Retirement giant Arvida Group, whose shareholders include ex-All Blacks Richie McCaw and Dan Carter, drove up half-year profit 110 per cent and has a $500 million-plus expansion plan in the next seven years.
Net profit after tax rose from $14.5m in the September 2017 half-year to $30.4m in the latest period, revenue was up 26 per cent from $60m to $75.6m and revaluations rose from $8.9m to $25.2m.
Chief financial officer Jeremy Niccol said a plan to develop 1385 new units in the next seven years would create assets worth "more than $500m" and chief executive Bill McDonald said the business had not ruled out buying existing assets, as well as developing its own properties.
Arvida declared total assets of $1.2b, has an NZX market capitalisation of $538m and its shares, which listed around four years ago for 90c, are now trading around $1.30. Debt rose from $109m last year to $150m at the end of September and residents' loans are on the books at $435m, up from $294m.
Arvida owns 1909 retirement village units and takes a deferred management fee of 30 per cent, compared with Ryman Healthcare's 20 per cent. The minimum age to buy into one of its villages is 65. Arvida made $10.3m from deferred management fees, up from last year's $8.3m - the amount of money it keeps when people leave their property, usually due to illness or death.
Niccol said unlike some other listed retirement businesses, Arvida had paid tax for the half-year. That amounted to $2.1m. If Arvida had paid tax at its 28 per cent applicable rate, it would have been liable for $9.1m. But that was reduced by $6.8m due to its revaluations which amounted to $25.3m. Capital gains are not taxed, hence it gets tax rebates on its revaluations.
McDonald said new villages planned at Kerikeri and Nelson would each be worth around $130m on completion: "Those are our two biggest greenfields sites."
The All Black investors owned a share in Park Lane, a Christchurch retirement village at Addington and McDonald said Arvida had bought that and was now expanding it. Niccol said once the development and existing village would be worth around $60m once all work there was finished.
Jeremy Simpson, Forsyth Barr senior equities analyst, described Arvida's half-year result as "strong, in line or ahead in most areas compared with its forecasts". Care revenue of $63m was up 20 per cent and helped by 95 per cent occupancy rates and the portfolio expansion, Forsyth Barr said.
Arvida had delivered 61 new units in the half-year and produced 30 new unit sales, slightly ahead of forecast. Its highly-rated and highly-performing aged care operation remained a key feature and strength of the company, it said.
Although it did not provide any full-year 2019 guidance, it had indicated it would deliver 112 new units "in line with our forecast of 111 units and previous guidance. It has additionally indicated it will lift its annual unit delivery rate of 200+ units in FY21," Forsyth Barr said.
Arvida made special mention of the Australian government's royal commission into aged care quality but McDonald said such an investigation was not needed here due to the quality of care and high standards.
"We operate a different system. I believe that over here, we're very well regulated and there's good learnings to take out of Australia," McDonald said.
Arvida is a play on words mixing "Arv" as in "A retirement village" and "vida", the Spanish word for life. It listed on the New Zealand stock exchange in 2014.