Revaluations – trumpeted by listed property entities in good years, played down with all sorts of explanations in bad years.
The revised valuations for the period affected by Covid-19 have brought a sharp decline for many companies, but you can be sure the likely rise again next year will again be trumpeted.
In bad years, revaluations are “unrealised”. In fact, while they’re a book entry which doesn’t hit the profit/loss line, their effect flows through the accounts.
At retirement village company Oceania Healthcare Ltd, the downward revaluations took the company to a loss for the year to May, but the company’s earnings had also plunged last year, though not to a loss on that occasion.
Key result measures (2019 in brackets):
Underlying net profit after tax (non-GAAP measure), down 12.9% to $42.9 million ($51.2 million)
Underlying ebitda (earnings before interest, tax, depreciation & amortisation), down 1.2% to $63.5 million ($64.3 million)
Net earnings, down 130% to a $13.6 million loss ($45.4 million profit in 2019, $77 million profit in 2018)
Revaluations, down 147% to a $21.7 million reduction ($46.6 million gain); the company also gained $17.1 million this year from a change in fair value of right of use investment property relating to one village, previously included within investment property
Basic & diluted earnings share, down 129% to 2.2c loss (7.5c profit)
Total assets, up 10.7% to $1.55 billion ($1.4 billion)
Operating cashflow, up 11.3% to $99.4 million ($89.3 million)
Final dividend, 1.2c/share (not imputed), taking full year’s dividends to 3.5c/share (not imputed; 4.7c last year)
Aged care occupancy, 93.7% (93.2%) at aged care sites not impacted by redevelopment activity
Attribution: Company release, annual report.