- Ryman Healthcare's half-year profit surged by about 13% to $212.4 million amid higher property valuations, but its underlying earnings got hit by coronavirus.
- COVID-19 increased costs and restricted sales and construction activity in key markets.
- Still, the firm expects conditions to improve in the second half amid a resilient housing market and relaxing of lockdowns in Victoria.
- The Company expects to get $275 million in cash from the sale of new units in the second half of the year.
- Ryman has been rapidly building new villages and big land banks for future development to aid the ageing population.
Ryman Healthcare Limited (NZX:RYM), NZ's largest retirement village operator, reported an increase in profit of 12.8% to $212.4 million for the half-year ended 30 September 2020, compared to $188 million last year as a thriving housing market increased the value of its retirement villages.
However, COVID-19 hit the Group's underlying earnings due to higher costs and limited trading. On both sides of the Tasman, Ryman invested more to drive COVID-19 out of its 39 rest houses, thus being forced to lower down the development of new villages and the selling of vacant units.
Some of the highlights of Ryman's financials for H1 ended 30 September 2020 included the following:
- Unaudited underlying profit fell by 14.2% to $88.4 million due to COVID-19 challenges.
- Unrealised valuations on investment properties increased from $92.7 million to $124.1 million.
- Ryman made investment of $50 million in COVID-19 response to protect residents and staff since January 2020
- Total assets stood at $8.34 billion, up by 14.9% on September 2019 and there were only 1.9% of resale units left unsold by September end.
- Interim dividend stood at 8.8 cents per share, representing 50% of underlying profit.
In the first half, Ryman's integrated villages and high-quality treatment continued to be in great demand, with care occupancy at 97% in developed villages. On 30 September, only 1.9% of the retirement village portfolio was available for resale.
COVID-19 led to a rise in costs
Gordon MacLeod Chief Executive of RYM, stated that the pandemic has led to the rise in costs and limited its ability to sell and build in key markets amid extended lockdowns.
Mr Gordon added that while the pandemic is likely to trigger some continued instability, there is a lot of suppressed demand in the housing sector and the Company is in a strong position to continue to spend aggressively in new homes and employment.
He also noted that RYM expects cash receipts of at least $275 million from new transactions in the second half of the year. It plans to build more than 2000 jobs, as well as housing and care for more than 4000 people, with 12 villages in construction and more on the way.
Ryman has planned not to issue any year-end guidance and is looking to recruit a chief executive for its Australia operations.
In the coming year, Mr MacLeod stated that the focus would continue to be on keeping COVID-19 villages open, growing the team, innovating to enhance the Ryman community's living and working experience and providing new towns to satisfy demand.
With 12 new villages ongoing, seven in New Zealand and five in the Australian state of Victoria, Ryman is continuing its largest-ever expansion campaign.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)