Summerset Group Holdings Limited · NZX:SUM
Summerset — H1 2024 Earnings Presentation
68 slides from Summerset's earnings presentation, Aug 26, 2024
Slide 1: Results presentation
Results presentation For the six months to 30 June 2024 Summerset Group Holdings Ltd Summerset at Monterey Park (Hobsonville, New Zealand)
Slide 2: Agenda
Half Year Report 2024 Half year results presentation Agenda 01 Our highlights 02 Business update 03 Our community 04 New Zealand development 2 05 Australia development 06 Financial performance 07 Business performance 08 Questions 09 Appendix
Slide 3: 1H24 Reporting updates
Half Year Report 2024 Half year results presentation 1H24 Reporting updates Updated reporting measures included within the presentation Underlying profit • Maintain underlying profit as a key performance measure and segment reporting • Segment reporting for care EBITDA, village EBITDA and corporate
Slide 4: Our highlights
4 01 Our highlights Half Year Report 2024
Slide 5: Who we are
Half Year Report 2024 Our highlights Who we are About Summerset Summerset builds, owns and operates integrated retirement villages We create vibrant, happy communities for residents and our people that delivers on our purpose – bringing the best of life to our 8,400+ residents We are the second larg
Slide 6: Underlying profit of $89.9m up 3% on 1H23
Half Year Report 2024 Our highlights Underlying profit of $89.9m up 3% on 1H23 First half underlying profit of $89.9m, up 3% on 1H23 with total settlements of 588, up 22% on 1H23 $102.2m Net profit after tax $191.6m Operating cash flows $89.9m Underlying profit 1H23 $133.1m 1H23 $146.7m 1H23 $87.2m
Slide 7: Investor highlights
Half Year Report 2024 Half Year results presentation Investor highlights First half underlying profit of $89.9m, up 3% on 1H23 with total settlements of 588, up 22% on 1H23 Financial • First half underlying profit of $89.9m, up 3% from $87.2m in 1H23 • Resale gain of $45.7m (up 32% on 1H23) and deve
Slide 8: Looking back – 1H24 milestones
Half Year Report 2024 Our highlights Looking back – 1H24 milestones A showcase of key events from the six months Cambridge village opens Boulcott main building opens Construction cadets graduates 8 Pāpāmoa Beach main building opens First Australian residents Civils underway at Chirnside Park Casebro
Slide 9: Business update
Summerset Milldale (Auckland, New Zealand) 9 02 Business update Half Year Report 2024
Slide 10: Business update
Half Year Report 2024 Business update Business update Summerset remains well placed to navigate the ongoing uncertainty in the wider economy FY24 deliveries Cost control Sales 10 FY24 delivery guidance maintained Expenditure review complete Sales continue to perform well ▪ FY24 build rate to be at t
Slide 11: Business update
Half Year Report 2024 Business update Business update Summerset remains well placed to navigate the ongoing uncertainty in the wider economy Balance sheet Land bank St Johns 11 Balance sheet remains strong Land bank in place to grow the business Progress on track ▪ Summerset carries no core debt, wi
Slide 12: Our community
12 03 Our community Half Year Report 2024
Slide 13: Bringing the best of life
Half Year Report 2024 Our community Bringing the best of life Bringing the best of life to residents and staff ▪ We are committed to making Summerset a place where our residents and staff can live their best life ▪ Extended our highly successful holiday home initiative, adding Casebrook and Ellersli
Slide 14: Our environment
Half Year Report 2024 Our environment Our environment Environmental performance and sustainability ▪ Summerset is a market leader in sustainability in the retirement and aged care sectors ▪ Our ambition is to develop, build and manage sustainable retirement villages in New Zealand and Australia ▪ Na
Slide 15: Marketing & community support
Half Year Report 2024 Our community Marketing & community support Promoting and supporting our communities ▪ We have a continued focus on growing our brand and presence in both New Zealand and Victoria ▪ Summerset now works with 220 local community clubs, including bowls, golf, croquet, bridge and t
Slide 16: New Zealand development
Summerset Milldale (Auckland, New Zealand) 16 04 New Zealand development Half Year Report 2024
Slide 17: New site – announced today
Half Year Report 2024 New Zealand development New site – announced today Summerset Mission Hills ▪ Acquisition of a 10.9ha broad acre site in Napier, to be home to our third village in the city ▪ The site will offer approximately 270 independent homes, a care centre with rest home and hospital level
Slide 18: Development activity
Half Year Report 2024 New Zealand development Development activity New Zealand summary ▪ Delivered 311 units to be sold under Occupation Right and 21 care beds across 11 sites in 1H24 ▪ Currently have 14 villages in construction across ten regions in New Zealand, with a further three care centre upg
Slide 19: Village development photos
Half Year Report 2024 New Zealand development Summerset Mt Denby (Whangārei) Summerset Half Moon Bay (Auckland) 19 Summerset Cambridge (Waipā District) Summerset by the Dunes (Pāpāmoa Beach, Tauranga)
Slide 20: Village development photos
Half Year Report 2024 New Zealand development Summerset Palms (Te Awa, Napier) Summerset Waikanae (Kāpiti Coast) 20 Summerset Boulcott (Lower Hutt, Wellington) Summerset Richmond Ranges (Tasman)
Slide 21: Village development photos
Half Year Report 2024 New Zealand development Summerset Blenheim (Marlborough District) Summerset Rangiora (Waimakariri District) 21 Summerset on Cavendish (Casebrook, Christchurch) Summerset Prebbleton (Selwyn District)
Slide 22: New Zealand development pipeline
Half Year Report 2024 New Zealand development New Zealand development pipeline Diversified development pipeline of 20 sites* 22 * Excludes care centre upgrades at three sites (Havelock North, Levin and Trentham) ** New site purchased
Slide 23: Project cash profits
Half Year Report 2024 New Zealand development Project cash profits $3.5b+ $245m+ ▪ Summerset developments produce positive net cash Forecast capital Projected net cash flows (net cash position) upon completion, this investment position means they carry no debt after first sell down Development Forec
Slide 24: Project cash profits
Half Year Report 2024 New Zealand development Project cash profits 14.6% Project cash profit $229.9m ▪ Our last 11 villages to complete recycled around Cash margin from village $229.9m of positive cash flow development ▪ This is an average cash margin from village Year ORA Non-ORA Project cash Cash
Slide 25: Australia development
Summerset Cranbourne North (Melbourne, Victoria) 25 05 Australia development Half Year Report 2024
Slide 26: Development activity
Half Year Report 2024 Australia development Summerset Craigieburn Summerset Mernda Development activity Summerset Chirnside Park Australia summary Melbourne CBD ▪ Significant milestone for Summerset with the first Australian Summerset Oakleigh South residents welcomed at Cranbourne North ▪ Stage one
Slide 27: Summerset Cranbourne North (Melbourne)
Half Year Report 2024 Australia development Summerset Cranbourne North (Melbourne) 27 30 independent villas Main building with 34 assisted living apartments and 72 care Rest home and hospital level Site progress – June 2024 delivered beds to commence construction in 2H24 care will be available
Slide 28: Australia development pipeline
Half Year Report 2024 Australia development Australia development pipeline Now have seven villages in planning and development across Victoria 28
Slide 29: Financial performance
Summerset Boulcott (Lower Hutt, New Zealand) 29 06 Financial performance Half Year Report 2024
Slide 30: Reported profit (IFRS)
Half Year Report 2024 Financial performance Reported profit (IFRS) $102.2m 23% ▪ IFRS NPAT of $102.2m, down from $133.1m in Net profit after tax Decrease on 1H23 1H23 NZ$m 1H24 1H23 Variance FY23 ▪ Fair value movement of investment of $128.4m, Total revenue 151.6 128.2 18% 272.2 including $49.6m fro
Slide 31: Fair value movement
Half Year Report 2024 Financial performance Fair value movement $128.4m $49.6m ▪ Fair value movement of $128.4m, in line with 1H23 Fair value movement Increase from new ▪ Fair value movement has been driven by: units delivered ▪ New units built $49.6m: Value of new units delivered in 1H24 Fair value
Slide 32: Underlying profit
Half Year Report 2024 Financial performance Underlying profit $89.9m 3% • Underlying profit remains an important financial Underlying profit Increase on 1H23 measure - used to benchmark performance, show the core drivers of the business and how they grow NZ$m 1H24 1H23 Variance FY23 over time, with
Slide 33: Segment earnings
Half Year Report 2024 Financial performance Segment earnings $59.5m $30.4m • Summerset has two core business segments, being Ongoing operations Construction activity ongoing operations and construction activity Ongoing Construction • Ongoing operations incorporates care and village NZ$m operations a
Slide 34: Operating expenses
Half Year Report 2024 Financial performance Operating expenses NZ$m 1H24 2H23 Variance 1H23 FY23 Employee expenses 109.3 103.1 6% 85.2 188.3 Building and grounds 19.9 20.0 (1%) 17.4 37.4 • Gross operating expenses of $167.1m, down 1% on Sales and marketing 14.0 15.1 (7%) 11.9 27.0 2H23 Software and
Slide 35: Cash flows
Half Year Report 2024 Financial performance Cash flows • Operating cash flows of $191.6m, up 31% from $191.6m 31% Operating cash flows Increase on 1H23 $146.7m in 1H23 • Increase in operating cash flows driven by increases NZ$m 1H24 1H23 Variance FY23 in care and village services (up 16%) and net Re
Slide 36: Balance sheet
Half Year Report 2024 Financial performance Balance sheet $7.4b Total assets $2.2b ▪ Total assets of $7.4b, up 17% on 1H23, driven by 17% Retained 19% portfolio growth and the underlying value in our earnings existing villages NZ$m 1H24 1H23 Variance FY23 ▪ Investment property of $6.8b, up 17% on 1H
Slide 37: Funding
Half Year Report 2024 Financial performance Funding $1.5b Bank facility $575m ▪ Bank facility approximately $1.5b, with existing Retail bonds $575m of retail bonds at 30 June 2024 ▪ As at 30 June 2024, 52% of total debt was hedged Funding maturity profile at fixed interest rates, resulting in a weig
Slide 38: Development assets
Half Year Report 2024 Financial performance Development assets $1.8b Underlying development 38.0% ▪ Development assets exceed the value of net debt by Bank & bond LVR $248.3m, or 16% assets ▪ Development assets comprise: Net debt to underlying assets $248m excess assets ▪ $552.8m relating to undevel
Slide 39: Debt measures
Half Year Report 2024 Financial performance Debt measures 36.2% 203% ▪ Gross debt of $1.5b, up from $1.3b at 1H23 Gearing ratio ICR coverage ▪ Uplift in gross debt driven by increased construction Gross borrowings and gearing activity across our developing villages in the period $1,600m 50% ▪ Gearin
Slide 40: Interim dividend
Half Year Report 2024 Financial performance Interim dividend Declared 1H24 interim dividend of 11.3 cents per share Gross dividend payout per year ▪ The Board has declared an unimputed interim $70m dividend of 11.3 cents per share, being 29.6% of $60m underlying profit $50m ▪ This represents a payou
Slide 41: Business performance
41 07 Business performance Half Year Report 2024
Slide 42: Retirement unit delivery
Half Year Report 2024 Business performance Retirement unit delivery 1H24 unit Retirement units Care units Serviced Memory care Care Care Total delivery Villas Apartments units 352 total units delivered with 332 in apartments apartments suites beds Bell Block 18 - - - - - 18 New Zealand, and 20 villa
Slide 43: Development margin
Half Year Report 2024 Business performance Development margin Realised development margin of $51.7m, with 28.3% $51.7m Development margin Realised margin 8% a 28% development margin ▪ Realised development margin of $51.7m with a 28% Realised development margin margin, compared to 34% at 1H23 $70m 10
Slide 44: New sales
Half Year Report 2024 Business performance New sales 290 new sales in the period, gross proceeds of 290 $629k New sales of Occupation Average gross 9% $182.4m Rights proceeds ▪ 290 new sales of Occupation Rights in 1H24, up 20% on the 241 settled in 1H23 New sales 1H24 1H23 Variance FY23 ▪ Gross pro
Slide 45: New sales stock
Half Year Report 2024 Business performance New sales stock 142 total delivered units under contract 142 Two Delivered units Main buildings under contract opened in 1H24 ▪ 142 delivered units under contract, including eight villas at Cranbourne North in Australia New Zealand new sales stock 1H24 FY23
Slide 46: Resales
Half Year Report 2024 Business performance Resales 298 resales in the period, up 23% on 1H23 298 Resales of Occupation $45.7m Realised resale 32% with realised resale gain of $45.7m Rights gains ▪ Total gross proceeds of $177.5m, up 33% on 1H23 Resales 1H24 1H23 Variance FY23 ▪ This was driven by hi
Slide 47: Resales cash margin
Half Year Report 2024 Business performance Resales cash margin Cash margin on resales of 35% with $61.6m $61.6m $209k Realised resale cash Cash margin on realised in 1H24 margin resales ▪ Resales cash margin of 35% in 1H24 with an Resales 1H24 1H23 Variance FY23 average margin of $209k per unit, up
Slide 48: Embedded value
Half Year Report 2024 Business performance Embedded value Embedded value now $1.6b, up 8% on 1H23 $1.6b Embedded value 8% $600m Embedded DMF ▪ Total embedded value now $1.6b, up 8% from $1.5b Embedded value at 1H23 $1,800m ▪ Embedded value comprised of: $1,600m ▪ $1.04b resale gains $1,400m ▪ $0.60b
Slide 49: Resale stock
Half Year Report 2024 Business performance Resale stock Uncontracted resale stock remains low 131 2.7% Contracted Percentage of resale stock uncontracted stock ▪ Resale stock of 311 units, up from 292 units at FY23 ▪ Increase was driven by a record 324 units that Resales stock 1H24 FY23 vacated in 1
Slide 50: Questions
Summerset at Avonhead (Christchurch, New Zealand) 50 08 Questions Half Year Report 2024
Slide 51: Disclaimer
Half Year Report 2024 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 52: Appendix
Summerset Boulcott (Lower Hutt, New Zealand) 52 09 Appendix Half Year Report 2024
Slide 53: Appendix contents
Half Year Report 2024 Appendix Appendix contents 01 Key terms 02 Summerset overview 03 Portfolio and land bank 04 Underlying profit reconciliation 53 05 Historical trends 06 Fair value movement 07 Sales price relativity 08 Summerset growth and demographics 09 Customer profile and occupancy
Slide 54: Key terms
Half Year Report 2024 Key terms Key terms Summerset key terms Non-GAAP financial measure used by Summerset to monitor financial performance and determine dividend distributions. Calculated by making the following adjustments to reported Net Profit after Tax: Removing the change in fair value in inve
Slide 55: Key terms
Half Year Report 2024 Key terms Key terms Summerset key terms Care fees from providing care (e.g. rest home and hospital care), deferred management fees from care units and realised resale gain from Care EBITDA care units less costs of operating the care centres. Excludes any allocation of head offi
Slide 56: Summerset overview
Half Year Report 2024 Appendix Summerset overview Diversified portfolio throughout New Zealand and Australia Our portfolio Our care Our people 6,364 1,359 8,400+ Retirement units Care units in Residents in portfolio portfolio 5,301 1,337 2,900+ 56 Retirement units Care units in Staff members in land
Slide 57: Portfolio as at 30 June 2024
Half Year Report 2024 Appendix Portfolio as at 30 June 2024 7,723 total units including 6,364 retirement units and 1,359 care units Existing portfolio - as at 30 June 2024 Retirement units Care units Total units and Serviced Memory Care Care Village Villas Apartments care beds apartments care apartm
Slide 58: Portfolio as at 30 June 2024
Half Year Report 2024 Appendix Portfolio as at 30 June 2024 7,723 total units including 6,364 retirement units and 1,359 care units Existing portfolio - as at 30 June 2024 Retirement units Care units Total units and Serviced Memory Care Care Village Villas Apartments care beds apartments care apartm
Slide 59: Future development
Half Year Report 2024 Appendix Future development Largest New Zealand land bank for a retirement village operator of 4,462 units and beds Landbank – as at 30 June 2024 Retirement units Care units Serviced Memory care Care Care Total units and Village Villas Apartments apartments apartments suites be
Slide 60: Future development
Half Year Report 2024 Appendix Future development Largest New Zealand land bank for a retirement village operator of 4,462 units and beds Landbank – as at 30 June 2024 Retirement units Care units Serviced Memory care Care Care Total units and Village Villas Apartments apartments apartments suites be
Slide 61: 1H24 underlying profit reconciliation
Half Year Report 2024 Appendix 1H24 underlying profit reconciliation Reconciliation of underlying profit to reported net profit after tax 1H24 1H23 Variance FY23 Net profit before tax (IFRS) 120.8 128.1 (6%) 422.5 Net profit after tax (IFRS) 102.2 133.1 (23%) 436.3 Financial (NZ$m) Less fair value m
Slide 62: Historical trends
Half Year Report 2024 Appendix Historical trends Historical trends across operational and financial metrics Half year results 1H24 2H23 1H23 2H22 1H22 2H21 1H21 2H20 1H20 2H19 1H19 2H18 1H18 New sales of occupation rights 290 319 241 248 289 238 302 276 128 193 136 194 145 Operational Resales of occ
Slide 63: Fair value movement
Half Year Report 2024 Appendix 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 Villag
Slide 64: Fair value movement
Half Year Report 2024 Appendix 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 Villag
Slide 65: Sales price relativity
Half Year Report 2024 Appendix Sales price relativity Continue to watch the residential market closely, unit pricing remains well placed Long term sales price relativity Sales price relativity vs median house price $1.6m $1.2m $1.4m $1.0m $1.2m $0.8m $1.0m 65 $0.8m $0.6m 90% $0.6m $0.4m 97% 100% $0.
Slide 66: Summerset growth and key demographics
Half Year Report 2024 Appendix Summerset growth and key demographics 26 years of consistent delivery and growth Summerset build rate New Zealand population growth 75 years and over 8,000 1,200,000 16% 7,723 1,000,000 14% 12% 800,000 10% 7,000 600,000 8% 400,000 6% 6,000 4% 200,000 2% - - 2002 2007 2
Slide 67: Customer profile & occupancy
Half Year Report 2024 Appendix Customer profile & occupancy Occupancy, tenure and resident demographic statistics Occupancy – retirement villages Occupancy – established care centres 100% 100% 80% 80% 60% 60% 95% 95% 94% 95% 95% 95% 93% 93% 93% 93% 40% 40% 20% 20% 67 - - 1H22 2H22 1H23 2H23 1H24 1H2
Slide 68: Ngā mihi
Ngā mihi For more information: 68 Will Wright Chief Financial Officer will.wright@summerset.co.nz 021 490 251 Stephen Richards GM Strategy stephen.richards@summerset.co.nz 021 023 96585
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