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Ryman posts record FY profit, beats guidance, on strong demand for units

Thursday 17th May 2012

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Ryman Healthcare, New Zealand’s largest retirement village operator, posted a 17 percent increase in underlying profit to a record, beating guidance, after it sped up its building programme to meet demand for units.

Underlying net profit rose to $84 million in the 12 months ended March 31, from $72 million a year earlier, it said in a statement. That marks 10 years of profit growth. Sales rose about 20 percent to about $155 million.

Ryman lifted its build rate by 24 percent to 710 units and aged care beds on the previous year. That's well ahead of its target build rate of 550 beds annually. New villages were opened in Gisborne and Tauranga, while Christchurch welcomed its first townhouse residence in March.

"The lift in build rate reflected the significant investment we made in hospital and dementia facilities this year," David Kerr, chairman said. "We are experiencing strong demand for our villages - which has spurred us on to keep building at the rate of 700 units and beds per annum."

Ryman cited estimates by Statistics New Zealand that the number of kiwis aged 75 or over will more than double to 516,000 over the next 20 years, boding well for the long-term prospects of rest-home operators. Across the Tasman the outlook is similar, with the number aged 75 plus, doubling to 2.8 million.

The stock has risen 53 percent in the last two years and is rated as 'outperform' based on the consensus of five analysts, polled by Reuters. It last traded at $3.25. Shareholders will receive a 17 percent increase in final dividend to 8.4 cents per share to be paid out June 22.

The Christchurch-based company received planning approval for its Waikanae village. It is currently undertaking the planning process for its Melbourne and Howick villages.

The company said it is also reviewing several other sites across New Zealand.

Operating cash flows rose 27 percent to $169 million, enabling the company to self-fund the bulk of its building activity. Profit after tax increased about 20 percent to about $120 million.

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