The following article provides some insight into potential issues being faced by LLP, and therefore why the share price continues to drift lower. However, with Lend Lease as a major shareholder, I expect this will limit the slide, yet I probably would have said the same when it went just below 20 cents.
RETIREMENT living company Aevum has reported a first-half loss and slashed its interim dividend after its asset values dived.
Aevum expects to generate a $3 million to $5 million profit in the second half of 2008-09.
But it says its full-year result is still set to be in loss-making territory at $10 million to $12 million.
The net loss for the six months to December 31 was $14.96 million, compared with profit of $10.95 million in the previous corresponding period.
The company said in January an interim net loss of $15 million to $20 million was expected.
Aevum said softer housing market conditions had hampered sales and reduced carrying values on some assets in NSW and Western Australia by $18 million, pre-tax.
The company slashed its first-half dividend by 55.6 per cent to 2c per share, from 4.5c.
It plans to pay a similar amount as a final dividend, providing there is no further deterioration in market conditions in the second half.
Managing director Steve Mann said the first-half result was disappointing, but did not reflect the underlying quality of its operating business and ongoing demand for retirement accommodation from the ageing population.
"Due to the ageing baby boomer demographic, population growth of those older than 65 years old is growing at twice the rate of the general population," Mr Mann said yesterday.
"This is a fundamental strength that will return the retirement living industry to strong growth in the medium to long term."
Aevum is one of the largest owners, operators and developers of for-profit retirement living accommodation in NSW.
It expects to report profit of $3 million to $5 million in the second half as development returns come through.
An expected full-year net loss of $10 million to $12 million is compared with a profit of $28.55 million in 2007-08.
Aevum shares closed up 4c at 90c. The group was floated in late 2004 at 90c a share and traded at an all-time high of $3.98 in mid-2007.
Mr Mann said the company's balance sheet and funding position remained sound, with gearing at 23 per cent and net debt of $78 million.
It has a $150 million debt facility drawn to $90 million and $12 million cash on hand.
The company, 14.3 per cent owned by property developer Stockland Group, said it would be able to fund its existing organic development pipeline and could make modest acquisitions "at a time in the market when distressed sales and opportunities may arise".
Aevum's first-half revenue rose 7 per cent to $12.06 million.
The company flagged the expected losses and writedowns last month, citing declining market conditions.
Aevum said prospective tenants had been unable to buy into aged-care centres because the falling housing market meant they were unable to sell their homes.
LLP Price at posting:
13.5¢ Sentiment: Buy Disclosure: Held
