OCA - Oceania Group - retirement villages

[Beagle]

So nobody has bothered to get to grips with the accounts yet then!

OCA is what it is, now trades at what I consider fair value.
England is currently 'dank', weather wise, according to the weather forecaster on TV the other day.
Apparently that means 'unpleasantly dark and cold'. Seems accurate to me.

Choosing to be in England in the depth's of an English winter Hope you've grown extra thick fur in advance

[winner69]

My thoughts on the result:



- Operating cash flow is up by 21% as per the cash flow statement which is very positive, supports paying a dividend a bit more which I wasn't a fan of previously considering all the spending.

Retirement s sector cash flow reporting doesn’t really tell the full story even though all tout how wonderful their Operating Cash Flow is

Sale proceeds in Operating Cash Flow but the spend on building things to sell (correctly) shown as Investments

Recast cash flows look like this -

Operating Cash Flow from day to day activities............. -$23m
Proceeds from sales of ORAs .......................................$80m
Buying and building things........................................ -$71m
Actual Free Cash Flow ............................................. -$14m

Paid Dividends .................................................. ...... -$14m

TOTAL CASH OUT .................................................. . -$28m
FUNDED BY INCREASED BORROWINGS ........................$20m and $8m less in Bank


That’s how I see the money go round anyway ...still say nice that a ‘growth’ company borrows to pay a divie.

[Beagle]

That "growth" company THL have been borrowing to pay dividends for a long time now...haven't looked in a while, how's that working out for them ?

[trader_jackson]

Ah yes, net debt... that is one area where OCA has experienced rapid growth. From $84.4m in FY17 to an expected $203.6m in FY19, and $283m in FY20... up 235% in 3 years, that is more rapid than any other listed operator.

That FY20 number would be nearly as much as the 'bad old days' (the days when Roger wouldn't touch OCA with a bargepole - those days were a mere 2 years ago) when OCA was riddled with debt... that was before the IPO where $173m of the $200m IPO proceeds were dedicated to paying off the $259.1m in debt OCA had as at FY16 - OCA did a good job however, and reduced debt all the way down to $84.4m.

With the housing market now slowing down, it will be come down to how good OCA's continuum of care really is to attract people to their villages - otherwise we'll find sum things won't be selling so fast and capital recycling won't be occurring as swiftly... and that 'enormous debt' OCA is forecast to soon be riddled with again, just might turn into dangerous debt.

I believe OCA can do it, especially if it is as good as their flashy preso's and tour days, but it has silently and certainly elevated the risk profile of OCA above that of a particular other listed operator with strong continuum of care offering who are nearly as cheap with similar yield.

Posted April 2019... Net debt was $84.4m as at May 2017, and now $288.1m as at November 2019, with a 'prudent' (they say) gearing level of 31.8% (net debt to debt plus equity), this is already ahead of where sum were picking debt to be at the end of FY20 less than a year ago... well OCA certainly does have stunning rates of growth when it comes to borrowing.

No worries cause the Share price and dividend are up and its a new decade

[winner69]

Tj - That gearing of 31.8% is 56% if you include what’s been borrowed from residents.

[forest]

Posted April 2019... Net debt was $84.4m as at May 2017, and now $288.1m as at November 2019, with a 'prudent' (they say) gearing level of 31.8% (net debt to debt plus equity), this is already ahead of where sum were picking debt to be at the end of FY20 less than a year ago... well OCA certainly does have stunning rates of growth when it comes to borrowing.

No worries cause the Share price and dividend are up and its a new decade

T-J, you right that debt has risen a lot from May 17 to Nov 19. It has risen by your calculation $204mil.
But total assets have risen as well, by $600mil.
So maybe it is a case of no worries.

[Beagle]

Posted April 2019... Net debt was $84.4m as at May 2017, and now $288.1m as at November 2019, with a 'prudent' (they say) gearing level of 31.8% (net debt to debt plus equity), this is already ahead of where sum were picking debt to be at the end of FY20 less than a year ago... well OCA certainly does have stunning rates of growth when it comes to borrowing.

No worries cause the Share price and dividend are up and its a new decade

Growth in debt is fine if its reasonable and generating meaningful earnings growth...unfortunately in this case...

[forest]

I think this is an interesting slide of OCA explaining the reduced care fees while changes are being made to their brownfield sites.

[winner69]

There was a pretty hefty increase in realised gains on new sales in H1 ....from more sales and importantly from a higher average

That’s good

Somebody had to say something as thread not on front page

[Beagle]

That fancy new hire they made late last year with decades of experience http://nzx-prod-s7fsd7f98s.s3-websit...073/307805.pdf at a cost of many hundreds of thousands of dollars per annum, apparently has heaps of new idea's about how care standards can be lifted significantly higher yet and apparently according to a "little birdie" has been given free rein to make whatever changes she likes irrespective of cost and with no regard to getting an acceptable return on investment whatsoever. I would be thrilled if I was a resident and quite concerned if I was a shareholder.

As previously warned, with this company residents come first, second, third, fourth and fifth and then its management and staff and then shareholders come a long and distant last.