Announcement
INTERIM: ARV: Arvida Reports NPAT Growth of 47% for 1H20
08:32am
ARV
19/11/2019 08:32
INTERIM
PRICE SENSITIVE
REL: 0832 HRS Arvida Group Limited
INTERIM: ARV: Arvida Reports NPAT Growth of 47% for 1H20
> Net profit after tax of $45.0 million, up 47% on 1H19
> Underlying profit of $23.4 million, up 31% on 1H19
> Underlying EPS of 5.0 cents per share, up 16% on 1H19
> Continued high care occupancy above 95%
> 192 total occupation rights sales, up 16% on 1H19
> Total resales of $53.9 million, up 28% on 1H19
> 94 new units delivered, on track for delivery of 200 new units for FY20
> Annual delivery rate confirmed at 250+ units in FY21
> Dividend of 1.45 cents per share declared for second quarter
NZX listed retirement village and aged care operator Arvida Group Limited
reported strong growth in net profit to $45.0 million for the six months
ended 30 September 2019, up $14.5 million compared to the prior corresponding
period.
Arvida said IFRS profit included fair value movement on investment property
of $35.3 million relative to $25.3 million in the first half of FY2019. The
higher fair value movement reflected continuing positive unit pricing
movement across the portfolio and the increase from the three acquired
villages.
The total value of assets for the Group grew to over $1.8 billion at 30
September 2019, up $542 million from the start of the 2020 financial year.
Arvida now has a portfolio of 2,359 retirement units and 1,682 aged care beds
spread across 32 villages.
The three high quality villages acquired from the Sanderson Group for $180
million have now been largely integrated. Arvida said it was focused on
completing their integration and refining plans for development of
complementary care facilities at two of the villages; Bethlehem Shores in
Tauranga and Queenstown Country Club in Queenstown. Construction teams
welcomed as part of the transaction had continued to make excellent progress
with the planned development at these villages and their expertise was being
utilised across other developments in the Group.
Business Performance
Underlying profit for the half increased to $23.4 million, a 31% lift on the
prior corresponding period.
"The result was driven by higher volumes and strong margins on the resale of
occupation rights and an excellent operating result that was underpinned by
the continuing performance of the care business," said Arvida CEO Mr Bill
McDonald. "High demand for our care services and range of quality
accommodation offerings is producing year on year growth in financial
performance."
Arvida reported care occupancy at 95% in September, which continued to be
significantly higher than industry experience, and that 72% of Arvida's care
centres had now attained the gold-standard four-year Ministry of Health
certification.
Mr McDonald commented that "the culture and know-how brought together in
Arvida's person-centred care service offering - The Attitude of Living Well -
forms a critical component in delivering quality services."
Staff engagement was indexed at 86%, up from 78%, in Arvida's second annual
workplace survey.
Sales Activity
Underlying profit included $17.9 million of gains on the settlement of 192
sales of occupation rights during the period, a 16% increase on the first
half of FY2019.
Compared to the same period last year, a 41% lift in resale gains of $12.7
million was reported. This reflected 148 resales in the period, up 10%, and
higher resale margins at 24%. On average resale prices were 3% above the
pricing independently assessed at 31 March 2019, highlighting continued
pricing momentum and demand for homes.
In the six-month period to 30 September 2019, $34.3 million of new unit sales
were settled at a development margin of 19%.
Development Milestones
Key development milestones were met with the delivery of the initial stage of
the Waimea Plains development in Richmond, the final apartment block at
Village at the Park in Wellington and the final villa stage at Lauriston Park
in Cambridge. In total, 94 new homes were delivered across eight development
sites in the half.
Mr McDonald said, "we are on track to deliver 200 new homes this financial
year, in line with guidance provided. We expect this build rate to increase
next year to over 250, as our development activity increases to deliver the
pipeline of opportunities existing in our portfolio."
Arvida's future development pipeline includes 1,693 units and beds to be
built over the next 5-7 years.
Development Update
Arvida said the outwardly facing community concept at Waimea Plains had been
well received. The concept helps make the connection to the community by
creating a "neighbourhood" that may include a health and fitness centre,
hospitality, allied health and mixed retail. Sales of new villas and
townhouses in the first stage at Waimea Plains had gone particularly well.
In Christchurch, the development at Park Lane is to include a similar concept
where both residents and the wider community will have access to a new
on-site facility and complementary health and wellbeing services.
Development of new care and apartment facilities at Aria Bay in Auckland and
Copper Crest in Tauranga are progressing to an FY2021 completion date. These
developments represent the first care suites to be offered under the new
Arvida care occupational right agreement structure.
Outlook
Bill McDonald said the momentum in the first half was expected to continue
for the balance of this financial year.
"With a strong first half now behind us, good momentum in earnings and a lift
in our full year targets following completion of the recent acquisition, we
remain confident to follow through with our priorities in the second half of
FY2020," said Mr McDonald.
A dividend of 1.45 cents (partially imputed) per share was declared for the
September quarter to be paid on 11 December 2019. The record date for the
dividend entitlement is 3 December 2019. The dividend is partially imputed at
0.10 cents per share. A supplementary dividend of 0.0454 cents per share will
be paid to non-resident shareholders.
- ENDS -
End CA:00344511 For:ARV Type:INTERIM Time:2019-11-19 08:32:33
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