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Metlifecare 1H underlying profit drops 38%

Friday 17th February 2012

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Metlifecare, the retirement village operator that raised $45.5 million last year, reported a 38 percent fall in underlying profit as a rising insurance bill pushed up the company’s costs.

Underlying profit, which strips out unrealised movements in the value of its property portfolio, fell to $3.4 million in the six months ended Dec. 31 from $5.5 million in 2010. Operating revenue fell to $30.9 million from $32.9 million after the sale of its Merivale Village reduced income. On a like-for-like basis operating revenue “increased slightly,” the company said.

Property costs rose to $8.6 million from $6.1 million a year before, with the cost of insurance more than doubling after the Canterbury earthquakes pushed up the price of premiums. Total expenses fell 1.7 percent to $35.1 million.

“The first half of the 2012 financial year saw us make good progress on our goals to lift sales performance, reduce stock and increase operating efficiency,” managing director Alan Edwards said in a statement. “We have been trading well and expect to see these trends continue in the second half.”

Net profit, a measure previously criticised by Metlifecare because of the International Financial Reporting Standards, rose to $7.4 million, or 5.79 cents per share, from $2 million, or 1.6 cents per share, a year earlier. That figure was bolstered by an $11.4 million unrealised gain in the value of its investment properties, more than twice the $4.5 million gain in 2010.

The value of Metlifecare’s property portfolio rose to $1.27 billion as at Dec. 31 from $1.23 billion in 2010.

The company cut bank debt to $76.3 million as at Dec. 31 from $165 million a year earlier after tapping shareholders and raising new equity.

Metlifecare’s board didn’t declare a dividend, and the company said it plans to make shareholder returns in the future. The shares fell 0.8 percent to $2.40 in trading yesterday, and have shed 6.6 percent this year.

BusinessDesk.co.nz

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