Creating Shareholder Value
We create value every time we establish a new village, as we know how to build and deliver a great village and service to our residents in a cost-effective way. A completed village thereafter provides us with a growing tail of realised profits.
The best evidence of this is our performance over a long period of time. Since listing in 1999 we have built more than 6,000 retirement village units and aged care beds, investing over $1.7bn – all of which has been funded out of operating cash flows, while profits and dividends have grown 16 fold.
As a result we have reinvested heavily in the business, so the capital base just keeps getting stronger, and have also paid out over $500 million to shareholders in dividends since we listed.
Our strong balance sheet and cash flows, together with secure bank funding for work in progress, is a key source of competitive advantage - at a time when many others are struggling with capital requirements.
30 years of exceptional demographic growth is ahead of us
There remain many locations throughout New Zealand which are ideally suited for a Ryman village, and we are continuing to see a strong number of land opportunities from which we will continue to pick the best. The opportunity in Victoria, Australia, is even larger.
The company has doubled its underlying profits over the last five years. This has been achieved during a time where the 75+ population has been growing at a relatively flat rate of 5,000 per annum.
Over the next 10 years the rate of growth in the 75 + population steps up signifiantly.
So, we are now at the point of inflection for the aging of the 75+ population - and this significant lift will continue for the next three decades. In fact, Statistics NZ estimates the number of New Zealanders aged 75 plus will almost triple to 731,000 over the next 30 years. In Victoria the outlook is similar, with the number set to triple to 1.1 million.
Our confidence in Ryman’s future prospects is therefore not just the result of the quality of what we do – our purpose-designed villages meet a very real, and growing, need in the community.
Sustainable business is about having the right balance between happy residents and happy shareholders.
Our plans are to achieve continued earnings growth for our shareholders in three ways:
Firstly, we will continue to see a growth on growth effect at completed villages, especially from those villages built in more recent years as they reach their full earning potential.
Secondly, we plan to continue rolling out new villages at our new rate of 700 new units and beds per annum in New Zealand, growing to 850 in 2017. Our landbank is in good shape – with enough land to sustain our building programme for at least the next four years.
And finally, you can also expect to see us continuing to build in the lucrative Australian aged care and retirement village market. Our aim is to have five villages open by 2020.
We greatly appreciate the trust that residents and their families place in us to provide first class care and great surroundings. Likewise, we very much value the loyal support we have received from our shareholders.