Announcement

HALFYR: OCA: Oceania Healthcare - Half Year Result and Interim Report 08:30a.m. 
OCA  
25/01/2019 08:30  
HALFYR  
PRICE SENSITIVE  
REL: 0830 HRS Oceania Healthcare Limited  
 
HALFYR: OCA: Oceania Healthcare - Half Year Result and Interim Report  
 
Oceania Healthcare grows profit for the six months ended 30 November 2018  
 
Highlights  
? Underlying net profit after tax of $20.9m representing a 5.3% increase over  
the prior corresponding period. Continuing business operations increased  
underlying net profit after tax by 8.7% over this same period.  
? Total comprehensive income attributable to shareholders of $19.5m delivered  
during the period, driven by the completion of new care developments,  
revaluations and conversions of care suites.  
? Operating cashflow improved from $17.1m to $47.1m (175.9%) with $43.5m of  
sales proceeds from our developments completed earlier in 2018, an increase  
of 287.8%.  
? Total assets increased by $209.7m over the prior corresponding period to  
$1.2bn due to significant development capital expenditure, acquisition of  
land adjoining existing sites and revaluations.  
? First stage of The BayView (Tauranga) delivered on time and on budget.  
Premium aged care facility comprising 81 Care Suites with 60 rooms already  
occupied by residents transferring from old facility, opening the way for  
Stage 2 (74 independent living units and new community centre) which  
commenced in December 2018.  
? All apartments at Meadowbank Stage 3 now sold or under application.  
? Development programme across other key sites continuing to accelerate with  
587 units and care suites now under construction across nine projects.  
? Strong increase in aged care occupancy levels across the Group; 92.0%  
occupancy recorded as at 30 November 2018 at care homes that are not impacted  
by our redevelopment activity (up from 89.9% in prior corresponding period).  
? Winner of Excellence in Food and Innovative Service Delivery categories at  
New Zealand Aged Care Association annual awards.  
? Significant increase in pay for Registered Nurses to reflect DHB settlement  
and retain key staff.  
? Interim dividend per share announced of 2.1 cents per share (not imputed)  
payable on 18 February 2019.  
 
$'m Growth  
Nov 2018  
$m Nov 2017*  
$m $m %  
Operating Revenue 96.4 92.1 4.3 4.7%  
Underlying NPAT 20.9 19.9 1.0 5.3%  
Underlying NPAT - continuing operations* 20.5 18.8 1.7 8.7%  
Total Comprehensive Income 19.5 42.9 (23.4) (54.5)%  
Reported NPAT 1.3 42.5 (41.3) (97.1)%  
Total Assets 1,208.8 999.1 209.7 21.0%  
Operating Cashflow 47.1 17.1 30.0 175.9%  
 
*Underlying NPAT - continuing operations contains a proforma adjustment that  
excludes divested site earnings in both 1HY2019 and 1HY2018. Sites were  
divested in 1HY2019.  
 
Earl Gasparich, Chief Executive Officer, commented:  
We have delivered a strong result for the first half of the year with 8.7%  
growth achieved across our continuing business operations reflecting  
increases in deferred management fees from our Village business and realised  
development gains from sites completed earlier in the year.  
In accordance with our strategy for our aged care business, we converted a  
number of care rooms into premium care suites over the period. These  
conversions, as well as the completion of the new care suite facility at The  
BayView (Tauranga) and increase in revaluations of our existing care suites,  
sites, increased total comprehensive income attributable to shareholders to  
$19.5m during the period. Due to the classification of our care facilities  
in the financial statements as property, plant and equipment rather than  
investment property, these increases in valuation are not recorded in our  
statutory reported profit.  
Underlying net profit after tax attributable to our Retirement Village  
business increased by $5.4m or 32.9% in the period due to the sale of new  
units completed earlier in the year, as well as the continuation of strong  
resale margins for existing independent living units (30.3%). Sales at our  
Meadowbank Village have been particularly strong, with all 62 apartments in  
Stage 3 now either sold or under application, less than a year since this  
stage was completed.  
We have focused heavily on generating higher revenues in our Care business  
through occupancy and premium room charges given the increase in operating  
costs particularly staff costs associated with the equal pay settlement and  
registered Nurse pay rates. Occupancy across our non-development sites has  
increased materially over the six-month period and across all sites is now  
92.0%. This has been driven by site refurbishments including conversion of  
standard beds to Care Suites and our new operational management structure put  
in place earlier this year. We are continually enhancing our service  
delivery and once again achieved recognition for our industry-leading care  
offering by winning both the Excellence in Food and Innovative Service  
Delivery categories at New Zealand Aged Care Association annual awards.  
Operating cashflow was particularly strong over the period, increasing from  
$17.1m to $47.1m (175.9%) with sales proceeds from our developments completed  
earlier in 2018 contributing $43.5m, which represents an increase of 287.7%  
compared to the prior corresponding period. Our total assets are now $1.2bn  
given that significant development capital expenditure, as well as the  
acquisition of land adjoining existing sites and revaluations.  
While our developments are funded from our bank facilities that we increased  
and extended earlier in the year to July 2023, our net debt of $197.3m as at  
30 November 2018 represents a prudent gearing level of 26.7% (net debt to net  
debt plus equity).  
We continue to deliver all of the development projects in our pipeline on  
time and on budget, an excellent achievement in the current construction  
market. This is testimony to our highly skilled and experienced internal  
project management team and the quality of our designs. As well as  
completing Stage 1 of The BayView in Tauranga (81 Care Suites) in October  
this year, we are well on track to complete The Sands (Browns Bay, Auckland)  
and Meadowbank Stage 4 (Auckland) by the end of the current financial year,  
followed shortly thereafter by Stage 1 of Trevellyn (Hamilton) comprising 90  
Care Suites. With Green Gables (Nelson) progressing well and on track to be  
completed in the 2020 financial year, Stage 2 of The BayView (74 apartments  
and new community centre) now commenced and Windermere (71 Care Suites, 22  
apartments, and new community centre) also underway in January 2019, we have  
587 units and beds under construction throughout the country.  
We have also recently obtained new resource consents for the development of a  
new 142 care suite home at Elmwood Village (The Gardens, Auckland), and the  
expansion of Eversley (Hastings) and Eden Villages (Auckland). Of the 2,065  
beds and units in our total development pipeline, 73.4% already has resource  
consents in place, considerably reducing the risk associated with delivery of  
this new product over the next six years.  
In the second half of the year we will complete The Sands and Meadowbank  
Stage 4 developments, continue the conversion of standard rooms to Care  
Suites and drive higher occupancy levels across our Care portfolio. We have  
already received presale applications for 13 apartments at The Sands with  
strong pricing that reflects the high quality of the product. We will also  
continue to roll out our new Clinical Information System after a successful  
pilot in Auckland and of course rollout our new, higher care service delivery  
standards across all premium facilities.  
 
On behalf of the Board, Oceania Chair Liz Coutts confirmed that an interim  
dividend of 2.1 cents per share (not imputed) would be paid to shareholders  
on 18 February 2019. This dividend reflects Oceania's steady earnings and  
cash flow and is in line with the Board policy.  
ENDS  
 
For all media enquiries, please contact Miriam Carter of Oceania Healthcare  
on (09) 361 0350.  
Oceania Healthcare Limited is New Zealand's third largest residential aged  
care provider and sixth largest retirement village operator. Oceania  
Healthcare has a total of 3,668 beds, suites and units located at 46 sites in  
the North and South Islands.  
This release should be read in conjunction with the Financial Statements  
contained within the Interim Report.  
End CA:00329805 For:OCA Type:HALFYR Time:2019-01-25 08:30:21