CDL Investments NZ Ltd lifted after-tax profit by 19% in the year ended 31 December, from $27 million to $32.2 million – the 8th consecutive year of profit growth for the company. And, like its majority shareholder, Millennium & Copthorne Hotels NZ Ltd, it’s also lifted its dividend.
Profit before tax increased to $44.7 million ($37.5 million). Property sales & other income rose 5.6% to $78.7 million ($74.5 million).
Shareholders’ funds as at 31 December increased to $186.1 million ($161.8 million) and the company’s total assets stood at $191.7 million ($168.3 million). The net tangible asset/share (at book value) was 67.1c (58.4c). Earnings/share were 11.6c (9.77c).
Reflecting the record result, CDL has increased its fully imputed ordinary dividend to 3.5c/share (3.0c/share). The dividend reinvestment plan will apply.
At 31 December, the independent market value of CDL’s landholdings was $276.3 million ($297.0 million). The company’s accounting policies require it to carry the value of its land portfolio at the lower of cost or net realisable value and, at year end, the land portfolio at cost was $124.7 million ($117.8 million).
New chair Colin Sim said the New Zealand housing stock & new housing supply remained short of demand: “This can explain why, while housing sales have eased, pricing has only evened out. The Reserve Bank’s loan:value ratio (LVR) restrictions & the availability of finance have both had an effect on the New Zealand housing market. That said, although not as strong as in 2016, demand for CDL housing sections remained steady in 2017.
Mr Sim expected the Overseas Investment Amendment Bill, which the Government proposed in December, to have minimal impact on CDL’s business model of acquiring land for residential development.
“The proposed new Government measures classifying residential housing land as ‘sensitive land’ is a demand-side measure and aimed ‘not to impede the broader objective of increasing the supply of residential housing’. As a development company in housing sections, CDL has consistently demonstrated its ‘financial commitment, business experience & acumen & good character’ with its commitment to increasing the supply of sections for housing.
“The Overseas Investment Amendment Bill in its current form may, however, have unintended consequences. These include the number of consent applications & time required to process them. Both measures are expected to increase, with significant delays & costs to the housing industry.”
Attribution: Company release.