Summerset Group Holdings Limited · NZX:SUM

Summerset — FY2018 Earnings Presentation

47 slides from Summerset's earnings presentation, Feb 22, 2019

  1. Slide 1: Full year results presentation

    Full year results presentation Year ended 31 December 2018 Summerset Group Holdings Limited 22 February 2019

  2. Slide 2: Agenda

    Agenda 1 FY18 result highlights 2 Business overview 3 Financial results 4 Final dividend 5 Appendix FY18 results presentation 2

  3. Slide 3: FY18 result highlights

    FY18 result highlights

  4. Slide 4: FY18 result highlights

    FY18 result highlights Underlying profit up 21%, driven by strong development and resale margins FY18 FY17 Variance FY16 Net profit before tax (IFRS) 216.2 240.2 -10% 145.6 Financial (NZ$m) Net profit after tax (IFRS) 214.5 239.9 -11% 145.5 Underlying profit* 98.6 81.7 21% 56.6 Total assets 2,766 2,

  5. Slide 5: FY18 result highlights

    FY18 result highlights 454 retirement units delivered in FY18, underlying profit of $98.6m  IFRS profit of $214.5m after tax compared to FY17 of $239.9m  Record underlying profit of $98.6m, up 21% on FY17  Delivered 454 retirement units in FY18, in line with previous guidance  Record development

  6. Slide 6: FY18 result highlights

    FY18 result highlights Record full year underlying profit result Total assets Underlying profit $3,000m $120m $2,500m $100m $2,000m $80m $1,500m $60m $2,766m $2,233m $98.6m $1,000m $40m $81.7m $1,707m $1,364m $56.6m $500m $1,043m $20m $37.8m $24.4m $m $m FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17

  7. Slide 7: Business overview

    Business overview

  8. Slide 8: Summerset snapshot

    Summerset snapshot Developed most retirement village units in the New Zealand industry in FY18  21 years of consistent delivery and growth  Balance sheet growth of 348% since listing on the NZX in 2011  Portfolio of 3,732 retirement units (villas, apartments, serviced apartments and memory care a

  9. Slide 9: FY18 review

    FY18 review 454 retirement units delivered, record underlying profit of $98.6m  Delivered new design standards, which have been used in our Casebrook and Rototuna villages  Delivery of Ellerslie’s first apartment block, adjacent to the main building  Completed villages in Trentham, Karaka, Katika

  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 CEMARS certified

    First NZ retirement group CEMARS certified Increasing focus on sustainability  Summerset has become the first retirement village operator to become CEMARS (Certified Emissions Measurement and Reduction Scheme) certified  Provides third party certification to ensure accurate and consistent carbon m

  12. Slide 12: Lifemark certification

    Lifemark certification First retirement group to receive full Lifemark village certification  First New Zealand retirement village group to receive Lifemark Village Certification. This certification signals to potential and current residents that Summerset’s products and services meet the needs of

  13. Slide 13: Levin village Dementia Friendly accredited

    Levin village Dementia Friendly accredited Further focus on continuum of care Estimated number of people in New Zealand  We have increased awareness of dementia throughout Summerset with Dementia from 2016 to 2050 * by upskilling staff at our retirement villages and head office to provide further s

  14. Slide 14: Operations and staff

    Operations and staff Improvements from introduction of new systems  97% care customer satisfaction rating and 95% village customer satisfaction rating for 2018 survey  Successfully completed the rollout of VCare resident management system across all villages, accompanied with the introduction of i

  15. Slide 15: FY18 development activity

    FY18 development activity Delivery of 454 retirement units in FY18 across nine sites Total Total Location Villas Apartments Serviced apartments retirement units care beds Casebrook 69 - - 69 - Ellerslie - 54 - 54 - Hobsonville 2 28 37 67 52 Karaka 71 - - 71 - Katikati 38 - - 38 - Rototuna 56 - - 56

  16. Slide 16: FY18 development activity

    FY18 development activity Delivery of 454 retirement units in FY18 across nine sites Katikati Wigram Casebrook Hobsonville Rototuna FY18 results presentation 16

  17. Slide 17: FY18 development activity

    FY18 development activity Delivery of 454 retirement units in FY18 across nine sites Ellerslie Wigram Warkworth Warkworth Hobsonville Warkworth Karaka FY18 results presentation 17

  18. Slide 18: New land sites acquired

    New land sites acquired Five new land sites acquired since the beginning of 2018 Milldale (Auckland) Te Awa (Napier) Waikanae (Kapiti Coast) Papamoa (Tauranga) Pohutukawa Place (New Plymouth) FY18 results presentation 18

  19. Slide 19: Future development

    Future development Land bank of 3,910 retirement units and 540 care beds Land bank - as at 31 December 2018 Serviced & memory care Total Total Village Villas Apartments apartments retirement units care beds Ellerslie 8 142 - 150 - Hobsonville 8 8 4 20 - Milldale 99 117 76 292 43 Parnell - 264 76 340

  20. Slide 20: Development pipeline

    Development pipeline FY18 results presentation 20

  21. Slide 21: Development margin

    Development margin Record FY18 development margin of 33.2% with a realised margin of $63.7m  Record development margin of 33.2% achieved in FY18, with strong Realised development margin margins across all villages that settled new retirement units within the $70m 33.2% 35% year  Investment in our

  22. Slide 22: New sales of occupation rights

    New sales of occupation rights Record gross proceeds of $192.0m  New sales of occupation rights of 339 in FY18, down from New sales FY18 FY17 Variance FY16 382 in FY17 Gross proceeds ($m) 192.0 186.4 3% 175.6  Despite lower new sales volumes, gross proceeds were Villas 235 235 0% 293 up 3% from FY

  23. Slide 23: New sales stock

    New sales stock New sales stock remains historically low on a relative basis  Contracted stock as a proportion of total new sales stock was consistent at 32% in FY18, versus 29% in FY17 with good sales still being seen. 133 retirement unit deliveries in late December reducing the ability to settle

  24. Slide 24: Resales of occupation rights

    Resales of occupation rights Record realised gain and embedded value Resales FY18 FY17 Variance FY16  Record realised resale gain of 23.5%, up 9% on FY17 Gross proceeds ($m) 122.2 114.9 6% 83.1  Resales of 301 occupation rights in FY18 (FY17 resales of 300) Realised resale gains ($m) 28.7 24.9 15%

  25. Slide 25: Resales stock

    Resales stock Resales stock levels remain low despite growing portfolio  Resales stock remains low with 58 retirement units under contract and 53 retirement units uncontracted at FY18, maintaining similar contracted and uncontracted resales stock levels as FY17, despite the portfolio growing  As a

  26. Slide 26: Financial results

    Financial results

  27. Slide 27: FY18 reported profit (IFRS)

    FY18 reported profit (IFRS) FY18 net profit after tax of $214.5m  IFRS NPAT of $214.5m, down 11% relative to FY17 driven by lower NZ$m FY18 FY17 * Variance FY16 fair value movement in investment property of $209.9m – refer to next slide for further details Total revenue 137.0 110.5 24% 86.1  Total

  28. Slide 28: Fair value movement

    Fair value movement $209.9m fair value movement of investment property FY18 fair value movement of investment property  Fair value movement of $209.9m, down 10% on FY17 * $250m  Reduction on prior year primarily driven by lower level of retirement unit pricing increase $72.9m of uplift FY18 $8.8m

  29. Slide 29: FY18 underlying profit

    FY18 underlying profit Underlying profit up 21% on FY17, 43% CAGR over last seven years  FY18 underlying profit of $98.6m, up 21% on FY17 NZ$m FY18 FY17 Variance FY16  Uplift in underlying profit principally driven by the maturing nature of Care fees and village 91.2 74.5 22% 57.8 our operating bu

  30. Slide 30: FY18 cash flows

    FY18 cash flows Net operating business cash flows up 17% NZ$m FY18 FY17 Variance FY16  Continuing to see benefits of maturing portfolio - net operating cash flows up 5% from $207.7m in FY17 to $217.8m in FY18. Net operating business cash flow 30.5 26.1 17% 15.7 Have seen a consistent maturing opera

  31. Slide 31: FY18 balance sheet

    FY18 balance sheet Total assets of $2.8b, up 24% from $2.2b in FY17  Total assets of $2.8b, up 24% on FY17 NZ$m FY18 FY17 * Variance FY16  Retained earnings have increased from $509.1m as at 31 Investment property 2,585 2,070 25% 1,591 December 2017 to $694.5m as at 31 December 2018. This Other as

  32. Slide 32: Gearing ratio

    Gearing ratio Gross debt of $451.5m* and gearing ratio of 31.2%  Gross debt of $451.5m as at 31 December 2018, up $103.7m from NZ$m FY18 FY17* Change FY16 31 December 2017 Face value of bank loans  Uplift in gross debt includes construction spend for Ellerslie 451.5 347.8 30% 274.0 & retail bonds

  33. Slide 33: Project cash profits

    Project cash profits Delivering significant positive cash flow across new villages  High density metropolitan sites require significant investment, but yield significant returns upon sell down of the village  Positive net cash flows from village development allows us to recycle capital for new pro

  34. Slide 34: 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 & FY18 exceed the value of net debt by $118m and 27%. This has lifted Net Debt Undeveloped Land Development WIP Unsold Stock from $66.0m and 19%

  35. Slide 35: Final dividend

    Final dividend

  36. Slide 36: FY18 final dividend

    FY18 final dividend Summerset board declares FY18 final dividend  The Summerset Board has declared a final dividend of 7.2 cents per share, unimputed  This bring total dividends for the 2018 year (interim and final) to 13.2 cents per share, being approximately $29.7m, and representing 30% of under

  37. Slide 37: Questions?

    Questions? FY18 results presentation 37

  38. Slide 38: 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

  39. Slide 39: Appendix

    Appendix

  40. Slide 40: 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% 400,000 6% 10,000 4% 200,000 5,000 2% 0 0% 0 1997-200

  41. Slide 41: Summerset growth

    Summerset growth 21 years of consistent delivery and growth Summerset build rate 4,000 3,732 3,500 3,278 454 3,000 2,828 450 2,419 409 2,500 Retirement units 2,116 303 2,000 1,855 261 1,646 209 1,486 3,278 1,352 160 1,500 1,272 122 2,828 1,109 80 983 163 2,419 921 126 2,116 1,000 795 62 1,855 732 12

  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 - established care centres occupancy of 96% for FY18 100%  Average tenure on FY18 resale retirement units was 5.3 years for villas,

  43. Slide 43: Portfolio as at 31 December 2018

    Portfolio as at 31 December 2018 3,732 retirement units and 858 care beds Existing portfolio - as at 31 December 2018 Serviced & memory care Total Total Village Villas Apartments apartments retirement units care beds Ellerslie 34 77 57 168 58 Hobsonville 117 65 48 230 52 Karaka 182 - 59 241 50 Manuk

  44. Slide 44: Land bank as at 31 December 2018

    Land bank as at 31 December 2018 Land bank of 3,910 retirement units and 540 care beds Land bank - as at 31 December 2018 Serviced & memory care Total Total Village Villas Apartments apartments retirement units care beds Ellerslie 8 142 - 150 - Hobsonville 8 8 4 20 - Milldale 99 117 76 292 43 Parnel

  45. Slide 45: FY18 underlying profit reconciliation

    FY18 underlying profit reconciliation Reconciliation of underlying profit to reported net profit after tax NZ$m FY18 FY17 Variance FY16 Reported net profit after tax 214.5 239.9 -11% 145.5 Less fair value movement of investment property (209.9) (234.5) -10% (143.5) Add realised gain on resales 28.7

  46. Slide 46: Fair value movement

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

  47. Slide 47: Year metrics summary

    8 year metrics summary Underlying profit 7 year CAGR of 43% 7 Year Full Year Results FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 CAGR* New sales of occupation rights 18% 339 382 414 333 286 228 167 108 Resales of occupation rights 14% 301 300 244 245 172 174 164 123 Operational Total sales 16% 640 682 6

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