Property values boost Metlifecare

Retirement village operator Metlifecare's annual profit has grown more than 20 per cent, but as a result of increased property values rather than higher revenue.

The company reported a 23 per cent increase to $17.5 million in its profit to the end of last year.

But the boosted bottom line came on lower trading revenue - $108.9 million against $110.1 million.

Chairman Peter Fitzsimmons said the profit improvement was the result of increased margins on property resales and on sales of new properties.

He said Metlifecare still saw itself as a retirement village operator but was building new properties as demand warranted.

"[Whether this mix] continues will depend on the market going forward but at the moment it's the phase the company is in - building for demand," Fitzsimmons said.

During the year, Metlifecare sold 74 new villas and apartments.

The average price of its resales for the year rose 17.4 per cent to $243,000.

Metlifecare's earnings per share rose to 20.2c from 16.4c.

The company declared a final unimputed 3.5c per share dividend - payable March 18 - bringing the total dividend for the year to 5.5c per share. That is 10 per cent higher than the previous year's payout.

Metlifecare shares were unchanged at $3.70 yesterday.

Given that company founder Clifford Cook is in the process of selling his 25 per cent stake, Fitzsimmons broke with tradition and released a forecast for this year's profit of $21.5 million.

"As it is possible that, through this process, price sensitive information ... may be provided to certain parties, the board feels it appropriate to provide all shareholders with an indication of 2005 projected profit," he said.

Aside from acknowledging that any offer was likely to be in the form of a full takeover - as Cook's stake is above 19.9 per cent - he had no more comments.

"We don't have a view on it. We sense there's a lot of preparatory activity but we don't have an indication of timing."

Goldman Sachs JBWere is handling the sale. Metlifecare owns and operates 13 lifestyle villages incorporating nine full-care facilities. It has 1768 villas and apartments.

"While there is speculation about a flattening of the residential property market, demand for homes within our villages remains strong," Fitzsimmons said.

"We expect this trend to continue into 2005. Accordingly, Metlifecare is forecasting to trade better than last year.

"The first two months' performance is tracking to plan."

He said the company was concentrating on completing a village in Remuera and this was expected to make a significant contribution to this year's profit.