Summerset Group Holdings Limited · NZX:SUM

Summerset — H1 2019 Earnings Presentation

43 slides from Summerset's earnings presentation, Aug 13, 2019

  1. Slide 1: Half year results presentation

    Half year results presentation Six months ended 30 June 2019 Summerset Group Holdings Limited 13 August 2019

  2. Slide 2: Agenda

    Agenda 1 1H19 result highlights 2 Business overview 3 Financial results 4 Interim dividend 5 Appendix 1H19 results presentation 2

  3. Slide 3: 1H19 result highlights

    1H19 result highlights

  4. Slide 4: 1H19 result highlights: underlying profit up 6%

    1H19 result highlights Underlying profit up 6% from 1H18 1H19 1H18 Variance FY18 Net profit before tax (IFRS) 92.1 97.2 -5% 216.2 Financial (NZ$m) Net profit after tax (IFRS) 92.6 96.4 -4% 214.5 Underlying profit* 47.8 45.2 6% 98.6 Total assets 3,028 2,451 24% 2,766 Net operating cash flow 93.3 92.8

  5. Slide 5: 1H19 result highlights

    1H19 result highlights 139 retirement units delivered in 1H19, total assets $3.0b  IFRS profit after tax of $92.6m  Underlying profit of $47.8m, up 6% on 1H18  Delivered 139 retirement units in 1H19  First half development margin of 28.4%  Resale gain of 23.4% consistent with 1H18  Operating c

  6. Slide 6: Strong first half underlying profit result of $47.8m

    1H19 result highlights Strong first half underlying profit result of $47.8m Total assets Underlying profit $3,500m $60m $3,000m $50m $2,500m $40m $2,000m $30m $1,500m $3,028m $53.4m $2,766m $46.0m $45.2m $47.8m $2,451m $20m $1,000m $2,216m $35.7m $1,932m $10m $500m $0m $0m 1H17 2H17 1H18 2H18 1H19 1

  7. Slide 7: Business overview

    Business overview

  8. Slide 8: Summerset snapshot

    Summerset snapshot Diversified portfolio throughout New Zealand  22 years of consistent delivery and growth  Total assets have grown almost five times since listing on the NZX in 2011  Portfolio of 3,871 retirement units (villas, apartments, serviced apartments and memory care apartments) and 858

  9. Slide 9: 1H19 review

    1H19 review 139 retirement units delivered, underlying profit of $47.8m*  Completed Warkworth village  Obtained resource consent for Papamoa Beach (Tauranga), which was also blessed by local iwi  Announced six new land acquisitions in Blenheim (Marlborough), Cambridge (Waikato), Rangiora (Canterb

  10. Slide 10: Summerset strategy

    Summerset strategy Summerset builds, owns and operates retirement villages  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  Cus

  11. Slide 11: First NZ retirement group carboNZero certified

    First NZ retirement group carboNZero certified Providing sustainability to the environment and community  Summerset became the first New Zealand CarboNZero certified retirement village group and received the first CEMARS (Certified Emissions Measurement and Reduction Scheme) certification for a ret

  12. Slide 12: Business update

    Business update Residents engage with technology and the local community ▪ We have launched the Community Connect pilot, an initiative to help our residents solve their tech problems with the help of local school students. As well as supporting our residents with their IT needs, the initiative also

  13. Slide 13: 1H19 development activity

    1H19 development activity Delivery of 139 retirement units in 1H19 across six sites Avonhead Warkworth Ellerslie Casebrook Hobsonville Rototuna 1H19 results presentation 13

  14. Slide 14: 1H19 development activity

    1H19 development activity Delivery of 139 retirement units in 1H19 across six sites Total Total Unit delivery 1H19 Villas Apartments Serviced apartments retirement units care beds Avonhead 29 - - 29 - Casebrook 31 - - 31 - Ellerslie - 2 - 2 - Hobsonville 8 8 4 20 - Rototuna 34 - - 34 - Warkworth 23

  15. Slide 15: New land sites acquired

    New land sites acquired Six new land sites acquired in 1H19 Blenheim (Marlborough) Whangarei (Northland) Milldale (Auckland) Cambridge (Waikato) Rangiora (Canterbury) Waikanae (Kapiti Coast) 1H19 results presentation 15

  16. Slide 16: Development pipeline

    Development pipeline 1H19 results presentation 16

  17. Slide 17: Development margin

    Development margin First half realised margin of $27.1m with a 28.4% development margin  First half realised margin of $27.1m up 5% from $25.8m in 1H18 Realised development margin - half on half margins  Development margin of 28.4% achieved in 1H19 $40m 33.3% 40%  Sales of new occupation rights w

  18. Slide 18: New sales of occupation rights

    New sales of occupation rights Gross proceeds of $95.3m, up 22%  136 new sales of occupation rights in 1H19 New sales 1H19 1H18 Variance FY18 Gross proceeds ($m) 95.3 78.3 22% 192.0  Gross proceeds were up 22% from 1H18 Villas 71 97 -27% 235  Average gross proceeds per new sale settlement of Apar

  19. Slide 19: New sales stock

    New sales stock New sales stock remains historically low on a relative basis  Total new sales stock is consistent with FY18, with 322 in stock compared to 319 six months ago  30% reduction on serviced and memory care apartments uncontracted stock from FY18  Significant amount of villa deliveries

  20. Slide 20: Resales of occupation rights

    Resales of occupation rights Record embedded value Resales 1H19 1H18 Variance FY18  Realised resale gain remains consistent across at 23.4% compared to 23.3% 1H18 Gross proceeds ($m) 61.1 64.0 -4% 122.2 Realised resale gains ($m) 14.3 14.9 -4% 28.7  Resales of 142 occupation rights in 1H19 Realise

  21. Slide 21: Resales stock

    Resales stock Resales stock levels remain low despite growing portfolio  Resales stock remains low with 66 retirement units under contract and 59 retirement units uncontracted at 1H19  Uncontracted resales stock as a percentage of the portfolio has remained stable over the last five years  We con

  22. Slide 22: Financial results

    Financial results

  23. Slide 23: 1H19 reported profit (IFRS)

    1H19 reported profit (IFRS) 1H19 net profit after tax of $92.6m  IFRS NPAT of $92.6m for 1H19, driven by fair value movement in NZ$m 1H19 1H18 Variance FY18 investment property of $85.7m Total revenue 74.0 65.7 13% 137.0  Total revenue of $74.0m, up 13% relative to 1H18  Total expense growth for

  24. Slide 24: Fair value movement

    Fair value movement $85.7m fair value movement of investment property  Fair value movement of $85.7m, down 8% on 1H18 1H19 Fair value movement of investment property primarily driven by a reduction of 26 retirement unit $90m deliveries, approximately $7m impact $37.6m $0.2m $5.7m  Fair value movem

  25. Slide 25: 1H19 underlying profit

    1H19 underlying profit Underlying profit up 6% on 1H18, 36% CAGR over last eight years  1H19 underlying profit of $47.8m, up 6% on 1H18 NZ$m 1H19 1H18 Variance FY18  Uplift in underlying profit principally driven by the maturing nature of Care fees and village 48.8 43.3 13% 91.2 our operating busi

  26. Slide 26: 1H19 cash flows

    1H19 cash flows New sale receipts up 18% NZ$m 1H19 1H18 Variance FY18  Net operating business cash flows of $4.2m impacted by  One-off change in policy to repay outgoing residents when Net operating business cash flow 4.2 17.1 -76% 30.5 residents internal to the village transfer into their retirem

  27. Slide 27: 1H19 balance sheet

    1H19 balance sheet Total assets of $3.0b, up 24% from $2.5b in 1H18  Total assets of $3.0b, up 24% on 1H18 NZ$m 1H19 1H18 Variance FY18  Retained earnings have increased from $590m as at 1H18 Investment property * 2,824 2,269 24% 2,585 to $770m as at 1H19. This continues to positively impact Other

  28. Slide 28: Gearing ratio

    Gearing ratio Gross debt of $489.3m** and gearing ratio of 31.3%  Gross debt of $489.3m as at 30 June 2019, up $110.1m from 30 NZ$m 1H19 1H18 Variance FY18 June 2018 Face value of bank loans 489.3 379.3 0.3 451.5 & retail bonds **  Uplift in gross debt driven by construction spend and land acquire

  29. Slide 29: Composition of drawn debt

    Composition of drawn debt Strong asset backing to net debt  Development projects are debt funded. Development assets Net debt* to underlying assets - FY18 & 1H19 exceed the value of net debt by $211m and 44%. This has lifted Net Debt Undeveloped Land Development WIP Unsold Stock by $93m or 79% from

  30. Slide 30: Interim dividend

    Interim dividend

  31. Slide 31: 1H19 interim dividend

    1H19 interim dividend Declared 1H19 interim dividend of 6.4 cents per share  The Board has declared an interim dividend of 6.4 cents per share, Dividend payout per year unimputed. This compares to a 2018 interim dividend of 6.0 cents per share $30m  This represents a pay-out for the first half of

  32. Slide 32: Questions?

    Questions? 1H19 results presentation 32

  33. Slide 33: 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

  34. Slide 34: Appendix

    Appendix

  35. Slide 35: Operational and financial year metrics summary

    9 year metrics summary Underlying profit 8 year CAGR of 36% 8 Year Half Year Results 1H19 2H18 1H18 2H17 1H17 2H16 1H16 FY11 CAGR* New sales of occupation rights 12% 136 194 145 203 179 231 183 108 Resales of occupation rights 11% 142 147 154 156 144 121 123 123 Operational Total sales 12% 278 341 2

  36. Slide 36: 1H19 underlying profit reconciliation

    1H19 underlying profit reconciliation Reconciliation of underlying profit to reported net profit after tax NZ$m 1H19 1H18 Variance FY18 Reported net profit after tax 92.6 96.4 -4% 214.5 Less fair value movement of investment (85.7) (92.8) -8% (209.9) property Add realised gain on resales 14.3 14.9 -

  37. Slide 37: Fair value movement of investment property – key assumptions

    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* Growth rate Growth rate Growth rate Growth rate Growth rate Village Location NZ$m NZ$m Discount r

  38. Slide 38: Fair value movement of investment property – key assumptions

    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* Growth rate Growth rate Growth rate Growth rate Growth rate Village Location NZ$m NZ$m Discount r

  39. Slide 39: Portfolio as at 30 June 2019

    Portfolio as at 30 June 2019 3,871 retirement units and 858 care beds Existing portfolio - as at 30 June 2019 Village Villas Apartments Serviced & memory care apartments Total retirement units Total care beds Ellerslie 34 79 57 170 58 Hobsonville 125 73 52 250 52 Karaka 182 - 59 241 50 Manukau 89 67

  40. Slide 40: Summerset growth: retirement units

    Summerset growth 22 years of consistent delivery and growth Summerset build rate 4,500 4,000 3,871 3,732 139 3,500 3,278 454 3,000 2,828 450 Retirement units 2,419 409 2,500 2,116 303 2,000 1,855 261 1,646 3,732 1,486 209 3,278 1,500 1,352 160 1,272 122 2,828 1,109 80 983 163 2,419 921 2,116 1,000 7

  41. Slide 41: Future development: land bank

    Future development Largest NZ land bank for retirement village operator Landbank – as at 30 June 2019 Village Villas Apartments Serviced apartments Total retirement units Total care beds Whangarei 214 - 76 290 43 Northland 214 - 76 290 43 Ellerslie 8 140 - 148 - Hobsonville 32 - - 32 - Milldale 99 1

  42. Slide 42: Customer profile & occupancy

    Customer profile & occupancy Occupancy, tenure and resident demographic statistics  Occupancy within our established care centres is stable, with an average occupancy of 97% for 1H19 Occupancy - established care centres 100%  Average tenure on 1H19 resale retirement units was 5.8 years for villas,

  43. Slide 43: 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% 30,000 16% 1,000,000 25,000 14% 800,000 12% 20,000 10% 600,000 15,000 8% 10,000 400,000 6% 4% 5,000 200,000 2% 0 0 0% 1997-200

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