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Argosy annual earnings flat, no change in 2013 dividend

Argosy annual earnings flat, no change in forecast dividend for 2013

By Paul McBeth

May 24 (BusinessDesk) - Argosy Property, whose shareholders agreed to corporatise the company after buying out its ANZ Bank-owned manager last year, reported flat annual earnings and doesn't expect any change in its 2013 dividend.

Distributable earnings, the favoured profit measure for property investors as it strips out unrealised value changes in property portfolios, was $33.4 million, or 6.03 cents per share, in the 12 months ended March 31, compared to $33.5 million, or 6.17 cents per unit, a year earlier, the company said in a statement. Net profit plunged to $1.9 million, or 0.35 cents per share, from $26.3 million, or 4.85 cents per unit, after the company spent $20 million internalising its management contract.

Argosy's board declared a fourth-quarter dividend of 1.5 cents per share, taking the annual payment to 6 cents per share. The company said it expects to pay a dividend of 6 cents per share in the 2013 financial year.

"While we expect that there will continue to be challenges ahead, the company is now well-positioned to make the most of future opportunities for growth," chief executive Peter Mence said. "The more demonstrable alignment between the interests of management and investors has been well received."

Argosy followed the trend among property trusts to bring management in-house and changed its capital structure into a company amid growing opposition to fees paid to external managers. The property investor also had to fend off a takeover bid by DNZ Property Fund.

Annual net property income fell to $71.2 million from $72.3 million after the company sold 15 properties in the year. As at March 31, Argosy's property portfolio was worth $905 million, down from $948.7 million a year earlier.

The property investor's vacancy rate was 5.93 percent as at March 31, up from 3.69 percent a year earlier, while the weighted average lease term fell to 4.77 years from 4.92 years.

Bank borrowings fell to $382 million by the end of the financial year from $410.9 million in 2011, and the company plans to bring its debt-to-total assets ratio to below 40 percent in the medium term. As at March 31, the ratio was 42 percent.

Argosy plans to sell vacant land and underperforming assets to cut its debt, and is also considering "selective growth opportunities," it said.

The shares fell 0.6 percent to 87 cents in trading yesterday, and have gained 11 percent this year.


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