Summerset Group Holdings Limited · NZX:SUM
Summerset — H1 2023 Earnings Presentation
67 slides from Summerset's earnings presentation, Aug 23, 2023
Slide 1: Half year results presentation
Half year results presentation Half Year Report 2023
Slide 2: Agenda
Half Year Report 2023 Half year results presentation Agenda 01 Market conditions 02 Our highlights 03 Our strategy 04 Our community 2 05 New Zealand development 06 Australia development 07 Financial performance 08 Business performance 09 Appendix
Slide 3: Market conditions
Market conditions 3 Half Year Report 2023 Summerset in the Sun (Nelson)
Slide 4: Market conditions
Half Year Report 2023 Market conditions Market conditions Summerset continues to perform well despite challenging market conditions over the past 18 months ▪ Summerset has operated under dynamic and challenging Movement in median residential house price wider market conditions over the past 18 month
Slide 5: Funding and regulation
Half Year Report 2023 Market conditions Funding and regulation Inadequate funding of aged care continues to impact the sector and wider New Zealand healthcare system ▪ Summerset, and all New Zealand aged care operators, continue to be concerned about underfunding in the wider aged care sector ▪ The
Slide 6: Our highlights
Our highlights 6 Half Year Report 2023 Summerset in the Sun (Nelson)
Slide 7: 1H23 investor highlights
Half Year Report 2023 Our highlights 1H23 investor highlights Two new regional New Zealand sites announced, with underlying profit of $87.2m, up 6% on 1H22 Record first half underlying profit of $87.2m, up 6% from $82.5m in 1H22 Record half year realised development margin of 34%, with $56.0m realis
Slide 8: Record first half underlying profit of $87.2m up 6% on 1H22
Half Year Report 2023 Our highlights Record first half underlying profit of $87.2m up 6% on 1H22 Uplift in underlying profit driven by strong development returns and growth in our core business $133.1m $146.7m $87.2m Net profit after tax Net operating cash flows Underlying profit 1H22 $134.6m 1H22 $
Slide 9: Record first half underlying profit of $87.2m up 6% on 1H22
Half Year Report 2023 Our highlights Record first half underlying profit of $87.2m up 6% on 1H22 Consistent asset growth over time continues to strengthen balance sheet Underlying profit Total assets $100m $7,000m $6,000m $80m $5,000m $60m $4,000m $89.0m $3,000m $6,298m $82.5m $87.2m $5,840m $40m $7
Slide 10: Acquisitions
Half Year Report 2023 Our highlights Acquisitions Two new sites acquired in New Zealand in 1H23, in Mosgiel and Rolleston ▪ Acquired two new sites in New Zealand, in Mosgiel (Dunedin) and Rolleston (Selwyn District) ▪ On completion the combined investment in the two sites will be in excess of $400 m
Slide 11: Strategic update
Strategic update 11 Half Year Report 2023
Slide 12: Our strategy
Half Year Report 2023 Our strategy Our strategy Summerset builds, owns and operates integrated retirement villages, creating vibrant, happy communities for residents and staff that delivers on our purpose – bringing the best of life DELIVER NEW ZEALAND’S BEST RETIREMENT GROW IN VILLAGES AUSTRALIA 12
Slide 13: Our strategy
Half Year Report 2023 Our strategy Our strategy Summerset builds, owns and operates integrated retirement villages, villages creating vibrant, happy communities for residents and staff that delivers on our purpose – bringing the best of life BRINGING THE BEST OF LIFE Our strategic goals are underpin
Slide 14: Our community
Our community 14 Half Year Report 2023
Slide 15: Bringing the best of life
Half Year Report 2023 Our community Bringing the best of life Lumin technology Bringing the best of life to residents and staff every day ▪ Our staff are the core of our business, we are very thankful for the work they do in supporting our residents to live our purpose – bringing the best of life Lu
Slide 16: Our environment
Half Year Report 2023 Our community Our environment Environmental performance and sustainability ▪ Summerset continues to be a market leader in sustainability within the retirement and aged care sector ▪ Our aim is to develop, build and manage more sustainable retirement villages in both New Zealand
Slide 17: Community support
Half Year Report 2023 Our community Community support Promoting and supporting our communities ▪ Summerset actively supports a range of organisations that align with our brand and our values ▪ This year we are the proud sponsor of the Dementia Hawke’s Bay Matariki Charity Ball and Auction Bowls New
Slide 18: Community support
Half Year Report 2023 Our community Community support Supporting our communities through over 180 local clubs and associations 75 37 27 13 8 Bowls Golf Service Croquet Bridge clubs clubs organisations clubs clubs 18 7 4 4 3 Other sports Tennis Nature Indoor clubs clubs clubs bowls clubs 3 3 3 2 Art
Slide 19: New Zealand development
New Zealand development 19 Half Year Report 2023 Summerset Richmond Ranges (Tasman District)
Slide 20: Development activity
Half Year Report 2023 New Zealand development Development activity New Zealand summary ▪ In 1H23 we delivered 152 total units over nine sites ▪ Now have a total of 16 villages in construction across ten regions in New Zealand ▪ Summerset is now recognised as the second largest residential home build
Slide 21: Summerset Cambridge and Pōhutukawa Place
Half Year Report 2023 New Zealand development Summerset Mt Denby (Whangārei) Summerset at Monterey Park (Hobsonville, Auckland) 21 Summerset Cambridge (Waipā District) Summerset at Pōhutukawa Place (Bell Block, New Plymouth)
Slide 22: Summerset by the Dunes (Pāpāmoa Beach, Tauranga)
Half Year Report 2023 New Zealand development Summerset by the Dunes (Pāpāmoa Beach, Tauranga) 22 123 independent villas Main building with 60 serviced apartments, 15 care suites, Rest home and hospital level care Site progress – June 2023 delivered 21 care beds and 20 memory care apartments due 1H2
Slide 23: Summerset Waikanae (Kāpiti Coast)
Half Year Report 2023 New Zealand development 23 Summerset Palms (Te Awa, Napier) Summerset Waikanae (Kāpiti Coast) Summerset on the Landing (Kenepuru, Wellington) Summerset Boulcott (Lower Hutt, Wellington)
Slide 24: Summerset Richmond Ranges (Tasman)
Half Year Report 2023 New Zealand development Summerset Richmond Ranges (Tasman) 24 182 independent villas Main building with 56 serviced apartments, 17 care suites, Rest home and hospital level Site progress – June 2023 delivered 26 care beds and 20 memory care apartments delivered care available
Slide 25: Summerset Blenheim and Rangiora villages
Half Year Report 2023 New Zealand development 25 Summerset Blenheim (Marlborough District) Summerset Rangiora (Waimakariri District) Summerset on Cavendish (Casebrook, Christchurch) Summerset Prebbleton (Selwyn District)
Slide 26: New Zealand development pipeline
Half Year Report 2023 New Zealand development New Zealand development pipeline Diversified development pipeline with 22 sites in 1H23 26 * New sites purchased in 1H23
Slide 27: Project cash profits
Half Year Report 2023 New Zealand development Project cash profits ▪ Summerset developments produce positive net 16 $250m+ NZ villages under Projected net cash cash flows (net cash position) upon completion, this means they carry no debt once built construction position ▪ The 16 villages currently u
Slide 28: Project cash profits
Half Year Report 2023 New Zealand development Project cash profits ▪ Our last eight villages to complete recycled around 14.4% $162.2m Cash margin* Project cash profit $162.2m of positive cash flow ▪ This is an average cash margin of 14.4% Total units ▪ The two villages that completed in FY22, Avonh
Slide 29: Australia development
Australia development 29 Half Year Report 2023 Show suite, Summerset Cranbourne North (Melbourne)
Slide 30: Development activity
Half Year Report 2023 Australia development Development activity Australia summary ▪ Our expansion into Australia continues to show excellent progress ▪ Now have seven villages in planning and development across Victoria ▪ The current Australian pipeline gives us capacity to build over 2,100 units (
Slide 31: Australia development pipeline
Half Year Report 2023 Australia development Australia development pipeline Now have seven villages in planning and development across Victoria 31
Slide 32: Financial performance
Financial performance 32 Half Year Report 2023
Slide 33: Reported profit (IFRS)
Half Year Report 2023 Financial performance Reported profit (IFRS) NZ$m 1H23 1H22 Variance FY22 Total revenue 128.2 114.1 12% 238.7 ▪ IFRS NPAT of $133.1m, 1% down on 1H22 Fair value movement of investment 131.5 136.7 (4%) 268.8 property ▪ Fair value movement of investment property of $131.5m Total
Slide 34: Fair value movement
Half Year Report 2023 Financial performance Fair value movement ▪ 1H23 fair value movement of $131.5m, down 4% $131.5m $79.0m Fair value movement Increase from new on 1H22, primarily due to fewer units delivered in units delivered the period ▪ Fair value movement has been driven by: Fair value movem
Slide 35: Underlying profit
Half Year Report 2023 Financial performance Underlying profit ▪ Underlying profit of $87.2m, up 6% on 1H22 and a $87.2m 6% Underlying profit Increase on 1H22 record for first half earnings ▪ The increase is driven by the following: NZ $m 1H23 1H22 Variance FY22 ▪ Realised development margin of $56.0
Slide 36: Cash flows
Half Year Report 2023 Financial performance Cash flows $146.7m 23% ▪ Net operating cash flows of $146.7m, down from Net operating cash flows Decrease on 1H22 $190.4m at 1H22 ▪ Includes deferred management fees of $62.3m NZ$m 1H23 1H22 Variance FY22 for 1H23 ($41.8m relating to new sales and $20.5m f
Slide 37: Development cash flows
Half Year Report 2023 Financial performance Development cash flows ▪ Summerset’s internal development model has an 9 years 7.1% Average development Average development average village construction timeline of approximately cash flow recycling cash margin eight to ten years ▪ Our broadacre villages s
Slide 38: Village cash flows
Half Year Report 2023 Financial performance Village cash flows ▪ Summerset focuses on broadacre development with 7 years 9.5% Average stabilised cash flow Average annual return villages taking around seven years from final delivery (from final delivery) on assets at maturity to reach maturity and ge
Slide 39: Balance sheet
Half Year Report 2023 Financial performance Balance sheet ▪ Total assets of $6.3b, up 17% on 1H22 driven by $6.3b $1.9b Total assets 17% Retained 13% portfolio growth and the underlying value in our existing villages earnings ▪ Investment property valuation of $5.8b, up 17% on NZ$m 1H23 1H22 Varianc
Slide 40: Net tangible assets
Half Year Report 2023 Financial performance Net tangible assets Strong financial discipline underpinning net tangible assets and gearing Net tangible assets and gearing* Summerset net tangible assets per share $16 50% $12 45% $14 $9.88 $10 40% 36.6% $12 35.5% Gearing ratio (%) 33.1% 35% NTA per shar
Slide 41: Gearing ratio
Half Year Report 2023 Financial performance Gearing ratio ▪ Net debt of $1,272m* at 1H23, up from $1,049m* at 35.5% 39.1% Gearing ratio Bank & bond LVR FY22 ▪ Uplift in gross debt driven by increased construction Net debt to underlying assets $264m excess assets activity across our developing villag
Slide 42: Funding
Half Year Report 2023 Financial performance Funding ▪ Bank facility approximately $1.2b, with existing $1.2b $550m Bank facility Retail bonds $550.0m of retail bonds at 30 June 2023 Funding maturity profile ▪ Retail bond of $100m was repaid on 11 July 2023 with the total facility (incl. bonds) now h
Slide 43: Interim dividend
Half Year Report 2023 Financial performance Interim dividend Declared 1H23 interim dividend of 11.3 cents per share Gross dividend payout per year ▪ The Board has declared an unimputed interim $60m $60m dividend of 11.3 cents per share, being 30% of $50m underlying profit. This represents a payout f
Slide 44: Business performance
Business performance 44 Half Year Report 2023 Cottage, Summerset Pōhutukawa Place (Bell Block, New Plymouth)
Slide 45: Retirement unit delivery
Half Year Report 2023 Business performance Retirement unit delivery 152 total units delivered in the period, three 152 Retirement units 3 New villages opening new villages to open in 2H23 delivered in 2H23 ▪ A total of 152 retirement units delivered in the period across nine villages Retirement unit
Slide 46: Development margin
Half Year Report 2023 Business performance Development margin Record realised development margin of $56.0m, 34% $56.0m with a 34% development margin Development margin Realised margin 7% ▪ Record half year realised development margin of Realised development margin $56.0m, an increase of 7% on 1H22 $
Slide 47: New sales
Half Year Report 2023 Business performance New sales 241 new sales in the period, gross proceeds of 241 $694k $167.3m New sales of Average gross 7% Occupation Rights proceeds ▪ 241 new sales of Occupation Rights in 1H23 New sales 1H23 1H22 Variance FY22 ▪ This is down on 1H22 due to 32% fewer delive
Slide 48: New sales stock
Half Year Report 2023 Business performance New sales stock Total stock levels down 17% from FY22 256 4.4% Uncontracted Percentage of new sale stock uncontracted stock ▪ Good progress made on selling down new sale stock despite challenging market conditions New sales stock 1H23 FY22 ▪ Total new sales
Slide 49: Resales
Half Year Report 2023 Business performance Resales 242 resales in the period, up 9% on 1H22 with 242 $34.6m realised resale gain of $34.6m Resales of Occupation Realised resale 8% Rights gain ▪ Total resales of 242 Occupation Rights in 1H23, up from the 222 achieved in 1H22, a 9% increase Resales 1H
Slide 50: Embedded value
Half Year Report 2023 Business performance Embedded value Embedded value now $1.5b, up 3% on 1H22 $1.5b $1.0b Embedded value 3% Embedded resale gain ▪ Total embedded value now $1.52b, having Embedded value increased from $1.47b at 1H22, a 3% uplift $1,600m ▪ Embedded value comprised of: $1,400m ▪ $1
Slide 51: Resale stock
Half Year Report 2023 Business performance Resale stock Record contracted resale stock of 173 units 155 2.7% Uncontracted Percentage of resale stock uncontracted stock ▪ Contracted resale stock at the highest level recorded with 173 units under contract, up 49% on Resales stock 1H23 FY22 FY22 and 26
Slide 52: Questions
Questions 52 Summerset at Wigram (Christchurch, Canterbury)
Slide 53: Disclaimer
Half Year Report 2023 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 thos
Slide 54: Appendix
Appendix 01 Summerset overview 02 Portfolio and land bank 03 Underlying profit reconciliation 54 04 Historical trends 05 Fair value movement 06 Sales price relativity 07 Summerset growth and demographics 08 Customer profile and occupancy
Slide 55: Summerset overview
Half Year Report 2023 Appendix Summerset overview Diversified portfolio throughout New Zealand and Australia Our portfolio Our care Our people 5,670 1,161 7,600+ Retirement units Care units in Residents in portfolio portfolio 6,060 1,435 2,500+ 55 Retirement units Care units in Staff members in land
Slide 56: Portfolio as at 30 June 2023
Half Year Report 2023 Appendix Portfolio as at 30 June 2023 6,831 total units including 5,670 retirement units and 1,161 care units Existing portfolio - as at 30 June 2023 Retirement units Care units Total units and Serviced Memory care Care Care care beds Village Villas Apartments apartments apartm
Slide 57: Portfolio as at 30 June 2023
Half Year Report 2023 Appendix Portfolio as at 30 June 2023 6,831 total units including 5,670 retirement units and 1,161 care units Existing portfolio - as at 30 June 2023 Retirement units Care units Total units and Serviced Memory care Care Care care beds Village Villas Apartments apartments apartm
Slide 58: Future development
Half Year Report 2023 Appendix Future development Largest New Zealand land bank for a retirement village operator of 5,386 units and beds Land bank – as at 30 June 2023 Retirement units Care units Serviced Memory care Total units and Village Villas Apartments Care suites Care beds apartments apartme
Slide 59: Future development
Half Year Report 2023 Appendix Future development Largest New Zealand land bank for a retirement village operator of 5,386 units and beds Landbank – as at 30 June 2023 Retirement units Care units Serviced Memory care Total units and Village Villas Apartments Care suites Care beds apartments apartmen
Slide 60: 1H23 underlying profit reconciliation
Half Year Report 2023 Appendix 1H23 underlying profit reconciliation Reconciliation of underlying profit to reported net profit after tax 1H23 1H22 Variance FY22 Net profit before tax (IFRS) 128.1 134.9 (5%) 265.1 Net profit after tax (IFRS) 133.1 134.6 (1%) 269.1 Less reversal of impairment on land
Slide 61: Historical trends
Half Year Report 2023 Appendix Historical trends Underlying profit 12 year CAGR of 29% since listing 12 Year FY11 NZX Full Year Results 1H23 2H22 1H22 2H21 1H21 2H20 1H20 CAGR* listed New sales of Occupation Rights 13% 241 248 289 238 302 276 128 108 Operational Resales of Occupation Rights 12% 242
Slide 62: Fair value movement
Half Year Report 2023 Appendix Fair value movement Fair value movement of investment property – key assumptions Value of Fair value movement of Fair value investment Key valuation assumptions investment property gain/(loss) property* Discount Growth rate Growth rate Growth rate Growth rate Growth ra
Slide 63: Fair value movement
Half Year Report 2023 Appendix Fair value movement Fair value movement of investment property – key assumptions Value of Fair value movement of Fair value investment Key valuation assumptions investment property gain/(loss) property* Discount Growth rate Growth rate Growth rate Growth rate Growth ra
Slide 64: Sales price relativity
Half Year Report 2023 Appendix Sales price relativity Continue to watch the residential market closely, unit pricing remains well placed Long term sales price relativity Sales price relativity vs median house price $1.6m $1.2m $1.4m $1.2m $1.0m $1.0m 64 $0.8m $0.8m $0.6m 83% $0.6m 89% $0.4m 89% 95%
Slide 65: Summerset growth and key demographics
Half Year Report 2023 Appendix Summerset growth and key demographics 25 years of consistent delivery and growth Summerset build rate New Zealand population growth 75 years and over 8,000 1,200,000 16% 1,000,000 14% 12% 6,831 800,000 10% 7,000 600,000 8% 400,000 6% 6,000 4% 200,000 2% - - 5,000 2016
Slide 66: Customer profile & occupancy
Half Year Report 2023 Appendix Customer profile & occupancy Occupancy, tenure and resident demographic statistics Occupancy – retirement villages Occupancy – established care centres 100% 100% 80% 80% 60% 60% 97% 96% 95% 95% 94% 97% 97% 95% 93% 92% 40% 40% 20% 20% 66 - - 1H21 2H21 1H22 2H22 1H23 1H2
Slide 67: Ngā mihi
Ngā mihi For more information: 67 Will Wright Chief Financial Officer will.wright@summerset.co.nz 021 490 251
Summerset Group Holdings — H1 2023 Earnings Presentation on 6ix