Summerset Group Holdings Limited · NZX:SUM

Summerset — FY2017 Earnings Presentation

45 slides from Summerset's earnings presentation, Feb 23, 2018

  1. Slide 1: Full year results presentation

    Full year results presentation Year ended 31 December 2017 Summerset Group Holdings Limited 23 February 2018

  2. Slide 2: Agenda

    Agenda 1 FY17 result highlights 2 Business overview 3 Financial results 4 Final dividend 5 Appendix FY17 results presentation 2

  3. Slide 3: FY17 result highlights

    FY17 result highlights

  4. Slide 4: FY17 result highlights: another record full year profit

    FY17 result highlights Another record full year profit for Summerset FY17 FY16 YOY change FY15 Net profit before tax (IFRS) 223.7 145.6 54% 82.8 Financial (NZ$m) Net profit after tax (IFRS) 223.4 145.5 54% 84.2 Underlying profit* 81.7 56.6 44% 37.8 Total assets 2,216 1,707 30% 1,364 Net operating ca

  5. Slide 5: Record full year profit for Summerset

    FY17 result highlights Record full year profit for Summerset  FY17 net profit after tax (NZ IFRS) of $223.4m, up 54% on FY16  FY17 underlying profit of $81.7m, up 44% on FY16 – record full year profit  Tracked ahead of our $77.0m to $79.0m guidance with better than expected resale settlements, st

  6. Slide 6: Strong trends continue across the business

    FY17 result highlights Strong trends continue across the business Total assets Underlying profit $2,500m $100m $2,000m $80m $1,500m $60m $2,216m $1,000m $40m $81.7m $1,707m $1,364m $56.6m $500m $845m $1,043m $20m $37.8m $22.2m $24.4m $0m $0m FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 Retireme

  7. Slide 7: Business overview

    Business overview

  8. Slide 8: 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 259% since listing  3,278 retirement units (villas, apartments, serviced apartments and memory care a

  9. Slide 9: FY17 review

    FY17 review 450 retirement units delivered, record underlying profit of $81.7m  Celebrated our 20th anniversary year  Completed the Ellerslie main building and delivered final retirement units in Hamilton and New Plymouth  Received the New Zealand Aged Care Association’s Best Built Environment 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  Focused on food offering to residents – introducing new providers in FY18  New Summerset brand established, quarterly magazine

  12. Slide 12: FY17 results presentation

    FY17 results presentation 12

  13. Slide 13: Village photos

    Ellerslie Casebrook Ellerslie Nelson Hobsonville Ellerslie Hobsonville FY17 results presentation 13

  14. Slide 14: FY17 development activity

    FY17 development activity Delivery of 450 retirement units in FY17 across nine sites Total Total Unit delivery FY17 Villas Apartments Serviced apartments retirement units care beds Ellerslie 22 23 57 102 58 Hamilton 14 - 30 44 - Hobsonville 8 24 11 43 - Karaka 33 - 39 72 - Katikati 41 - - 41 - New P

  15. Slide 15: FY17 development activity

    FY17 development activity Delivery of 450 retirement units in FY17 across nine sites Ellerslie Wigram Karaka New Plymouth Trentham FY17 results presentation 15

  16. Slide 16: FY17 development activity

    FY17 development activity Delivery of 450 retirement units in FY17 across nine sites Hobsonville Warkworth Hamilton Katikati FY17 results presentation 16

  17. Slide 17: Future development

    Future development Land bank of 2,841 retirement units and 396 care beds Land bank - as at 31 December 2017* Serviced & memory Total Total Village Villas Apartments care apartments retirement units care beds Avonhead 156 12 98 266 43 Casebrook 260 12 76 348 43 Ellerslie 8 196 - 204 - Hobsonville 10

  18. Slide 18: Development margin

    Development margin Record development margin of 27.3% with a realised margin of $51.0m  Record development margin achieved in FY17 with strong margins Realised development margin - full year margins across all villages that settled new retirement units within the year $60m 30%  Realised developmen

  19. Slide 19: New sales of occupation rights

    New sales of occupation rights New sales gross proceeds of $186.4m across 382 settlements  New sales gross proceeds of $186.4m in FY17 New sales FY17 FY16 YOY change FY15  New sales of occupation rights slightly down versus FY16: Gross proceeds ($m) 186.4 175.6 6% 131.0 Villas 235 293 -20% 279  V

  20. Slide 20: New sales stock

    New sales stock New sales stock up but still historically low on a relative basis  Uncontracted new sales stock of 145 retirement units at FY17, up from 67 at FY16. Uplift driven by deliveries being weighted to the second half (up 27% on FY16) and a large number of serviced apartment deliveries in

  21. Slide 21: Resales of occupation rights

    Resales of occupation rights Resales of 300 occupation rights in FY17  Resale of 300 occupation rights in FY17, an increase of 23% Resales FY17 FY16 YOY change FY15 on FY16 Gross proceeds ($m) 114.9 83.1 38% 77.0  Gross proceeds of $114.9m, up 38% on FY16 Realised resale gains ($m) 24.9 15.4 62% 1

  22. Slide 22: Resales stock

    Resales stock Resales stock levels continue to sit at record lows  Resales stock remains low with 63 retirement units under contract and 47 retirement units uncontracted at FY17  Resales stock is up on FY16, we experienced a historically high number of terminations over the second half of the year

  23. Slide 23: Financial results

    Financial results

  24. Slide 24: FY17 reported profit (IFRS)

    FY17 reported profit (IFRS) Net profit after tax up 54% versus FY16  Record NPAT of $223.4m, up $78.0m or 54% relative to FY16 YOY NZ$m FY17 FY16 FY15 change  NPAT has seen an annual compounded increase of 93% since we listed in 2011 Total revenue 110.5 86.1 28% 68.8  Strong growth in investment

  25. Slide 25: Fair value movement

    Fair value movement $218m fair value movement of investment property  Fair value movement of $218.0m for FY17, up 52% on FY16 FY17 fair value movement of investment property  Fair value movement has been driven by: $300m  Retirement unit pricing ($99.7m): strong retirement unit price inflation on

  26. Slide 26: FY17 underlying profit

    FY17 underlying profit Underlying profit up 44% on FY16, 47% CAGR over last six years  Record full year underlying profit of $81.7m, up 44% on FY16 YoY NZ$m FY17 FY16 FY15 change  Uplift in profit driven by the continued benefits of bringing our design Care fees and village and development team in

  27. Slide 27: FY17 cash flows

    FY17 cash flows Continued investment in new village builds  Continuing to see benefits of maturing portfolio - net operating NZ$m FY17 FY16 YOY change business cash flows up 67% from $15.7m in FY16 to $26.1m in FY17 Net operating business cash 26.1 15.7 67% flow  Cash flow from care fees and villa

  28. Slide 28: FY17 balance sheet

    FY17 balance sheet Total assets of $2.2b, up 30% from $1.7b in FY16  Total assets of $2.2b, up 30% on FY16 YOY NZ$m FY17 FY16 FY15 change  Retained earnings have increased from $289.1m as at 31 December 2016 to $492.6m as at 31 December 2017. This Investment property 2,058 1,591 29% 1,261 will con

  29. Slide 29: Gearing ratio

    Gearing ratio Gross debt of $348m* and gearing ratio of 30.7%  Gross debt of $347.8m as at 31 December 2017, up $32.5m from 30 June 2017 NZ$m FY17 1H17 Change FY16 Face value of bank loans  Uplift in gross debt principally due to settlement of land in & retail bonds* 347.8 315.3 10% 274.0 Avonhead

  30. 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 Forecast Capital Forecast Net Cash deliveries Village Investment ($m) Position* ($m)  Our high rise sites require a large amount of capital but are Casebrook for

  31. Slide 31: 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 - FY17 exceed the value of net debt by $85.3m or 25% Net Debt Undeveloped Land Development WIP Unsold Stock  All debt is associated with development a

  32. Slide 32: Final dividend

    Final dividend

  33. Slide 33: FY17 final dividend

    FY17 final dividend Summerset board declares FY17 final dividend  The Summerset Board have declared a final dividend of 7.1 cents per share, unimputed. This compares to a 2016 final dividend of 5.1 cents per share  This represents a pay-out for the second half of 2017 of approximately $15.9m  Tot

  34. Slide 34: Questions?

    Questions? FY17 results presentation 34

  35. Slide 35: 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

  36. Slide 36: Appendix

    Appendix

  37. Slide 37: 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-

  38. Slide 38: Summerset growth

    Summerset growth 20 years of consistent delivery and growth Summerset build rate 3,500 3,278 450 3,000 2,828 409 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 62 795 1,855 732 126 652 1,646 63 1,486 5

  39. Slide 39: 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 2H17 100% 80%  Average tenure on 2H17 resale retirement units was 5.0 years for vill

  40. Slide 40: Portfolio as at 31 December 2017

    Portfolio as at 31 December 2017 3,278 retirement units and 806 care beds Existing portfolio - as at 31 December 2017 Total Total Village Villas Apartments Serviced apartments Memory care apartments retirement units care beds Ellerslie 34 23 57 - 114 58 Hobsonville 115 37 11 - 163 0 Karaka 111 0 59

  41. Slide 41: Land bank as at 31 December 2017

    Land bank as at 31 December 2017 Land bank of 2,841 retirement units and 396 care beds Land bank - as at 31 December 2017* Serviced & memory Total Total Village Villas Apartments care apartments retirement units care beds Ellerslie 8 196 - 204 - Hobsonville 10 36 41 87 52 Karaka 71 - - 71 - Parnell

  42. Slide 42: FY17 underlying profit reconciliation

    FY17 underlying profit reconciliation Reconciliation of underlying profit to reported net profit after tax NZ$m FY17 FY16 YOY change FY15 Reported net profit after tax 223.4 145.5 54% 84.2 Less reversal of impairment on land & buildings (0.0) - N/A - Less fair value movement of investment property (

  43. Slide 43: Fair value movement

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

  44. Slide 44: Care centre valuation

    Care centre valuation Care centre valuation – key assumptions Assumed Assumed value per Value of care facilities Total care beds Value of care facility capitalisation rate equivalent bed** Village Location No. NZ$m % NZ$'000 Summerset at Bishopscourt Dunedin 42 6.7 13.50% 133 Summerset Down the Lane

  45. Slide 45: 7 year metrics summary

    7 year metrics summary Underlying profit 6 year CAGR of 47% Full Year Results 6 Year CAGR* FY17 FY16 FY15 FY14 FY13 FY12 FY11 New sales of occupation rights 23% 382 414 333 286 228 167 108 Resales of occupation rights 16% 300 244 245 172 174 164 123 Operational Total sales 20% 682 658 578 458 402 33

Summerset Group Holdings — FY2017 Earnings Presentation on 6ix