1H FY18 HALF YEAR RESULTS 22 February 2018 Mudgeeraba Queensland 1 - PowerPoint PPT Presentation

1H FY18 HALF YEAR RESULTS 22 February 2018 Mudgeeraba Queensland 1

CONTENTS 1. OVERVIEW & HIGHLIGHTS 2. FINANCIAL PERFORMANCE 3. GROWTH STRATEGY 4. SUMMARY AND OUTLOOK APPENDICES Artist’s Impression : Kogarah, New South Wales 2

1. OVERVIEW & HIGHLIGHTS 3

Delivering high quality residential aged care services to everyday Australians One of Care delivered Australia’s 68 to 8,000+ largest operational older Employing aged care homes Australians over 7,000 providers annually staff 4

OUR PORTFOLIO Key Portfolio Statistics (as at 31 Dec 2017) Number of homes Metro 52 Regional 16 Total number of operational homes 68 Freehold sites 61 Total operational places 6,023 QLD 6 homes Number of single rooms 4,829 615 places Single rooms as percentage of total rooms 90% Average number of places per home 89 SA 17 homes Number of homes receiving significant refurbishment 16 NSW 1,348 places supplement 18 homes 1,936 places • Focused on metropolitan locations across the East coast and South Australia VIC • New home (Twin Waters, QLD) opened in September 2017 27 homes 2,124 places • Ongoing investment to expand and improve our portfolio – 1 new home to open March 2018 in Kogarah – 3 new homes under development in Blakehurst (NSW), Southport (QLD) and Sunshine Cove (QLD) – 15 further homes currently undergoing significant refurbishment 5

1H FY18 HIGHLIGHTS EBITDA 1 of $45.4m achieved – increase of 5.6% from 1H FY17 Strong operating performance – increased revenue per operating bed day and robust cost control 94% average occupancy achieved in the period EBITDA margin increased to 16.7% of revenue Net RAD inflows continued with $33.6m received in the period New home at Twin Waters (QLD) opened on schedule and on budget in September Significant focus on portfolio development and growth with more than $130m of developments approved and commenced Board, Executive team and Leadership team renewal completed Declared interim dividend of 7.8c per share, fully franked, representing ~100% of NPAT for the period. Epping , New South Wales Re-affirmed full year FY18 EBITDA guidance of mid-single digit percentage growth subject to no material changes in market or regulatory conditions 1. A reconciliation of operating profit to EBITDA is presented in Appendix D. EBITDA excludes net profits from asset disposals of $0.4m. 6

1H FY18 FINANCIAL OVERVIEW $271.7m $45.4m $20.3m EBITDA 1 OPERATING REVENUE NPAT Up 3.3% on 1H FY17 Up 5.6% on 1H FY17 Up 2.5% on 1H FY17 7.78 cents $51.1m $42.3m EARNINGS PER SHARE OPERATIONAL CASHFLOW 2 NET DEBT 3 Decrease of 24.5% on 1H FY17 due to dilution 113% EBITDA/Cash conversion impact of FY17 capital raise EBITDA 1 includes net losses of $0.7m at Twin Waters between opening and 31 • December and excludes $0.4m profit from asset disposals • The decision to build a completely new home at Southport required the demolition of the old buildings which has resulted in a non-cash impairment charge of $3.2m. This is not included in EBITDA but is included in reported NPAT 1. A reconciliation of operating profit to EBITDA is presented in Appendix D. 2. Operational cash flow before interest, income tax and RADs, and Govt January prepayment of $31.3m 3. Net Debt referred to above includes the impact of the prepayment of January Govt revenues which occurs each December. 7

1H FY18 OPERATIONAL OVERVIEW Delivering Quality Care and Services • Continuing to deliver high quality care – all accreditation outcomes successfully met during the period • Additional services program embedded with more choices across dining and lifestyle activities • Introduction of Group Hospitality Manager has enhanced dining experience with greater emphasis on local produce Expanding and Improving Our Portfolio • Twin Waters (QLD) opened 4th September, Kogarah (NSW) expected to open March 2018 • Blakehurst (NSW), Southport (QLD) and Sunshine Cove (QLD) under development • St Ives and Wollongong in final planning stages • Significant refurbishment of 3 homes during the period, an additional 15 underway • $5m sustainability capital investment program approved and underway Leadership & People • All senior leadership roles now in place including Chief Customer Officer, GM Development and Property, and Regional Management Team • Consolidation of Enterprise Bargaining Agreements (EBAs) in NSW, QLD and VIC • Independent staff culture survey undertaken – upper quartile level of Strathalbyn, SA Dalmeny, NSW engagement • Graduate Nurse Development Program strengthened 1 • Executive team gender diversity 1 8

2. FINANCIAL PERFORMANCE Artist’s Impression: Sunshine Cove, Queensland 9

KEY OPERATING METRICS Highlights 1H FY17 2H FY17 1H FY18 • 94% average occupancy over the period Occupancy in Existing Homes (1) 93.0% 94.0% 94.0% • Total increase in revenue POBD of $5.00 compared to 2H Total Occupied Bed Days – all homes 1,011,148 1,005,537 1,024,957 FY17 Government Revenue POBD $192.6 $192.3 $196.0 – $3.70 increase in Govt revenues POBD with no material contribution from new significant refurbishments in period Resident Revenue POBD $67.6 $67.8 $69.1 – $1.30 increase in resident revenues POBD from Additional Total Revenue POBD $260.2 $260.1 $265.1 Services and DAP improvements Staff Costs POBD $166.6 $170.1 $173.8 • Increase in staff costs resulted from consolidating EBA agreements, increased costs associated with flu season, Non-Wage Costs excl rentals POBD $48.5 $44.2 $44.6 commencement of Twin Waters, and executive restructuring EBITDA per Occupied Bed Per Year $15,509 $15,804 $16,222 • Non-wage costs stable on 2H FY17 Total Staff Cost % of Revenue 64.0% 65.4% 65.6% • Net RAD receipts continue to be strong: Non-Wage Costs excl rentals % Rev 18.6% 17.0% 16.8% – Average incoming RAD prices exceed average outgoing RAD/Bond price EBITDA % of Revenue 16.3% 16.6% 16.7% – $1.5m was received from new residents at Twin Waters Net RAD Receipts $m $38.7 $41.4 $33.6 Average Period Occupancy in Existing Homes 95.0% 94.0% 93.0% 92.0% Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 1. Existing Homes refers to all homes except Twin Waters which opened in September. Refer to Appendix F for more detail on the calculation of Occupancy %. 10

FINANCIAL PERFORMANCE Highlights 1H FY18 vs Summary P&L 1H FY17 2H FY17 1H FY18 1H FY17 • 5.6% EBITDA growth versus 1H FY17 – includes net $m $m $m % losses from Twin Waters of $0.7m, expected to Government Revenues 194.7 193.4 200.9 3.2% breakeven in 2H FY18 Resident Revenues 68.4 68.1 70.8 3.5% • One-off $3.2m impairment charge associated with Total Revenues 263.1 261.5 271.7 3.3% Southport demolition and re-build has decreased Staff Costs (168.5) (171.0) (178.1) 5.7% NPAT for the period Non-Wage Costs (51.6) (46.9) (48.2) (6.6%) • Interest and financing costs down 36% versus 1H EBITDA (1) 43.0 43.6 45.4 5.6% FY17 with significantly lower debt levels Depreciation & Amortisation (8.5) (10.4) (10.7) 25.9% • EPS reduced due to the issue of new shares from Impairment Expense - - (3.2) n.a. capital raise in mid-FY17 Profit on Disposal of Assets - 1.0 0.4 n.a. EBIT 34.5 34.2 31.9 (7.5%) Finance Costs (5.9) (3.7) (3.8) (35.6%) EBT 28.6 30.5 28.1 (1.7%) Tax (8.8) (9.5) (7.8) (11.4%) NPAT 19.8 21.0 20.3 2.5% EPS (cents) 10.3 8.1 7.8 (24.3%) 1. A reconciliation of operating profit to EBITDA is presented in Appendix D.. 11

CAPITAL MANAGEMENT Highlights 31 Dec 2016 30 June 2017 31 Dec 2017 Summary Balance Sheet $’000 $’000 $’000 • Strong balance sheet supported by: Current assets − EBITDA to cash conversion in excess of 100% Cash 86,239 19,215 17,706 − Net RAD inflow of $33.6m Other current assets 16,438 18,273 17,826 Total current assets 102,677 37,488 35,532 • Net Debt of $42.3m at 31 December 2017 Non-current assets represents gearing ratio of 0.5x 2 Property, plant & equipment 708,048 725,049 732,079 • Undrawn debt facilities of $270m Intangible assets, goodwill & 971,683 1,035,990 1,035,740 bed licences Total non-current assets 1,679,731 1,761,039 1,767,819 Total assets 1,782,408 1,798,527 1,803,351 Current liabilities RADs and bonds 690,394 730,222 762,823 Current Borrowings 881 264 - Other current liabilities 105,582 73,354 108,075 Strong and Stable Funding Structure Total current liabilities 796,857 803,840 870,898 Non-current liabilities Bank Debt, Deferred tax liabilities 42,354 108,765 107,164 $42m Loans and borrowings 266,500 121,250 60,000 Other provisions and payables 3,361 3,556 4,499 Equity, Total non current liabilities 312,215 233,571 171,663 $761m Total liabilities 1,109,072 1,037,411 1,042,561 Net assets 673,336 761,116 760,790 RADs, $763m Net Debt 1 181,142 102,299 42,294 1. Net Debt equals loans and borrowings less cash 2. Gearing Ratio based on Net Debt divided by consensus FY18 EBITDA 12