Summerset Group Holdings Limited · NZX:SUM
Summerset — FY2019 Earnings Presentation
52 slides from Summerset's earnings presentation, Feb 25, 2020
Slide 1: Full year results presentation
Full year results presentation Year ended 31 December 2019 Summerset Group Holdings Limited 25 February 2020
Slide 2: Agenda
Agenda 1 FY19 result highlights 2 Strategic update 3 Business overview 4 Financial results 5 Final dividend 6 Appendix FY19 results presentation 2
Slide 3: FY19 result highlights
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Slide 4: Summary
Summary Key result highlights 1. Underlying profit of $106.2m, up 8% 2. Total assets are now $3.3b, up 21%, and equity of $1.1b, up 16% 3. Consistent growth over time with the largest New Zealand land bank of all operators 4. Australian growth ramping up with two sites already acquired 5. Opened thr
Slide 5: FY19 result snapshot
FY19 result snapshot Continued growth whilst positioning for a higher build rate FY19 results presentation 5
Slide 6: FY19 result highlights
FY19 result highlights Consistent growth over time $571.5m $7.6m Total assets up 21% Underlying profit up 8% $4.0b $120m $3.5b $100m $3.0b $2.5b $80m $2.0b $60m $3.3b $98.6m $106.2m $1.5b $2.8b $40m $81.7m $1.0b $2.2b $56.6m $1.7b $20m $1.4b $37.8m $0.5b $0b $0m FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY
Slide 7: Strategic update
Strategic update
Slide 8: Summerset strategy
Summerset strategy Summerset builds, owns and operates integrated 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 ▪ Customer centric phi
Slide 9: Summerset snapshot
Summerset snapshot Diversified portfolio throughout New Zealand ▪ 22 years of consistent delivery and asset growth ▪ Total assets have grown more than five times since listing on the NZX in 2011 ▪ Portfolio of 4,086 retirement units and 858 care beds ▪ More than 5,500 residents ▪ 31 villages complet
Slide 10: Growth path – New Zealand
Growth path – New Zealand Six new villages opening across FY19 and FY20 ▪ Delivered 354 retirement units in FY19 Avonhead ▪ Four new villages consented in FY19 plus the extensions to our Hobsonville and Casebrook villages ▪ FY20 build rate of around 400 retirement units expected ▪ Total land bank of
Slide 11: Positioned for growth
Positioned for growth Minimal difference in sales price growth between Auckland and rest of NZ Australia / NZ land bank over time NZ land bank comparison * 6,000 6,000 Retirement units Retirement units 5,000 5,000 1,470 4,000 4,000 232 1,069 3,000 195 3,000 2,000 533 3,910 2,000 2,414 2,609 2,841 1,
Slide 12: Land bank diversification
Land bank diversification Diversified land bank provides platform for growth Development pipeline 45 40 35 Numbers of sites 19 30 25 18 12 14 20 15 12 7 10 9 9 5 9 10 6 6 - FY16 FY17 FY18 FY19 Design/consenting Construction Complete Highest land bank No land bank FY19 results presentation 1 12 2
Slide 13: Growth path - Australia
Growth path - Australia Victoria has a greater projected 75+ population than New Zealand Projected 75 + population ▪ Victoria’s population is similar in scale to the whole of NZ providing a strong growth opportunity 1.4m ▪ Purchased two sites and significant work has been undertaken on 1.2m our Aust
Slide 14: Growth path - Australia
Growth path - Australia New sites in Cranbourne North and Torquay Cranbourne North ▪ Acquisition of an 8.0 ha property in south-east Melbourne in the Cranbourne North suburb, 41km MELBOURNE CBD away from Melbourne CBD ▪ The site is located close to four shopping centres, a golf course, public transp
Slide 15: Business overview
Business overview
Slide 16: Bringing the best of life - residents
Bringing the best of life - residents Continued improvement of resident wellbeing ▪ 96% resident satisfaction for both our retirement villages and Resident satisfaction survey care centres from our independently run survey, consistent 100 97 97 97 97 96 with previous years 80 93 95 92 94 94 95 96 Sa
Slide 17: Bringing the best of life - care
Bringing the best of life - care Increased focus on continuum of care, next generation memory care ▪ Our new concept Casebrook and Rototuna main buildings include market leading memory care facilities, bringing apartment living to a secure environment ▪ We have adopted the seven international Dement
Slide 18: Bringing the best of life - staff
Bringing the best of life - staff Large investments continue to be made for nurses and caregivers ▪ Large investments being made in FY20 in relation to Staff engagement survey remuneration increases for nurses and caregivers to achieve 100 target of “top equal payer” in the sector 80 ▪ Our staff eng
Slide 19: Bringing the best of life - sustainability
Bringing the best of life - sustainability Emission intensity tracking down over time Emissions intensity - CO2e tonnes per ▪ In FY18, we became the first NZ retirement village operator $million revenue to become CEMARs certified (now Toitu carbonreduce) 60 ▪ First NZ retirement village operator to
Slide 20: FY19 development activity
FY19 development activity Delivery of 354 retirement units in FY19 across eight sites Rototuna Avonhead Casebrook Richmond FY19 results presentation 20
Slide 21: FY19 development activity
FY19 development activity Delivery of 354 retirement units in FY19 across eight sites Hobsonville Ellerslie Kenepuru Warkworth FY19 results presentation 21
Slide 22: FY19 development activity
FY19 development activity Delivery of 354 retirement units in FY19 across eight sites Total Total Unit delivery FY19 Villas Apartments Serviced apartments retirement units care beds Avonhead 60 - - 60 - Casebrook 65 - - 65 - Ellerslie - 67 - 67 - Hobsonville 8 8 4 20 - Kenepuru 29 - - 29 - Richmond
Slide 23: New land sites acquired
New land sites acquired Seven new land sites acquired in FY19, five in NZ and two in Australia Blenheim (Marlborough) Rangiora (Canterbury) Whangarei (Northland) Whangarei (Northland) Cambridge (Waikato) Prebbleton (Canterbury) FY19 results presentation 23
Slide 24: Development pipeline
Development pipeline * Seven new sites purchased in FY19 FY19 results presentation 24 24
Slide 25: Development margin
Development margin Realised development margin of $61.0m, with a 28% development margin ▪ Full year realised development margin of $61.0m Realised development margin $70m 35% 33% ▪ Development margin of 28% achieved in FY19 28% ▪ Drop in development margin from FY18 is reflective of: $60m 30% 27% ▪
Slide 26: New sales of occupation rights
New sales of occupation rights Record gross proceeds of $218.7m, up 14% New sales FY19 FY18 Variance FY17 ▪ 329 new sales of occupation rights in FY19 Gross proceeds ($m) 218.7 192.0 14% 186.4 ▪ Gross proceeds were up 14% from FY18 Villas 216 235 (8%) 235 ▪ Average gross proceeds per new sale settle
Slide 27: New sales stock
New sales stock Stock levels remain stable relative to FY18 ▪ Serviced apartment stock has decreased 54% from FY18 ▪ In FY19 we delivered 75 apartments in Auckland (largely Ellerslie), strong sales throughout the year result in similar apartment stock levels to FY18 ▪ Increase in villa stock reflect
Slide 28: Resales of occupation rights
Resales of occupation rights Record total resales and embedded value ▪ Realised resale gain has increased by 29% to $36.9m in FY19 Resales FY19 FY18 Variance FY17 ▪ Resales of occupation rights up 7% with FY19 at 323 Gross proceeds ($m) 143.7 122.2 18% 114.9 Realised resale gains ($m) 36.9 28.7 29%
Slide 29: Resales stock
Resales stock Resales stock levels remain low despite growing portfolio ▪ Higher resale stock was driven from increased stock becoming available in Q4 ▪ Waitlist numbers have increased from FY18, showing strong demand remains for our stock Resales stock FY19 FY18 FY17 Available resales uncontracted
Slide 30: Financial results
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Slide 31: FY19 reported profit (IFRS)
FY19 reported profit (IFRS) FY19 net profit after tax of $175.3m ▪ IFRS NPAT of $175.3m for FY19, driven by fair value NZ$m FY19 FY18 Variance FY17 movement in investment property of $165.3m ▪ Total revenue of $153.9m, up 12% relative to FY18 Total revenue 153.9 137.0 12% 110.5 ▪ Total expense growt
Slide 32: Fair value movement
Fair value movement $165.3m fair value movement of investment property ▪ Fair value movement of $165.3m, down 21% on FY18 FY19 fair value movement of investment property primarily driven by a reduction of 100 retirement unit $250m deliveries (approximately $54m impact) ▪ Fair value movement for FY19
Slide 33: FY19 underlying profit
FY19 underlying profit Underlying profit up 8% on FY18, 38% CAGR over last eight years ▪ FY19 underlying profit of $106.2m, up 8% on FY18. Uplift in NZ$m FY19 FY18 Variance FY17 underlying profit principally driven by continued portfolio growth increasing deferred management fees, and realised gain
Slide 34: FY19 cash flows
FY19 cash flows Net operating cash flow up 9% ▪ Net operating business cash flows of $28.5m relatively consistent NZ$m FY19 FY18 Variance FY17 with FY18, despite one-off change in policy to repay outgoing residents on internal village transfers Net operating business cash flow 28.5 30.5 (7%) 26.1 ▪
Slide 35: FY19 balance sheet
FY19 balance sheet Total assets of $3.3b, up 21% from $2.8b in FY18 ▪ Total assets of $3.3b, up 21% on FY18 driven by continued NZ$m FY19 FY18 Variance FY17 development and growth in existing village values Investment property 3,107.0 2,585.0 20% 2,069.7 ▪ Retained earnings has increased to $838m in
Slide 36: Gearing ratio
Gearing ratio Net debt of $565.7m* and gearing ratio of 33.3% ▪ Uplift in gross debt driven by increased construction spend and land Net debt to underlying assets - FY18 and FY19 acquired in 2H18 Net debt Undeveloped land Development WIP Unsold stock $118m excess assets ▪ Refinanced and increased ou
Slide 37: Final dividend
Final dividend
Slide 38: FY19 final dividend
FY19 final dividend Declared FY19 final dividend of 7.7 cents per share Dividend payout per year ▪ The Board has declared an unimputed final dividend of 7.7 cents $35m per share $30m ▪ This bring total dividends for the 2019 year (interim and final) to $25m $17.5m 14.1 cents per share $20m $16.2m $1
Slide 39: Questions
Questions
Slide 40: 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 41: Appendix
Ade A aie, * 7 ‘ Appendix _ a oe |
Slide 42: FY19 result highlights
FY19 result highlights Underlying profit up 8% from $98.6m FY19 FY18 Variance FY17 Net profit before tax (IFRS) 173.6 216.2 (20%) 240.2 Net profit after tax (IFRS) 175.3 214.5 (18%) 239.9 Financial (NZ$m) Less reversal of impairment on land & buildings - - N/A (0.0) Less fair value movement of inves
Slide 43: Historical trends
Historical trends Underlying profit 8 year CAGR of 38% 8 Year FY11 Full Year Results FY19 FY18 FY17 FY16 FY15 CAGR* NZX Listed New sales of occupation rights 15% 329 339 382 414 333 108 Operational Resales of occupation rights 13% 323 301 300 244 245 123 Total sales 14% 652 640 682 658 578 231 New r
Slide 44: 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 45: Fair value movement (cont’d)
Fair value movement (cont’d) 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 ra
Slide 46: Portfolio as at 31 December 2019
Portfolio as at 31 December 2019 4,086 retirement units and 858 care beds Existing portfolio - as at 31 December 2019 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 Manu
Slide 47: Portfolio as at 31 December 2019 (cont’d)
Portfolio as at 31 December 2019 (cont’d) 4,086 retirement units and 858 care beds Existing portfolio - as at 31 December 2019 Serviced & Total Total Village Villas Apartments memory care retirement units care beds apartments Aotea 96 33 38 167 - Kenepuru 29 - - 29 - Paraparaumu 92 22 - 114 44 Trent
Slide 48: Future development
Future development Largest NZ retirement village operator land bank, with 5,380 retirement units Land bank Serviced and memory care Total retirement Village Villas Apartments Total care beds apartments and units care suites Whangarei 214 - 76 290 43 Northland 214 - 76 290 43 Ellerslie 4 75 - 79 - Ho
Slide 49: Future development (cont’d)
Future development (cont’d) Largest NZ retirement village operator land bank, with 5,380 retirement units Land bank Serviced and memory care Total retirement Village Villas Apartments Total care beds apartments and units care suites Richmond 203 - 76 279 43 Nelson-Tasman 203 - 76 279 43 Blenheim 139
Slide 50: Demographics
Demographics Population over 75 years forecast to grow 232% from 2019 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% 2058-206
Slide 51: Summerset build rate
Summerset growth 22 years of consistent delivery and growth Summerset build rate 4,500 4,086 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 1,855 261 1,646 3,732 1,486 209 3,278 1,500 1,352 160 1,272 122 2,828 1,109 80 983 163 2,419 921 1,000 795 126
Slide 52: 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% 96% 97% 96% 50% 97% 96% 96% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% FY17 FY18 FY19 FY17 FY18 FY19 Averag
Summerset Group Holdings — FY2019 Earnings Presentation on 6ix