Australia’s biggest property developer, Lend Lease Corporation Ltd, has again cut its 2009 full-year net operating profit because it says it won’t sell assets at " suboptimal" values.
Lend Lease Corp said in a statement to the ASX it was not a forced seller of assets and had no intention of selling assets at sub-optimal values.
"Given current market conditions Lend Lease does not believe it is appropriate to sell certain assets, including some equity investments in public-to-private partnership projects in the UK this financial year," Lend Lease said.
"Revised guidance after the removal of these items and other adjustments for the year ending June 2009 is net operating profit after tax of circa $300 million."
That’s around 22% under the $447 million earned in the 2008 financial year. In February the company announced a capital raising of just over $300 million and then told the market there was no change to the guidance.
Lend Lease shared ended the day down 3% at $7.33.
In August of last year, Lend Lease advised the market that it expected net operating profit for financial year 2009 to be 10-15% below 2008 net operating profit of $447 million.
Lend Lease said its previous guidance of between $380 million and $400 included an amount of about 30% related to capital recycling and financial close on projects where Lend Lease is the preferred bidder.
Lend Lease expects a further reduction of asset values when it revalues its property portfolio on June 20.
But the company said it would not impact its net profit.
"Any adjustment to asset values will be a non-operating charge which will reduce the group’s statutory profit after tax but will not impact the group’s net operating profit after tax."
Lend Lease said impairment costs associated with its cost-reduction program are expected to be about $80 million after tax.
These costs are also non-operating and will not impact the net operating profit.
Lend Lease booked a first-half loss of almost $600 million after write downs and impairment charges.
The company said that revised guidance after the removal of these items and other adjustments for the year ending June 30 is for net operating profit after tax of about $300 million.
Lend Lease’s previous guidance of between $380 million and $400 million included an amount of around 30% related to capital recycling and financial close on projects where Lend Lease is the preferred bidder.
"Given current market conditions Lend Lease does not believe it is appropriate to sell certain assets, including some equity investments in Public to Private Partnership projects in the UK this financial year.
Lend Lease previously flagged an expectation of further pressure on property valuations in the second half of the financial year due to expansion in capitalisation rates.
The Group’s property portfolio will be re-valued at 30 June 2009 and we expect a further reduction in asset values at that time.
Any adjustment to asset values will be a non-operating charge which will reduce the Group’s Statutory Profit after Tax but will not impact the Group’s Net Operating Profit after Tax.
"Lend Lease has previously indicated that there will be additional implementation costs associated with its cost reduction program in the second half of FY2009.
“The full year 2009 implementation costs are expected to be circa A$80 million after tax.
“These costs are also non-operating and will reduce the Group’s Statutory Profit after Tax but will not impact the Group’s Net Operating Profit after Tax.
"Lend Lease continues to maintain its strong financial position with net debt (including Bluewater lease liability) of circa $300 million as at 30 April 2009.’ Bluewater is a huge shopping centre in Kent, south of London.
Pacific Brands has chosen to take advantage of a sharp rise in its share price in the last month to chase $256 million in new equity to pay down some of its debt.
The company yesterday sought the suspension of its shares to allow a minimum of $154 million, fully underwritten to be raised from its institutional investors.
The balance of $102 million will come in a non-underwritten offer to retail shareholders.
Pacific Brands shares were 77 cents when they went into a trading halt ahead of the raising, having risen from 44.5 cents on April 24.
The company has queried by the ASX when the shares hit 66 cents four days later. It answered in the negative when asked if there was anything it should be telling investors.
The new shares will be priced at 60 cents a share, a 22.1% discount to the latest closing price.
The raising comprises a $30 million institutional placement and a 3-for-4 pro-rata entitlement offer, or a total of $124 million.
"The raising will place Pacific Brands in a much stronger financial position and better position the company to withstand any further softening in the retail environment,” chief executive Sue Morphet said in a statement to the ASX.
The company’s aid the raising would lower the company’s gearing from 3.2 times net debt as a ratio of earnings before interest, taxation, depreciation and amortisation to 2.6 times, although the company said its banking covenants required it only to be below 3.5 times. Those covenants were set early last month when Pac Brands’ debts were restructured by lenders.
The banks agreed to delay the refinancing schedule, pushing its debt due in
