One of the reasons Ryman has created so much shareholder value over a long period of time is that we have a very capital-efficient business model.
Key to our success has been our ability to recycle our cash investment in a village while creating a recurring income stream that grows over time. This means that by the time we’ve sold the occupation rights to the apartments and townhouses in a new village, it has paid for the construction of those apartments and townhouses as well as the community assets and the care centre of that village. We continue to target recycling our cash investment and establish future recurring income streams.
Our aim is to double our underlying profit every 5 years. We believe that’s a sustainable pace that takes into account the growth opportunities and the challenges we face, as well as making sure we have a happy, healthy, well-functioning team.
Our shareholders have enjoyed a growing income stream since listing. In November 2021, the board adjusted Ryman’s dividend policy from 50% of underlying profit to a 30%-50% range. We have strong long-term growth plans and this change enhances our ability to continue to deliver the Ryman experience to more communities through the retention of capital within the business.
The United Nations has described the ageing of the world’s population as unprecedented and unparalleled, and we are only just at the start of it.
Over the coming decades we will see a substantial lift in the population aged 75+ in both New Zealand and Victoria.
To meet the future needs of our ageing population, we’re committed to bringing Ryman to as many communities as we can.
We build critical aged-care infrastructure, for the benefit of older people, which is otherwise not being built. Developing our aged-care offering takes pressure off the public healthcare system (where beds are required for acute care) and alleviates funding pressures for district health boards. Hospitals have limited beds available. The cost of caring for someone in one of our care centres is significantly lower than caring for them in a public hospital.
Each village we build represents a long-term investment in care for the communities we operate in. And each village creates a new economic engine, with a growing stream of recurring income, to support our future growth as a company.
Our future growth depends on having a solid land bank at different stages of development – planning, design, consenting, and construction. And our goal is to keep the land banks in both countries at a supply of not less than 4 years.
Future growth will also be underpinned by our maturing portfolio. When we build a new village, it takes about 6 or 7 years for the earning potential of the village to mature after the initial influx of capital from the first sales.
This means that our earnings from completed villages will continue to grow in the future, as a direct result of what we have built over the last 6 or 7 years. When you consider that we have a large number of villages in the pipeline, there’s a lot of potential future earnings yet to be realised.