After the unexpected emergency lunch
Quote:
Originally Posted by
Roger
International Financial Reporting Standards (IFRS) require property companies to revalue their portfolio each year to current market value.
IFRS reported profit includes all property revaluations and does not represent the underlying cash earnings of the business. This measure underlying earnings, referred to by all the retirement village operators is the measure all professional analysts use to compare the earnings across the sector because this measure excludes the annual property revaluation but includes all cash earnings from license to occupy resales, new unit sales and the development margin thereon and any profit from the operations of the villages....
Underlying earnings has 4 main components:
1 - The current assessed value of a new units sold - the cost of those units;
2 - The current assessed value of resold units - the previous assessed value of those units when last sold or resold, however many years ago that was;
3 - The profit/loss from operating the villages and providing services;
4 - Anything else.
Later the same day...
For SUM for 2016 the underlying earnings numbers for a total of $56.6M were:
1 - $39.0M
2 - $15.4M
3 & 4 - $2.2M
or mostly revaluation gains.
this compares with the NPAT total of $145.5M of which only $2.0M is non-revaluation profits.
Now for the really good bit...
For SUM for 2016 there was a net operating cash inflow of $192.6M, an even bigger number than that NPAT profit.
:t_up:
Interestingly one element of the cash flow is:
Receipts for residents' loans - $261M8;
which is, as near as makes no difference, also the current assessed value of those units sold and resold (as in items 1 & 2) up top.
That makes one ponder. Which came first, the sale or the valuation?
Best Wishes
Paper Tiger