Eureka profits slashed and poor performing Couran Cove disposed of
Written on the 31 August 2018 by David Simmons
Listed aged care provider Eureka Group (ASX: EGH) has had a tough year, and it's reflected in the company results.
Revenue and earnings were down across the board, but profit took the biggest hit for Eureka.
The company recorded a loss of $276,000 for FY18, down 104.2 per cent from a $6.5 million profit in FY17.
Revenue dived 11.6 per cent to $23.4 million, whilst earnings tumbled 71 per cent to $2.7 million.
Despite these results, occupancy in the group's aged care residences were up 92.9 per cent, and the company successfully pushed into Tasmania.
The company recently wriggled itself out of a difficult situation after its investment in the Couran Cove Resort (pictured) on South Stradbroke Island.
Acquired in late 2015 for $2.05 million, the Couran Cove Resort was intended to become another one of Eureka's many aged care facilities under management. Recently, the board determined it would not acquire the management rights of Couran Cove, and has since disposed of its property assets at the resort. Eureka says Couran Cove was negatively effecting the group's cash flow.
This transaction will return $3.6 million cash, which will be re-deployed in Eureka's core business activities.
Eureka now owns 32 properties around Australia, of which 9 are under management.
Murray Boyte, Eureka's executive chairman, says FY18 has been difficult.
"While Eureka Group has experienced a difficult year the core business providing affordable senior rental accommodation and other services has performed strongly," says Boyte.
During the period, Eureka acquired three new villages for $6.26 million and entered into a joint venture with private investors to acquire five senior rental villages in Tasmania.
Eureka's total investment in the Tasmanian expedition was $4.5 million.
Business News Australia
Author: David Simmons