The chairman of Peet, Tony Lennon, has told shareholders at the company's annual general meeting the developer remains confident about the fundamentals of the Australian residential property market.
Mr Lennon said there are positive trends for the property sector including continued population growth and strong employment participation rates.
His comments came despite the Reserve Bank's 0.25 of a percentage point increase in official interest rates to control inflation and inflationary demand in the housing sector.
He said the company was looking to the future.
"The Company can look back on a very successful year as set out in our 2010 Annual Report," Mr Lennon said.
Last financial year, Peet recorded a substantial increase in operating net profit after tax to $42.1 million.
The figure represented a 35 per cent uplift compared to the 2009 financial year.
"However, that is already behind us and we are fully focused on this year and the future," Mr Lennon said.
"We have a land bank being a potential inventory of more than 34,200 new building lots when subdivided with an end value, based on current average lot sales prices, of $7.5 billion.
"Fortunately for all of us Australia has a strong economy, high employment and growing population.
"Consequently, there is solid demand for new lots we produce, which are mainly in the $200,000 to $250,000 price range," said Mr Lennon.
See chairman's statement below:
Introduction
Ladies and gentlemen. Thank you for joining us at the Peet Limited Annual General Meeting.
Peet this year celebrates 115 years in the property business. However, the last 20 years have been the major period of consistent expansion and financial growth so that today, Peet is one of Australia's largest listed specialist residential land acquirers, developers and funds managers. During the 2010 financial year we sold 2,567 Company-owned and managed lots for a total of $601.5 million.
The Company can look back on a very successful year as set out in our 2010 Annual Report. However, that is already behind us and we are fully focussed on this year and the future.
We have a land bank being a potential inventory of more than 34,200 new building lots when subdivided with an end value, based on current average lot sales prices, of $7.5 billion.
Peet will continue to optimise management and subdivision of its land bank to deliver earnings growth and improved returns to shareholders.
Fortunately for all of us Australia has a strong economy, high employment and growing population.
Consequently, there is solid demand for new lots we produce, which are mainly in the $200,000 to $250,000 price range.
FY10 Performance
I turn now to the results achieved by the Group during the year ended 30 June 2010.
Our Managing Director and Chief Executive Officer, Brendan Gore, will provide a summary of the key financial and operational factors and achievements for the 2010 financial year in a moment.
Peet Limited recorded a substantial increase in operating net profit after tax to $42.1 million. That represented a 35% uplift compared to the 2009 financial year and reflected an increase in sales prices across our estates, improved cost management and the Peet Point Cook Kingsford Syndicate capital raising.
This pleasing result was achieved while, at the same time, reducing debt and gearing levels.
Our after tax earnings per share grew to 14.1 cents per share and the Directors are very pleased to have declared a final fully franked dividend for the year of 4.5 cents per share, bringing the total dividend for the year to 8.5 cents per share, fully franked - an increase of 21% over the previous corresponding period and was a total of approximately $25.5 million.
During the uncertain times of the Global Financial Crisis, Peet responsibly focussed on its core business, while maintaining a prudent approach to its capital management.
I am pleased to report that, with the Australian economy performing well for us, and Peet being in such a sound position, we continue to assess potential growth opportunities and look forward to the commencement of a number of new estate developments over the coming 18 months.
I wish to comment to you on a few of the year's highlights for us:
In Western Australia, Shorehaven at Alkimos where Peet has led the way in opening up a new development front in Perth's northern coastal urban growth area - more than 240 home sites have been sold in its first year. This Estate will comprise a community of approximately 3,300 dwellings, so this is just the beginning.
As evidence of the quality of our developments, Shorehaven won WA's top marketing award for 2010 for the New Product/Service Launch category; and just last week, a record price of $865,000 was achieved at our Shorehaven estate for Perth's Channel 7 Telethon Charity Home - the Peet Telethon Home at Shorehaven.
These achievements are a tremendous reflection on the work Peet has done in introducing this new coastal suburb and the Shorehaven project to the market.
In Victoria, where Peet is a dominant operator in the residential land development market, our Brimbank Gardens Estate is another example of a very high quality estate produced at affordable prices. On behalf of our Peet Windsor Park Syndicate Limited investors, we sold more than 220 lots at Brimbank Gardens last year. It is now nearing completion with Peet having subdivided and sold some 2,000 lots in the estate.
And in Queensland, Peet's Warner Lakes community - another syndicated project - was recognised as a finalist in the Urban Development Institute of Australia Awards for excellence and continues to sell very well.
Also our new subdivision in Gladstone is underway with strong sales already.
The Peet Point Cook Kingsford Syndicate was over-subscribed. We are already subdividing and selling on the estate and it is performing above expectations.
New Peet Land Syndicate for investors: Peet Yanchep Land Syndicate
I hope you have all had the opportunity to familiarise yourselves with the Peet Yanchep Land Syndicate offer. The Yanchep property is outstanding.
It is a project with the potential for some 1,500 residential lots on 151 hectares in the northern coastal suburb of Yanchep, some 50 kilometres from the Perth CBD. Peet already is a strong performer in other new land subdivisions in the northern coastal suburbs of Burns Beach and Alkimos.
Residents in our new community at Yanchep will enjoy four kilometres of frontage to the picturesque Sun City Golf Course - and readers of the Financial Review will have been reminded in a recent article of the value in golf course estates and, of course, Peet's Carramar Golf Course Estate, north of Wanneroo, WA, is testament to that. The Carramar Estate is nearing completion with Peet having subdivided successfully and very profitably more than 3,000 lots in this estate.
The Yanchep property is also just a few kilometres from the ocean and will enjoy the benefit of Perth people's love affair with the beach.
I do encourage you to learn more about the Peet Yanchep Land Syndicate offer and consider an investment in this latest Peet syndicate - copies of the PDS are available here today.
The year ahead
Ladies and gentlemen, as we report today, we are nearing the end of the first half of the 2011 financial year.
Our fundamental approach to our business has not changed:
we continue to assess growth opportunities and to manage the existing business for growth in a disciplined manner;
our approach to acquisitions involves seeking out quality parcels of land in strategic locations;
we continue to invest in our people and build on the strength and expertise of our entire team;
we focus on environmentally sustainable major master-planned communities demonstrating industry best practice; and
we will continue to deliver syndicate investment opportunities to investors.
The Australian residential property market
Ladies and gentlemen, as we prepare to move into the second half of the 2011 financial year, Peet remains very confident in the fundamentals of the Australian residential property market.
While the Reserve Bank has increased interest rates to control inflation and inflationary demand in housing, there are positive trends and signs for the property sector including continued population growth and strong employment participation rates, particularly in the markets where Peet is most active.
In short, we are looking forward to another busy and very positive year ahead.
Thank you - Shareholders and Peet team
Before I conclude today, there are a few matters I draw your attention to:
I want to thank the Peet team, who works so hard for you, our shareholders, and our syndicate investors. We are very fortunate to have great depth and experience - as well as a wealth of enthusiasm and energy - across our entire team.
We have a positive, engaging and hard working culture that is underpinned by our six core values of integrity, respect, teamwork, adaptability, accountability and customer service.
Peet has again attracted new and exciting talent to the business this year, with each new team member adding value to our brand through their technical aptitude as well as by demonstrating and embracing our core values.
In order to continue to attract and retain such a high calibre workforce, we must give a number of factors our consideration. In particular, we must endeavour to provide staff members with a positive and safe workplace environment, professional development opportunities, fulfilling career pathways, and of course, fair and equitable remuneration packages.
Remuneration
It is appropriate that we provide a fair and equitable remuneration framework which aligns the interests of employees and shareholders.
The Corporations Act requires a resolution to be put to the meeting adopting the Remuneration Report, appearing in the Annual Report.
This vote is advisory only, and does not bind the directors or the Company. However, I assure the meeting that our remuneration packages are appropriate and well supported by qualitative and quantitative performance data and results.
Because they are Directors, there are resolutions proposed for the approval of the granting of Performance Rights to our Managing Director and CEO, Brendan Gore and to Executive Director, Anthony Lennon. Additionally there are Performance Rights granted to other key executives.
There are performance hurdles linked to key performance indicators, which your directors consider to have an appropriate balance between being achievable and challenging.
Ladies and gentlemen, we have an excellent team and they produce good results for shareholders and our syndicate investors.
