I scratched my head over the $80M Revaluation also. Note that its almost exactly the same figure they reported for the previous year too.
My reading of the fine print in recent reports is that this $80M is the increased value of properties due to buy-back/refurbishment and also building new properties. My reading also is that this is the profit margin (i.e. increase in value after discounting for costs). It makes sense then, that they report this as "underlying profit", (which seems unusual for revaluation), because it sits next to the associated costs for refurbishment & building new, and is a result of company activities, not just general market values shifting.
Also note that one of the reports states that almost $5M of this $80M is cash, and the rest is "unrealised profit". This makes sense, as FKP sell a small percentage of units outright, but the majority are let out under contract/long-term lease, with no profit realised until end-of-contract roll-over (about 10 years down the track, on average).
They do, however, get a nice "interest free loan", that goes on the books, for the value of the property when the customer first signs the contract.
The way cash flows around the retirement business is a little complex. If anyone else has a better understanding of this, I'd love to hear it.
FKP Price at posting:
$1.44 Sentiment: LT Buy Disclosure: Held
