Summerset Group Holdings Limited · NZX:SUM
Summerset — H1 2017 Earnings Presentation
40 slides from Summerset's earnings presentation, Aug 15, 2017
Slide 1: Half Year Results Presentation
HALF YEAR RESULTS PRESENTATION SIX MONTHS ENDED 30 JUNE 2017 SUMMERSET GROUP HOLDINGS LIMITED 15 August 2017 0
Slide 2: Agenda
AGENDA 2 1H17 Result Highlights 6 Business Overview 23 Financial Results 32 Interim Dividend 36 Appendix 1
Slide 3: 1H17 Result Highlights
1H17 RESULT HIGHLIGHTS 2
Slide 4: Strong profit growth for first half of 2017
1H17 RESULT HIGHLIGHTS STRONG PROFIT GROWTH FOR FIRST HALF OF 2017 1H17 Actual vs. 1H16 1H17 Actual 1H16 Actual FY16 Actual Actual* New sales of occupation rights 179 183 -2% 414 Operational Resales of occupation rights 144 123 17% 244 Total sales of occupation rights 323 306 6% 658 New retirement u
Slide 5: Another record half year underlying profit
1H17 RESULT HIGHLIGHTS ANOTHER RECORD HALF YEAR UNDERLYING PROFIT ■ 1H17 net profit after tax (NZ IFRS) of $90.3m, up 78% on 1H16 ■ 1H17 underlying profit of $35.7m, up 45% on 1H16 – a new first half record ■ Record low level of new sales stock with 128 retirement units in stock, 14% lower than a ye
Slide 6: Strong trends continue across the business
1H17 RESULT HIGHLIGHTS STRONG TRENDS CONTINUE ACROSS THE BUSINESS TOTAL ASSETS UNDERLYING PROFIT $2,100m $40m $1,900m $35m $1,700m $30m $1,500m $25m $1,300m $20m $1,932m $35.7m $1,100m $1,707m $15m $31.9m $1,521m $24.7m $900m $1,364m $10m $20.7m $1,161m $17.1m $700m $5m $500m $m 1H15 2H15 1H16 2H16
Slide 7: Business Overview
BUSINESS OVERVIEW 6
Slide 8: 1H17 Review
1H17 REVIEW 171 RETIREMENT UNITS DELIVERED, RECORD UNDERLYING PROFIT OF $35.7M ■ Delivered 171 retirement units across eight villages in 1H17 ■ Deliveries this year are weighted to the second half – on track to achieve delivery target of 450 retirement units in FY17 ■ Delivered our first retirement
Slide 9: Summerset Snapshot
SUMMERSET SNAPSHOT SECOND LARGEST RETIREMENT VILLAGE DEVELOPER IN NEW ZEALAND ■ 20 years of consistent delivery and growth ■ Listed on the NZX in 2011, and the ASX in 2013 ■ Balance sheet growth of 213% since listing ■ 2,999 retirement units (villas, apartments, serviced apartments and memory care a
Slide 10: Summerset Strategy
SUMMERSET STRATEGY SUMMERSET BUILDS, OWNS AND OPERATES RETIREMENT VILLAGES IN NZ ■ 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 brand offering
Slide 11: Operations and Staff
OPERATIONS AND STAFF FOCUS ON STAFF INITIATIVES AND SYSTEMS AND PROCESS IMPROVEMENTS ■ Pay equity decision will see a substantial increase in caregiver wages, largely funded by Government – positive outcome for our caregivers ■ Second year of the all staff share scheme with 83% of our employees sign
Slide 12: Demographics
DEMOGRAPHICS POPULATION OVER 75 YEARS FORECAST TO GROW 254% FROM 2017 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-
Slide 13: Summerset Growth
SUMMERSET GROWTH 20 YEARS OF CONSISTENT DELIVERY AND GROWTH SUMMERSET BUILD RATE 3,500 2,999 3,000 2,828 171 409 2,419 2,500 2,116 303 Retirement Units 2,000 1,855 261 1,646 209 1,486 160 1,500 1,352 1,272 122 2,828 80 1,109 2,419 163 983 921 126 2,116 1,000 795 62 1,855 732 126 1,646 652 63 1,486 5
Slide 14: 1H17 Development Activity
1H17 DEVELOPMENT ACTIVITY DELIVERY OF 171 RETIREMENT UNITS IN 1H17 ACROSS EIGHT SITES Unit Delivery 1H17 Villas Serviced Apartments Total Ellerslie 1 23 24 Hamilton 8 0 8 Hobsonville 4 0 4 Karaka 8 39 47 Katikati 25 0 25 New Plymouth 18 0 18 Trentham 23 0 23 Wigram 22 0 22 Total 109 62 171 ■ 171 ret
Slide 15: 1H17 Development Activity
1H17 DEVELOPMENT ACTIVITY DELIVERY OF 171 RETIREMENT UNITS IN 1H17 ACROSS EIGHT SITES Ellerslie Hamilton Hobsonville Karaka 14
Slide 16: 1H17 Development Activity
1H17 DEVELOPMENT ACTIVITY DELIVERY OF 171 RETIREMENT UNITS IN 1H17 ACROSS EIGHT SITES Katikati New Plymouth Trentham Wigram 15
Slide 17: Future Development
FUTURE DEVELOPMENT LAND BANK OF 2,670 RETIREMENT UNITS AND 412 CARE BEDS Land Bank - as at 30 June 2017* Serviced & Memory Village Villas Apartments Total Retirement Units Care Beds Care Apartments Avonhead 150 14 76 240 43 Casebrook 197 0 76 273 43 Ellerslie 29 221 34 284 58 Hamilton 6 0 30 36 0 Ho
Slide 18: Development Margin
DEVELOPMENT MARGIN RECORD DEVELOPMENT MARGIN OF 28.0% WITH A REALISED MARGIN OF $21.3M ■ Realised development margin of $21.3m, up 37% from $15.6m in 1H16 REALISED DEVELOPMENT MARGIN - HALF ON HALF MARGINS ■ Development margin of 28.0% in 1H17, this is up from 20.3% in 1H16 $25m 30% 28.0% ■ Record d
Slide 19: New Sales of Occupation Rights
NEW SALES OF OCCUPATION RIGHTS NEW SALES GROSS PROCEEDS OF $75.9M ■ New sales gross proceeds of $75.9m in 1H17 1H17 Actual vs. New Sales 1H17 Actual 1H16 Actual FY16 Actual 1H16 Actual* ■ Strong new sales volumes in Wigram, New Plymouth, Katikati and Trentham Gross proceeds ($m) 75.9 76.6 -1% 175.6
Slide 20: New Sales Stock
NEW SALES STOCK NEW SALES STOCK LEVELS CONTINUE TO SIT AT RECORD LOWS ■ New sales stock has reduced to a total of 128 retirement units at 1H17, this compares to AVAILABLE NEW SALES STOCK* 148 at 1H16 and 136 at FY16 8% ■ 48% of new sale retirement units in stock were contracted at 1H16, this remains
Slide 21: Resales of Occupation Rights
RESALES OF OCCUPATION RIGHTS RESALES OF 144 OCCUPATION RIGHTS IN 1H17 ■ Gross proceeds of $53.4m, up 28% on 1H16 1H17 Actual vs. Resales 1H17 Actual 1H16 Actual FY16 Actual 1H16 Actual* ■ Realised resale gain of 20.2% Gross proceeds ($m) 53.4 41.7 28% 83.1 Realised resale gains ($m) 10.8 8.3 31% 15.
Slide 22: Resales Stock
RESALES STOCK RESALES STOCK LEVELS CONTINUE TO SIT AT RECORD LOWS ■ Resales stock remains low with 53 retirement units under contract and 35 retirement AVAILABLE RESALES STOCK* units uncontracted at 1H17 3.0% ■ We are seeing good demand for resale units across all villages ■ As a proportion of our t
Slide 23: Customer Profile & Occupancy
CUSTOMER PROFILE & OCCUPANCY OCCUPANCY, TENURE AND RESIDENT DEMOGRAPHIC STATISTICS OCCUPANCY - ESTABLISHED CARE CENTRES ■ Occupancy within our established care centres is stable with an average 100% occupancy of 98% for 1H17 90% 80% ■ Average tenure on 1H17 resale retirement units was 5.0 years for
Slide 24: Financial Results
BUSINESS FINANCIALOVERVIEW RESULTS 23
Slide 25: 1H17 Reported Profit (IFRS)
1H17 REPORTED PROFIT (IFRS) NET PROFIT AFTER TAX UP 78% VERSUS 1H16 ■ NPAT up $39.7m relative to 1H16 1H17 Actual NZ$m 1H17 Actual 1H16 Actual vs. 1H16 FY16 Actual ■ Fair value movement of $87.1m for 1H17, up 74% on 1H15 Actual* ■ Fair value movement has been driven by: Total revenue 50.7 40.0 27% 8
Slide 26: 1H17 Underlying Profit
1H17 UNDERLYING PROFIT UNDERLYING PROFIT UP 45% ON 1H17, 44% CAGR OVER LAST 6 YEARS ■ Record half year underlying profit of $35.7m, up 45% 1H17 Actual vs. NZ$m 1H17 Actual 1H16 Actual FY16 Actual on 1H16 1H16 Actual* ■ Realised development margin of $21.3m achieved in Reported profit after tax 90.3
Slide 27: 1H17 Cash Flows
1H17 CASH FLOWS CONTINUED INVESTMENT IN NEW VILLAGE BUILDS ■ Net operating cash flow of $86.4m for 1H17 Actual vs. NZ$m 1H17 Actual 1H16 Actual FY16 Actual 1H16 Actual* 1H17, up 2% on 1H16 Care fees and village services 34.9 26.4 32% 57.2 ■ Cash flow from care fees and village Interest received 0.0
Slide 28: 1H17 Balance Sheet
1H17 BALANCE SHEET TOTAL ASSETS OF $1.9B, UP 27% FROM $1.5B IN 1H16 ■ Total assets of $1.9b, up 27% on 1H16 NZ$m 1H17 Actual 1H16 Actual 1H17 Actual vs. FY16 Actual 1H16 Actual* ■ Retained earnings have increased from $199.9m as at 30 Investment property 1,806 1,416 28% 1,591 June 2016 to $368.2m as
Slide 29: Gearing Ratio
GEARING RATIO GROSS DEBT OF $315M AND GEARING RATIO OF 32.5% 1H17 Actual ■ Gross debt of $315.3m as at 30 June 2017, up $41.3m from NZ$m 1H17 Actual 1H16 Actual vs. 1H16 FY16 Actual 31 December 2016 Actual* ■ Uplift in gross debt principally due to settlement of land in Bank loans 315.3 262.7 20% 27
Slide 30: Project Cash Profits
PROJECT CASH PROFITS DELIVERING SIGNIFICANT POSITIVE CASH FLOW VILLAGES ■ Positive cash flows allow us to recycle our capital into future deliveries Forecast Capital Forecast Net Cash Village Investment ($m) Position* ($m) ■ Our Auckland sites require a large amount of capital but are forecast to de
Slide 31: Composition of Drawn Debt
COMPOSITION OF DRAWN DEBT STRONG ASSET BACKING TO NET DEBT ■ Development projects are debt funding. Development assets NET DEBT TO UNDERLYING ASSETS - 1H17 exceed the value of net debt by $68.8m or 22% Net Debt Undeveloped Land Development WIP Unsold Stock $400m ■ All debt is associated with develop
Slide 32: Metrics Summary
6 YEAR METRICS SUMMARY UNDERLYING PROFIT 6 YEAR CAGR OF 44% 6 Year CAGR* 1H17 2H16 1H16 2H15 1H15 2H14 1H14 FY11 New sales of occupation rights 22% 179 231 183 173 160 181 105 108 Resales of occupation rights 15% 144 121 123 135 110 82 90 123 Operational Total sales 19% 323 352 306 308 270 263 195 2
Slide 33: Interim Dividend
INTERIM DIVIDEND 32
Slide 34: 1H17 Interim Dividend
1H17 INTERIM DIVIDEND SUMMERSET BOARD DECLARES 1H17 INTERIM DIVIDEND ■ The Summerset Board have declared a interim dividend of 3.9 cents per share, unimputed. This compares to a 2016 interim dividend of 2.6 cents per share ■ This represents a pay-out for the first half of 2017 of approximately $8.7m
Slide 35: Questions?
BE SUMMERSET SURE QUESTIONS?
Slide 36: Disclaimer
DISCLAIMER This presentation may contain projections or forward looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward looking stat
Slide 37: Appendix
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Slide 38: Portfolio as at 30 June 2017
PORTFOLIO AS AT 30 JUNE 2017 2,999 RETIREMENT UNITS AND 748 CARE BEDS Existing Portfolio – as at 30 June 2017 Memory Care Total Retirement Village Villas Apartments Serviced Apartments Care Beds Apartments Units Aotea 96 33 38 0 167 0 Dunedin 61 20 20 0 101 42 Ellerslie 13 0 23 0 36 0 Hamilton 177 0
Slide 39: Land Bank as at 30 June 2017
LAND BANK AS AT 30 JUNE 2017 LAND BANK OF 2,670 RETIREMENT UNITS AND 412 CARE BEDS Land Bank - as at 30 June 2017* Serviced & Memory Village Villas Apartments Total Retirement Units Care Beds Care Apartments Avonhead 150 14 76 240 43 Casebrook 197 0 76 273 43 Ellerslie 29 221 34 284 58 Hamilton 6 0
Slide 40: Fair Value Movement
FAIR VALUE MOVEMENT FAIR VALUE MOVEMENT OF INVESTMENT PROPERTY – KEY ASSUMPTIONS Fair Value Movement of Value of Investment Fair Value Valuation Assumptions Investment Property Property* Gain/(Loss) Village Location NZ$m NZ$m Discount Rate Growth Rate Yr 1 Growth Rate Yr 2 Growth Rate Yr 3 Growth Ra
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