Summerset Group profit drops 18% after retirement unit delivery rate falls

Summerset's Whanganui village. Photo / Stuart Munro

Summerset

Profit from retirement giant Summerset Group fell 18 per cent in the latest half-year due to unrealised investment property valuation changes reflecting fewer units developed.

Summerset made $175.3m net profit after tax for the half-year to December 31, 2019, down on $214.5m for the half-year to December 31, 2018.

Underlying profit rose 8 per cent from $98.6m to $106.2m, total assets grew from $2.8b to $3.3b, three new villages were opened last year and a second Australian site has been purchased. Revenue rose 12 per cent from $137m to $153.9m.

Summerset delivered only 354 new homes in the latest period, down from 454 in 2018.

"Net profit, which includes the impact of unrealised movements in the fair value of investment property, was down 18 per cent on FY2018 at $175.3m," the company has announced.

"The lower fair value movement versus the corresponding period in 2018 largely reflected fewer retirement unit deliveries in the financial year. Annual growth in underlying profit has averaged 38 per cent since the company listed on the NZX in November 2011," today's statement said.

Summerset Group chief executive Julian Cook. Photo / Chris Steel

Chief executive Julian Cook said: "We are satisfied with our delivery progress through 2019. We built 354 new homes, made substantial progress on another 152 units, and opened three new retirement villages. We have another three villages which will open in 2020."

Summerset, with a market capitalisation of $2b, yesterday closed at $9.05. The business has 28 villages with independent living, rest home and hospital-level care.

In September, the business announced it had bought its first Australian site for a village: an 8ha property in south-east Melbourne.

Ryman Healthcare has extensive holdings in Victoria where its New Zealand investments will soon be matched by its Australian investments.

Summerset was founded in 1997. It listed on the NZX in 2011 and entered the NZX50 a year later. It is also listed on the ASX.