95 cents, despite a furious attempt by the company to put the best possible complexion on what was a miserable half year, for it, for management and of course, for investors.
The company simply failed to provide any meaningful comparisons with the first half of last year, and instead concentrated on spinning what was the worst half’s result for years.
The press release and some of the directors’ comments didn’t contain any comparisons with the first half of 2008, while the accounts didn’t highlight the dramatic worsening in the company’s performance.
The press statement started " The following table summarises the key financial results for the six months ended 31 December 2008:
"Operating profit after tax of $81.6 million; Operating earnings of 6.48 cents per stapled security; ‘Half year distribution of 7.80 cents per stapled security; $500.0 million of equity raised via an entitlement offer."
The notion of a "operating profit" was a misstatement, as the directors admitted in this in their report
"Operating profit is a financial measure which is not prescribed by Australian Accounting Standards and represents the profit under Australian Accounting Standards adjusted for specific non-cash items and other significant items which management consider to reflect the core earnings of the Mirvac Group."
Mirvac said it reaffirmed its EPS and DPS guidance of 13.4 cents per stapled security for the FY09 year.
"The Group’s statutory net loss after tax of $645.7 million was impacted by the volatility associated with Investment property revaluations, and the impact of mark to market financial instruments and associated foreign exchange movements, as well as the Group’s proportionate share of losses from joint ventures and associates.
“Additionally, the Group wrote-down $247.8 million in goodwill and intangibles relating to the Investment Management and Development business.’
Looking at the "Operating profit: in the first half of 2008, it was $215 million, so the fall is effectively more than 60%. That comparison wasn’t given in the report to the ASX.
The huge statutory operating loss was mentioned, but downplayed, but the statutory operating profit in the first half of 2008 was $388 million, so there was a $1 billion-plus turnaround in the 12 months.
The spin this year was amazing: the huge loss was a "statutory" result; the $388 million one from last year was called "net profit after tax"
This year’s distribution was cut to 13.4 cents for the 12 months to 2009. It was forecast at 32.9 cents a security in the year to June 30, 2008, but never made it as the first round of write-downs and falling income and sales saw it slashed.
The company, like so many others switched to paying distributions out of income, so the 2008 full year figure was cut to 16.21 cents.
The real story about the distribution that this year’s will be less than half the promised one for 2008, which wasn’t delivered.
The contacts for the company a year ago were the then CEO, Greg Paramour (who had told the chairman he was quitting, but Mirvac hadn’t got round to telling the market and wouldn’t for another five months).
Other senior managers were listed for media and analysts to contact.
This year, just two names without titles and the newish CEO, Nick Collishaw was no where to be seen, despite being a contact point a year ago.
Mr Collishaw said in yesterday’s press release and directors’ statement:
Mirvac’s Managing Director, Nick Collishaw said, “Today’s results vindicate the tough decisions Mirvac has made since August last year. We witnessed significant changes in the market in which we operate and we acted swiftly and prudently to review and adjust our business.
“We made important changes to our model to bring our focus back to our core competencies and we were pro-active in securing our balance sheet.
“Our realistic assessment of the market means that we are well advanced in delivering on our strategy as opposed to reacting to changed market conditions.”
Mirvac said it continued to comply with all its debt covenants as at 31 December 2008, and the Group had over $1.2 billion of undrawn facilities. Gearing remained low at 31.3 per cent and see-through gearing at 34.0 per cent. Mirvac maintained its S&P BBB credit rating.
Post 31 December 2008, Mirvac announced it had reached agreement on a new unsecured debt facility of $805 million. This facility will replace Mirvac’s existing $1.1 billion syndicated facility which was due to expire in June 2009 but was undrawn at 31 December 2008.
Of the $805 million facility, $755 million was refinanced from the previous $1.1 billion bank syndicate which was due to expire in June 2009, with $50 million of capacity from other facilities renegotiated as part of the new unsecured bank syndicate.
