Sunland : Announces Full Year Profit of $35.3 million Opens in a new Window

23 August 2017

The Manager

Company Announcements Australian Securities Exchange

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SUNLAND GROUP ANNOUNCES FULL YEAR PROFIT OF $35.3 MILLION AFTER TAX

Sunland Group ('Sunland' or 'Group') today announced an after tax profit of $35.3 million for the full year ended 30 June 2017, an increase of 12% on the previous corresponding period's result (2016: $31.5 million profit) and consistent with Group guidance.

Operational highlights are as follows:

• Net tangible assets per share increased by 17 cents to $2.39 (2016: $2.22) representing growth of 8%.

• The Group declared a fully franked final dividend of 4 cents per share.

• A special dividend of 2 cents per share has also been declared subsequent to year end.

• Strong balance sheet capacity, with $14.6 million in cash and $109.8 million in undrawn working capital lines. This has significantly improved subsequent to balance date to $32.2 million in cash and

  $153.3 million in undrawn working capital lines.

• Overall gearing at disciplined levels, with 34% debt to assets and 60% debt to equity.

• $65.5 million in new site acquisitions.

• Earnings per share (based on issued shares at 30 June 2017) of 23.1 cents (2016: 19.7 cents), representing growth of 17%.

• Strong forecast cash flow generated from existing projects.

Sunland Managing Director, Sahba Abedian, said the improved earnings performance is a result of a significant increase in revenue from property sales and continuing capital management initiatives.

"The strategic repositioning of the portfolio three years ago to return to the luxury multi-storey sector, and our expansion in to south-east Queensland residential markets, has delivered a strong financial performance for the year," Mr Abedian said.

"This has been balanced by the continuance of our conservative capital management strategy and share buyback program, which has enhanced earnings per share and contributed to Net Tangible Asset per share growth consistently over the past eight years."

SU N LA N DGRO U P . C O M .A U

SU NLAND GRO UP LI M I TED ABN 65 063 429 532

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Operational highlights

Sunland launched three new residential projects during the financial year including Marina Concourse and The Lakes Residences on the Gold Coast, and 18 Macpherson Street in Warriewood in Sydney's Northern Beaches. The Group also released new stages within its master planned communities at The Heights in Pimpama and The Terraces in Peregian Springs.

As at 30 June 2017 Sunland had 18 active projects along Australia's east coast and a $3.9 billion portfolio comprising 5,601 land, housing and multi-storey products, providing a sustainable pipeline of premium developments to be delivered primarily over the next five years.

Mr Abedian said Sunland's revenue from property sales increased by 67% to $394.3 million (2016: $235.6 million) during the period, generated from 597 settlements (2016: 443 settlements).

A major contributor to revenue was the luxury Abian residential tower in the Brisbane CBD, which commenced settlements in June 2017 and has increased the average revenue per lot due to the higher average contract price. Other contributors to revenue include Magnoli Residences, The Heights, and Ancora on the Gold Coast; Carre Residences and The Gardens in Victoria; and Dahlia Residences in New South Wales. The portfolio achieved an average return of 20%, in line with Sunland's target development margin.

Sales volume increased 23% in FY17 with new project launches in Queensland and New South Wales, in addition to sales from the existing portfolio, with 524 sales completed to the value of $376.4 million (2016: 426 sales to the value $261.3 million).

Contracted presales for projects that have been released across the development portfolio total 641 as at 30 June 2017, with a combined value of $534.4 million.

Sunland's multi-storey portfolio is primarily located in premium, high-growth locations across the Gold Coast and will continue to enhance its contribution to revenue as designs and approvals are granted and projects are launched to the market. Construction of the twin six-storey, mid-rise apartment buildings at Marina Concourse, located adjacent to the Royal Pines Marina, is well advanced and scheduled for completion in mid-2018. Other multi-storey projects in the preliminary design and approval stages include 272 Hedges Avenue (high-rise), Greenmount Residences (medium-rise), One Marine Parade (high-rise), The Lakes (medium-rise), and Palm Beach (medium-rise).

Brisbane City Council approved the proposed Grace on Coronation high-rise development in Toowong in 2015. A subsequent appeal against the approval was recently dismissed by the Land and Environment Court, however Sunland is responding to a further appeal through the Queensland Supreme Court, which is expected to be heard in late 2017.

Site Acq uisitions

Strategic site acquisitions in Sydney (Mount Annan), Brisbane (Everton Hills), and the Gold Coast (Coolangatta and Mermaid Beach) totalled $65.5 million and added 579 allotments to the portfolio with an estimated end value of $689 million.

The two site acquisitions on the Gold Coast, at Coolangatta and Mermaid Beach, are earmarked for luxury multi-storey residential developments which, pending planning approvals, will be launched in 2018.

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Capital Management & Dividend

Mr Abedian said Sunland's capital management strategy has consistently enhanced the Group's earnings per share and contributed to Net Tangible Asset per share growth over the past eight years.

"The accumulative impact of this strategy has resulted in a 53 per cent reduction in shares on issue since 2009 at an average price of 93 cents per share. The combined programs are delivering significant long­ term benefit and value to shareholders, " he said.

During FY17, earnings per share (based on issued shares at 30 June 2017) grew 17% to 23.1 cents (2016: 19.7 cents) and net tangible assets per share increased by 17c to $2.39 (2016: $2.22), representing growth of 8%.

The Group's latest share buyback program was announced on 13 December 2016 and, over the course of 12 months, has the ability to acquire up to 10 percent of Sunland's issued capital, equivalent to approximately 16.4 million ordinary shares. Sunland has acquired and cancelled 7.9 million shares under this current program for a total value of $13.3 million.

Directors declared a total of 8 cents per share fully franked for the period, comprising an interim payment of 4 cents per share (paid 23 March 2017) and cl final dividend of 4 cents per share, to be paid 25 September 2017. Directors have also declared a special dividend of 2 cents per share fully franked, to be paid 25 September 2017, reflecting the increased contribution from the Group's multistorey segment, specifically Abian, with a high value of settlements occurring throughout July and August 2017.

Surplus cash generated by project settlements, including post balance date, have reduced the Group's debt by $163 million from the Group's peak utilisation levels. The project facility of $132 million provided to fund the delivery of Abian has been repaid and the Group's working capital lines reduced to ensure significant capacity is available to continue the delivery of the existing portfolio, as well as realising any acquisition opportunities that may arise. Consequently, as a result of settlements subsequent to 30 June 2017, the Group's net debt position (total debt minus cash) has reduced by 28% to $147.1 million.

"Sunland remains focused on enhancing operational outcomes by reducing risk through portfolio and geographic diversification, and utilising various capital structures to spread the project and funding risks associated with different developments, " Mr Abedian said.

Future outlook

Mr Abedian said Sunland enters the 2018 financial year with a substantial pipeline of projects at various phases of delivery along Australia's east coast, and a significant portfolio of residential housing, land and multi-storey developments planned for release.

"Sunland remains in an active mode of delivery, with 14 residential projects under construction in Queensland, New South Wales and Victoria," Mr Abedian said.

"Throughout the course of the 2018 financial year we intend to launch a further eight projects, pending planning approvals and market conditions.

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"This includes a substantial expansion of the Group's multi-storey portfolio on the Gold Coast, comprising both high-rise and integrated mid-rise apartment developments, and new residential housing developments in south-east Queensland and New South Wales."

Mr Abedian said the Group's $3.9 billion portfolio is strategically diversified across its core activities of land, housing and multi-storey development and is well positioned to benefit from the favourable market conditions, particularly in south-east Queensland.

"Furthermore, the cashflow generated from the settlement of significant projects, including the luxury Abian residential tower in the Brisbane CBD, will assist in the delivery and replenishment of the portfolio," he said.

"Sunland's capital management initiatives, sound balance sheet, and access to capital continue to provide a demonstrated foundation for sustainable profitability and shareholder returns."

The Group expects to provide profit guidance at the Annual General Meeting of shareholders, which will be held in Brisbane on 22 November 2017.

Sahba Abedian Managing Director

Media contact: Sarah Dixon, National Communications Manager, 0418 748 892.