Published 24 August 2012
Metlifecare Ltd reported a pre-merger lift in sales, resales & operating cashflows in the year to June, but still ended the year with a $132 million loss arising from revaluations & deferred tax adjustments.
The results were in line with market guidance and excluded the benefits of the merger, which was finalised after balance date.
Chief executive & managing director Alan Edwards said yesterday sale & resale settlements were up 12% to 330 settlements, providing gross cashflows of $113.9 million. Occupancy levels were at 93%, excluding The Poynton beside North Shore Hospital (which rose from 44% to 65% occupancy), with a significant increase in serviced apartment occupancy.
He said operating cashflows also showed good improvement, up 35% to $31 million ($23 million): “This reflects strong settlements leading up to year end, with improvements in serviced apartment sales, sales settlements at The Poynton and revenue from village services. Operating expenses were on a similar level to previous years, with a rise in property expenses offset by a reduction in finance costs. Merger costs of $1 million were included in operating expenses.”
However, 2 non-cash expenses took the bottom line to a $132 million loss – the fair value of investment properties was reduced by $99.8 million (a $27.5 million gain last year), and the company had a $38 million deferred tax charge.
The company appointed CBRE to value its investment properties, which led to changes to various key assumptions, including discount rates & property price growth, and resulted in a decline in the total fair value of investment properties from $1.3 billion to $1.2 billion.
Care facilities were revalued following a change in accounting policy, resulting in a $9.6 million gain net of tax.
The deferred tax adjustments related to the impact of the group’s ongoing ability to use tax losses carried forward and the impact of the recent changes to the depreciation rules on the depreciable tax base in the future.
As a result, Metlifecare reported a $132 million net loss after tax. Excluding non-cash expenses, trading performance was $6.2 million ($8.1 million).
The company cut its bank debt from $125.2 million to $69.2 million, excluding cash balances.
Basic & diluted earnings/share wet from 17c to a negative 104.1c. Net asset backing at balance date was $3.04/share ($4.01 last year), provisionally rising to $3.24 post-merger.
Metlifecare chairman Peter Brown said: “2012 was a milestone year for Metlifecare, as we effected a number of major strategic initiatives that will be of long-term value to the company and to shareholders.
“Following a strategic review of the capital & ownership structure in October 2011, a capital-raising was undertaken and generated about $45.5 million in equity, which was used to reduce bank debt. Following this, in May, we announced a proposed merger with Vision Senior Living Ltd & Private Life Care Holdings Ltd, which was finalised in July.
“As part of the merger transaction & post-year-end, Retirement Villages Group sold down their majority shareholding from 50.1% to 43.2%. The board believes this will lead to greater liquidity & trading volumes and will be of long-term benefit to all shareholders.
“These initiatives have created a company with a strong portfolio of villages, a significant development pipeline & the expertise to support this, an improved balance sheet & a more diverse shareholder base. Metlifecare is now well positioned to take advantage of the significant potential available in the retirement living sector.”
Mr Edwards said: “In a transformative year for the company, our staff continued to focus & deliver on operating performance. We have seen a pleasing increase in sales, resales & operating cashflows over the past 3 years. The benefits of our larger organisation will start to be realised in the 2013 financial year, and our focus is on integrating the businesses, realising synergies, debt reduction, initiating developments and delivering improved results.
“We will also be looking to maximise the potential of established and mature villages, and will continue to drive revenue from village services and from resales.
“We now have an exciting development pipeline in place, offering a mixture of brownfield & greenfield opportunities. We have sufficient bank funding capacity to continue with these opportunities, as well as seek out additional development prospects.”
Mr Brown said the board would consider a dividend for 2012 around the time of the annual meeting in October, once the post-merger capital management & development strategies have been finalised.
19 July 2012: Bookbuild completed for RVNZ’s Metlifecare selldown
9 May 2012:Metlifecare deal at 55% NTA
9 March 2012: Metlifecare secures new funding facilities
24 August 2011: Lower revaluation gains cut Metlifecare profit
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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.