Summerset annual earnings may rise as much as 39% as sales surge

Tuesday 7th July 2015

Summerset Group, New Zealand's third-largest listed retirement village operator, expects annual earnings may rise as much as 39 percent as it benefits from record sales of units.

The Wellington-based company expects underlying profit of between $32 million to $34 million in the year ending Dec. 31, from $24.4 million last year, it said in a statement. Sales of occupation rights jumped 38 percent to a record 270 in the first half of the financial year, compared with the same period a year earlier, it said.

Summerset achieved a record 110 resales in the six months ended June 30, as well as 160 new sales as it benefited from the opening of four new villages in the second half of 2014. It will open one new village in Wigram in the fourth quarter of this year, which will contribute to sales in the quarter, as well as new care centres in three of its developing villages over the second half of the year.

Earnings growth is expected to accelerate from last year's 10 percent pace as the front-loaded costs last year of opening new villages in Karaka, Hobsonville and New Plymouth, almost doubling the size of its Trentham village, and opening new care centres in Dunedin, Hamilton and Nelson are offset by fees from new residents. Earnings will also benefit from a higher development margin and an increased build rate of retirement units, the company has said.

The earnings forecast doesn't include the impact of unrealised property valuation gains. It will publish first-half earnings on Aug. 11.

Shares in Summerset last traded at $3.54 and have gained 28 percent so far this year.

BusinessDesk.co.nz

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