Summerset's Kenepuru village in Wellington. Photo / Summerset
Summerset's Kenepuru village in Wellington. Photo / Summerset
Summerset Group reported a 4 per cent drop in net profit to $92.6m due mainly to less spectacular property revaluations, rising expenses and increasing finance costs.
Total revenue from the retirement business rose 13 per cent from $65.7m to $74m, total income was up 1 per cent but property revaluations which last year were recorded at $92.8m were only $85.7m in the latest period and expenses rose from $55.8m to $60.8m.
Total assets jumped to more than $3b despite valuations rising at a lower pace.
Total expense growth for the period was 9 per cent, significantly lower than the average growth over the last three years of 25 per cent, Summerset said.
Net finance costs rose from $5.4m to $6.8m which the company said was "in line with an increase in debt levels."
Summerset said it had developed 139 retirement units in six villages in the half-year to June 30, 2019 and was on track to finish 350 new units in the year.
Completion of work Warkworth was planned, work at Hobsonville was in the final stages and construction had started at Kenepuru in Wellington, Papamoa Beach in Tauranga and Te Awa in Napier.
Summerset has also bought land for new villages in Blenheim, Cambridge, Rangiora, Whangarei, Milldale north of Auckland, Waikane and bought 1.3ha of additional land to expand its existing Hobsonville village.
"These purchases reflect our desire to buy sites in urban fringe locations, retirement destinations, and high growth regional centres. These sites are attractive from a financial return, risk, and demand perspective," said Cook.
The additional sites have lifted Summerset's land bank to nearly 5,000 retirement units and it currently has 28 villages completed or under development.
Chief executive Julian Cook said Summerset continued to explore expansion in Australia.
"We are in the process of carrying out due diligence on a number of potential sites in Melbourne, Victoria. We are seeing a good range of opportunities and will continue to be prudent with our approach," he said.
Summerset's new village at Ellerslie, Auckland. Photo / Summerset
Summerset's total asset base had increased almost five times since the business listed on the NZX in 2011 and Summerset now owns 3871 units and 858 hospital-level care beds. It has 28 villages either completed or under development.
The shares last traded at $5.84 and are down 8.3 per cent so far this year.
