DNZ posts better result, looks forward to merger
Listed DNZ property posted a slightly higher than expected annual result today and is looking to improved earnings thanks to a large tax credit.
The tax credit arises from the $31.7 million payment the company made to two directors who owned the contract for the management, which will now be controlled in-house.
Forsyth Barr analyst Jeremy Simpson said the tax credit was worth about $10 million and would be applied against future earnings.
Otherwise the result was largely within expectations. DNZ had been conservative in its forecasts, he acknowledged.
The immediate effect of the termination payment plus unrealised devaluations resulted in a bottom line loss of $35.1 million for the year ending March 31, 2011. But rental income gleaned from leased properties and property sales provided a distributable profit for shareholders of $21.9 million or 9.6c a share.
The value of the property portfolio reduced by 1.9%, or $11.8 million to $637.7 million.
The company’s Wellington properties were most affected by the value decline, reflecting the effects of the government’s downsizing of the state sector, resulting in slow rental growth and a rising vacancy rate.
The sale of properties raised $72 million with sales close to book value. The proceeds were used to reduce debt.
Other highlights included the conclusion of 188 lease transactions and a resulting high occupancy rate at 98%.
On the development front, DNZ completed the Fletcher Building Laminex Group design build at O’Rorke Road, Penrose.
The 12,000m² warehouse and 1,800m² office building over 2.89ha was completed in November 2010 with a new 12 year lease. The project was completed on time and under budget.
DNZ is now looking to negotiate terms for an office/warehouse design/build facility for the residual 2.28ha of the site.
An immediate focus for the company is a bid to merge with listed Argosy as an alternative to shareholders in that company paying a management contract termination fee.
Chris Hutching
Mon, 23 May 2011
Mon, 23 May 2011
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DNZ posts better result, looks forward to merger
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