Radius Matua at Tauranga is the company's largest property.
Radius Matua at Tauranga is the company's largest property.
Listed aged care rest home and retirement village owner/operator Radius Residential Care pushed up revenue 21 per cent but rising costs reduced its bottom-line profit.
The company made $84.4m total revenue in the six months to September 30, 2023, up on the previous half-year’s $69.8m.
But employee costs also rosefrom $44m to $52m which was one of the reasons net profit after tax fell from $1.7m to $1.4m in the latest half year. Other expenses were also up from $16m to $18m.
The first half’s result was also boosted by a $1.8m one-off gain on the acquisition of a previously leased property asset.
Radius has 24 aged care properties, of which it owns 13 and leases 11.
It employs just over 1900 people and listed on the NZX three years ago.
Andrew Peskett, chief executive, said: “The expense line is what we’re paying our registered nurses now. We’re now fully staffed and we’re paying them as funded to match the Te Whatu Ora rates.”
An overseas nurse recruitment programme was intensified last calendar year and internationally qualified nurses were employed to fill many vacancies. Peskett said they came from the Philippines, India, South Africa and Europe.
“The critical thing is getting nurses into New Zealand, settled into this country and feeling welcome. Many New Zealand nurses aren’t staying in this country so it’s critical to have nurses coming here from overseas well-trained but also ensuring we train them up in our aged care systems,” he said.
Some were leaving their families in the countries they left so Radius staff met them at the airport and helped them find accommodation, he said.
Those many migrants who had arrived here lately had completed their New Zealand accreditation as registered nurses and were working at the Radius properties.
The company’s accounts showed the value of total assets had dropped but Peskett said that was due to investment property valuations which had been flat.
Chief executive Andrew Peskett. Photo / supplied
Ebitda was a more important figure and was up 50 per cent to $10.5m, he said.
Occupancy is at 93 per cent, whereas many others in the industry were around 80-90 per cent, Peskett said.
Radius has only 120 out of 1885 beds empty, “so it’s not many”.
The company saved $1.3m in the last six months under what it called the business improvement programme, Peskett said, which resulted in fewer people in the support office and cutting fees paid to consultants.
“There are 10 fewer people now in the office in Parnell.”
The largest facility Radius operates is the 150-bed rest home Radius Matua in Tauranga.
Most of the company’s rest homes are larger than privately-owned ones.
Around 1400 rest home beds had disappeared from New Zealand’s rest home market last year, often smaller owner-operator businesses, Peskett said.
“It’s worth noting the scale we operate at with larger rest homes.”
Radius has 150 retirement village units in its national portfolio. It re-sold 21 of those in the latest period.
The average length of tenure in a Radius retirement village unit is only 4.2 years. That means the person leaves - usually dying or being transferred to a higher level of care - after that term.
Radius then re-sells the unit but keeps 30 per cent of the elderly person’s or couple’s purchase price after three years. That system is called the deferred management fee.
Radius collected $785,000 in the previous half-year from that but got $1.1m in the latest year from that.
No dividend will be paid in this half-year. Shareholders are likely to get a dividend again after the debt management programme is completed. That will be in 2024. Total debt is $98m, mainly borrowed from ASB.
“We’re focusing on reducing our debt, as all the listed operators are,” Peskett said.
The share price has fallen 51 per cent in the last year to 14c, giving a market cap of $41m.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
