Arvida Group, which operates 21 retirement villages and aged care facilities, posted first-half profit of about $7.4 million, putting it on track to meet its prospectus forecast for full-year earnings.
Arvida listed in December 2014, having raised $75 million in an initial public offering at 95 cents a share. It was created through the merger of an initial 17 retirement villages and added to that in July with the $62 million cash and scrip purchase of the three Aria villages in Auckland. The results for the six months ended September 30 included three months' contribution from the Aria properties. The shares last traded at 87 cents and have dropped 8.4 per cent since listing.
First-half sales were $39.3 million, including $34.6 million in care fees and village services, and total assets were $436 million, ahead of the $365 million year-end target set out in its prospectus. That included a $3.8 million fair-value gain on investment properties after a review by CB Richard Ellis. Expenses of $33.8 million included one-time costs from the Aria acquisition and earthquake remediation work of $1.4 million, and $19.6 million for employee costs, the Auckland-based company said in a statement.
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The company said it has made "significant progress" integrating its 21 properties and benefits from leveraging its new operating structure, it said. "Supported by positive ongoing sector demographics and the favourable outlook in demand for services, we are confident that by keeping our focus on our strategy we are well positioned to exceed the profit forecasts contained in the prospectus."
The company had forecast full-year revenue of $69.3 million and profit of $10.6 million, or underlying profit of $13.3 million. The underlying profit measure replaces the fair value adjustment in investment property values "with the board's estimate of realised components of movements in investment property value", elimination of deferred tax and one-time items.
During the first half, Arvida agreed with its insurer to a gross settlement of $18.1 million to resolve claims over six properties damaged by the Christchurch earthquakes. The actual claim is reduced by $1 million to account for Earthquake Commission contributions already received and a $400,000 excess on policies.
The company plans to add 225 beds/units in the next three years, including 32 in the current year. It has lodged resource consents for 173 units and is drafting a consent for a further 20, it said.
Arvida will pay a second-quarter dividend of 1.05 cents a share, imputed to 0.35 cents, on December 21, with a record date of December 10.