Covid 19 coronavirus: What pandemic cost Ryman Healthcare, its $14.2m payout, pre-Christmas dividend

Ryman Healthcare spent $50 million on anti-pandemic measures, got $14.2 million in Government wage subsidies to keep staff employed and will next month pay out shareholders $44m in dividends.

Chief executive Gordon MacLeod explained more about the effects of Covid on the business after it issued its first-half result for the six months to September 30.

He detailed what the business bought to protect its 12,000 residents and keep all villages virus-free, how different village entities applied for and got the Government subsidy to keep running, and how half underlying earnings were always paid out to shareholders.

In a pre-Christmas bonanza, investors in New Zealand’s largest listed retirement business will get the money around December 18.

On paying out the $44m, he said: “The dividend is always half our underlying profit. We took advice on the wage subsidy and there was a body of thought that suggested that we could have claimed up to $25m as a group but we decided not to do that.

“There’s no bucket which says which [wage subsidy/Government payout] should be in which. We carefully considered receiving the wage subsidy to keep employing people and we invested in critical healthcare infrastructure. We’ve benefitted in no way from that wage subsidy in terms of our net result.”

Ryman spent $50m to ward off the potentially deadly virus spreading through 12,000 residents in its 39 villages here and in Australia.

Of that $50m, $34m of that alone was spent on personal protective equipment, MacLeod said.

“We bought N95 masks – the highest grade of mask. We also bought surgical masks, eye shields, gloves, hand sanitiser and a whole bunch of other stuff like shoe coverings, full body suits or protective body gowns. We’ve got two warehouses filled with the stuff in Christchurch and Melbourne,” MacLeod said.

“We can’t rely on district health boards to handle procurement,” he said.

Ryman was not just trying to protect its residents but also family members, he stressed.

It bought four Alpaure AP4 sterilising fog machines for $1m. The machines killed bugs within 30 seconds, he said.

A Ryman spokesman supplied further information which said Sanipure NZ, owned by microbiologist Ben Harris and businessman Paul Archibald, had imported the Altapure AP4, an aerosol high-level disinfection system manufactured in Wisconsin.

The new machines had originally been brought here to use in a meth decontamination business. Each machine costs about $240,000.

Ryman’s underlying profit for the half-year to September 30 fell 14 per cent because of higher costs from the pandemic, it told the market. Shareholders who enjoyed 11.5cps interim dividend in the September 2019 half-year got only 8.8cps in this latest period.

Ryman pays out half its underlying profit in dividends to shareholders and invests the other half into a massive development pipeline, creating new villages. Twelve are being built and plans are afoot for lots more.

The company would appoint a new CEO of Ryman Australia “as soon as we can find a suitable candidate”, MacLeod said. “It’s most likely to be an Australian.”

The company plans a new bond issue to repay debt. No amount has yet been put on that raise, nor a date. This would be Ryman’s first new capital or bond issue in its entire 22 years since listing, he said.

Refundable accommodation deposits [RAD] were being offered to Ryman residents in a new concept only launched a fortnight ago, he said.

The scheme was different from a licence to occupy, which is the main method retirement villages use to “sell” properties to residents.

RADs will be regulated under the Retirement Villages Act “giving people a chance to pay a capital sum up front instead of a weekly rental payment to Ryman”.

“It’s a choice for the consumer. It is only for beds in the aged-care facilities.”

In some cases, the deposits will be hundreds of thousands of dollars, he said.

“People will be able to decide whether to pay money on an ongoing basis or monetise that capital sum upfront which is then fully refundable to them. We are trialling it in Auckland first with the intention of other centres afterwards.”

A spokesman said: “We’ve introduced refundable accommodation deposits in New Zealand for the first time. RADs are a common choice in Australia, where we have offered them for a number of years. It is a Government scheme in Australia,” he said.

If a resident wishes, they can pay a lump sum upfront for their accommodation premium, instead of paying their accommodation on a weekly basis.

“We refund the full amount when the resident leaves. We have done it because they are popular in Australia and they give residents a choice about how they pay. An easy way to think about it is that a weekly fee is like paying rent on the room, while a RAD is a bulk payment, which they get back when they leave. We don’t have a number for what they are likely to be worth, we are trialling the idea,” he said.

On Mt Eliza, on the Mornington Peninsula outside Melbourne, Ryman would get a hearing in March before the Victoria Civil and Administrative Tribunal, MacLeod said.

Ryman’s scheme for that village was rejected by the council so it is appealing to a higher authority. Ryman says there is strong demand from the local community for its planned village on the site once owned by Sir Reg Ansett.

But some locals disagree and say Ryman should not be given consent.

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