DELOITTE/MANAGEMENT MAGAZINE COMPANY OF THE YEAR: Ryman Healthcare

Ryman Healthcare is quite extraordinary Kiwi company. Since 2000 it has regularly appeared in Top 200 awards categories. This year it is the Deloitte/Management magazine Top 200 Company of the Year.
It had another great year, of which it has had many since its first appearance in these awards 12 years ago. The company’s after-tax profit increased 21 percent to record $120.7 million and its revenue climbed 20 percent to $155 million. As consequence, Ryman’s stock price climbed 60 percent.
Given the major challenges in Christchurch over the past 18 months the result was exceptional, chair Dr David Kerr notes in his annual report. Ryman has now notched up decade of record results.
A recent Harvard Business Review global survey claimed that just five of every 2350 large companies grew both their revenue and profits by five percent or more each year over the past decade.
“So Ryman’s accomplishments are pretty outstanding,” agreed the judges.
Ryman’s growth, again in Kerr’s words, is driven by the goodwill the company has generated with its three key stakeholder groups – residents, staff and shareholders. Ryman enjoys strong positive relationship with its residents and works hard to retain it.
It credits its Peace of Mind Guarantee scheme with building and maintaining positive relationships with residents. According to Kerr, resident satisfaction surveys consistently tell management that the company’s care and services exceed their expectations.
Ryman constantly enhances the quality of care it delivers. This year, for example, it introduced new auditing tools to further analyse residents’ healthcare needs, move it claims lifted its internal quality standards above what is typical in the sector.
Delivering consistently good aged-care services isn’t without its challenges, according to Ryman’s managing director Simon Challies. The challenge is exacerbated by the limited funding companies like Ryman get from the Government.
In sector that has often been criticised for poor employee relations and pay rates, Ryman stands out as significant exception to the rule. It operates senior management share scheme and this year introduced new share scheme for employees who want to become shareholders.
The board believes it will align staff and shareholder interests which in turn will help generate wider interest in the long-term creation of shareholder value in the company.
The company’s pay rates are also above those generally seen in the aged-care sector. And, according to Kerr, Ryman pays annual increases above what the Government provides by way of aged-care fee increases. “Staff are further rewarded through increased pay for passing additional aged-care qualifications, which we support them to study,” he wrote in his report.
The company’s shareholders have been equally well looked after, rewarded with growing dividends and enhanced share value. Total shareholder returns have climbed 1600 percent since the company listed in 1999. That’s compound annual growth rate of more than 24 percent. That’s an impressive company performance by any standard and is unrivalled on the NZX over the period. Ryman has never had to seek fresh equity from its shareholders to grow the business.
Yet grow it has. It completed record build programme last year, opening six new aged-care facilities and acquiring its first site in Australia. There have, in contrast to Australia, been very few new aged-care facilities built in New Zealand over the past 10 years, other than those built by Ryman. The company’s building activity has been almost matched by closures over the same period so bed and united capacity hasn’t increased much. The company has, therefore, increased the size of its new facilities to 100-plus beds.
The company concedes its decision to test the Australian market will be challenging. Its first village, in Melbourne, will present “relatively steep learning curve”, said Challies in his report. “We are not, therefore, committing to any further sites until we have some runs on the board at this first village.”
However, the Australian government recently announced major aged-care reforms and Ryman directors and management believe the changes will be positive and provide opportunities for the company.
Ryman Healthcare is perfectly positioned to capitalise on the growth that inevitable expansion of the aged-care sector offers. Its consistently developed strategic approach to growth, commitment to high-quality services, prudent management and best practice execution of its services and building project management suggest the company has future that is as promising as the record-breaking past it has so far delivered. M

COMPANY OF THE YEAR AWARD JUDGES’ COMMENTS

WINNER
RYMAN HEALTHCARE
Ryman is in its prime and bent on remaining there for long time to come. This outstanding enterprise has consistently featured as winner or finalist in one category or another of the Top 200 Awards since 2000. It was Company of the Year finalist in 2010 and has cracked it this year.
Ryman is the Deloitte/Management magazine 2012 Company of Year because it reported “a record profit on top of decade of record profits”, said the judges. This feat of consistent double-digit growth is accomplished by few companies worldwide, fact noted by recent Harvard Business Review study.
Ryman also deserves the accolade for its other innovative and significant industry benchmark-setting management and employment practices. It has delivered outstanding returns to its shareholders highlighted by the 60 percent increase in share price this year.
Ryman is now expanding into the Australian aged-care market. Everything this company does has merit and it performs outstandingly well in very competitive industry sector. It is model New Zealand enterprise.

FINALIST
PORT OF TAURANGA
Port of Tauranga has consistently featured in one category or another of these awards since 1999. It was here last year and is back again now as Company of the Year finalist because it is an all-round outstanding enterprise. The business has again successfully leveraged its impressive investment in its people, plant and infrastructure.
Port of Tauranga is compelling example of how the mixed ownership model can work. The company is still substantially publicly owned through the Bay of Plenty Regional Council and it performs to the highest local and global management, governance and trading standards. The port does not have monopoly, it operates in competitive marketplace and demonstrates just how successful infrastructure business should be run.

FINALIST
TRADE ME GROUP
More successful New Zealand companies should follow the Trade Me example, list on the stock exchange to access capital and enable investors to share their success. Nearly in its second year as listed company, Trade Me turned in an impressive result after successfully emerging from the difficulties of its majority media company ownership.
It has retained its public popularity and its share price has climbed almost 70 percent since listing. Trade Me has shown clean pair of heels to global competitors such as eBay and other would-be copycat online trading sites.
The company is well managed in every sense. It has used its clever technology to build an enterprise that is clearly the local market leader with brand penetration equalled by no other similar site.
Trade Me is New Zealand household name and has emerged as substantial, if not the largest, retailer of houses, motor vehicles, jobs and other categories into which it has expanded. It should be applauded for its ongoing success driven by its strategic foresight while maintaining its focus on customer service and innovation.

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