Eureka Group Holdings (ASX:EGH) Chairman, Robin Levinson talks company strategy and outlook at the ASX Spotlight Series, Hong KongEureka Group Holdings
(ASX:EGH) is the largest operator of rental retirement villages in Australia at the moment. We have close to 2,000 residents who stay with us. And our shared value mission in life is to provide meaningful and respectful accommodation for the 25 per cent of Australians who are less well off. And either totally or primarily rely on the pension and rent assistance, provided by the Australian Government.
Eureka’s focus is to keep growing; right now we have four ways to grow. We’ll continue to acquire existing villages throughout regional Australia. We’ll continue to in-fill or brownfield develop on existing land that we already own. We have the ability to increase rents and occupancy. And lastly, something we haven’t done before is to provide services into our residences, to allow them to stay with us longer and not necessarily have to move to a higher level of care, in an aged-care facility.
Eureka’s currently corporatising what is a cottage industry. Right now, we’ve identified there are over 2,000 retirement villages that are owned by church groups, volunteers, not for profits and individual private owners. And of that 2,000 only 60 of those villages are owned in a corporate framework of which we own and manage 29. We’ve done due diligence on over 200 of those 2,000 villages and we would be quite happy to buy any of those at the right price.
The market that we’re active in, which is the less well off Australian retiree is unfortunately, the fastest growing retiree market in Australia, every year. So we see a strong supply of residents looking for a quality place to live. And at the moment, we’re not seeing any shortage of assets that we can acquire, to fulfil that requirement.
Over the last 12 months, every metric has gone through the roof. We’ve increased revenue, we’ve increased EBITDA, we’ve increased net profit. In fact if you look back to January 2014 until now, the annualised EBITDA has grown from $1 million to $10.5 million. The other thing that Eureka is extremely good at is converting a dollar of revenue to free cash flow, which we then reinvest back into buying existing assets. So all in all, I would say we’re in a strong position, we’ve got a conservatively geared balance sheet. And I think the next 12 months for Eureka looks very exciting.
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