Primelife Corporation has turned its fortunes around by posting net profit after tax of $6.2 million for the 12 months ended June 30, 2006 – compared to a net loss of $34.5 million in the previous year.
Yesterday, Primelife managing director Jim Hazel said the result marks the culmination of a period of significant restructure of the company’s operations and business model.
“Today’s result marks a turning point for Primelife and a return to profitability,” he added.
During the year, Primelife’s revenue rose 11% to $99.7 million for the 12 months to June 30, 2006. The retirement villages operations contributed $30.5 million up from $19.7 million; aged care operations contributed $50.9 million, up from $50.2 million; and construction and development operations contributed $27 million, up from $20.1 million in 2005.
Despite the return to profit, the company has not declared a dividend for the 2006 year.
In addition to strong revenue growth, Primelife has also reduced its corporate costs by 32% from $28.8 million in 2005 to $19.5 million in 2006.
Hazel said the group will continue to make improvements in each operating divisions, while also making significant progress on the resolution of legacy issues.
“We envisage Primelife will soon be rid of its residual legacy issues and will strengthen its position as a leading player in the growing retirement living and aged care sectors.
“The establishment during the year of the PrimeLiving Trust, with Babcock & Brown and MFS, which has quickly become one of the largest owners of retirement villages in Australasia, has allowed Primelife to be an active participant in on-going industry consolidation,”
Hazel said the achievements to date have been driven by a clear strategy of ownership and management of retirement villages and aged care facilities.
Primelife now operates 38 retirement villages and 19 aged care facilities across Australia and New Zealand, providing accommodation and care for some 7000 residents.
Looking ahead, Hazel said the group will continue to roll out its business model and in doing so generate improved operating performance going forward.
“In coming years the company plans to track towards developing and selling 300 units per annum. Achievement of these development targets will further enhance the growth in its deferred management fee book, creating a long-term annuity income stream.
“Significant savings at the corporate level will also be achieved as the remaining legacy issues associated with the managed investment schemes and other litigation matters are resolved,” he added.
Hazel said Primelife will also continue to generate growth opportunities through both the PrimeLiving Trust and the company’s development joint venture with Babcock & Brown.
In addition, he said the company continues to be in discussions with Babcock & Brown about its intention to establish a Babcock & Brown managed investment vehicle in the sector.
Yesterday, PrimeLiving Trust bought two retirement developments in New South Wales. The Annesley Bowral and the approved Gibraltar Park retirement development is located in the Southern Highlands.
Annesley Bowral is located at Bowral approximately 110 kilometres south-west of the Sydney CBD. Annesley Bowral originally began in 1924 as ‘Annesley Methodist Girls College’ but was purchased in 1998 for conversion into a retirement community. Annesley comprises 72 independent living units, being a mixture of villa and apartment style accommodation.
Gibraltar Park is an approved retirement development located in the township of Mittagong, within the Southern Highland Region of NSW, about 108 kilometres south-west of the Sydney CBD. The proposed village will comprise 66 detached single level independent living units. Construction is expected to commence this year.
Hazel said the acquisition takes total units owned by PrimeLiving Trust to 2,350, and total units under development to 575.
He added that this acquisition will further enable Primelife to expand its footprint in this important growth corridor south west of Sydney and compliments the trust’s Henry Kendall portfolio with its large and established villages on the Central Coast of NSW and its new development, Coastal Waters, at St George’s Basin on the South Coast.
Primelife will have an option to acquire the retirement villages from the trust at appropriate market prices.
By Adam Parsons and Kathryn O’Meara
