Forum Archive Index - December 2000

[Philip Robinson <PhilipR@Pharmac.govt.nz>]

Kelvin,

The company does not have such a consistent history, but have a look at
Datex 2000, the 95 figures don't seem to match up, anyway.
1995 ROE -2555.5% EPS 489.11
1996 ROE 15.28% EPS 26.66
1997 ROE -5.4% EPS -16.33
1998 ROE 0.21% EPS 0.63
1999 ROE -67.46% EPS -0.21

They wrote a novel to the NZSE (follows) at their recent meeting about what
they have been up to and talked about growth into other
areas..."progressively expand its existing...operations". So maybe they is a
time to top up for you. But they may just be making market friendly comments
to try to stop the slide. If you are confident of managent then you should
go for it.

Phil 



ElderCare NZ today announced plans to progressively expand its existing
nursing and rest home operations into additional medical and health care
growth opportunities. Speaking at the Company's Annual Meeting, Chairman
Maurice Kidd told shareholders there was significant opportunity to
reposition ElderCare into the wider medical and health care market in New
Zealand and, potentially, Australia._
"We remain committed to growth, but we have begun to exercise some caution
about the actual direction in which we steer the Company," he said.  "In
recent months, the Board, along with Senior Management, started to develop a
wider investment strategy.  We determined that there was a unique
opportunity
to move ElderCare into a listed medical/health operating company by
concentrating on new investments in the health care market and not be
constrained purely to the retirement sector." While fees from ElderCare's
residential services provided a solid platform for sustained growth in the
elderly care market, Kidd said the Company has become more selective in
evaluating further development of its considerable land bank.  Before
proceeding with new developments the Company will spend considerable time
evaluating whether they fit with its wider investment strategy, given the
desire not to be dependent on one-off property gains._
ElderCare realised $1.7m in after tax profit from the sale of villas,
apartments and land holdings for the 12 month period ending
31/05/2000.Commenting on ElderCare's repositioning, CEO, Alan Clarke said
the
Company's June acquisition of Ranworth Healthcare, New Zealand's largest
provider of rehabilitation services to the Accident Compensation
Corporation,
was the first significant step toward a change in direction."The core
operating assets of Ranworth Healthcare and the ElderCare hospitals and rest
homes provide a strong base with good EBITDA yields on the back of strong
occupancy and service levels."_
In light of the Company's repositioning, Kidd said ElderCare Directors will
make one-off write downs of certain assets, including goodwill associated
with the acquisition of village developments which the Company no longer
plans to complete. It will also revalue selected land holdings to more
realistically reflect current market conditions and the fact that these will
no longer be used for village developments.  The Company will also recognise
some one-off restructuring costs associated with implementing the new
direction.Going forward Kidd said the Company's purpose is to acquire good,
sound, businesses with excellent track records at attractive prices with the
objective of increasing earnings per share for all shareholders and to have
this reflected in a sustainable and improving share price._
Extract from Chairman's Address:_
Embargoed until 10.30am_
Friday 24 November 2000_
This meeting is the first one at which we can review a full year's
performance of ElderCare in New Zealand's aged care market and look at the
Company's operations and direction.While fundamental statistics in all OECD
countries indicate there is a strong and growing demand for assisted living
facilities as the 'Baby Boom' generation reaches retirement age, the current
situation is negatively affected by several factors.Firstly, the overall
residential property market in New Zealand is depressed and this in turn has
affected the retirement village sector.  While interest remains high in the
assisted living retirement market, completing sales is difficult with
interested parties largely unable to sell their own homes.Secondly, there is
a significant amount of new development stock either just coming onto the
market or still moving to completion.  This has inevitably brought about
considerable price competition and resulted in confusion over differential
retirement products. The first indications that the property market was
entering this phase came earlier this year.  Your Board took note of this
and, while we remained committed to growth, we began to exercise some
caution
about the actual direction in which we would steer the company.
Particularly, we become more selective about initiating further development
of our considerable land bank and we began to apply more stringent criteria
when evaluating and reviewing new development investment propositions. The
new direction is to progressively widen our base and move away from any
reliance on retirement property development income.To steer the Company
through this change in direction we are fortunate that we have attracted
Alan
Clarke to the position of Group CEO.  Alan has been with us since April of
this year and he has spent the last 10 years involved in the health sector,
both in New Zealand and Australia where he most recently held the position
of
Area Director and CEO for the Swiss-based multinational, SGS. Indeed, we are
also very fortunate to have Andrew Beattie in the company today.  Andrew is
one the founders of Ranworth Healthcare and a leading expert in the field of
rehabilitation services in New Zealand.  He heads the Company as founding
Managing Director with an experienced management team of health
professionals
who manage this exciting and fast growing healthcare business. _
With the move away from the development of assisted living facilities, we
reviewed a number of the Company's properties, originally earmarked for
development, which we now believe to be more appropriate to divest.  The
proceeds of the sale of all non-core assets will then enable us to advance
our new strategy as a listed healthcare company offering a wider range of
health services.As stated we have sold our holding in RMG realising NZ$ 3.7
million and we will assess other opportunities to release and raise capital
to assist with the new strategy.Before Alan's presentation, I would like to
comment on the legal actions between ElderCare New Zealand and Fletcher
Challenge Energy and to foreshadow the company's position for the upcoming
half-year result. With respect to the litigation, shareholders will be aware
of several actions being taken by ElderCare against Fletcher Challenge
Energy
Limited.We have reached a partial settlement in respect of two of the claims
and have agreed to negotiate the third, which relates to determining the
value of preference shares held by ElderCare.  A process of binding
negotiation and ultimately, if needed, arbitration is now entering its final
phase and we expect it will be concluded by the end of February 2001, at
which time we are confident of achieving a favourable outcome. Finally, I
would like to foreshadow the result for the six months ending 30 November
2000.  As we indicated in the annual report and detailed here today, this
will be significantly affected by the actions we have taken since our year
end result was notified and we will be moving away from our dependency on
property and towards a fee-based healthcare business model. We will
recognise
a loss on the sale of RMG securities against the value as set in May this
year.  The Directors have also decided that it is an appropriate time to
address the structure of the Company's balance sheet with respect to the new
widened medical/health strategy._
In doing so we will also make a one-off write down of goodwill associated
with village developments that we no longer plan to complete and we will
also
write down selected land values to more realistically reflect current market
conditions.  In addition we will recognise some one-off restructuring costs
associated with implementing the new strategic direction.The Company's
Earnings Before Interest Tax Depreciation and the Amortisation of Goodwill
will be in the order of $3 million for the six months to 30 November 2000, a
result which is considerably up on the first half result for last year.
However as a result of these write downs the Directors expect to post a loss
for the six months to the half year, of between $6.5 million and $6.9
million.The planned move to take us into the wider health care arena will
take time to develop.  Our purpose is to acquire good, sound, businesses
with
good track records at attractive prices with the objective of increasing the
earnings per share for all shareholders and to have this reflected with a
sustainable, improving share price performance.To assist with our new
direction we will also be addressing the make up of the Company's Board of
Directors, as it is our intention to strengthen the Board with new
independent appointments.This exciting new direction will take time to
implement and be successfully developed.  Consequently, the Directors expect
that it will be in the next financial year before the Company's performance
will begin to reflect this change in direction.  Future performances will
then be based on core operational outputs from the existing excellent
nursing
home and hospital assets, including Ranworth Healthcare and will be
complemented with new investments in other sound health sector businesses._



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