Revenue boost for Summerset
RETIREMENT village developer and operator Summerset has booked a 29% firsthalf revenue boost, but aftertax profit eased by 9%, down to $82 million.
Revenue for the half to June rose by 29%, from $50.7 million a year ago to $65.7 million, expenses were up 34% from $41.7 million to $55.8 million and aftertax profit declined by 9%, from $90.3 million to $82 million.
Summerset chief executive Julian Cook said underlying profit, which rose 27% to $45.2 million, was driven mainly by strong profit margins on both new units and resales, settled during the half.
Average new unit prices were up 27% to $540,000.
He said the 9% decline in aftertax profit to $82 million included unrealised valuation gains in the fair value of investment property, because of lower levels of retirement unit price increases.
New sales of occupation rights of 145 in the half were down from 179 a year ago, but despite the lower number of new sales, gross proceeds were up from $75.9 million a year ago to $78.3 million.
‘‘While sales volumes were lower than the same period of 2017, we’re seeing good levels of contracts on homes, both on resales and homes to be completed . . . many of which will settle in the second half of the year,’’ he said.
The waiting list numbers across Summerset’s villages were up 22% during the past year.
Summerset shares were down slightly yesterday at $7.69, but up more than 57% on a year ago. Its dividend rose 54% to 6c.
Forsyth Barr broker Lyn Howe said the result was in line with guidance and revenue was ‘‘slightly stronger’’ in most areas than expected.
‘‘The major one was the [construction] development gain, driven by a margin of 33%, versus our forecast of 29%,’’ she said.
However, Mrs Howe was watching new stock levels with some risk in a slower Christchurch market, although Summerset remained on target to build its proposed 450 units during fullyear 2018.
‘‘There’s good growth across the business indicating demand remains very robust for highquality retirement products,’’ Mrs Howe said.
Craigs Investment Partners broker Peter McIntyre said it was a ‘‘strong result’’, just short of its record secondhalf 2017 trading result.
‘‘While Summerset did not provide earnings guidance, we believe it remains on track to hit our fullyear 2018 estimate of $100 million net profit after tax,’’ he said.
Mrs Howe said Summerset’s debt ‘‘remains in check’’, with gearing at 30.3%, down from 32.5%.
Gross debt at June was $379.3 million, up by $31.4 million since December, due to development at Ellerslie, Casebrook, Hobsonville, Rototuna, Karaka and Warkworth.