Summerset Group Holdings Limited · NZX:SUM
Summerset — H1 2020 Earnings Presentation
50 slides from Summerset's earnings presentation, Aug 17, 2020
Slide 1: Half year results presentation
Half year results presentation Six months ended 30 June 2020 Summerset Group Holdings Limited 17 August 2020
Slide 2: Agenda
Agenda 1 1H20 result highlights 2 Strategic update 3 COVID-19 update 4 Business overview 5 Financial results 6 Interim dividend 7 Appendix 1H20 results presentation 2
Slide 3: 1H20 result highlights
1H20 result highlights 1H20 results presentation 3
Slide 4: Summary
Summary COVID-19 pandemic 1. Positive 1H20 result achieved under the extraordinary operating environment of the COVID-19 global pandemic 2. Our priority is keeping our residents and staff safe with no cases in our villages and care centres to date 3. In level one, sales rates largely recovered howev
Slide 5: 1H20 result snapshot
1H20 result snapshot Underlying profit of $45.1m driven by demand in our villages and care centres 1H20 results presentation 5
Slide 6: 1H20 result highlights
1H20 result highlights Consistent asset growth over time Total assets Total revenue $4.0b $90m $3.5b $75m $3.0b $60m $2.5b $2.0b $45m $3.4b $79.9m $82.0m $3.3b $71.3m $74.0m $1.5b $2.8b $3.0b $65.7m $2.5b $30m $59.8m $1.0b $2.2b $50.7m $1.9b $15m $0.5b - - 1H17 2H17 1H18 2H18 1H19 2H19 1H20 1H17 2H1
Slide 7: Strategic update
Strategic update 1H20 results presentation 7
Slide 8: Summerset strategy
Summerset strategy Summerset builds, owns and operates integrated retirement villages ▪ Continued focus on our response to the COVID-19 pandemic ▪ Emphasis on continuum of care model ▪ High quality care and facilities across all villages ▪ Villages designed to integrate into local communities ▪ Inte
Slide 9: Summerset snapshot
Summerset snapshot Diversified portfolio throughout New Zealand ▪ 23 years of consistent delivery and asset growth ▪ Total assets have grown more than five times since listing on the NZX in 2011 ▪ Portfolio of 4,225 retirement units and 901 care beds ▪ More than 5,700 residents ▪ 31 villages complet
Slide 10: COVID-19 update
COVID-19 update 1H20 results presentation 10
Slide 11: COVID-19 response
COVID-19 response Prevention of COVID-19 in our villages and care centres remains our priority ▪ Remaining vigilant in response to the ▪ Planned early to ensure systems and ▪ Focus continues to be on our ongoing COVID-19 pandemic supplies were in place ahead of time residents and COVID-19 prevention
Slide 12: COVID-19 response
COVID-19 response Prevention of COVID-19 in our villages and care centres remains our priority Total sales contracts 2019 vs 2020 Second outbreak COVID-19 Lockdown 2019 2020 ▪ Broad cost control measures ▪ Sales and settlements rebounded ▪ Delivered 139 retirement units and implemented from March 20
Slide 13: COVID-19 response
COVID-19 response Prevention of COVID-19 in our villages and care centres remains our priority ▪ Strong financial disciplines upheld ▪ Investment property continues to ▪ 1H20 underlying profit of $45.1m grow with our portfolio, FV of $17.7m despite impacts of COVID-19 ▪ Sufficient bank debt headroom
Slide 14: Resident and family feedback
Resident and family feedback Overwhelming appreciation from residents, family and friends Memory care courtyard 1H20 results presentation 14
Slide 15: Business overview
Business overview
Slide 16: Bringing the best of life
Bringing the best of life Our staff, residents and wider community ▪ Awarded Dementia Friendly accreditation by Alzheimers New Zealand in April 2020 - reflecting 18 months work to make our villages more accessible for those living with dementia ▪ Continued our successful partnership with Dementia Ne
Slide 17: New main building design
New main building design Delivery of our new concept main building design in Casebrook ▪ New concept main building delivered in Casebrook in 1H20 ▪ The main building forms the heart of our village and has seen a fantastic response from residents, supported by positive sales and occupancy rates ▪ The
Slide 18: New main building design
New main building design Delivery of our new concept main building design in Casebrook ▪ Market leading memory care apartments incorporated into Casebrook and future villages ▪ The design brings apartment living for those with dementia to a secure environment ▪ Our new memory care centre includes; ▪
Slide 19: Land bank diversification
Land bank diversification Land bank to contribute significant boost in revenue each year once mature Development pipeline 50 Impact of land bank on DMF and realised gain on resales 40 Numbers of sites 30 6,000 $300m $275m 5,241 20 5,000 $250m DMF + resale gain revenue 10 4,225 Retirement units 4,000
Slide 20: 1H20 development activity
1H20 development activity Delivered 139 retirement units and 43 care beds in 1H20 across four sites Rototuna Avonhead Casebrook Richmond 1H20 results presentation 20
Slide 21: 1H20 development activity
1H20 development activity Delivered 139 retirement units and 43 care beds in 1H20 across four sites Serviced & memory care Total Total Unit delivery 1H20 Villas apartments retirement units care beds Avonhead 13 - 13 - Casebrook 17 76 93 43 Ellerslie - - - - Hobsonville - - - - Kenepuru - - - - Richm
Slide 22: Development pipeline
Development pipeline 1H20 results presentation 22 22
Slide 23: Development margin
Development margin Realised development margin of $17.4m, with a 22% development margin ▪ 1H20 realised development margin of $17.4m. Lower than Realised development margin previous year with volumes remaining close to 1H19 levels $40m 33% 33% 35% ▪ Development margin of 22% achieved in 1H20 across
Slide 24: New sales of occupation rights
New sales of occupation rights Gross proceeds of $78.0m, 128 new sales in the period New sales 1H20 1H19 Variance FY19 ▪ New sales broadly in line with 1H19 despite the disruption of COVID-19 with residents unable to settle for around five Gross proceeds ($m) 78.0 95.3 (18%) 218.7 weeks Villas 82 71
Slide 25: New sales stock
New sales stock Stock levels remain stable relative to FY19 ▪ Uncontracted new sale stock of 257 retirement units, down from 266 at FY19 (3%). Contracted new sale stock now at historically high levels ▪ Decrease in stock numbers seen in both villa and apartment retirement units with a higher proport
Slide 26: Resales of occupation rights
Resales of occupation rights Strong realised resale gains for the period ▪ Realised resale gain has increased by 10% to $15.7m in 1H20 Resales 1H20 1H19 Variance FY19 ▪ Resale gain continue to be strong at 25.2%, up from 23.4% at Gross proceeds ($m) 62.2 61.1 2% 143.7 1H19 Realised resale gains ($m)
Slide 27: Resales stock
Resales stock Resales stock levels impacted by the April-May COVID-19 shutdown ▪ Resales stock 35% to 40% higher than normal due to the impact of the first COVID-19 lockdown. The key driver being units were unable to be vacated during the lockdown period which delayed refurbishment and subsequent re
Slide 28: Financial results
Financial results
Slide 29: 1H20 reported profit (IFRS)
1H20 reported profit (IFRS) 1H20 net profit after tax of $1.0m ▪ 1H20 IFRS NPAT of $1.0m a result of fair value movement in NZ$m 1H20 1H19 Variance FY19 investment property of -$14.7m Total revenue 82.0 74.0 11% 153.9 ▪ Fair value movement impacted by material adjustments in short Fair value movemen
Slide 30: Fair value movement
Fair value movement Core fair value movement of investment property of $37.3m Fair value movement of investment property 1H20 ▪ Total fair value movement of -$14.7m, impacted by material changes in the assumptions applied by our independent valuers, $40.0 CBRE ($3.9m) ▪ CBRE have adopted a more cons
Slide 31: 1H20 underlying profit
1H20 underlying profit Underlying profit down 6% on 1H19 ▪ Underlying profit of $45.1m highlights the strength of Summerset’s NZ$m 1H20 1H19 Variance FY19 core business Care fees and village 53.3 48.8 9% 101.3 ▪ Continued growth in our care and village operating performance services driven by demand
Slide 32: 1H20 cash flows
1H20 cash flows Net operating cash flow in line with 1H19 ▪ Net operating cash flow of $92.8m, in line with 1H19 operating NZ$m 1H20 1H19 Variance FY19 cash flows of $93.3m Net operating business cash flow 16.5 4.2 297% 28.5 ▪ Net operating business cash flow of $16.5m, up $12.3m on 1H19 highlightin
Slide 33: 1H20 balance sheet
1H20 balance sheet Total assets of $3.4b, up 13% from $3.0b at 1H19 NZ$m 1H20 1H19 Variance FY19 ▪ Total assets of $3.4b, up 13% on 1H19 driven by continued development and growth in existing villages Investment property 3,206 2,824 14% 3,107 ▪ Investment property valuation of $3.2b, up 14% on 1H19
Slide 34: Gearing ratio
Gearing ratio Net debt of $621.9m* and gearing ratio of 35.8% ▪ Net debt of $621.9m* as at 30 June 2020, up $56.3m on FY19 Net debt to underlying assets - 1H20 Net Debt Undeveloped land Development WIP Unsold stock ▪ Uplift in gross debt driven by land settlements in the period and $110m excess asse
Slide 35: Interim dividend
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Slide 36: 1H20 interim dividend
1H20 interim dividend 1H20 interim dividend of 6.0 cents per share Dividend payout per year ▪ The Board has declared an interim dividend of 6.0 cents per $35m share, unimputed. This compares to a 2019 interim dividend of $30m 6.4 cents per share $25m $17.5m $16.2m $20m ▪ This represents a pay-out fo
Slide 37: Questions
Questions
Slide 38: Disclaimer
Disclaimer ▪ This presentation may contain projections or forward looking statements regarding a variety of items. Such forward looking statements are based upon current expectations and involve risks and uncertainties ▪ Actual results may differ materially from those stated in any forward looking s
Slide 39: Appendix
Appendix
Slide 40: 1H20 result highlights
1H20 result highlights Underlying profit down 6% on 1H19 1H20 1H19 Variance FY19 Net profit before tax (IFRS) (2.7) 92.1 (103%) 173.6 Net profit after tax (IFRS) 1.0 92.6 (99%) 175.3 Financial (NZ$m) Less reversal of impairment on land & buildings - - n/a - (Add)/ less fair value movement of investm
Slide 41: Historical trends
Historical trends Underlying profit 9 year CAGR of 31% 9 Year Half Year Results 1H20 2H19 1H19 2H18 1H18 2H17 1H17 FY11 CAGR* New sales of occupation rights 10% 128 193 136 194 145 203 179 108 Resales of occupation rights 9% 136 181 142 147 154 156 144 123 Total sales 10% 264 374 278 341 299 359 323
Slide 42: Fair value movement
Fair value movement Fair value movement of investment property – key assumptions Value of Fair value movement of Fair value investment Key valuation assumptions investment property gain/(loss) property* Growth Growth Growth Growth Growth Discount Village Location NZ$m NZ$m rate rate rate rate rate r
Slide 43: Fair value movement
Fair value movement Fair value movement of investment property – key assumptions Value of Fair value movement of Fair value investment Key valuation assumptions investment property gain/(loss) property* Growth Growth Growth Growth Growth Discount Village Location NZ$m NZ$m rate rate rate rate rate r
Slide 44: Portfolio as at 30 June 2020
Portfolio as at 30 June 2020 4,225 retirement units and 901 care beds Existing portfolio - as at 30 June 2020 Serviced & memory Total Total Village Villas Apartments care apartments retirement units care beds Ellerslie 34 144 57 235 58 Hobsonville 125 73 52 250 52 Karaka 182 - 59 241 50 Manukau 89 6
Slide 45: Portfolio as at 30 June 2020 (cont'd)
Portfolio as at 30 June 2020(cont’d) 4,225 retirement units and 901 care beds Existing portfolio - as at 30 June 2020 Serviced & memory Total Total Village Villas Apartments care apartments retirement units care beds Aotea 96 33 38 167 - Kenepuru 29 - - 29 - Paraparaumu 92 22 - 114 44 Trentham 231 1
Slide 46: Future development
Future development Largest NZ retirement village operator land bank, with 4,801 retirement units Land bank – as at 30 June 2020 Serviced & memory Village Villas Apartments Total retirement units Total care beds care apartments Whangarei 214 - 76 290 43 Northland 214 - 76 290 43 Ellerslie 4 75 - 79 -
Slide 47: Future development (cont'd)
Future development (cont’d) Largest NZ retirement village operator land bank, with 4,801 retirement units Land bank – as at 30 June 2020 Serviced & memory Village Villas Apartments Total retirement units Total care beds care apartments Richmond 183 - 76 259 43 Nelson-Tasman 183 - 76 259 43 Blenheim
Slide 48: Demographics
Demographics Population over 75 years forecast to grow 220% from 2020 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% 10,000 400,000 6% 4% 5,000 200,000 2% 0 0 0% 1997-200
Slide 49: Summerset growth: years of consistent delivery
Summerset growth 23 years of consistent delivery and growth Summerset build rate 4,500 4,225 4,086 139 4,000 3,732 354 3,500 3,278 454 3,000 2,828 450 Retirement units 2,419 409 2,500 2,116 303 2,000 1,855 4,086 261 1,646 3,732 1,486 209 3,278 1,352 160 1,500 1,272 122 2,828 1,109 80 983 163 2,419 9
Slide 50: Customer profile & occupancy
Customer profile & occupancy Occupancy, tenure and resident demographic statistics Occupancy - retirement villages Occupancy - established care centres 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 97% 97% 96% 96% 95% 50% 96% 96% 97% 96% 96% 40% 40% 30% 30% 20% 20% 10% 10% - - 1H18 2H18 1H19 2H19 1H
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