Property, wage costs hit profits

AUCKLAND: Oceania Healthcare’s firsthalf net profit plummeted 97%, reflecting the demolition of a care facility in Tauranga, other propertyrelated costs and the impact of the pay equity deal for aged care workers on wages.

Net profit for the six months ended November 30 fell to

$1.3 million from $44.5 million in the same six months a year earlier. The yearearlier result included a $34.1 million gain in the value of its investment properties, compared with a gain of $1.6 million in the latest six months.

Employee benefits rose 8.9% to $59.3 million in the latest period.

Nevertheless, the retirement village and aged care company is highlighting that its underlying operating earnings were up 7.5% in the six months, underlying net profit from continuing operations was up 8.7% and that operating cashflow rose almost threefold to $47.1 million.

Chief executive Earl

Gasparich said the company had delivered and that the underlying result reflected increases in deferred management fees from the village operations and realised development gains from sites completed earlier in the year.

‘‘We have focused heavily on generating higher revenues in our care business through occupancy and premium room charges, given the increase in operating costs, particularly staff costs associated with the equal pay settlement and registered nurse pay rates,’’ Mr Gasparich said in a statement.

Sales from developments completed earlier in 2018 contributed $43.5 million to cashflow.

‘‘While our developments are funded from our bank facilities that we increased and extended earlier in the year to July 2023, our net debt of $197.3 million as at November 30 represents a prudent gearing level of 26.7%,’’ Mr Gasparich said.

The company will continue to complete developments in the second half and to convert standard rooms to care suites as it drives higher occupancy levels.

Oceania will continue to roll out its new clinical information system after a successful pilot in Auckland.

The company will pay a nonimputed firsthalf dividend of 2.1c per share, unchanged from last year. — BusinessDesk