Summerset Group (SUM) H1 2024 earnings summary

Executive summary

• Underlying profit rose 3% year-over-year to $89.9m, at the upper end of guidance, with record first-half sales of 588 occupation rights and 352 units delivered.

• Net profit after tax (IFRS) was $102.2m, down 23% from 1H23, mainly due to higher tax expense and lower fair value movement.

• Expansion continued in New Zealand and Australia, including acquisition of a new site in Napier and progress at multiple Australian developments.

• Interim dividend of 11.3 cents per share declared, representing 29.6% of underlying profit, payable 20 September 2024.

• Total assets increased 17% to $7.4b, with net tangible assets per share up 16% to $11.43.

Financial highlights

• Underlying profit: $89.9m (up 3% year-over-year); Net profit after tax: $102.2m (down 23%).

• Operating cash flows: $191.6m (up 31%); Total revenue: $151.6m (up 18%).

• Development margin: 28.3%; Resales cash margin: 35.1%; Realised development margin: $51.7m; Resale gain: $45.7m (up 32%).

• Total assets: $7.4b (up 17%); Net tangible assets per share: $11.43 (up 16%).

• Gearing ratio: 36.2%; ICR coverage: 203%; Weighted average interest rate on debt: 5.4%.

Outlook and guidance

• FY24 build rate expected at the lower end of 675–725 units in New Zealand due to market conditions.

• Management remains confident in achieving targets as new stock comes online, with continued focus on cost efficiencies and robust sales.

• Demand for retirement living remains strong, supported by population growth in the 75+ age group.

• Forecast net cash position from NZ villages under development of over $245m.