Published 26 February 2007
NZ-listed Trans Tasman Properties Ltd, 80% owned by SEA Holdings Ltd of Hong Kong, has gone from a $4.3 million profit in 2005 to a $3.4 million after-tax loss for 2006.
The company said its development profits realised on the sale of the Viaduct 1 & 2 properties in Auckland and 12 strata units at 65 York St in Sydney were offset by unrealised writedown of the group’s investment in Asian Growth Properties Ltd to quoted market value, the group’s share of a consolidated subsidiary’s operating deficit, and management & administration costs.
Revenue from ordinary activities fell by 41% to $44.8 million and shareholders’ equity was reduced from $394.1 million to $99.5 million, consequences of the Asian Growth Properties split at the start of 2006.
The group’s total net assets fell from $392 million at the end of 2005 to $96.5 million, but New Zealand assets actually rose, from $72.6 million to $79.6 million. New Zealand investment property was down at $5.5 million in both years, but development property was up from $88.6 million to $103.2 million.
Long-term NZ debt doubled from $14.4 million to just under $30 million and total NZ liabilities rose from $54.7 million to $69 million.
Trans Tasman isn’t paying a dividend for the year.
Balance-date ratios:
Return on assets down from negative 0.26% to negative 2.72%
Return on equity down from 1.1% to negative 3.52%
Debt:equity up from 40.39% to 71.91%
Net interest-bearing debt:total assets less cash up from 2.23% to 17.66%
Net asset value down from 67.9c/share to 64.5c/share.
The shares have barely traded lately, last quoted at 54c.
In terms of cashflow, Trans Tasman turned operating cashflow round from a $15.8 million net outflow to an $8 million inflow. It:
increased development property sale proceeds from $25.5 million to $40.1 million
spent just under $121 million buying development properties ($26 million in 2005)
spent $14.7 million developing properties ($9 million in 2005).
Its investment cashflow picture was understandably in sharp contrast – Trans Tasman sold $158 million of investment property in 2005 but only $1.6 million-worth in 2006, then deconsolidated Asian Growth Properties for a $117 million cash outflow. The net investment cashflows were $144.4 million positive in 2005, $122.3 million negative in 2006.
After repaying $84 million of borrowings in 2005, Trans Tasman still ended that year with $123 million in cash, but after the deconsolidation it was down to $10.5 million in cash at the end of 2006.
One aspect of the accounts on which there’s no elaboration is what happened to the shareholders who took Asian Growth Properties shares on the London Stock Exchange’s Aim market, leaving Trans Tasman with just 2.5% of that investment.
Asian Growth was listed in London in January 2006 at a premium to pro forma net asset value, but early trading the next day took the price below asset backing. Initial trading was in a range of 62-65p/share, compared to asset backing of 54p.
SEA Holdings Ltd of Hong Kong, the group parent, held 73.4% of Asian Growth at 19 January 2006. In September, SEA proposed an inhouse deal under which Asian Growth would acquire SEA’s main Hong Kong & China property portfolio for $HK4.43 billion ($NZ860 million). On completion of this deal, SEA was to hold 96.42% of Asian Growth. It reached that target in October, buying at 40p/share.
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Attribution: Company statement, story written by Bob Dey for this website.
