KEY POINTS:
Property investment firm Blue Chip is clinging to its forecast of a 15 per cent increase in full-year net profit, despite its result for the nine months to September coming in at less than half of that for the six months to June last year.
Net profit for
the nine months to September was $3.07 million, against $7.03 million for the June half last year.
The company's bottom line had been hit by a $5.49 million "one off extraordinary charge" for discontinued operations, said executive director Mark Bryers.
Nevertheless the ASX-listed company said its "solid result" was a "highly significant turnaround" from this year's first-half loss of $2.5 million.
"Traditionally, the last quarter of the year represents the busiest trading period, so providing the Australian sales follow this trend, the board's guidance of a 15 per cent uplift in net profit after tax remains realistic," said Bryers.
But despite that confidence, Bryers said the board had "decided to adopt a conservative view around discontinued operations, with the effect that net profit attributable to shareholders might be at levels similar to 2006 of $14.8 million".
In its filing to the ASX, Blue Chip noted a large increase in the net cash outflows from operating activities for the nine-month period, with a net outflow of $13.45 million over the three months to September.
That left the company with a net cash deficit of $5.63 million at the end of the nine-month period from a $3.08 million surplus at the start.
However, with the company restructuring in August, "there will be a much sharper turnaround in cash flows from operating activities than what could be expected under normal circumstances", the company said.
Its shares closed up A6c at A41c on the ASX.
EARNINGS UPDATE
* Blue Chip is sticking by its guidance of a 15 per cent increase in full-year net profit.
* That sets a target of $17 million but yesterday it posted a nine-month net profit of just over $3 million.
* It says it is confident of achieving that 15 per cent increase, excluding "extraordinary one-offs".