Ryman Healthcare Ltd. · NZX:RYM
Ryman Healthcare — FY2023 Earnings Presentation
61 slides from Ryman Healthcare's earnings presentation, May 19, 2023
Slide 1: Full year result
RYMAN HEALTHCARE Full year result 31 March 2023 Presented 19 May 2023 1
Slide 2: Enhancing freedom, connection and wellbeing for people as we grow older
Enhancing freedom, connection and wellbeing for people as we grow older. Ryman resident Jean and caregiver Ronalyn Alolor enjoy time together at our Kevin Hickman Village in Christchurch. 2
Slide 3: Summary
Summary Financial Solid result for FY23 against a backdrop of a challenging economic environment, severe weather performance events and the tail-end impacts from COVID Underlying profit of $301.9 million (18.4% YoY), which compares to guidance of $280-290 million Invested $1.04 billion in port
Slide 4: FY23 key financials
FY23 key financials $301.9m $272.6m Underlying profit1 18.4% Operating EBITDA1 29.4% • Underlying profit of $301.9 million (vs guidance of $280-290 million) • Reported IFRS profit down $257.8m $12.51bn due to lower revaluation Reported (IFRS) profit -62.8% Total assets 14.1% gains and early USPP rep
Slide 5: Strategy update
Strategy update Decisive steps taken to position the business for sustainable growth and improved performance Increased focus on cash recovery from development Improved returns from existing villages Site density Rebalancing portfolio towards lower density Sales New market incentives and strateg
Slide 6: Reset balance sheet
Reset balance sheet Net interest bearing debt (billions) $902.4m $3.5b • Raised $902.4 million to reset the balance sheet and repay debt (USPP) 3.00 $3.0b • 71% take-up of entitlements across Gross proceeds from both institutional and retail offers, equity raise $2.5b with remaining entitlements sol
Slide 7: Continued investment to meet future demand
Continued $1.2b Investing cash flows (billions) investment to 1.04 meet future $1.0b demand 0.84 0.79 $0.8b 0.71 • Positive age and wealth $0.6b demographics 0.55 0.48 • Spent $1.04 billion on portfolio $0.4b development in FY23 • Capital intensity remains high in the short term as we work to $0.2b
Slide 8: Portfolio movement
Portfolio movement FY23 portfolio movements in RV units and aged care beds Retirement Aged care Total units Our portfolio of RV units and aged care village units beds and beds beds increased by 821 in FY23 Prior outlook Included in this movement are: 1H23 reported1 96 93 189 • 519 fully completed un
Slide 9: Committed to exceptional care
Committed to exceptional care • Maintained 4-year Ministry of Health certification at 82% of our New Zealand villages • Achieved 4-star ratings for all four of our operational care centres under the new star rating system in Australia • Home care offering gaining traction in Australia with 132 resid
Slide 10: Advancing our sustainable future
Advancing our sustainable future • Climate based action is a priority in our first sustainability strategy which launched in October 2022 • Signed a 10-year deal with renewable energy developer Solar Bay who will build a new solar farm in Northland, a first for the retirement sector • The solar farm
Slide 11: Resident Judy at Murray Halberg Village
Avid rower Judy is a resident at our Murray Halberg Village in Auckland and recent star of our Full Life brand campaign. 11
Slide 12: FY23 key performance indicators
FY23 key performance $571.0m 1,519 29.4% Total revenue Booked sales of Gross new sales indicators occupation rights margin 12.2% -1.6% 5.1%* vs last year vs last year vs last year 95% 2.1% 31.1% Average aged Available RV Gross resales care occupancy unit resale stock margin for mature villages -1%*
Slide 13: Full year reported (IFRS) profit of $257.8 million
Full year reported $800m 692.9 (IFRS) profit of $700m 103.2 $257.8 million $600m $500m IFRS profit impacted by: 423.1 388.2 32.3 $400m • Smaller unrealised fair-value 24.9 326.0 movement of $73.7 million $300m 49.3 264.7 589.6 in FY23 ($467.1 million in FY22), 257.8 22.8 reflecting softer valuation
Slide 14: Underlying profit up 18.4%
Underlying profit $350m up 18.4% 301.9 $300m 254.9 69.7 $250m 242.0 • Group underlying profit 227.0 224.4 51.2 of $301.9 million (vs $280-290 203.5 42.2 million guidance range) $200m 18.7 37.1 32.2 • YoY increase of $47.0 million (18.4%) on FY22 $150m 232.2 • Australia’s underlying profit $100m 199.
Slide 15: Profit and loss breakdown
Profit and loss $m Underlying profit and loss bridge (non-GAAP1) FY23 FY22 YoY breakdown Total revenue Resales margins 571.0 234.9 508.8 168.1 12.2% 39.8% Operating expenses (533.3) (466.2) 14.4% Operating EBITDA 272.6 210.6 29.4% • Total revenue up 12.2% Development margins 122.9 110.7 11.1% • Oper
Slide 16: Operating EBITDA up 29.4%
Operating EBITDA $300m 272.6 up 29.4% $250m 210.6 New metric excluding development $200m 181.7 184.2 margins, interest expense and 181.2 167.8 D&A, used to measure performance of existing operations $150m • 29.4% increase driven by $100m a 39.8% lift in resales margins reflecting increased volumes a
Slide 17: Average new and resale prices lifted
Average new and $1,000k resale prices lifted $800k • Average new sales and resale prices lifted to $905,000 and $600k $714,000 respectively • Average new sale pricing for independent units exceeded $400k $1,000,000 for the first time • New sale pricing reflects shift in $200k mix to high value locat
Slide 18: RV unit sales performance
RV unit sales performance FY23 FY22 YoY Booked New sales 462 560 -17.5% sales Resales 1,057 983 7.5% • Total booked sales of occupation Total 1,519 1,543 -1.6% rights broadly unchanged YoY with growth in resales offsetting a softer Average price New sales $905k $814k 11.2% period for new sales per u
Slide 19: Robust RV margins despite challenging market
Robust RV margins 35% despite challenging 31.1% 30.2% 30% 29.4% market 27.4% 27.4% 26.9% 25.9% 24.6% 24.3% 25% 22.7% 21.5% • Resale margins lifted to 31.1%, 20% 19.2% driven by a maturing NZ portfolio • Resale bank of $1.78 billion 15% implies potential future resale margins of 24.9% 10% • New sale
Slide 20: Significant embedded value in existing portfolio
Significant $3.0b embedded value 2.57 2.45 2.45 $2.5b in existing portfolio 2.21 0.58 0.62 0.67 $2.0b 0.54 1.65 • Embedded value now $1.5b 1.41 $2.45 billion, down 4.7% on 1.28 1.30 0.50 September 2022 due to 0.47 realisation of resale margins $1.0b 0.41 0.44 1.95 1.87 through FY23 1.67 1.78 1.15 •
Slide 21: Free cash flow
Free cash flow $800m 650.8 586.0 $600m 449.8 401.4 413.1 $400m 349.3 New metric which reflects the combination of net operating cash $200m flows and net investing cash flows - • Slower growth in net operating cash (200m) (129.6) (153.3) flows in FY23 impacted by increased (201.3) settlement times an
Slide 22: Aged Care RADs driving cash flow
Aged Care RADs $350m Refundable accommodation deposits (RADs) driving cash flow $300m $300.3m • Aged care RADs up 50.3% to $250m $300.3 million at 31 March 2023 $115.3m $199.8m $200m • Net cash inflow of $100.5 million $65.4m • Significant cash flow opportunity $150m with RAD penetration1 sitting at
Slide 23: Net debt reduced to $2.30 billion
Net debt reduced $3.5b Net interest-bearing debt1 to $2.30 billion $3.0b 3.00 2.55 0.72 2.43 • Equity raise proceeds used to prepay all $2.5b 2.30 2.25 outstanding USPP debt 2.11 0.42 0.39 0.27 0.26 0.40 0.26 $2.0b • $577.2 million of funding available at 0.26 0.15 0.15 1.71 0.15 Mar-23 (ref Appendi
Slide 24: Residents Neil and David at Bruce McLaren Village
Neil and David, new mates and neighbours at our Bruce McLaren Village, are often spotted wading rivers in search of the catch of the day. 24
Slide 25: NZ development highlights
Linda Jones Village, Hamilton Cambridge, Waikato NZ development highlights Construction New image: Linda One site fully completed (Linda Jones) Jones One site with construction commencing (Cambridge) Planning Two sites received council Karori, Wellington Rolleston, Canterbury approval (Karori and Ro
Slide 26: AU development highlights
Charles Brownlow Village, Victoria Raelene Boyle Village, Melbourne AU development highlights Construction Two sites fully completed (Charles Brownlow and Raelene Boyle) Planning Mulgrave, Melbourne Mt Eliza, Victoria Two sites received council approval (Mulgrave and Mt Eliza) Land bank One site rem
Slide 27: Outlook
Outlook Underlying profit FY24 underlying profit is expected to be in the range $310-$330 million Portfolio growth FY24 portfolio to grow by 750-800 retirement village units and aged care beds, with a similar proportion of care beds to FY23 Cash flow FY24 net investing cash flows estimated to be in
Slide 28: Resident Annie and coordinator PK Karan
Resident and former nurse Annie and Special Care Unit Coordinator PK Karan enjoy a close bond at our Murray Halberg Village. 28
Slide 29: Questions
Questions John Flynn Village resident Patricia with Personal Care Worker, Bryant Fernandez. 29
Slide 30: Reported (IFRS) profit
Appendix 1 Reported (IFRS) profit 12 months to 12 months to 12 months to 31-Mar-23 31-Mar-22 31-Mar-21 $000s NZ AU Group NZ AU Group NZ AU Group Underlying profit (non-GAAP) 232,222 69,670 301,892 203,763 51,186 254,949 192,286 32,163 224,449 Unrealised revaluations of 20,233 53,428 73,661 436,804 3
Slide 31: Booked sales of occupation rights
Appendix 2 Booked sales of occupation rights 12 months to 12 months to 12 months to 31-Mar-23 31-Mar-22 31-Mar-21 NZ AU Group NZ AU Group NZ AU Group Resale of existing units Independent 438 52 490 444 34 478 415 18 433 Serviced 528 39 567 479 26 505 483 9 492 966 91 1,057 923 60 983 898 27 925 Sale
Slide 32: Available resales stock
Appendix 3 Available resales stock 2.5% 2.1% 2.0% 1.9% 0.5% 1.7% 1.7% 0.4% Mar-23 Sep-22 Mar-22 1.6% 0.3% 1.4% 1.5% 1.4% 0.3% Independent living units 77 52 45 0.4% 1.2% 1.2% Serviced apartments 115 92 75 0.5% 0.4% 0.2% 1.0% Total resales stock 192 144 120 1.0% 0.5% 0.8% 0.2% 1.6% 0.1% 1.5% 1.4% 1.3
Slide 33: Margins
Appendix 4 Margins 12 months to 12 months to 12 months to 31-Mar-23 31-Mar-22 31-Mar-21 $000s NZ AU Group NZ AU Group NZ AU Group New sales Realised fair value movement1 46,989 75,952 122,941 54,742 55,939 110,681 70,658 37,719 108,377 Sale of occupation rights2 185,113 233,209 418,322 243,636 212,2
Slide 34: Refundable accommodation deposits (RADs)
Appendix 5 Refundable accommodation 100% RAD penetration1 deposits (RADs) 90% 80% 80% 78% RAD balance ($000s) Mar 23 Mar 22 Mar 21 73% New Zealand 115,329 65,408 10,166 70% Australia 184,985 134,376 103,500 60% Group 300,314 199,783 113,666 50% 40% Outstanding RADs (no.) Mar 23 Mar 22 Mar 21 New Zea
Slide 35: Investment property valuation summary
Appendix 6 Investment property valuation summary Valuer unit price average growth assumption Discount As at 31 March 2023 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5+ rate Auckland 0.1% 0.6% 2.3% 3.0% 3.5% 12.9% Rest of New Zealand 0.2% 0.7% 2.2% 2.8% 3.4% 13.1% Australia 3.5% 3.1% 3.2% 3.4% 3.6% 13.2% Valuer unit pri
Slide 36: Affordability ratios
Appendix 7 Affordability ratios $1.6m 1.51 1.29 • Offering continues to be $1.2m affordable relative to local 1.06 house prices 0.94 • Independent unit pricing in $0.8m 0.74 0.76 0.73 Auckland and Melbourne 18% 0.69 and 38% below local median 0.50 house prices respectively $0.4m • Residents continue
Slide 37: Aged care occupancy
Appendix 8 Aged care Aged care occupancy1 occupancy 100% 98% • Occupancy impacted by COVID and other illness through winter 96% months in 2022 • Mature village occupancy of 94% 95% in FY23, down -1% on FY22 • Occupancy improved to over 92% 96% in March 2023 90% 88% Apr May Jun Jul Aug Sep Oct Nov De
Slide 38: Resident average age and tenure (years)
Appendix 9 Resident average age Average age (current) and tenure (years) 90 89 88 Average age (current) Mar-23 Mar-22 Mar-21 87 Independent 82.6 82.4 82.3 86 Serviced 87.4 87.5 87.5 85 Care centre 86.4 86.8 86.7 84 83 Average age (on entry) Mar-23 Mar-22 Mar-21 82 Independent 79.8 79.3 79.2 81 Servi
Slide 39: Cash management fees
Appendix 10 Cash management fees Financial statement 12 months to 12 months to 12 months to $000s reference 31-Mar-23 31-Mar-22 31-Mar-21 Accrued management fees and resident loans – opening (Note 19) 578,254 502,890 439,636 Accrued management fees and resident loans – closing (Note 19) (671,838) (5
Slide 40: Operating cash flows
Appendix 11 Operating cash flows Financial statement 12 months to 12 months to 12 months to $000s 31-Mar-23 31-Mar-22 31-Mar-21 reference Care and village fees received Not disclosed 442,915 400,618 360,855 Refundable accommodation deposits (net) Not disclosed 100,619 87,411 27,884 New sale of occup
Slide 41: Committed sales
Appendix 12 Committed sales $600m Total committed new sales 512.3 • Total committed sales which are $500m yet to settle of $347.6 million 433.3 122.5 386.8 $400m • Reduction in new sales 370.4 74.9 346.3 347.6 receivables of $67.8m 326.5 25.5 137.8 286.7 $300m 117.0 162.4 100.5 142.6 $200m 389.8 358
Slide 42: Investing cash flows
Appendix 13 Investing cash flows $1,200m 1,039.9 $1,000m 50.1 • $1.04 billion invested in new 62.2 villages and existing portfolio 844.5 41.6 787.3 $800m 45.2 • $150.1 million spent on land 713.5 42.9 57.0 acquisition, reflecting Taupō and 39.0 43.6 deferred settlement of previously $600m 554.7 acqu
Slide 43: Equity raise and USPP prepayment
Appendix 14 Equity raise1 and USPP prepayment • Net equity proceeds of $876.0 million, $3.6 million higher than equity raise estimate due to transaction cost savings • Total cash repayment for USPP and associated swaps of $855.5 million, $12.9 million higher than equity raise estimate due to unfavou
Slide 44: Balance sheet movement
Appendix 15 Balance sheet movement $m As at Impact of Pro-forma Other movements As at 30-Sep-22 equity raise post equity raise 2H FY23 31-Mar-23 (unaudited) (unaudited) Cash and cash equivalents 26 21 46 (19) 28 Trade and other receivables 792 - 792 (73) 719 Property, plant & equipment 2,230 - 2,230
Slide 45: Summary of debt facilities
Appendix 16 Summary of debt facilities Debt maturity profile ($m) $900m Debt facilities have a weighted term to maturity of 3.1 years at 31 March 2023 $800m 118 150 $700m Debt facilities at 31 March 2023 $600m 1 2 $000s Facility size Drawn debt Headroom (NZD) (NZD) (NZD) $500m 326 Bank facilities -
Slide 46: Key debt metrics
Appendix 17 Key debt metrics Debt facilities Reference 31-Mar-23 30-Sep-22 31-Mar-22 Total facilities at face value Note 21 2,889,373 3,477,396 3,353,391 Drawn interest bearing debt at face value Note 17 2,340,034 3,022,230 2,616,834 Debt headroom 549,339 455,166 736,557 Cash and cash equivalents Ba
Slide 47: Fixed rate debt profile
Appendix 18 Fixed rate debt profile1 Notional value of active fixed rate debt ($m2) Average interest rate on fixed rate debt (%) $1,800m 6.0% 1,570 1,570 $1,600m 5.0% 4.9% 4.9% 4.9% 4.9% 5.0% 4.7% $1,400m 363 363 4.3% 4.3% 4.3% 4.3% $1,200m 4.0% 3.7% $1,000m 851 3.0% 811 $800m 64 64 950 950 647 $600
Slide 48: Debt covenants
Appendix 19 Debt covenants Interest coverage ratio (ICR) Pro-forma interest coverage ratio (ICR) for the 12 months ending 31 March 2023 for the 12 months ending 31 March 2023 If the interest costs associated with the now repaid USPP were backed out of the Reference $000s Gross Interest Expense, the
Slide 49: Debt covenants cont.
Appendix 19 cont. Debt covenants cont. Adjusted total liabilities to net tangible assets at 31 March 2023 Reference $000s Adjusted total liabilities Total liabilities Balance sheet 7,846,727 Less net occupancy advances Balance sheet (4,826,182) Less RADs Balance sheet (300,314) Adjusted total liabil
Slide 50: Development pipeline: NZ
Appendix 20: Development pipeline: NZ 15 9 Total sites in Sites under pipeline construction Peak capital Median Council Village Village centre Targeted village Design Consenting Construction requirement house price approval open open completion 1 William Sanders High >$1.7m 2023 2 Murray Halberg Hig
Slide 51: Development pipeline: AU
Appendix 20 cont. Development pipeline: AU 10 5 Total sites in Sites under pipeline construction Peak capital Median Council Village Village centre Targeted village Design Consenting Construction requirement house price approval open open completion 1 John Flynn High >$1.2m 2023 2 Nellie Melba Mediu
Slide 52: Summary of RV Units and aged care beds
Appendix 21 Summary of RV Units and aged care beds Unit type Asset base1 Land bank Asset base and land bank New Australia Total New Australia Total New Australia Total Zealand Zealand Zealand Independent townhouse 2,708 128 2,836 894 291 1,185 3,602 419 4,021 Independent apartment 2,952 793 3,745 1,
Slide 53: Development of RV Units and aged care beds
Appendix 22 Development of RV Units and aged care beds Independent Independent Serviced Total Aged care Total RV units townhouse apartment apartment RV units beds and beds New Zealand Murray Halberg - 58 - 58 - 58 Miriam Corban 18 44 56 118 50 168 Keith Park - 49 60 109 69 178 Linda Jones 39 - - 39
Slide 54: Movement in RV Units and Aged Care beds
Appendix 23 Movement in RV units and Aged Care beds As at 31 March 2022 As at 31 March 2023 Near Near Complete Total Complete Total complete complete Sold RV units 7,848 222 8,070 Sold RV units 8,307 167 8,474 Vacant RV Vacant RV 120 - 120 192 - 192 resale stock resale stock Total units included in
Slide 55: Asset base: New Zealand (ex Auckland)
Appendix 24 Asset base: New Zealand (ex Auckland) Village Location Hospital Dementia Resthome Total Serviced Independent Independent Total Total RV units care care care care apartment apartment townhouse RV units and care Anthony Wilding Christchurch 80 33 35 148 50 - 110 160 308 Bob Owens Tauranga
Slide 56: Asset base: New Zealand (Auckland)
Appendix 24 cont. Asset base: New Zealand (Auckland) Village Location Hospital Dementia Resthome Total Serviced Independent Independent Total Total RV units care care care care apartment apartment townhouse RV units and care Bert Sutcliffe Birkenhead 40 40 38 118 81 225 - 306 424 Bruce McLaren Howic
Slide 57: Asset base: Australia
Appendix 24 cont. Asset base: Australia Village Location Hospital Dementia Resthome Total Serviced Independent Independent Total Total RV units care care care care apartment apartment townhouse RV units and care Charles Brownlow Victoria 40 20 40 100 60 16 64 140 240 Deborah Cheetham Victoria 40 40
Slide 58: Land bank: New Zealand
Appendix 25 Land bank: New Zealand Location Hospital Dementia Resthome Total Serviced Independent Independent Total Total RV units 1 care care care care apartment apartment townhouse RV units and care Existing villages Grace Joel Auckland - - - - - 96 - 96 96 James Wattie Hawkes Bay 35 35 20 90 78 -
Slide 59: Land bank: Australia
Appendix 25 cont. Land bank: Australia Location Hospital Dementia Resthome Total Serviced Independent Independent Total Total RV units care care care care apartment apartment townhouse RV units and care Existing villages Nellie Melba Melbourne - - - - - 74 - 74 74 Deborah Cheetham Victoria - - - - -
Slide 60: Glossary
Glossary Term Definition Term Definition AU Australia Pro-forma Adjusted for the impact of the equity raise Care bed Rest home, hospital and dementia level care RAD Refundable accommodation deposit Care suite Rest home, hospital and dementia level care rooms subject to an ORA that attracts a DMF Res
Slide 61: Disclaimer
Disclaimer This presentation has been prepared by Ryman Healthcare Limited and its group companies ("Ryman") for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This presentation provides additional comments on the 2023