Oceania Healthcare Ltd. · NZX:OCA
Oceania Healthcare — FY2017 Earnings Presentation
36 slides from Oceania Healthcare's earnings presentation, Jul 27, 2017
Slide 1: Oceania Healthcare Limited FY2017 Results Presentation
Oceania Healthcare Limited FY2017 Results Presentation 27 July 2017
Slide 2: Agenda
Agenda SECTION PAGE 01 Highlights of the 2017 Financial Year 2 02 Business Overview and Strategy 5 03 Update on Developments 9 04 Financial Results 12 05 Appendices 26 1
Slide 3: Highlights of the 2017 Financial Year
1 Highlights of the 2017 Financial Year SECTION 1 STRICTLY CONFIDENTIAL 2
Slide 4: FY2017 Highlights
FY2017 Highlights This has been a milestone year for Oceania 1 FY2017 IPO Forecasts exceeded • Reported NPAT of $44.9m compared to IPO Forecast of $25.3m • Pro Forma Underlying NPAT of $34.0m compared to IPO Forecast of $33.5m • Pro Forma Underlying EBITDA of $45.0m compared to IPO Forecast of $44.3
Slide 5: FY2017 Financial highlights
FY2017 Financial highlights We exceeded the FY2017 IPO Forecasts with Reported NPAT, Pro Forma Underlying EBITDA, Total Assets and Operating Cashflow all ahead of forecast Reported NPAT Pro forma Underlying EBITDA 60.0 50.0 $47.0m $45.0m $44.3m $48.7m 50.0 $44.9m 40.0 40.0 $29.5m 30.0 30.0 $25.3m $1
Slide 6: Business Overview and Strategy
2 Business Overview and Strategy SECTION 2 STRICTLY CONFIDENTIAL 5
Slide 7: Oceania at a glance
Oceania at a glance We are a nationwide operator with a portfolio of 50 sites. Our focus is aged care with a growing retirement village business. We are an experienced developer of new aged care and retirement village facilities Portfolio and Oceania’s site locations landbank overview Care Care Unit
Slide 8: Operational highlights
Operational highlights Oceania has a leading clinical care platform, demonstrated through both industry recognition and MoH certification results Winner of the New Zealand Aged Care Association overall excellence in care award (second year in a row) Continued our excellent MoH audit results (8 f
Slide 9: A clear growth strategy in aged care
A clear growth strategy in aged care The care suite model is an integral part of our growth strategy Estimated population growth1 800,000 700,000 227,800 600,000 500,000 489,800 400,000 300,000 200,000 100,000 - 1995 2000 2005 2010 2015 2019 2024 2029 2034 2039 Population Aged 75 to 84 Population Ag
Slide 10: Developments
33 Developments SECTION 3 STRICTLY CONFIDENTIAL 9
Slide 11: Tangible development pipeline
Tangible development pipeline We have a pipeline of 1,708 units, of which 316 units and care suites are currently under construction across 5 sites. We have increased our consented pipeline to 1,072 residences (63% of total including those under construction) Key changes since IPO Product Disclosure
Slide 12: Key developments on track
Key developments on track 316 units and care suites currently under construction including those at premium metropolitan sites: Meadowbank, Maureen Plowman, Elmwood and Melrose Meadowbank Village - Auckland Maureen Plowman Village - Auckland Stage 3 under construction (62 apartments, 30 care suites)
Slide 13: Financial Results
Financial Results 01 Income statement and segmental performance 4 02 Balance sheet and drivers of IP and PPE valuation 03 Cashflow statement and analysis of operating cashflow 04 Capital structure 12
Slide 14: Income statement
Income statement Reported net profit after tax of $44.9m was $19.6m (77%) above the FY2017 IPO Forecasts Summary of Income Statement for the year ended 31 May Commentary FY2016 FY2017 (A) FY2017 (F) $174.8m operating revenue - includes care revenue ($152.8m), NZDm village weekly fees ($5.3m) and v
Slide 15: Pro forma Underlying NPAT and EBITDA
Pro forma Underlying NPAT and EBITDA Pro Forma Underlying NPAT and EBITDA were $0.5m and $0.7m ahead of the IPO Forecasts respectively Reconciliation of Underlying and Pro Forma Adjustments NZDm FY2017 (A) FY2017 (F) By segment FY2017 (A) FY2017 (F) Reported Net profit after tax 44.9 25.3 Aged Care
Slide 16: Care segment
Care segment The Care segment was $0.2m ahead of the IPO Forecast with EBITDA per bed (excluding decommissioned sites) of $12,648 compared to $12,614 in the IPO Forecast NZ$m FY2014 FY2015 FY2016 FY2017 (A) FY2017 (F) Commentary Daily care fees 145.0 146.0 149.7 145.7 145.4 Occupied beds in line w
Slide 17: Village segment
Village segment Pro Forma Underlying EBITDA was $0.3m ahead of the IPO Forecast due to further increases in DMF and improving resale and development margins. 316 units and care suites are currently under construction NZ$m FY2014 FY2015 FY2016 FY2017 (A) FY2017 (F) Development Sales Volume and Margin
Slide 18: Village segment – key indicators
Village segment – key indicators Resale prices and margins were above FY2016 with volumes reflecting less available stock to sell. Of the 62 units available for resale at 31 May 17, 29 were under application Resales Volumes and Margins Closing Stock (incl stock under application) - Resales 27.4% 28.
Slide 19: Embedded value
Embedded value The embedded value in Oceania’s portfolio has increased significantly over the last three years to $183.1m and will underpin ongoing DMF cash flows and resale gains Embedded value per unit1 Commentary 160 141.3 133.3 140 115.5 120 Embedded value in Oceania’s portfolio is $183.1m 100
Slide 20: Developments
Developments Development margin of 22.9% was above FY2016. The volume of units and care suites sold was ahead of the IPO Forecast by 4 units and 2 care suites. We are bringing to market a high quality product that will generate considerable uplift in DMF Development Volumes and Margins Sales Prices
Slide 21: Balance sheet
Balance sheet Total assets increased by $135m due to significant development capital expenditure during FY2017 and revaluations reflecting improved trading performance NZ$m FY2016 FY2017 (A) FY2017 (F) • Our net adjusted value per share (CBRE plus WIP less debt) was 92c per share as at 31 May 2017 A
Slide 22: Balance sheet drivers
Balance sheet drivers Significant uplifts in PPE and IP through development capital expenditure, acquisitions and revaluations Investment Property Property, Plant and Equipment 650,000 300,000 43,917 611,017 600,000 275,000 267,972 NZD $000’s 5,414 NZD $000’s 9,460 15,751 7,706 7,639 48,021 3,785 25
Slide 23: Cash flow
Cash flow Strong operating cash flows, ahead of the IPO Forecasts Statement of cash flows Commentary NZD $m’s FY2016 FY2017 (A) FY2017 (F) Receipts from customers 163.8 159.3 158.3 Payments to suppliers and employees (147.4) (141.1) (146.8) Government funding of care fees Receipts from new Occupat
Slide 24: Operating cash flow
Operating cash flow We generated $30.9m of adjusted operating cash flow (excludes new sales and interest) in FY2017, $5.9m ahead of the FY2017 IPO Forecasts and ahead of FY2016 Adjusted Operating cash flows 40.0 29.5 30.9 30.0 25.0 Reconciliation of Resales Cash flow 20.0 NZD M's 13.7 11.1 NZD $m’s
Slide 25: Capital structure
Capital structure Gearing of 15.3% as at 31 May 2017 and headroom under our debt facilities provides the flexibility to accelerate our existing brownfield development pipeline and/or undertake further brownfield and greenfield acquisitions Debt structure upon listing Development debt to Underlying d
Slide 26: Summary of Oceania's investment proposition
Summary of Oceania’s investment proposition Oceania’s business model supports a combination of current dividend yield with long term growth potential Aged care Stable revenue from “needs-based” …with growth through premium care service and government funding…. charging and care suite model Village R
Slide 27: Appendices
Appendices 01 Portfolio Summary 02 Development Pipeline 03 Summary of Unit Sales 04 Lady Allum Attwood Apartments 05 Capital Expenditure 06 Definition of Underlying NPAT 07 Pro Forma Adjustments 08 Glossary 09 Disclaimer 26
Slide 28: Portfolio summary (31 May 2017)
Portfolio summary (31 May 2017) Total Certified Care Total Certified Care Facility Region Category Effective Care Beds Effective Care Suites Total Effective Beds Total Care Suites Village Units Beds Capacity Totara Park Village Rodney Village - - - - - - 30 Greenvalley Rest Home North Shore Care Bed
Slide 29: Development pipeline
Development pipeline Site Stages Status Gross Units Net Units Notes Meadowbank Stage 3 Under Construction 92 92 Construction began in Feb-16 Stage 4 Consented 81 81 Construction begins Sep-17 Stage 5 Consented 20 20 Stage 6 Planned ~40 ~40 Elmwood Stage 3 Under Construction 25 25 Construction began
Slide 30: Summary of unit sales
Summary of unit sales New Sales FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 (A) FY2017 (F) Care Suite 12 9 21 29 23 15 13 Apartment 1 20 39 23 20 20 17 Villa 29 16 22 41 17 17 16 Total 42 45 82 93 60 52 46 Development Margin 9.2% 12.6% 6.8% 8.9% 19.2% 22.9% 24.3% Resales FY2012 FY2013 FY2014 FY2015 FY
Slide 31: New Attwood apartments at Lady Allum
New Attwood apartments at Lady Allum The Attwood apartments at Lady Allum were completed on schedule in April 2017. We achieved 20 sales to 31 May 2017, 3 ahead of the IPO Forecasts and at forecast pricing. We now have two thirds sold or under application Lady Allum Sales Summary as at 19 July 2017
Slide 32: Capital expenditure
Capital expenditure We stepped up our development capital expenditure significantly during FY2017 as well as acquired land for development and the freehold land and buildings at Palmerston Manor and Elderslea NZ$m FY2016PF FY2017 (A) FY2017 (F) Acquisitions 0.0 23.0 22.8 Development capital expendit
Slide 33: Underlying NPAT
Underlying NPAT Underlying Profit (or Underlying NPAT) Underlying Profit is a non-GAAP measure used by the Group to monitor financial performance and, in future, determine dividend distributions. It is reported in the operating segment note of the audited consolidated financial statements. Underlyin
Slide 34: Pro forma adjustments
Pro forma adjustments Transaction and offer costs Total transaction and offer costs of $11.9m have been incurred relating to joint lead manager fees, due diligence expenses, travel expenses, advertising, printing costs, and other costs associated with the IPO. Of these $4.4m million has been expense
Slide 35: Glossary
Glossary Care Suite: A room or studio certified for the provision of care by the Ministry of Health which has been licensed under an ORA DMF: Deferred management fees, charged under an ORA, which accrue monthly to a specified maximum and are deducted from the refund paid to the departing residen
Slide 36: Important notice and disclaimer
Important notice and disclaimer This presentation has been prepared solely by Oceania Healthcare Limited ("Oceania"). You must read this disclaimer before making any use of this presentation and the accompanying material or any information contained in it ("Document"). The presentation includes non-