Ryman business model praised for 10th successive year of profit

Retirement village operator Ryman Healthcare yesterday reported its 10th year of successive record profits, the underlying profit rising 16.5% to $84 million in the year ended March.

The underlying profit strips out things like property revaluations and profit not directly attributable to the company's core business.

Craigs Investment Partners broker Chris Timms said the 10 years of profit underlined the strength of Ryman's business model.

"It's a stunning result and when you consider what the 10 years we are talking about involves, it is a very good story." Ryman shareholders would receive a 17% increase in their annual dividend to 8.4c per share, another indication of the company's strength, he said.

The share price rose 4.6% on the profit result to last trade at $3.40.

In Dunedin, the company owns the Yvette Williams and Frances Hodgkins retirement homes.

Ryman chairman David Kerr said the Christchurch-based company had faced some major challenges in the past 18 months and had responded with a performance which exceeded even its own targets.

"It's an exceptional result."

The company built 710 retirement units and aged care beds during the year, up 24% on the previous year and well ahead of its target build rate of 550 units and beds a year, Dr Kerr said.

The lift in build rate reflected the significant investment Ryman made in hospital and dementia facilities this year, and the decision to fast-track new Christchurch facilities post-earthquake.

The Government had recognised the need for an additional 12,000 to 20,000 aged care beds to meet the projected growth in demand over the next 15 years, he said.

Villages were opened in Gisborne and Tauranga during the year, and the new village in Christchurch welcomed its first townhouse residents in March.

"We are experiencing strong demand for our villages, which has spurred us on to keep building at the rate of 700 units and beds a year in New Zealand," Dr Kerr said.

Mr Timms said most of what Ryman achieved was through self-funding from its strong cash flows. Cash flows were up 27% to $169 million. Bank debt increased but was still conservative.

The company recently received planning approval for its Waikanae village and was working through the planning process for its Howick village.

Importantly, it was also working through a planning process for its Melbourne village, he said.


Ryman Healthcare

  2012 ($000)

2011 ($000)

Change (%)
Revenue
155,177
129,650
20
Revaluations
101,856
80,796 26
Profit before tax
130,153 102,772 27
Underlying tax
84,058
72,143 16.5
Earnings per share
23.3c
20.1c
21

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