CDL Investments NZ Ltd’s annual earnings from its land subdivision business were up marginally, but the company’s asset values have jumped.
CDL said yesterday that 2019 was its 10th consecutive year of profit growth, as it lifted the net return for the year to 31 December by $500,000 (1.5%) to $34.1 million on revenue up nearly 8%.
In contrast, its assets at book value rose 11.6%.
The independent market value of its landholdings fell to $315.6 million at year-end ($337.8 million in 2018). At cost, the portfolio was valued at $182.7 million ($169.7 million), in line with the company’s accounting policies.
Chair Colin Sim commented: “In the 2019 interim report, we noted that trading conditions were ‘challenging’ and it is a credit to the work of the CDL team, particularly in the latter part of 2019, that we have been able to a deliver a result better than the last few years in a slowing market.
“These challenges are set to continue in 2020, but we are confident that the location & quality of our developments are in areas which have high demand and will prove attractive to buyers.”
Managing director BK Chiu commented: “In the latter part of 2019 we had to adjust & refine our sales & development strategies, and shareholders can be pleased that those strategies have worked and have translated into profit.”
CDL acquired 9.7ha in Hawke’s Bay in 2019: “Management is targeting further acquisitions, but only if pricing & location are competitive in line with the company’s investment criteria,” Mr Sim said.
The company opened sales in late December of the first stages of 2 Auckland subdivisions – Dominion Rd (Papakura) & Kewa Rd (off Lonely Track Rd in Albany Heights, at the top of the North Shore).
“Both of these developments are well located & well priced and we expect to recognise these sales in the current year, with development on further stages to be undertaken as well.”
Mr Sim said the commercial areas at Prestons Park, on Christchurch’s north-eastern fringe, and Stonebrook, west of the city in Rolleston, were progressing well: “Stonebrook is on track for completion & letting out in the first half of this year, with construction of Prestons Park due to be completed by the end of this year, with letting in early 2021.”
Looking ahead, Mr Chiu added: “While our acquisitions over the past few years now give us sufficient land to sustain our core business over the medium term, we are continuing to look for opportunities that meet our investment criteria. As our existing commercial areas in Canterbury & Rolleston are both on track for letting this year, such opportunities could be additional land or commercial developments.
“We will have profitable sales in 2020 and our results will reflect the market. More importantly, our message to our shareholders is that they can be confident that we have land assets which will hold their value, product that is in demand and a pipeline of sections across the country to deliver positive results. Our strategy will ensure that we are able to go beyond the current property cycle.”
Summary of results:
After-tax profit, up 1.5% to $34.1 million ($33.6 million)
Pretax profit, up 1.5% to $47.4 million ($46.7 million)
Revenue, up 7.8% to $91.6 million ($85 million)
Shareholders’ funds, up 11.8% to $235.5 million ($210.6 million)
Total assets, up 10.6% to $240.7 million ($217.6 million)
Net tangible asset value at book value, up 11.6% to 84.5 cents per share (75.7cps)
Earnings/share, up 1.3% to 12.26c (12.1c)
Dividend, fully imputed, unchanged at 3.5c/share.
Development expenditure, down 27.4% to $30.85 million ($42.5 million)
Land purchases, down 70.5% to $13.6 million ($46.1 million)
Millennium & Copthorne Hotels NZ Ltd holds 66% of CDL’s shares and both NZX-listed companies’ ultimate parent company is Hong Leong Investment Holdings Pte Ltd in Singapore.
Attribution: CDL, Millennium & Copthorne.