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Oceania Health on track to lift annual earnings at least 51%, meeting IPO forecast

Tuesday 1st May 2018

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Oceania Healthcare says it's on track to lift underlying earnings by at least 51 percent and meet forecasts in its offer document, with strong demand for its aged care suites. 


The Auckland-based company today said it's on track to meet the forecasts provided in its 2016 initial public offering document, implying underlying earnings will rise to at least $51.4 million in the year ending May 31 from the $34 million reported in 2017. Oceania more than doubled underlying earnings in the first half of the year to $19.9 million, and almost doubled net profit to $42.5 million as its investment property grew in value and it sold more retirement village units. 


"We are building excellent momentum across the business and have very strong demand for our new developments delivered this year at Meadowbank and Elmwood Villages, both Auckland sites with an outstanding reputation for delivering quality aged care," chief executive Earl Gasparich said in a statement.  "We are beginning to show the market our advantage in having a true point of difference in terms of our weighting of aged care suites within our facilities and the premium quality of our product." 


Once the 2018 results are announced, Oceania's escrow arrangements, which lock up 57 percent owned by Macquarie Group managed funds and senior managers' holdings, will be lifted. 


Oceania shares rose 1 percent to 99 cents, having dropped 6.7 percent so far this year, compared to a 5.5 percent decline in Arvida Group, a 5.3 percent fall for Metlifecare, a 0.1 percent increase on Ryman Healthcare shares, and a 25 percent jump in Summerset Group over the same period. 


The company raised $200 million in last year's IPO, selling shares at 79 cents apiece. Of that, $173.4 million was earmarked to reduce debt, giving the firm headroom to fund development projects, $16.1 million would be used to acquire the title of Oceania's Elderslea facility currently under lease, and the remaining $10.5 million would cover the offer costs.


The aged care and retirement village operator increased its landbank 34 percent to 2,100 beds and units since going public last year with land purchases in Auckland. The company has 3,893 care beds across 51 sites nationwide. 



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