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Aged care operator Arvida doubles first half profit

 Retirement village and aged care operator Arvida Group saw strong growth in the six months to Sept. 30 on the back of high occupancy and contributions from last year’s acquisitions.

The retirement village and aged care company predicts even better financial performance for the full year, as more people move through its expanded operations.

Net profit for the half year rose 110 percent on 1H18, to $30.5 million, and underlying profit rose 45 percent to  $17.9 million.

Arvida chief executive Bill McDonald said occupancy of its higher-dependency care facilities was 95.3 percent in September, “significantly higher than industry experience.

“Growth in bed numbers, premium fee revenue and high care occupancy underpin a strong recurring cash flow profile,” he said.

Meanwhile, the strong property market over the last few years helped lift Arvida’s resale gains - the difference between the price a unit was initially bought for and what it was sold for during the financial period - by 75 percent, and resale margins rose to 22 percent.

Arvida - a play on words mixing 'Arv' as in 'A retirement village' and 'vida', the Spanish word for life - listed on the New Zealand stock exchange in 2014. That followed what McDonald described at the time as an intense period of merger and acquisition activity to get 17 villages scattered throughout New Zealand into one entity and ready for an initial public offering.

The float raised $80 million, with two of the first investors being then All Blacks Richie McCaw and Dan Carter.

At the time of the float, Arvida had 952 aged-care beds and 812 retirement units, providing accommodation for more than 1,700 residents. It bought three more villages in 2015.

More acquisitions have seen the group expand to 29 retirement villages with over 4,000 residents.

McDonald told BusinessDesk that while the ongoing growth strategy includes acquisition, the company will also look more at building new villages, and expanding its existing ones.

“We are on track to deliver 112 new homes this financial year, in line with guidance provided. This will be a significant milestone for the group as the developments reflect the completion of the first of our major apartment projects since listing four years ago.”

In August, Arvida announced the purchase of 18 hectares of bare land in Kerikeri for a new retirement village involving 200 independent-living villas and an 80-bed care facility. McDonald said the first new homes at the company’s other greenfield development in Tasman should be finished next year.

“With acquisition of the Kerikeri site, our future annual build rate increased to over 200 new homes from 2021,” McDonald said.

“The future development pipeline includes 1,385 units and beds to be built over the next 5-7 years.”

McDonald said new villages would be more “outward-facing”, meaning there would be a focus on involving the community in the life of the village, whether it be through a cafe, recreational facilities like pool or a gym, or even a creche.

“We have a desire to create a connection with the outside community - not to be inwardly focused. If you look at some of our new development - it’s outwardly-facing, inviting the community in. It’s a model where we see our residents coming in the back door and helping in the structure and function of the village, and the outside community coming in the front door.”

Arvida announced a September quarter dividend of 1.3 cents per share to be paid on Dec. 20.

The shares closed Monday at $1.30 and have gained about 8.5 percent in the past 12 months.

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