Peet Limited · ASX:PPC
Peet — H1 2007 Earnings Presentation
57 slides from Peet's earnings presentation, February 2007
Slide 1: Peet Limited 2007 Half Year Results
Peet Limited 2007 Half Year Results February, 2007
Slide 2: Contents
Contents » Key Achievements » Group Financial Performance » Strategic Growth Model and Initiatives » Land Bank » Funds Management » Commercial, Residential and Retirement » Market Conditions and Outlook » Future Outlook and Strategy 2
Slide 3: Key Achievements
Key Achievements Peet achieved earnings growth of 13.6% for 1H07 and remains confident of achieving its 15% EPS growth target of 21.2 cps » Half year net profit after tax of $19.4 million (1H06: $17.1 million) » Interim dividend of 9.0 cents per share fully franked – up 20% on the previous correspon
Slide 4: Key Achievements (continued)
Key Achievements (continued) Performance demonstrates Peet’s ability to consistently deliver through market cycles » Acquisition program continues to deliver land bank growth - a total of 3,200 lots potential acquired since year end » Well advanced diversified commercial and residential development
Slide 5: Group Financial Performance
Group Financial Performance
Slide 6: Financial Highlights
Financial Highlights Peet’s first half performance has been solid, driven by a strong business model and a quality land bank 1H07 1H06 Revenue $51.2M $55.3M 7.4% Net profit after tax $19.4M $17.1M 13.6 % Earnings per share 9.5c 8.5c 11.8 % Dividends per share 9.0c 7.5c 20.0 % Gearing 31% 30% Interes
Slide 7: EBIT Composition
EBIT Composition High quality earnings stream, weighted to funds management » Vic and Qld contributed 56% of 1H07 EBIT » Improved EBIT contribution from funds management » Overall improvement in margins » Two capital raisings completed totalling $41M 1H07 EBIT composition by business type 1H07 EBIT
Slide 8: Strategic Growth Model and Initiatives
Strategic Growth Model and Initiatives
Slide 9: Strategic Growth Model
Strategic Growth Model Peet’s strategic objective is to deliver EPS growth and TSR out-performance » Funds and asset management underpinned by Australia’s third largest land bank (ASX) and an established company-owned distribution network » Business model allows use of syndication and income fund pl
Slide 10: Key Drivers to Growth
Key Drivers to Growth Peet has an established and scalable business model and future earnings growth will be driven by leveraging existing platform » Increased scale of funds management business / syndication rollout » Increase product flow (via strengthened capital position including $82M instituti
Slide 11: Land Bank
Land Bank
Slide 12: Land Bank and Market Position
Land Bank and Market Position Significant land bank with an on-completion value of approximately $5.5 billion » Australia’s third largest land bank amongst ASX listed entities » Existing controlled lots stand at 30,297 with a further pipeline of 1,616 lots under conditional contract » Size of land b
Slide 13: Land Acquisition Activity
Land Acquisition Activity Land acquisition activity continues to facilitate future growth 5000 4500 4,297 » Around 3,200 lots acquired since June 2006 4000 – 10% land bank increase 3500 3,200 1 » Acquisitions continue in key states of Vic, WA 3000 and Qld 2500 2000 » Zoned industrial landholdings ac
Slide 14: Land Bank
Land Bank Peet has established a quality national land bank that provides a diversified production profile QLD Estimated on-completion 8 Projects value approx $5.5 billion WA 2,726 Lots 29 Projects 9% 11,871 Lots 39% ► 12 years stock NSW 1 Project 7 Lots ► 67 projects ► 30,297 lots managed or VIC ow
Slide 15: Estates – Western Australia
Estates – Western Australia 1. Ocean Lagoon 2. Burns Beach 3. Carramar Golf Course Estate 4. Ashton Heights 5. The Chase 6. Forrest Gate 7. Hawkstone 8. Oakford Gardens 9. Brookwood 10. The Village at Wellard 11. The Ridge 12. Byford 19 13. LakeLands Estate 21 14. Twin Rivers 15. Quattro 16. Brigado
Slide 16: Estates - Victoria
Estates - Victoria 1. Craigieburn Central 2. Greenvale Gardens 3. Greenvale Rise 23 4. Greenvale Lakes 5. Brimbank Gardens 6. Tarneit Gardens 7. Tarneit Rise 8. Innisfail 9. Point Cook Gardens 22 10. Castlereagh 11. Brookland Greens 12. Cranbourne Central 13. Cardinia Lakes 14. Westbury Park 15. Wes
Slide 17: Estates - Queensland
Estates - Queensland 6 500km north of Brisbane 8 140km north of Brisbane 1. River Bank 2. Warner Lakes 3. Buderim 4. Thornlands 5. Beechmere 6. Gladstone 7. Mitchelton, Keperra, 8. Cooroy 7 17
Slide 18: Syndicated and JV Project Pipeline
Syndicated and JV Project Pipeline Over 17,147 lots under management, with an estimated on-completion value of $3.5 billion » Older syndicates make significant contribution to profits over FY07 to FY08; Increased profitability over longer term as increased profit share is realised on more recent syn
Slide 19: Owned Project Pipeline
Owned Project Pipeline Over 13,150 lots owned with a combined estimated completion value of $2.0 billion » Owned projects contributing to profits projected to increase from three in FY06 to 24 in FY08 » Number of owned projects have historically low cost base No. of On-completion Lots 1 Value ($m) 2
Slide 20: Funds Management
Enriching lives since 1895 | www.peet.com.au
Slide 21: Syndicate Capital Raising and Distribution
Syndicate Capital Raising and Distribution Distribution network of over 3,600 active investors; repeat investment in excess of 65% » A further 6,000 prospective investors who receive information » $41M raised from two land syndications in 1H07 – Botanic and Mundijong » Increased syndicate investor p
Slide 22: Funds Management – Income Property Fund
Funds Management – Income Property Fund » A portfolio of non-CBD commercial and industrial properties » Two new properties purchased in FY07 to date » Expanded to around 600 unit holders » $37 million funds under management » Fund property values increased by 11% during FY06 » Net Asset Value increa
Slide 23: Commercial, Residential and Retirement
Commercial, Residential and Retirement
Slide 24: Commercial and Residential Built Form
Commercial and Residential Built Form More than 110 commercial and residential built form projects identified in land bank; potential income fund feedstock » Peet Commercial seeks to develop shopping centres, light industrial units, office & hi-tech business units, bulky goods outlets and medical an
Slide 25: Carramar
Carramar Project Carramar Neighbourhood Centre, Carramar, WA Project Type Shopping No. of retail units 16 Current Status Development approval received and construction commenced in January 2007 Expected March 2008 Completion Date Description This project comprises a full line supermarket and a range
Slide 26: Grand 56, Joondalup, WA
Grand 56, Joondalup, WA Project Grand 56, Joondalup, WA Project Type Mixed use (apartments & commercial) No. of residential 25 units Current Status 100% Pre-sold and construction commenced January 2007 Expected January 2008 Completion Date Description This boutique project designed by leading Perth
Slide 27: The Village at Wellard
The Village at Wellard Project The Village at Wellard, WA Project Type Apartments and tow nhouses No. of residential 60 units Current Status Clearing of Planning Approval conditions Expected December 2008 Completion Date Description This transit orientated project designed by The Buchan Group and Ov
Slide 28: Retirement Housing
Retirement Housing » Growing business organically by utilising existing (and future) Peet land estates » Retirement projects will generate development profit on initial unit sales and DMF (Deferred Management Fee) income in the long term » Existing Peet estates with retirement housing potential have
Slide 29: Market Conditions and Outlook
Market Conditions and Outlook
Slide 30: Introduction / Key Points
Introduction / Key Points Peet is well placed to take advantage of any improvement in the east coast market with more than 12 years of land supply » Strong economic and population growth in Qld, WA and Victoria » Resources sector and overseas / interstate migration is a key driver of growth » Moneta
Slide 31: Residential Market Overview
Residential Market Overview MARKET PERFORMANCE Last 6 -12 Months Next 6 -12 Months Sound. Trading at historical averages Remain stable – VIC Low vacancy rate strong fundamentals ◄► Market coming off all time high but Strong economy. Strong demand WA Low vacancy rate underlying demand ◄► remains fund
Slide 32: Housing Commencements
Housing Commencements Equivalent to underlying demand running at 3,175 dwellings per week Underlying demand (dwellings) Dwelling Annual average commencements 1996/97-2000/01 2001/02-2005/06 2006/07-2010/11 2005/06 WA 17,500 19,000 21,300 25,500 Vic 33,700 37,700 38,600 38,350 Qld 31,000 44,100 43,00
Slide 33: Growth expected to continue
Growth expected to continue » WA is expected to achieve growth of 5.3% 6% and 2.8% in 2006-07 and 2007-08 respectively while Qld is expected to grow 5% 2006-07 2007-08 Average 2006-2008 by 4.3% in each year. » Growth in Vic is also expected to remain 4% sound averaging 3.4% over the period GDP/GSP 2
Slide 34: Population Growth %
Housing demand has driven strong population growth » Population growth in the three key States of Vic, WA and Qld has been strong. » After some years of below Australian average population growth, Victoria has rebounded with population growth in that State mirroring the rest of Australia. 2.5% 2.0%
Slide 35: Overseas migration a key driver of population growth
Overseas migration a key driver of population growth » All three States continue to see strong overseas migration, with Victoria taking a relatively large share of Australia’s overseas migration intake. The State’s status as Australia’s 2nd largest economy is a key driver of overseas migration. » Th
Slide 36: Strong population growth expected to continue
Strong population growth expected to continue » Strong population growth is projected to continue for Qld and, to a lesser extent, WA, while Vic will continue to grow at a robust rate. Population 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 VIC QLD WA 1,000,000 0 2001 2006 2011 2016 2
Slide 37: Interest rates “on hold”
Interest rates “on hold” » Interest rates are now at historical lows and, although a series of rate increases by the RBA has seen rate rises recently, monetary policy has been fairly stable. 15 10 Target Cas h Rate 5 0 Aug 90 Apr 91 Nov 91 Jul 92 Aug 94 Jul 96 May 97 Nov 99 May 00 Mar 01 Oct 01 Jun
Slide 38: Record low vacancy rates
Record low vacancy rates All key states experiencing record low vacancy rates » A tightening rental market is expected to see rents rise which may also drive prices further. 10 MELB —— MELB 9 BRIS —— BRIS PERTH 8 —— PERTH AUS Qtr’ly Vacancy Rate (%) —— AUS AVG (AUS) 7 —— LONG TERM AVG (AUS) 6 Tighte
Slide 39: Housing investment …or lack of
Housing investment …or lack of » Low vacancy rates and strong price growth are symptoms of housing shortages. » These shortages have been caused by a range of factors, not least recent interest rate increases which have dampened the investor market and therefore the stock of investment properties. M
Slide 40: Australian Land Supply - Overview
Australian Land Supply - Overview » There is currently a land supply deficiency - driving up land prices and distorting demand for land » Land supply is now a national issue due to: » Mobility of labour markets » High levels of interstate migration » Growth in household wealth generating demand for
Slide 41: Land Supply Adequacy – Eastern Sea Board
Land Supply Adequacy – Eastern Sea Board 10000 Adequate Supply » The Eastern sea board (Qld, Sydney, 5000 and Melbourne) is forecast to suffer from a potential lack of lot supply. 0 » It is likely that much of this shortfall 2001-2005 2006 2011 will be addressed but there may be -5000 lags in achiev
Slide 42: Land Supply Adequacy - Perth
Land Supply Adequacy - Perth 4000 Adequate Supply 2000 » Currently a shortage of land. 0 » Medium term outlook not encouraging 2001-2005 2006 2011 for shortage to ease. -2000 -4000 -6000 -8000 Inadequate Supply -10000 -12000 -14000 Source: MacroPlan Australia 42
Slide 43: Future Outlook and Strategy
Enriching lives since 1895 | www.peet.com.au
Slide 44: Future Outlook
Future Outlook Strong competitive advantage driven by experienced and focused management team » Peet presently owns or manages 100% of stock required to provide product to achieve our next 3 year internal revenue targets, excluding syndication fee revenue » Continue to develop growth opportunities w
Slide 45: Forward Strategy
Forward Strategy Long term target to deliver EPS growth of 10% per annum » Continue to optimise Peet’s core business » Continued focus of EPS growth as a key driver of shareholder value » Continue to pursue new growth opportunities » Confidence to manage business for low risk including maintaining g
Slide 46: About Peet
About Peet More than 111 Years of Assets and Funds Management 46
Slide 47: About Peet
About Peet Key issues over the past 111 years remain relevant today 47
Slide 48: Appendix: Existing Projects
Appendix: Existing Projects
Slide 49: Lakelands
Lakelands » 1994 » 60km South » 2570 » 16 years Syndicated Project Awards Location Mandurah, 60km South of CBD » Urban Development Institute of Australia Award ‘2005 Environmental’ Projected Gross Revenue $419 million » Western Australian Environment Award Total Area 281.9 ha 2005 ‘Business Leading
Slide 50: The Village at Wellard
The Village at Wellard » 2003 » 29km South » 2,631 » 10 years Joint Venture Project – Landstart (WA Gov’t) Awards Location Wellard, 29km South of CBD » 2006 Housing Industry Association Greensmart Development of the Year $332 million Projected Gross Revenue » 2005 Planning Institute Australia Awards
Slide 51: Burns Beach
Burns Beach » 1969 » 28km North » 1,500 » 40 years Syndicated Project Location 28km North of CBD Projected Gross Revenue $963 million Total Area 290.0 ha Purchase Date 1969 Commencement Completion Estimated Timing 2005 2013 Sold Remaining Total Number of Lots 291 1,172 1,463 51
Slide 52: Greenvale
Greenvale Owned Project Location 20km North of CBD Projected Gross Revenue $500 million Total Area 357.0 ha Purchase Date 2003 Commencement Completion Estimated Timing 2004 2021 Sold Remaining Total Number of Lots 196 2,123 2,319 52
Slide 53: Innisfail
Innisfail Owned Project Location 22km West of CBD Projected Gross $250 million Revenue Total Area 145.0 ha Purchase Date 1999 Commencement Completion Estimated Timing 2003 2012 Remainin Sold Total g Number of Lots 803 780 1,583 53
Slide 54: Tarneit Gardens
Tarneit Gardens Syndicated Project Location 25km West of CBD Projected Gross Revenue $139 million Total Area 124.6 ha Purchase Date 2003 Commencement Completion Estimated Timing 2005 2012 Sold Remaining Total Number of Lots 428 674 1,102 54
Slide 55: Warner Lakes
Warner Lakes » 2002 » 1,024 » 7 years » 21km North Syndicated Project Location 21km North of CBD Projected Gross Revenue $203 million Total Area 206.0 ha Purchase Date 2003 Commencement Completion Estimated Timing 2004 2012 Sold Remaining Total Number of Lots 356 805 1,161 55
Slide 56: Disclaimer
Disclaimer While every effort is made to provide accurate and complete information, Peet does not warrant or represent that the information in this presentation is free from errors or omissions or is suitable for your intended use. Subject to any terms implied by law and which cannot be excluded, Pe
Slide 57: Asset Manager Land Syndicator Fund Manager
Asset Manager Land Syndicator Fund Manager