Summerset Group Holdings Limited · NZX:SUM
Summerset — H1 2022 Earnings Presentation
61 slides from Summerset's earnings presentation, Aug 23, 2022
Slide 1: Half year results presentation
Half year results presentation Half Year Report 2022 Summerset on the Landing (Kenepuru, Wellington)
Slide 2: Agenda
Half Year Report 2022 Half year results presentation Agenda 01 Our highlights 02 Our community 03 New Zealand development 2 04 Australia development 05 Financial performance 06 Business performance 07 Appendix
Slide 3: Our highlights
Our highlights 3 Half Year Report 2022 3
Slide 4: Record underlying profit of $82.5m up 9% on 1H21
Half Year Report 2022 Our highlights Record underlying profit of $82.5m up 9% on 1H21 Increase in underlying profit driven by strong performance across our core business functions $134.6m $190.4m $82.5m Net profit after tax Net operating cash flows Underlying profit 1H21 $263.8m 1H21 $222.7m 1H21 $7
Slide 5: Record underlying profit of $82.5m up 9% on 1H21
Half Year Report 2022 Our highlights Record underlying profit of $82.5m up 9% on 1H21 Continue to see strong demand across our villages, unit pricing remains well placed Underlying profit Sales prices vs median house price 5 New sale settlements and total ORA unit delivery Auckland Rest of New Zeala
Slide 6: 1H22 investor highlights
Half Year Report 2022 Our highlights 1H22 investor highlights Our results at a glance Record first half underlying profit of $82.5m, up 9% from $75.5m in 1H21 Net profit after tax (NZ IFRS) of $134.6m, down from $263.8m in 1H21, related to lower fair value movement in investment property Gearing rat
Slide 7: Acquisitions – three new sites announced
Half Year Report 2022 Our highlights Acquisitions – three new sites announced 7 Masterton, Approximately 235 Rest home and Memory Wairarapa independent homes hospital-level care care centre Mernda, Approximately 304 Rest home and Memory Fairy Springs, Approximately 267 Rest home and Memory independe
Slide 8: Our community
Our community 8 Half Year Report 2022 8
Slide 9: COVID-19 update
Half Year Report 2022 Our community COVID-19 update Protection of staff and residents remains our focus ▪ We continue to focus on ensuring our residents are well protected against COVID-19 ▪ Our high rates of vaccination, and the vigilance of our staff, enabled us to responded effectively to Omicron
Slide 10: Our residents
Half Year Report 2022 Our community Our residents Bringing the best of life to residents every day ▪ This year we committed to investing $4.5m in frontline staff and new digital innovations – with a focus on keeping our residents safer and improving their experiences every day ▪ Developed a number o
Slide 11: Lumin – resident portal
Half Year Report 2022 Our community Lumin – resident portal Bringing the best of life to residents every day ▪ Successfully completed Lumin trial at our Kenepuru village, now underway with the roll out of the technology across our villages ▪ Lumin is a purpose-built platform specifically aimed at as
Slide 12: Our staff
Half Year Report 2022 Our community Our staff Our staff are key to our success and we are immensely proud of the work they do ▪ As part of our three year wellbeing strategy and plan we have implemented a range of wellbeing initiatives for staff, a diversity and inclusion plan, and a wellbeing by des
Slide 13: Our environment
Half Year Report 2022 Our community Our environment Environmental performance and sustainability ▪ This is the final year of our short term carbon reduction target, being a 5% reduction in emissions intensity ▪ We are on track to achieve this, and also our medium and long term targets which include:
Slide 14: New Zealand development
New Zealand development 14 Half Year Report 2022 Summerset at Monterey Park (Hobsonville, Auckland) 14
Slide 15: Development activity
Half Year Report 2022 Development New Zealand Development activity New Zealand summary ▪ In 1H22 we delivered 223 total units over ten sites, our second highest first half delivery programme ever ▪ A total of 16 villages in construction across nine regions in New Zealand in 1H22 ▪ Began construction
Slide 16: New Zealand village construction photos
Half Year Report 2022 Development New Zealand 16 Summerset Mt Denby (Whangārei) Summerset Cambridge (Waipā District) Summerset by the Dunes (Pāpāmoa Beach, Tauranga) Summerset Rototuna (Hamilton)
Slide 17: Summerset Palms, Te Awa, Napier
Half Year Report 2022 Development New Zealand Summerset Palms, Te Awa, Napier 17 Site progress - Mar 2018 Site acquired Site progress - Dec 2020 Civils complete, 40 independent homes delivered 68 independent villas delivered, main building construction 111 independent villas and show home delivered,
Slide 18: Village construction progress
Half Year Report 2022 Development New Zealand 18 Summerset at Pōhutukawa Place (Bell Block, New Plymouth) Summerset Boulcott (Lower Hutt, Wellington) Summerset Waikanae (Kāpiti Coast) Summerset Richmond Ranges (Tasman District)
Slide 19: Summerset on the Landing, Kenepuru
Half Year Report 2022 Development New Zealand Summerset on the Landing, Kenepuru 19 Site progress - Jun 2019 Civils started, no independent homes delivered Site progress - Jun 2020 29 independent villas delivered, apartment blocks under construction 51 independent villas and 24 apartments delivered,
Slide 20: Village construction progress
Half Year Report 2022 Development New Zealand 20 Summerset Blenheim (Marlborough District) Summerset at Avonhead (Christchurch) Summerset Prebbleton (Selwyn District) Summerset on Cavendish (Casebrook, Christchurch)
Slide 21: New Zealand development pipeline
Half Year Report 2022 Development New Zealand New Zealand development pipeline Diversified development pipeline with 23 sites in 1H22, 88% of land bank fully consented** 21 * New sites purchased ** Excludes newly purchased sites (Masterton and Rotorua)
Slide 22: Australia development
Australia development 22 Half Year Report 2022 22
Slide 23: Development activity
Half Year Report 2022 Development Australia Summerset Craigieburn Summerset Mernda Development activity Summerset Chirnside Park Australia summary Melbourne CBD ▪ We now have six Australian sites with the recent acquisition of Mernda Summerset Oakleigh South ▪ Continue to look for suitable sites aro
Slide 24: Australian village artist impressions
Half Year Report 2022 Development Australia 24 Artist impression: Summerset Chirnside Park (Melbourne) Artist impression: Summerset Craigieburn (Melbourne) Artist impression: Summerset Oakleigh South (Melbourne) Artist impression: Summerset Torquay (Victoria)
Slide 25: Australia development pipeline
Half Year Report 2022 Development Australia Australia development pipeline* Excellent progress made in growing our Australian land bank *As at 30 June 2022, excludes Mernda 25
Slide 26: Financial performance
Financial performance 26 Half Year Report 2022 26
Slide 27: Reported profit (IFRS)
Half Year Report 2022 Financial performance Reported profit (IFRS) NZ$m 1H22 1H21 Variance FY21 Total revenue 114.1 94.9 20% 205.3 Reversal of impairment on land & ▪ IFRS NPAT of $134.6m, down from $263.8m 1H21 buildings - - - 3.4 ▪ Fair value movement of investment property of Fair value movement o
Slide 28: Fair value movement
Half Year Report 2022 Financial performance Fair value movement ▪ 1H22 fair value movement of $136.7m, down 47% $136.7m $94.9m Fair value movement Increase from new on 1H21 units delivered ▪ Fair value movement has been driven by: ▪ Unit pricing ($55.4m): Retirement unit price Fair value movement of
Slide 29: Underlying profit
Half Year Report 2022 Financial performance Underlying profit ▪ Underlying profit of $82.5m, a six month record and $82.5m 9% Underlying profit Increase on 1H21 up 9% on 1H21 NZ$m 1H22 1H21 Variance FY21 ▪ Continue to achieve improved performance in operating earnings across our core business Care f
Slide 30: Cash flows
Half Year Report 2022 Financial performance Cash flows ▪ Net operating cash flows of $190.4m, down 14% from $190.4m 14% Net operating cash flows Decrease on 1H21 $222.7m at 1H21 primarily due: NZ$m 1H22 1H21 Variance FY21 ▪ Slightly lower volumes of new sale settlements compared to 1H21 Net operatin
Slide 31: Balance sheet
Half Year Report 2022 Financial performance Balance sheet ▪ Total assets of $5.4b, up 23% on 1H21 driven by $5.4b $1.7b Total assets 23% Retained 29% portfolio growth and the underlying value in our existing villages earnings ▪ Investment property valuation of $5.0b, up 22% on NZ$m 1H22 1H21 Varianc
Slide 32: Net tangible assets
Half Year Report 2022 Financial performance Net tangible assets Strong financial disciplines underpinning net tangible assets and gearing Net tangible assets and gearing* Summerset net tangible assets per share 32 SUM NTA per share NTA per share Gearing ratio * Peer results based on most recent resu
Slide 33: Gearing ratio
Half Year Report 2022 Financial performance Gearing ratio ▪ Net debt of $860.3m* as at 30 June 2022, up from 29.4% 32.9% Gearing ratio Bank & bond LVR $741.5m* at FY21 Net debt to underlying assets ▪ Uplift in gross debt driven by increased build rate $119m excess assets across our developing villag
Slide 34: Funding
Half Year Report 2022 Financial performance Funding ▪ Bank facility approximately $1.2b, with existing $1.2b $375m Bank facility Retail bonds $375.0m of retail bonds Funding maturity profile ▪ Total facility (incl. bonds) has an average tenure of 3.2 years ▪ Bank facility has undrawn capacity at $63
Slide 35: Interim dividend
Half Year Report 2022 Financial performance Interim dividend Declared 1H22 interim dividend of 10.7 cents per share Gross dividend payout per year ▪ The Board has declared an unimputed interim dividend of 10.7 cents per share, being 30% of underlying profit ▪ This represents a payout for 1H22 of app
Slide 36: Business performance
Business performance 36 Half Year Report 2022 Summerset by the Sea (Katikati, Bay of Plenty) 36
Slide 37: Retirement unit delivery
Half Year Report 2022 Business performance Retirement unit delivery Second highest 1H deliveries of 223 total units 223 10 Retirement units delivered Regions in construction ▪ A total of 223 retirement units delivered in the period across ten villages Care units 1H22 unit Total ▪ This is the second
Slide 38: Development margin
Half Year Report 2022 Business performance Development margin Realised development margin of $52.3m, with 28% $52.3m a 28% development margin Development margin Realised margin 29% ▪ Realised development margin of $52.3m, a record Realised development margin half year result and up 29% from $40.7m i
Slide 39: New sales
Half Year Report 2022 Business performance New sales 289 new sales in the period, gross proceeds of 289 $646k $186.8m New sales of Average gross 3.8% ▪ 289 new sales of Occupation Rights in 1H22, the Occupation Rights proceeds second highest number for a six month period New sales 1H22 1H21 Variance
Slide 40: New sales stock
Half Year Report 2022 Business performance New sales stock Uncontracted stock levels down 23% from FY21 201 3.8% Uncontracted Percentage of new sale stock uncontracted stock ▪ Good progress made on selling down new sale stock ▪ Uncontracted new sale stock of 201 units, down from New sales stock 1H22
Slide 41: New sales performance
Half Year Report 2022 Business performance New sales performance New sale settlements and total ORA unit delivery Annual new sales contracts 41 Uncontracted new sales stock as % of portfolio Committed new sales pipeline
Slide 42: Resales
Half Year Report 2022 Business performance Resales Realised gain of $31.9m, up 8%, embedded 222 $31.9m value now $1.5b Resales of Occupation Realised resale gain 8% Rights ▪ Total resales of 222 Occupation Rights in 1H22, down from 243 in 1H21, but up from 195 in 2H21 Resales 1H22 1H21 Variance FY21
Slide 43: Embedded value
Half Year Report 2022 Business performance Embedded value Embedded value now $1.5b, up 29% $1.5b $1.0b Embedded value Embedded resale gain ▪ Total embedded value now $1.5b, having increased Embedded value from $1.1b at 1H21, a 29% uplift ▪ Embedded value comprised of: ▪ $1.04b resale gains ▪ $0.43b
Slide 44: Resale stock
Half Year Report 2022 Business performance Resale stock Available resale stock remains at low levels 96 1.8% Uncontracted Percentage of resale stock uncontracted stock ▪ Resale stock has increased from 198 units at FY21 to 233 units at 1H22 (18%) Resale stock 1H22 FY21 1H21 ▪ The increase in overall
Slide 45: Resale performance
Half Year Report 2022 Business performance Resale performance Resale settlements Annual resale contracts 45 Realised resale gain Uncontracted resale stock as % of portfolio
Slide 46: Questions
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Slide 47: Disclaimer
Half Year Report 2022 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 thos
Slide 48: Appendix
Appendix 01 Summerset overview 02 Portfolio and land bank 03 Underlying profit reconciliation 48 04 Historical trends 05 Fair value movement 06 Demographics 07 Summerset growth 08 Customer profile and occupancy 48
Slide 49: Summerset overview
Half Year Report 2022 Appendix Summerset overview Diversified portfolio throughout New Zealand Our people Our care Our portfolio 7,100+ 1,098 5,153 Residents Care units in Retirement units portfolio in portfolio 2,300+ 1,302 5,645* 49 Staff members Care units in Retirement units land bank in land ba
Slide 50: Portfolio as at 30 June 2022
Half Year Report 2022 Appendix Portfolio as at 30 June 2022 6,251 total units including 5,153 retirement units and 1,098 care units Existing portfolio - as at 30 June 2022 Retirement units Care units Total units and Serviced Memory care Village Villas Apartments Care suites Care beds care beds apart
Slide 51: Portfolio as at 30 June 2022
Half Year Report 2022 Appendix Portfolio as at 30 June 2022 6,251 total units including 5,153 retirement units and 1,098 care units Existing portfolio - as at 30 June 2022 Retirement units Care units Total units and Serviced Memory care care beds Village Villas Apartments Care suites Care beds apart
Slide 52: Future development
Half Year Report 2022 Appendix Future development Largest New Zealand land bank for a retirement village operator of 5,646 units and beds Landbank – as at 30 June 2022 Retirement units Care units Serviced Memory care Total units and Village Villas Apartments Care suites Care beds apartments apartmen
Slide 53: Future development
Half Year Report 2022 Appendix Future development Largest New Zealand land bank for a retirement village operator of 5,646 units and beds Landbank – as at 30 June 2022 Retirement units Care units Serviced Memory care Total units and Village Villas Apartments Care suites Care beds apartments apartmen
Slide 54: 1H22 underlying profit reconciliation
Half Year Report 2022 Appendix 1H22 underlying profit reconciliation Reconciliation of underlying profit to reported net profit after tax 1H22 1H21 Variance FY21 Net profit before tax (IFRS) 134.9 265.6 (49%) 543.6 Net profit after tax (IFRS) 134.6 263.8 (49%) 543.7 Financial (NZ$m) Less reversal of
Slide 55: Historical trends
Half Year Report 2022 Appendix Historical trends Underlying profit 11 year CAGR of 32% FY11 Half Year Results 11 Year CAGR* 1H22 2H21 1H21 2H20 1H20 NZX Listed New sales of occupation rights 16% 289 238 302 276 128 108 Operational Resales of occupation rights 12% 222 195 243 245 136 123 Total sales
Slide 56: Fair value movement
Half Year Report 2022 Appendix 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* Discount Growth rate Growth rate Growth rate Growth rate Growth ra
Slide 57: Fair value movement
Half Year Report 2022 Appendix 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* Discount Growth rate Growth rate Growth rate Growth rate Growth ra
Slide 58: Demographics
Half Year Report 2022 Appendix Demographics Population over 75 years forecast to grow 214% from 2022 to 2073 Population growth 75 years and over Per annum population growth 75 years and over 58 Stats NZ Data Stats NZ Data
Slide 59: Summerset growth
Half Year Report 2022 Appendix Summerset growth 25 years of consistent delivery and growth Summerset build rate 59 New units delivered includes retirement units, memory care apartments, care suites and care beds
Slide 60: Customer profile & occupancy
Half Year Report 2022 Appendix Customer profile & occupancy Occupancy, tenure and resident demographic statistics Occupancy – retirement villages Occupancy – established care centres 60 Average entry age of residents (years) Average tenure (years)
Slide 61: Ngā mihi
Ngā mihi For more information: 61 Will Wright Chief Financial Officer will.wright@summerset.co.nz 021 490 251
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