Mixed News From ALZ, AVJ

  Two very different results from the still tough property sector.Australand Property Group saw a fall in profit from operations in the year to December, and reported a bottom line loss after asset write-downs earlier in the year.But home builder, AV Jennings returned to profitability in its latest period, and for that it can thank the Federal Government's stimulus package, especially the first home buyers' & #160;scheme.Australand & #160;saw a 31% & #160;drop in & #160;2009's operating profit and warned that it was expecting a similar & #160;result this year.The shares edged 1c to 46.5c, a gain of 2.2%.In its 2009 profit report to the ASX yesterday, the company said & #160;operating profit for the year ended December 31 was & #36;120.024 million, down from & #36;174.790 million in 2008.The & #160;statutory result for 2009 & #160; was a loss of & #36;298.240 million, reflecting property revaluation losses, asset impairments and finance costs.During 2009, its investment property assets were revalued downwards by & #36;249.4 million and it booked impairments on developments of & #36;148.4 million. & quot;It is expected that group operating profit will be similar in 2010 to that achieved in 2009, & quot; Australand said in a statement on Tuesday. & quot;Market evidence indicates that investment property valuations are at, or near, trough levels in the cycle. & quot; & quot;With the improved outlook and economic conditions, it is anticipated that development activity in the Commercial & #38; Industrial Division will strengthen during the course of 2010, leading to growth in 2011.Volumes and margins in the Residential division are expected to be similar in 2010 to that in 2009. & quot;Increased demand from second and third home buyers from improved consumer sentiment is anticipated to offset the expected softening in first home buyer demand. & quot;A number of new Residential projects will commence in 2010, which should lead to an improved performance from the division in 2011. & quot;Australand's Managing Director, Bob Johnston said in a statement that & quot;despite the large statutory loss for the full year, the majority of which was recorded in the first half, the operating profit demonstrates the resilience of the Group's high quality investment portfolio. & quot;Property valuations now appear to be stabilising with revaluation losses of & #36;14.0 million in the second half across the & #36;2.0 billion portfolio & quot;.Australand also said it expects its investment property earnings to grow steadily, primarily due to embedded rental growth. & quot;Due to limited new supply to the Australian industrial market there have been limited relocation options for tenants, which has assisted landlords in retaining tenants, & quot; it said. & quot;Commercial property face rents within all capital city central business districts have been under pressure and incentives have been rising over the past twelve to eighteen months. & quot;However, there is limited future supply of new commercial projects in Sydney and Melbourne as a result of subdued demand and capital constraints. & quot;The & #160;investment property division, which has a portfolio valued around & #36;2 billion, reported a 13 per cent rise in earnings before interest and tax (EBIT) to & #36;153.9 million - before revaluation losses.The group's residential division delivered EBIT of & #36;67.9 million in 2009, before impairments of & #36;116 million, which was down from & #36;117 million in the previous year.Australand confirmed it will pay a final distribution per stapled security of two cents, taking the total for 2009 to 5 cents.It projected a 2010 annual payout of 4.1 cents, so in fact securityholders will go backwards. & quot;We have seen an improvement in both business and consumer confidence over the last quarter of 2009. With a strengthened balance sheet, the Group is well-positioned to take advantage of the improving economic conditions in the commercial, industrial and residential markets & quot;, Mr Johnston said.The company said it will & #160;continue to distribute 80% - 90% of realised operating trust income. & quot;No dividend will be paid in 2010 from corporate earnings. Distributions for 2010 are expected to be 4.1 cents per stapled security.Australand also announced that it intends to seek approval at the Annual General Meeting in April 2010 to undertake a 5 into 1 consolidation of the Group's stapled securities.This will reduce the large number of securities on issue following the recent entitlement offers.AV Jennings first half results returned to the & #160;black after a corporate makeover and the rebound in housing, due to the first home buyers boost.The company described 2009 & #160;as & #160;testing and said the current year would bring a new set of challenges.AV Jennings reported a net profit of & #36;3.2 million for the six months to December 31, compared to a loss of & #36;9.7 million in the prior first half.The company said the & #160;profit was & quot;due to improved margins, reduced costs and a greater emphasis on project management fees. & quot;The effective tax rate of 18.3% is lower than the statutory tax rate of 30% as a result of equity accounting the after tax profits of jointly controlled entities. If the income from these entities had been accounted for on a pre-tax basis (i.e. taking into account the Company's share of the gross result) the profit before tax would be & #36;4.8 million with a corresponding income tax expense of & #36;1.6 million. & quot;Contract signings were & #36;255.1 million compared with & #36;183.7 million for the same period last year. & quot;Total revenues were & #36;239.9 million compared with & #36;241.7 million for the same period last year.Chief executive Peter Summers said the return to profit reflected a total review of operations during 2009 and the current year remained challenging. & quot;Consumer confidence remains volatile, likely interest rate rises will further add to affordability concerns and the ending of the First Home Owners Boost has seen a significant decline in first home owner activity, & quot; Mr Summers said. & quot;However, the Australian residential property market has proven resilient. & quot;The dramatic under supply of new residential property compared to underlying demand is continuing to be reflected in selling prices, albeit tempered by affordability constraints. & quot; & quot;Conditions for investors to take a stronger position in the coming years, backed by price growth, low vacancy rates and rent increases, are positive. & quot; & quot;Contract signings for the Contract Building division were & #36;115.8 million compared with & #36;67.7 million for the same period last year and & #36;121.6 million for the second half of the year ended 30 June 2009. Revenue for the same periods was & #36;105.7 million, & #36;86.8 million and & #36;72.1 million respectively. & quot;Mr Summers said that gross margins for contract building also improved during the first six months of the financial year and should continue to improve in the second half. Overheads have also been significantly reduced from previous years' levels. & quot;The shares ended unchanged on 50c. & #160;  

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