Please find attached our AGM presentation and Chairman s address for release to the market.

Transcription

1 6 November 2009 Australian Securities Exchange Exchange Centre, Level 4, 20 Bridge Street, Sydney NSW Dear Sir / Madam, AGM PRESENTATION AND CHAIRMAN S ADDRESS Please find attached our AGM presentation and Chairman s address for release to the market. Yours faithfully, Paul Freedman, Company Secretary

2 6 November 2009 Chairman s Address 2009 AGM When I stood before shareholders at last year s AGM I spent some time discussing the impact of the Global Financial Crisis on the financial markets and more particularly its effect on Cedar Woods. Until around March of this year global financial markets had been in turmoil, with the Australian stock market experiencing a sharp correction, down approximately 50% from October 2007 to its lowest point in March Many sectors of the economy, including the property sector, experienced a significant decline in demand as consumer sentiment weakened. As noted last year, some high profile company failures negatively impacted sentiment towards the Australian listed property sector, which suffered share price falls greater than the overall stock market. Property valuations were impacted during the crisis, causing most companies within our sector to make write downs or impairment charges, as they reflected the lower valuations on their balance sheets and in their income statements. Your company was not immune to these changes and as a result the company suffered a decline in earnings in FY2009 and after conducting a thorough review of the carrying values of properties in our inventory, the Board determined to recognise write downs on a number of non-core properties. Many of the companies in our sector, both large and small, were forced to conduct major equity raisings in order to strengthen their balance sheets in response to lower earnings and property values, significantly diluting existing shareholders future earnings. By comparison, Cedar Woods raised only a low level of additional equity over the duration of the financial crisis, by way of the dividend reinvestment plan. While a small amount of additional equity was considered to be necessary and in the best interest of shareholders, other capital management techniques were applied to ensure the financial health of the company. This included cancellation of the 2009 interim dividend and a focus on debt reduction through operational cash flow. The recent underwriting of the dividend reinvestment plan has further strengthened your company s balance sheet. As a result, your company has entered the new financial year with a strong balance sheet, with low levels of debt, achieved without significant shareholder dilution. This positions the company to achieve strong earnings per share growth as the economic recovery gains pace. I am glad to report, that since the company s share price hit a low point of 85 cents at the peak of the financial crisis, the price has recovered strongly and at the close of trade yesterday was trading at $2.28. Financial and property markets appear to be recovering. We are optimistic of delivering strong total shareholder returns for 2010 financial year, comprising strong share price and dividend growth and intend therefore to re-introduce the interim dividend in Our focus over the 2009 financial year was to steer the company through difficult times and position it for when financial markets stabilise and economic conditions improved. As I stated previously, a recovery is now under way and your Board is turning its thoughts to capitalising on the company s strong position going forward.

3 Recently the Board spent two days in Melbourne reviewing our projects and conducting a strategic planning session with a special focus on Williams Landing. We reviewed our strategic targets and consider they continue to be appropriate. We see great opportunities arising from the Williams Landing project as the company embarks upon the development of the town centre. Our intention is to develop and retain significant precincts within the town centre which will comprise retail, bulky goods, commercial and residential components. This will add significant assets to the company s portfolio and provide a recurrent income stream through property rentals, underpinning future earnings. Planning is under way and negotiations have already commenced with a number of major retailers who have indicated a desire to anchor the town centre. The Victorian State Government has announced that it will commence construction of the Williams Landing railway station in With those introductory comments, I now turn to a review of last year s performance.

4 Annual General Meeting 2009

5 Presentation Outline Current environment Highlights 2009 results Property portfolio Residential market Outlook

6 Current Environment Financial markets recovering Property markets improving Continued focus on low debt and certainty of funding Strong balance sheet Cedar Woods well placed to prosper as conditions improve

7 Highlights NPAT $9.3m, ahead of forecast Significant reduction in gearing Ample bank funding available Strong pre sales in place FY2010 Strong profit growth anticipated

8 2009 Operating Results FY2009 $m FY2008 $m Revenue % Profit before income tax expense % Net profit after tax % Earnings per share 16.2 cents 37.3 cents 57% Dividend per share 7 cents 18 cents 61%

9 Operating Results

10 Dividend Policy

11 Financial Highlights Total assets decreased to $162.7m due to increased sales activity (particularly Melbourne projects) and write-down of non-current assets inventory during FY2009. Gearing dropped to 51.4% at end of FY2009, well within target range of 20-75%. FY2009 FY2008 Total assets $m Net bank debt $m Shareholders equity $m Net bank debt to equity Interest cover (12 months) (%) (x) Book NTA/share ($)

12 Property Portfolio CARINE CARLINGFORD HARRISDALE WELLARD WATERLINE

13 Project Life - Perth FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Rivergums Cambridge Waters Mariners Cove Mandurah Country Club Kestrels Waterline (including stage 2) Helena Valley The Jetty Port Mandurah (Sutton) Forrestdale Cedar Woods Wellard Pinjarra Carine Harrisdale

14 Residential Built Form

15 Residential

16 Residential

17 New Projects 16km drive from Perth CBD

18 New Projects 20km south east of Perth CBD

19 Project Life - Melbourne FY2009 FY2010 FY2011 FY2012 FY2013 FY2104 FY2015 FY2016 FY2017 FY2018 Carlingford Williams Landing Banbury Village

20 Williams Landing 350 lots sold New releases consistently sold out Rail station construction starting 2010 Town centre development planned to coincide with key infrastructure

21 Melbourne Projects

22 Melbourne Projects

23 Carlingford Over 200 lots sold Very strong local demand Metro market relocation to northern boundary

24 Melbourne Projects

25 Banbury Village 300 dwellings mixture of terraces, detached houses and apartments Successive stages sold out Off the plan auction demonstrates demand Prices from $425,000 $800,000

26 Melbourne Projects

27 Residential Supply Listings down, auction clearance rates up Rental vacancies very low Development timeframes still lengthy Limited banking funding for new residential projects

28 Residential Supply Stock & Clearances Perth Listings Clearance rates have improved since the end of 2008 Sydney was hovering around 40% clearance during 2008, now at 60-65% Melbourne clearances have moved from 60% to 80%

29 Residential Supply Prices Growth in prices of established houses (%) to 30 th September 2009 * Weighted Average Source: ABS

30 Residential Demand Population growth Availability of finance Employment Incentives Affordability (prices, interest rates) Population growth quarterly change

31 Residential Demand

32 Residential Demand Finance

33 Residential Demand

34 Company Outlook Significant pre sales in place for FY2010 Strong demand in Melbourne Ample bank funding available Profit forecast approx. $12.5m Gearing to remain within target range

35 Annual General Meeting 2009