Mirvac Group · ASX:MGR
Mirvac — H1 2009 Earnings Presentation
34 slides from Mirvac's earnings presentation, Feb 17, 2009
Slide 1: Mirvac Group 1H09 results presentation
Mirvac Group 1H09 results presentation 17 February 2009 MIRVAC GROUP 1H09 results presentation 17 february 2009 page 101 miller street, north sydney A , nsw
Slide 2: Disclaimer and Important Notice
DISCLAIMER AND IMPORTANT NOTICE The information made available through this presentation and annexure, including any expression of opinion or forecast, has been obtained from or based on sources believed by Mirvac Group to be reliable. Mirvac Group does not warrant the accuracy, completeness or curr
Slide 3: Agenda
agenda > Market conditions and Group positioning > Financial performance and capital management > Divisional performance > Strategy MIRVAC GROUP 1H09 results presentation 17 february 2009 page 2
Slide 4: Market conditions
market conditions Mirvac has operated through many market cycles since 1972 and its continued success is attributable to its ability to adapt quickly to changed market conditions Market challenges: > Global Capital Rationing: need to be realistic and pro-active in securing sufficient equity and debt
Slide 5: Mirvac – realistically responding to market conditions
Mirvac – realistically responding to market conditions Prudent actions taken: Announcement to market: Refocusing on core competencies: Investment and Development 22 July 08 Primacy of balance sheet: $300m private placement and underwriting of DRP 1 February/25 July 08 Primacy of balance sheet: $500m
Slide 6: Performance and capital management
performance and capital management justin mitchell MIRVAC GROUP 1H09 results presentation 17 february 2009 page 5
Slide 7: Summary of results
SUMMARY OF RESULTS 1H09 1H08 $m $m Operating profit (profit before specific non-cash and significant items) 81.6 215.0 Specific non-cash items Loss from fair value of investment properties 215.3 (143.4) Unrealised loss on fair value of derivatives and associated FX movements 154.0 (53.8) Expensing o
Slide 8: Investment
investment 1 Operating 1H09 1H08 Operating profit before tax 2 $116.7m $194.1m EBIT 3 $123.7m $222.8m Portfolio value $3,851.7m $4,219.7m Net income growth (like-for-like) 4.2% 3.4% WACR 7.0% 6.4% Gross revaluations 4 $(236.3m) $179.1m 1) Includes MPT, Parking and Mirvac Asset Management. 2) Before
Slide 9: Investment management
investment management 1 Operating 1H09 1H08 Hotels operating profit before tax 2 $9.1m $8.2m Hotels under management 42 40 IM operating profit before tax 2 $(36.0m) $1.8m EBIT 3 $(23.4m) $10.4m FUM 4 $7.6bn $7.8bn Investment Management’s operating profit forecast to be adversely impacted by one-offs
Slide 10: Development
development Operating 1H09 1H08 Operating profit before tax 1 $1.2m $51.4m EBIT 2 $30.1m $87.0m Gross margin 3 14.5% 19.6% Settlements (House & land) 430 lots 868 lots Settlements (Apartments) 132 lots 204 lots Settlements (Total) 562 lots 1,072 lots Exchanged contracts $955.1m $1,046m 1) Before tax
Slide 11: Debt profile
debt profile 31 Dec 08 30 Jun 08 Drawn debt facility maturity profile (post refinance) 1 $m S&P Rating BBB BBB 1000 Weighted average expiry: 3.8 years Total interest bearing debt 2 $2,227m $2,453m 800 Avg borrowing rate 3 6.66% 7.07% Wtd avg debt maturity 3.5 yrs 3.8 yrs 600 % hedged 92.8% 79.7% 400
Slide 12: Debt covenants
debt covenants Mirvac has two main debt covenants Mirvac remains within all debt covenants > Total leverage ratio (TLR) (total liabilities to total tangible assets) < 55% > TLR — 31 Dec 08 — 41.3% > Interest cover ratio (ICR) 1 Adjusted EBITDA/interest expense 2.25:1 > ICR — Year to 31 Dec 08 3.0 x
Slide 13: Balance sheet sensitivities
balance sheet sensitivities Mirvac’s TL/TLR covenant of 55% can withstand significant asset value deterioration Devaluation sensitivity Inventory devaluation Current (5%) (10%) (15%) (20%) (25%) Cap rate expansion – Mirvac Investment Division 0bps 25bps 50bps 75bps 100bps 150bps TLR 41.3% 42.6% 43.9
Slide 14: Capital management
Capital management Funding profile $520.1m of available funds, after meeting all debt maturities and capital commitments over FY09 and FY10 Mirvac has rolled over $805.0m of its Jun 09 facility of $1,112.5m which was undrawn at 31 Dec 08 Mirvac funding profile over FY09 and FY10 (A$m) as at 31 Dec 0
Slide 15: Development
development brett drafFEn australia’s premium built-form developer waterfront, newstead, qld MIRVAC GROUP 1H09 results presentation 17 february 2009 page 14
Slide 16: Development value chain: key success factors
development value chain Strategic divisional review completed – integrated model retained and consolidating via a national platform Model allows for acceleration and/or deceleration of projects to meet market conditions 4 DESIGN SALES AND ACQUISITION TOWN DEVELOPMENT CONSTRUCTION MARKETING DRAFTING
Slide 17: Development division
development division Diversified pipeline of 29,662 lots > 21.0% – 100% owned > 36.8% – held in Joint Ventures > 42.2% – held through PDA’s or managed funds Residential In progress Proposed Lots 3,287 26,375 Non-residential In progress Proposed Number of projects 3 16 Cost $123.2m $2,086.8m 1 1) Doe
Slide 18: Settlements
settlements 562 total lot settlements > Homes Division pro-actively responding to improved market conditions by accelerating delivery of ‘affordable’ housing, resulting in strong settlements in Western Sydney, repatriating capital to the Group > Consumer sentiment the main obstacle to residential re
Slide 19: Development 1H09
development 1H09 EBIT forecast – major projects > FY09 EBIT forecast of $102m translates into $22m PBT 1 > 6 major projects account for 83% of forecast 2H09 EBIT Project 2H09 Forecast EBIT ($m) Pre-sold Tennyson Reach, Brisbane 39.0 100% Yarras Edge, Docklands 6.6 100% Newbury Estate, Stanhope 1.7 1
Slide 20: Securing future earnings
DEVELOPMENT DIVISION Securing future earnings 6 months exchanged contracts reconciliation Forecast settlement of exchanged contracts 1 A$m FY08 $1,018m 500 Net 1H09 settlements ($164m) 400 New exchanges (FY10 & 11) $101m 300 200 1H09 exchanges contracts 1 $955m 100 0 FY09 FY10 FY11 $336m $358m $261m
Slide 21: Residential development operating conditions
residential development operating conditions Fundamentals Positive/negative Outlook > Job security 5 Deteriorating as businesses look to cut costs in the face of falling profits > Sentiment/confidence 5 Rising unemployment and possible falls in asset prices to weigh on monetary and fiscal stimulus b
Slide 22: Investment
investment nick collishaw income generated from 57 quality assets, providing income security 101 miller street, North sydney, nsw MIRVAC GROUP 1H09 results presentation 17 february 2009 page 21
Slide 23: Investment division
investment division Mirvac Property Trust underpins Mirvac’s earnings > Trust achieved 4.2% like-for-like income growth > Trust earnings are highly visible as 97.2% of 2H09 reviews are fixed or CPI and 92.7% of FY10 reviews > Minimal lease expiry in FY09 - 4.1% of portfolio expiring in 2H09 > Commer
Slide 24: Mirvac Property Trust valuation
MIRVAC PROPERTY TRUST VALUATION All properties were valued in the 6 months to 31 Dec 08 1 Portfolio weighted average capitalisation rate (WACR) has expanded by 46 basis points Resulting in a $236.3m decrease in total portfolio asset value Sector Value WACR 31 DEC 08 WACR 30 JUN 08 WACR 31 DEC 07 Com
Slide 25: Mirvac risk management
MIRVAC risk management Mirvac Asset Management as part of the Group’s integrated platform employs 260 specialists that ensure secure rental income streams by: Leasing operatives > maximising rents and balancing tenant expiry profile Property managers > ensuring negligible arrears, maximising tenant
Slide 26: Investment management
investment management facilitating the flow of capital to two core divisions 3 Rider boulevard, rhodes, nsw MIRVAC GROUP 1H09 results presentation 17 february 2009 page 25
Slide 27: Streamlining Investment Management
streamlining Investment Management Core funds Funds under management Mirvac Wholesale Residential Partnership Trust $287.5m Mirvac Wholesale Hotel Fund $502.9m Mirvac Real Estate Investment Trust $1,273.9m Mirvac PFA Diversified Property Trust $635.1m Total $2,699.4m > JFI Nominees contracts execute
Slide 28: Hotel management
Hotel management Expansion through brand and IP leverage > 1H09 strong operating profit of $9.1m 1 > Management model limits capital commitment > Strategic expansion of hotel brands in existing markets > Increase of 2 hotels under management in the 6 months to 1H09 with 7 hotel management contracts
Slide 29: Reaffirming guidance and group strategy
reaffirming guidance and group strategy nick collishaw the royal, newcastle, nsw MIRVAC GROUP 1H09 results presentation 17 february 2009 page 28
Slide 30: Mirvac strategy – a simplified approach
mirvac strategy – a simplified approach Investment > Grow secure, recurring income through active management of Australian investment grade assets Development > Focused acquisition approach will centre on the mid to high end market > Concentrate on urban renewal and major generational projects, movi
Slide 31: Mirvac delivering
mirvac delivering Strategic focus Status Progress to date Investment row Mirvac Property Trust’s G — Medium-term strategy as asset values will fall further with consolidation by well Australian rental income stream capitalised organisations inevitable Development Future projects to focus on major 3
Slide 32: Operating earnings guidance
operating earnings 1 1H09 actual Summary of 2H09 Guidance by division operating profit $m divisional outlook FY09 guidance $m Key assumptions Investment (MPT) 116.7 > 2H09 full half year benefit 243.0 > No asset sales assumed due to interest savings as a > Reduction of overhead cost result of Novemb
Slide 33: Our strategy
our strategy Our strategy is realistic and brings simplicity to our model, focusing on our two core divisions, Investment and Development with Investment Management facilitating capital interaction. Mirvac is moving towards more recurring revenue streams, over the medium term, and a more focused app
Slide 34: www.mirvac.com
www.mirvac.com