Dual-listed rest-home developer Summerset's rapid expansion
in recent years has been reflected in large gains in unit
sales, cash flow and its after-tax profit.
Analysts are looking at the possibility of companies such as
Summerset and Ryman Healthcare having a further two to three
decades of growth ahead, given the rapid rise in New
Zealand's ageing population.
For its year to December, Summerset's total revenue rose from
$38.1 million to $45.2 million. Total income,
including property value rises, went from $53.2 million to
Underlying profit rose 46% to $22.1 million for the year.
Summerset had two ''one-off'' items - a $2.2 million tax
credit and an $8.4 million land revaluation gain on an
Auckland property - which pushed after-tax profit up 131%, to
Summerset increased its dividend from 2.5c to 3.25c. Its
shares rose 3.3% to $3.44, after the announcement.
Summerset's chief executive designate Julian Cook, who takes
over from long-time chief executive Norah Barlow in April,
was bullish on Summerset's outlook, but did not unveil any
Summerset had built just more than the 200 units targeted
during 2013 and he expected it to hit earlier guidance of
having a further 300 units by 2015.
Summerset's total sales for the year were up 21%. That was up
35% for new units and 7% for resales, Mr Cook said in an
The 7% resales was lower than the long-term target of 14%, as
at the end of 2012 there were only about 1% of units
available for resale, he said.
''In the first quarter there were only sales [of existing
units]; it is a quality problem to have,'' Mr Cook said.
No new sites were announced. although 2013 was a very busy
year in terms of adding to the land bank,'' with five new
sites, Ms Kinnaird said.
Summerset had total banking facilities of $180 million to
draw on and during the past year, banking debt had risen from
$75 million to $105 million.
Mr Cook said he was ''entirely comfortable'' with the debt
levels, which on a debt to debt plus equity ratio stood at
26%, so Summerset was ''conservatively geared''He ruled out
the need to consider any capital-raising from shareholders.
Summerset's asset values had risen 20% to $845 million during
Mr Cook was asked, given Summerset operated 17 villages and
had five land-banks under way, whether there was a long-term
''No. If we can continue to grow profitably then we will
continue to do so. We want to establish ourselves as the
provider of `first choice','' Mr Cook saidCraigs Investment
Partners broker Peter McIntyre said the overall result, debt
and outlook meant Summerset would have the confidence to
increase its dividend, with investors expecting both capital
growth and dividend growth.
''Companies like Summerset and Ryman [Healthcare] have 20 or
30 years growth left in them, taking advantage of a
demographic which is growing,'' he said.
Craigs research expects the need for retirement villages to
''increase substantially'' during the next 15 to 20 years.
Summerset's typical client age was 75; and from 261,000 in
that group in 2011, the number was expected to almost double
to 516,000 by 2031.