Buoyant Ryman to keep on growing

Listed retirement village owner Ryman Healthcare plans to expand after a record annual profit.

The company, favoured by institutional investors as an NZX top performer, beat the consensus of analysts' forecasts by $2 million.

It will shell out 16 per cent more in dividends on the back of its $78 million net after-tax profit for the March full year, up 16 per cent on last year's bottom-line result.

Craig Tyson, ING (NZ) investment manager, cited reasons for the firm's success.

"Ryman owns 21 retirement villages, all of which it designed, built and now operates. It's a simple model and the ratio of bank debt to total assets is very low: $142 million interest-bearing debt on a total asset base of $1.329 billion.

"How many companies in New Zealand could you say spend $119.4 million on growing the business, kept borrowing constant and were still able to increase dividends during the year by 16 per cent?" Tyson asked.

Ryman will pay a 3.4c second-half dividend to take the full-year dividend to 6.1c. Investors also enjoyed a 47 per cent return for the March year and the shares have continued to move higher since balance date, up from $2.07 then to close at $2.14 yesterday.

Simon Challies, Ryman's chief executive, said the biggest shareholders were Canada's Gardiner family with 13.8 per cent, Ngai Tahu/Tainui with 12.5 per cent, ING with 9.38 per cent and the Hickman Family Trust, associated with co-founder Kevin Hickman, with 7 per cent.

Ryman issued no projections for 2011 but Challies said it would build another 300 units and 150 care-beds this year. It also wants to draw more Australian institutions.

"There's only two there with only about 2 per cent now. We are always looking to make sure we're attracting investors and there's a limit to the number in New Zealand.

"We don't have any desire to list on the ASX," Challies said.

Shane Solly of Mint Asset Management said Ryman showed consistent quality.

"This is a very well-managed business that has stuck to its knitting and delivered a great outcome for its residents and an excellent outcome for investors," Solly said yesterday.

Matt Henry of Goldman Sachs JBWere said Ryman had released another strong performance, delivering a high-quality result with an exceptionally efficient business model.

Ryman chairman David Kerr says the business will expand its real estate this financial year.

Ryman is building seven retirement villages, has increased its land bank so it can develop 1900 units and is well-placed to continue at its present building rate for the foreseeable future, he says.

It is working on its new Orewa village, where 445 residents will live.

Ryman opened in New Plymouth, Whangarei and Orewa during the past financial year and has started new villages in Dunedin and Gisborne.

Over the past four years Ryman has built about 450 new units/rooms annually and has 4200 units/rooms.

Kerr cited Statistics NZ estimates that the number of New Zealanders aged 75-plus would more than double from 250,000 to 516,000 in the next 20 years.

"We are seeking to grow at the rate of 450 units/rooms per annum to meet the needs of an elderly population which is increasing at the rate of 12,000 people per annum for the next 20 years," Kerr said.

Shareholders will get their final half-year dividend on June 25.