Share Investor Interview: Move Logistics CEO Chris Dunphy

Move Logistics

 

From Move Website - Additional info by MOVE Company Reports and added to by Share Investor.

  

Move Logistics Group is a 150-year-old company that is currently undergoing a transformation. 

The business was formed in 1869 with the original Hooker Brothers transport company. In 1989, a new vision was created, to grow the business and expand nationwide.

 

They offer freight transport and warehousing services throughout New Zealand and co-ordinate freight movements offshore through their international alliances. They also have a specialist road tanker division which is one of the largest operators in the New Zealand fuel delivery market.

The Company's operations include general transport, bulk liquids, heavy haulage, shipping, storage and distribution, and freight. The Company operates through three divisions: Freight Services, Warehousing Services and Trading Services. The Freight Services division provides transportation services.

In 2021 MOVE underwent a rebrand and a new direction under acting CEO Chris Dunphy. Moving to a business where the truck operator is increasingly becoming the truck owner operator. 

 

 

The Questions

  

Share Investor

In a way you have come full circle, after leading a division of the biggest logistics company in New Zealand - (Mainfreight)- you now lead the second biggest listed logistics company in New Zealand. So how does your approach to operations differ from that of “the Mainfreight Way” and how much have you borrowed from what you learnt while you were there? 

Chris Dunphy

The Mainfreight Way has developed and evolved over the years - there is a lot to admire and emulate from their success. Equally the approach being taken by the team @ MOVe is more reflective of the combining of numerous businesses under one umbrella, as distinctive from bringing individual purchases / acquisitions to an already successful marque.

 

S. I

Like other New Zealand companies from 2020 till now - the pandemic and its effects are still with us - it has been a tough few years for MOVE Logistics. What have you learnt from the economic difficulties of these 2.5 years in terms of the company’s strengths and weaknesses? Has that made MOVE a stronger company? 

 

C. D

Ours is a heartland kiwi business not an Auckland one. The industries that we serve are largely rural and regional. Keeping our teams intact and responding to our customers’ needs during and post-covid was challenging (e.g., vax mandates) as well as the disruption to normal business trading.

 

S. I

We have heard in the media that you are in the process of transforming the business. How is the transformation going? 

 

C.D

Continuing, not linear and certainly requiring plenty of focus.

 

S. I

What are your thoughts on both the “economic slow-down” and the effect that it may have on the company & your overall strategy in both markets that you currently operate in - New Zealand and Australia? 

 

C.D

Its real; inflation is a far bigger issue than media or the Reserve Bank are recognising (to date anyway) and we know that this inevitably causes wage & price ructions…we must get our customers to pay more so that we can retain our team members who are encountering real increases in their living costs.

 

S.I

Is this not the basis for inflation?

 

C.D

IMHO Inflation in the NZ setting is cost of living increases foisted through excessive government borrowing.

 

S.I

One cost goes up, so another one puts up their costs and so on. If you are leading and inspiring your team, would it not be better to become more efficient?

 

C.D

Of course, but the customer still must pay for the service provided.

 

S.I

Yes, costs are going up, but can your innovation drive cost out of the business? 

 

C.D

To some extent (e.g., modal shift) but not entirely & that's why rates have to reflect rising costs.

  

S.I

Do you believe that you have responded to the economic uncertainty in an appropriate way? 

 

C.D

Yes.

 

S.I

How is MOVE currently doing in its various markets of operation and how well are profit margins holding up? 

 

C.D

Switching to lower cost transport modes (ship & rail) where possible and margin testing our clients to ensure we avoid busy-fool syndrome.

 

S.I 

What are the biggest commercial threats to your businesses in terms of competition and is your reaction to this competition likely to be aggressive or reactive in nature?

 

C.D

Weak competitors will engage in a race- to- the- bottom where they falsely believe that more revenue will save them from poor business practices. Strong competitors will stay focused and look for opportunities. Our path is to be very diligent with our capital, look after our customers and naturally be match-fit to deal with both weak & strong competitors.    

 

Reader Question

What new blood are you bringing into the business? 

 

C.D

Watch this space. 

 

Reader Question

As I know you have a new fleet manager coming. Was he picked by you? 

 

C.D

He was recommended by a new team member and endorsed by several existing ones. That is how we like to hire - talent known by great people.

  

S.I

Any business has inherent risks. How do you manage those risks in the normal business operating environment that changes due to economic cycles and other outside and inside influences? 

 

C.D

Freight and logistics are inherent economic barometers. The narrower you are to one sector, region, or product, the more your returns reflect that metric. We need to intensify our service offering within key industry verticals and expand our footprint, starting with our modest shipping to/ from Tasmania. 

 

S.I

What are your biggest challenges as the company expands and do you prefer organic expansion rather than the purchase of companies to pursue revenue and profit growth?

 

C.D

We will grow with our existing customers’ needs as well as look for opportunistic bolt-on deals that are earnings accretive.

 

S.I

You had one capital raising last year to restructure your business, do you intend to pursue that model again by issuing more capital or do you think you will be fine raising capital through retained earnings when you want to bolt on another company? 

 

C.D

We’re in good shape; I am a shareholder, and my preference is to not get diluted with more capital unless there is a compelling reason to do so.

 

S.I

Do you expect to re-introduce a dividend? 

 

C.D

Yes, when we can pay a fully franked dividend - equally we believe investors see us as a growth stock, so the clear intention is to grow our activities and re-invest to the greatest extent possible.

 

S.I

What is your opinion on bonuses paid with stock options and other incentive pay and how do you feel about executives of other NZX listed companies receiving incentives even though predetermined targets have not been met? 

 

C.D

I believe in total alignment between shareholders, directors, management & team. If we are all shareholders, the focus is steely resolve to improve. Equally soft targets don't produce better outcomes: There needs to be real sweat before there’s equity & that means outperformance before bonuses = Do the mahi & get the treats…

 

S.I

What are your views on how we can get better shareholder representation in the boardroom? 

 

C.D

Nominate people and vote @ AGMS!

 

S.I

Given enough time and expansion in New Zealand, you say Australia is a target. Where and when will you expand over there and any idea where your main hubs will be? 

 

C.D

Easy - We will stay away from 800Ib gorillas and look to places where our core competencies are in demand … Tasmania looks like a good place to start. 

 

S.I

How much input does every worker at MOVE have into the business? 

 

C.D

Slightly less than their output.

   

S.I

Is there enough long-term thinking and planning when it comes to making decisions in the boardroom that affect New Zealand companies? 

 

C.D

Maybe. There’s a lot of “paralysis through analysis” in public companies these days. I think that boards are too often inclined to engage external consultants to provide answers than back their judgement or exercise the cranium through intelligent debate.

 

S.I

How is the culture change going and its hard once drivers change over to the ownership model or is it easy because they now have the financial incentive? 

 

C.D

We are creating a MOVe culture rather than changing; The mantra is “we MOVe as one” and that is both defining & self-fulfilling. Our business is equal parts owner-drivers and a company fleet.

 

S.I

How long do you intend to be with MOVE or is it your baby and have you committed yourself to seeing it through? 

 

C.D

I serve at the pleasure of the board. My role as acting CEO should alter next year but I will remain as director and a substantial shareholder. A bunch of us “freight dogs” have a pact that we hope to be soon promoted from our current roles to looking after the chep pallet accounts, freight claims and washing trucks, as soon as younger/better versions emerge! To wit, we laugh (a lot) and sometimes it literally feels like the Blue Brothers as the band has been put back together!!

 

S.I

What would you say are the major differences between MOVE and Mainfreight and other logistics brands in the space in which you operate? 

 

C.D

See above.

 

S.I

Do you have a moat?

 

C.D

I don't have a castle, so there's no need for a moat! 

 

S.I

Surely MOVE is your castle?

 

C.D

I am an investor & employed to do a turnaround ~ its significant but not my only asset & equally it’s a team effort not one man’s crusade.

 

S.I

With no moat - what is going to keep your castle yours?

 

C.D

An army of like-minded team members who want to make a difference & see the opportunity.

 

S.I

Where do you see the business over the next five to 10 years? 

 

C.D

Bigger, much better & yet eerily still focused on the same needs of our customers.

 

S.I

What made you get into this fast-developing world of logistics/trucking? 

 

C.D

Just unlucky really…all the smart people were heading off to offices when I left University whereas I had a job driving a logging truck that paid more. Things just evolved from there.

 

S.I

The demands on your time must be huge. I am sure the life of a CEO at MOVE is terribly busy. How have the demands of MOVE impacted on your family and what skills as a dad have you used in your business life and where and how do you find the balance between home and work? 

 

C.D

I left Mainfreight @ 40 so I could be a better Dad than the one I was rapidly becoming as a freight executive constantly on planes. The last 16 years I have happily flown under the radar in Australia.

 

S.I

In conjunction with the above - Is it simply good time management? 

 

C.D

It’s about leading, following & getting out of the way … we have high energy people in the MOVe team who know it's better to beg for forgiveness (occasionally) than ask for permission all the time.

 

S.I 

What do you see as the strongest and weakest quality of your leadership style? 

 

C.D

Impatience, hiring people much smarter than me, self-depreciation & a willingness to be proven wrong…and yes, they are all strengths & weaknesses!

 

S.I

You are an extraordinarily strong leader brought about by your tenure at what I would say Mainfreight. How do you balance that strong personality when you make company decisions? 

 

C.D

See above.

  

S.I

Who are some of your business mentors/heroes and why? 

 

C.D

I draw most of my inspiration from non-business circles, like art & history and a bit of philosophy - Lee Kuan Yu (founder of Singapore) is the most complete & purposeful individual that I admire. Malcolm McClean (investor of the shipping container) for his problem-solving/innovation.

 

S.I

Who is your favourite New Zealand business leader/s and why? 

 

C.D

Hard to go past Bruce Plested but Don Rowlands (former Mainfreight chair) was no slouch either.

 

S.I

In relation to the last 2 questions, are there any books or periodicals that you have read that you would recommend to Share Investor readers?

 

C.D

Read widely and voraciously - avoid the biographies particularly auto-bios as no-one wants to know the bad & dumb sh*t that has happened. 

I subscribe to a lot of periodicals but religiously read The Financial Times every day, the Economist and Monocle ~ amazing what ideas, inspiration and fun there is out there beyond the arid business press.

  

Conclusion - My opinion

What can we take home and put in the bank from this little one on one?

Well, it’s hard to pin Chris down. 

His answers sometimes can be a little “smart” and to the point – maybe I got him on a bad day.

Clearly, he has got a lot of work to do and he’s doing it and he has got his own money invested so the incentive is there to do the job and do it right.

He is forging his own way, not necessarily the “Mainfreight Way” but Chris’s model of what he has leant from Mainfreight and his other ventures over the years – I suspect learnt in Australia.

We will be watching!

 

 

  

From Move Website - Additional info by stuff.co.nz and MOVE Company Reports.

ACTING CEO OF MOVE

Born in the Bay of Plenty, Dunphy went to Papatoetoe High School in South Auckland and drove trucks to fund himself through his university studies in transport economics. Dunphy said he comes “from a long illustrious line of truck drivers” and has been in and around the industry all his life.

He met Mainfreight founder Bruce Plested as a boy climbing Mt Wellington to photograph Mainfreight trucks in a convoy.

Chris has a deep knowledge of the transport and logistics industry and was formerly an executive director of Mainfreight and general manager of Mainfreight’s international division. Chris joined Mainfreight in 1993 and helped take it public in 1996. After ten years of senior management roles in Mainfreight, spearheading their global growth-by-acquisition strategy, Chris resigned as executive director in 2003 to pursue private investments in several freight, shipping, and logistics businesses. In July 2021, Chris took on the role of Executive Director of MOVE Logistics Group.

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Share Investor Q & A: Ryman Healthcare's CFO Gordon MacLeod

Please forward to near the end of the review. Gordon talks of Australian expansion just before they actually started. VERY illuminating.

Ryman Healthcare Ltd [RYM.NZ], the retirement village and aged care provider, is one of the NZX's best performing companies and historically it has increased earnings by at least 10% for each of the last 10 years.

Its full year result to March 31 2010 was up 16% on last years 2009 full year and indications are that these sorts of results are likely to continue for the foreseeable future considering the increasing age demographics for the New Zealand population and the seemingly unparalleled popularity of their offering to their prospective customers.

It seems a well managed business with unlimited prospects. In fact you would find it hard to find anything negative written about the company and the way that it is run.

Little is known about who the company is run by and how -they just get in and run the business and get good results - and I would like to know what is behind the hype of promised increased returns forever. Is this company going to achieve the lofty results of the past into the future?

With these things at the centre of my mind I flicked off an email to Ryman in Christchurch and got back a response from the Chief Financial Officer, Gordon MacLeod who kindly agreed to a Share Investor Q & A.

The Q & A was conducted via email .



The Q & A

Share Investor - Congratulations on a great full year result to 31 March 2010. Was this expected by management or a surprise given the state of the economy?

Gordon Macleod - Our growth in realised profits of 16% to $61m was mainly driven by strong growth in earnings from completed villages. This growth reflects our portfolio doubling in size over past 5 years – feeding through into earnings – and higher occupancy. So, we experienced higher care fees, management fees and resale gains in addition to the initial earnings from the three new villages opened in 2010. Most importantly, this increase in profitability was also reflected in even stronger growth in operating cashflows, up 31% to $149m.

The growth in earnings was therefore not a surprise to management, and reflects the robust nature of our business model along with the very real need we are serving to the elderly.

SI - Ryman Healthcare has had significant growth in the size of the business, its revenue and long-term returns to shareholders since listing in 1999. Are you able to continue with this sort of growth for say the next 10 or 11 years or do you see a tail-off, for whatever reason, of these sorts of spectacular results?

GM - We believe that Ryman will grow strongly for many years to come for a number of reasons. There remain many locations throughout New Zealand which are ideally suited for a Ryman village, and we are continuing to see a strong number of land opportunities from which we will continue to pick the best.

Most importantly, we are now entering a prolonged period where the elderly population will increase at a significantly faster rate than ever before. In fact, the number of people aged 75 years and over is set to increase on average by 12,000 per annum for the next 20 years.

Add to this the harsh reality that although we are living longer we are also somewhat frailer. Recent medical research estimates that men spend the last 6.8 years, and women the last 9.1 years, of their lives with the limiting diseases of old age. In addition, it is also expected that the incidence of dementia is set to rise by 50% and osteoporosis and osteoarthritis by 40% by 2025.

Our confidence in Ryman’s future prospects is therefore not just the result of the quality of what we do – our purpose designed villages meet a very real, and growing, need in the community.

So, our medium term earnings target is to grow realised profits 15% per annum, or put in more simple terms - to double the size of the business every five years.

SI - Do you anticipate continued growth of the aged care sector in general or do you see a plateau sometime in the future?

GM - Given the growth in our elderly population expected over the long term (as outlined above) it is hard to see a plateau – the demand will just get stronger over the next 20 years. Capacity in the sector generally is getting tighter, and there is very little in the way of new build going on (except for Ryman), so we expect very strong demand.

SI - Is your growth rate above that of the rate of growth of the elderly population?

GM - Since listing in 1999 our growth has significantly exceeded the rate of growth in the 75 plus population – our realised profits are up ten fold from $6m to $61m, whereas the 75 plus population has increased by 30% over that same time frame to 256,000. So our growth in realised profits has far exceeded the demographics growth rate. Market share wise we are only just over 12% of the retirement village market (ie independent and serviced units) and 5% of the aged care market (ie rest home, hospital and dementia beds).

Reader Question - What is your projected yearly growth rate in net profit for the next five years? Also, what would a 10% decrease in residential property prices have on net profit, say over a 1 year period?

GM - Approximately half of our realised profits are retained for our organic growth strategy, as the business model provides returns well in excess of our cost of capital. We aim to grow our dividends in line with our realised profits, so shareholders should expect growing dividends in addition to our capital growth.

SI - What kind of profit margins are you achieving and have they been maintained as the company has grown?

GM – Our overall realised profit margins have averaged just over 20% for many years and we have maintained this rate.

SI - Interest free loans for senior staff of up to $2 million to buy shares as pointed out in the 2010 Annual Report. Shouldn't senior employees use their own money to buy shares and wouldn't that be a better incentive for them to achieve positive results?

GM – Our Board views it as important that management’s long term interests are aligned to those of long term shareholders, with the on market share scheme representing an important part of the senior management remuneration package. The Board (and shareholders for that matter) prefers the on market purchase mechanism ahead of share options. This is because they are non dilutive, as existing shares are bought on market – rather than share options which constantly impact the issued share capital for existing shareholders.

SI - How hard is it to purchase suitable sites for a reasonable price for your villages and has the recession provided some added opportunity in this area?

GM - We have seen a number of good opportunities over the last two years, our landbank is very healthy, and we continue to explore potential new sites. It has been a good time to buy, as there are very few competing bidders with too much cheap debt. Prices are therefore more sensible than before. We now have 4 to 5 years’ worth of stock in the landbank which is a strong position to be in.

SI - Could you envisage another style of aged care in your business, say a move away from the "village" type layout of your properties to a more self contained, self sufficient sort of living?

GM - Our residents tell us that our lay out works very well, and this has been the case for many years. A Ryman village is tailor designed by us to meet the needs of the elderly, and includes a range of care options to ensure we can meet our residents needs as their health needs change. It is hard to see a time when the elderly will not want this peace of mind and security. In addition, our retirement village environments are very difficult to replicate in the broader community when you consider the village facilities, companionship, beautiful gardens, secure environment and so on that we offer, all on one site.

SI - Do you offer "hotel" style living, that is, rent a unit in one of your villages, rather than own, therefore allowing individuals to free up capital in the latter years of their lives or generally do your customers have enough free cashflow on top of what they might put into buying a unit to allow them to live how they want?

GM - Residents actually often free up capital when they come into a Ryman village, as we offer an affordable product due to our cost advantages. In addition, our weekly fees are very affordable, and in over 20 years we have never increased the weekly fees to an existing retirement village resident. This has given residents real certainty over their weekly outgoings, which is very important for the elderly. We therefore do not offer a rental type model for our independent and serviced units.

SI - As we all live longer and are generally healthier, we are living longer in our own homes. How much of an impact do you think that will have on your business in the long-term as the age when we might want to consider moving to a retirement village moves out?

GM - Our average age of entry is 78+ for independent units, 83+ for serviced units and 85+ for rest home / hospital, so we are catering for the older end of the spectrum rather than the 65’s as some independent retirement villages do. As noted above, people may be living longer, but often frailer due to the health issues of old age. So we see demand increasing, especially with the 75+ population doubling over the next 20 years. Over the long term we may see the average ages of entry noted above increasing, but this will depend on people’s health needs.

SI - Is New Zealand in its infancy in terms of retirement living, in the sorts of complexes you build and run, and if we are how much more advanced are say things in Australia and the United States?

GM - Based on what we have seen overseas, and feedback from overseas investors, our Ryman offering is unique and world class. Self constructing our own villages, with a full range of care options integrated on one site, is uncommon around the world. Most often, nursing or care services are run by different operators to the providers of independent living villages and in different locations. This is not what the older resident wants, as they want the peace of mind and security that they can age in place with the same friends and staff, and stay in the same location as their partner.

SI - How much impact will the recent Government tax changes on building depreciation affect Ryman and will the lower corporate tax rate ameliorate the situation if the company has been impacted?

GM - At this early stage we estimate that we will lose tax depreciation on buildings of $9m to $10m. Shareholders currently pay tax at 33% on our dividends, so they will start to receive the benefit of imputation credits once tax losses accumulated during our investment / growth phase have been utilised over the next 2 to 3 years.

Reader Question - Do you have a maximum debt to equity figure that directors aim to keep below?

GM - Our strategy is to only incur bank debt to fund the construction of new villages, which ultimately fund themselves by the time of full occupancy. We have never incurred debt to fund acquisitions, or share buy backs and the like. In this way, there is no debt on a substantial existing portfolio and we aim to keep this conservative position. Our strong operating cash flows mean that we have been able to invest $730m in new villages since listing in 1999, and we haven’t needed to raise any fresh equity from shareholders to do so. Our current bank debt to equity ratio is only 31%.

SI - What are your biggest challenges as the company expands?

GM - Executing well is our most important focus.

SI - You have a sizable workforce of over 2000. Is there much of a union movement in that workforce or are your employment contracts mostly on an individual basis?

GM - We are a good employer and there is very little union involvement. Staff are on individual employment contracts.

SI - How have you managed the business in relation to your competitors, do they have or will they have an impact on your business in the future?

GM - We don’t manage our business relative to competitors. The demographics mean that if we offer a first class product to our residents at an affordable price then we will do well.

SI - Why have you done better results wise than your listed competition, Metlifecare Ltd [MET.NZ] for such a sustained period?

GM - We only focus on why we do well and don’t really want to compare and contrast ourselves to MET.

Reader Question - It has been suggested to me that Ryman’s success is built on its being a property company, rather than a healthcare one. If there is a significant element of truth in that assertion there would be implications?

GM - First and foremost our core business is looking after the elderly. We are therefore a healthcare company, which meets a very real need from the growing elderly population. Our rest home and hospital beds are purely needs driven, as are our serviced apartments – collectively these account for two thirds of our units / beds. We have shown that we can trade well in a difficult property market, as was evidenced in 2009 when the market fell 10% yet our realised profits increased 5%. Without the absolute healthcare focus we have, our business could well be considered as more a property company.

SI - In my investing experience I have found the level of business leadership in New Zealand wanting – with a few very notable exceptions - when it comes to making good long-term decisions based on sound business skills, the basic understanding of running a business and accountability when it comes to making mistakes and this is often reflected in businesses hiring from an overseas talent pool. What are your views on how we can get good shareholder representation in the boardroom?

GM - I think Boards should always be looking for the right mix of skills, experience and commercial acumen – and not just ticking governance boxes. Real business experience is critical. Of particular importance is that a good balance of directors on the Board understands the perspective of shareholders - by having a reasonable amount of skin in the game through share ownership. This is the best way to get shareholder representation in the Boardroom (along with having the usual respectful dialogue with all forms of shareholders). This contrasts with some theories out there that ‘pure’ independence on Boards (ie no financial interest at all) improves governance – what is important is a good balance.

SI - What company or companies do you admire the most (apart from RYM) that you don't have a financial interest in and why?

GM - I think that Fulton Hogan in Christchurch have done a great job of growing their business in NZ and Australia. They seem to take a good long term approach and look after their staff well. Also I have really respected the way Foodstuffs have successfully responded to the Australian challenge through their Pak N Save and New World stores. Neither businesses try and grab the headlines, they just focus on offering a good product to customers.

SI- Are there any particular books , periodicals or websites that you have read that you would recommend to Share Investor readers in terms of business and investing?

GM - I think that people in business should read Jim Collin’s books – Good to Great, Built to Last, and How the Mighty Fall. All good stuff, practical and not full of MBA jargon. I try not to read too much from economists anymore, the last three years has been proof enough to me that you can’t predict the future – just focus on running your own business extremely well, and mind the farm.

SI - I have read Benjamin Graham's Security Analysis and find it crucial to long-term investing not just in the stockmarket but for investing in general. Have you read it and if you have what have you taken from it as its main points?

GM - I haven’t read it. I think investing is about finding a very good quality company that you would be happy to be the owner of, and then taking a long term perspective.

SI - What does a Chief Financial Officer do and responsible for in a listed company?

GM - A good broad range of stuff! Providing advice to the Board, strategy and planning, forecasting, cash management, banking relationships, financial reporting, maintaining controls, IT, and investor relations. Dealing with the financial and investment community is a very important part of the job.

SI - Who are some of your business mentors/heroes and why?

GM - He will hate me for mentioning his name, but I greatly admire Kevin Hickman (Ryman co-founder). Ryman has been built from the ground up (literally) over 25 years, and the business principles installed in the team many years ago are still just as strongly recognised today. In my experience it is highly unusual for founding principals to be so respected and still part of a large company’s (family) culture.

SI - What do you see as the strongest and weakest quality of your leadership style?

GM - I will have to think about that! Basically I have just worked very hard for many years and tried to get on with people, not matter what their job title.

SI - Where do you see yourself and the business you help manage over the next five years?

GM - Ryman – Double the size, from well managed growth in NZ and Australia and with lots of happy residents and shareholders. Me – I have never really thought more than one year ahead, the ‘to do list’ is too daunting! If I do a good job then there will be lots of good opportunities for me at Ryman.


On Ryman's Australian Expansion

I asked Gordon a question about Ryman moving their business model across the ditch before the announcement last week that they were looking at expanding there, so asked some additional questions about that move.

SI- How long will the first village be assessed before expanding further?

GM – We will carefully assess the entire Australian experience, from land acquisition to consenting to constructing, sell down and operations. During the initial sell down phase of the first stages we will get a good feel for how we are going. We have strict business case criteria for capital pay back of a village and we will set the same criteria as we do in NZ for whether the opportunity stacks up.

SI - Just how much research was done before the move?

GM – We have undertaken substantial research over a number of years. Australia has always been an opportunity for Ryman, and we felt the time was right now to take the next step up.

SI - Is your business model different to how such villages operate in Australia?

GM – We are quite different to many, in that we plan to continue to building and operating our own unique villages (many others simply undertake acquisition activity). Most importantly, what we offer will be different in that we plan to offer the same sort of integrated village with a full range of care as we do in NZ. This means that residents will have the security of having their changing health needs met within one village.

SI - Why Melbourne, Victoria first?

GM – We have a number of contacts in that area and it is easy to get to from Christchurch. That said, other states on the East Coast remain a possibility too.

SI - Will business conditions, employments laws, tax structures etc allow you to operate the way you do in New Zealand or do you have to tweak the model for Australia?

GM – As always we will have adapt to local conditions to a certain extent. However, on the whole the overall industry attractiveness and dynamics are very similar which is good. Encouragingly, build costs are actually lower in Australia and on the care side of things providers can obtain an accommodation bond on top of the weekly fees (in NZ rest home / hospital care offers weekly fees only), which we see as an advantage.

SI - If successful in Melbourne what are 5 year growth plans for that State and other Australian States?

GM – We actually just plan to focus on this first village for now. We will develop our strategy once we have a better idea as to the long term opportunity.

SI - Will you concentrate on growth in Victoria first before other States are considered?

GM – Victoria is our initial front runner, as you need to focus your energies somewhere to get traction, but a site could equally pop up in Queensland or NSW first. Once the first site is underway our plan is just to focus on that before anything else is planned. Thereafter it would make sense to focus our energies in one State for a while.

SI - How will expansion in OZ be funded?

GM – Traditional debt funding from our bankers – ANZ and CBA, and through our strong operating cash flows.

SI - Will RYM consider listing on the ASX sometime in the future?

GM – Yes, this is a real option for us once we have a site established. An ASX listing could be a way to achieve better liquidity for investors and to broaden the base of Australian fund managers in the Ryman shareholder list. That said, we have no plans at this stage and the Board will assess this option when the time is right.

Q & A End.


Disclosure: I own RYM shares in the Share Investor Portfolio


Gordon MacLeod Bio - Supplied by Ryman

Gordon MacLeod is the Chief Financial Officer and Company Secretary of Ryman Healthcare Ltd. Gordon is responsible for investor relations, treasury management, planning and budgeting, financial and management reporting, IT and systems development, taxation compliance, aged care billing and insurances. Previously, Gordon was a Corporate Finance Partner of PricewaterhouseCoopers, and was also the Finance Director of a London listed hi-tech engineering company based in Cambridge, England.


About Ryman Healthcare - Various sources including RYM website

Established in Christchurch in 1984, Ryman draws on over 20 years of experience to provide the best possible retirement living options for its residents.

Ryman Healthcare Limited develops, owns and operates integrated retirement villages, resthomes and hospitals for the elderly within New Zealand. Its villages provide a range of retirement living and care options, including independent townhouses and apartments, serviced apartments, and a care centre providing resthome, hospital and dementia level care. As of March 31, 2010, the Company operated 22 operational retirement villages from Auckland to Invercargill and plans to open two new villages every year. The villages are all designed, built and operated by Ryman. Since listing in 1999 the company has increased profits and dividends ten-fold without seeking any fresh capital from shareholders. The company is a six times winner of Best Retirement Village in New Zealand, serves over 4500 elderly New Zealanders, and employs over 2000 staff.

The Company's subsidiaries operate in the aged care sector in New Zealand. Its subsidiaries include Anthony Wilding Retirement Village Limited, Beckenham Courts Retirement Village Limited, Edmund Hillary Retirement Village Limited, Ernest Rutherford Retirement Village Limited, Evelyn Page Retirement Village Limited, Frances Hodgkins Retirement Village Limited, Grace Joel Retirement Village Limited, Jane Mander Retirement Village Limited and Jane Winstone Retirement Village Limited.


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