Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ryman Healthcare Ltd (RHCGF, Financial) achieved record settlements of 827 ORAs and $651 million in gross receipts, marking the highest level in the last three years.
- The company delivered 667 retirement units and aged care beds in the first half, including significant new facilities in New Zealand.
- Ryman Healthcare Ltd (RHCGF) has implemented a new pricing structure for RV units, which is expected to create significant long-term value for shareholders.
- The company has achieved $18 million in annualized savings in non-village operating expenses, with a target to achieve similar savings by the end of FY26.
- Ryman Healthcare Ltd (RHCGF) maintains a strong brand reputation, being acknowledged as best in class across three separate cohorts in New Zealand.
Negative Points
- Ryman Healthcare Ltd (RHCGF) reported a net loss before tax and fair value movements of $79.8 million, down $17.8 million from the prior half.
- Cash flow from existing operations was negative at $7.8 million, a decrease of $24.8 million compared to the first half of '24.
- The company's debt increased by $50 million to $2.56 billion, with gearing remaining above the target range of 30% to 35%.
- Occupancy rates for aged care and retirement units have slightly decreased, with aged care occupancy at 91.7% and retirement unit occupancy at 87.9%.
- Ryman Healthcare Ltd (RHCGF) has not declared a dividend for this period, with plans to review the dividend policy in FY26.
Q & A Highlights
Q: Can you clarify the fair value movement in the restated balance sheet? Is it primarily due to the increase in DMF from 20% to 30%?
A: The increase in valuation is due to several factors, including the DMF adjustment to 30%, moderated discount rates, and growth rates. The net impact from these changes on the DMF is about $90 million, with additional valuation from new developments contributing to the overall $280 million increase.
Q: With the changes in interest capitalization, can you explain the current debt structure and how much is not backed by active development?
A: We need to review the numbers, but we aim to ensure that cash flow from existing operations is positive to avoid increasing debt. We see a path to reducing debt to under $2 billion over the next two to three years, focusing on recycling in-flight projects and improving cash flow.
Q: Are there any more accounting changes or restatements expected in the future?
A: While we can't say definitively that all changes are complete, the main outstanding issue is the capitalization of overheads, which is a work in progress. We aim to finalize this by the full year, but most major changes have been addressed.
Q: How is the construction cost inflation in Victoria affecting your projects and margins?
A: While construction inflation has moderated from the COVID period, it remains a factor in Australia. We are seeing some impact, but it's more pronounced in specific regions like the Mornington Peninsula due to local taxes.
Q: With the Board refresh, has dual listing in Australia been considered?
A: Currently, our focus is on the ongoing transformation and operational improvements. While dual listing might be considered in the future, it is not a priority at this moment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
