ElderCare Targets Growth In Wider Market

ElderCare Targets Growth In Wider Health Care Market

Auckland – 24 November 2000 – Listed retirement care provider ElderCare New Zealand (NZSE: ELD) today announced plans to progressively expand its existing nursing and rest home operations into additional medical and health care growth opportunities.

Speaking at the Company’s Annual Meeting, Chairman Maurice Kidd told shareholders there was significant opportunity to reposition ElderCare into the wider medical and health care market in New Zealand and, potentially, Australia.

“We remain committed to growth, but we have begun to exercise some caution about the actual direction in which we steer the Company,” he said. “In recent months, the Board, along with Senior Management, started to develop a wider investment strategy. We determined that there was a unique opportunity to move ElderCare into a listed medical/health operating company by concentrating on new investments in the health care market and not be constrained purely to the retirement sector.”

While fees from ElderCare’s residential services provided a solid platform for sustained growth in the elderly care market, Kidd said the Company has become more selective in evaluating further development of its considerable land bank. Before proceeding with new developments the Company will spend considerable time evaluating whether they fit with its wider investment strategy, given the desire not to be dependent on one-off property gains.

Kidd also confirmed that the country’s weakening property market meant that one-off gains made by the Company from the sale of villas, apartments and land holdings during the last financial year could not be expected to continue at the current level.

ElderCare realised $1.7 million in after tax profit from the sale of villas, apartments and land holdings for the 12 month period ending 31 May 2000.

The Company currently operates 14 nursing home and hospital facilities, all of which have increased occupancy levels steadily over the last eight months, with eight of the 14 facilities running at or close to 100% occupancy.

Commenting on ElderCare’s repositioning, CEO, Alan Clarke said the Company’s June acquisition of Ranworth Healthcare, New Zealand’s largest provider of rehabilitation services to the Accident Compensation Corporation, was the first significant step toward a change in direction.

“The core operating assets of Ranworth Healthcare and the ElderCare hospitals and rest homes provide a strong base with good EBITDA yields on the back of strong occupancy and service levels.”

“Expansion of these core cash flow medical businesses along with other health and medical opportunities is seen as offering an attractive investment base for existing and future shareholders,” Clarke said.

In light of the Company’s repositioning, Kidd said ElderCare Directors will make one-off write downs of certain assets, including goodwill associated with the acquisition of village developments which the Company no longer plans to complete. It will also revalue selected land holdings to more realistically reflect current market conditions and the fact that these will no longer be used for village developments. The Company will also recognise some one-off restructuring costs associated with implementing the new direction.

“The Company’s Earnings Before Interest Tax Depreciation and the Amoritisation of Goodwill, will be in the order of $3 million for the six months to 30 November 2000, a result which is considerably up on the first half result for last year. However as a result of these write downs the Directors expect to post a loss for the six months to 30 November 2000, of between $6.5 million and $6.9 million.”

Going forward Kidd said the Company’s purpose is to acquire good, sound, businesses with excellent track records at attractive prices with the objective of increasing earnings per share for all shareholders and to have this reflected in a sustainable and improving share price.

Company Background
ElderCare New Zealand Limited (NZSE: ELD) develops, invests in and manages retirement and other health care facilities. The company owns a substantial portfolio of nursing homes, assisted living and assessment and rehabilitation facilities throughout New Zealand, in which it offers broad and varied services to meet the healthcare needs of New Zealanders.

ENDS

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