Oceania Healthcare Ltd. · NZX:OCA
Oceania Healthcare — 1HY2022 Earnings Presentation
39 slides from Oceania Healthcare's earnings presentation, Nov 29, 2021
Slide 1: Believe in better. Results presentation half year ended 30 September 2021
Believe in better. RESULTS PRESENTATION FOR THE FINANCIAL HALF YEAR ENDED 30 SEPTEMBER 2021
Slide 2: Agenda
Agenda Introduction 3 Our new directors 4 COVID-19 update 5 1HY2022 trading highlights 7 Update on developments 10 Financial results 17 Appendices 29 2
Slide 3: Introduction
Introduction This is the first half-year results presentation since the change of balance date to 31 March1. Oceania recorded a number of highlights in the period despite the disruptions of COVID-19 lockdowns. Highlights Comparison with prior period • 20% increase in underlying EBITDA compared to pc
Slide 4: Our new directors
Our new directors The Oceania Board appointed and welcomed Rob Hamilton and Peter Dufaur as independent non-executive directors. The appointments were effective from 17 September 2021. Rob Hamilton BSc, BCom Peter Dufaur BProp Rob is a respected member of the capital Peter has over 25 years’ experie
Slide 5: COVID-19 update
COVID-19 update The safety of our staff and residents remain our primary focus. Our response to the Delta outbreak All Oceania sites were placed into immediate lockdown following the Prime Minister’s announcement on 17 August 2021. Increased communications • Central communications updates delivered
Slide 6: Oceania leading advocacy during COVID
Oceania leading advocacy during COVID Oceania’s executive team have been at the forefront of the retirement industry’s public voice during COVID-19, advocating for staff and resident welfare. “The boss of a retirement village operator is calling on the “Oceania Healthcare chief executive Brent Patti
Slide 7: 1HY2022 trading highlights
1HY2022 trading highlights Recurring premium revenue underpins our result with DMF and PAC revenue for 1HY2022 of $25.0m, a 35% increase on pcp2021. Premium revenue Underlying EBITDA1 NZDm 25.0 NZDm 37.1 35.3 36.5 20.4 30.5 18.6 16.3 1HY2020 1HY2021 pcp2021 1HY2022 1HY2020 1HY2021 pcp2021 1HY2022 6
Slide 8: 1HY2022 trading highlights (continued)
1HY2022 trading highlights (continued) Our aged care business is underpinned by our premiumisation strategy. Care suites are now a proven product delivering increasing annuity income streams. Premiumisation underpins aged care in a challenged environment Strong resale volume and pricing Premiumisati
Slide 9: 1HY2022 trading highlights (continued)
1HY2022 trading highlights (continued) We have commenced development at three new sites in 1HY2022, adding 209 new units and care suites under construction. We now have 545 units and care suites under construction across 8 sites. Development pipeline progress Growth Areas Successful retail bond issu
Slide 10: Future development outlook
Future development outlook 50% of our existing portfolio is now premium units and care suites as we progress to ~70% premium / 30% standard at the end of our current pipeline. Current & future portfolio composition – remaining “needs” focused1 Existing portfolio1 1,509 1,803 Care beds Care suites IL
Slide 11: Acquisitions
Acquisitions Waterford and Franklin were settled in 1HY2022 using the proceeds of our successful $100m capital raise completed in March 2021. Waterford Franklin Progress update Progress update Hobsonville Point, Auckland Pukekohe, Auckland Settled in April 2021 Post-settlement we have more Settled i
Slide 12: Our care premiumisation journey
Our care premiumisation journey Care The status of our care suite development pipeline within the Brownfields Earnings Cycle. Maturity EBITDA/bed Consent Construct Commission Ramp Up $8-10k $0-5k -$10-0k $5-15k $20k+ T-4 T-3 T-2 T-1 T T+1 T+2 T+3 T+4 T+5 Care at The BayView (opened FY2020) Eden now
Slide 13: Developments completed
Developments completed 59 units and care suites completed in 1HY2022, in line with expectations. Eden Gracelands Auckland Hawkes Bay Completed in April 2021 8 villas completed in September 2021 with the remaining 10 villas completed in October 2021. This concludes the three stages of development at
Slide 14: Developments commenced in 1HY2022
Developments commenced in 1HY2022 209 units and care suites commenced development in 1HY2022 Redwood The Bellevue – Stage 2 Elmwood Blenheim Christchurch Auckland Commenced in May 2021 Commenced in July 2021 Commenced in September 2021 57 46 106 Care suites Units Care suites Site for new 3 storey ca
Slide 15: FY2022 scheduled completions
FY2022 scheduled completions 112 units and care suites scheduled for completion in 2HY2022 taking total deliveries for FY2022 to 171. The BayView 2b Awatere Tauranga Hamilton Scheduled to complete in December 2021 Accelerated and now scheduled to complete in 2HY2022 39 Units & Community centre 63 Un
Slide 16: Other developments under construction
Other developments under construction In total there are 545 units and care suites under construction as at 1HY2022, an increase of 150 over 10m 2021. COVID-19 Alert Level 4 lockdowns in Auckland have delayed Lady Allum which was previously expected to deliver in March 2022. Lady Allum – Stage 1 Wai
Slide 17: Financial Results
Income statement and segmental performance Cash flow statement Balance sheet Financial Capital structure Results. 17
Slide 18: Change in balance date
Change in balance date This is the first half-year results presentation since the change of balance date to 31 March. 6 months to 30 September Growth Comparison with prior period 2021 2020 NZDm Δ % 1HY2022 pcp2021 The focus of this presentation will be comparing the pro-forma 6 months of trading to
Slide 19: Income statement
Income statement Total Comprehensive Income for the period of $62.7m. Key valuation assumptions remained largely consistent from 10m2021 with IP growth and discount rates unchanged and only minor adjustments to growth rates. Summary of income statement Key IP and PP&E CBRE valuation assumption chang
Slide 20: Underlying earnings
Underlying earnings Underlying EBITDA of $36.5m for the 6 month period ended 30 September 2021, a 19.7% increase on pcp2021. Reconciliation of underlying adjustments Segmental underlying adjustments NZDm 1HY2022 10m2021 NZDm 1HY2022 pcp2021 Var 10m2021 Unaudited Audited Six months Ten months Aged Ca
Slide 21: Care segment
Care segment EBITDA per bed of over $9,500 per bed was an increase of 19.2% on pcp2021. Key drivers of care performance were group occupancy of 92.5% and continued increases in premium revenue continues as our care suite portfolio matures. Aged care underlying EBITDA Occupancy rates NZDm 1HY2022 pcp
Slide 22: Village segment
Village segment Sales volumes ahead of pcp2021 and delivering improved DMF capture despite COVID-19. Village underlying EBITDA Villa and apartment DMF revenue NZDm NZDm 1HY2022 pcp2021 Var 10m2021 15.6 Villa and apartment DMF 15.6 11.5 4.1 22.1 12.9 Retirement village service fees 3.7 3.1 0.6 5.2 11
Slide 23: Developments – key indicators
Developments – key indicators Development margin of 26% is consistent with 10m2021. This development margin and our average sales prices reflect the higher proportion of new stock we are selling outside of Auckland at sites like Green Gables, The BayView and The Bellevue. New sales volumes and margi
Slide 24: Resales – key indicators
Resales – key indicators Resale volumes of 129 in 1HY2022 represents a 50% increase compared to pcp2021. Apartment resale prices averaged $811k, an increase of 14.5% on pcp2021. Resales volumes and margins Resales volume regional breakdown Units 150 40.0% 53 30.3% 120 46 47 84 30.0% 74 22.4% 37 90 6
Slide 25: Cash flow
Cash flow Operating cash flow of $52.5m for 1HY2022 compared to $96.0m for 10m2021. Operating cash flow was driven by first time sales proceeds of $59.1m. Statement of cash flows NZDm 1HY2022 10m2021 • First time sales receipts at development sites of $59.1m Receipts from customers 97.0 142.3 (c.f.
Slide 26: Oceania has been active in M&A and capital markets
Oceania has been active in M&A and capital markets Over 1HY2022 Oceania has completed two M&A transactions and raised both equity and debt capital to position the business for growth “Oceania Healthcare said it planned to raise about $100 “Oceania Healthcare had plenty of interest in its $20 “NZX-li
Slide 27: Balance sheet
Balance sheet Total assets increased by $181m from 31 March 2021 driven by growth in the value of retirement village and care properties through acquisitions and continued development Balance sheet Net adjusted value (“NAV”) NZDm As at As at NZDm As at As at 30 September 31 March 30 September 31 Mar
Slide 28: Capital structure
Capital structure Following a second successful retail bond issue of $100m in September 2021, Oceania has $241m of debt headroom providing significant balance sheet capacity to execute on our growth strategy Net debt Credit metrics Drawn amount As at As at Debt facilities Facility limit Headroom Per
Slide 29: Appendices
01 Portfolio summary 02 Development pipeline 03 Reconciliation of portfolio movements 04 Summary of unit sales 05 Embedded value 06 Capital expenditure Appendices. 07 Reconciliation of resales cash flow 08 Definition of Underlying NPAT 09 Glossary 10 Important notice and disclaimer
Slide 30: Portfolio summary
01 Portfolio summary As at 30 September 2021 Facility Region Care beds Care suites Village units Total Facility Region Care beds Care suites Village units Total NORTH ISLAND SOUTH ISLAND Totara Park Rodney - - 30 30 Marina Cove Picton - - 22 22 The Sands North Shore - 44 64 108 Green Gables Nelson -
Slide 31: Development pipeline
02 Development pipeline Status as at 30 September 2021 Sites Stage Status ILUs Care suites Gross units Net units Notes Meadowbank Stage 6 Consented - 36 36 36 Awatere (formerly Trevellyn) Stage 2 Under Construction 63 - 63 63 Scheduled for completion 2HY2022 Stage 3 Consented 71 - 71 71 The BayView
Slide 32: Reconciliation of portfolio movements
03 Reconciliation of portfolio movements Changes Conversion Conversion Changes in Changes in As at in existing of beds to of units to New units New units pipeline – gross pipeline – As at FY2020 capacity care suites care suites acquired delivered units added decommissions 10m2021 Existing Care beds
Slide 33: Summary of unit sales
04 Summary of unit sales New Sales 6 months to 30 November 6 months to 30 September 2018 2019 2020 2021 2020 2021 Villa 9 17 3 16 19 13 Apartment 7 24 26 44 38 44 Care suite 7 24 55 85 65 44 Total 23 65 84 145 122 101 Average development margin 36.4% 29.5% 36.6% 24.6% 27.1% 25.7% Resales 6 months to
Slide 34: Embedded value
05 Embedded value The embedded value in our portfolio has increased 27.6% to $330.2m as at 1HY2022 and will underpin the future realisation of cash flows from deferred management fees and resale gains. Embedded Value NZDm 400 3,000 330.2 • Embedded value in Oceania’s portfolio is $330.2m, up 27.6% o
Slide 35: Capital expenditure
06 Capital expenditure Significant increase in capital expenditure in 1HY2022 relative to pcp due to the acquisitions of Waterford and Franklin, as well as an increase in Oceania’s development activity Breakdown of Capital Expenditure NZDm 1HY2022 1HY2021 Acquisitions 66.7 0.4 Development capital ex
Slide 36: Reconciliation of resales cash flow
07 Reconciliation of resales cash flow Reconciliation of resales cash flow NZDm 1HY2022 1HY2021 Receipts from New ORAs 109.3 113.4 less: Payments for Outgoing ORAs (35.7) (29.9) less: Cash Inflow From New Sales (59.1) (65.1) Net Resales Cash flow 14.6 18.5 Made up of: Resale Gains 10.6 10.4 DMF Real
Slide 37: Definition of Underlying NPAT
08 Definition of Underlying NPAT Underlying Profit (or Underlying NPAT) Development Margin Underlying Profit is a non-GAAP measure used by the Group to monitor financial performance and is a The Directors’ estimate of realised development margin is calculated as the cash received, and receivable, in
Slide 38: Glossary
09 Glossary Care suite PAC A room or studio certified for the provision of care by the Ministry of Health which has been licensed Premium accommodation charge on a care bed for accommodation provided above the mandated under an ORA. minimum. DMF pcp Deferred Management Fees, charged under an ORA, of
Slide 39: Important notice and disclaimer
10 Important notice and disclaimer This presentation has been prepared solely by Oceania Healthcare Limited ("Oceania"). You must read change without notice. To the maximum extent permitted by law, Oceania, its directors, officers, this disclaimer before making any use of this presentation and the a