Summerset's underlying 2013 profit rises 46% to $22.1 million

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 $74.9 million.

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 $34.2 million.

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 upgraded guidance.

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 interview.

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 the year.

Mr Cook was asked, given Summerset operated 17 villages and had five land-banks under way, whether there was a long-term village target.

''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.

simon.hartley@odt.co.nz

ODT/directory - Local Businesses

CompanyLocationBusiness Type
Storage & Workshop RentalsWanakaStorage
Bowen For HealthDunedinAlternative Health Services
Lake Hawea Holiday ParkHaweaHoliday Parks
Blueskin General StoreWaitatiSupermarkets