Providing a sustainable outcome for all stakeholders

How we measure our financial performance

Growth in underlying profit is a key metric used within the business to measure our trading performance. This measure incorporates our four earnings streams: care fees, management fees, realised resale gains, and development margins.

Our medium-term target is to double our underlying profit every 5 years. This equates to annual growth of 15 percent per annum and we remain committed to achieving this.

We did not meet this target in FY21. While financial performance is important to all our stakeholders, so too is the care we provide for older people.

In early January 2020 we made the decision to do everything we could to keep our residents and staff safe and turn our villages into safe havens.

A benefit of being a profitable company was that we were able to spend what we needed to in order to keep everyone safe. Our response to COVID-19 has totalled over $50 million and we are now holding pandemic levels of personal protective equipment for future use.

This investment has been well spent. As a company we look after more than 12,500 residents and 6,100 staff, and have over 4,500 contractors across our 41 villages and 12 construction sites. At the date of printing this annual report, no-one has tested positive for COVID-19.

Our business model allows us to recycle capital

Ryman’s origins date back to 1984, when our two founders invested $10,000 to start their first development. The same model has evolved to enable us to turn $25 million into more than $9.17 billion of assets.

Key to our success has been our ability to recycle our cash investment in a village while creating a recurring income stream that grows over time. This means that by the time we’ve sold the occupation rights to the apartments and townhouses in a new village, it has paid for the construction of those apartments and townhouses as well as the community assets and the care centre of that village. We continue to target recycling our cash investment and establish future recurring income streams. We expect to collect $2.8 billion of capital proceeds from the 12 sites currently under development. Collectively, those sites will recycle capital, which is always our objective. And on completion, these 12 villages will establish a recurring income stream of around $220 million per annum that will continue to grow over time.

Our debt is used to build new villages

Our debt increased to $2.25 billion, reflecting our expansion into Victoria and a lift in our construction activity, which sees us now building across 12 sites. This is our biggest-ever build programme.

The vast majority of this debt is used to fund our land bank and the development of our new villages. This is why we, and our funding partners, regard our debt as productive debt. By the time we have developed and sold down all the villages in our land bank, we would have very little bank debt while still generating strong earnings and cash flows.

We’re providing our residents with greater choice on how to pay for their care

At the end of the financial year we launched refundable accommodation deposits (RADs) for our aged-care rooms in New Zealand.

RADs provide our care residents with an alternative way to pay the accommodation portion for their residential aged care.

To pay for their accommodation, they can now pay either a daily fee, an accommodation deposit which is fully refunded when the room is vacated, or a combination of the two options.

RADs are commonplace in Australia. The introduction of these into our New Zealand business will enable us to recycle capital more quickly at a village and means the funding models in both countries are much more aligned.

We are well positioned to meet the demands of an ageing population

Following a lengthy Royal Commission investigation into aged care, the Australian Government has committed a further $17.7 billion to the sector in response to the recommendation made by the Commissioners. The government’s 5 year- 5 pillar plan commits to major reform of home care, residential aged-care quality and safety, residential aged-care services and sustainability, workforce, and governance.

The plan includes increased funding for residential aged-care providers to improve care, service and contact time with staff along with a commitment to grow a skilled and professional workforce.

This commitment has been well received by the sector, with demand for what we do stronger than ever and growing.

Penetration rates in both New Zealand and Australia have continued to lift, and the growth opportunities for us in both markets is supported by an ageing population and an undersupply of quality retirement living and care options.

We are well placed to meet these demands. Our current development programme is spread across 12 sites in New Zealand and Victoria, reducing our construction and sales risks as well as our exposure to any one market.

We have a well-consented land bank and it is of a sufficient size that we are not dependent on any new site acquisitions to support our build rate over the next 3 years.