Underlying Growth Drivers
We are confident that Ryman will continue to deliver long-term growth for shareholders. This is because of a number of unique factors:
Preparing the company for something bigger
The size of the market opportunity ahead of us in New Zealand and Victoria means that we have been working hard to prepare the company for something even bigger.
This means we have been growing the depth of the management team, along with building the financial strength of the company. We also have plans to lift the New Zealand and Victoria landbanks to four years’ stock. One of the ways we keep on building our financial strength is through our growing tail of earnings at completed villages.
Our business has a very long time horizon and it can take up to 10 years before you see normal levels of activity from when a new village first opens. This means that our tail of earnings from completed villages will continue to grow in the future, as a direct result of what we have already built over the last 10 years.
This model of sustainable profitable growth starts from having a very efficient and cost-effective in-house design and construction team. As a result we achieve a healthy development margin when we build new villages – this in turn funds the construction of large-scale aged care and community facilities at our villages. Villages are self-funding.
Long term care demand growing – people are living longer, albeit frailer. The afflictions of old age (including dementia, diabetes and arthritis) mean that the need for long-term residential aged care will increase.
Developing higher value villages – our villages are custom-designed and built to meet the needs of the older people, based on 25 years of in-house experience. We are building larger and more complicated villages in urban areas and this is a trend that is set to continue. While our villages are now more capital intensive to build, the potential rewards are greater because they generate much higher returns.
Growing acceptance of retirement villages – there is a growing acceptance of retirement villages amongst older people to provide the peace of mind and care solutions associated with aging.
Strength of the Ryman brand – we have a very strong reputation in the retirement village and aged care sector, having been a leading provider for more than 30 years. Residents and their families are rightly very careful about whom they choose to care for them in their later years; reputation is critical to their decision making.