A large write-down in predicted sales values for its properties has seen retirement village operator Summerset's half-year profit slump dramatically.
A Summerset retirement village. Photo: Summerset
Profit was down to $988,000, a 99 percent fall on last year. Its underlying profit - which does not take into account valuation changes - was down only 6 percent on the same time last year.
The valuation loss of $14.6 million, compared to a gain of more than $85m last year, took into account more conservative house price inflation forecasts and the fact that fewer units were delivered in the period due to construction restrictions during the lockdown.
Summerset chief executive Julian Cook said the write-down was expected and the net profit result did not reflect trading performance for the period.
"I think the key point there is those are forecast assumptions and what may happen in the future.
"What we have seen in actual trading performance of the business for the first six months was relatively robust [as seen in our] underlying profit."
Cook said prior to the new lockdown restrictions last week, the business was performing well.
"We were seeing good in fact, better, sales across the country than we had pre-Covid. Going into the current restrictions it remains to be seen what happens but i think looking at how this cluster is being controlled... hopefully we'll be able to move out of the restrictions at the appropriate time."
He said the Group was on track to deliver between 300 and 350 new retirement units this year, so far it had built 139 of them.
Total revenue was up 11 percent on the same time last year due to solid growth in unit resales and payments from residents.
The board has declared an interim dividend of 6 cents per share.