Summerset Group Holdings Limited · NZX:SUM

Summerset — H1 2018 Earnings Presentation

43 slides from Summerset's earnings presentation, Aug 14, 2018

  1. Slide 1: Half year results presentation

    Half year results presentation Six months ended 30 June 2018 Summerset Group Holdings Limited 14 August 2018

  2. Slide 2: Agenda

    Agenda 1 1H18 result highlights 2 Business overview 3 Financial results 4 Interim dividend 5 Appendix 1H18 results presentation 2

  3. Slide 3: 1H18 result highlights

    1H18 result highlights

  4. Slide 4: Underlying profit up 27%, driven by strong margins

    1H18 result highlights Underlying profit up 27%, driven by strong margins 1H18 1H17 Variance FY17 Net profit after tax (IFRS) 82.0 90.3 -9% 223.4 Financial (NZ$m) Underlying profit* 45.2 35.7 27% 81.7 Total assets 2,420 1,932 25% 2,216 Net operating cash flow 92.8 86.4 7% 207.7 New sales of occupati

  5. Slide 5: 1H18 result highlights

    1H18 result highlights 165 retirement units delivered, on track for delivery of 450 retirement units in FY18  1H18 underlying profit of $45.2m, up 27% on 1H17, relative to guidance of $43.0m to $45.0m  Delivery of 165 retirement units in 1H18, on track for delivery of 450 retirement units in FY18

  6. Slide 6: Record first half underlying profit result

    1H18 result highlights Record first half underlying profit result Total assets Underlying profit $2,500m $50m $2,000m $40m $1,500m $30m $2,420m $46.0m $45.2m $2,216m $1,000m $1,932m $20m $35.7m $1,707m $31.9m $1,521m $24.7m $500m $10m $0m $0m 1H16 2H16 1H17 2H17 1H18 1H16 2H16 1H17 2H17 1H18 Retirem

  7. Slide 7: Business overview

    Business overview

  8. Slide 8: Summerset snapshot

    Summerset snapshot Second largest retirement village developer in New Zealand  21 years of consistent delivery and growth  Balance sheet growth of 292% since listing on the NZX in 2011  3,443 retirement units (villas, apartments, serviced apartments and memory care apartments) and 858 care beds 

  9. Slide 9: 1H18 review

    1H18 review 165 retirement units delivered, underlying profit of $45.2m  Opened our Casebrook and Rototuna villages  Granted resource consent for our Avonhead village  Special housing area status granted and land earthworks consented for Richmond village  Announced new land acquisitions in Te Aw

  10. Slide 10: Summerset strategy

    Summerset strategy Summerset builds, owns and operates retirement villages across New Zealand  Focus on continuum of care model  High quality care and facilities across all villages  Villages designed to integrate into local communities  Internal development and construction model  Nationwide b

  11. Slide 11: Operations and staff

    Operations and staff Focus on staff initiatives and systems and process improvements  97% care customer satisfaction rating and 97% village customer satisfaction rating  Successfully completed the rollout of VCare customer management system for village operations and rollout of clinical care funct

  12. Slide 12: 1H18 results presentation

    Ellerslie Hobsonville Ellerslie Hobsonville 1H18 results presentation 12

  13. Slide 13: 1H18 development activity

    1H18 development activity Delivery of 165 retirement units in 1H18 across seven sites Total Total Unit delivery 1H18 Villas Serviced apartments retirement units care beds Casebrook 31 - 31 - Hobsonville - 18 18 52 Karaka 32 - 32 - Katikati 22 - 22 - Rototuna 14 - 14 - Warkworth 16 - 16 - Wigram 32 -

  14. Slide 14: 1H18 development activity

    1H18 development activity Delivery of 165 retirement units in 1H18 across seven sites Katikati Wigram Casebrook Karaka Rototuna 1H18 results presentation 14

  15. Slide 15: 1H18 development activity

    1H18 development activity Delivery of 165 retirement units in 1H18 across seven sites Karaka Warkworth Hobsonville Warkworth 1H18 results presentation 15

  16. Slide 16: Future development

    Future development Land bank of 3,041 retirement units and 368 care beds Land bank - as at 30 June 2018* Serviced & memory care Total Total Village Villas Apartments apartments retirement units care beds Ellerslie 8 196 - 204 - Hobsonville 10 36 23 69 - Karaka 39 - - 39 - Parnell - 264 76 340 48 St

  17. Slide 17: Development margin

    Development margin Record development margin of 33.0% with a realised margin of $25.8m  Record development margin achieved in 1H18 with strong margins Realised development margin - half on half margins across all villages that settled new retirement units $35m 35% 33.0%  Consistent margins across

  18. Slide 18: New sales of occupation rights

    New sales of occupation rights New sales gross proceeds of $78.3m across 145 settlements  New sales of occupation rights of 145 in 1H18, down from New sales 1H18 1H17 Variance FY17 179 in 1H17 Gross proceeds ($m) 78.3 75.9 3% 186.4  Despite a lower number of new sales, gross proceeds Villas 97 115

  19. Slide 19: New sales stock

    New sales stock New sales stock remains historically low on a relative basis  Uncontracted new sales stock of 143 retirement units at 1H18, down from 145 retirement units at FY17. Contract levels strong with 81 retirement units contracted at 30 June 2018 and likely to settle in the near future  Se

  20. Slide 20: Resales of occupation rights

    Resales of occupation rights Resales of 154 occupation rights in 1H18  Resales of 154 occupation rights in 1H18, an increase of 7% Resales 1H18 1H17 Variance FY17 on 1H17 Gross proceeds ($m) 64.0 53.4 20% 114.9  Gross proceeds of $64.0m, up 20% on 1H17 Realised resale gains ($m) 14.9 10.8 38% 24.9

  21. Slide 21: Resales stock

    Resales stock Resales stock levels continue to sit at record lows  Resales stock remains low with 56 retirement units under contract and 47 retirement units uncontracted at 1H18  We continue to see good demand for resale units across all villages. On average only ~2 uncontracted retirement units p

  22. Slide 22: Financial results

    Financial results

  23. Slide 23: 1H18 reported profit (IFRS)

    1H18 reported profit (IFRS) 1H18 net profit after tax of $82.0m with total revenue up 29%  IFRS NPAT of $82.0m, down $8.3m or 9% relative to 1H17 NZ$m 1H18 1H17 Variance FY17  Lower IFRS profit result for the half due to a lower fair value Total revenue 65.7 50.7 29% 110.5 movement in investment p

  24. Slide 24: Fair value movement

    Fair value movement $78.3m fair value movement of investment property  Fair value movement of $78.3m for 1H18, down 10% on 1H17 1H18 fair value movement of investment property  Fair value movement has been driven by: $90m $44.8m  Retirement unit pricing ($35.6m): retirement unit price $80m $4.4m

  25. Slide 25: 1H18 underlying profit

    1H18 underlying profit Underlying profit up 27% on 1H17, 41% CAGR over last seven years  1H18 underlying profit of $45.2m, up 27% on 1H17, relative to NZ$m 1H18 1H17 Variance FY17 guidance of $43.0m to $45.0m Care fees and village  Uplift in underlying profit principally driven by the maturing nat

  26. Slide 26: 1H18 cash flows

    1H18 cash flows Net operating business cash flows up 35%  Continuing to see benefits of maturing portfolio - net operating NZ$m 1H18 1H17 Variance business cash flows up 35% from $12.7m in 1H17 to $17.1m in 1H18 Net operating business cash 17.1 12.7 35% flow  Have seen a consistent maturing operat

  27. Slide 27: 1H18 balance sheet

    1H18 balance sheet Total assets of $2.4b, up 25% from $1.9b in 1H17  Total assets of $2.4b, up 25% on 1H17 NZ$m 1H18 1H17 Variance FY17  Retained earnings have increased from $368.2m as at 30 Investment property 2,241 1,806 24% 2,058 June 2017 to $558.9m as at 30 June 2018. This continues to posit

  28. Slide 28: Gearing ratio

    Gearing ratio Gross debt of $379m* and gearing ratio of 30.3%  Gross debt of $379.3m as at 30 June 2018, up $31.4m from 31 December 2017 NZ$m 1H18 1H17 Variance FY17 Face value of bank loans  Uplift in gross debt principally due to development spend in 379.3 315.3 20% 347.8 & retail bonds* Ellersl

  29. Slide 29: Project cash profits

    Project cash profits Delivering significant positive cash flow across new villages  Positive cash flows allow us to recycle our capital into future Forecast Capital Forecast Net Cash deliveries Village Investment ($m) Position* ($m)  Our high rise sites require a large amount of capital but are El

  30. Slide 30: Composition of drawn debt

    Composition of drawn debt Strong asset backing to net debt Net debt* to underlying assets - 1H18 & FY17  Development projects are debt funded. Development assets Net Debt Undeveloped Land Development WIP Unsold Stock exceed the value of net debt by $112.5m or 30%, this has lifted from $85.3m or 25%

  31. Slide 31: Interim dividend

    Interim dividend

  32. Slide 32: 1H18 interim dividend

    1H18 interim dividend Summerset board declares 1H18 interim dividend  The Summerset Board have declared an interim dividend of 6.0 cents per share, unimputed. This compares to a 2017 interim dividend of 3.9 cents per share  This represents a pay-out for the first half of 2018 of approximately $13.

  33. Slide 33: Questions?

    Questions? 1H18 results presentation 33

  34. Slide 34: Disclaimer

    Disclaimer  This presentation may contain projections or forward looking statements regarding a variety of items. Such forward looking statements are based upon current expectations and involve risks and uncertainties  Actual results may differ materially from those stated in any forward looking s

  35. Slide 35: Appendix

    Appendix

  36. Slide 36: Demographics

    Demographics Population over 75 years forecast to grow 245% from 2018 to 2068 Population growth 75 years and over Per annum population growth 75 years and over 1,200,000 18% 25,000 16% 1,000,000 20,000 14% 800,000 12% 15,000 10% 600,000 8% 10,000 400,000 6% 4% 5,000 200,000 2% 0 0% 0 1997-2002 2002-

  37. Slide 37: Summerset growth

    Summerset growth 21 years of consistent delivery and growth Summerset build rate 4,000 3,443 3,500 3,278 165 450 3,000 2,828 2,419 409 2,500 Retirement units 2,116 303 2,000 1,855 261 1,646 209 1,486 3,278 160 1,500 1,272 1,352 122 2,828 1,109 80 163 2,419 983 921 126 2,116 1,000 795 62 732 1,855 65

  38. Slide 38: Customer profile & occupancy

    Customer profile & occupancy Occupancy, tenure and resident demographic statistics  Occupancy within our established care centres is stable with an average Occupancy - established care centres occupancy of 96% for 1H18 100%  Average tenure on 1H18 resale retirement units was 4.9 years for villas,

  39. Slide 39: Portfolio as at 30 June 2018

    Portfolio as at 30 June 2018 3,443 retirement units and 858 care beds Existing portfolio - as at 30 June 2018 Total Total Village Villas Apartments Serviced apartments Memory care apartments retirement units care beds Ellerslie 34 23 57 - 114 58 Hobsonville 115 37 29 - 181 52 Karaka 143 - 59 - 202 5

  40. Slide 40: Land bank as at 30 June 2018

    Land bank as at 30 June 2018 Land bank of 3,041 retirement units and 368 care beds Land bank - as at 30 June 2018* Serviced & memory care Total Total Village Villas Apartments apartments retirement units care beds Ellerslie 8 196 - 204 - Hobsonville 10 36 23 69 - Karaka 39 - - 39 - Parnell - 264 76

  41. Slide 41: 1H18 underlying profit reconciliation

    1H18 underlying profit reconciliation Reconciliation of underlying profit to reported net profit after tax NZ$m 1H18 1H17 Variance FY17 Reported net profit after tax 82.0 90.3 -9% 223.4 Less reversal of impairment on land & buildings - - N/A (0.0) Less fair value movement of investment property (78.

  42. Slide 42: Fair value movement

    Fair value movement Fair value movement of investment property – key assumptions Value of Fair value movement of investment Fair value investment Key valuation assumptions property gain/(loss) property* Growth rate Growth rate Growth rate Growth rate Growth rate Village Location NZ$m NZ$m Discount r

  43. Slide 43: 7 year metrics summary

    7 year metrics summary Underlying profit 7 year CAGR of 41% Half Year Results 7 Year CAGR* 1H18 2H17 1H17 2H16 1H16 2H15 1H15 FY11 New sales of occupation rights 15% 145 203 179 231 183 173 160 108 Resales of occupation rights 14% 154 156 144 121 123 135 110 123 Operational Total sales 15% 299 359 3

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