Last week higher property valuations helped Goodman group and Mirvac improve their 2020-21 results, yesterday it was the turn of Shopping Centres Australasia owner SCA Property (ASX: SCP) and online housing portal Domain (ASX: DHG) to benefit from the improvement in the sector.
SCP boosted its earning 13% in the year to June after sales rebounded nicely across their 92 neighbourhood malls (which are dominated by Woolies outlets, Dan Murphys and Big W).
SCP reported a statutory net profit after tax of $462.9 million, which included a $354.2 million uplift in the value of its portfolio as more people shopped locally, driving up revenue and rents.
That’s a nice headline, but the figures watched by investors – funds from operations (FFO) and distributions per revealed much more sedate performance with nearly all the funds from operations paid out in the year to June.
The company said that supermarket sales in outlets in its centres rose 3.2% in the year to June, discount department store spending jumped 9.2% and speciality stores saw a near 10% rise.
“Over the last twelve months, our convenience-based centres have benefited from the shift to shopping locally,” SCP’s CEO Anthony Mellowes said in the statement.
The company said that the COVID-19 pandemic has continued to negatively impact the group’s financial results with $10.5 million in rental assistance to over 800 tenants (comprising rent waivers of $6.9 million and rent deferrals of $3.6 million), in the year.
But the company said that rent collection rates returned to pre-pandemic levels by the end of the financial year in June.
Excluding non-cash and one-off items, Funds From Operations (“FFO”) totalled $159.0 million, up 12.9% compared to 2019-200.
“The main reasons for this increase were a reduction in the COVID-19 earnings impact (from $20.5 million in FY20 to $7.3 million in FY21) and acquisitions that were completed in 2021.
On a per unit basis the FFO per unit increase of 0.8% to 14.76 cents per unit was lower due to the full year effect of equity raisings (the number of shares therefore rising faster than funds from operations did) completed in late FY20, the company pointed out.
Distributions of 12.4 cents per unit fell 0.8% from 2020, a payout ratio of 98.5% of adjusted funds from operations.
Adjusted Funds From Operations (“AFFO”) was $135.8 million, up 9.3% compared to FY20.
The Group did not receive any funds from the Australian Government under its JobKeeper scheme.
The securities eased 1.1% to $2.62.
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Meanwhile the country’s second ranked real-estate listings portal Domain Group will pay its first final dividend in two years and repay grants received under JobKeeper after reporting an increase in revenue and earnings for the year to June 30.
The company, which is majority controlled by Nine Entertainment earned a net profit after tax of $34.2 million, a turnaround from last year’s $227.2 million loss.
Domain shareholders, led by Nine will receive a full franked final dividend of 4 cents a share. After the 2 cents a share interim, total payout is 6 cents a share.
Despite that positive news, the shares fell to 3-month lows at the opening of $4.45 yesterday, but bounced to close at $4.89, up 4.7%.
Underlying earnings grew almost 20% to $100.6 million and revenue grew almost 10% to $289.6 million for the year.
Domain said the improvement was underpinned by the continued growth of its core digital services which include residential listings; media, developers & commercial; and agent and property data solutions segments.
The residential segment hit record audience figures in March, with a unique audience of 9.6 million across print and digital streams, up 23% year-on-year.
CEO Jason Pellegrino said Domain is positioned to take advantage of an improving property market.
The recovery in market listings has combined with an expansion in Domain’s controllable yield to deliver accelerating revenue growth in the second half,” Mr Pellegrino said.
“While the market recovery was very welcome, it’s been extraordinary for me to see the amazing efforts and outcomes that have been achieved by Domain’s high performing teams.”
Net debt reduced was $79 million compared to $105.8 million at June, 2020.
Residential revenue rose 21% to $195.3 million or approximately 67.4% of total revenue. The company said revenue growth accelerated in the second half, increasing 32% as demand for houses and new listings also rose strongly, lifting prices.
The strong uplift in demand was supported by a recovery in listings from FY20 Covid-induced lows.
In addition to an uplift in audience, listings and revenue figures, the company successfully implemented a delayed price increase in July.
The company said it will repay JobKeeper payments in 2021-22 from previous years which will cut earnings before interest, tax depreciation and amortisation this year by $5.7 million for the 12 months.
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A big thumbs down from investors for the 2020-21 results from investment house Magellan after it trimmed final dividend off the back of a 33% slide in earnings.
The company said yesterday it will pay shareholders a final dividend of $1.141 a share, taking the total dividend for the year to $2.112 – down from $2.149 paid last year because of a dip in performance fees for the year.
What Magellan says are ‘crystallised performance fees’ before tax fell to $30.1 million for the year, down from $81 million in 2020.
That saw the performance fee dividend to shareholders fall 62% to 11.5 cents a share, but total ordinary interim and final dividends for the year increased 8.2% to 199.7 cents a share, which was a more accurate look at the dividend for the year.
Magellan reported net profit after tax of $265.2 million for the financial year ending June 30, 33% less than last year’s profits of $396.2 million which was boosted by one off payouts in the December, 2019 half year.
The company said the 33% slide reflected amortisation expense of $4.5 million, a net unrealised gain on changes in the fair value of financial assets and liabilities of $11.2 million, and transaction costs related to strategic initiatives of $154.1 million.
These are primarily related to the restructuring of its global shares retail funds that was completed in December and the associated partnership offer and bonus option issue that completed in March 2021.
These moves are aimed to increase long-term profitability and the ‘stickyness’ of its funds under management (FUM) ie to keep as much of the money under management as possible.
On an adjusted basis, Magellan’s net profit after tax was $412.7 million, down 6% year on year. This reflects lower performance fees which fell 63%.
Profit before tax and performance fees was up 10% to $526.6 million.
Investors failed to spot the break down in the dividend and one-off spending on “strategic initiatives” and sent the shares down to $45.66 before they recovered slightly to end at $46.20 and down more than 10% on the day.
Despite the falling profits, the group’s average funds under management (FUM) rose 9% over the year to $103.7 billion, with a closing balance of $113.9 billion. This was up 17.2% over the year.
Retail FUM rose 15.4% to $30.9 billion, while Institutional FUM jumped 17.9% to $83 billion.
