TSX Stock Symbol: GDC
CALGARY, March 31 /CNW/ - Genesis Land Development Corp. ("Genesis" or the "Company") is pleased to report financial results for the fiscal year ended December 31, 2007. Total revenues for the year were $98,974,402 (2006 - $51,655,128) with after-tax earnings of $23,217,665 (2006 - $8,416,210) or $0.50 per share (2006 - $0.18 per share). Consolidated operating margins increased in 2007 (46%) from 2006 (44%). Residential single-family home sales accounted for $48,722,228 (49%) of total fiscal 2007 revenues, while residential lot sales were $49,054,112 (50%) and interest and other income was $1,198,062 (1%). In 2006, 37% of Company revenues were from single-family home sales ($19,013,008) with 62% of revenues generated from land and lot sales ($31,886,504), while interest income accounted for 1% of revenues ($755,616).
General and administrative costs ("G & A") increased in 2007 to $11,425,113 from $7,527,950 in 2006, an increase of $3,897,163 or 52%. This increase was primarily the result of increased activity from the Company's Equity Investment division involved in limited partnership arrangements used as financing vehicles for raw land acquisitions in 2007. These limited partnership expenses are offset by the non-controlling interest allocation to the limited partners on the income statement. Additionally, increased growth in home building operations contributed to the remainder of the increase in G & A charges.
For the three months ended December 31, 2007, Genesis revenues totaled $22,591,690 (2006 - $18,397,731) producing after-tax earnings of $4,367,367 (2006 - $1,808,816) or $0.09 per share (2006 - $0.04 per share). Gross margins in the fourth quarter of 2007 were 54% on residential lot sales and 20% on residential single-family home sales for a combined margin of 42% on lot and home sales. For the final quarter of 2006, gross margins were 47% on residential lot sales and 19% on residential single-family home sales for a combined margin of 33% on lot and home sales.
Genesis added substantially to its raw and developed land base in 2007. Real estate held for development and sale increased from $130,084,381 at December 31, 2006 to $221,264,426 at December 31, 2007, an increase of $91,180,045 or 70%. More specifically, land held for future development (raw land) increased from $68,705,835 at December 31, 2006 to $118,236,045 at December 31, 2007, an increase of $49,530,210 (72%) while land under development increased from $52,904,895 at December 31, 2006 to $84,262,693 at December 31, 2007, an increase of $31,357,798 (59%). These increased land inventories were financed by cash flow generated from operations of $30,808,535 in 2007 (2006 - $10,780,050) and an increased level of financings to $85,159,905 at December 31, 2007 from $20,090,558 at December 31, 2006. Of the total financings at December 31, 2007, land project loans account for $60,953,738 with a further $18,830,000 held by the most recent limited partnership offering (LPLP2007) for payment of the 617 acres acquired at Delacour. Genesis Builders Group ("GBG") had a closing 2007 balance of $4,611,698 on its $7.5 million operating line. Genesis closed 2007 with a cash balance of $11,007,142, a decrease of $2,403,862 from the December 31, 2006 balance of $13,411,004. Genesis retains a strong balance sheet as evidenced by a debt to equity ratio (excluding non-controlling interests) of 0.75 at December 31, 2007 and 1.24 inclusive of non-controlling interest. Management is confident that the Company's real estate holdings will provide the opportunity to leverage assets to secure financing arrangements as needed to meet its liabilities and land acquisition commitments. Genesis is also forecasting further increases in cash flow from operations in 2008 as lot sales, single-family home closings, multi-family closings and commercial land sales are all expected to increase from 2007 levels.
Land Development:
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Genesis Land division completed 234 residential single-family lot sales to third-party builders during the year ended December 31, 2007 resulting in external lot revenues of $49,054,112 ($209,633 per lot) and gross margins of $30,658,568 (62%). This compares to 81 lot sales in 2006 resulting in revenues of $9,726,504 ($120,080 per lot) and gross margins of $4,272,075 (44%). The Company also had a development land sale in Q1-2006 for sales proceeds of $22,160,000.
With over 800 single-family lots forecast to be produced in 2008, the Company is forecasting increases in lot sales in 2008 while still retaining ample lot inventory for GBG to continue to grow its building operations. For 2008, Genesis is anticipating residential lot sales in the communities of Sage Meadows/Evanston, Kincora, Bayside, Canals, Taralake and Saddleton and land sales at the Sage Hill Crossing site and the Acheson industrial property purchased during 2007.
Single-Family Home Building
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The Genesis Builders Group closed 135 single-family home sales in the year ended December 31, 2007 resulting in revenues and gross margins of $48,722,228 and $14,118,643 (29% of sales) respectively. The average sales price per home was $360,905 for the year as compared to an average sales price of $271,615 in 2006 for 70 homes sold, an increase of $89,290 per home (33%) year over year. Home and lots acquired in the Point Grey Homes acquisition accounted for 54 of the homes sold in 2007, while the remaining 81 closings were from internally generated lots. No homes remain in the Company's inventory from the Point Grey acquisition. Genesis expects to continue to increase single-family home closings again in 2008 as compared to 2007.
Multi-Family Home Building
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Generations Group of Companies, the Company's multi-family home building division, did not generate any sales in 2007 but is expected to contribute unit closings and revenues in the latter half of 2008. Construction is well under way at The Breeze, a 125 unit condominium project in Airdrie, and is expected to be concluded in the third quarter of this year. The Company has achieved 20 pre-sales for the project and very recently added a sales trailer on site to further expand pre-sales. Five other multi-family projects have commenced planning and approvals with sales in 2009 expected from four of these projects.
Commercial
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Genesis Commercial division did not record any revenues in 2007, but is scheduled to close the sale of a large anchor store land parcel in 2008 at the Sage Hill Crossing site in NW Calgary for total revenues exceeding $22 million. The Company expects to sign another purchase and sales agreement for a second anchor store site during the second quarter of 2008. As the regional shopping centre in the area, Sage Hill Crossing continues to see strong demand from retailers. Current retail vacancy rates of 0.3% in Calgary and a prime location with a transit hub and a major thoroughfare bodes well for the future of this commercial project.
Equity Investments
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The Company's Equity Investment division launched a limited partnership offering in June of 2007 to fund the acquisition of a total of 937 acres of land acquired just west of Airdrie and at Delacour, NE of Calgary. As at March 27, 2008, the Equity Investment division had raised approximately $32.5 million.
Outlook
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Despite weakening real estate markets over much of North America, real estate values have stabilized in the Calgary Metropolitan Area, thanks in large part to a steady economy buoyed by oil and natural gas prices. In 2008, Genesis expects to build on our record 2007 financial results, with the strength of a strategically positioned land base and the diversity and depth of our four well established operating divisions.
AUDITED FINANCIAL SUMMARY
Year Ended 31st of December, 2007 and 2006 (in $CAN)
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2007 2006
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Assets 302,423,470 170,533,812
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Liabilities 183,429,797 75,614,076
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Shareholders Equity 118,993,673 94,919,736
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Revenue 98,974,402 51,655,128
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Expenses 66,944,618 38,325,490
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Earnings before taxes and
non-controlling interest 32,029,784 13,329,638
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Net earnings 23,217,665 8,416,210
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Earnings per share (basic & fully diluted) 0.50 0.18
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Common Shares Outstanding 46,021,190 46,102,190
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Genesis Land Development Corp. is a Calgary based land development company with an inventory of more than 24,000 future residential building sites (single-family and multi-family) and over 300 acres of commercial/industrial lands in Western Canada, of which more than 14,000 residential sites and over 300 acres of commercial/industrial lands are located in the Calgary metropolitan area.
This news release contains certain statements or disclosures that may constitute forward-looking information under applicable securities laws. All statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that the Company anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms such as "forecast", "future", "may", "will", "expect", "anticipate", "believe", "potential", "enable", "plan", "continue", "contemplate", "pro forma" or other comparable terminology. Forward-looking information presented in such statements or disclosures may, among other things, relate to: sources of income; forecasts of capital expenditures and the sources of the financing thereof; expectations regarding the ability of the Company to raise capital; movements in currency exchange rates; anticipated income taxes; the Company's business outlook; plans and objectives of management for future operations; forecast business results; and anticipated financial performance.