Arvida Group Limited — AGM Information 2019

Jul 5, 2019

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2019 SHAREHOLDER ANNUAL MEETING

ARVIDA GROUP LIMITED Annual Shareholder Meeting 5 July 2019

CEO’S REVIEW

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STRATEGY UPDATE

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ARVIDA GROUP LIMITED Annual Shareholder Meeting 5 July 2019

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CARE STRATEGY

Retain high needs-based portfolio composition Excellence in care: The Attitude of Living Well Increase PAC rates on care beds Introduce premium care suite offering in key urban areas Conversion of existing care beds and certification of serviced apartments

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ARVIDA GROUP LIMITED Annual Shareholder Meeting 5 July 2019

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TRANSFORMING THE CARE MODEL

 Attitude of Living Well delivering better resident outcomes

 Household model provokes move in culture

 Resident-led quality care services overarching principle

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ARVIDA GROUP LIMITED Annual Shareholder Meeting 5 July 2019

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MEASURABLE OUTCOMES

• Exceptional NPS result from resident survey

• +58 in villages and +51 in care facilities, much higher than industry context

• Inaugural staff engagement survey completed

• 96% determined to give best

• 83% motivated to go beyond

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EXCELLENCE IN CARE

• 96% care occupancy

• Continues to be significantly above sector at 88%

• Continued excellent Ministry of Health audit results

• 82% of FY2019 audits achieved 4 years

• Now 18 facilities with gold standard of 4 years certification (+1 since year end)

• Clinical standard is substantially above national level

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ARVIDA GROUP LIMITED Annual Shareholder Meeting 5 July 2019

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OVERVIEW OF OPERATIONS

 Rollout of resident management system now implemented

 Over 26,000 training modules completed by staff

− Continue to invest in our people

 No significant health and safety incidents during the period

− Our Health and Safety Plan has ten goals to be completed before 30 June 2020

− Arvida aims for continual H&S improvement

 IT roadmap includes investment in enabling technology

 All FY18 acquisitions fully integrated

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ARVIDA GROUP LIMITED Annual Shareholder Meeting 5 July 2019

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FINANCIAL OUTPERFORMANCE

 Strong financial results up on lead measures

Revenue $152m +15%

Underlying Operating Profit Cashflow $39m $69m +17% +28%

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Total
Assets
$1.3b
+15%
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• 5% accretion in Underlying Profit per share

• 328 ORA sales – 258 resales and 70 new sales

• Stock levels remain low

• Pricing and margins increased

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ARVIDA GROUP LIMITED Annual Shareholder Meeting 5 July 2019

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INCREASED ASSET BASE

• Total asset base now in excess of $1.3b, with over $1.0b of investment property

• Investment property increased $159m (vs FY18):

• $69m of development activity

• Fair value movements at existing and completed villages

• $27m of land acquisitions

• No village acquisitions undertaken in FY2019

• Gearing remains conservative at 25% with headroom to undertake current development programme

• Total net debt of $186m included:

• $48m of development project work in progress

• $53m of development land

• $62m of inventory

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PROJECTS COMPLETED IN FY2019

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PARK LANE, CHRISTCHURCH

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COPPER CREST, TAURANGA

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RHODES ON CASHMERE, CHRISTCHURCH

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ARIA BAY, AUCKLAND

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MARY DOYLE,
HAVELOCK NORTH
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KEY PROJECTS IN FY2020

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Imagery Nearmap VILLAGE AT THE PARK, WELLINGTON

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Imagery Nearmap
WAIMEA PLAINS,
RICHMOND
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WAIMEA PLAINS RETIREMENT COMMUNITY

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Artist impression. Subject to final investment decision approval.
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WAIMEA PLAINS, RICHMOND

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KEY PROJECTS IN FY2020

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Imagery Nearmap
ST ALBANS,
CHRISTCHURCH
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Imagery Nearmap
LAURISTON PARK,
CAMBRIDGE
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KEY PROJECTS IN FY2020

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Imagery Nearmap
PARK LANE,
CHRISTCHURCH
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Imagery Nearmap
MARY DOYLE,
HAVELOCK NORTH
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COPPER CREST CARE FACILITY

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COPPER CREST, TAURANGA

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LAURISTON PARK CARE FACILITY

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Artist impression. Subject to final investment decision approval.
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LAURISTON PARK, CAMBRIDGE

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18HA GREENFIELD SITE IN KERIKERI

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Boundary line indicative only.
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HALL RD, KERIKERI

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NEW PORTFOLIO ACQUISITION

• On 25 June 2019, announced agreement to purchase three quality villages of scale, or scale potential, for $180m[1]

− Bethlehem Country Club, Bethlehem Shores and Queenstown Country Club

• Includes agreement to retain vendor development team

 Acquired off-market from interests controlled by Fraser Sanderson, a long-term developer of high-quality retirement villages from whom we have acquired assets previously

• Completion on track to occur 31 July 2019, subject to customary closing conditions

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Excludes estimated transaction costs of $4m and estimated working capital and work in progress adjustments of $6m.

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ADJACENT TAURANGA VILLAGES

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Bethlehem Shores
Bethlehem Country Club
Boundary line is indicative only. Nearmap imagery 2019.
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Located in Bethlehem, approx. 10km to Tauranga centre

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Adds to existing facilities in Tauranga:

1. Bethlehem Shores and Bethlehem Country Club

2. Bethlehem Views (acquired 2016)

3. Copper Crest (acquired 2016)

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PRIME LOCATION IN QUEENSTOWN

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Queenstown Country Club
4
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Located in Shotover Country, Wakatipu Basin

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1. Queenstown Country Club

Queenstown Airport and Frankton town centre (approx. 5 km)

2. Queenstown centre (approx. 10km)

3. New Commercial Precinct with community and medical amenity

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PORTFOLIO TRANSFORMATION

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PORTFOLIO DEVELOPMENT
> 9% increase in existing portfolio
Acq’d Acq’d
Adds 326 504 and 37% increase in development
units units pipeline [2]
portfolio
scale > Future development pipeline is
3,677 1,357
units units largely consented
PRE POST
200 250+
+ 200 > FY20 delivery now expected to
Increases 170 be 200 units
build rate > Target annual build rate increased
to 250+ units from FY21
FY20 FY21+ FY20 FY21+
PRE [1] POST [1]
Acq’d ILUs > Needs-based composition
8% remains high at 60%
Retains
ILUs > ILU’s represent 40% of portfolio
needs-based 34% ILUs
Needs- Needs-
32%
composition based based > Acquisition strategy includes
66% 60% future build of care at Tauranga
and Queenstown villages
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1. Established units/beds only.

2. Subject to resource consents and final investment decision approval.

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FUNDING APPROACH

Acquisition price at $180m (includes $53m of land) to be funded by equity and debt:

• $10m of new shares to Vendor at $1.343 per share

• $50m placement of new shares completed at $1.25 per share

• Fully underwritten

• Oversubscribed by NZ and Australian institutions and NZ shareholders

• $92m 1-for-5.7 pro-rata rights issue at $1.15 per share

• Arvida Directors and senior executives to subscribe[1]

• Balance funded from a new $125m 3-year debt facility tranche by current ANZ & BNZ syndicate

1. Arvida directors and senior executives intend to take up all of their entitlements for shares beneficially owned by them under the Offer, except for Michael Ambrose whose associated interests intend to apply for around 68,000 shares under the Offer.

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FINANCIAL IMPACT

Based on Arvida’s estimated earnings for the portfolio:

• Immediately earnings accretive

• $15.8m of underlying profit in FY20 (pro forma basis)

 $19.4m of underlying profit in FY21

• Mid single digit accretion to underlying EPS

• Further earnings growth expected beyond FY21:

• Future developments; and

− Maturing of resident profiles

• Post transaction gearing is expected to remain at 25% with sufficient capacity to meet current development pipeline and make additional greenfield site acquisitions

• Dividend policy retained at 50%-70% of underlying profit

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RIGHTS ISSUE NOW OPEN

• Rights issue opens today

• Offer documents sent to eligible shareholders yesterday

• Applications can be made at www.shareoffer.co.nz/arvida

• Completed applications with monies by 5pm, 15 July to be accepted

• Eligible shareholders can

• Apply for entitlement of up to 1 new share for every 5.7 shares held at the record date at a price of $1.15 each

• Apply for additional new shares above entitlement at the Clearing Price

• Apply for nil new shares, in which case your rights will lapse and you may receive some value in Shortfall Bookbuild for rights not taken up

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DIVIDEND GROWTH

Total Net FY2019 Dividend 5.35 cps

7% up on last year Dividend payout at 57% of Underlying Profit, within policy range of 50-70%

• Increase in build rate from development activities

• Benefit from embedding The Attitude of Living Well

 Momentum in revenue and earnings continuing

 Demand fundamentals continue to underpin sector outlook

 Challenges remain labour supply, cost pressures and housing market

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PERFORMANCE UPDATE

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ARVIDA
RYMAN
OCEANIA
SUMMERSET
METLIFECARE
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Source: IRESS. Rebased to 100 at 31 March 2018.

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