Oceania Healthcare Ltd. · NZX:OCA
Oceania Healthcare — UBS Conference 2018
50 slides from Oceania Healthcare's conference presentation, Nov 12, 2018
Slide 1: Introduction to Oceania
Introduction to Oceania
Slide 2: Purpose of Document
Purpose of Document This document provides some background information on Oceania and the New Zealand aged care industry to assist investors. It should be read in conjunction with Oceania's annual reports and financial statements. Further information is available on our website at www.oceaniah
Slide 3: Contents
Contents 01 Oceania at a Glance 03 02 Board and Management Team 11 03 Industry and Regulation 16 04 Overview of Business Model 24 05 Key Developments 31 2
Slide 4: Oceania at a Glance
1 Oceania at a Glance SECTION 1 STRICTLY CONFIDENTIAL 3
Slide 5: Oceania by numbers
Oceania by numbers We are a “care focused” operator and developer of aged care facilities and retirement villages in New Zealand Formed In NEW 43 2 2005 ZEALAND based Operating Facilities Operating segments AGED CARE RETIREMENT VILLAGE BROWN Non-operating development +3 sites “Care” “Village” FIELDS
Slide 6: Oceania's portfolio
Oceania’s portfolio We are a “care focused” operator and developer of aged care facilities and retirement villages in New Zealand Current & future portfolio composition – Remaining “needs” focused Oceania’s site locations 43 CARE VILLAGE OCEANIA Assisted Living Independent Operating Facilities Auckl
Slide 7: Oceania's offering
Oceania’s offering Oceania is recognised as a high quality provider of Aged Care services in New Zealand, and its offering includes both standalone and integrated facilities Aged Care Retirement Village Overview Care beds Care suites Units Residential Aged Care including rest home, hospital and Inde
Slide 8: Our key business strengths
Our key business strengths Our strength is our care focus and this will continue to differentiate Oceania moving forward AGED CARE DEVELOPMENT Highly cashflow and Recognised leader in value accretive 1 clinical care 4 brownfield development projects in key urban locations Clear growth strategy 2 in
Slide 9: Oceania's investment proposition
Oceania’s investment proposition Our business model supports a combination of dividend yield with long term growth Yield Growth Increase in portfolio from Total dividend of 4.70 cps for FY2018 – ~4,000 to 5,400 units as brownfields 4.20% yield (gross) based share price of sites redeveloped over $1
Slide 10: FY2018 Operational highlights
FY2018 Operational highlights We exceeded the IPO Forecasts for FY2018, increased earnings by over 50%, and continued to execute our key developments and operational initiatives. Aged Care Strategy & Operations Development Pipeline Operational excellence and clear growth Development pipeline enhance
Slide 11: FY2018 Financial highlights
FY2018 Financial highlights Reported NPAT and Underlying NPAT were ahead of FY2017 and the IPO Forecasts. Total assets as at FYE2018 approximately $1.15b Operating Revenue Underlying NPAT1 NZ$m NZ$m 184.0 51.4 52.1 173.6 174.8 175.3 34.01 n/a1 FY2016 FY2017 FY2018 (F) FY2018 FY2016 FY2017 FY2018 (F)
Slide 12: Oceania's Board and Management Team
23 The Sands, Auckland The Sands, Auckland Oceania’s Board and Management Team SECTION 2 STRICTLY CONFIDENTIAL 11
Slide 13: Directors
Directors Elizabeth Coutts Alan Isaac Kerry Prendergast Chair and Independent Director Independent Director Independent Director BCA, FCA, MBA (VUW), BMS, FCA FICS NZRN, NZM Alan Isaac has been a Director of Kerry Prendergast has been a Director of Oceania since 1 October 2015. Alan is a Oceania sin
Slide 14: Directors
Directors Sally Evans Patrick McCawe Hugh FitzSimons Gregory Tomlinson Independent Director Non-Executive Director Non-Executive Director Non-Executive Director BHSc, MSc, BCA (Hons), BEc AME FAICD, GAIST MBA, CA LLB (Hons) (Syd) Sally Evans has been a Director of Patrick McCawe has been a Hugh Fitz
Slide 15: Executive management team
Executive management team The Executive Management Team has 75 years of combined aged care experience Earl Gasparich Matt Ward Jill Birch Chief Executive Officer Chief Financial Officer General Manager Sales, Marketing BCom, LLB (Hons), BCom, LLB, and Villages FCA (Chartered Accountants New Zealand
Slide 16: Executive management team
Executive management team Our strength is our care focus and this will continue to differentiate Oceania moving forward Barbara Sangster Mark Stockton Anna Thorburn General Manager Nursing & Risk General Manager Property General Counsel & Company DipNursing MCIOB, Secretary NZIOB BA, LLB (Hons) Barb
Slide 17: Aged Care Industry in New Zealand
3 Aged Care Industry in New Zealand SECTION 3 STRICTLY CONFIDENTIAL 16
Slide 18: Aged care – attractive demographics
Aged care – attractive demographics Demand for aged care is set to more than double in the next 20 years Estimated population growth1 800,000 700,000 227,800 600,000 New Zealand Population Population Aged 85+ 500,000 Aged 85+ 489,800 400,000 300,000 200,000 New Zealand 100,000 Population Aged 75 to
Slide 19: Aged care supply – not keeping up with population growth
Aged care supply – not keeping up with population growth In the last 12 years the number of facilities has reduced by 103 and only 3,155 beds have been added New Zealand aged care places vs 80+ population growth1 Low net build rate of care beds 42 180 ● Recent growth in the 80+ age group has 171 see
Slide 20: Aged care demand – outstripping supply
Aged care demand – outstripping supply Listed operators are only building approximately 800-900 beds per annum c.f the 1,500 beds required per annum 1,500 800 - 900 New beds 600 -700 Shortfall of new New beds required p.a. to delivered by beds required meet NZ listed operators to meet demand p.a. de
Slide 21: Stable regulatory framework in NZ
Stable regulatory framework in NZ While returns from traditionally-funded aged care beds are insufficient to incentivise new builds, the MoH has supported innovation in the sector - specifically the introduction of private charging ● NZ funding model has historically not reflected the capital costs
Slide 22: Comparison with Aged Care in Australia
Comparison with Aged Care in Australia Relative level of funding may provide upside for New Zealand Aged Care providers Australia New Zealand • Government contribution depends on level of care required and is • Three key segments of care; rest home, hospital and dementia of care Levels determined us
Slide 23: Regulatory overview
Regulatory overview Australian reform has been caused by matters specific to the ACFI framework, while the New Zealand funding regime is expected to remain stable Australia New Zealand • Funding for Aged Care residents in Australia vary from person to • The New Zealand system does not have the same
Slide 24: Growth in Retirement Village demand
Growth in Retirement Village demand Significant increase in demand expected for RV and aged care services 4,000 Forecast Average ~3,000 p.a. 3,500 3,000 Population Aged 85+ Forecast Unit Demand 2,500 Population 2,000 Aged 75 to 84 Average ~1,400 p.a. 1,500 1,000 500 0 2028 2011 2012 2013 2014 2015 2
Slide 25: Oceania's Business Model
4 Meadowbank Village, Auckland Oceania’s Business Model SECTION 4 STRICTLY CONFIDENTIAL 24
Slide 26: Oceania's strategic positioning
Oceania’s strategic positioning Our focus is aged care with a growing retirement village business Comparison to other listed New Zealand operators EXISTING portfolio composition FUTURE portfolio composition Oceania 63.8% 8.5% 27.7% 34.2% 24.4% 41.4% Arvida 50% 0.3% 19% 30% 47% 5% 18% 30% Ryman 35% 1
Slide 27: Oceania business model
Oceania business model Oceania has revenue diversity arising from occupancy-based fees in aged care/care suites, property-linked income in units/care suites, and development gains on new builds Aged Care Beds DHB assessors determine the • Predominantly government-funded daily care fees District Heal
Slide 28: Oceania business model
Oceania business model Oceania has revenue diversity arising from occupancy-based fees in aged care/care suites, property-linked income in units/care suites, and development gains on new builds Care Suites DMF: 30% of entry price Capital gains • Combination of government funded daily care fees, DMF
Slide 29: Care Suite Model
Care Suite Model Our Care Suite model utilises the economics of both the Aged Care and Retirement Village business models Care Suite Resales Prices Care Suites 250 188 • Premium product fully certified by the Ministry of Health for the 163 173 156 158 NZD $000’s provision of care services up to hosp
Slide 30: Care Suite Economics
Care Suite Economics The sale of an ORA on a care bed is essentially the capitalisation of an alternative daily PAC and enables capital to be recycled Government Funding Daily premium charge: PAC Bed • All care beds (standard, PAC and care • Government funded daily care fee plus daily premium suite)
Slide 31: Care Suite conversion – a worked example
Care Suite conversion – a worked example Woodlands Stage I involved the conversion of 7 resthome rooms into 5 care suites. Woodlands Stage I conversion 400 200 132 132 299 132 0 -200 -645 -400 550 -600 -800 Development Sale Year 1 Year 2 Year 3 Net cost proceeds Earnings Earnings Earnings Developmen
Slide 32: Developments
53 The Sands, Artist’s impression Developments SECTION 5 STRICTLY CONFIDENTIAL 31
Slide 33: Substantial progress executing developments
Substantial progress executing developments We delivered our key developments during the IPO Forecast period on time and on forecast cost Development progress in FY2018 Platform set for future development Development completed in FY2018 Development commenced in FY2018 25 villas completed at Elmwoo
Slide 34: Development pipeline
Development pipeline We have a pipeline of 2,129 units and care suites. Of this, 1,303 units and care suites are either under construction or consented (61% of pipeline). Details of sites under construction or consented are set out below FACILITY LOCATION STATUS GROSS RESIDENCES MAY-18 NOV-18 MAY-19
Slide 35: Development pipeline
Development pipeline SITE, STAGE STATUS GROSS UNITS NET UNITS NOTES Meadowbank Stage 4 Under Construction 83 83 Expected completion May 2019 Stage 5 Consented 26 26 Stage 6 Consented 36 36 Consent received July 18, not included in 1,303 consented units The Sands (formerly Maureen Plowman) Under Cons
Slide 36: Track record of developments delivered
Track record of developments delivered We have delivered, and are currently constructing, a combined total of 903 care suites and units We have a highly experienced in-house development team Units delivered and currently under construction with a proven track record of delivering projects on time
Slide 37: Increased pipeline and build rate
Increased pipeline and build rate Our development pipeline and forecast build rate has increased since IPO. We have new debt facility limits in place to achieve this and our in-house development team has the capacity and capability to deliver Current development pipeline vs IPO development pipeline
Slide 38: Meadowbank Village
Meadowbank Village Stage 3 completed in February 2018 and selling well. Stage 4 on track for completion in May 2019 Meadowbank Auckland Stage 3 Completed on time & under budget 62 30 Apartments Care Suites 69% sold / under 40% occupied application Stage 4 Under construction with a further 49 34 Apar
Slide 39: The Sands
The Sands Construction of The Sands is on track for completion in May 2019 The Sands Browns Bay, Auckland The Sands will provide 64 44 Apartments Care Suites Due for completion around May 2019 ● Strong inbound enquiries ● Over 140 pre-qualified interested parties 38
Slide 40: The BayView
The BayView Redevelopment of The BayView is on track and scheduled to complete in 1HY2019 with Stage 2 commencing in 2HY2019 Stage 1 Stage 2 Under construction will Scheduled to commence in 2H2019 The BayView provide Tauranga 81 74 Community Centre Care Suites Apartments Due for completion around Oc
Slide 41: Trevellyn
Trevellyn Construction of Trevellyn commenced in 2HY2018 with completion scheduled for FY2020 Trevellyn Hamilton Stage 1 Stage 2 Currently under construction1 will provide: Scheduled to commence in FY2020 Due for completion in FY2020 90 63 Community Centre Care Suites Apartments 1. Stage 1 site outl
Slide 42: Green Gables
Green Gables Redevelopment of Green Gables commenced in June 2018 Green Gables Nelson Green Gables will provide 28 61 Apartments Care Suites Due for completion in FY2020 41
Slide 43: Waimarie Street
Waimarie Street We have significantly enlarged the development area of the Waimarie Street site in the premium suburb of St Heliers, Auckland Waimarie St St Heliers, Auckland 13,464m2 116 Land Units & care acquisition suites planned Greenfield site in the Auckland suburb of St Heliers: ● Original la
Slide 44: Eden
Eden Additional land was acquired adjacent to the Eden Village Eden Auckland Development of the site1 will provide 47 Community Centre Apartments ● Under-croft carparks and a community centre to supplement the existing retirement village facility 1. Site to be developed is shaded red within the Eden
Slide 45: Windermere
Windermere Stage 1 development at Windermere is scheduled to commence in 2HY2019 Windermere Christchurch Stage 1 development will provide 22 60 Apartments Care Suites Scheduled to commence 2HY2019 ● Premium suburb close to centre of Christchurch with local median house prices of $0.9m1 1. Median hou
Slide 46: Appendices
Appendices 01 Definition of underlying NPAT 02 Pro forma adjustments 03 Glossary 04 Disclaimer 45
Slide 47: Underlying NPAT
07 Underlying NPAT Underlying Profit (or Underlying NPAT) Development Margin Underlying Profit is a non-GAAP measure used by the Group to monitor financial The Directors’ estimate of realised development margin is calculated as the cash performance and is a consideration in determining dividend dist
Slide 48: Pro forma adjustments
08 Pro forma adjustments The following adjustments relate to the FY2017 year only Transaction and offer costs Listed company capital structure Total transaction and offer costs of $11.9m were incurred relating to joint lead manager The proceeds of the IPO were used to substantially repay a portion o
Slide 49: Glossary
09 Glossary Care Suite MoH A room or studio certified for the provision of care by the Ministry of Health Ministry of Health which has been licensed under an ORA ORA DMF An occupation right agreement that confers on a resident the Deferred management fees, charged under an ORA, which right to occupa
Slide 50: Important notice and disclaimer
10 Important notice and disclaimer This presentation has been prepared solely by Oceania Healthcare Limited The information contained in this presentation has been prepared in good faith by ("Oceania"). You must read this disclaimer before making any use of this presentation Oceania. No representati