Summerset increases interim profit

HAMISH MCNICOL
Last updated 09:17 12/08/2014

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Retirement village and aged-care operator Summerset has increased its interim net profit to $15.3 million, despite sluggish new sales of occupation rights.

But having built a record number of units in the first half of the year, the company expects good demand to lift sales, as it opens three new villages this year.

Summerset today announced its half-year net profit had risen by 42 per cent.

This included sales of 195 occupation rights, only slightly up - 3 per cent - on the same period a year ago.

Re-sales of occupation rights had increased 23 per cent but new sales were down 9 per cent, compared to the first half of last year.

Chief executive Julian Cook said this was due to the timing of retirement-unit builds, with two new villages in Auckland - in Karaka and Hobsonville - having just opened.

Stages of construction at both these villages had been released early to cope with demand.

"Together with the opening of New Plymouth and the extension to our Trentham village [in Wellington] in the second half of the year, we expect strong settlements of homes over the remainder of 2014," he said.

"We are seeing good demand for homes in these villages, and they will all contribute to settlements over the second half of 2014."

The Wellington-based listed company said it built 136 new units in the first half of the year, a record for the period.

In the last year Summerset's assets were up 21 per cent on the first half of 2013, for a total of $921m.

Assets had grown by 69 per cent over the last three years, and Cook said the business was trading well.

"Having delivered 136 retirement units in the first half of this year, we are in good stead to achieve our target of delivering 250 retirement units this year," he said.

"We are on track to achieve a build of 300 retirement units per annum from next year."

Cook said development margins were improving at developing villages, after the company took construction management in house.

Construction had recently begun at both its New Plymouth and Trentham sites, with the first homes expected to be completed in New Plymouth by the end of this year.

Summerset announced an interim dividend of 1.4 cents a share.

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