Ryman plans cautious Aussie debut
Retirement village operator Ryman Healthcare will be treading carefully as it enters the Australian market, aware of the New Zealand business record of tripping up across the Tasman.
Yesterday the star sharemarket performer said it would start building its first Australian complex in Melbourne early next year and would learn from that before getting into that market boots and all.
The company added another notch to its 10-year sharemarket performance of climbing profits by posting a record half-year profit after tax of $69 million. Its share price rose 6 cents to close at $4.14.
Shareholders will receive an 18 per cent higher dividend for the half-year of 4.6 cents a share. All up, about $23 million in dividends is going to shareholders in the first half.
Ryman continues to develop new retirement villages and rest homes - the recipe for its growth over the last 25 years.
Its business receives care and management fees from residents and the company also makes a profit on the sale and resale of units. The average sale price in the six months was $350,000.
Ryman has a land bank for the development of almost 2300 units and rest-home beds.
The $69m profit for the six months to September 30 was 15.3 per cent higher than the previous half-year. Excluding the increases in property values, "underlying profit" grew 16 per cent to $48m.
In the six months the company brought in almost $88m in care and management fees, 18.6 per cent higher than the previous half-year. Other cash income was the gain of almost $32m on the sale of units. It also booked $27.3m of unrealised gains on the value of its properties.
Ryman has just completed the largest post-quake construction project in Christchurch, the more than $100m Diana Isaac retirement village in Mairehau, taking its number of villages to 25 in New Zealand.
Managing director Simon Challies said the site in the Melbourne suburb of Wheelers Hill attracted the company because there was a shortage of aged care and retirement units.
The intention was to roll out development in Australia as they had done in New Zealand, once Ryman proved itself on the first one in Melbourne.
"We appreciate we might know how to look after old people but we don't know much about the Australian environment, the regulatory environment, what consumers want and what they expect.
"I think we're being very cautious because we've got a lot to learn. Just because we've been successful in New Zealand doesn't mean we can assume the same parameters apply in Australia.
"Most of the other companies with a chequered history are those who went in boots and all."
Challies said Australia had developed more rest homes than retirement villages so there was a little more competition in the rest-home area.
There were good opportunities in both categories.
It was not common to develop a retirement village with a rest home as well in Australia as Ryman had done in New Zealand.