Arvida Group Limited Analysis

Overview

Arvida is one of the larger operators of aged care facilities and retirement villages in New Zealand. The group comprises 32 villages spread nationally with 2,475 retirement units and 1,688 care beds. Over 4,7500 residents are provided a continuum of care that extends from independent living to full rest home, hospital and dementia level care.

Arvida listed in December 2014 and became a constituent member of the NZX 50 Index in December 2016. Since raising $80 million at the Initial Public Offer, Arvida has grown considerably completing the acquisition of a further fourteen villages and now has a development pipeline of 1,683 units/beds to be progressively rolled out over the next 5-7 years with an annual build rate of 200 units.

Arvida continues to invest in its residents and support network adding programs and engaging in the local communities. A holistic approach is taken to care where as much emphasis is put on vitality and community inclusion as to quality of care. Arvida has a vision to be true leaders and innovators in the New Zealand retirement and aged care industry, creating rich and dynamic resident communities.

Arvida targets a dividend payout ratio of between 50% and 70% of Underlying Profit per annum, with imputed dividends paid on a regular quarterly basis.

Performance

The following information was extracted from Arvida Group Limited's full year results, released on 28 May 2024:

• IFRS net profit after tax of $139m, up 69%
• Underlying profit[1] of $85 million, down 3%

• Gross value sales of $427 million, up 13%

• 201 new units delivered, including 144 villas
• Total assets of $4.2 billion, up 12%
• Gearing at 33.9%
• NTA at $2.05 per share

Retirement village operator Arvida Group Limited today announced a full year net profit after tax (IFRS) of $139 million and underlying profit for the year ending 31 March 2024 of $85 million. Results include the impact of record unrealised movements in the fair value of investment property.

Operating Performance

Commenting on the performance Arvida CEO Jeremy Nicoll said it was encouraging to see our business performance in the later part of the financial year starting to recover following a period of challenging property and macroeconomic conditions. High inflation, high interest rates and a slow residential property market had impacted cash flow generation from operations.

Good progress with revenue uplift and cost out strategies had been made during the year to improve cash flow and profit performance.

Mr Nicoll said, “We are making a concerted effort to reduce our operating costs, with firm internal targets. Operating efficiency initiatives identified an initial $10 million of annualised cost out benefits to be delivered in the coming financial year.”

“An equal effort has been placed on increasing our revenue sources from other than the sale of retirement village units. This resulted in improved revenues from a review of weekly fees, service packages and premium care charges.”