LISTED Gold Coast property developer GEO Property Group (ASX: GPM) has completed a $149.8 million turnaround in net earnings to record a net profit of $18.2m for FY10.
It compares to a net loss of $131.6m in the previous year and has been built on near record settlements of 863, up from 711 in the 2009. The settlements lifted total revenue by 21 per cent from $212.9m to $272.2m.
Managing director Guy Farrands, says a highlight of the group’s full year result was net operating cash flows of $77 million while net tangible assets were $148.8 million, representing 34.9 cps.
He says the result underlined the strength of the business and reconfirmed the value of the Group’s decision to focus exclusively on residential property development.
“We have remained focused on bringing quality product to the market and meeting the expectations of consumers looking for affordable homes in great areas,” said Farrands in a statement.
“Our ability to deliver a record number of settlements with vastly reduced expenses further underlies the efficiency of the business and the potential for future earnings growth.”
Farrands says the group’s reduced levels of debt which has created greater financial stability provided the flexibility to undertake a re-stocking of the Group’s development portfolio, including the acquisition of approximately 520 new lots over the last 12 months.
“The sale of four non-core investment property assets, with a further three properties to be sold shortly, will complete the orderly unwinding of our investment arm and leaves the Group as a pure developer of residential house and land and land-only projects,” he said.
“At the end of the year we had a total pipeline of nearly 4495 lots spread across a diverse range of geographic locations.”
During FY10 the group achieved total settlements of 863 (2009: 711), including proportional share of JV sales, at an average gross margin of 20.9 per cent.
Farrands attributed sales to a stronger underlying demand throughout the year, but concedes challenges ahead for Queensland’s sluggish property sector.
“Our Victorian operations continue to benefit from strong conditions which are driving high volumes and better margins. In Queensland there are still a number of challenges,” he said.
“Interest rate concerns have somewhat subsided in recent months but there is still uncertainty among buyers about the political outlook as well as the impact of offshore financial and economic events.”
Despite the current market conditions the group was already well placed for a strong start to the current year with a total value of unconditional contracts as at August 20 2010, to be carried into FY11 of $71 million.
GPM shares are today trading at 21c.
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