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UPDATE: Ryman posts 13% gain in 1H earnings, on track for FY target of 15% increase

Ryman Healthcare, New Zealand's largest listed retirement village builder and operator, posted a 13 percent gain in underlying first-half profit and signalled it's on track to meet its target of a 15 percent increase in annual earnings. The shares touched a four-month high.

The Christchurch-based company said trading profit, which is used as a basis for dividend payments and doesn't include tax or unrealised gains in property values, rose to $66.3 million in the six months ended Sept. 30, from $58.5 million in the year earlier period. Revenue rose 9.6 percent to $109.2 million, it said in a statement.

Ryman has been developing new villages as it seeks to benefit from an ageing demographic. It added a record 450 beds and units in the first half of its financial year and says it is on track to reach about 900 units for the full year, ahead of its annual run rate of 700. The company this year expanded to Australia where it is eyeing similar demographic trends. It opened its first village in Melbourne, bought a second site and is eyeing spots for two more developments in the city. To aid its future expansion, Ryman has acquired a landbank in both Australia and New Zealand with potential for an additional 4,294 units and beds to be built.

"We have got 30 years of extraordinary demographic growth ahead so we want to be in a strong position and well placed to take advantage of it, and we think we are," chief executive Simon Challies told an investor briefing.

Shares in Ryman touched a four-month high of $8.28 and closed up 1 percent to $8.19, having gained 3.3 percent so far this year.

Ryman will pay a dividend of 6.3 cents on Dec. 12, up from 5.6 cents in the same period a year earlier.

The company's net profit jumped 38 percent to $107.9 million, or 21.6 cents per share, as it benefited from a $39.8 million unrealised gain in the value of its properties and a $1.9 million deferred tax credit. In the year-earlier period, the $78.4 million net profit was boosted by a $24.7 million property gain, offset by a $4.8 million tax expense.

Ryman said the first-half result benefited from increased prices and strong sales volumes as its village portfolio grew.

The company's total retirement village units and residential beds rose 11 percent to 7,174. Retirement village units increased 12.4 percent to 4,478 and residential care beds rose 8.7 percent to 2,696.

Ryman sold more occupation rights for its new units, posting a 10.4 percent increase in volume to 233, while the fee revenue rose 21.7 percent to $101.6 million. Meanwhile, sales volumes of its existing units rose 19.5 percent to 312 units, with the value of those sales rising 30.8 percent to $119 million.

Auckland, New Zealand's largest, fast-growing city, is a key focus for the company, with more than $800 million of work to be carried out over the next five years, Challies said.

"If you look at where we are building and where our landbank is at the moment, you can see there's a lot of concentration on Auckland and Melbourne," said Challies. "We are preparing ourselves to be opening three new large scale villages per annum from 2017 and the general mix will be one in Melbourne, one in Auckland and one outside Auckland in New Zealand each year."