bayswater village mount maunganui for personal use only · dmf and realised resale gains per...
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24 February 2016 Metlifecare 1H16
Bayswater Village Mount Maunganui
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Contents
2
3 1H16 Results Highlights #1
12 Operating Performance #3
Party time at The Poynton!
Please refer to the definitions section on page 28 of the presentation for additional detail on the non-GAAP financial measures contained within this presentation. A glossary of terms used in this presentation is contained on page 30.
8 Development & Growth #2
19 Summary Financial Information #4
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1. 1H16 Results Highlights
The Orchards – Stage 1 Occupied (right hand side)
Stage 2 nearing completion (far left)
Glenfield
Auckland Greenwich Gardens
Unsworth Heights
Auckland
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1H16 Results: Financial Highlights
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1H16 1H15
Net profit after tax (IFRS) ($m) 125.7 39.7
Net operating cash flow ($m) 78.0 33.0
Net operating cash flow excluding new sales
($m) 17.7 16.9
Underlying Profit ($m) 33.5 26.0
Dividend per share (cps) 1.75 1.5
Net Assets per share ($) 4.85 3.92
Financial Highlights
Increase in net profit after tax primarily due to growth in investment property values arising from residential property appreciation and the completion of villages.
Earnings per share 59.2 cents, 215% up.
Net operating cash flow increased 137% driven by new sales of $60.3m and realised resale gains of $21.6m.
Underlying Profit up 29% relative to the pcp.
Total Assets increased by 17% to $2.4b relative to pcp.
Total Equity $1,033.2 million, an increase of 24% relative to pcp.
FY15 interim dividend declared payable 21 March 2016 with a record date of 11 March 2016.
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1H16 Results: Operating Highlights
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1H16 1H15
New Sales (units) 103 29
Resales (units) 200 202
Total new sales and resales (units) 303 231
Embedded Value per Unit ($’000) 180 147
Operating Highlights
New sales development margin of 12%.
Sum of Realised Resales Gain and DMF increased to $175k per settlement, up 33% from $132k
DMF per settlement increased to $64k from $57k.
Realised Resale Gain per settlement increased to $111k from $75k.
Embedded value per unit increased 22% which is a positive for future Realised Resale Gains.
Embedded resale gain now $104k per unit
Embedded DMF now $76k per unit
Resales occupancy remains strong at 96% excluding contracted stock and 98% including contracted stock.
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1H16 Results: Development Highlights
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1H16 1H15
New Units Completed 41 8
New Care Beds Completed 36 0
Development Pipeline (Units) 1,580 1,089
Development Pipeline (Care Beds) 604 370
Total Development Pipeline (Units & Care Beds) 2,184 1,459
Increased the delivery of units and beds to 77 during 1H16 being:
41 units being 37 units at The Orchards and 4 units at Papamoa
36 care beds at The Orchards.
307 units and beds currently under construction.
Unconditional agreement to purchase 3ha site on McClymonts Road, Albany – the 16th village in the wider Auckland region.
Progressing towards resource consent stage for 5ha of land at Red Beach on the Whangaparaoa Peninsula.
The development pipeline increased by 50%.
Increased capability of development team.
Development Highlights
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1H16 Results: Outlook Statement
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Full year expected units and beds deliver range of 105 to 160 depending on the timing of 55 units at
Greenwich Gardens, currently due to be completed in July 2016 which may be completed earlier.
Underlying Profit guidance for FY16 is in the range of $62m to $64m.
Achievement of this will be influenced by the mix between ILUs / ILAs and SAs and the
volume of returns in 2H16 available for resale. We expect realised resale gains per settlement
between $95k to $105k;
2H16 cash realised development margin will be lower than 1H16 due to lower levels of
available sales stock (expectation is cash of between $2.5m to $3.0m); and
On an annualised basis total expenses for FY16 are expected to be slightly higher than 1H16.
The guidance above assumes that the residential property and general market conditions remain
consistent with 1H16. Should changes in the market have an impact on Metlifecare’s guidance then
we will update the market.
Outlook Statement
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2. Development & Growth
The Poynton
Takapuna, Auckland
All stages complete and the Bowling Green is a popular new attraction.
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Development & Growth
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Completed 77 new units and beds during 1H16.
Settled 103 new units with realised development margin of 12%.
Development pipeline of 2,184 units and beds.
604 care beds represent 28% of the pipeline.
1,580 units represent 72% of the pipeline.
0 100 200 300 400 500 600
The Orchards
Coastal
Somervale
Oakridge
Papamoa
The Avenues
Greenwich Gardens
Red Beach
Albany
Crestwood
Pinesong
Pakuranga
Highlands
Greenwood Park
Total Development Pipeline
Units Care Beds
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Development & Growth
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Total of 307 Units and Beds under construction (190 units and 117 beds)
In addition to the 77 units and beds already delivered, a range of 28 to 83 units are scheduled to be
completed during 2H16 depending on the timing of 55 units at Greenwich Gardens, currently due to be
completed in July 2016 which may be completed earlier.
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12
20
100
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48
0 20 40 60 80 100 120
The Orchards
Somervale
Oakridge
Papamoa
Greenwich Gardens
UNITS & BEDS UNDER CONSTRUCTION
Beds Under Construction Units under Construction
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Development Progress
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The Orchards Apartment – Stage 1 and Stage 2 are fully occupied.
Final Stage at The Poynton is now completed including the brand new Bowling Green.
The new Villas at Papamoa Beach Village, Bay of Plenty. Next stages underway.
Oakridge Villas – Kerikeri – The new Pavilion was recently opened.
The Orchards – Top Apartments, Top Views.
Greenwich Gardens – Stage 1 Villas shortly after completion.
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3. Operating Performance
The Orchards – Glenfield, Auckland
Artist impression
Artist Impression Only F
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Operating Performance
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Resales occupancy remains strong.
Including stock that is currently under contract, total occupancy increases to 98%.
Available sales stock at 31 December 2015 was 34 units excluding stock under contract.
Resales occupancy breakdown:
Independent Living Units - 97%
Serviced Apartments - 89%
89%
92%
95% 95% 97% 96%
84%
86%
88%
90%
92%
94%
96%
98%
1H11 1H12 1H13 1H14 1H15 1H16
Resales Occupancy
Resales Occupancy
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Operating Performance
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DMF and realised resale gains per settlement have increased strongly by 33% relative to the pcp reflecting mix of units and property price growth.
The mix of units sold during the period was weighted towards ILUs and ILAs at 76% and 24% SAs.
65 44 50 53
75
111
40
43
56 58
57
64
0
20
40
60
80
100
120
140
160
180
1H11 1H12 1H13 1H14 1H15 1H16
$'000
DMF & Resale Gains per Settlement
Realised Resale Gain Cash DMF Cash
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Operating Performance
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Embedded value per unit continues to grow and has increased by 22% to $180k which is a positive for future realised resale gains.
Increase in Embedded DMF and resale gains per unit reflect strong growth in list prices and moving legacy contracts to the standard 30% membership fee over three years.
Average list prices increased to $465k per unit across the portfolio, 15% relative to the pcp and 7% relative to 30 June 2015.
Total Embedded Value $702.5m, up 27% on the pcp.
58 62 67 72 76
56 51 57
75
104
0
20
40
60
80
100
120
140
160
180
1H12 1H13 1H14 1H15 1H16
Embedded Value per unit ($'000)
Membership Fee Receivable Resales Gains
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Operating Performance
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Resident Profile • The average age of residents across the portfolio is 81.5 years old. • We track the length of stay for all unit settlements during a period and year. In the current period the average length of
stay for units settled was: • ILUs and ILAs – 8.2 years • SAs – 3.2 years
• A separate cash flow valuation for a 20 year period is undertaken for each village. The cash flow estimates are determined
using a “Monte Carlo” simulation model. The simulation model factors in available actuarial reports, death and non-death probabilities, local demographics, the individual characteristics of a unit and the village profile. The range of stabilised occupancy periods is;
• 7.2 to 8.9 years for ILUs and ILAs with an average of 8.2 years; and • 3.7 to 4.7 years for SAs with an average of 4.2 years.
• The forecast resident length of stay is directly related to age of entry of residents across our villages. If our ages of entry
were trending lower, then we would anticipate the length of stay simulation from CBRE to increase which is not evident in the current analysis.
• As a business we track age of entry by sale and resale and unit type. The average age of entry for ILUs and ILAs is
approximately 76.9 years and for SAs 86.5 across the portfolio. • Age of entry has trended up over the past 20 years.
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Operating Performance
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Employee Value Proposition • We are proud to have taken an industry leading position by increasing Care Giver wages an average of 11.6% and we have
seen the following benefits: • Reductions to caregiver rolling turnover; • Median tenure of caregiver staff has increased; and • Increased numbers of staff choosing training programs (up 15% since the implementation of the Employee Value
Proposition).
Care Offering • We offer care at the majority of our villages through residential aged care homes and the village services offered. In
villages without care homes we have a Care Services Manager who is responsible for the delivery of care into residents’ serviced apartments and independent units.
• We support resident directed care and ageing in place - consistent with NZ's Positive Ageing Strategy (2001). Our view is therefore that residents deserve the choice to receive care in their homes if the resident and their families believe this is serving their best interests.
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Business and Market
Leaders in providing innovative and sustainable solutions for the lifestyle and care needs of older people.
Development of retirement and aged care facilities designed to meet the unique needs of each community in which we are located.
Five revenue streams:
Village operations
Village services
Care services
New sales and resales
Development margins
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Our Business
Our Goals
To maintain a leadership position in the industry and…
to maintain a sustainable growth in build rate of units and beds through both greenfield and brownfield development;
to increase the Company’s exposure to medium and high care as well as in home care services;
to improve cash flows; and to continuously enhance the performance and profitability of the existing villages.
Aqua Aerobics in the beautiful Kapiti Village Pool
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4. Summary Financial Information
Hillsborough Heights - Auckland F
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Financial Performance
Profit & Loss 1H16 ($m)
1H15
($m)
Total revenue 52.0 50.9
Fair value movement of investment property
128.5 32.3
Joint Venture share of profit 0.2 0.8
Total expenses (47.2) (40.6)
Finance costs (0.1) (0.6)
Net profit before tax 133.4 42.8
Tax expense (7.7) (3.1)
Net profit after tax 125.7 39.7
Non recurring item - (2.0)
Net profit excluding non recurring items 125.7 37.7
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1H16 revenue was 2%
ahead of the pcp.
The Fair Value movement
for the period was
$128.5m up 298% on the
pcp as a result of strong
property price growth.
Auckland and BOP villages
delivered strong property
price lifts.
Deferred tax increased as
a result of increased future
DMF income associated
with price lifts.
Total expenses ahead of the pcp due to:
Timing of maintenance cost over the full year in 1H15
Greenwich Gardens and The Orchards operating with the majority of completed units occupied
Continued commitment to our employees through the employee value proposition has increased costs
Investment in the future has lead to an increase in support office costs to support operations and development growth
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Financial Performance
Underlying Profit 1H16 ($m)
1H15
($m)
Net profit excluding non recurring items
125.7 37.7
Fair Value movement of investment property
(128.5) (32.3)
Realised resales gains 21.6 14.1
Realised development margin
7.0 3.4
Deferred tax expense 7.7 3.1
Underlying profit 33.5 26.0
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Underlying profit up 29%.
Realised resale gains ahead
53% on the pcp as a result of
increased realised resale gain
per settlement and mix of
ILUs, ILAs and SAs.
Realised development margin
was 12%.
Excluding The Orchards,
realised development margin
was 17%.
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Financial Performance
Operating Cash Flow 1H16 ($m)
1H15 ($m)
New Sales cash flows 60.3 16.1
Resales cash flows (realised resale gains) 21.6 14.1
Total sales and resales cash flows 81.9 30.2
Net operations performance (3.7) 3.3
Interest paid (0.2) (0.5)
Net operating cash flow 78.0 33.0
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Operating cash flows were ahead of 1H15 as a result of higher new sales volumes, higher realised resale gains and settlement volumes achieved given the mix of units settled.
New sales revenues were driven by increased levels of available new sales stock at the beginning of the period.
Reduction in net operations performance on the pcp reflects non-recurring revenue of $2m in the pcp, increased operating costs and a reduction in trade and other payables from 30 June 2015. Additional detail on page 23.
* The table above splits operating cash flows between sales, resales, operations and interest (refer page 23 for additional detail).
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Financial Performance
Operating Cash Flow 1H16 ($m) 1H15 ($m)
Resident receipts 42.3 39.8
ORA new sales & resales 142.8 89.1
Payments to suppliers (46.4) (38.3)
ORA repurchases (60.9) (58.9)
GST 0.4 (0.3)
Interest received 0.1 0.1
Interest paid (0.2) (0.5)
Other Income - 2.0
Net operating cash per cash flow 78.0 33.0
Operating cash flow with new sales & resales split
New sales revenue 60.3 16.1
Net resales revenue 21.6 14.1
Net ORA revenue 81.9 30.2
Net operating performance (3.7) 3.3
Interest paid (0.2) (0.5)
Net operating cash per cash flow 78.0 33.0
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Realised DMF cash for 1H16 of $12.6m (1H15 realised cash DMF was $10.8m) included in Resident receipts above.
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Financial Performance
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Payables and other liabilities include the balance of the purchase price for the Albany site at McClymonts Rd due to settle in March 2016.
Balance Sheet 1H16 ($m)
1H15
($m)
Cash & other assets 24.4 22.7
Property plant & equipment 32.9 28.5
Investment properties 2,380.6 2,035.6
Total assets 2,437.9 2,086.8
Payables & other liabilities 45.2 21.6
Bank loans 48.8 51.6
Deferred membership fees 89.5 81.2
Refundable occupation right agreements 1,134.9 1,031.5
Deferred tax liability 86.3 70.9
Total liabilities 1,404.7 1,256.8
Total equity 1,033.2 830.0
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Financial Performance
Investment Properties 1H16 ($m)
1H15
($m)
Development land 49.8 38.1
Investment properties under development 61.8 51.7
Completed investment properties 1,042.0 836.1
Total valuation 1,153.6 925.9
Plus: Refundable occupation right agreement amounts 1,408.0 1,279.7
Plus: Residents’ share of capital gains 30.2 28.7
Plus: Deferred Membership Fee 89.5 81.2
Less: Membership fee receivables (297.4) (271.0)
Less: Occupation right agreement receivables (3.3) (8.9)
Total investment properties 2,380.6 2,035.6
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The value of total investment properties has increased by 17.0% on the pcp.
Discount rates and property price growth assumptions have remained unchanged:
Discount rates range between 12.3% – 16.5%.
Average property price growth assumptions range between 2.2% – 3.4%.
CBRE average list price per unit has increased by 14.6% relative to the pcp and 6.8% relative to 30 June 2015.
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Arts and Crafts – Bayswater,
Mount Maunganui
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Portfolio Summary, Definitions, Disclaimer & Glossary
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Portfolio Summary
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Villages ILU's ILA's SA's TotalCare
Beds
Care
SuitesTotal
Future
Units
Future
HospitalTotal
Overall
Total
The Avenues - 90 - 90 - - 12 59 71 161
Bayswater 159 56 17 232 - 6 6 238
Coastal Villas 140 16 49 205 30 - 30 8 8 243
Crestwood 121 - 14 135 41 - 41 125 60 185 361
Dannemora Gardens - 201 - 201 - - 201
Forest Lake Gardens 142 56 - 198 - - 198
The Orchards - 54 - 54 36 - 36 42 42 132
Greenwood Park 145 80 15 240 - - 72 72 312
Hibiscus Coast Village 150 71 48 269 - - 269
Hillsborough Heights Village 176 - 42 218 - - 218
Highlands 129 - 70 199 41 - 41 60 60 300
Kapiti Village 225 - - 225 - - 225
Longford Park Village 144 4 45 193 - - 193
Oakridge Villas 56 - - 56 - - 61 34 95 151
Pakuranga Village 69 - 18 87 60 - 60 60 60 120 267
Palmerston North Village 49 - 50 99 38 - 38 137
Papamoa Beach Village 58 - - 58 - - 122 48 170 228
Pinesong 100 232 27 359 10 10 25 25 394
Powley 46 - 34 80 45 45 125
Poynton - 242 15 257 - 5 5 262
7 Saint Vincent - 81 12 93 - 2 2 95
Somervale 83 - 11 94 40 - 40 16 69 85 219
Greenwich Gardens - Unsworth Heights 27 - - 27 - - 283 48 331 358
Wairarapa Village 56 - 25 81 41 - 41 122
Waitakere Gardens - 324 - 324 - - 324
Red Beach 420 68 488 488
Albany 346 86 432 432
Total 2075 1507 492 4074 372 23 395 1580 604 2184 6653
Metlifecare Portfolio - 31 December 2015
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Definitions
• Underlying profit removes the impact of unrealised fair value movements on investment properties, impairment of property, plant & equipment and excludes one-off gains and deferred taxation. It is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS. Underlying profit is an industry-wide measure and assists in comparison to peers.
• Non recurring items represent the proceeds from the settlement of a claim associated with remediation works for Hibiscus Coast Village and is offset by costs associated with the remediation. It is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS. Metlifecare believes it assists readers understand the operating performance of the business on a comparable basis.
• Realised development margin is the margin obtained on cash settlement of an occupation right agreement following the development of the unit. The calculation includes construction costs, non-recoverable GST, capitalised interest to the date of completion, land apportionment at cost, and infrastructure costs but excludes construction costs associated with offices, common areas and amenities. Margins are calculated based on when a stage is completed. Margins presented above are on the basis of the settled units during the period.
• Total settlement figures include resale settlements for Metlifecare Palmerston North which under the changes to NZ IFRS 11 in relation to joint venture accounting are excluded when calculating average settlement values in the operational section. In 1H16 resale settlements for Metlifecare Palmerston North were ILU’s 3 and SA’s 2 (1H15 ILU’s 5 and SA’s 8). DMF and realised resale gains figures exclude resale settlements for Metlifecare Palmerston North when calculating average settlements.
• Embedded value is calculated by taking the sum of the CBRE unit prices of units across our portfolio, deducting the resident refundable loan liability as per the balance sheet and company-owned stock items. The embedded value is a combination of Resale Gains and Deferred Membership Fee receivable. The value of the Deferred Membership Fee receivable is as per note 7 of the Financial Statements and the balance is Embedded Resale Gains. The per unit calculations have been adjusted for the Palmerston North joint venture accounting changes. Embedded value assists readers to understand the potential future cash flows from Realised Resale Gains & Deferred Management Fee Receivables.
• The presentation includes non-GAAP financial measures for new sales, resales and occupancy which assists the reader with understanding the volumes of units settled during the period and the impact that new sales and resales during the period had on occupancy as at the end of the period.
• Percentage movements may differ due to rounding.
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Disclaimer
• The information in this presentation is an overview and does not contain all information necessary to make an investment decision. It is intended to constitute a summary of certain information relating to the performance of Metlifecare Limited (“Metlifecare”) for the period ended 31 December 2015. Please refer to the financial statements for the half year ended 31 December 2015 that have been simultaneously released with this presentation.
• The information in this presentation does not purport to be a complete description of Metlifecare. In making an investment decision, investors must rely on their own examination of Metlifecare, including the merits and risks involved. Investors should consult with their own legal, tax, business and/or financial advisors in connection with any acquisition of financial products.
• The information contained in this presentation has been prepared in good faith by Metlifecare. No representation or warranty, expressed or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation, any of which may change without notice. To the maximum extent permitted by law, Metlifecare, its directors, officers, employees and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence on the part of Metlifecare, its directors, officers, employees and agents) for any direct or indirect loss or damage which may be suffered by any person through use of or reliance on anything contained in, or omitted from, this presentation.
• This presentation is not a product disclosure statement, prospectus, investment statement or disclosure document, or an offer of shares for subscription, or sale, in any jurisdiction.
• This presentation includes non-GAAP financial measures in various sections.
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Glossary of Terms
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– New Sales: The first time sale of an ORA (new stock)
– Resales: The sale of an ORA where a sale has previously been completed
– Realised Resale Gain: The difference between the resale and repurchase of occupation right agreements
– ORA: Occupation Right Agreement
– ILU: Independent Living Unit
– ILA: Independent Living Apartment
– SA: Serviced Apartment
– PCP: Prior Comparable Period
– Unit: Independent Living Units, Independent Living Apartments and Serviced Apartments
– DMF: Deferred Membership Fees
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