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Metlifecare turns to a profit in 2013 after merger

Metlifecare turns to a profit in 2013 after merger boosts property portfolio

By Tina Morrison

Aug 23 (BusinessDesk) – Metlifecare, New Zealand’s second-largest listed retirement village operator and developer, turned to a profit in 2013 as it benefited from a larger business following the merger with Vision Senior Living and Private Life Care Holdings.

The Auckland-based company posted a profit of $120.3 million in the year ended June 30, from a loss of $141.7 million in 2012 when it wrote down the value of its portfolio by $99.8 million. Revenue rose 44 percent to $92.2 million as it increased unit sales by 214 percent to 113 and resales by 44 percent to 424.

Metlifecare benefited from a larger portfolio following the merger, adding 46 percent more care beds over the financial year to take the total to 4,195 units. Metlifecare aims to build at least 200 units and care beds a year by 2015 as it sits on a land bank of 827 units and 173 care beds.

“They had solid new sales which are encouraging given planned new village developments,” said Shane Solly, who helps manage more than $200 million at Mint Asset Management. “Metlifecare appears to be emerging positively from a period of restructuring.”

Shares in Metlifecare rose 0.9 percent to $3.25 after earlier jumping to a five-week high of $3.34

Underlying profit, which Metlifecare uses to show trends in the core business excluding one-time items, rose 76 percent to $32.1 million. The company said its operating cash flow, excluding interest and merger costs, was $74.2 million, 22 percent ahead of its June 2012 guidance.

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Metlifecare will pay a final dividend of 2 cents a share on Oct. 17, after it paid no dividend in the year earlier period.

As part of Metlifecare’s strategy to focus on the premium Auckland, Hamilton and Bay of Plenty regions, the company in the past year sold its Ilam development land in Christchurch for $9.4 million and its Oakwoods village in Nelson for $29 million, using the funds to pay down debt.

The company’s total assets increased by 55 percent to $1.9 billion from the year earlier as a result of the merger.

“We were particularly pleased with our sales and resales results which reflect the ongoing demand for homes in our villages and continue the steady increase in volumes we have seen over the last three years,” chairman Peter Brown said in a statement. “We are looking forward to another successful year as we realise the benefits of scale and invest in growth.”

Retirement village stocks are among the 15 best performing companies on the New Zealand stock exchange the past year as investors anticipate growth supported by an ageing population. Shares in Metlifecare have advanced 26 percent in the past year, while shares in rival Ryman Healthcare have surged 91 percent and Summerset Group Holdings has gained 63 percent.

Retirement villages are benefiting from an increase in average life spans which is stoking demand from elderly New Zealanders. The number of New Zealanders aged over 65 is forecast to increase by 20,000 people per annum while the number aged over 75 will increase by 12,000 per annum, according to presentation notes published by Metlifecare today.


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