This article is from the Australian Property Journal archive
REFURBISHMENT and growth initiatives have delivered Regis Healthcare an 8% net profit after tax for the 2017 full year, but the aged care operator will sweat on a federal court ruling that will have significant effect on its earnings over the next two years.
The group’s NPAT came in at $61.1 million, whilst revenue and EBITA both increased by 18% to $123.6 million and $565.5 million respectively.
Net refundable accommodation deposits (RAD) jumped by 57% to $70.5 million, albeit below expectations, and net operating cashflow by 13% to $151.1 million.
Managing director, Ross Johnston said the federal government’s announced changes to residential aged care funding, which commenced in FY17, had a minimal impact on the results from FY17, but would be more significant in FY18 and FY19.
“A range of strategies have been and continue to be implemented to mitigate the impact of the changes to funding. Regis currently charges an Asset Replacement Charge (ARC) to some residents. In April, the Company announced that it had applied to the Federal Court for a declaration as to the interpretation of the Aged Care legislation in order to obtain clarity in relation to its ARC. Regis continues to exclude the ARC revenue from its results, pending the outcome of Federal Court proceedings,” he said.
Johnston said the group’s financial result was underpinned by an increased contribution from the significant refurbishment program and from growth initiatives.
“This includes the earnings from the facilities acquired from Masonic Care, QLD in June 2016, which reached target run rates during the first half of the financial year,” he said.
He said the net RAD cashflow result was attributable to a small number of facilities experiencing higher than projected admissions of non-RAD paying residents (being supported, DAP and respite residents) in the second half FY17.
The group expects the level of RAD paying residents will return to expected levels at these facilities over time.
Revenue per occupied bed day increased from $272 to $281, and occupancy slipped from 95.2% to 94.9%. Net RAD receipts increased to 48% of new residents electing to pay a RAD over a DAP or a combination RAD/DAP payment, and an average incoming RAD of $455,000 compared with $389,300.
Johnston said Regis’ medium term growth strategy would continue to combine organic growth, including greenfield and brownfield development, with acquisitions of single facilities and portfolios.
The company recorded $151.0 million of capital expenditure. Greenfield development progression included the opening of the Kingswood facility in South Australian, contributing 100 new places. There are 1,303 new places in the group’s pipeline, with seven developments currently under construction. It announced the acquisition of 287 places across three facilities in Hobart and Launceston from Presbyterian Care, including some retirement village units, home care and surplus land for development, taking operational places to 6,316 in total.
The group’s net debt is $233.5 million, and declared a final dividend of 10.04cps, taking total dividend to 20.34cps.
Australian Property Journal
