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Recession-proof Ryman posts 16% profit lift

Wednesday 19th May 2010

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Retirement village operator Ryman Healthcare posted a 16% rise in net earnings to $61 million for the year ended March 31, before unrealised property revaluations, the company announced to the NZX this morning.

With an ever-expanding pool of elderly seeking retirement housing and care, Ryman continued to add close to 450 new units to its portfolio last year, to deliver a 25% increase in "receipts from residents" of $307 million for the year, and delivering $149 million in free cashflow that allowed the company's construction programme to continue without borrowing or recourse to shareholders for new equity.

"This is a great result," said chairman David Kerr. "We are particularly pleased to have been able to achieve strong growth earnings from our completed villages and to be able to continue to fund the building of our new villages out of operating cashflows."

Retained earnings were up 17% at $347 million, and net profit, which includes unrealised revaluations, rose 19% to $78.4 million.

New retirement villages were opened in New Plymouth, Whangarei and Orewa, with new developments planned this year in Dunedin and Gisborne, as Ryman holds to its strategy of building around 450 new units a year to take its slice of the 12,000 people reaching the age of 75 every year.

The result came despite the weak economy, property market, and capital markets. 

"It shows we are meeting a very real need in the community, and it highlights the company's remakrable resilience to economic cycles," said Kerr in a statement.

Ryman's opportunity lies in the projected doubling of over-75's to 516,000 citizens in the next 20 years. It currently runs 21 retirement villages throughout the country, with plans to add two a year for the foreseeable future.

The only blot on the landscape was a $1.2 million impairment on the value of the Glamis Private Hospital, whose residents are being relocated in 2011 to the new Yvette Williams home in Dunedin.

Elsewhere, revaluation of the property portfolio saw an increase in unrealised gains of $23.6 million.

The result is good news for Ryman shareholders, whose dividends will increase 16% for the year, with the payment of a final dividend of 3.4 cents per share payable on June 25 (record date of June 11). Ryman shares rose 1.4% in morning trading to $2.17 today.

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