OCA - Oceania Healthcare

[BlackPeter]

Seems to $43m worth

Hmm.

Good Ferg seems to have found it, but I see not how which value on page 19 of the HY report points to how much it costs OCA to pay es residents after 12 months for their unsold unit (and add interest from the 7th month).

Given that the average resell time is below 6 months must it be a small number of units - and basically provide a loan for some months (until it is sold).

If the 43m is e.g. the number of unsold preloved units (after 12 months) - than we still would need to know what interest rate they pay and for how long. Say 5% interest and 3 months, than this would be something like 500k per year.

Must be my lack of peacounting ... could you just help us to explain where the number comes from and what it exactly is ... ?

[winner (n)]

Hmm.

Good Ferg seems to have found it, but I see not how which value on page 19 of the HY report points to how much it costs OCA to pay es residents after 12 months for their unsold unit (and add interest from the 7th month).

Given that the average resell time is below 6 months must it be a small number of units - and basically provide a loan for some months (until it is sold).

If the 43m is e.g. the number of unsold preloved units (after 12 months) - than we still would need to know what interest rate they pay and for how long. Say 5% interest and 3 months, than this would be something like 500k per year.

Must be my lack of peacounting ... could you just help us to explain where the number comes from and what it exactly is ... ?

You only asked what the units >12 months value was. I assumed that was $43m of unsold resale units. Migh5 be wrong.

What is financial impact of unsold resales? We'll never be told. Besides interest expenses incurred there's also the lost fees and DMF until sold again. They all add up and impact profitability at some point in time.

[BlackPeter]

You only asked what the units >12 months value was. I assumed that was $43m of unsold resale units. Migh5 be wrong.

What is financial impact of unsold resales? We'll never be told. Besides interest expenses incurred there's also the lost fees and DMF until sold again. They all add up and impact profitability at some point in time.

OK - so, if the 43m is the number of unsold resale units (vs unsold of all units) ... than at least half of them are less than 6 months unsold (based on average resale time with 5 yrs residence and 90% occupation), i.e. no interest at all.

For the other half OCA will need to pay for some months some interest. Some $100k per year?

Does not sound to me like the big hammer which  is wedged for years in this and other forums gainst OCA (and other retirement villages), but if this is the big thing, than buying them now while the interent hype is so bad, could be good.

Apart from that - I think total occupation in OCA was last time I checked about 91% and occupation of resale villas was more something like 94% (but hey, this is a couple of years ago and from memory) ... i.e. the real costs are still smaller (and they pay them already anyway). So - rather small costs and OCA pays them already anyway.

[Ferg]

Shareholders might wonder when this 12 month buy-back change came into effect ?

It has been there every year since FY17.

[Ferg]

The $43m is after a suite or unit has sat unsold for 12 months.  It would have cost OCA interest paid to the estate of the departed resident from months 7-12.  Once it passes 12 months and is bought back by OCA, then it will still cost interest but instead OCA pay interest to the banking syndicate.  Keep in mind OCA did not pay $43m for that buyback stock...that is based on the estimated (or listed) resale prices.

I estimate about 62 suites & units had been bought back by OCA at the end of HY26, give or take a few.

To your point BP I reckon there was around $7m of unsold resale stocks at HY26, of which a proportion (half?) would be subject to interest payments to the estate of the outgoing resident.  It is small beer.

But the bigger issue for OCA is the number of new unsold apartments...whilst this has come down by 49 since the end of FY25, it is still a large number and will be the bulk of the $302m new unsold stock.

OCA stocks:

You cannot view this attachment.

My "unsold %" percentage does not take into account care suites occupied under a PAC arrangements that have yet to be sold under an ORA.  OCA have a higher occupancy % due to that plus they may have an occupancy % weighted over the period instead of at a point in time.

[Buzz]

It has been there every year since FY17.

Hey thanks Ferg, for this and your other well informed posts. I find it disappointing that a vocal minority here are so out of touch and for whatever reason choose to constantly and repetitively spread misinformation.

[Crackity]

Hey thanks Ferg, for this and your other well informed posts. I find it disappointing that a vocal minority here are so out of touch and for whatever reason choose to constantly and repetitively spread misinformation.

I personally value reasoned opposing viewpoints on a forum like this more than anything else.

Then again all I have posted on lately is NTL

I'd rather buy OCA than them

[Greekwatchdog]

I personally value reasoned opposing viewpoints on a forum like this more than anything else.

Then again all I have posted on lately is NTL

I'd rather buy OCA than them

Everyone does, but when its done without research and constant Poop Poop people get a little fed up considering some of these so called posters are supposed to be formative posters.

[Administrator]

Once again I am drawn to this festering wound of a thread and being asked to take sides.
I don't have time to investigate who is right and who is wrong. I only see who is calling who names.
I know some of you are invested in this both financially and emotionally, but that is not an excuse to be rude.
This is a strict thread. Moderation action has been taken against multiple people for making personal attacks and being rude, any more and whoever is doing it will be taking a nice long Christmas holiday.
In a similar vein, spamming incorrect information constantly will also get one removed, however I note this thread has been inactive for weeks until recently.
Please keep things civil, so we can all have a peaceful and profitable Christmas 

[Ferg]

Hey thanks Ferg, for this and your other well informed posts.

Thanks Buzz.

I probably should have added more context to my post but I was focussed on my other post at that time.

Where to find the relevant value for buy backs is in the presentation that accompanies the annual accounts - in particular the page titled 'Reconciliation of resales cash flow'.  On that page is a line titled 'less: Net Buybacks'.  The earliest recorded instance I could find of this is in the FY18 presentation and they included a value for FY17.  The FY17 presentation did not contain that particular page.

The accompanying note in FY25 says:

Net Buybacks is the difference between the gross ORA payments made in relation to units bought back (and not resold) during the year and the gross ORA receipts from units resold during the year that were bought back in prior financial years.

And the note in the FY18 presentation says:

Net Buybacks is the difference between the gross ORA payments made in relation to units bought back (and not resold) during the year and the gross ORA receipts from units resold during the year that were bought back in prior financial years.

So it appears to have been a policy since at least FY17, and my guess is it likely pre-dates then.

Edit: I just found this in the 2014 accounts prior to listing: "Note the Group has an obligation to buy back some of any unsold Assisted Living Suites after a period of 90 days on contracts entered into prior to 6 July 2011."

[winner (n)]

Thanks Buzz.

I probably should have added more context to my post but I was focussed on my other post at that time.

Where to find the relevant value for buy backs is in the presentation that accompanies the annual accounts - in particular the page titled 'Reconciliation of resales cash flow'.  On that page is a line titled 'less: Net Buybacks'.  The earliest recorded instance I could find of this is in the FY18 presentation and they included a value for FY17.  The FY17 presentation did not contain that particular page.

The accompanying note in FY25 says:
And the note in the FY18 presentation says:
So it appears to have been a policy since at least FY17, and my guess is it likely pre-dates then.

Edit: I just found this in the 2014 accounts prior to listing: "Note the Group has an obligation to buy back some of any unsold Assisted Living Suites after a period of 90 days on contracts entered into prior to 6 July 2011."

Ferguson - is there any noticeable trend (getting bigger or stable?) in the Net Buybacks amounts or do they just reflect the ebb and flows of business.

[Ferg]

Winnerson: it is ebbs and flows per the image below.

Net buybacks were relatively minor until FY23 and then we see some larger swings in FY24 & FY25.  It will naturally ebb and flow as resale stocks build up and then sell down depending on the state of the property market, plus it is one of the joys of "as at" reporting.....

You cannot view this attachment.

Three other points to note from the image:

1) "Development buybacks" have cost OCA $40m in 9 years....I believe this is where OCA demolish a facility (for instance) and need to pay out the current resident.  TBC

2) Deferred settlements is the impact of the sales incentive to "buy now pay later" with the last say 5 or 10% of the ORA value (% TBC)....we can see there was a buildup of ~$31m over the past 9 years that will either reverse or rollover depending on the state of the property market as these unwind.  These become another deduction from the ORA payout when the resident departs.  This is partly the reason (as well as increased sales activity) for the massive growth in ORA debtors over the years.  In FY17 ORA debtors was $0.88m and in FY25 this value had grown to $93.9m.*

*There was a note in the FY25 accounts which said:

Occupation licence receivable includes an amount of $65.1m in relation to short term occupation licence receivables expected to be recovered in less than 12 months. (31 March 2024: $74.0m).

3) DMF Realised: once again OCA are hampered by IFRS and this line item is IMO a cash inflow to OCA that you don't see in the cashflow statement.  DMF is not pure profit as such...rather it is income to fund expenses.  Accordingly, the CF statement understates the cash received (or not paid out) when a resident departs.  OCA collect the management fees that have been charged over the years by deducting that amount from the final ORA payment.

Take for instance FY25, the CF statement has ~$107m of ORA payments out per the 2nd image below.  In my opinion this should be shown as a cash outflow of $139m with another line showing a cash inflow of DMF realised of $32m.  That would provide greater transparency around operating cashflows.

I have more to say about the inaccuracy of operating cashflows but that can wait for another time.

You cannot view this attachment.

[Ferg]

This way of showing the reconciliation of resale gains makes more sense to me:

You cannot view this attachment.

[winner (n)]

Good work there Ferg

Re DFM realised. I enquired once and was told it was the difference between the new DFM and the amount of the DMF included in the previous sale.

The whole accounting for DMFs by RV is complicated/confusing as no doubt accrued over the tenancy and included in Revenue.

I've given up trying to 'reconcile' DMF related bits in the Income Statement, Balance Sheet and Cash Flow Statements.

But valuable spreadsheet there you posted

[winner (n)]

Nice to see a new slide in the Appendices of the half year preso

14 Available Stock - which gives a breakdown of available stock in March 25 and Sept 25.

As at September 271 new and 73 resales available. of the 344 soem41 are Under Application which I assume is buyers in throes of buying.

The last year or so 350 seems about the average available