Arvida more than doubles annual profit on expansion drive

Arvida Group, the retirement village company that listed in 2014, more than doubled annual profit as it expanded its offering and benefited from a buoyant property market.

Net profit rose to $53.7 million in the 12 months ended March 31, from $24 million a year earlier, the Auckland-based company said in a statement. The latest earnings were boosted by a $39.3 million gain in the value of its investment properties, ahead of the $19.1 million gain booked the previous year. Revenue in the latest year increased 23 percent to $101.4 million.

Underlying profit, which excludes changes in property values and other one-time items, increased 47 percent to $23 million.

Arvida is expanding its portfolio as it seeks to benefit from increased demand for care due to an ageing population. The latest earnings were boosted by a full year's contribution from the three villages it acquired in the 2016 financial year as well as partial contributions from five acquisitions completed in the 2017 year, taking its total number of villages to 26.

The company's total unit or bed numbers increased to 2,747, up from 2,154 a year earlier. It plans to develop a further 262 new units or beds over the next two years, and currently has about 100 units under construction, with a further 645 in the planning stage. It announced today that it has inked a conditional agreement to pay $11 million for 8.2 hectares of bare land in Richmond, Nelson, which would cater for a $100 million retirement village and integrated care development.

"We continue to see a range of acquisition prospects and will continue to actively consider opportunities that meet our criteria in terms of location, quality of assets and current management, potential for development and earnings accretion," Arvida chair Peter Wilson said.

To help fund its growth, Arvida sold $41.8 million of new shares in October 2016. This month, it agreed a new $150 million facility with ANZ Bank to help fund development activity over coming years, which is expected to be executed next month. The company said it expects to spend $75 million on developments over the next 12 months. The total value of its assets lifted to $794.9 million, from $460.7 million a year earlier as the value of its investment property jumped to $569.9 million from $295.8 million.

Occupancy rates at the company's villages was maintained at 95 percent, and the company said it had experienced strong demand for its village and care facilities

In the past year, Arvida sold 32 new units, up from 20 the year earlier. The average value slipped to $438,700 from $465,000, although the margin increased to 17 percent from 16 percent. The company lifted the total number of resales to 166 from 149, with the average value increasing to $274,100 from $244,900 and the margin lifting to 19 percent from 14 percent.

Arvida will pay a fourth quarter dividend of 1.15 cents per share on June 16, taking the total annual dividend to 4.45 cents, 5 percent ahead of the previous year. The company said it expects the increased level of dividend to be maintained.

Its shares rose 1.5 percent to $1.33, and have gained 24 percent over the past year.

(BusinessDesk)