26 February 2016 1 Contents 01 2 Business and financial - PowerPoint PPT Presentation

26 February 2016

• 1 • Contents 01 • 2 • Business and financial highlights 1HFY16 02 • 9 • Portfolio overview and growth strategy 03 • 16 • Summary and outlook 04 • 19 • Appendices Half Year Results for the period ended 31 December 2015

• 2 • 01

• 3 • Financial highlights 1H FY16 Financial results have exceeded those for the prior corresponding period 1H FY16 highlights Revenue of EBITDA of NPAT of $236.6m $51.0m $28.3m 12% higher than 14% higher than 15% higher than Normalised 1HFY15 1 Normalised 1HFY15 1 Normalised 1HFY15 1 ฀ Revenue increase from acquisitions and an increase in revenue/occupied bed day ฀ EBITDA 14% and NPAT 15% higher than 1HFY15 when normalised for the removal of the payroll tax supplement (impact ($7.0m)) ฀ Net RAD cashflow of $25.1m $69.7 m ฀ Capital expenditure of $70.2m to support business growth Net operating ฀ Development pipeline expanded by 35% to 1,273 additional places cashflow 2 ฀ Occupancy at 94.9%, in line with expectations ฀ Fully franked dividend of 9.4 cents per share declared, 100% of NPAT 1. 11%, 14% and 15% comparisons are to Normalised 1HFY15 results – refer to Glossary in Appendix A for definitions and Appendix E for reconciliation with 1H FY15 Pro forma results 2. Net cashflow before investment, interest, tax and financing activities, normalised to exclude government funding payment in December for January funding of $26.6m – refer Appendix C

• 4 • Business highlights – key operational statistics Statistics for the half year reflect the strong operational result 1H 2015 2 1H 2015 3 2H 2015 4 FY 2015 4 1H 2016 Key operational statistics 1 Reported Comment (1H FY16 vs 1H FY15) Pro forma Normalised Normalised Normalised Movement reflects Marleston acquisition, Sunset closure, Total operational places 4,855 5,049 5,088 opening of Mildura extension & some minor operational changes Revenue ($million) 218.1 211.1 218.3 429.4 236.6 Pro forma EBITDA 1H 2015 has been normalised to remove the EBITDA ($million) 50.5 44.8 44.7 89.5 51.0 payroll tax supplement and interest on RADs payable Average occupancy percentage 5 94.4% 94.3% 94.4% 94.9% In line with expectations Occupancy percentage at end of period 94.5% 94.3% 94.9% Revenue/occupied bed day 5 $265 $255 $262 $258 $271 Reflects increasing contribution from the Higher Accommodation Government income/occupied bed day 5 $181 $173 $177 $175 $188 Supplement, increased Care funding and COPE increase Resident income/occupied bed day 5 $74 $75 $74 $76 Reflects increasing contribution from DAP payments Staff costs/revenue percentage 60.5% 62.9% 64.0% 63.5% 63.3% In line with expectations RADs held (#) 6 2,046 2,128 2,194 46.5% of portfolio paying bond or RAD (in full or part) RADs held ($million) 7 $674.2 $704.6 $741.5 Average RAD/RAD held ($000’s) 6 $326.0 $328.0 $335.1 Reflects quality and location of assets Average incoming RAD ($000’s) 8 $365.9 $398.5 $383.9 $394.6 Reflects a higher proportion of DAP paid by residents choosing Average DAP rate 9 $31.43 $31.52 $35.56 RAD / DAP combinations 1. As per Glossary definitions unless otherwise noted 2. As per Half Year Results and Business Update for period ended 31 December 2014 – refer Glossary Appendix A for definition of Pro forma 3. As per definition Glossary (Appendix A) – refer Appendix E for reconciliation between 1H FY15 Pro forma and 1H FY15 Normalised 4. As per definition Glossary (Appendix A) – refer Appendix F for reconciliation between FY15 Pro forma and FY15 Normalised 5. Average across the reporting period (12 months or 6 months) 6. Includes all RADs held – partial and full at their weighted value 7. Includes ILU resident entry contributions 8. Includes partial RADs at full notional value and excludes lump sums received from partially supported residents 9. Includes full and partial DAPs at actual value and excludes daily accommodation contributions received from partially supported residents

• 5 • Earnings highlights Increased income the key contributor to EBITDA results ฀ Improvement in 1H FY16 EBITDA performance was driven principally by revenue ฀ The 3 facilities acquired since 1 November 2014 are making per occupied bed day of $271 for 1H FY16 compared to $255 in 1HFY15. This satisfactory progress in moving towards targeted run rate by consisted of: the end of 2016 • Government revenue per occupied bed day of $188 for 1H FY16, compared to $173 ฀ Occupancy was in line with expectations in 1H FY15 2 , reflecting COPE 2 increase of 1.3% from 1 July 2015, care funding and ฀ Staffing expenses were in line with expectations increased contributions from Significantly Refurbished facilities • Resident revenue per occupied bed day of $76 compared to $74 in 1H FY15 2 , ฀ Financial reporting has been updated to reflect Living Longer reflecting increased income from DAPs, Club and Additional Services fees Living Better changes – Interest on RADs payable, previously an expense within EBITDA, has been reclassified ฀ The closure of the Sunset facility, SA for redevelopment impacted earnings during as interest 3 the period Significant EBITDA movements compared to 1HFY15 3 60 (7.0) 3.5 (1.1) 1.8 0.2 EBITDA $ Millions 1.8 1.3 45 30 50.5 51.0 44.8 15 0 1H FY15 Pro forma Payroll tax Interest on RADs Normalised 1H FY15 Increased DAP Increased Closure - Sunset Increased Other 1H FY16 Reported supplement payable income supplements - Facility contribution from Significantly Acquisitions Refurbished facilities 1. Note – all “per occupied bed day” figures are based on Normalised results. 2. Refer to Glossary Appendix A for definition 3. Refer Appendix A for glossary and Appendix E for reconciliation between 1H FY15 Pro forma and 1H FY15 Normalised

• 6 • Earnings highlights Solid NPAT growth underpinned by EBITDA growth ฀ Improvement in 1H FY16 NPAT performance driven by 14% growth in EBITDA compared to prior comparable period ฀ This was partially offset by increased depreciation expense, which will continue to increase in 2H FY16 (further detail provided – Appendix G) ฀ Tax expense at 30% Significant NPAT movements compared to 1H FY15 1 60 NPAT $ Millions 45 6.2 (1.9) (4.9) (1.2) 0.5 30 15 29.6 28.3 24.7 0 1H FY15 Pro forma Payroll tax supplement Normalised 1H FY15 Increased EBITDA Increased depreciation Reduced interest Increased tax expense 1H FY16 Reported (tax effected) expense expense 1. As per definition glossary (Appendix A) – refer Appendix E for reconciliation between 1H FY15 Pro forma and 1H FY15 Normalised

• 7 • Cashflow highlights Net RAD inflows reflect the LLLB changes maturing ฀ Key investment activities included: ฀ Net RAD inflow of $25.1 million compared to $43.4 million in 1H FY15 • Expenditure of $19.3 million on land for development sites in • Reflects the tail end of the grandfathering of residents from the Camberwell, VIC and Newcastle, NSW impacts of the LLLB legislation • Development capex and significant refurbishment expenditure of • The majority of residents 1 elect to pay a RAD, however the $50.0 million number of combination RAD/DAPs increased significantly in ฀ Note: the monthly payment for January of $26.6 million for 1HFY16 compared to FY15 government funding was received prior to 31 December 2015. • The value of incoming RADs continues to increase This happens from time to time in the December month in the Aged Care industry and has been normalised from the result. 3 ฀ Net cash on hand of $6.8 million 2 Key cashflow movements 80 16.2 60 (3.1) 25.1 (3.4) (74.7) 40 69.7 $Millions 51 5.0 (11.4) 20 (1.1) 0 1H FY16 EBITDA Change in Non cash items in Net receipts from Net Operating SRO stamp duty Net Capex - land, Net interest paid Net debt Tax Dividends paid Normalised Net working capital EBITDA RADs Cashflow refund buildings and drawndown cash flow -20 development (52.9) (49.1) -40 -60 1. Permanent, non supported residents only, entering care after 1 July 2014 2. Excluding the $26.6m government prepayment normalised from the net cashflow result – refer Appendix D 3. Refer Appendices C and D