Ryman Healthcare: Getting Fit for the Future

Highlights:

• Financial Improvement: Cash flow from existing operations reached NZ$43.3 million, a NZ$51.8 million improvement from the previous year, and cash flow from development activities improved to -NZ$230.2 million, a NZ$150.8 million increase.
• Governance Overhaul: Significant Board and management changes included appointing Dean Hamilton as Chair and Executive Chair, and introducing new directors James Miller, Kate Munnings, and David Pitman.
• Development Progress: Completed developments at John Flynn (Melbourne) and William Sanders (Devonport), with 10 villages under active construction and a focus on cash recycling and efficiency in new village developments.

Significant Financial Improvements

Ryman Healthcare's (ASX: RYM) 2024 Annual Report highlights a year of transformation and significant financial improvements. The company reported a cash flow from existing operations of NZ$43.3 million, marking an improvement of NZ$51.8 million from the previous year. However, the IFRS profit before tax and fair value movements saw a decrease, with per share figures at -47.2 cents, compared to -43.6 cents in FY23. Cash flow from development activities also showed improvement, amounting to -NZ$230.2 million, a notable increase of NZ$150.8 million from the previous year.

Enhanced Financial Performance Metrics

Ryman Healthcare has revised its financial performance metrics to better reflect its audited financial accounts. The focus is now on three key metrics: cash flow from existing operations, cash flow from development activities, and IFRS profit before tax and fair value movements per share. This shift emphasizes the importance of cash flow as a performance indicator, splitting measurements between current operations and development activities.

Governance and Management Overhaul

The year witnessed significant changes in Ryman’s Board and management. Dean Hamilton was appointed as Chair, later transitioning to Executive Chair after Richard Umbers’ resignation. New directors, including James Miller, Kate Munnings, and David Pitman, bring extensive experience and leadership to the board. Additionally, Dr. Bernadette Eather joined as a Clinical Advisor, replacing Dr. David Kerr.

Health, Safety, and Wellbeing Focus

Ryman has reconfigured its health, safety, and wellbeing systems to ensure a safer environment for residents, visitors, and staff. The company has prioritized upskilling teams in safety performance and mitigating critical risks. Remarkably, there were no critical injuries reported over the year.

Prudent Capital Management

The Board decided to suspend dividends to allocate capital for ongoing village developments and limit borrowings. At March 2024, net interest-bearing debt was NZ$2.51 billion, with a gearing ratio of 36.2%, slightly above the medium-term target.

Development Progress

Ryman completed developments at John Flynn (Melbourne) and William Sanders (Devonport), with 10 villages under active construction. The company plans to adopt a simpler build rate measure, focusing on efficiency and expected cash recycling. Some sites in the land bank are held for sale, while others are reassessed for future development.

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