Profit Growth

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The RBA have announced they made a $3.8bn profit this year, a stark contrast to the $900 million they reported as losses last year.
It represents a turnaround of $4.7 billion turnaround.
RBA governor Philip Lowe began his statement saying the global economic expansion continued over the past year.
He said unemployment rates have declined further, inflation rates remain low, and financial conditions are still expansionary.
"This improvement in the global environment is helping the Australian economy," he said.
"Economic growth has gradually picked up and inflation is moving closer to the Reserve Bank’s target."
Governor Philip Lowe's salary total remuneration (including superannuation) rose to $1.02 million, or up 10 per cent from $930,000 in 2017, but back in line with his predecessor Glenn Stevens' remuneration.
The $3.8bn profits represent a $4.7 billion turnaround from last year's $900 million loss.
The RBA made a net gain of $3 billion from securities and foreign exchange compared to last year's loss of $1.8 billion.
Net interest income was down 10 percent to $900 million as the RBA continued to hold interest rates throughout the year.
The Reserve fund only dished out around half of the $1.3 billion they gave to the Commonwealth Government last year. This year they only released $669 million.
The Reserve Bank's earnings come from two sources, underlying earnings, which comprises net interest and fee income and less operating costs, and valuation gains or losses.
Net interest income arises because the bank earns interest on almost all of its assets.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/21/earnings1.jpg" target="_blank">to enlarge.</a>
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The RBA suggested valuation gains and losses result from fluctuations in the value of the Reserve Bank's assets because of movements in exchange rates or in yields on securities it holds.
"A depreciation of the Australian dollar or a decline in interest rates results in valuation gains," the RBA noted.
"Conversely, an appreciation of the Australian dollar or a rise in market yields leads to valuation losses.
"These gains and losses are realised only when the underlying asset is sold or matures.
"Valuation gains and losses are volatile, as both exchange rates and market interest rates fluctuate in wide ranges over time.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/21/losses.jpg" target="_blank">to enlarge.</a>
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The RBA said they measure their property at fair value.
Their properties are formally valued annually by an independent valuer. They recently <a href="https://www.urban.com.au/expert-insights/investing/89655-rba-sells-melbourne-hq-for-160-million" target="_blank">sold their Collins Street office</a>, their Melbourne HQ, for $160 million after only expecting around $100 million.
 
 
 
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jrobinson-rf4aSBido9

RBA announces $3.8bn profits 

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With property management making up an average 56% of agency revenue, staff training and marketing spend across the best channels are key to increasing profits, according to a survey data by rental property website Rent.com.au.
Australian property management heads, principals and business development managers were primarily concerned with four key risks to their agency’s profitability: staff turnover, training, rent roll growth and the cost and direction of their advertising and marketing spend, the survey found.
Conversely, key contributors to profitability were marked as the number of secured new managements, ongoing property management fees and income picked up from the sales team.
More than half the respondents (55.2%) in Rent.com.au’s February ‘Best Practice and Finance’ survey indicated their agency set an overall revenue target for the business, while 28.9% reported they had set individual targets for both the sales and management departments. Others indicated the number of managed properties determined their department’s profitability.
Property management heads reported that staff training was primarily allocated between 0-10% annually (78.95%), while 15.79% reported 11-20% of their budget was pushed in that direction. The remaining 5.26% said training was prioritised with 21-30% of their agency’s budget. Total staff turnover in the department was, on average, 5.2% according to the survey.
A summary of the key results include:
 At present, respondents indicated they managed on average 101-200 properties (25.64%), followed by 17.95% for both 301-500 and 500+ ranges.
 38.46% of property management heads indicated they would like to manage more than 500 properties, while 101-200 and 301-500 properties came in equal second on 17.95%.
 The key methods of securing new managements were: Referrals from owners (81.58%), referrals from tenants (41.11%), networking (47.37%) and referrals from the sales team (47.37%).
 Survey respondents indicated they spend the majority of their allocated budget on subscriptions to portals (70.27%)
 41% of property management heads indicated they met with their department every day.
 67.5% said they had a rent arrears percentage under 5%.
“Our results show that property management heads have prioritised growth and staff development by meeting on a regular basis with their teams. The majority (41.03%) indicated they would meet daily with their team, which suggests a strong commitment to immediate support and resolution for potential conflicts,” Rent.com.au CEO and Founder Mark Woschnak said.
Rent arrears are well managed across a number of agencies, with the majority (67.5%) indicating their arrears were under 5%, closely followed by 24.3% with between 6-10%.
Woschnak added that good property management resulted in repeat business and satisfied clients, thus driving up profitability. 
“While the sales impact on a company’s revenue is clear for the 74.58% of respondents who work in an agency that operates across sales and property management, our results indicate that strong communication, knowledge of properties and the local area, a set fee structure and benchmarks are key ‘best practice’ tools.”
The results showed that marketing budget is annually directed to advertising options such as local subscriptions to portals, local sponsorships, Facebook and Google Adwords.
 
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jonathanchancellor-7SQnKwU6yx

Staff training and targeted advertising spend key to profitability for property firms: Rent survey

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Mortgage Choice Limited reported a profit growth of 12.4 percent for the six months ending December 31, boosted by a record $6 billion in mortgage settlements during the period.
The mortgage broker’s shares ended up 7.3 percent on the ASX on Wednesday.
The company said its loan book also crossed the $50 billion milestone and hit $50.7 billion, up 4.7% from 1H15.
“We have recorded our strongest ever interim profit result, which is a testament to the Mortgage Choice business as a whole, as well as the strength of our plans and our ability to execute those plans,” Mortgage Choice chief executive officer John Flavell said in a media release.
The mortgage broker’s net profit after tax on a cash basis was $10.1 million, up 12.4% from in 1H15. Group revenue grew to $102.3 million, up 5.4% on 1H15.
It settled home loans worth $6.2 billion in 1H16, an 8.5% increase from 1H15 and its highest ever.
The company also announced a fully franked interim dividend of 8 cents per share, up from 7.5 cents in 1H15.
“Our strong profit growth of 12.4% has come from significantly growing our revenue and controlling our operating expenses whilst continuing to invest for future growth. Since addressing Help Me Choose, we have been able to dedicate more resources to those parts of the business that align with our 2020 strategy,” Flavell said.
“We have seen a significant increase in both the number of referrals going to our financial advisers as well as the number of brokers referring business.”
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prateek24-ezbwHMbNAk

Mortgage Choice posts 12% rise in net profit on record home loan settlements

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Stockland performed strongly in FY16, growing asset returns, broadening its customer base and taking advantage of supportive market conditions. Revenues were up 10 percent.
They generated substantial profit growth from its business activities, with FFO of $740 million, up 12.5% on FY15.
Statutory profit was $889 million, down 1.6% on the prior year due to a number of unrealised fair value items.
Stockland's return on equity increased 1.1 percent to 11 percent, excluding workout assets.
<a href="/images/2016/08/17/Screen%20Shot%202016-08-17%20at%209.58.25%20am.png" target="_blank">Click here to enlarge Stockland's growth in FFO and underlying profit</a>
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The company's residential, commercial property and retirement living arms all made solid contributions.
Mark Steinert, Stockland managing director and CEO said the company delivered strong results in FY16 by executing strategy and delivering purposes in their communities and properties.
"I’m very pleased that each of our commercial property, residential and retirement living businesses have made significant contributions to the performance of the Group.
"Our commercial property business delivered comparable FFO growth of 4.5% and we achieved a record number of settlements in both our residential and retirement Living businesses. 
<a href="/images/2016/08/17/Screen%20Shot%202016-08-17%20at%209.57.58%20am.png" target="_blank">Click here to enlarge Stockland's key achievements over FY16</a>
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FY 16 Results
 Statutory profit of $889 million, down 1.6 percent on FY15
 Funds from operations (FFO) of $740 million, up 12.5 percent1
 FFO per security of 31.1 cents, up 11.1 percent
 Underlying profit of $660 million, up 8.5 percent
 Underlying earnings per security (EPS) of 27.8 cents, up 7.3 percent
 Profit growth in all core businesses, with Residential operating profit up 38.8 percent
 Return on equity (ROE) of 11.0percent, up 1.1 percent
Net tangible assets (NTA) per security of $3.82, up 3.8 percent. Distribution per security (DPS) of 24.5 cents, up 0.5 cents 
FY17 targets
Targeting growth in FFO per security of 5.0 – 7.0 percent, assuming no material change in market conditions
From FY17, our distribution policy will be based on FFO and will reflect a payout ratio of 75 – 85 percent. We are targeting an estimated distribution per security of 25.5 cents, a 4.1 percent increase on FY16, assuming no material change in market conditions 
 
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j.ballantyne1990-6AQqhLzZaK

Stockland perform strongly in FY16 with 10% rise in revenues

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Specialist investment manager Centuria Capital have announced results for the full year ended June 30 2016 and declared a fully franked final dividend of 3.00 cents per share.
John McBain, Group CEO was pleased with the overall figures. 
“Centuria delivered a record underlying net profit after tax of $10.4 million, which is at the upper end of guidance provided to the market in December.
"We are pleased that the FY16 fully franked dividend of 5.25 cents per share is in line with our aim to provide consistent earnings and distribution growth over the short and long term.”
<a href="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%2010.55.38%20am.png" target="_blank">Click here to enlarge</a>
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Operating Highlights during FY16 included:
· Group funds under management increased 21% from $1.6 billion to $1.9 billion.
· Unlisted property fund acquisitions totaled $265 million.
· Centuria Metropolitan REIT portfolio book increased 9.3% to $400 million with distributions on forecast.
· Strengthened balance sheet supports unlisted acquisitions and acquisition of GMF stake.
 
Centuria is target 25 percent growth in Group FUM during FY17.
The acquisition of the $280 million Zenith Tower in partnership with Blackrock in July 2016 will contribute significantly to reaching the FUM target. 
“It has been a very successful year for Centuria and we believe our platform is well positioned to deliver growth in earnings," Group CEO John McBain added.
"We have clear strategies to enhance our business in FY17 and these include expanding and diversifying our distribution channels and a concerted move towards a higher recurring revenue model.
“Centuria will continue to review opportunities to expand the Group by acquisition of fund managers if they are on-strategy and enhance value to shareholders.”
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Centuria Capital target 25% FUM growth after posting strong profits

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Melbourne based residential developer AVJennings continue to make profits in the housing boom, showing a 19 percent profit increase in FY16.
The company stayed away from the over-supplied CBD high-rise markets and saw their net profit rise to $40.9 million.
The profits came due to its increased housing lot sales, with chief executive Peter Summers suggesting traditional housing had the steadiest outlook.
"Our markets, that is the traditional housing markets, remain under-supplied."
"The customer base is traditional, stable, domestically based and in need of housing, rather than speculators." 
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The growing revenue hit $421.9 million, an increase of 32.7 percent, and the full-year dividend payout rose by 25 percent to 5¢.
Below are AVJennings FY16 results
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AVJennings pipeline plans are extensive, with developments planned all over Australia and one in New Zealand.
Summer acknowledged the widespread concerns of oversupply, but suggested that it's concentrated on the CBD apartment markets, and there's a large under-supply of housing in the wider market.
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"We've been saying for some years that we believe this type of product of apartment construction is the wrong type of product for many Australians and it has created too much product in certain markets."
"Our strategy has been to focus on a stable base of traditional buyers.
"We haven't chased what see as potentially more risky markets for short term gain."
AVJennings offshore buyers only represent one percent of their purchasers.
 
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AVJennings stay away from CBD over-supply for 19 percent FY16 profit boost

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Lendlease secured strong figures for the FY16, showing a profit after tax of $698.2 million.
Group CEO and managing director Steve McCann suggesting that solid cash generation was a highlight.
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“Solid cash generation was a highlight of the result with operating cash flow representing over 120 per cent of Profit after Tax,” he said.
“Lendlease produced a strong result for the 2016 financial year (FY16) and maintained a disciplined and focused approach to delivering on our strategy.
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The development segment delivered a very strong result across both residential and commercial.
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Residential settlements were up 7 per cent to 4,790 units.
“The high level of residential pre-sales provides good future visibility for earnings," McCann said.
“We settled over 1,200 apartments with non-settlements at less than 1 per cent versus our historical average of closer to 3 per cent.
McCann also sited the contribution of the commercial buildings to the strong figures.
“The forward sale of three major commercial buildings, two at International Quarter London and one at Darling Square in Sydney, has further de-risked our development exposure."
The Australian Construction result was robust with EBITDA margins up by more than 1 percentage point to 3.7 per cent.
The Investments segment, representing 37 per cent of operating EBITDA, continues to deliver solid recurring style earnings.
Below is the Lendlease group financial figures
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Group CFO Tarun Gupta said the FY16 result ensures that Lendlease enters FY17 in a strong financial position. 
“Generating in excess of $850.0 million in operating cash flow while deploying a further $3.0 billion6 into development of projects is a significant achievement.” 
At 30 June 2016, Lendlease held a cash balance of $1.0 billion and undrawn facilities of $2.2 billion, providing substantial financial flexibility.
Below is Lendlease's financial performance
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FY16 major highlights
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Profit after Tax of $698.2 million, up 13 per cent and earnings per stapled security of 120.1 cents, up 12 per cent 
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  Return on equity of 13.0 per cent2, up 60 bps 
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  Final distribution of 30.0 cents per stapled security, taking the full year distribution to 60.0 cents per stapled security 
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  Operating cash flow of $853.0 million, 122 per cent of Profit after Tax 
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  Further $3.0 billion deployed into development of projects3 
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  Strong balance sheet with gearing of 6.5 per cent4 and available liquidity of $3.2 billion 
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  Further de-risking Development with the forward sale of three major commercial buildings 
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  Record pre sold residential revenue of $5.9 billion5, up 13 per cent 
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  Establishment of a $400 million managed investment vehicle 
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  Construction backlog revenue of $20.7 billion, up 20 per cent 
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  Funds Under Management (FUM) of $23.6 billion, up 11 per cent 
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Lendlease profits up 13 percent in FY16 - and no sign of rise in apartment settlement defaults

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Estate agent John McGrath is stepping away from the daily operations of the recently listed McGrath group.
The company has revealed the company’s current joint chief executive Cameron Judson will take Mr McGrath’s role.
It came as McGrath Limited (ASX: MEA) announced a 12 percent revenue increase in their first year as a listed company.
Their revenue increased to $137 million, which was in line with their guidance range of $136 million to $140 million.
The chairman David Mackay, who oversaw the listing last year, will retire from the board and be replaced by Cass O’Connor, who has been on the board for 15 years.
Elizabeth Crouch is the board's latest appointment. Elizabeth is currently Deputy Chancellor of Macquarie University and on the Board of the Macquarie University Hospital and the Museum of Applied Arts and Sciences. She chairs the Audit and Risk committees of the City of Sydney and the NSW Government’s Health Infrastructure and is a Non-Executive Director of SGS Economics and Planning. Elizabeth has served as Chair of Railcorp, Non-Executive Director of Chandler Macleod for 4 years and CEO of the Housing Industry Association for 9 years. 
John McGrath, who remains an executive director, said his new job would focus on growing the company’s “brand, growth and innovation”.
“As the company grows rapidly it’s important to focus my attention and efforts on the business that I add most value,” Mr McGrath said.
The McGrath group continued to grow sales, agent numbers, offices and market share in FY16.
Their number of property sales rose 11 percent to 12,232, with the value of property sales seeing a 14 percent increase to $13.2 billion.
Agent numbers increased by 77, rising to 642 across the country, and the number of McGrath offices increased by 20 to 87.
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Joint-CEO and founder John McGrath was pleased with the business model strength despite the difficult market.
“Notwithstanding the challenging market environment for the real estate industry, given the low volume of listings and sales in the second half, the strength of our business model saw us deliver a solid result," he said.
“We have successfully grown into new and emerging markets by opening our first four franchise offices in Victoria, and another eight in Queensland.
McGrath Estate Agents were made the exclusive selling agency for the Property NSW's Millers Point sell-off in FY16.
“Property NSW’s appointment of McGrath Estate Agents as the exclusive selling agent for two phases of the Millers Point program was a key milestone for the company.
"Our ability to achieve a 100 percent clearance rate with 58 properties sold for $179.9 million is a testament to the capabilities of our people and the strength of our offering.
John also spoke of the appointment of joint-CEO Cameron Judson, whom he had shared the chief executive position with since July.
“Our team has been further strengthened with the appointment of Cameron Judson as Joint-CEO on 14 July 2016.
"He brings a wealth of professional services industry experience and new perspectives to McGrath.”
Judson spoke on the strategy and outlook, suggesting despite the short term challenging market conditions, the long term fundamentals of the real estate industry remain attractive.
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John McGrath announces 12 percent revenue increase in first year as veteran steps aside from listed company leadership

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Scentre Group today announced its results for the six months to 30 June 2016, with Funds From Operations (FFO) of $617 million.
The profit represents 11.61 cents per security and distribution of 10.65 cents per security, keeping them on track to deliver its full year forecast FFO growth.
The full year forecast FFO growth was around 3 percent, with forecast FFO of 23.25 cents per security and forecast distribution of 21.3 cents per security.
“We are pleased with these half year results which reflect the benefits of focussing on the highest quality shopping centres in Australia and New Zealand," said Scentre Group CEO Peter Allen.
"Our portfolio is well positioned to continue to deliver long term growth”.
Comparable net property income increase 2.6 percent for the six months, driven primarily by contracted rent increases.
“Our shopping centres continue to experience strong demand from retailers, demonstrating the benefits of the high sales productivity across the portfolio” Peter said. 
Scentre Group announced earlier this month that it had purchased the David Jones Market Street building in Sydney's CBD with Cbus Property.
When completed, Scentre Group will own the redeveloped retail site, adding an additional 10,00 sqm of luxury retail space.
“Having completed the acquisition of the adjacent David Jones building, we have the unique opportunity to expand Westfield Sydney, which has the highest specialty sales productivity in Australia, reinforcing the precinct as Sydney’s luxury retail destination” Peter said.
During the half, the Group commenced $605 million of developments including projects at Westfield Chermside, Queensland, Westfield North Lakes, Queensland and Westfield Whitford City, Western Australia. 
The Group owns and operates interests in 40 Westfield shopping centres, including 16 of the top 25 performing centres in Australia, and has assets under management of $43.3 billion.  
Scentre Group has a strong balance sheet with gearing of 33.7% at 30 June 2016. 
 
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Scentre Group announce six month profit of $617 million

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<div>Mortgage Choice Limited has announced a 10.7 percent growth in cash profit, rising to $20.5 million, in FY16.</div>
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<div>They recorded their best ever settlement result, with settlements totalling $12.2 billion, up 6.3 percent on FY15.</div>
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<div>Their loan book was up 4.4 percent on FY15, pushing through the $50 billion milestone, growing to $51.7 billion.</div>
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<div>Mortgage Choice chief executive officer John Flavell said the latest annual financial results were a testament to the ongoing strength of the business.</div>
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<div>“Throughout FY16 the Group performed very well, achieving (or exceeding) all of the business objectives we set for ourselves,” he said.   “Better yet, our impressive business results were recorded against a backdrop of considerable economic and market volatility.</div>
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<div>"Complexity in the market has provided a real opportunity for our business to deliver increased value to our customers through the provision of help, guidance and advice.</div>
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<div>John said he is confident about the future direction of Mortgage Choice and believes FY17 will be a strong year for the Business.</div>
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<div>  “In FY16, we laid the foundations for a very successful future,” he said.   “We set ourselves some aggressive business targets and we met, if not exceeded, all of them.</div>
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<div>"Heading into FY17, we will step up this momentum.</div>
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<div>"We have identified the four key priorities for the business over the next 12 months, and we will deliver on these whilst maintaining a laser-like focus on our 2020 vision.   
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