This article is from the Australian Property Journal archive
Primelife said its fortunes are changing, despite the retirement village operator posting a net profit of $0.6 million – a fall of 688% when compared to $2 million over last year.
In the six months to December 31, 2005, Primelife’s operating revenue increased 6.7% to $38.45 million due to the substantial improvements in the retirement village and aged care operations and the first joint venture development with Babcock & Brown and MFS.
The joint venture PrimeLiving Trust was launched in October 2005 to buy the Henry Kendall portfolio in New South Wales and the Primecare Holdings portfolio in New Zealand, adding 1,873 units to Primelife’s units under management.
The trust now has more than $250 million in assets under management, adding at least $2.5 million to its earnings per annum which will start to flow through over the next half.
“Across the portfolio, there has been a significant improvement in sales as indicated by a 48% increase in reservations for the December half year. As a key leading indicator of sales, we expect to see the positive cash flow benefits of this in the second half of the year as reservations convert into settlements,” Primelife’s managing director Jim Hazel said.
“We have also been actively participating in industry consolidation through the PrimeLiving Trust and will continue to work with our strategic partners to grow this vehicle in the short to medium term,” he added.
In addition, Hazel said the company has achieved substantial progress on the resolution of Managed Investment Schemes and other legacy litigation, where 16 of 23 Schemes are either finalised or subject to winding up orders.
Hazel said the resolution of some of the Managed Investment Schemes has provided the company with an opportunity to acquire some high quality assets on balance sheet, which will be announced over the course of the next six months.
“In the last half, we resolved two major legacy litigation issues. We expect the balance of Managed Investment Schemes and other legacy litigation to be finalised by the end of this calendar year. Primelife continues to reduce corporate cost and is on track to achieve its target of $13.0 million per annum,” he added.
Hazel said Primelife is confident that the delivery of its existing pipeline of projects valued at more than $500 million, strong sales and marketing focus, together with a strong operational team provides a strong platform to deliver continued growth in earnings and cash flows.
Primelife will not pay a dividend, unchanged from last year.
By Nelson Yap
