RYM - Ryman Healthcare

[Sauce]

To digress slightly from the moat discussion one of the key attractions, in my opinion with Ryman, is its ability to grow consistently as has been demonstrated in the past and almost without doubt into the future.

Well I think its very much part of the discussion Roger! Indeed it is your conviction of the existence of a MOAT, and your assessment of whether it is getting wider or narrower, that allows you to come to the conclusion that their returns are sustainable for a long time into the future.

Of course the first decade of their listed life was an absolute doozy with compounding returns in the mid 20's not even including divis. Of course they were coming off a low base, and had more favorable tail winds - but you simply don't need to hit those returns to do ridiculously well over time.

Management are on record as targeting a 15% growth rate for the forseeable future which I think taking into account the higher demand for advanced care in rest home and dementia with a rapidly aging population should be realistically achievable over the long term.

Yes, some years they will do more and some years they will do less. Eventually growth rate will slow down (the bigger they get the harder it will be to maintain), but that is far enough away that it is not relevant to investors at this point in time.

Take a theoretical example, an investor approaching 50 thinks Ryman's facilities are first class and wants to retire at one of their fine establishments when he's 65.

I realise its theoretical, but I believe RYM target 80+ which is better for investors, as the turnover is higher. It sounds cold to put it like this, but in my experience people are often not ready for this step until about this age anyway - so its a win win. If people came into the villages at 65 they could have a 20 - 25 year tenure rather than a 5-7 year one, which would be no good for RYMs stockholders.

Here's how the Ryman compounding machine appears to loo to me, $100,000 invested in Ryman now compunded at 15% growth per annum over 15 years = $813,000.

Yes! But you are forgetting one important factor, and that's dividends. During that time they will also have paid you $130,370 less tax in dividends. And at that time you will be getting about 22,000 - tax a year (and still growing) from your corporate coupon

P.S. Looking forward to tomorrow.

Me too. Not that the short term result makes much difference, but its one of the few times a year you get to really chew over the progress and comments.

[troyvdh]

....gee you guys are good.....RYM is a great Co.....its accepted....do you guys have real jobs......

[Sauce]

That's a strange comment to make while lurking on a forum which has been specifically created for people to talk sh it about shares... !

[voltage]

Sauce good stuff. Growth in dividends is really what you want at the end of the day. RYM has grown at 19.8% over the last 11 years, Trust power 15%, cochlear 21.3%, ramsay health 19.2%. (taken from research Craigs)

[voltage]

those were dividend growth rates per annum

[Beagle]

....gee you guys are good.....RYM is a great Co.....its accepted....do you guys have real jobs......

Some of us like to make constructive comments to help each other along and in the process actually add something to the thread and most of us I assume like to plan for our retirement, of course if you wish to rely on the Government, then I wish you all the luck in the world. In case it wasn't obvious the purpose of yesterday's "theoretical" excercise regarding prospective compounding returns was to illustrate how someone like me approaching 50 could be well on their way to having a secure retirement by investing approx $100,000 now.

Sauce, as always you've articulated your viewpoint extremly well and you're quite right its exactly because of the ever increasing moat along with a range of other factors not the least of which is the old age population expansion, that we can be assured of excellent growth over the forseeable future. I plan to re-invest my dividends so that will no doubt add a little extra probability to expected long term returns. Maybe I'll be able to buy an S Class Mercedes-Benz

Would appreciate any insights you have as soon as you've digested the annual result today. Regards

[Beagle]

RYM
19/05/2011 08:30
FLLYR

REL: 0830 HRS Ryman Healthcare Limited

FLLYR: RYM: Ryman announces 17% profit increase

Ryman announces 17% profit increase

Christchurch based aged care and retirement village operator Ryman Healthcare
today announced a 17% increase in underlying profit, posting a new record of
$72 million for the year. Unrealised valuation gains lifted the reported
profit after tax to $100 million.

The underlying profit growth has prompted the directors to lift the annual
dividend by 18% to 7.2 cents per share, with the remaining 50% of the
company's profits being retained for investment in new villages both in New
Zealand and Australia. The final dividend of 3.8 cents per share will have a
record date for entitlements of June 10, and will be paid on June 24.

Operating cashflows were again strong at $133 million for the year, and the
increasing value of the village assets helped boost shareholders equity by
24% to $566 million.

"This is a very strong performance from the company, ahead of our own
expectations, and in the face of a weak economy" said chairman Dr David Kerr,
"It's a result that reinforces the defensive nature of the company's trading
activities and reflects the company's growing reputation for looking after
its residents."

The company recently announced a lift in its build rate to 550 units or beds
per annum in New Zealand.

"We have escalated our expansion plans to meet the growing demand we are
experiencing," said Dr Kerr. "We achieved our new build rate this year,
which boosted our new sales by 50%, and allowed us to beat our medium term
target of 15% underlying profit growth."

"This year's expansion will also spark profit growth in the year ahead, as it
also establishes new income streams from care fees, management fees and
resales gains."

A new village was successfully opened in Dunedin during the year, and work
commenced on new villages in both Gisborne and Tauranga. The company is
currently building across nine sites, has increased its landbank to over 2100
units or beds, and is well placed to continue building at the new rate of 550
units or beds per annum for the foreseeable future.

The company recently acquired a site in Waikanae and is actively seeking a
site for its first village in Australia.

Statistics NZ estimates the number of New Zealanders aged 75 plus will more
than double from 250,000 to 516,000 over the next twenty years. Ryman is
well positioned to cater for the accommodation and care needs of this rapidly
growing group.

Ryman currently owns 22 villages nationwide, which each offer a combination
of retirement living and resthome care.

The company is a six times winner of Best Retirement Village in New Zealand,
serves over 5400 elderly New Zealanders, and employs over 2600 staff.

Ends

Media advisory: For further information, photos, interviews or comment please
contact Ryman chairman Dr David Kerr on 021 362 403, or Ryman managing
director Simon Challies on 03 3664069 or 0274 968 762

CONSOLIDATED OPERATING STATEMENT FOR THE YEAR ENDED 31 MARCH 2011

Audited.

Current Year NZ$; Up/(Down) %; Previous Corresponding Year NZ$

UNDERLYING PROFIT:
72,143,000; + 17.5%; 61,389,000

OPERATING REVENUE:

Trading Revenue:
129,149,000; + 18%; 109,148,000
Other Revenue
501,000; (9 %); 549,000
Total Operating Revenue
129,650,000; + 18%; 109,697,000

Fair value movement of investment properties:
80,796,000; + 22%; 66,327,000

TOTAL INCOME:
210,446,000; + 20%; 176,024,000

NET PROFIT BEFORE TAXATION:
102,772,000; + 23 %; 83,816,000

Less tax on operating profit:
2,595,000; (52%); 5,399,000

NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS OF LISTED ISSUER:
100,177,000; + 28%; 78,417,000

Earnings per share (basic and diluted):
20.1 cps; + 27%; 15.8 cps

Final Dividend
3.80 cps; + 12%; 3.40 cps
Record Date: 10 June 2011
Date Payable: 24 June 2011
Imputation Tax Credit: No Imputation Credit
End CA:00209241 For:RYM Type:FLLYR Time:2011-05-19 08:30:43

My initial thoughts:- Very impressive performance in light of the very difficult economic conditions. Very happy, will be buying more. Will definitly be investing much more than the initial $100,000. How well will this company perform when the country starts enjoying real growth again ?

[mamos]

Predictable result in-line with 15% underlying growth targets.

Flat 2H. Probably was expecting little stronger.

New sales: 1H/2H: 196 / 152.

Existing sales: 1H/2H: 154 / 197.

Good to see healthy increase in average $ value of new units from $308k to $359k and slight increase in existing units from $306k to $314k. However new sales average price was mainly a result of 1H where the average sales prices in 1H was $370k. 1H the average sale price was $312k for re-sales.

Churn of the existing units y/o/y lower which was mainly from a much lower 1H.

Disc some #'s obtained from research reports so cant verify accuracy.

[buns]

Truly great stock to hold.

I’m back in for good at $2.50

And Sauce - great insight, I wish I could add something useful to the discussion but am out of my league!

[percy]

Truly great stock to hold.



And Sauce - great insight, I wish I could add something useful to the discussion but am out of my league!

I think a lot of us feel the same way buns.
I too am very pleased with the result.All that growth,from retained earnings,yet paying a dividend.