Originally Posted by
ronaldson
I thought to expand on my post 14077 above which drew attention to the fact that 10 of OCA's sites are now classified as " held for sale".
The first mention of this was in the CEO's commentary on 23 June at the AGM. He said " As the business matures we also have an eye to those sites that may no longer fit the portfolio or meet return thresholds and divestment of a few sites will likely be part of this year's activity."
After a couple of subsequent acquisitions OCA now has 47 sites, 26 of which are described as existing sites with mature operations,21 as existing sites with current or planned development, and 1 undeveloped. I suspect it is only the rules around accounting treatment that have forced the disclosure in the half-year financials that no less than 10 of these sites have been assessed by the Board as appropriate for disposal (no doubt dependent upon price that can be achieved).
The Chair makes clear that " The strategy is to enable less reliance upon Government funding for ongoing operations, with (remaining) sites free to operate outside the restrictions of the current Government funding model." And there is reference to " recycling cash within the business."
This may beg the question how you successfully dispose of operational sites that are not making an adequate return, to whom you might do that, and what sale price might be achieved in such circumstance. But it is still more than 20% of the portfolio and should have Andrew Little on edge as once the listed and unlisted RV operators effectively abandon ship with regard to basic state funded aged care as policy he is in really big trouble. I would say this is yet another dead canary signaling how it is and is going to be in future.
I wonder what will occur so far as the intended divestments are concerned between now and FY23. That may tell a tale what, if anything, can be achieved and as to the extent of any "haircut" to values.