Ryman reaps benefits of earlier investment

Ryman Healthcare's growth rate continues. Pictured, Ryman's Frances Hodgkins facility at St Clair...
Ryman Healthcare's growth rate continues. Pictured, Ryman's Frances Hodgkins facility at St Clair, one of two in Dunedin. Photo by Gregor Richardson.

Expansion in Auckland and Melbourne by rest-home builder and operator Ryman Healthcare has underpinned a record profit for the year, its 13th consecutive rise in profits.

Ryman, which has doubled in size during the past five years, booked a sales record for its full year to March, up 20% on the previous year with 1175 unit sales.

Total operating revenue was up 11.8%, from $203.2 million to $227.1 million and property revaluations rose 18%, to $444.7 million.

While underlying profit was $136.3 million, the valuation gains on properties boosted the reported profit to $241.9 million.

Ryman chairman David Kerr said the company was now poised ''for a terrific future in Australia and New Zealand'', given growing demand and its significant landbank; which is the equivalent of 4228 beds over 20 sites, in both countries.

''We achieved everything we set out to do and more in what was a landmark year for Ryman,'' Dr Kerr said.

Shareholders will receive a final dividend of 7.3c per share in June, boosting the total annual dividend to 13.6c, a 15% gain on last year.

Ryman shares were up 4c to $8.10 following yesterday's announcement.

Craigs Investment Partners broker Peter McIntyre said Ryman's result was ''bang in line'' with expectations, the key being its focus on developing Australian opportunities, which had offset a moderation in new New Zealand units.

New Zealand had 607 new units in 2014, and 620 for the reporting period, while Australia went from zero to 225 new beds this year.

Mr McIntyre said growth had picked up from 13% in the first half to 17% in the second half and Australia had delivered ''the lion's share'', its after-tax profit increasing by $11 million.

The crucial resale gains increased 30% to $51.6 million, which Mr McIntyre said was mainly due to higher resales volume, higher average unit price, and higher margin.

Ryman was benefiting from its increased build rate between 2007 and 2012, he said.

Ryman's net debt gearing increased 23% to 27% from a year ago, and with Westpac having joined its banking syndicate, its on-call bank debt facility rose from $490 million to $700 million.

Ryman's construction division is working on five new villages, including Wheelers Hill in Melbourne, Howick, Pukekohe, Birkenhead and Petone, and had set a target of having five villages open in Melbourne by 2020.

Dr Kerr said, ''Our first village in Melbourne is one of our fastest-selling ever. We've got ample proof that our expansion into Melbourne was the right thing to do.''

Dr Kerr said Ryman's years of reinvestment in its portfolio was paying off as villages matured and returns grew.

''We have also been pleasantly surprised by the level of demand we're seeing for our New Zealand villages, particularly in Auckland,'' he said.

In the coming year, Ryman expects to start work on new villages in Rangiora and Greenlane in New Zealand, and also on its second Melbourne village.

''Ryman is looking to expand its landbank again in Australia and New Zealand,'' Dr Kerr said.

simon.hartley@odt.co.nz

 


At a glance

• Record underlying profit $136.3 million

• 13 consecutive annual profits

• Ryman Healthcare, founded Christchurch 1984

• Initial public offering in 1999 raised $25 million

• Owns and operates 30 retirement villages in NZ and Australia

• 9000 residents, 4000 staff

• One Melbourne facility just opened, six new under way in Auckland

• Target: to open five villages in Melbourne by 2020

• Land bank: NZ, equivalent 3523 beds at 18 sites. Australia 705 beds at two sites

• Total dividends paid, including $36.5 million this year, $418 million

- Source: Ryman Healthcare


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