OCA - Oceania Group - retirement villages

[Bjauck]

Cash burn was $78m …if include dividend it was $85m

Mav ….this more than what you estimated in that cool chart you showed us a few months ago?

At least there has been no dividend paid since June 2023 and no dividend declared with these results. However that may be a reason why the share price is still in the doldrums. Some holders, who may have originally bought the share partly for its dividend yield, may now be capitulating, disappointed that dividends have not resumed.

[bull....]

Well, it would certainly help if they weren't operating at a day to day of loss of $42M, + net interest costs have increased by $3M.
That's a lot of sales/resales to just break even.

But apparently some on here don't think they are losing money day to day...
They did in FYE23 & have basically doubled that operating loss in the last financial year

included a one off insurance paymt of nearly 9mil in result as well
expense growth far exceeding rev growth

[ronaldson]

Some takeaways for me:-

Employee retention rate (including clinical employees) was up 10%. May be just a sign of the times, but the Net promoter score was better as well and there is a share plan participation offered.

The total of care beds reduced to 1396 from 1651 at FY23. A further 91 will have gone since via the Takanini sale, 31 more (along with 21 Care Suites) via the Middlepark sale and more from the unidentified site presently under contract. Notwithstanding, it was interesting that MoH aged care subsidies paid was up $3.2m over FY23.

The insurance settlement re Gabriel and the Auckland Floods reached on 16 May removed uncertainty and allowed the 31 March figures in the Consolidated statement of Comprehensive Income and the Balance Sheet to reflect the actual sums agreed as receivables.In that regard insurance income recorded under Other Income was only $2.69m, compared with 12.02m in the prior year.

Interest on Senior Debt Facilities increased to $27.87m from the prior year $13.68m, a real drag on profitability. Bank Loan interest rates applicable were in the range 6.40% to 7.15% by comparison with the prior year 3.23% to 6.53%. Given the change in rates arose incrementally thru the year the interest charge for FY25 will certainly be even more even if drawn debt was unchanged. Bank Loans drawn as at 31 March were $418m.

Actual development and construction commitments disclosed as at 31 March 2024 were $45.3m. This is significantly lower than the prior year figure of $124.8m suggesting a slow down in the pace of ongoing activity or an unusually high level of practical completions in FY24.

Shareholders were thrown a small bone with the indication that an interim dividend for FY25 might be declared in October. This will not do much to move the dial so we seem to be in a holding pattern just now and perhaps for some time to come. Sub 60c will continue in my view.

I don't have real doubt that in the longer run the switch out of care beds and into more premium accommodation and care suites is the best strategy for OCA but it takes time and incurs costs.

[bull....]

From Shareguy:

Craig's say

Ridgewell notes net bank debt is now $633m and worse than management guidance for debt to be flat or down at the interim result. -

As such, we think OCA will either need to i) scale down its development aspirations and focus on paying down debt or ii) raise equity

OCA could run in too real trouble if property market slows more

[winner69]

Hey Ron …good list of achievements

But you didn’t include the 79% of construction waste was diverted from land fill …some 842t of it

[Lego_Man]

OCA could run in too real trouble if property market slows more

Which is exactly what is unfolding. Not out of the woods yet.

Hopefully i'll have some dry powder to average down further in that scenario.

[kiwikeith]

From Shareguy:

Craig's say

Ridgewell notes net bank debt is now $633m and worse than management guidance for debt to be flat or down at the interim result. -

As such, we think OCA will either need to i) scale down its development aspirations and focus on paying down debt or ii) raise equity

I must admit I was surprised by the bullet point about debt in the press release. "Undrawn debt headroom is is $88m". Normally companies are upfront with their net debt position and whether it has gone up or down - not a comment on net debt headroom.

[mistaTea]

You've all been waiting for it...so...

### Critical Review of the Oceania Annual Report 2024


#### Executive Summary
The Oceania Annual Report 2024 presents a comprehensive overview of the company's performance, strategic initiatives, and future outlook. The report emphasizes Oceania's commitment to innovation, sustainability, and providing a premium resident-focused experience in the retirement and aged care sector. Key sections include financial performance, integrated reporting, sustainability framework, resident experience, and growth strategy.


#### Strengths


1. **Financial Performance**:
- The company has shown robust financial growth with significant increases in total comprehensive income and net profit after tax.
- Consistent improvement in sales volumes and cash flow indicates strong market demand and efficient operations.


2. **Innovation and Resident Experience**:
- Oceania has introduced several innovative initiatives like the Nurse Practitioner Model and the Together App to enhance resident care and engagement.
- The Helier, a flagship premium care facility, showcases Oceania's ability to provide luxurious and high-quality care services, setting a new standard in the industry.


3. **Sustainability**:
- The company’s commitment to sustainability is evident through its initiatives like the Sustainability Linked Loan, Greenstar Communities project, and waste management practices.
- Oceania's alignment with the Integrated Reporting Framework and Global Reporting Initiative (GRI) reflects its dedication to transparency and long-term value creation.


4. **Strategic Growth**:
- The report outlines a clear and strategic approach to growth, focusing on both greenfield and brownfield developments.
- The divestment of non-core assets and reinvestment in high-potential projects demonstrate prudent capital management.


5. **Governance and Risk Management**:
- The report highlights a proactive approach to governance and risk management, including addressing emerging risks like climate change and cyber threats.
- Regular engagement with residents and incorporation of their feedback into continuous improvement processes show a resident-centered approach.


#### Weaknesses


1. **Dividend Policy**:
- The decision to not pay a final dividend might disappoint some investors who expect regular returns. While this is justified by the need for reinvestment, it could affect investor sentiment.


2. **Regulatory Environment**:
- The report acknowledges the ongoing review of the Retirement Villages Act and potential regulatory changes. However, it lacks detailed contingency plans or strategies to address potential regulatory impacts.


3. **Operational Challenges**:
- The report mentions the pressures on residents, teams, and the portfolio but does not provide in-depth analysis or solutions to these challenges.
- The GP shortage and its potential impact on resident care is recognized, but the mitigation strategies (e.g., Nurse Practitioner Model) might not fully address the scale of the problem.


#### Opportunities


1. **Expansion of Private Care**:
- The successful launch of The Helier indicates a market for premium private care. Expanding this model to other locations could capture a high-value segment of the market.


2. **Sustainability Leadership**:
- Oceania's sustainability initiatives position it as a leader in environmentally responsible aged care. Further development in this area could enhance brand reputation and attract environmentally conscious consumers and investors.


3. **Technology Integration**:
- Continued innovation in technology, such as the Together App and Alexa integration, could significantly enhance resident satisfaction and operational efficiency.


4. **Community Engagement**:
- Strengthening community engagement and partnerships could create additional value for residents and enhance Oceania’s reputation as a community-focused organization.


#### Threats


1. **Market Competition**:
- The aged care and retirement living sector is highly competitive. Maintaining a competitive edge through continuous innovation and high-quality service delivery is crucial.

2. **Economic Downturn**:
- Economic challenges or downturns could impact the financial stability of residents and their ability to afford premium services, affecting Oceania's revenue.


3. **Regulatory Changes**:
- Potential changes in the Retirement Villages Act could impose new requirements and increase operational costs. Proactive engagement with regulators and adaptation strategies are essential.


4. **Workforce Challenges**:
- Ongoing workforce shortages, particularly in nursing and general practitioners, could impact the quality of care and operational efficiency.


#### Conclusion


The Oceania Annual Report 2024 demonstrates a company committed to growth, innovation, and sustainability. While there are areas for improvement, particularly in addressing regulatory and operational challenges, Oceania's strategic initiatives and financial performance indicate a positive trajectory. The company's focus on premium resident experiences, technological innovation, and sustainable practices positions it well for future success.


---


**Recommendations**:
1. Enhance transparency around regulatory contingency plans.
2. Develop more detailed strategies to mitigate operational challenges.
3. Explore further opportunities for expanding premium care services.
4. Continue to invest in technology and sustainability to maintain competitive advantage.

[MauroNZ]

Too late now...SP will be around $1.30...when market open

Open

$0.58



Intraday Range

$0.57 - $0.59




What year?

[X-men]

According to sailor moon....year 2400