Summerset posts 10% rise in 2014 earnings, expects faster growth in 2015

Tuesday 24th February 2015

Summerset Group, New Zealand's third largest listed retirement village operator, posted a 10 percent gain in annual earnings and said it expects benefits from last year's fast rate of expansion to help lift earnings growth this year.

The Wellington based company said underlying earnings, which exclude unrealised property valuation gains, increased to $24.4 million in calendar 2014, from $22.2 million in 2013.

Summerset expects earnings growth to accelerate this year as the front loaded costs last year of opening new villages in Karaka, Hobsonville and New Plymouth and new care centres in Dunedin, Hamilton and Nelson are offset by fees from new residents. Earnings will also benefit from a higher development margin and an increased build rate of retirement units, it said.

"The 2014 year carried a bit of extra cost associated with the investment into new villages and care centres which will be a little bit more normal for us in 2015," said chief financial officer Scott Scoullar. "This year we will only be opening Wigram so we won't have such a big hump of new villages opening."

Summerset expects to meet or exceed its target development margin of 17 percent this year, up from 15.7 percent in 2014 and 13.2 percent in 2013, it said. The company is on track to achieve its target of building 300 retirement units this year, up from 261 in 2014, 209 in 2013, and 160 in 2012.

Shares in Summerset advanced 0.6 percent to $3.46, and have gained 24 percent so far this year.

Summerset will pay a final dividend of 2.1 cents per share, taking its total payment for the year to 3.5 cents, ahead of the 3.25 cents the year earlier. The latest payment will be made on March 25.

Its annual net profit rose to $54.2 million, or 24.94 earnings per share, from $34.2 million, or 15.87 cents, a year earlier. The measure includes a $52.5 million gain on the fair value movement of investment property for the latest year, ahead of the $29.7 million gain the previous year. The total value of its assets rose 24 percent to $1.04 billion.

Summerset's revenue rose 20 percent to $54.3 million as expenses increased 24 percent to $47.8 million.

Its sales of new occupation rights increased 25 percent to 286, while resales of occupation rights declined 1.1 percent to 172.

BusinessDesk.co.nz

Comments from our readers

No comments yet