Former Act Party president and MP John Boscawen. Photo / Natalie Slade
A former MP and long-term shareholder in New Zealand's biggest listed retirement business challenged the board over its reporting at today's AGM and plans to take matters up with the Financial Markets Authority.
John Boscawen, a former Act Party president and MP, criticised Ryman Healthcare's board about aspects of the 2022 annual report and financial statements being "misleading" in terms of the number of new retirement village units stated as being delivered and what was actually delivered.
He left the meeting dissatisfied and plans to complain to the FMA.
At the Christchurch AGM, he disputed what was listed as being built and delivered or completed and whether that was true.
He cited units without kitchens or bathrooms which he said were listed as being complete but were not.
Director Claire Higgins said the answer was somewhat technical but the audit committee was happy with the numbers reported on.
She had accompanied auditors on site visits and said accounts appropriately reflected the situation to provide good information to shareholders.
However, she acknowledged disclosure could be improved.
Boscawen said he regularly visited Ryman villages and development projects and saw inconsistencies in what he saw physically and in Ryman's completed units quoted in its accounts.
Boscawen said he had attended to raise the issue of disclosure but had been a shareholder for 10 years and his own mother had lived in an Auckland Ryman village.
Just because the company had pandemic difficulties in the last two years, "that's no reason to say you've 12,777 units when you've only got 12,350", Boscawen said.
By 11.30am, chairman Greg Campbell said the company was happy to engage further with Boscawen but the meeting had been running for one-and-a-half hours.
"I could go village by village," Boscawen said, referring to the difference in his numbers and the company's.
He remained unhappy with the answers received today.
"I'll put it with the Financial Markets Authority and leave it with them," Boscawen concluded.
His concerns date back some years to around 2016.
Today, he also challenged whether 411 of the 419 units were actually completed in the year's second-half when the company issued those numbers in a full-year result. Yet he had visited sites and it wasn't true, he said. Positions were overstated, he said.
Higgins, referring to what was built, said "descriptions could be improved" but Ryman was complying with accounting standards.
"I'm trying to seek extra disclosure for shareholders. Now, it might upset a few people," Boscawen told the meeting.
Higgins said the words "built, complete and delivered" were not as descriptive as she'd like them to be, but that would be looked at.
Campbell said there was other business for the meeting. Director George Savvides said what Boscawen had described was "physically correct" but the way Ryman accounted for units was different and complied with standards.
The board was also asked why it wasn't reporting quarterly sales as some other listed retirement village operators were. Campbell said that would be considered, adding: "It is certainly our objective to be transparent. Nothing to hide here."
Another shareholder asked what effect softening residential market sales would have on Ryman.
"We'll be keeping a close eye on it. But right now, sales are still holding. We're not seeing that demand fall away. People coming to us are looking for more, not less. More and more potential customers have other sources of capital available to them."
Asked about staff shortages and pay rates, Campbell said: "It's a very, very live question. There is a nursing shortage. DHBs are feeling that. As far as the pay rates, we pay the same as the DHBs. We have some advantages over the DHBs over shift work."
He expressed hope about immigration numbers rising.
An online shareholder asked about fixed fees for life and Campbell said that was one of Ryman's strengths.
The dramatic share price fall had not been addressed, a shareholder said, and it was "the elephant in the room".
Campbell said the board was acutely aware of the pain for shareholders. He said the company was focused on improving commercial outcomes "and that will rise value to shareholders over a period of time. We're not hiding away from that".
Shareholder Kevin Taylor asked if a dividend reinvestment plan was considered but Campbell said there were no such plans.
The board was asked if recycling capital was taking longer because it was building in more expensive places and building more expensive buildings, such as apartments.
Campbell said capital was taking longer to recycle and construction costs were rising. But having high-value villages gave the company momentum, particularly in Australia.
Ryman's total assets grew 19.6 per cent in the last year to reach $10.97 billion, as it bought more land and developed new properties.
Yet its shares are being heavily discounted on NZX trading, at around $8.80, down from around $15.80 a year ago, giving a market capitalisation of only $4.4b today.
Campbell told shareholders: "We've reviewed progress and we are pleased with where we are at after the first three months of the financial year."
The last two years had been "challenging" for the business which cared for older people, he said. He cited New Zealand's health system as undergoing fundamental change.
In his formal address, Campbell said around 15,000 extra care beds would be needed by 2030 according to some estimates. The issues were worse in Victoria where the population was much greater.
"Living in a Ryman village is a form of health insurance," Campbell told shareholders, referring to the continuum of care offered from independent living to high-needs hospital-level care.
Ryman has 16 new villages under construction in New Zealand and Victoria.
Those under construction are often in places where residents have already moved to but where building work is yet to conclude.
In New Zealand those are at Hobsonville (Keith Park), Lynfield (Murray Halberg), Devonport (William Sanders), Takapuna on the lakefront, Lincoln Rd (Miriam Corban), River Rd, Hamilton (Linda Jones), Havelock North (James Wattie), Riccarton Park in Christchurch (Kevin Hickman) and Northwood in Christchurch.
In Australia, new villages are being built or expanded at Melbourne's Aberfeldie (Raelene Boyle), Highett and Ringwood East, Brandon Park, (Nellie Melba), Burwood East (John Flynn), Highton in Victoria (Charles Brownlow), and Ocean Grove in Victoria (Deborah Cheetham).
Richard Umbers, group chief executive and with Ryman for nine months, said sales in Victoria continued to be strongest.
But the Covid-related skilled labour shortage had hit the construction part of the business, he said.
Managing debt was a focus and $1.13b of debt had been diversified lately, Umbers said.
Ryman had more than $700m of headroom on its debt and debt to gearing was now 43 per cent, down from 44 per cent last September. Debt was a key to expansion and developing new villages, he said.
"The supply of Gib has been a particular challenge and we've had to secure supplies from overseas."
'Developers are a good target for a council under financial pressure.' - Steve Evans