Arvida doubles 1H profit, expects strong annual result

Wednesday 23rd November 2016

Arvida Group, the retirement village and aged care facilities operator, says it's "on track to deliver a strong FY17 result" after it more than doubled first-half profit.

Net profit rose to $19.4 million in the six months ended Sept. 30, from $7.4 million a year earlier, with revenue up 27 percent to $49.9 million, the Auckland-based company said in a statement. Arvida, which has 25 villages across the country, also gained $14.3 million from an increase in the valuation of its investment properties, an improvement from $3.8 million in the first half of the previous financial year.

In October, Arvida completed a $41.8 million capital raising by selling about 35.7 million shares with a 90 percent uptake of entitlements amongst shareholders, to help fund a $66 million purchase of two villages in Tauranga and one in Cambridge. Those purchases were settled in early October and were expected to add an additional $4.4 million of underlying profit to Arvida's earnings, a 28 percent boost to its 2016 result.

The company is conservatively geared at 10 percent following its capital raise and settlement of its October acquisitions, and has headroom to fund planned development activity and the $21.2 million acquisition of Cascades Retirement Resort in Hamilton under a new $80 million multi-tranche facility, it said in the results presentation posted to the NZX this morning. The Cascades acquisition, which it conditionally agreed to today with settlement expected on Dec. 30, will increase proforma gearing to 14 percent, it said.

Arvida's care facility occupancy is at 95 percent, well above the national average of 89 percent, and care facility revenue accounted for 72 percent of its total revenue at $33.5 million, it said. The company gained $21.5 million from new residents through 87 resales, with a 15 percent resale margin, and $3.6 million from 12 new sales, with a 19 percent margin, while it paid $11.4 million to residents who left.

The board declared a 1.1 cent dividend for the September quarter, with a Dec. 8 record date, payable on Dec. 16. Arvida's policy is to distribute between 60 percent and 80 percent of underlying profit per annum; it said it made $9.6 million in underlying profit in the first half and is paying $3.7 million, or 38.5 percent, in dividends for the quarter. The board said it affirmed guidance that the current dividend level is sustainable.

The shares gained 0.9 percent to $1.15, and have risen 25 percent this year.

BusinessDesk.co.nz

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