Announcement

FLLYR: OCA: Financial Results for the Year Ended 31 May 2019 08:30a.m. 
OCA  
25/07/2019 08:30  
FLLYR  
PRICE SENSITIVE  
REL: 0830 HRS Oceania Healthcare Limited  
 
FLLYR: OCA: Financial Results for the Year Ended 31 May 2019  
 
Oceania Healthcare reports completion of key development projects and strong  
sales momentum for the year ending 31 May 2019  
 
Highlights  
? Three key development projects completed on time and on budget, adding  
$131.8m to total assets. FY2020 development programme on track with 265 beds  
and units to be delivered, slightly higher than previous guidance.  
? Strong sales rate and pricing at recently completed development sites  
tracking ahead of expectation.  
? Operating revenue increased by $5.4m (2.9%) due to increased aged care  
occupancy, higher income from premium rooms and increased income from  
retirement village operations.  
? Reported net profit after tax of $45.4m was $31.6m below last year  
primarily due to existing village valuations remaining stable.  
? Underlying net profit after tax from continuing operations of $49.7m was  
consistent with last year. Improved development margins were offset by  
increased costs to improve care earnings in future years and interest costs  
to fund development activity.  
? Operating cashflow increased 8.6% to $89.3m as a result of sale proceeds  
from developments completed in the last financial year.  
o Total assets increased by 22.0% to $1.4bn which reflects the significant  
development capital expenditure, greenfields acquisitions and revaluations.  
o Aged care occupancy of 92.8% at aged care sites not impacted by  
redevelopment activity.  
o Final dividend per share declared of 2.6 cents per share (not imputed)  
payable on 26 August 2019 with record date 12 August 2019, maintaining a full  
year dividend of 4.7 cents per share (not imputed).  
 
$ million Year to 31 May Growth  
2019  
(this year) 2018  
(last year) $m %  
Operating Revenue 189.4 184.0 5.4 2.9%  
Reported NPAT 45.4 77.0 (31.6) (41.0)%  
Underlying NPAT* 49.7 50.6 (0.9) (1.8)%  
Operating Cash Flow 89.3 82.2 7.1 8.6%  
Total Assets 1399.4 1147.2 252.2 22.0%  
Final Dividend (cents/ share) 2.6 2.6 - n/a  
Total Dividend (cents/ share) 4.7 4.7 - n/a  
*From continuing operations. Adjustment is included to both 2019 and 2018  
for sites divested during 2019  
Aged Care and Retirement Village Operator and Developer Oceania Healthcare  
reported a net profit after tax for the year ending 31 May 2019 of $45.4m  
which is below its reported profit last year due to the valuation of existing  
villages remaining stable this year when compared with the last financial  
year.  
Oceania Healthcare CEO Earl Gasparich advised that "while Oceania  
Healthcare's reported profit includes the increase in fair value generated  
from the completion of our two Auckland investment property developments this  
year, it excludes the increase in value of property, plant and equipment from  
the care suites completed at these two Auckland sites as well as at The  
BayView (Tauranga). Together, these 159 new care suites added $23.8m to our  
assets this year".  
Mr Gasparich said "given Oceania Healthcare's current position in the  
redevelopment and conversion cycle of its existing facilities, our underlying  
net profit after tax from continuing operations, which excludes the impact of  
unrealised movements in the fair value of investment property, was relatively  
consistent with last year at NZ$49.7 million. This reflects the completion  
of our two key development sites (Meadowbank Stage Four and The Sands,  
Auckland) at the end of our financial year, which only allowed for a small  
number of residents to move in before the end of May. Sales have been very  
strong at these two sites during June and July to date, and we expect this to  
continue as they are sold down over the coming year. While underlying profit  
reflected improved development margins in FY2019, there were also increased  
interest costs to fund the development activity." In total, Oceania  
Healthcare's asset base increased by 22.0% to $1.4bn in 2019.  
Mr Gasparich was pleased to report aged care occupancy increased to 92.8%,  
compared to 90.8% last year, primarily due to the investment made in  
refurbishing Oceania Healthcare's existing portfolio and in particular  
converting older, standard aged care rooms into its premium care suite  
product, which is sold under occupation right agreement. Oceania  
Healthcare's care suite model is popular with residents across the country,  
who are increasingly demanding rooms and common areas that are of a  
significantly higher standard than the traditional rooms that are funded by  
Government contributions alone.  
Earnings from aged care were $2.7m (9.8%) below last year due to rooms being  
unavailable during the redevelopment and refurbishment process, the impact of  
sector-wide wage cost increases and start-up costs incurred in opening new  
aged care sites. "We are now well into the cycle of decommissioning older  
sites and replacing them with our new, premium offering" said Mr Gasparich.  
"This redevelopment process means there is a period at the beginning of the  
cycle where earnings from our aged care segment are negatively impacted, and  
we have seen this in the 2019 financial year as we opened The BayView in  
Tauranga and neared completion of Awatere in Hamilton".  
Oceania Healthcare's current development programme remains on track to  
deliver a further 265 beds and units in the next financial year. In  
addition, new resource consents were obtained at five redevelopment sites  
during the year. "With the projects recently completed, our development  
pipeline is 1,995 retirement village units and aged care beds, with 67.3% of  
this already having resource consents in place".  
Mr Gasparich said "at Oceania Healthcare we are investing in our people with  
record numbers of Healthcare Assistants achieving new qualifications and  
staff at all levels receiving increases in wage rates during the year. I am  
also delighted to announce that an employee share scheme is being introduced  
for our permanent employees. This will give staff an opportunity to own a  
stake in Oceania Healthcare and share in our growth".  
Oceania Healthcare Chair Liz Coutts advised that Directors had declared a  
final 2019 dividend of 2.6 cents per share (not imputed) to be paid on 26  
August 2019 with a record date of 12 August. This maintains full year  
dividend of 4.7 cents per share (not imputed) and represents a dividend  
payout ratio of 57% of underlying net profit after tax. The Board also  
approved the implementation of a dividend reinvestment plan for New Zealand  
and Australian shareholders to take effect from the dividend payable on 26  
August 2019. Participating shareholders will be able to reinvest their final  
dividend, or part thereof, with a discount of 2.5% on the five day volume  
weighted average price commencing from the ex-dividend date.  
 
ENDS  
For all media enquiries, please contact Miriam Carter 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 2,654 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 Annual Report.  
End CA:00338084 For:OCA Type:FLLYR Time:2019-07-25 08:30:34