24 Nov 2020

Rest home profit down as costs go up to remain Covid-free

11:25 am on 24 November 2020

Another retirement village operator has seen its half-year result hit by higher costs as a result of Covid-19.

Photo of elderly man on wheelchair and his private carer

Photo: 123RF

The Arvida Group's net profit for the six months to September is down by 7 percent on last year to $41.8 million, as it incurred one-off costs of about $5m to prevent the coronavirus from entering its villages.

Chief executive Bill McDonald said a number of costs associated with Covid-19 dented its bottom line.

"As an essential service additional costs were incurred to maintain Covid-free and safe communities for our residents. We have been successful in remaining Covid-free having had no positive cases recorded amongst our 4750 residents or 2600 staff."

McDonald said it spent $5m extra on extra staff, increased pay for front line staff, and purchased more personal protective equipment (PPE).

Arvida's revenue for the period was $86.2m, an 8 percent increase on a year ago as it made more from care fees and higher prices from the sale of units.

The bottom line was also lifted by a $37.6m gain in property values, slightly ahead of the gain a year ago.

Trading for the first six weeks of the half-year was severely affected by the first lockdown, putting a lid on unit sales and resulted in lower occupancy rates.

McDonald said once restrictions were eased there was a strong increase in enquiries and sales, as older people isolated during the lockdown looked at what retirement villages had to offer.

"We are seeing increased sales enquiry for our safe communities and from those looking to stay connected - or becoming more connected - as a key part to healthy living in their retirement."

McDonald said it should complete the construction of 199 new units in the second half to bring it to 247 new units for the year.

He said Arvida was in a strong position with a good outlook because of the strong property market and high occupancy, despite significant economic uncertainty in the near term.

Arvida received $2m in subsidies for rest home relief and essential worker subsidies, and it claimed $400,000 from the wage subsidy scheme for construction and cafe workers during the lockdowns, although McDonald said repayment was "not off the table".

A half-year dividend of 2.4 cents a share will be paid.

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