Arvida posts underlying full-year profit that beats IPO forecast, sees further growth

Wednesday 25th May 2016

Arvida Group, which operates 21 retirement villages and aged care facilities, reported annual earnings ahead of its prospectus forecast and said it was confident of further gains in 2017.

Underlying profit, which Arvida has said it will use as its primary earnings measure, was $15.8 million in the year ended March 31, about 19 percent more than its initial public offering forecast of $13.3 million given in December 2014. Underlying earnings strip out fair value changes to investment property and include the board’s estimate of "realised components of movements in investment property value" while eliminating deferred tax and one-off items.

Net profit was $24 million, more than double its IPO forecast of $10.6 million, on revenue of $82.5 million which was 19 percent ahead of forecast. The company booked a $19.1 million increase in the fair value of its investment properties with its total assets now worth $461 million, up 31 percent on a year earlier.

“Our first full financial year as a publicly listed company has seen Arvida make substantial progress against the growth initiatives outlined at the time of IPO and deliver strong financial results against IPO forecasts," chairman Peter Wilson said in a statement.

Arvida listed in December 2014, having raised $75 million in an IPO at 95 cents a share. It was created through the merger of an initial 17 retirement villages and added to that in July 2015 with the $62 million cash and scrip purchase of the three Aria villages in Auckland. The results for the year included nine months' contribution from the Aria properties. The shares last traded at $1.12 and have risen 19 percent this year.

“The board sees the business continuing to perform strongly," Wilson said. "Refurbishment and development activity will deliver continued momentum in our revenue and earnings. We have established a business capable of scaling up as the group grows. Well located and operated villages, complemented by potential greenfield opportunities that enhance our national coverage and underpin future growth options will be of interest to us.”

The board declared a final dividend of 1.1 cents per share for the quarter, payable on June 17 with a June 9 record date. This brings total dividends for the year to 4.25 cents per share, ahead of the IPO forecast, and Wilson said the company expects to maintain that increased level of dividend. Arvida paid out 74 percent of its underlying profit in dividends in the year, within its stated 60-80 percent range.

(BusinessDesk)

Kevin Dutta Gupta, General Manager Research at IRG said “This is the baby of the retirement sector. We have expected it to be re-rated as it performs and as the market understands it better. Although it is up 19% it is still underpriced on a number of fundamentals however this will alter over time"

BusinessDesk.co.nz

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