Retirement and aged care operator Aevum has delivered an AIFRS adjusted net profit after tax of $13.4 million for the year to June 30, 2006 – an increase of 174% when compared to $4.9 million in 2005.
Aevum’s chief executive Simon Owen said the company has made considerable progress over the past 12 months.
“Aevum’s retirement operations performed well during the year with strong sales price growth also supported by an increase in occupancy rates to 95.3% – now above the long term goal of 95%.
“The recently announced acquisition of the Sakkara and Moran portfolios, adding 887 operational units and 133 development approvals across 10 villages, broadens the company’s footprint into new and attractive markets diversifying Aevum beyond our core Sydney market,” he added.
Over the year, the company’s earnings before interests and tax was $14.9 million, up 56% when compared to $9.5 million in 2005. In addition, Aevum’s earnings per share jumped 159% from 6.3 cents in 2005 to 16.3 cents.
The operating revenue for the retirement division was $17.2 million for the year, 62% higher than 2004/05 revenues of $ 10.7 million. Earnings before tax and interest for the retirement division of $16.0 million were 67% higher than 2004/05 of $9.6 million.
Owen said demand for retirement accommodation remains firm with strong levels of enquiry being recorded across the portfolio.
“The soft Sydney residential property market is continuing to have an impact on turnover periods as prospective residents take upwards of 90 days to sell their homes.
“The company has in some instances extended settlement periods in order to maintain sales price growth targets and meet competitive pressures,” he added.
Owen said the key challenge for the company in the year ahead is the successful integration and operation of the Sakkara and Moran acquisitions and to push forward with redevelopment plans for the Cardinal Freeman and Lourdes villages.
He added that organic growth opportunities may also be supplemented through the acquisition of additional villages and greenfield opportunities with a number of prospects presently under review.
“The company expects double digit growth in both revenues and earnings from its retirement village operations in 2006/07 driven by both the core Sydney villages and the recent acquisitions,” he added.
Aevum’s operating revenue for the aged care division was $9.7 million for the year, 4.0% higher than 2004/05 revenues of $9.3 million. Earnings before tax and interest for the aged care division of $0.4 million were 52% lower than 2004/05 of $0.8 million.
This result does not include approximately $0.9 million of interest and financing charges earned on accommodation bonds and entry contributions.
Owen said during the year, margin pressures continue to erode the impacts of operational improvements and performance of the company’s aged care division was also impacted when 46 beds out of a total of 202 were taken off-line for several months whilst being upgraded to Extra Services capability.
“During the 2007 year the company expects that performance of aged care will be improved through the full year contribution of the 46 Extra Service rooms introduced during 2006. With the complex and time intensive accreditation process now completed, additional resources have been deployed to investigate further ways of increasing aged care margins and returns.
“The company is forecasting for growth in both revenues and earnings during the year however the ability to fully access the benefits of improved operational performance may again be impacted by the ever increasing legislative environment in which the industry operates,” he added.
As at June 30, 2006, Aevus has 517 units in its retirement portfolio. The company has total assets exceeding $270 million. Owen said it is moving to 2,000 unit target in FY 2007.
Aevum has declared a final dividend of 4.0 cents per share unfranked taking the full year dividend to 7.5 cents, up 25% on the prior period.
By Nelson Yap
