Arvida doubles first-half profit

Retirement village and aged care facilities operator Arvida Group says it's "on track to deliver a strong 2017 financial year result" after it more than doubled first-half profit. 

Net profit rose to $19.4 million in the six months ended September 30, from $7.4 million a year earlier, with revenue up 27% 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% 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% boost to its 2016 result.

The company is conservatively geared at 10% 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 December 30, will increase pro forma gearing to 14%, it said.

Arvida's care facility occupancy is at 95%, well above the national average of 89%, and care facility revenue accounted for 72% 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% resale margin, and $3.6 million from 12 new sales, with a 19% margin, while it paid $11.4 million to residents who left.

The board declared a 1.1c dividend for the September quarter, with a December 8 record date, payable on December 16. Arvida's policy is to distribute between 60-80% 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%, in dividends for the quarter. The board said it affirmed guidance that the current dividend level is sustainable.

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

(BusinessDesk)