Announcement
FLLYR: ARV: Arvida Reports Record Profit on Revaluation Gains
08:50am
ARV
25/05/2021 08:50
FLLYR
PRICE SENSITIVE
REL: 0850 HRS Arvida Group Limited
FLLYR: ARV: Arvida Reports Record Profit on Revaluation Gains
FY21 Highlights:
o IFRS Net profit after tax for FY21 of $131.1 million, up 207% on FY20
o Underlying profit* of $51.9 million, in line with FY20
o Total assets of $2.2 billion, up $275 million on FY20
o 404 total sales of occupation rights, in line with FY20
o 247 new units and beds delivered, up from 210 in FY20
o Land bank total of 1,324 units and beds
o Gearing ratio maintained at 30% and inaugural $125 million bond issue
o 4Q dividend of 1.50 cents per share declared, brings FY21 dividend to 5.35
cents per share
25 May 2021 - NZX listed retirement village and aged care operator Arvida
Group Limited today reported a record full year IFRS net profit for the year
ending 31 March 2021 up 207% on the prior year at $131.1 million. Results
included the impact of unrealised movements in the fair value of investment
property.
Arvida Chief Executive Bill McDonald said performance had been strong this
year despite disruptions from New Zealand's response to the Covid-19 pandemic
impacting first half results.
Underlying profit* for the year at $51.9 million was in line with the prior
year. Second half performance for the Group was significantly improved, 53%
higher than the first half.
"Additional expenditure was incurred in the first half to ensure resident
safety and staff wellbeing was the priority and we were able to keep Covid
out of our communities."
Mr McDonald said Arvida maintained strong operating cash flows and resilience
in care revenues throughout the year.
"While we continued to operate throughout the pandemic as an essential
business, care admissions, sales and construction activities were
significantly disrupted in lockdown periods," said McDonald.
Sales activity
Total gross proceeds from new sale and resale unit settlements increased to
$227.4 million, up 13% on the prior year. Settlements in the second half were
up 87% when compared to the first half.
"This was a very strong result reflecting a significant effort by our sales
teams and reflects a positive trending sentiment towards retirement village
living," said Bill McDonald.
Construction activity
Arvida built 247 new homes in the year across ten sites despite the closure
of construction sites for the Covid-19 lockdown. Construction activity
exceeded guidance provided at the start of the year.
Milestones celebrated included the completion of the first of Arvida's
purpose-built care suite product. These multi-storey buildings at Aria Bay in
Auckland and Copper Crest in Tauranga delivered 114 new care suites and 29
apartments. The care suite model allows the desired premium care
accommodation outcome, with a higher level of investment.
"The provision of care is core to strategy," CEO Bill McDonald said.
"Providing residents with the confidence that care services are available as
they age is essential. Care suites will lead the New Zealand retirement
industry into a new standard for aged care."
Arvida announced plans to introduce care suites across a number of its other
retirement communities.
The latest Arvida retirement community Te Puna Waiora in Kerikeri was
launched during the year. Arvida now has 33 retirement communities completed
or in development across New Zealand. It has a large future development
pipeline of 1,324 units and beds.
Stated strategy
Arvida announced it had conditionally agreed to sell one of its smaller
Christchurch retirement and aged care villages as it continued to rebalance
its portfolio in line with strategic priorities.
Also announced are conditional agreements to acquire two parcels of bare land
to provide the opportunity to develop broad acre retirement communities in
the future. In Kerikeri an adjoining site has been acquired with settlement
in June 2021.
"Adding to our land bank will support future greenfield development as we
look to lift our build rate," commented Mr McDonald.
"We are building differentiated product for the future that will be relevant
to ongoing generations of New Zealanders. Combining community connection is
central to building multi-generational assets."
As a key part to its community engagement strategy Arvida launched Arvida
Good Friends earlier this year after a successful Christchurch pilot. The
service combines the provision of care and services into the home with member
transport and a wellness centre where people can socialise, feel connected,
and receive centralised healthcare support if needed.
Planning is underway to introduce Arvida Good Friends into other Arvida
retirement communities.
Sound balance sheet
Total assets grew to $2.2 billion, up from $1.9 billion at the start of the
financial year with development activity completed and an increase in the
value of investment property.
The annual revaluations of investment property undertaken by CBRE and Jones
Lang LaSalle delivered a revaluation movement of $123.5 million. The increase
was driven by higher unit prices, the delivery of new units and the reversal
of the material uncertainty that existed at 31 March 2020 in relation to
Covid-19.
During the year, Arvida listed a $125 million retail bond applying the
proceeds to repay bank debt. The bond provided extended tenor to Arvida's
debt profile and improved diversification in debt funders. Balance sheet
gearing including the bond remained at 30% and within the target gearing
band.
Dividend and outlook
Arvida Chair Mr Peter Wilson said Arvida's shareholders will receive an
increased unimputed dividend of 1.50 cents per share for the final quarter.
The dividend is to be paid on 10 June 2021 with a record date of 2 June 2021.
Mr Wilson said, "We are pleased to return a total of $29 million to our
shareholders in dividends during this year. The dividend is evidence of the
strong momentum in the business even in a pandemic-impacted year."
The Arvida board also announced the intention to move the target distribution
band to 40-60% of underlying profit*. A dividend reinvestment plan would be
implemented at the next dividend payment with payments becoming six monthly.
Mr Wilson said the dividend reinvestment plan would help support Arvida's
capital base as it looks to recycle capital into growth opportunities
including greenfield development activity.
"Both our care operations and retirement villages continue to perform
strongly, and our development activities continue to grow," said Mr Wilson.
The current level of dividend is expected to be sustainable for FY22.
However, Mr Wilson noted that Covid-19 would be a factor globally for some
time yet with the outcomes unknown on the business and domestic economy as
New Zealand opens its border. The Government's move to dampen residential
house prices and possible review of the sector's regulatory framework are
factors that could impact the sector and performance of Arvida.
- ENDS -
* Underlying Profit is a non-GAAP (unaudited) financial measure and differs
from NZ IFRS net profit after tax by replacing the unrealised fair value
adjustment in property values with the Board's estimate of realised
components of movements in investment property value and to eliminate other
unrealised, deferred tax and one-off items. A reconciliation is included
within the Annual Report and the Investor Presentation.
End CA:00372755 For:ARV Type:FLLYR Time:2021-05-25 08:50:06
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