Peet Limited · ASX:PPC
Peet — Debt Investor Presentation (May 2016)
44 slides from Peet's debt investor presentation, May 10, 2016
Slide 1: Investor Presentation: Peet Bonds - Series 1, Tranche 1
Investor Presentation Peet Bonds - Series 1, Tranche1
Slide 2: Important notice and disclaimer
Important notice and disclaimer The information contained in this document (“Information”) has been prepared by Peet Limited ABN 56 008 665 834 (“Company” or “Group”) in connection with a proposed offer of Peet Bonds – Series 1, Tranche 1 (“Offer” and “Bonds”) . The Offer is being made under an Offe
Slide 3: Table of contents
Table of contents Section 1 Overview of the Offer Section 2 Overview of Peet Section 3 Financial Information Section 4 Key Risks Section 5 Offer Summary Section 6 Annexures
Slide 4: Section 1: Overview of the Offer
Section 1 Overview of the Offer
Slide 5: Overview of the Offer
OVERVIEW OF THE OFFER » Peet Limited (ABN 56 008 665 834) (“Peet”) − Develops and markets residential land estates predominantly under a capital efficient funds management model Issuer − At 31 December 2015, Peet managed and marketed a land bank of approximately 48,000 lots with an on completion val
Slide 6: Section 2: Overview of Peet
Section 2 Overview of Peet
Slide 7: Group Business Model
GROUP BUSINESS MODEL Land Bank Target EBIT Target EBIT Diversification by Capital Sources of Composition Margin Land Bank Employed2 Geography (%)1 Revenue 1 1 22 22 41 40 Lots: 13,855 40% – 50% Development 20%-25% GDV ($bn): 3.0 $485m » Development profit EBIT # Projects: 30 37 FY15 36 1H16 WA VIC Q
Slide 8: Overview of Peet's Land Bank
OVERVIEW OF PEET’S LAND BANK » Diversified land bank across all mainland states and territories − Pipeline of 48,000 lots1 with an on completion value of approximately $12 billion − More than 70% of the landbank is held via Funds Management and JVs » WA exposure balanced against eastern seaboard » W
Slide 9: Extensive experience in developing master-planned communities
Liensive experience it developonctil Peet is developing some of the most significant master-planned communities across Australia. DARWINSOUTH PERTH NORTHWEST CORRIDOR The Heights, Durack* Yanchep Golf Estate* s.)/ Lot 2Yanchep ‘Shorehaven at Alkimos* </\i Bums Beach* <1 4 ‘West Hamptons Apartments®
Slide 10: Land Bank – Funds Management Key Projects
LAND BANK – FUNDS MANAGEMENT KEY PROJECTS PROJECT LIFECYCLE PROJECT NAME STATE GDV LOTS1 REMAINING 2016 2017 2018 2019 Alkimos WA $999m 2,350 Selling Burns Beach WA $307m 585 Selling Golden Bay WA $275m 1,202 Selling Lakelands WA $226m 1,395 Selling Yanchep Golf Estate WA $388m 1,417 Selling The Ave
Slide 11: Land Bank – Company-Owned Key Projects
LAND BANK – COMPANY-OWNED KEY PROJECTS PROJECT LIFECYCLE PROJECT NAME STATE GDV LOTS1 REMAINING 2016 2017 2018 2019 Brigadoon WA $66m 132 Selling Greenlea WA $80m 485 Selling Mundijong WA $124m 511 Planning Start up Selling Other WA $686m 3,824 Planning Gladstone QLD $86m 340 Selling Beaudesert QLD
Slide 12: Land Bank – Joint Venture Key Projects
LAND BANK – JOINT VENTURE KEY PROJECTS PROJECT LIFECYCLE PROJECT NAME STATE GDV LOTS1 REMAINING 2016 2017 2018 2019 Googong2 NSW $577m 2,452 Selling Eyre Kingston ACT $111m 167 Selling Wellard WA $253m 1,245 Selling The Heights NT $125m 465 Selling Lightsview SA $133m 732 Selling Total joint venture
Slide 13: New Projects in FY16 - FY18
NEW PROJECTS IN FY16 - FY18 Pipeline of approximately 48,000 lots providing visibility of future earnings » Up to 12 new projects expected to commence FY16 - FY18 PROJECT RELEASE SCHEDULE development within the next 2-3 years Project State Segment First Sales Lots1 Project Life (Years) − Up to 8 new
Slide 14: Section 3: Financial Information – 1H16
Section 3 Financial Information – 1H16
Slide 15: Group Financial Summary
GROUP FINANCIAL SUMMARY » Operating profit2 after tax of $18.5m - up 8% KEY PERFORMANCE STATISTICS 1H16 1H15 VAR (%) Lot sales 1,659 1,610 3% » Group EBITDA2 of $40.3m – down 12% due to completed projects Lot settlements 1,275 1,456 (12%) Revenue1 − Quayside apartments (ACT) and The Chimes $136.7m $
Slide 16: Improving Financial Performance
IMPROVING FINANCIAL PERFORMANCE Growth in earnings via improvement in margins » Solid growth in first half earnings since FY13 » Ongoing EBITDA1 margin improvement 1,990 1,990 driven by improved gross margin through net price growth, cost efficiencies and greater impact of high margin projects OPERA
Slide 17: Group Operating Performance
GROUP OPERATING PERFORMANCE Strategic reweighting of portfolio to east coast delivering diversified earnings base » Contribution from east coast projects increased to 76% of EBITDA » Higher contribution driven by Victoria » Funds Management business provided solid earnings base representing 34% of G
Slide 18: FM Operating Performance
FM OPERATING PERFORMANCE KEY PERFORMANCE STATISTICS 1H16 1H15 VAR (%) » 1H16 revenue increased to $21.6m – up 2% on 1H15 − EBITDA1 margin 66%, up 1% on 1H15 Lot sales 1,008 906 11% Lot settlements 657 786 (16%) » Increased exposure to improving QLD market expected with Flagstone launch 2H16 Revenue
Slide 19: Development Operating Performance
DEVELOPMENT OPERATING PERFORMANCE KEY PERFORMANCE STATISTICS 1H16 1H15 VAR (%) » Revenues for 1H16 of $67.4m – down 29% on 1H15 Lot sales1 − 1H16 settlements down due to Quayside apartment 256 256 - project (ACT) and The Chimes (WA), substantially Lot settlements completed FY15 Retail 180 287 (37%)
Slide 20: JV Operating Performance
JV OPERATING PERFORMANCE KEY PERFORMANCE STATISTICS 1H16 1H15 VAR (%) » 1H16 revenue of $29.7m, down 38% on 1H15 predominantly due to soft market conditions in NT Lot sales 395 448 (12%) Lot settlements 437 381 15% » Equity accounted profits up 294% during the half to $6.3m Revenue $29.7m $47.7m (38
Slide 21: Capital Management and Financial Ratios
CAPITAL MANAGEMENT AND FINANCIAL RATIOS Significant improvement in capital position » ROCE1 of 13% − Expected to improve during 2H16 as a result of improved underlying earnings performance 2,184 − New retail syndicate to be launched in March 2016 further improving ROCE » Increase in covenant gearing
Slide 22: Residential Market Overview
RESIDENTIAL MARKET OVERVIEW Melbourne » Ongoing strong population growth, relative affordability and solid economy to support dwelling demand − Metropolitan Melbourne growth expected to remain strong − Volumes beginning to stabilise near current high levels with moderate price growth Brisbane » Mark
Slide 23: Outlook
OUTLOOK Portfolio well positioned for sustainable long-term growth and value creation » Outlook generally supported by market fundamentals with sustained low interest rates and modest economic growth − Conditions across Victoria, New South Wales/ ACT and South Australia are expected to remain suppor
Slide 24: Section 4: Key Risks
Section 4 Key Risks INVESTOR PRESENTATION PAGE 24
Slide 25: Key Risks
KEY RISKS A detailed outline of risks relating to the Bonds and Peet’s business is contained in Section 4 of the Base Prospectus and Section 3 of the Offer Specific Prospectus. All potential investors should read both the Base Prospectus and the Offer Specific Prospectus in full before deciding whet
Slide 26: Key Risks (continued)
KEY RISKS (CONTINUED) MAIN RISKS ASSOCIATED WITH THE BONDS INCLUDE (CONTINUED): Restrictions on Holders’ rights and ranking in a winding-up Each series of Bonds will be unsecured and unsubordinated. In the event of a winding-up of Peet, assuming the Bonds have not been previously Redeemed, Holders w
Slide 27: Key Risks (continued)
KEY RISKS (CONTINUED) MAIN RISKS ASSOCIATED WITH THE BONDS INCLUDE (CONTINUED): Unless specified in the relevant Offer Specific Prospectus, Holders may only collectively request early Redemption following a Change of Control Event Holders of the Bonds have the option to require Peet to Redeem their
Slide 28: Key Risks (continued)
KEY RISKS (CONTINUED) MAIN RISKS ASSOCIATED WITH THE BONDS INCLUDE (CONTINUED): Risks associated with the Peet business include: Residential property market conditions Peet derives earnings from its development business, funds management business and joint venture business based on the future value
Slide 29: Key Risks (continued)
KEY RISKS (CONTINUED) RISKS ASSOCIATED WITH THE PEET BUSINESS INCLUDE (CONTINUED): Property values Unanticipated factors can influence the realisable value of the Group’s property and property-related assets. These include: » the profit and risk factors, including discount rates applied, that are co
Slide 30: Key Risks (continued)
KEY RISKS (CONTINUED) RISKS ASSOCIATED WITH THE PEET BUSINESS INCLUDE (CONTINUED): Sales prices Lower than expected sales prices across Peet’s portfolio of projects would generally result in lower profits by reducing the settlement revenue from the Development business and the fee income from the fu
Slide 31: Key Risks (continued)
KEY RISKS (CONTINUED) RISKS ASSOCIATED WITH THE PEET BUSINESS INCLUDE (CONTINUED): Breach of financial covenants As at the date of this Prospectus, Peet was in compliance with all covenants (or has in place any necessary waivers) under its debt facilities. Proceeds from the Bond, together with other
Slide 32: Key Risks (continued)
KEY RISKS (CONTINUED) RISKS ASSOCIATED WITH THE PEET BUSINESS INCLUDE (CONTINUED): Increase in unemployment rate Sales of lots in Peet’s residential projects may be negatively impacted by a sustained increase in the unemployment rate in Australia, particularly in key markets where Peet has residenti
Slide 33: Key Risks (continued)
KEY RISKS (CONTINUED) RISKS ASSOCIATED WITH THE PEET BUSINESS INCLUDE (CONTINUED): Environmental and Cultural Heritage matters The discovery of, or incorrect assessment of costs associated with, environmental matters, cultural heritage or contamination on any of Peet’s projects could have an adverse
Slide 34: Key Risks (continued)
KEY RISKS (CONTINUED) OTHER GENERAL RISKS INCLUDE: General economic and financial market conditions General economic conditions (both domestic and international), long-term inflation rates, exchange rate movements, interest rate movements and movements in the general market for ASX and international
Slide 35: Key Risks (continued)
KEY RISKS (CONTINUED) OTHER GENERAL RISKS (CONTINUED): Litigation, claims and disputes From time to time, the Group may be exposed to the risk of litigation or disputes with various parties arising from the conduct of its business, including contractual counterparties, shareholders, Peet syndicate i
Slide 36: Section 5: Offer Summary
Section 5 Offer summary INVESTOR PRESENTATION PAGE 36
Slide 37: Key Terms and Conditions
KEY TERMS AND CONDITIONS Issuer » Peet Limited (ABN 56 008 665 834) (“Peet”) Series » Series 1 – Tranche 1 » Bonds are interest paying, unsubordinated and unsecured debt obligations. Each Bond is issued on and subject to the provisions of the Trust Peet Bonds – Deed and the Terms Series 1, Tranche 1
Slide 38: Key Terms and Conditions
KEY TERMS AND CONDITIONS » So long as any of the Peet Bonds remain outstanding, the Issuer will not (and will ensure that no other member of the Guarantor Group will) create or permit to subsist any Security Interest (other than a “Permitted Security Interest”) Negative pledge » “Permitted Security
Slide 39: Comparison of Peet Convertible Notes and Peet Bonds
COMPARISON OF PEET CONVERTIBLE NOTES AND PEET BONDS FEATURE CONVERTIBLE NOTES BONDS Issuer » Peet Limited » Peet Limited Guarantor » None » Yes – various Peet wholly-owned subsidiaries Legal form » Convertible debt obligations » Unsecured debt obligations Issue Price/ Face value FY14 » $100 per Peet
Slide 40: Ranking of Peet Bonds
RANKING OF PEET BONDS Illustration of ranking upon winding up of Peet (based on the consolidated balance sheet) Amount drawn as at 31 December 2015, adjusted for the Ranking Existing debt obligations and equity FY14 amount to be raised under the Result offer $100m Higher ranking Secured debt Bank lo
Slide 41: Key Dates for the Offer
KEY DATES FOR THE OFFER Reinvestment Record Date for determining Eligible Peet Convertible Note holders (7.00pm Perth time) Wed, 27 April 2016 Peet Offer Record Date (7.00pm Perth time) Wed, 27 April 2016 Lodgement of the original Offer Specific prospectus with ASIC Mon, 2 May 2016 Bookbuild to dete
Slide 42: Section 6: Annexures
Section 6 Annexures INVESTOR PRESENTATION PAGE 42
Slide 43: Summary Income Statement
SUMMARY INCOME STATEMENT 1H16 1H15 Var $M $M (%) Funds Management 21.6 21.2 2% Development 67.4 94.8 (29%) Joint venture 29.6 47.7 (38%) Share of net profit of equity accounted investments 6.6 1.4 371% Other1 11.5 19.1 (40%) Revenue 136.7 184.2 (26%) EBITDA (Pre inventory write-down) 40.3 45.9 (12%)
Slide 44: Summary Balance Sheet
SUMMARY BALANCE SHEET DEC 15 JUN 15 $M $M Assets Cash 49.3 57.7 Receivables 113.5 101.5 Inventories 598.9 520.5 Investments accounted for using the equity method 188.1 181.8 Other 12.9 13.5 Total assets 962.7 875.0 Liabilities Trade and other payables 66.4 63.3 Land vendor liabilities 123.2 48.2 Int