Property developer, Stockland sees the current financial year turning out to be better than the 2009 year, for which holders of the company’s securities will be very thankful.
Chairman Graham Bradley told yesterday’s AGM in Sydney that "it is encouraging to note signs pointing to economic recovery. Financial markets have stabilised.
"World equity markets have rebounded sharply—and this has recently been true for listed property groups.
"While unemployment is increasing in most developed countries, consumer and business confidence has lifted strongly in recent months. It looks like Australia may emerge more quickly from the recessionary cycle than many expected."
And CEO, Matthew Quinn said "We are confident about the year ahead and remain on track to achieve our FY10 guidance of 28 cents earnings per security, assuming no material decline in market conditions.
"Like last financial year, we will have a skew in profits to the second half, as settlement of a good proportion of our recent residential sales will not be completed until 2010.
"While we’ve achieved strong sales results so far this financial year, the consequently high production levels are physically constraining us from completing construction of many of the finished lots until after Christmas.
"All in all, we’re looking forward to building on the achievements of the last year, learning from the set backs and managing our business for the best outcomes through market cycles. We’re confident this approach will see us increase our returns over coming years."
He confirmed the statement at the time of the August results that the company was quitting the UK.
So no surprises or warnings from yesterday’s meeting.
Stockland has raised $2.7 billion in fresh capital in the year to June from an issue and underwritten dividend reinvestment plan, $600 million of unwanted property assets were sold off and 11% of staff was sacked.
It was a tough year and Mr Bradley said yesterday that the company’s security price had outperformed the property sector and was now trading above its net asset backing.
In his speech Mr Bradley reminded securityholders (shareholders) that a new distribution model applies for this year.
"There will be a new policy applied to distributions starting in FY10.
"Following a board review last April, we announced that we have adopted a more conservative distribution policy aimed at rebasing our distributions in future years.
"From FY10, Stockland will distribute the greater of our trust taxable income, or 80 per cent of our adjusted funds from operations.
"Adjusted funds from operations is, we believe, a better measure of the amount of free funds which we can distribute to securityholders without the need to fund distributions from increased debt or equity.
"We will in future distribute 80% of our free funds, allowing us to accumulate 20% for ongoing operations, unless our trust taxable income is greater than this number.
"We have previously indicated that it is likely our FY10 distributions will be based on 80 per cent of adjusted funds from operations."
That means if the company makes its planned 28 cents a unit guidance, then around 22.4 cents will be returned to securityholders, well under the 34 cents a security returned in 2009.
The company made 36.4c a unit in 2009.
Mr Bradley also said that "Individual and collective annual bonuses paid at Stockland were much lower in 2009 than the prior year.
"In addition, as a result of the Company missing the 2009 Earnings Per Security target set by the Board at the beginning of the year, the Group missed its three-year target for the period 2006-2009 and accordingly, 50% of Long-Term Incentive shares awarded to our senior executives in 2006 were forfeited.
"As I have already mentioned, the effective freeze on executive base salaries, which we instituted in FY09, has been continued for a second year in FY10."
Stockland securities rose 12 cents to $4.15 yesterday, up around 3% on the day.
