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Summerset first-half earnings boom

NZ Newswire logoNZ Newswire 14/08/2016 Paul McBeth

Retirement village operator and developer Summerset Group has lifted first-half earnings 44 per cent.

Underlying earnings, which strip out unrealised movements in the value of its property portfolio, rose to $24.7 million in the six months ended June 30 from $17.1m a year earlier, the Wellington-based company said on Monday.

That was ahead of Forsyth Barr analyst Jeremy Simpson's expectation for earnings of $20.9m.

Revenue climbed 23 per cent to $40m.

"The company has experienced a strong six-month period with increased sales and number of homes delivered, particularly during the second quarter where we delivered the highest number of quarterly sales in the company's history," chief executive Julian Cook said.

"We expect this growth to continue as the first stage of our Ellerslie village opens in September and we focus on further developing our Wigram and Hobsonville villages, and extending our existing Trentham and Warkworth villages."

Last month Summerset indicated earnings would be strong when it announced sales of 185 occupation rights in the June quarter, a record for the company.

Including the fair value movement of its property portfolio, net profit climbed to $50.6m, or 22.97 cents per share, from $35.7m, or 16.33 cents.

The board declared an interim dividend of 2.6 cents per share, up from 1.85 cents a year earlier.

The shares last traded at $4.96 and have gained 22 per cent so far this year, outpacing a 16 per cent gain in the S&P/NZX 50 Index.

Summerset affirmed its intention to keep dividend payments at the bottom of its policy range of 30-to-50 per cent of underlying earnings as it continues to expand its portfolio.

The value of Summerset's portfolio was $1.42 billion at the balance date, with $104.8m of new additions and a further $50.1m increase in fair value. Of the fair value movement, $23.8m was realised.

Summerset's net debt was $253.3m as at June 30 at a gearing ratio of 36.1 per cent, down from 37.1 per cent a year earlier.

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