Ryman Healthcare Ltd. · NZX:RYM
Ryman Healthcare — H1 2023 Earnings Presentation
46 slides from Ryman Healthcare's earnings presentation, Nov 18, 2022
Slide 1: Half year result
RYMAN HEALTHCARE Half year result 30 September 2022 1
Slide 2: First half financials
First half $138.8m $194.0m financials Underlying profit1 44.8% Reported (IFRS) profit -31.1% $12.03bn $3.63bn Total assets 9.7%* Net assets 5.6%* $714.7m 8.8c unchanged from the prior year Cash receipts 5.0% Interim dividend from residents per share 1: Underlying profit is a non-GAAP measure and dif
Slide 3: Half year metrics
Half year $274.2m 772 24.1% metrics Total revenue Booked sales of Gross new sales occupation rights margin 10.6% 9.8% 3.5%* vs last year vs last year vs last year 94% 1.7% 32.1% Aged care Available RV Gross resales occupancy for unit resale stock margin mature villages -3%* 0.3%2* 7.0%* vs last year
Slide 4: Development highlights
Cambridge, Waikato Raelene Boyle, Melbourne Development highlights New Zealand • Cambridge - works commenced • Karaka - resource consent lodged • Rolleston - resource consent lodged Mulgrave, Melbourne Charles Brownlow, Victoria Australia • Mulgrave - planning permit received • Charles Brownlow - co
Slide 5: Strategic initiatives
Strategic initiatives Pricing reviews delivering margin improvement DMF phasing for independent RV units decreased to four years Expansion into home care commenced Australian aged care policy discussion paper published in August (link here) Sustainability Strategy launched in October (link here) Ima
Slide 6: Sustainability Strategy: Top three priorities
Sustainability Climate change Strategy: Establish science-based emission targets Top three priorities Quality care Deliver future-focused dementia design Indigenous engagement Enhance indigenous engagement 6
Slide 7: Demographics underpinning demand
Demographics underpinning demand 2.4x New Zealand 75+ population1 2021–2051 2.1x Victoria 75+ population2 2021–2051 1,000,000 1,000,000 800,000 800,000 600,000 600,000 400,000 400,000 200,000 200,000 - - 2001 2006 2011 2016 2021 2026 2031 2036 2041 2046 2051 2001 2006 2011 2016 2021 2026 2031 2036 2
Slide 8: At Ryman, we believe the measure of a full life is one that gets richer with age
At Ryman, we believe the measure of a full life is one that gets richer with age 8
Slide 9: Ian, Jan and Joyce, recent stars of our Full Life brand campaign, are friends
Ian, Jan and Joyce, recent stars of our Full Life brand campaign, are friends and residents from our Nellie Melba Village, Melbourne. 9
Slide 10: RV units and Aged Care beds
RV units and Aged Care beds As at 31 March 2022 As at 30 September 2022 Near Near Complete Total Complete Total complete complete Sold RV units 7,848 222 8,070 Sold RV units 8,078 204 8,282 Vacant RV Vacant RV 120 - 120 144 - 144 resale stock resale stock Total units included in independent valuatio
Slide 11: Half year reported (IFRS) profit
Half year $300m reported $250m (IFRS) profit $200m • Reported IFRS profit of $150m $194.0 million, down 31.1% on the prior year $100m • Smaller unrealised fair-value movement of $89.3 million $50m in 2022, against $178.7 million in 2021 - • Smaller price increases H1 18 H1 19 H1 20 H1 21 H1 22 H1 23
Slide 12: Underlying profit up 44.8%
Underlying profit $150m up 44.8% $125m $100m • Group underlying profit $138.8 million, an increase of 44.8% on same period last year $75m • Australia’s underlying profit lifted materially to $27.1 million $50m from $3.0 million on same period last year $25m • COVID peak through winter months impacti
Slide 13: Embedded value lifted to $2.57 billion
Embedded $3.0bn value lifted to $2.5bn $2.57 billion $2.0bn • Embedded value* now $1.5bn $2.57 billion, up 4.9% since March 2022 $1.0bn • Resale bank of $1.95 billion, underpinning future earnings $0.5bn • Implied resale margin of 27.7% - FY 18 FY 19 FY 20 FY 21 FY 22 H1 23 Resale bank Accrued manag
Slide 14: Combined margin increased to 29.5%
35% Combined margin increased 30% to 29.5% 25% 20% • Combined margin 29.5%, up from 23.7% 15% • Resales margin 32.1%, the highest 10% recorded to date • New sales margin 24.1%, 5% reflecting strong demand, offsetting rising construction costs 0% and supply chain challenges H1 18 H1 19 H1 20 H1 21 H1
Slide 15: Average new and resale prices lifted
Average new $1,000k and resale $800k prices lifted $600k • Average new sales and resale prices lifted to $870,000 and $710,000 respectively $400k • Average new sale pricing for independent units exceeded $200k $1,000,000 for the first time • New sale pricing reflects our $0k focus on high value loca
Slide 16: Affordability provides resilience
Affordability $1.8m $1.6m provides $1.4m resilience $1.2m $1.0m • Offering continues to be affordable relative to local $0.8m house prices $0.6m • Independent RV unit pricing in $0.4m Auckland and Melbourne 18% and 43% below local median $0.2m house prices respectively - • Residents continue to free
Slide 17: Cash receipts from residents $714.7 million
Cash receipts $0.8bn from residents $0.7bn $714.7 million $0.6bn $0.5bn • Cash receipts from residents up 5% $0.4bn • Market conditions are $0.3bn slowing settlement times $0.2bn • Operating cash flows down 19.1% to $243.7 million in H1 23 $0.1bn - H1 18 H1 19 H1 20 H1 21 H1 22 H1 23 17
Slide 18: Under contract, not yet settled
Under contract, $600m not yet settled $500m $400m • Contracts not settled increased $300m by $100.5 million to $512.5 million • Reflects both delays in completing units as well $200m as slower settlement times impacted by market conditions $100m $0m Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 N
Slide 19: Treasury management
Treasury $14bn management $12bn $10bn • Investing cash flows of $8bn $540.3 million including $115.3 on land payments $6bn • Debt to debt-plus-equity ratio of 45.2% $4bn • Debt to total assets of 24.9% $2bn • Fixed rate debt lifted to - above 50% of total drawn Mar 19 Sep 19 Mar 20 Sep 20 Mar 21 Sep
Slide 20: Dividend Reinvestment Plan introduced
Dividend Capital management initiatives Reinvestment Short-term Long-term Plan introduced Dividend pay-out range • Rebalancing care to Nov decreased from 50% to 30-50% independent living 2021 of underlying profit • Introducing care suites • Drawn debt $3,0221 million at • Increasing RAD take-up Sept
Slide 21: Ryman resident Jean and caregiver Ronalyn Hermosa represent the close bond shared between residents
Ryman resident Jean and caregiver Ronalyn Hermosa represent the close bond shared between residents and our Ryman team. 21
Slide 22: Questions
Questions A resident at our Murray Halberg Village in Auckland and recent star of our Full Life brand campaign, avid rower Judy embraces her freedom and well-being at Ryman. 22
Slide 23: Reported (IFRS) profit
Appendix 1 Reported (IFRS) profit 6 months to 6 months to 12 months to 30 Sep 22 30 Sep 21 31 Mar 22 $m NZ Aust Group NZ Aust Group NZ Aust Group Underlying profit (non-GAAP) 111.7 27.1 138.8 92.8 3.0 95.9 203.8 51.2 254.9 Unrealised revaluations of 49.6 39.7 89.3 178.5 0.1 178.7 436.8 30.3 467.1 in
Slide 24: Booked sales of occupation rights
Appendix 2 Booked sales of occupation rights 6 months to 6 months to 12 months to 30 Sep 22 30 Sep 21 31 Mar 22 NZ Aust Group NZ Aust Group NZ Aust Group Existing units Independent 228 26 254 236 15 251 444 34 478 Serviced 285 17 302 257 6 263 479 26 505 513 43 556 493 21 514 923 60 983 New units In
Slide 25: Development of RV units and Aged Care beds
Appendix 3 Development of RV units and Aged Care beds Total RV units Aged care and aged Independent Serviced Total units beds care beds New Zealand Linda Jones 5 - 5 - 5 Miriam Corban 22 - 22 - 22 Keith Park 19 - 19 - 19 Kevin Hickman 6 - 6 - 6 Total build - New Zealand 52 - 52 - 52 Australia Nellie
Slide 26: Available resales stock
Appendix 4 Available resales stock 2.5% 1.9% 2.0% 1.7% 1.7% 1.6% 1.4% Sep 22 Sep 21 Mar 22 1.5% 1.4% 1.2% Independent living units 52 34 45 Serviced apartments 92 67 75 1.2% Total resales stock 144 101 120 1.0% 1.0% 0.8% 0.8% Total retirement portfolio 8,667 8,195 8,538 Uncontracted stock 0.5% 1.7%
Slide 27: Margins
Appendix 5 Margins $000s Reference 30 Sep 22 30 Sep 21 31 Mar 22 New sales Realised fair value movement (Note 3) 45,389 28,493 110,681 Sale of occupation rights (Key statistics) 187,951 137,651 455,856 Gross development margin 24.1% 20.7% 24.3% Resales Realised fair value movement (Note 3) 126,677 7
Slide 28: Investment property valuation summary
Appendix 6 Investment property valuation summary Valuers unit price inflation assumption Discount As at 30 September 2022 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5+ rate Auckland 0.3% 1.1% 2.3% 3.0% 3.5% 12.8% Rest of New Zealand 0.4% 1.2% 2.2% 2.8% 3.5% 13.1% Australia 2.9% 3.1% 3.4% 3.5% 3.4% 13.5% Valuers unit pr
Slide 29: Cash management fees
Appendix 7 Cash management fees $000s Reference Sep 22 Sep 21 Mar 22 Accrued management fees and resident loans – opening (Note 8) 578,254 502,890 502,890 Less: Accrued management fees and resident loans – closing (Note 8) (622,635) (537,079) (578,254) Movement in accrued management fees (44,381) (3
Slide 30: Operating cash flows
Appendix 8 Operating cash flows 6 months to 6 months to 12 months to $000s Sep 22 Sep 21 Mar 22 Resident receipts 213,302 194,174 400,618 Refundable accommodation deposits (net) 45,040 33,862 87,411 New sale of occupation rights 162,710 212,954 383,601 Resales of occupation rights 293,676 239,481 52
Slide 31: Investing cash flows
Appendix 9 Investing cash flows $600m $38m $29m • $540.3 million invested in new villages and existing portfolio $400m $26m $30m • Building across 15 sites with a further 12 sites in the land bank $358m • $115.3 million of land purchases reflecting staged settlements $200m $315m for previously annou
Slide 32: Use of debt
Appendix 10 Use of debt $3,500m $3,000m $402m • Debt balance predominantly a function of growth $2,500m $175m $330m $293m $390m • Debt funded investment in $177m $2,000m $229m development WIP increased $208m $358m $356 million to $1,556 million $1,500m $1,566m $1,321m $1,210m $1,000m $500m $384m $47
Slide 33: Debt maturity profile
Appendix 11 Debt maturity profile $900m $800m • Funding diversified and $700m extended with the addition of a second USPP in April 2022 $600m • Weighted average tenure on $500m debt facilities of 5.3 years $400m $300m $200m $100m - F23 F24 F25 F26 F27 F28 F29 F30 F31 F32 F33 F34 F35 F36 F37 F38 Bank
Slide 34: Value of contracts not booked
Appendix 12 Value of contracts $150m not booked • Contracts not booked (presales) currently $122.5 million. $100m $50m - Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 34
Slide 35: Resident average age and tenure (years)
Appendix 13 Resident average age Average age (current) and tenure (years) 90 89 88 Average age (current) Sep 22 Sep 21 Mar 22 87 Independent 82.4 82.2 82.4 86 Serviced 87.3 87.4 87.5 85 Care centre 86.4 86.8 86.8 84 83 Average age (on entry) Sep 22 Sep 21 Mar 22 82 Independent 79.8 79.0 79.3 81 Serv
Slide 36: Development pipeline: New Zealand
Appendix 14 Development pipeline: NZ Total sites 17 Sites under construction 10 Peak capital Median Council Village Village centre Targeted village Design Consenting Construction requirement house price approval open open completion 1 William Sanders High >$1.7m 2023 2 Murray Halberg High >$1.1m 202
Slide 37: Development pipeline: Australia
Appendix 14 cont. Development pipeline: Australia Total sites 10 Sites under construction 5 Peak capital Median Council Village Village centre Targeted village Design Consenting Construction requirement house price approval open open completion 1 John Flynn High >$1.2m 2023 2 Nellie Melba Medium >$1
Slide 38: Asset base: New Zealand (ex Auckland)
Appendix 15 Asset base: New Zealand (ex Auckland) Village Location Hospital Dementia Resthome Serviced Independent Total Anthony Wilding Christchurch 80 33 35 50 110 308 Bob Owens Tauranga 40 40 40 79 218 417 Bob Scott Petone 40 40 34 89 254 457 Charles Fleming Waikanae 40 40 40 79 201 400 Charles U
Slide 39: Asset base: Auckland
Appendix 15 cont. Asset base: Auckland Village Location Hospital Dementia Resthome Serviced Independent Total Bert Sutcliffe Birkenhead 40 40 40 81 225 426 Bruce McLaren Howick 41 40 42 74 192 389 Edmund Hillary Remuera 114 30 50 60 372 626 Evelyn Page Orewa 60 37 20 65 248 430 Grace Joel St Heliers
Slide 40: Asset base: Australia
Appendix 15 cont. Asset base: Australia Village Location Hospital Dementia Resthome Serviced Independent Total Charles Brownlow Victoria 40 30 30 59 80 239 Deborah Cheetham Victoria 20 20 20 - 48 108 John Flynn Melbourne 38 38 38 96 174 384 Nellie Melba Melbourne 80 39 74 86 256 535 Raelene Boyle Me
Slide 41: Land bank: New Zealand
Appendix 16 Land bank: New Zealand Existing villages Location Hospital Dementia Resthome Serviced Independent Total Grace Joel Auckland - - - - 96 96 James Wattie Hawkes Bay 35 35 20 78 24 192 Jean Sandel New Plymouth - - - - 59 59 Keith Park Auckland 40 40 40 101 192 413 Kevin Hickman Christchurch
Slide 42: Land bank: Australia
Appendix 16 cont. Land bank: Australia Existing villages Location Hospital Dementia Resthome Serviced Independent Total Nellie Melba Melbourne - - - - 74 74 Deborah Cheetham Victoria 20 20 20 53 98 211 Total existing villages 20 20 20 53 172 285 New sites Location Hospital Dementia Resthome Serviced
Slide 43: Auckland sites
Appendix 17 Auckland sites 43
Slide 44: Melbourne sites
Appendix 18 Melbourne sites 44
Slide 45: 45 Villages
45 Villages 38 New Zealand | 7 Australia 45
Slide 46: Disclaimer
Disclaimer This presentation has been prepared by Ryman Healthcare Limited and its group companies ("Ryman") for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This presentation provides additional comments on the 2023