Ann: HALFYR: ARV: Arvida Announces Interim Profit of $7.4 million

• Release Date: 26/11/15 09:56
• Summary: HALFYR: ARV: Arvida Announces Interim Profit of $7.4 million
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					ARV
26/11/2015 09:56
HALFYR
PRICE SENSITIVE
REL: 0956 HRS Arvida Group Limited (NS)

HALFYR: ARV: Arvida Announces Interim Profit of $7.4 million

o Net profit after tax of $7.4 million and Underlying Profit1 of $7.3 million
for the six month period to 30 September 2015
o Total assets grew to $438.4 million, up $84.4 million since year end
o Business transitioning from integration to 'business as usual' over the
next six months
o National footprint extended with the successful acquisition of the three
Aria villages - provides a key strategic Auckland presence and quality
brownfield development opportunities
o Growth to continue with 225 new units and beds planned for delivery over
the next three years
o Positive outcome to finalise all Christchurch earthquakes insurance claims
o Quarterly dividend of $1.05 cents per share declared, in line with Initial
Public Offer (IPO) prospectus
o Outlook - the business is performing well and is on track to exceed
prospectus profit forecasts

Financial Performance

Arvida Group Limited (NZX:ARV) today announced a strong interim result and
expects to exceed the profit forecasts for the year ending 31 March 2016, as
set out in the IPO prospectus dated 17 November 2014. The results for the
six-months include a full period of operations of the villages acquired in
the IPO and an approximate three month contribution from the acquisition of
Aria Bay, Aria Gardens and Aria Park, which completed on 3 July 2015 (the
"Aria Villages").

Commenting on Arvida's financial performance, Chairman Peter Wilson said,
"This is a very pleasing result which reflects the significant progress made
integrating the now 21 retirement village and aged care facilities, and the
benefits resulting from implementation of our support centre structure."

Statutory Result

For the first six months to 30 September 2015, Arvida achieved total
operating revenue of $39.3 million. Good demand exists for Arvida's villages
and care facilities across the country, with the care facilities occupancy
rate at over 93% across the Group (significantly higher than the national
average of 87%). In addition, $3.8 million of gains in the fair value of
investment properties were derived from a desktop review completed by CB
Richard Ellis (CBRE).

Total expenses were $33.8 million and included one-off expenses of $1.4
million relating to the acquisition of the Aria Villages and earthquake
remediation costs.  The Profit after Tax of $7.4 million compares to $10.6
million for the IPO prospectus forecast for the full year to 31 March 2016.

Underlying Profit of $7.3 million, compares to the IPO prospectus forecast
for the full year to 31 March 2016 of $13.3 million.  Included within
Underlying Profit are $2.7 million of gains from 61 resales of existing units
and 11 sales of new units.

Total assets grew to $435.8 million, up $82.8 million since year end. The
market value of all properties from the latest CBRE valuations (excluding any
insurance related impairment) was $295.7 million, up from $225.1 million at
31 March 2015 largely as a result of the Aria Villages acquisition.

External bank debt was $10.0 million and resident loans totalled $134.1
million at 30 September 2015.  Total Equity was $252.7 million, up from
$209.7 million largely due to the equity capital raisings of $35 million and
the issue of $6 million of shares to vendors of the Aria Villages to partly
fund the Aria transaction.

Insurance Settlement

Arvida agreed with its insurer, a gross settlement of $18.1 million to
resolve its outstanding insurance claims relating to six of its properties
impacted by the Christchurch earthquakes. The actual payment received was
reduced by $1.0 million for the EQC contributions already received and $0.4
million for policy excesses.  The proceeds were received on 30 September 2015
and were utilised to reduce bank debt whilst the remediation planning is
completed.

Transitioning from Integration to 'Business as Usual'

The integration of Arvida's 21 villages and care facilities has been a
successful process with the focus now on transitioning from integration to
'business as usual' over the next six months.  This includes continuing to
make improvements in our high quality 'care offering' and further operational
and financial improvements across the Group.

CEO Bill McDonald highlighted the progress made, commenting "Arvida's core
operations support centre is designed to provide the framework for our
individual villages and care facilities to deliver strong results. We now
have core support capabilities in development, finance, human resources,
operations and marketing and sales and are well positioned to deliver on our
strategy."

The next steps in delivering on our strategy include:
o developing the operational culture to increase positive resident
experiences
o providing the IT infrastructure to share information and improve
communication, reporting and benchmarking across the Group
o embedding standardised Group policies, procedures and processes that
maximise quality of care while minimising risk
o leveraging existing expertise and resources across the Group
o continuing to realise significant procurement savings while improving
overall quality and service.  To date  procurement savings are in excess of
$1.5 million
o developing consistent, professional marketing and sales processes and a
consistent brand and visual identity across the Group
o clearly positioning the business and its unique selling points and value
proposition

Development Activities

Our brownfield developments demonstrate our commitment to meeting the rising
demand for care bed and retirement living developments. In the current
financial year, development activities are anticipated to deliver 32 new
units/beds and significant refurbishments at two care facilities.  Resource
consents have been lodged for a further 173 units/beds and resource consent
drafting is underway for a further 20 units.  In total, 225 units/beds have
been planned for delivery in the next three years, with opportunities for a
further 100+ units/beds on existing sites.  Arvida is also focused on
planning the remediation and refurbishment of its villages in Christchurch
that were affected by earthquake damage.

Acquisition

On 3 July 2015, Arvida purchased Aria Gardens, Aria Park and Aria Bay
(collectively known as "Aria Villages").  The Aria Villages comprise three
high quality retirement villages and aged care facilities situated in premium
locations across Auckland that provide retirement services to around 350
residents.  The villages have a strong care focus and meaningful brownfield
development opportunities.

Although the focus is currently on optimising the performance of existing
villages and brownfield developments, we continue to scan the horizon for
attractive, earnings accretive and value enhancing acquisition opportunities
that meet our criteria.

Dividend

A cash dividend of 1.05 cents per share, consistent with the first quarter,
has been declared for the September quarter, amounting to $2.9 million. The
dividend is partially imputed at 0.35 cents per share. A supplementary
dividend of 0.16 cents per share will be paid to non-resident shareholders.
The dividend record date is 10 December 2015 and payment will be made on 21
December 2015.

Outlook

Arvida Chairman Peter Wilson said "The Board is pleased with progress made to
date. As Arvida transitions from integration to 'business as usual', our
focus will be firmly on improving the lives and wellbeing of our residents."

Beyond this, Mr Wilson said "supported by positive ongoing sector
demographics and the favourable outlook in demand for the services Arvida
provides, we are confident that by remaining on strategy, we are well
positioned to deliver on the profit forecasts contained in the IPO
prospectus."

Footnote:
Underlying Profit is a non-GAAP measure and differs from NZ IFRS net profit
after tax by replacing the fair value adjustment in investment property
values with the Board's estimate of realised components of movements in
investment property value and to eliminate deferred tax and one-off items.

- ENDS -

For more information contact:
Bill McDonald, Chief Executive Officer, Arvida Group Limited
Telephone: 021-270-3669 or email: [email protected]

Jeremy Nicoll, Chief Financial Officer, Arvida Group Limited
Telephone: 021-403-665 or email: [email protected]
End CA:00274129 For:ARV    Type:HALFYR     Time:2015-11-26 09:56:14