The Summerset at Bishopscourt village, under construction
in Dunedin last week. Photo by Stephen Jaquiery.
Retirement village developer and operator Summerset Group
Holdings has delivered increased revenue and remains on target
to complete construction of 155 units this year, the latter
underpinned by a $40 million Dunedin development.
For its six months' trading to June, Summerset increased
revenue from $16.1 million to $18.2 million and turned a $1.1
million loss a year ago to a $3.93 million profit.
While maintaining its forecast when listing for a full year
after tax result of $9.7 million, chief executive Norah
Barlow said yesterday that if trading momentum continued,
Summerset expected to exceed that forecast.
The half-year result was due to unit sales, a strengthening
of the company's in-house development and design capabilities
and higher development margins, she said.
Operating cashflows rose more than 100%, from $14 million
last year to $28.8 million.
"Sales are strong. Last year, sales were the highest in the
company's history. We are on track to exceeding that record,"
Mrs Barlow said.
During the half year, Summerset completed 68 new units,
across four developing sites, and is confident of meeting its
full-year target of 155 units.
"We have started building at our newest village in Dunedin
and are in a good position to reach our full-year target,"
Mrs Barlow said.
This is Summerset's second financial result since listing on
the NZX last November. Its 56% majority shareholder is
Australian company Quadrant Private Equity.
From a low of $1.31 in mid-December, Summerset shares have
since risen to a high of $1.95 earlier this week.
After yesterday's announcement, its shares were down 3.6% at
$1.88, possibly with some investors taking a profit from
gains in recent months.
Craigs Investment Partners broker Peter McIntyre said the
result was "a solid performance" and should keep investors
While Summerset was on track to deliver a maiden dividend,
and had expectations of beating its profit forecast for the
year, Mr McIntyre noted there had been no "substantive
financial guidance" offered, including expectations in 2012.
"They have performed better than expected, especially in
sales, resales and with a strong lift in development," he
Forsyth Barr broker Peter Young said the result was close to
expectations, in terms of care revenues, deferred management
fees and operating costs.
"Summerset's target remains its prospectus forecast of $9.7
million [profit] and it is well on track to achieve this with
$6.9 million [booked already] in the first six months," he
Highlights of the result were the improvement in operating
margins and the operating cash flow gains along with the
sharply increased volumes of new and resold units, Mr Young
In Dunedin, Summerset is building a $40 million, 200-person
village on a 1.9ha Wakari site, called Summerset at
The first of more than 30 homes are "spoken for" and expected
to be completed by the end of the year. Stage two pre-sales
are also strong.
Summerset surprised the market in March with an underlying
profit 35% ahead of its prospectus forecast, at $8.1 million
for the year to December. Profit before tax was up 2.3% on
the prospectus forecast and sales of occupation rights were
up 25% on 2010.
Summerset: six months to June
• Country's third-largest retirement village operator.
• Dunedin construction is 15th village.
• 1 Three more land-banked sites.
• New units 68; target 155 Total almost 2000 residents.
• 18 villages equals 1234 retirement units and more than 280
• Room sales of 83 (52% increase*).
• Gross proceeds $28.8 millionRoom resales of 88 (102%
increase*) Gains realised of $4.2 million.
*Compared with same period last year