DISCLAIMER PLEASE READ CAREFULLY BEFORE THE REST OF THE PRESENTATION This presentation has been prepared by Summerset Group Holdings Limited (SGHL or the Issuer) The information in this document is given in good faith and has been obtained from sources in relation to the offer of bonds described in this presentation (Bonds). The offer of the Bonds is believed to be reliable and accurate at the date of preparation, but its accuracy, correctness and made in the product disclosure statement dated 30 May 2017 (PDS) , which has been lodged in completeness cannot be guaranteed. accordance with the Financial Markets Conduct Act 2013 (FMCA). None of the Joint Lead Managers or Bond Supervisor nor any of their respective directors, The PDS is available through www.business.govt.nz/disclose or by contacting ANZ Bank officers, employees, affiliates or agents have independently verified the information contained New Zealand Limited (ANZ), Deutsche Craigs Limited, First NZ Capital Securities Limited and in this presentation. Forsyth Barr Limited as Joint Lead Managers or any other Primary Market Participant, and must be given to investors before they decide to acquire any Bonds. No applications will be The offer of Bonds is being made only in New Zealand. The distribution of this presentation, and the accepted or money received unless the applicant has been given the PDS. offer or sale of the Bonds, may be restricted by law in certain jurisdictions. Persons who receive this presentation outside New Zealand must inform themselves about and observe all such restrictions. Capitalised terms used but not defined in this presentation have the meanings given to them in Nothing in this presentation is to be construed as authorising its distribution, or the offer or sale of the PDS. the Bonds, in any jurisdiction other than New Zealand and the Issuer accepts no liability in that regard. The Bonds may not be offered or sold directly or indirectly, and neither this presentation The information in this presentation is of general nature and does not constitute financial product nor any other offering material may be distributed or published, in any jurisdiction other than advice, investment advice or any recommendation by the Issuer, the Bond Supervisor, the Arranger, New Zealand. the Organising Participant, the Joint Lead Managers, or any of their respective directors, officers, employees, affiliates, agents or advisers to subscribe for, or purchase, any of the Bonds. Nothing in Application has been made to NZX for permission to quote the Bonds on the NZX Debt Market and this presentation constitutes legal, financial, tax or other advice. all the requirements of NZX relating thereto that can be complied with on or before the distribution of the Terms Sheet have been duly complied with. However, NZX accepts no responsibility for any The information in this presentation does not take into account the particular investment objectives, statement in this document. NZX is a licensed market operator, and the NZX Debt Market is a financial situation, taxation position or needs of any person. You should make your own assessment licensed market under the FMCA. of an investment in the Issuer based on the PDS and should not rely on this presentation. In all cases, you should conduct your own research on the Issuer and analysis of any offer, the financial Certain financial information contained in this presentation is prepared on a non-GAAP basis. “Underlying profit” differs from IFRS net profit after tax. The unaudited underlying profit measure condition, assets and liabilities, financial position and performance, profits and losses, prospects and business affairs of the Issuer, and the contents of this presentation. is intended to assist readers in determining the realised and non-realised components of fair value movement of investment property and tax expense in the Summerset Group’s income statement. This presentation contains certain forward-looking statements with respect to the Issuer. All of these The measure is used internally in conjunction with other measures to monitor performance and forward-looking statements are based on estimates, projections and assumptions made by the make investment decisions. Underlying profit is an industry wide measure which the Summerset Issuer about circumstances and events that have not yet occurred. Although the Issuer believes Group uses consistently across reporting periods. these estimates, projections and assumptions to be reasonable, they are inherently uncertain. Refer to slide 19 for a reconciliation of non-GAAP underlying profit to GAAP net profit Therefore, reliance should not be placed upon these estimates or forward-looking statements after tax. and they should not be regarded as a representation or warranty by the Issuer, the directors of the Issuer or any other person that those forward-looking statements will be achieved or that the assumptions underlying the forwarding-looking statements will in fact be correct. It is likely that actual results will vary from those contemplated by these forward-looking statements and such variations may be material. 1 1
CONTENTS 4 17 24 BUSINESS FINANCIAL SECURITY OVERVIEW PERFORMANCE STRUCTURE 32 37 OFFER TERMS APPENDICES AND TIMETABLE 2
OFFER HIGHLIGHTS BOND OFFER FURTHER DIVERSIFIES FUNDING SOURCES AND TENOR ■ Total bank debt facilities of $600m ■ Net debt of $265m as at 31 December 2016 ■ This bond will be used to partially repay bank debt facilities and provide diversification of funding sources and tenor RETAIL BOND OFFER DETAILS Issuer Summerset Group Holdings Limited (listed on the NZX and ASX) Bonds Unsubordinated, guaranteed, secured, fixed rate bonds of the Issuer Provided by the Summerset Group Guarantee and security Equal ranking with Summerset’s banks Issue size Up to $75m with up to $25m oversubscriptions Maturity 6 year bonds maturing Tuesday 11 July 2023 Rating Not rated Quotation Application to quote the bonds on NZX Debt Market (NZDX) has been made Joint Lead Managers ANZ, Deutsche Craigs, First NZ Capital Securities and Forsyth Barr 3
BUSINESS OVERVIEW 4
SUMMERSET 2016 SNAPSHOT THIRD LARGEST RETIREMENT VILLAGE OPERATOR 748 MORE THAN 4,200 CARE BEDS RESIDENTS IN PORTFOLIO 2,828 MORE THAN 1,000 RETIREMENT UNITS STAFF MEMBERS IN PORTFOLIO 409 6 RETIREMENT UNITS GREENFIELD BUILT IN 2016 SITES LAND BANK OF LAND BANK OF 366 2,609 CARE BEDS RETIREMENT UNITS 21 450 OPERATING VILLAGES RETIREMENT COMPLETED OR UNDER UNITS: BUILD * Information as at 31 December 2016 DEVELOPMENT RATE FOR 2017 5
SUMMERSET BACKGROUND SECOND LARGEST RETIREMENT VILLAGE DEVELOPER IN NEW ZEALAND ■ Summerset will turn 20 years old this year ■ Listed on the NZX in 2011, and the ASX in 2013 ■ Nationwide provider ■ 21 operating villages completed or under development ■ 99% occupancy rate within established care centres for 2016 ■ Only 29 retirement units available for resale at 31 December 2016 ■ Six greenfield sites at Casebrook, Lower Hutt, Parnell, Richmond, Rototuna, and St Johns not yet started 6
SUMMERSET AWARDS FOUR-TIME WINNER OF RETIREMENT VILLAGE OF THE YEAR ■ Four-time winner of Best Retirement Village Operator at the Australasian Over 50s Housing Awards ■ Received a Highly Commended in the Reader’s Digest Trusted Brands Survey three years running, from 2015 - 2017 ■ 94% care customer satisfaction rating in 2016 ■ 94% village customer satisfaction rating in 2016 ■ Summerset finance team awarded the Finance Team of the Year award at the 2017 CFO Awards 7
DEMOGRAPHICS UNPRECEDENTED GROWTH FORECAST IN POPULATION 75 YEARS AND OLDER ■ The New Zealand population 75 years of age or older is forecast to increase from around 300,000 currently to around 1,000,000 by 2068 ■ The current penetration rate across New Zealand for people 75 years or older living in a retirement village is around 13%* ■ Continuing growth and ageing of the New Zealand population is expected to significantly increase demand for aged care and retirement village facilities Source: Statistics New Zealand 8 * Summerset estimate based on Statistics New Zealand population data, CBRE retirement unit data, occupancy of 93% and resident density of 1.26 per unit
SUMMERSET TRACK RECORD 19 YEAR TRACK RECORD OF DEVELOPING AND OPERATING VILLAGES ■ Consistent year-on-year growth in our portfolio over the last 19 years ■ Delivered 409 retirement units in 2016 and targeting a delivery of 450 retirement units in 2017 to meet strong demand *Build rate and portfolio as at 31 December 9
SUMMERSET STRATEGY SUMMERSET BUILDS, OWNS AND OPERATES RETIREMENT VILLAGES IN NZ ■ Focus on continuum of care model ■ High quality care available across all villages ■ Village designed to integrate into local communities ■ Internal development and construction model ■ Nationwide brand offering ■ Customer centric philosophy – “we love the life you bring to us ” ■ New Zealand focus 10
INTEGRATED BUSINESS MODEL FULL CONTINUUM OF CARE OFFERING IS KEY TO VILLAGE SUCCESS ■ Integration of independent and assisted living with the provision of aged care is a key reason why residents choose a village ■ Aged care available at all villages to ensure residents receive full support (can move through the village) should their needs change ■ High barriers to entry due to capital costs and complexity of care ■ Villages offering a continuum of care are more likely to have a waiting list and higher entry and average ages ■ Full continuum of care with dementia care introduced in 2016, and to be included in new village developments 11
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