Ryman Healthcare Ltd. · NZX:RYM
Ryman Healthcare — Debt Investor Presentation (November 2020)
46 slides from Ryman Healthcare's debt investor presentation, Nov 26, 2020
Slide 1: Ryman Healthcare Limited Retail Bond Presentation
Ryman Healthcare Limited Retail Bond Presentation | 26 November 2020 1
Slide 2: Disclaimer
Disclaimer Please read carefully before the rest of the presentation This presentation has been prepared by Ryman Healthcare Limited (Ryman) in relation to the offer of Some of the financial information contained in this presentation has not been prepared in accordance with bonds described in this p
Slide 3: Today's speakers
Gordon MacLeod, Chief Executive Gordon joined Ryman in 2007. He had previously been a corporate finance partner with PwC and finance director of a London listed hi-tech engineering company. Gordon has a Bachelor of Commerce degree and he is a Fellow of Chartered Accountants Australia and New Zealand.
Slide 4: Contents
Contents Offer highlights…………..…………… 5 Introducing Ryman Healthcare...... 6 Funding and security structure..... 19 Financial performance..…………… 30 Offer terms and timetable...……… 35 Appendices…………………..………… 40 Edmund Hillary, Auckland 4 4
Slide 5: Offer highlights
Offer highlights The purpose of the Offer is to provide diversity of funding sources and tenor. The proceeds of the Offer will be used to repay a portion of Ryman’s existing bank debt. This will provide Ryman with additional headroom under Ryman’s Bank Facility Agreement which it can drawdown as req
Slide 6: Introducing Ryman Healthcare
Introducing Ryman Healthcare Nellie Melba, Melbourne 6 6
Slide 7: Ryman overview
Ryman overview The largest retirement village operator in New Zealand, Ryman was founded in 1984 on the basis that older people deserve dignity and the highest standard of care Founding philosophy is that Ryman’s care has got to be good enough for Mum or Dad NZX Listed in 1999, Ryman is curren
Slide 8: Our competitive advantage
Our competitive advantage Brand reputation, 36 years, over 30,000 residents over this time Experienced leadership team Bespoke Ryman designed villages In-house development and construction Ryman peace of mind guarantees Full continuum of care – including dementia care Continued innovat
Slide 9: Village locations
Village locations 39 strategically located villages, 36 in New Zealand and 3 in Victoria, Australia Geographically diverse, with the majority of villages located in established markets with high population centres 25 villages are located in the North Island of New Zealand, with 10 of these in
Slide 10: COVID-19 care response
COVID-19 care response Both New Zealand and Australia have responded to the virus with strong public health measures and a range of economic stimulus packages Ryman is not unfamiliar with infectious diseases, and activated its infectious diseases protocol in January 2020 Ryman has infection co
Slide 11: Continuum of care
Continuum of care Independent living The continuum of care offering plays an Continuum of care important role in the decision-making process Average age of entry 79.6 years of residents considering moving into a retirement village The certainty, security and peace of mind that Assisted living co
Slide 12: Around 50% of Ryman's portfolio is needs based
Around 50% of Ryman’s portfolio is needs based Oceania Arvida Summerset Metlifecare Ryman 0 2,000 4,000 6,000 8,000 10,000 12,000 Beds / units Resthome / Hospital Dementia Assisted living Independent living Source: Oceania does not disclose the split of care beds in their villages. Figures based on
Slide 13: Continuum of care offering is rare in Australia
Continuum of care offering is rare in Australia Japara Allity Estia Regis Opal Australian Unity Retire Australia Stockland Lend Lease Ryman (NZ + Australia) - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Care beds & serviced apartments Retirement village units Source: Data based on ASX disclosures a
Slide 14: Ryman's earnings streams
Ryman’s earnings streams Care fees Receive weekly fee for service and achieve margin New sales Development margin on the initial occupation right sale (typically 20% to 25%) Resales Collect price to price gain for existing unit occupation rights when residents change Management fee 20% of the occupa
Slide 15: Development activity (at 30 Sept 2020)
Development activity Villages Design Consenting Council approval Construction Village open Final stages (at 30 Sept 2020) Nellie Melba Murray Halberg William Sanders Ryman is diligent in site selection for its new Linda Jones villages Miriam Corban Highton Development is primarily managed in-hou
Slide 16: Land bank of 6,171 beds and units
Land bank of 6,171 beds and units Land Bank Consent (Beds and Units) Ryman’s land bank consists of undeveloped 8,000 land on both existing and new village sites Local councils issue the required building consents to permit the development of new 6,000 villages 2,626 Land bank at existing villa
Slide 17: Aberfeldie Riccarton
Aberfeldie Riccarton Construction is underway at all sites shown. All images are artist impressions of the completed villages based on latest designs. 17
Slide 18: Our corporate citizenship
Our corporate citizenship Our commitment to be a good corporate citizen focuses on doing the right things for our residents and their families, staff, the broader community and stakeholders We believe it is a privilege to care for our elderly and share in their life story. We are committed to co
Slide 19: Funding and security structure
Funding and security structure Bert Sutcliffe, Auckland 19 19
Slide 20: Purpose of debt
Purpose of debt Debt is primarily used to develop Ryman villages As at 30 September 2020 – excluding bond issuance The Ryman Group’s principal use of debt is to facilitate the Net drawn debt ($m) 2,109.4 acquisition of land for development, the development and Facilities’ limit ($m) 2,309.6 cons
Slide 21: Additional funding
Additional funding As at 24 November 2020, the limit of the facilities available under the Bank Facility Agreement is $2,395m. To further diversify sources and tenor of debt funding, Ryman is investigating a number of additional debt funding options, including an issue of USPP notes and other arrang
Slide 22: Capital recycling
Capital recycling Cumulative village cash flow profile Optimally, cash flow generated from the sale of Occupation Agreements Cash for its independent units and serviced apartments supports the Returns development of the entire village Recycled including the communal and aged care facilities Capita
Slide 23: Security structure
Ryman Group Security Structure – as at 30 September 2020 Bond Supervisor Security structure Banks Ryman Group Security Trustee Total assets: $8.34b Guaranteeing Group Ryman Healthcare Ryman ultimately owns all the companies Limited Listed bond issuer within the Ryman Group, including each Total as
Slide 24: Assets of $4.93bn available as security at 30 September 2020
Assets of $4.93bn available as security at 30 September 2020 Security – Ryman Group balance sheet at 30 September 2020 ($bn) Total assets as at 30 September 2020 of 8.34 $8.34bn 0.03 0.01 Assets of $4.93bn after deducting amounts payable to Residents, supporting liabilities secured by the Securi
Slide 25: Security
Security The Bondholders will share the benefit of the same security package as Ryman’s banks and any other debt funding providers who become Beneficiaries under the Security Trust Deed on a pro rata basis. This security is held by the Security Trustee. The Securities held by the Security Truste
Slide 26: Security (continued)
Security (continued) Each NZ Village Company provides first ranking mortgages to the Statutory Supervisor over all land and buildings owned by that NZ Village Company containing Units and the land on which a care centre of any NZ Village Company is located where the care centre includes Care Suite
Slide 27: Occupation Agreement and Resident protection
Occupation Agreement and Resident protection New Zealand Resident rights are protected in New Zealand by a statutory supervisor. Residents acquire occupation rights under an Occupation Agreement by providing a repayable, interest free loan Residents’ loans have no set term, are generally repayab
Slide 28: Debt to Equity Covenant
Debt to Equity Covenant Covenant is aligned to the bank facility covenant Debt to Equity Covenant $2,500m 5.0x Under this covenant: the ratio of Total Liabilities of the Ryman Group (after deducting the total value of $2,000m 4.0x Resident Occupancy Advances, Australian Resident $1,500m 3.0x Loa
Slide 29: Guaranteeing Group Coverage covenant
Guaranteeing Group Coverage covenant Covenant is aligned to the bank facility covenant Under this covenant: the Total Tangible Assets and Adjusted EBIT of the Guaranteeing Group must represent not less than 90% of the Total Tangible Assets and Adjusted EBIT of the Ryman Group taken as a whole
Slide 30: Financial performance
Financial performance Bruce McLaren, Auckland 30 30
Slide 31: Historical annual financial performance (31 March)
Historical annual financial performance (31 March) Year ended 31 March 2015 2016 2017 2018 2019 2020 Underlying profit increased from $136.3m in 2015 to $242.0m in 2020 Revenue $m 227.1 261.1 289.2 342.5 382.3 423.9 Underlying profit (non- $m 136.3 157.7 178.3 203.5 227.0 242.0 Similarly, net op
Slide 32: Historical annual underlying profit growth
growth Historical annual underlying profit - $50m $100m $150m $200m $250m 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 32
Slide 33: Capital management
Capital management At 30 September 2020, Ryman’s assets Gearing ($m) 30 Sept 2020 31 March 2020 31 March 2019 totalled $8.34bn with interest bearing Interest bearing debt $2,130 $1,742 $1,324 debt of $2.13bn, representing a gearing Net assets $2,454 $2,301 $2,170 level of 25.6% Total assets $8,337
Slide 34: Annual investing cash flow
Investing cash flow Annual investing $800m New villages Purchase of land cash flow Care / systems / projects Bed licences Village upgrades $30m $39m $44m $600m $33m $101m $42m $35m $35m $44m $54m $27m $400m $97m $24m $111m $31m $12m $7m $65m $78m $497m $200m $430m $350m $296m $249m $204m $0m 2015 20
Slide 35: Offer terms and timetable
Offer terms and timetable Evelyn Page, Orewa 35 35
Slide 36: Key terms of the offer
Key terms of the offer Issuer Ryman Healthcare Limited Description The Bonds are fixed rate, secured, unsubordinated bonds Payments on the Bonds are guaranteed by each Subsidiary of Ryman (including the Village Companies) under a cross guarantee in Guarantee the Security Trust Deed Bondholders have
Slide 37: Key dates of the offer
Key dates of the offer Retail bond offer Date PDS lodgement date Thursday, 26 November 2020 Monday, 7 December 2020 Opening date The minimum Interest Rate and the Indicative Margin are expected to be announced on this date Closing date Thursday, 10 December 2020, 1pm Interest Rate Set date Thursday,
Slide 38: Key investment highlights
Key investment highlights Experienced leadership team with a long- Strong cash flow, financial performance term focus and high ethical standards and earnings growth Provide essential aged-care infrastructure Sustained occupancy rates above industry with high barriers to entry average Strong demand s
Slide 39: Questions
Questions 39
Slide 40: Appendices
Appendices 40
Slide 41: Board of directors
Board of directors Dr David Kerr Jo Appleyard Warren Bell George Savvides Claire Higgins Geoffrey Anthony Leighs Paula Jeffs MB CHB, LLB (HONS) MCOM, FCA AM, BE (HONS), BCOM, FCPA, Cumming NZCB BA (Psych & FRNZCGP MBA, FAICD FAICD BA (HONS), MSC Media), Grad Dip CHAIR (ECON), LLD (IR), GAICD, CAHRI
Slide 42: Senior executive team
Senior executive team Gordon MacLeod David Bennett Jeremy Moore Cheyne Chalmers Mary-Anne Stone Andrew Crerar Rick Davies CHIEF EXECUTIVE CHIEF FINANCIAL CHIEF CHIEF OPERATIONS ACTING CHIEF SALES HEAD OF PEOPLE HEAD OF OFFICER DEVELOPMENT OFFICER AND MARKETING AND CULTURE TECHNOLOGY AND OFFICER OFFI
Slide 43: Retirement village model
Retirement village model Residents enter an Occupation Agreement $700,000 Occupancy Advance from resident $600,000 $600,000 under which they are granted a right to $500,000 Resale gain $100,000 occupy a Unit for the remainder of their life $500,000 Development and a bundle of services margin (20%
Slide 44: Retirement village model cash flows
Retirement village model cash flows Single retirement village unit Cash flows When first built Cost to build unit -$400,000 Receive capital sum from first resident +$500,000 Net cash gain +$100,000 When unit vacated (eg. after 5 years) Repay capital sum to first resident -$400,0001 Receive capital s
Slide 45: Glossary
Glossary Australian RV Act The Retirement Villages Act 1986 (Vic) Occupation An occupation right agreement within the meaning of the Agreement NZ RV Act (for Villages in New Zealand) or a residence Australian Resident Any incoming contribution and/or loan provided to the contract with the meaning of
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