Summerset wins praise for growth

Julian Cook says more than 3000 people live with Summerset.

A busy development schedule and big growth from the country's third largest listed retirement specialist Summerset Group delighted analysts.

Net profit after tax for the six months ended December 31 was $54.2 million, up 58 per cent from $34.2 million in the same period the previous year, and the business remains in a big expansion phase.

Daniel Frost of Macquarie Securities (NZ) said realised gains of $23.4 million were expected but Summerset delivered $24.8 million. Unrealised gains of $29.6 million were significantly higher than expectations of $7.7 million. James Schofield of First NZ Capital liked the development margins, management comments about more development being brought forward and the company's good momentum.

Craig Stent of Harbour Asset Management praised the result and said Summerset was now geared up for an even larger expansion. But its development margins of around 17 per cent were well below rival Ryman Healthcare's 25 per cent, so there was room for improvement, Stent said.

Julian Cook, Summerset chief executive, said the latest period had been one of investment in growth.

"In 2014 we celebrated completion of our 2000th retirement unit and now have over 3000 residents living with Summerset. We have seen a record profit and strong increase in development margins across the group in 2014," he said. "We delivered 261 retirement units across the country, up from 209 in the prior year. Overall we are happy with the profit growth of 10 per cent on the prior year, particularly as this was achieved whilst opening four new villages and three new care centres.

"We expect the level of investment in 2014 to support a higher level of earnings growth in the future."