UPDATE: Ryman posts 24% rise in FY profit on values gain

UPDATE: Ryman posts 24% gain in annual profit as property values, sales increase

(Adds CFO comments starting in fifth paragraph, updates shares)

By Tina Morrison

May 22 (BusinessDesk) - Ryman Healthcare, New Zealand's largest listed retirement village builder and operator, posted a 24 percent gain in annual profit as the value of its properties increased and revenue rose.

Net profit increased to $241.9 million, or 48.4 cents per share, in the 12 months ended March 31, from $194.8 million, or 39cps, the year earlier, the Christchurch-based company said in a statement. Revenue rose 12 percent to $227.1 million and the company booked a gain of $217.6 million on the value of its investment properties, up from a $174 million gain the previous financial year.

Underlying earnings, which are used to determine dividend payments and doesn't include tax or unrealised gains in property values, rose 15 percent to $136.3 million, in line with the company's forecast. Shares in the company advanced 0.1 percent to $8.07 and have slipped 5.4 percent so far this year.

Ryman, which has been developing new villages as it eyes an ageing population, spent a record $300 million the past year adding 875 beds and units, including 620 in New Zealand and 255 in its emerging Australian business in Melbourne, Victoria. By 2020, it expects to be housing 14,000 of New Zealand's 350,000 population aged over 75 and 1,500 of Victoria's 467,000 population, it said today.

"Our asset growth is driving strong earnings as our villages mature and this effect will actually amplify over the next five years and beyond as we build higher value villages in places like Auckland and Melbourne," chief financial officer Gordon MacLeod told a briefing in Auckland.

Ryman says the number of people aged over 75 in New Zealand is set to more than double in the next 30 years. It is targeting growth in Auckland, New Zealand's largest city, where it expects its share of the 75+ market to increase to 4.7 percent of a total market of 94,892 people by 2020 from 2.8 percent of 75,988 people currently.

It expects demand to outstrip capacity by 2018 as more elderly people stay longer in their homes, leading to more acute needs once they require care. The company expects to add 1,200 care beds in New Zealand by 2020, two thirds of those in Auckland, compared with Ministry of Health estimates for a need for 5,500 beds.

In Melbourne, where the company expects to have five villages by 2020, the board cast its eye over potential sites for its third and fourth villages during its meeting in the city this week. Ryman says it has an edge over its rivals as its villages offer both retirement living and aged care options.

The company's bank loans increased 47 percent to $407 million in the past year. MacLeod said debt was likely to increase further as the company funded its building activity. Its banking facility has increased to $700 million from $495 million.

Expenses increased 17 percent to $202.7 million the past year, as the company noted it had increased caregiver pay rates 16 percent over the past three years.

MacLeod said a 6 percent price increase during the year had lifted the "resales bank" to $420 million from $340 million a year earlier.

Its new sale development margin slipped to 25 percent from 29 percent a year earlier, which MacLeod said was back within the company's normal range of 20 to 25 percent. He said the development margin may slip to the "lower 20s" this year, reflecting increased construction and earthquake requirements at its Petone village.

The company has a similar building programme this year compared to last year, although the majority of its projects will be completed in the second half of the year, he said. Its occupancy rate is 96 percent.

Ryman will pay a final dividend of 7.3 cents per share on June 26, taking the total dividend for the year to 13.6cps, ahead of the 11.8cps dividend last year.

(BusinessDesk)

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