Metlifecare profit drops 66 percent on flat residential market

Sowry of Metlifecare. Photo/Warren Buckland.

A less rampant real estate market pushed down Metlifecare's net profit after tax by nearly 66 per cent but that was not reflective of the business making more revenue.

The retirement giant made $56.5 million net profit after tax in the December 31 half-year, down on the previous $165m in the same period a year ago.

Asked for his reaction to the profit drop, chief executive Glen Sowry said: "Disappointed? Of course, we would love it to stay like that but we did not believe it could keep going like that forever. The housing market has returned to more normal levels and that's reflected in the result."

Richard Thomson, chief financial officer concurred, saying the 65.8 per cent drop was because property values increased less than what they did last year and that the first half of last year was particularly unusual.

Like other NZX listed retirement giants, Metlifecare paid no tax, even though a $6.7m provision was made. All tax was deferred due to its big development workload.

Metlifecare has 4,230 independent living units and serviced apartments and accommodates 5,200 residents under its license to occupy model. After three years of living in a Metlifecare village, the business takes 30 per cent of what residents pay to buy in, calling that a deferred management fee. A minimum age limit of 70 is set for Metlifecare entry.

The business is developing three new villages and now owns 24. On average, people buying into an independent living unit stay there for about eight years, Sowry said. They are in an apartment for an average of about four years and in a Metlifecare hospital for about six months.

Sowry said four Metlifecare villages were estimated to cost $44.1m to fix. All have weathertightness issues, some have "minor" seismic issues and none have fire safety issues, he said.