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Ryman first-half earnings rise 22 percent to record, hikes dividend, affirms guidance

Thursday 21st November 2013

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Ryman Healthcare, whose shares have climbed 72 percent this year, said first-half underlying earnings rose 22 percent to a record, allowing the retirement village operator to hike its dividend while affirming its guidance for full-year earnings growth.

Underlying profit, which excludes deferred tax and unrealised gains on investment properties, rose to $58.5 million in the six months ended Sept. 30, from $48.1 million a year earlier, the Christchurch-based company said in a statement. Sales rose 13 percent to $99.6 million.

Ryman's shares are trading at more than five times their value of five years ago and the company has a 12-year record of double-digit earnings growth, expanding its footprint of retirement villages at a current rate of 700 units a year. Ryman has jumped across the Tasman with its first Melbourne village under construction and today said it had sold 48 apartments, beating its own presales target.

"The market in Victoria is bigger than New Zealand in terms of scale. There is potentially a bigger opportunity there," managing director Simon Challies told BusinessDesk. "We're committed to searching for a second site in Melbourne. We're still learning about the regulatory environment and how that defines how people operate."

Regulatory differences in particular show up in aged care and Ryman expects to open its aged care facility at the Melbourne site in the middle of next year, he said.

Ryman's biggest surprise for the first half was the Melbourne presales, he said. "We've been very well received."

The company today affirmed it is on track for full-year underlying earnings growth of 15 percent. It will pay a first-half dividend of 5.6 cents a share on Dec. 13 with a record date of Dec. 6. That's 22 percent up from last year's interim payment.

The shares last traded at $7.84 and touched a record $8.12 on Nov. 15. The stock is rated a 'hold' based on a Reuters poll of six analysts, with a median price target of $6.69.

Sales of occupation right agreements rose to 174.5 in the latest six months, from 157.2 a year earlier. Sales of existing units rose to 261 from 235, while sales of new units were little changed at 211 from 212.

The company's total of retirement village units and residential care beds rose to 6,464 from 5,882, with most of the growth coming from village units. Its landbank to be developed rose to the equivalent of 2,516 units and beds from 2,295.

Challies said Ryman is funding its growth from bank debt and "that's our intention for the foreseeable future" with no plans to raise capital. Its debt to equity ratio currently stands at 29 percent and it is about 50 percent drawn on a $500 million debt facility.

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