The pandemic cost listed retirement business Arvida Group $3 million, sales fell, construction sites were shut for months and Government subsidies didn't offset extra expenses, shareholders heard today.
Peter Wilson, chairman of the 32-village business, said: "We have incurred a net cost of $3m due to Covid-19 measures and have experienced reduced sales activity over the last quarter."
Arvida, which has 4750 residents, is holding its AGM in Auckland at the Cordis this morning where Wilson complained about inadequate state financial assistance.
"The contribution made by our sector to meeting the challenges of Covid-19 has proved to be material. One-off sector subsidies have been inadequate and have not addressed the cost incurred by operators to ensure maintenance of high health and safety operating standards.
"This again has highlighted the need for recognition by funding bodies that there remains an ongoing requirement for sector funding to reflect the cost of providing quality care. Aged care makes up a very important component of a sustainable health care system. Additional care funding for the sector is urgently required," Wilson said in his address.
The $3m extra costs came from more staff rostered on, extra personal protective equipment which had to be bought and higher security staffing costs. Sales fell in March. People were disrupted from moving to Arvida properties and settlements of purchases were delayed, a presentation showed.
All Arvida building sites were shut for weeks during the higher-level lockdowns, except where health and safety works were necessary.
Significant additional operating costs of about $5m were incurred from April to June due to Covid-19, only partially offset by Government subsidies of about $2m, resulting in the $3m extra expenses.
The chairman said the company hoped to maintain its dividend policy and pay half to 70 per cent of underlying profit.
"We would hope there would be further clarity on the future economic environment when we report on the half year results in November," he said.
The impacts of Covid-19 in New Zealand and globally had numerous short-term impacts but there was a long way to go before whatever is the "new normal", Wilson said.
Factors that could hit the 2021 financial year on delivery timeframes for new property developments included further Covid-19-related shutdowns of construction sites and disruption getting equipment and supplies for those new properties, the business said.
"The impact of Covid-19 on the residential housing market will be closely monitored to ensure the supply of new units does not exceed projected demand. Villa construction can be phased to demand, with good presale interest and commitments for planned FY21 villa construction," Arvida's presentation today said.
Arvida developed 201 new units in the year, ahead of guidance.
Its shares are trading around $1.49.