Metlifecare lifts annual earnings, dividend on unit sales growth, beating estimates

Wednesday 24th August 2016

Metlifecare lifted annual earnings and dividends as the retirement village company continues to benefit from an ageing population and increased demand for its units.

Underlying earnings, which strip out unrealised movements in the value of the Auckland-based company's property portfolio, rose 26 percent to $66.1 million in the 12 months ended June 30, beating Forsyth Barr analyst Jeremy Simpson's prediction of $63.3 million. That was driven by a 16 percent increase in sales of occupation rights agreements to 568, a record for the company, of which 138 were new sales and 430 were resales.

Including a $237.2 million increase in the fair value of Metlifecare's property portfolio, net profit soared to $228.7 million, or $1.075 per share, from $122.7 million, or 57.9 cents, a year earlier.

"This performance demonstrates the quality of Metlifecare's portfolio which is concentrated in high-growth regions of the upper North Island and positions us well to benefit from ongoing population growth and the buoyant property market," chief executive Glen Sowry said in a statement. "Demand has been consistent across new and established villages with overall occupancy at 97 percent."

Metlifecare has been targeting building villages in Auckland, Bay of Plenty, and Waikato, an area it has called the 'golden triangle', which it sees as having large and ageing populations in need of more retirement services.

The board declared a final dividend of 4 cents per share payable on Sept. 23 with a Sept. 9 record date. That takes the annual payment to 5.75 cents, more than the 5 cents forecast by Forsyth Barr and up from 4.5 cents in 2015.

The shares last traded at $6.08 and have climbed 31 percent so far this year.

Metlifecare's property portfolio spans 24 villages with 4,025 units and 354 care beds, and its land bank can cater to another 1,386 units and 387 care beds. That portfolio was valued at $2.52 billion as at June 30, up from $2.18 billion a year earlier.

The company's total income increased 5 percent to $106.2 million, of which membership fees were up 9.8 percent to $44.6 million and rest home, hospital, service and village fees rose 5.1 percent to $57.5 million. Metlifecare received $12.8 million from the Ministry of Health as a government care fee to subsidise residents with rest home or hospital level care.

The company's wage bill rose 16 percent to $4.6 million from a year earlier, and Sowry said Metlifecare had invested significantly in its people.

"The improved qualification-based wage structure for our care staff has seen immediate and positive outcomes, with more than one-third of our staff now in training; higher quality care being delivered; and greater staff retention," he said. "We are also seeing increased levels of engagement with our leaders who have embarked on a company-wide leadership development programme."

A landmark court ruling last year that female dominated work "requires equal pay for work of equal value (pay equity), not simply the same pay for the same work" is seen as increasing the aged care sector's collective wage bill by as much as $500 million a year. A working group set up in response to those rulings recommended the government adopt a series principles to facilitate "good faith" bargaining, though three months later ministers Paula Bennett and Michael Woodhouse are still formulating their response.

Sowry took over the CEO role at Metlifecare four months ago and has been reviewing and refining its priorities for the future, which he will share with investors at an update on Sept. 7.

BusinessDesk.co.nz

Comments from our readers

No comments yet