AGM 2005 Chairman s Address

Transcription

1 FKP PROPERTY GROUP comprising FKP LIMITED ABN and FKP PROPERTY TRUST ARSN the responsible entity of which is FKP FUNDS MANAGEMENT LIMITED ABN , AFS Licence number ASX ANNOUNCEMENT Date 28 October 2005 Subject AGM 2005 Chairman s Address In my first year as chairman I am proud to confirm another record profit delivered by the group, reflecting an impressive increase of 50% in net profit after tax for 2004/2005. That result reflected good earnings per security growth of 12% for the year and growth in dividends / distributions of 67% over the prior year. Another outstanding result for the group was reaching 35% recurring income for 2004/2005. This was primarily delivered through growth in the group s retirement investment business and positions FKP very well to meet its recurring income objective of 50% by This is a target that was set in 2003 as part of the group s strategic 5 year vision. The Board is very pleased with these results. Peter Brown will provide more detail of these results, following my presentation. I would also mention that management is well advanced with the implementation of the new IFRS accounting standards and as reported in the Annual Report, the expected adjustments to the 2005 result are not material. At the previous AGM, securityholders voted in favour of the stapling proposal, allowing FKP to restructure, and trade as a stapled entity, in order to better position the group to meet its future ambitions. The benefits of that restructure can already be seen, through improved financial capacity, and the increase in securityholder value by approximately 65% since announcing the stapling proposal. I have already outlined FKP s excellent annual result. That result exceeded the Product Disclosure Statement forecast, issued by the group in October 2004, and was achieved in a year, which saw the group raise approximately $130m of new equity. F:\doc\corporate\asx\announcements\2005\ AGM 2005 Chairmans Address.doc

2 Indeed 2005 was an eventful and exciting year for your company. In 2005/2006 FKP will continue to further invest in retirement village assets, in order to achieve its stated recurring income objectives. Since the release of its annual result, the group has acquired a portfolio of retirement villages across Brisbane, the Gold Coast and Adelaide, and through the joint venture vehicle formed with Macquarie Bank has entered into a takeover offer, for the leading retirement village operator in New Zealand, Metlifecare, and yesterday acquired another New Zealand retirement village operator Private Life Care. The joint venture with Macquarie Bank is seen as an important step for the Group as its couples the Group s development and management skills of retirement village assets with Macquarie Bank s financial capacity and experience in overseas transactions. The joint venture will seek further acquisitions in both Australia and New Zealand. I would like to thank my fellow Directors for another year of commitment and contribution to the group. Some of you maybe aware that sadly in January of this year the founder of Peter Kurts Properties Limited, Mr Peter Kurts passed away, aged 81. An extremely successful, self-made property developer and investor, he will be remembered for his straightforward approach to business, belief in mentoring, determination and passion. He was also a remarkable yachtsman, having represented Australia in six Admiral s Cups, competed in 31 Sydney-Hobart races (winning two) and led the tall ships into Sydney Harbour for Australia s bicentennial. He sailed around Cape Horn aged 70, and frequently skippered his own yacht Love and War single-handedly from Sydney to Lord Howe Island. Whilst having never joined the Board of FKP after the merger in 1998, his contributions importantly helped shape the group as it is today. There have been several changes to the Board this year. I thank founding Director Des Forrester, who will not seek re-election today, for his dedication and extensive contribution to the Board and for his efforts as Managing Director of the construction business from 1987 to I wish you well in your further pursuits. Mr Len McKinnon who is based I Sydney joined the Board in May Len s professional experience in property finance will prove valuable to the group. I also thank former Chairman John Jamieson, who retired from the Board after last year s AGM, for his strong leadership and contribution to the growth of the group over his time on the Board and his 3 years as Chairman. F:\doc\corporate\asx\announcements\2005\ AGM 2005 Chairmans Address.doc

3 On behalf of the Board, I would like to take this opportunity to also thank the management team and their staff, for their professionalism and dedication to the delivery of the group s outstanding result for 2004/2005 The Board and management will continue to focus on the delivery of FKP s stated five year strategic plan. We are one third of our way through this financial year and at this stage are pleased with current trading. Increased investment in the retirement and property investment & funds management divisions are prime areas for growth as these business divisions contribute to a secure future for FKP by providing securityholders dependable recurring income. Our land division, with its flagship Peregian Springs estate continues its strong performance, despite slowing residential markets experienced across Australia. The development division is in an enviable position, with its premium quality development pipeline, across all property markets, securing future earnings, and leaving the team to focus on profit delivery. Further expansion is also planned into the NSW and Victorian markets. The outlook for 2005/2006 is positive for continued growth in EPS and distributions and we are on track for another year of record profits. I thank you for your ongoing support. Ben Macdonald Chairman F:\doc\corporate\asx\announcements\2005\ AGM 2005 Chairmans Address.doc

4 Annual General Meeting 2005 Managing Director s Address Peter Brown

5 Presentation Outline Strategic Vision Financial Highlights Divisional Overview 2

6 FKP Strategic Vision Vision to become a fully diversified national property group FKP remains committed to our key strategic objectives Diversification of operating activities Growth of recurring earnings minimum 50% by 2008 Measured expansion into NSW and Victoria Build on integrated business model 3

7 Highlights Net Profit After Tax ($m) % Compound NPAT growth 46% pa from

8 Highlights Earnings Per Security (CPS) % Compound EPS growth 34% pa from

9 Highlights Distribution Per Security (CPS) % Compound DPS growth 43% pa from

10 FKP business structure FKP Property Group Stapled Security Holders FKP Property Trust FKP Limited Property Investment & Funds Mgt Retirement Investment Development Land Queensland Victoria NSW Norwest (50% interest) 7

11 Highlights 30 June 2005 All four business divisions delivered growth Well on track to meet 50% recurring income objective Divisional EBIT contribution: 2005 $ % Increase Retirement 22,975 25% 35% Property Investment & Funds Management 10,132 10% 1170% Land 38,206 43% 20% Development 19,392 22% 11% 8

12 Highlights Gearing 25% 20% 20% 23% 15% 15% 16% 10% 5% 7% 0% Low gearing positions FKP well for growth objectives 9

13 Divisional overview

14 Retirement Investment Retirement investment division delivered EBIT of $23m, up 35% Retirement investment division constituted 25% of the group s 2004/2005 earnings Division delivered earnings growth due to larger portfolio and accumulated capital gains FKP owns and operates approximately 5,300 units, since its recent acquisition of 14 retirement villages across Brisbane, Gold Coast and Adelaide Portfolio size provides smoothing of cash flow for annuity style income Actively seeking further business expansion 11

15 NZ Retirement Investment Formed Retirement Villages New Zealand (RVNZ), an equally owned joint venture with Macquarie Bank Recently acquired Private Life Care, a leading retirement village owner and operator in New Zealand with a total of 611 units Recently acquired 60% of New Zealand s leading retirement village operator Metlifecare, with an offer for the additional 40% soon to come. This will add a further 1,800 units 12

16 Retirement Investment

17 Property Investment & Funds Mgt Property investment & funds management division delivered EBIT of $10.1m first full year and constituted 10% of the group s 2004/2005 earnings Approximately $220m of assets owned and managed at October 2005 Active management has resulted in 99% portfolio occupancy FKP Commercial Property Trust No. 1 continues to outperform PDS forecasts Committed to launching new funds management product in this financial year Continue to source investment opportunities to add to the existing property investment portfolio Take advantage of FKP s ability to build quality property through its internal development and construction skills, enjoying the benefits of its fully integrated business model 14

18 Property Investment & Funds Mgt

19 Land Land division delivered EBIT of $38.2m, up 20% Land constituted 43% of the group s 2004/2005 earnings Peregian Springs estate performed very well with strong sales in the second half of the year First half of the year included sale of school site at Coolum Ridges Received development approval for Coolum Ridges (adjacent to Peregian Springs), now under appeal Land holdings are well positioned in all respects to deal with the softer market currently being experienced Interstate migration continues to Sunshine Coast, which has very strong employment growth 16

20 Land

21 Development division Three operating units Queensland NSW Victoria Operations in Commercial Industrial Retail Retirement units Residential apartments Retirement Construction Apartments Commercial Sunshine Coast Sydney Melbourne Brisbane Construction Projects 18

22 Development Division Development division delivered EBIT of $19.4m, up 11% This division constituted 22% of the group s 2004/2005 earnings Decision taken in 2003 to reduce apartment exposure in 2005/2006 is now validated Successful acquisition of new projects to add to its premium quality pipeline across all property sectors Higher emphasis on commercial development projects in 2005/2006 FKP will continue medium term roll out of Board approved development pipeline of over $1b Continued roll out of retirement village unit pipeline of approximately 1,200 units Construction team will continue to support the group s expansion delivering quality product, and seek profitable external opportunities 19

23 Development Division

24 FKP Property Group Norwest Acquisition overview Off market transaction to acquire a 49.9% economic interest in Norwest Limited from Mulpha for $143m Portfolio of 1,500 residential land lots and 42ha of commercial development in growth areas of Sydney Expanded development pipeline provides sustainable earnings growth Significant opportunities for FKP s development, construction, retirement and funds management activities 21

25 Our People Growth. Diversity. Ambition. It is the ability to work together which determines our success Thank you to each employee for your contribution to FKP s excellent record of growth and superior returns provided to securityholders

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