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Argo Investments Limited (ARG) reported a 14.7% decline in profit for the six months to 31 December 2009 to $82.7 million. The investment company said the result was despite the value of stock rising from $2.9 billion to $3.9 billion by year end, though the company had previously flagged a fall of between 25% and 28%.

Managing Director, Rob Patterson, said the result came as dividends were slashed in the face of the GFC.

“Interest income also fell significantly due to lower interest rates earned on our cash during the period,” Mr Patterson said.

Looking ahead, Mr Patterson flagged the resurgent Chinese economy as the catalyst for Australian companies to return to profit and to pay dividends again.

Despite this, the influence of the uncertain US economy would still be felt, Argo’s chairman Chris Harris said.

“The global and Australian economic data continues to support improving economic conditions, with both consumer and business confidence levels continuing to rise. However, the pace of the recovery in 2010 is uncertain, particularly in the US which has an ongoing weak housing market and high unemployment,” Mr Harris said.

Argo said its operating profit after tax and before net gains was $71.6 million, down from $93.8 million.

At 1055 AEDT, Argo shares were up 1c to $6.73.

IMF (Australia) Limited (IMF) expects to announce a first half gross profit of about $11 million with an after tax profit of about $8 million. As announced in August, the company said its full year forecast was based upon four cases coming to a successful conclusion during the 2010 financial year and if this is the case expects to achieve the forecast $20 million – $24 million in after tax profits for FY10.

In regards to the four cases, IMF said it had received in excess of $14.5 million from the Sons of Gwalia matter during the first half and expects o receive further funds in this matter during the current financial year, while the court is likely to hand down its judgment on the Kingstream trial in the near future.

Meanwhile, the company said the trial in the National Potato litigation is due to recommence today and is of uncertain duration, while the trial in the AWB litigation was adjourned from the first half into the second half of the financial year.

IMF said the first half results referred above have therefore been achieved with only one of the four matters being successfully resolved in the first half.

The board reiterated its August advice that this forecast may vary significantly as the results from these cases become known.

The company said that if it discloses a profit after tax of at least $6 million it would announce an interim fully franked dividend of 5c per share.

As at 1024 AEDT, IMF shares were up 0.5c to $1.645.

Greenland Minerals and Energy Limited (GGG) completed its pre-feasibility study, confirming the Kvanefjeld Project has the potential to become one of the world’s largest rare earth mines. The study forecast a Net Present Value of US$2.18 billion and free cash flow of US$8.9 billion over the life of the project.

The report said the project could support an economically robust, large-scale mining operation that would produce a rare earth concentrate and uranium oxide over a 20-plus year mine life.

The company said initial estimates indicate the proposed output at Kvanefjeld could rival that of Bayan Ebo in China, the world’s largest rare earth producing mine that accounts for approximately 40% of current world production.

Initial estimates indicate the proposed output at Kvanefjeld could rival that of Bayan Ebo in China, the world’s largest rare earth producing mine that accounts for around 40% of current world production.

“The People's Republic of China satisfies a total of 97% of global demand and in recent months indicated their desire to cease the export of certain rare earths, therefore creating a significant supply deficit in the market.”

GGG said its independent market research indicated that by 2015, prices for mixed rare earth carbonate will fall within the range US$7.50/kg to US$18.50/kg, tending towards the upper end of this range.

“The company is of the view that the apparent relative equilibrium in the market over the next few years masks pressures that are likely to build in the medium to long term and the long term,” the company added.

On the Uranium front, the company said independent research indicated that the price for uranium would range between US$70 to US$90/lb in the medium to long-term.

Just after the open, Greenland Minerals and Energy shares were up 2.5c to 68.5c.

Aristocrat Leisure Limited (ALL) shares surged over 10% at the open after saying it was expecting to record a post-tax profit of around $116 million for the year to 31 December, ahead of analysts’ expectations. Despite this the company said it would report a loss, after abnormal items, after tax and minority interest for the year.

The loss was on the back of an abnormal provision of $187.3 million, after tax in its 2009 financial accounts relating to the expected damages liability associated with the US Convertible Bonds.

Over the 2008 year, Aristocrat posted a profit of around $101 million.

At 1012 AEDT, Aristocrat shares rose 45c to $4.42.

Navitas Limited (NVT), a global education provider, reported its fifth consecutive quarter of revenue growth to post a net profit of $27.5 million, up 45% on the previous corresponding period. The company said it was now expecting full year EBITDA of between $94 million and $97 million, against last year’s $77.1 million.

CEO Rod Jones said the result was driven by the quality of the education the group provides.

“Ultimately our revenues and earnings are driven by student enrolments across our operating divisions,” Mr Jones said.

The company said the result, more specifically, was underpinned the success of its University Programs, where enrolments were growing at existing colleges, coupled with new enrolments at start-up colleges.

“In one of the most significant milestones for the Company so far, we have recently executed three new College agreements in the United States,” Mr Jones said.

“We expect these projects to follow the established pattern and deliver positive returns within 18 months – in turn providing us with further revenue to fund growth while maintaining our strong balance sheet.”

Looking ahead the group said it had plans for up to 10 more colleges in the UK, US, Australia and Canada.

“With our established business model in place, our expansion into the US underway and further global opportunities under consideration, we are well positioned to

continue delivering value to both our stakeholders and shareholders well into the future.”

The board also reaffirmed its commitment to a 100% distribution policy, saying it would pay a fully franked interim dividend of 8.1c per share, up from 5.5c per share in the previous corresponding period.

At the close Friday, Navitas shares were $4.48.

Eastern Star Gas Limited (ESG) upgraded its Proven and Probable (2P) gas reserves of the Narrabri Coal Seam Gas Project in New South Wales as at 31 December 2009 by 152% to 1,520 PJ, of which ESG’s net interest is 988 PJ. The company also increased its 3P reserves by 43% to 2,797 PJ, of which ESG’s net interest is 1,818 PJ.

Managing director, David Casey, said the updated gas reserves estimate takes into account pilot production and other exploration data up to the end of 2009 and exceeds the company’s stated 2P reserves target of 1,300 PJ.

”This result confirms beyond doubt the lateral well methodology pioneered by ESG during 2009 is ideally suited to the coals targeted at Narrabri and provides the foundation for greater results ahead in 2010,” Mr Casey said.

“The upgrade primarily reflects an increase in the extent of gas reserves certified for the Bohena coal seam but, for the first time, the Namoi coal seam has made a material contribution.”

Mr Casey said the application of lateral well technology and focussed exploration has unlocked what is now a major resource for NSW and the east coast market.

”The upgrade in reserves will ensure that ESG is well placed to pursue its staged approach to commercialisation of reserves through existing MoUs along with additional material domestic gas sale opportunities under review,” Mr Casey said.

He added that further progressive increases are expected in certified gas reserves would continue to be booked as production from production pilots climbs, as production pilots are brought on line and as the areal extent and quality of the Namoi resource is further demonstrated. 

At the close of trade Friday, ESG shares were trading at 77.5c.

AJ Lucas Group Limited (AJL) said it was on track to report a ‘disappointing’ first half result when it reports to the market at the end of this month. The engineering firm said normalised EBITDA was set to be negative $18 million, though expected to swing to a $30 million EBITDA gain in the second half.

”The legacy of management mis-steps from the previous financial year, delays in project timing and general business uncertainty have all affected the group’s financial performance,” the company said in an update to the market.

However, on a more upbeat note, the company said the growth expected over the short to medium term would be strong, driven by tendering at Queensland Coal Seam Gas projects and development on North West Shelf LNG projects.

Looking at the previous six months, the company said the result had been adversely affected by a number of factors, including a poor result on the Minerva dispute costing $5.6 million.

”Management has also decided to take a conservative approach to various contract disputes and provided a further $4.5 million for their resolution,” the company said.

AJ Lucas said the company still expected to post a profit for the six months, however this would be on the back of a $93.5 million sale of its investment in ATP651. With the weaker underlying figures, the board said it would not be paying a dividend this half year.

The company said longer-than-expected maintenance and Christmas shutdowns had affected the result.

AJ Lucas also foreshadowed a $6 million drop in the building construction division after ‘execution difficulties’.

At the close Friday, AJ Lucas shares were down $3.24.

AJ Lucas Group Limited (AJL) said it was on track to report a ‘disappointing’ first half result when it reports to the market at the end of this month. The engineering firm said normalised EBITDA was set to be negative $18 million, though expected to swing to a $30 million EBITDA gain in the second half.

”The legacy of management mis-steps from the previous financial year, delays in project timing and general business uncertainty have all affected the group’s financial performance,” the company said in an update to the market.

However, on a more upbeat note, the company said the growth expected over the short to medium term would be strong, driven by tendering at Queensland Coal Seam Gas projects and development on North West Shelf LNG projects.

Looking at the previous six months, the company said the result had been adversely affected by a number of factors, including a poor result on the Minerva dispute costing $5.6 million.

”Management has also decided to take a conservative approach to various contract disputes and provided a further $4.5 million for their resolution,” the company said.

AJ Lucas said the company still expected to post a profit for the six months, however this would be on the back of a $93.5 million sale of its investment in ATP651. With the weaker underlying figures, the board said it would not be paying a dividend this half year.

The company said longer-than-expected maintenance and Christmas shutdowns had affected the result.

AJ Lucas also foreshadowed a $6 million drop in the building construction division after ‘execution difficulties’.

At the close Friday, AJ Lucas shares were down $3.24.

RBS – Round Up – 010210

Charter Hall Group (CHC) sold its 50% stake in 275 George Street in Brisbane to K-REIT Asia (Australia) Trust, for $166 million. CPOF will retain the remaining 50% stake in the office development. The group said co-developer Charter Hall Core Plus Office Fund would retain the remaining 50% stake in the office development alongside Singapore based real estate investment trust K-REIT Asia. Charter Hall said it would continue to undertake the management of the property.