TSX Stock Symbol: GDC
CALGARY, Feb. 4 /CNW/ - Genesis Land Development Corp. ("Genesis" or the "Company") reports restated financial results for the nine months ended September 30, 2008. As disclosed in the Company's press release dated January 12, 2009, one bulk lot sales transaction for $4,500,000 that was previously recognized as revenue for the third quarter was reversed and has been deferred until certain other criteria are met.
As disclosed in the restated financial statements, Genesis recorded total revenues of $75,733,310 over the first three quarters of 2008 as compared to $76,382,712 over the same period in 2007. This produced after-tax earnings in 2008 of $15,815,920 or $0.34 basic and fully diluted earnings per share vs. $18,850,298 and $0.41 basic and fully diluted earnings per share during the first nine months of 2007.
As at September 30, 2008, Genesis had a cash balance of $10,029,686 compared to $11,007,142 at December 31, 2007. Amounts receivable at September 30, 2008 were $55,100,888 compared to $47,587,450 at December 31, 2007. The balance of debt/financings at September 30, 2008 was $116,853,054 compared to $85,159,905 at December 31, 2007. At September 30, 2008 Genesis maintained a debt to equity ratio of 1.20 exclusive of non-controlling interest and 1.72 inclusive of non-controlling interest.
The financial statement effects of the restatement are as follows:
SUMMARY OF RESTATEMENT
Three months ended September 30, 2008
As reported Adjustment Restated
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$ $ $
Residential lot sales revenue 10,290,104 (4,500,000) 5,790,104
Cost of sales - residential
lots 3,518,580 (2,181,000) 1,337,580
Interest expense 895,504 189,146 1,084,650
Provision for taxes - Future 2,868,416 (672,510) 2,195,906
Net earnings and comprehensive
income 4,163,557 (1,835,636) 2,327,921
Cash flow from operating
activities (4,231,333) (4,689,146) (8,920,479)
Cash flow from financing
activities 1,537,871 5,000,000 6,537,871
Increase (decrease) in cash
and cash equivalents (2,733,351) 310,854 (2,422,497)
Nine months ended September 30, 2008
As reported Adjustment Restated
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Residential lot sales revenue 36,532,608 (4,500,000) 32,032,608
Cost of sales - residential
lots 13,365,353 (2,181,000) 11,184,353
Interest expense 1,173,010 189,146 1,362,156
Provision for taxes - Future 2,236,954 (672,510) 1,564,444
Net earnings and
comprehensive income 17,651,556 (1,835,636) 15,815,920
Cash flow from operating
activities (38,120,785) (4,689,146) (42,809,931)
Cash flow from financing
activities 36,966,460 5,000,000 41,966,460
Increase (decrease) in cash
and cash equivalents (1,288,310) 310,854 (977,456)
As at September 30, 2008
As reported Adjustment Restated
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Real estate held for
development and sale 259,714,270 2,181,000 261,895,270
Cash and cash equivalents 9,718,832 310,854 10,029,686
Financings 111,853,054 5,000,000 116,853,054
Future income taxes 7,335,054 (672,510) 6,662,544
Retained earnings 76,928,748 (1,835,636) 75,093,112
Land Development
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During the nine months ended September 30, 2008, Genesis sold a total of 181 lots to external builders resulting in revenues of $32,000,000 before accounts receivable write-downs. In the third quarter of 2008, Genesis wrote down a total of $5,794,837 of accounts receivable on 32 lot sales which have been deemed uncollectible. Genesis retains ownership of these lots and the 15% deposit placed by the purchaser. During the third quarter of 2008, Genesis sold a total of 33 lots. Gross margins on lots sales during the first nine months of 2008 were $20,728,000 (65%) as compared to gross margins of $26,249,000 (64%) over the first nine months of 2007. The average price per lot sold during the first three quarters of 2008 was $176,978 as compared to an average price per lot in the same period last year of $201,432. The reduced price per lot is primarily a result of a different sales mix whereby fewer amenity lots were sold in 2008 as well as a slight decline in market prices.
The Company also paid $5,629,000 on the closing date of February 4, 2009 to complete the $30,258,000 purchase of 1,476 acres of land in Delacour.
Single-Family Home Building ---------------------------
Genesis Builders Group completed the sale of a total of 92 single-family homes in the nine months ended September 30, 2008. Total revenues from single-family home sales for the first three quarters were $37,906,869 compared to $34,845,145 for the first three quarters of 2007. The average price of a single-family home sold in the first three months of 2008 was $412,031, up from the average price of $351,971 for the first three quarters of 2007. This rise is a reflection of the increases in house prices that were experienced during 2006 and 2007 in the Calgary real estate market. While prices in the Calgary residential housing market have softened in the latter part of 2008, prices still remain above pre-2006 levels in the Calgary region.
Multi-Family Home Building --------------------------
Generations Group of Companies continues construction on The Breeze, a 125 unit condominium/town home development in Airdrie, Alberta with completion of the project scheduled for April 2009. Pre-sales for this project to date have exceeded $5.98 million. Additionally, planning and approvals are underway for five additional multi-family projects totaling 1,630 units but construction of these projects are on hold due to a presently oversupplied multi-family market.
Commercial ----------
Genesis has signed a purchase and sale agreement for the sale of commercial land to a large anchor store at its Sage Hill Crossing shopping center site for total proceeds exceeding $22 million. This transaction is now forecast to close during the second quarter of 2009. Additionally, another large anchor store has signed a letter of intent ("LOI") to purchase a retail land site at Sage Hill Crossing for total proceeds of approximately $20 million.
Outlook -------
Genesis remains committed to adding shareholder value despite currently challenging markets. The Company has not been spared in the recent slide of stock prices of publicly traded companies worldwide. The depressed stock price has allowed the Company to repurchase 1,869,433 of its shares under the provisions of the NCIB announced on September 19, 2008. The Company is focused on adding shareholder value while carefully monitoring its business environment on a go-forward basis.
UNAUDITED RESTATED FINANCIAL SUMMARY
Nine Months Ended 30th of September, 2008 and 2007 (in $CAN)
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2008 2007
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Assets 368,496,050 241,491,523
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Liabilities 232,917,433 127,358,273
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Shareholders' Equity 135,578,617 114,113,250
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Revenue 75,733,310 76,382,712
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Expenses 51,410,445 49,573,482
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Earnings before taxes and non-controlling
interest 24,322,865 26,809,230
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Net earnings 15,815,920 18,850,298
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Earnings per share (basic & fully diluted) 0.34 0.41
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Common Shares Outstanding 46,035,690 46,019,190
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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 lots and over 300 acres of commercial/industrial lands are located in the Calgary metropolitan area.
Certain statements in this news release could constitute forward-looking statements. The Corporation's line of business involves risk, uncertainties and other factors which may cause actual results, performance or achievements of Genesis to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include the number of dwelling sites that Genesis will actually develop and sell.