Annual Report2022 Subsection HeadingSECTION HEADING4 Annual Report 20225 02
Contents
Chair and CEO’s report
Highlights
Snapshot
2022 highlights
Our people and community
Our villages
Our commitment to sustainability
Our performance
Five-year summary
Financial statements
Governance
Board of Directors
Executive Leadership Team
Remuneration
Disclosures
Directory
Company information
06
14
14
16
20
32
42
52
56
57
99
112
114
116
126
136
139
03
Annual Report 2022
04
8ABOUT THIS REPORTThis Annual Report of Summerset Group Holdings Limited (Summerset) is prepared in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), the NZX Listing Rules and Corporate Governance Code, the ASX Listing Rules (as relevant for foreign exempt listings) and the Companies Act 1993. It covers all our business operations for the year ended 31 December 2022. We are aligning our reporting to the International Integrated Reporting Framework to improve the way we communicate and improve transparency. We will continue to build on this approach. COVER: Summerset’s continuum of care model delivers dedicated and person-centred care, when neededINSIDE COVER: Artist impression of Summerset Milldale RIGHT: Artist impression of Summerset BoulcottINSIDE BACK COVER: Artist impression of Summerset Boulcott STRATEGY
05
9GROWTHWe look for expansionopportunities in New Zealandand Australia that delivercompetitive returnsfor our shareholders.OUR PEOPLEWe want to create agreat place to work, whereour people can thrive.OUR CUSTOMERSWe continue to improveand enhance our offeringto residents.Our strategic goals are underpinned by our desireto bring increased wellbeing to our customersand staff by harnessing the power of innovationand weaving sustainability into our work.WELLBEING INNOVATIONSUSTAINABILITYBRINGING THE BEST OF LIFEOur strategy Annual Report 2022
Chair and CEO’s
report
Mark Verbiest
Chair
06
Scott Scoullar
Chief Executive Officer
Welcome to our annual report
for the 12 months ended
31 December 2022. This has
been another year of significant
achievements for Summerset,
despite significant challenges.
Our achievements are all set against
a backdrop of increasing inflation,
supply chain constraints, national
nursing and care staff recruitment
shortages, a falling property market,
and New Zealand’s most difficult
year combatting COVID-19. Despite
this we have had a successful
2022 and we continue to be well
equipped to deal with these ongoing
challenges while maintaining focus
on delivering value for our residents
and shareholders.
Demand is strong for our product
with 1,007 unit sales of Occupation
Rights in 2022. New Zealand’s
population aged 75+ continues to
grow and is forecast to almost
triple in the next 50 years. With
that comes an increasing pool of
prospective Summerset residents.
Throughout the year, time to settle
has remained steady – driven by
when our residents sell their home
to move into a Summerset village –
but we are also cognisant that with
the easing of the residential property
market, settlement timing will likely
return to the more normal levels
before the pandemic bubble which
heavily inflated the market.
With an average age of 81, our
residents’ decision to enter a village
is driven by life events – lifestyle,
health, desire for more community,
downsizing and more, and the
COVID-19 pandemic highlighted
many of the benefits gained from
living in a village. These events
continue to happen and continue
to drive demand regardless of the
wider economic landscape.
Summerset’s offering is positioned
to offer something to a wide
range of people and budgets.
Approximately 88% of our product is
priced lower than the median house
price which makes it affordable,
particularly when many of our
potential residents are selling 3-4
bedroom homes priced in the upper
quartile of the market.
Also, we have a number of sales
mechanisms to assist people to
move into our villages while they're
still selling their home. The 2023
property market is likely to be
more challenging than 2022 but we
feel prepared.
To meet demand, we have
continued to strengthen our
development pipeline in both New
Zealand and Australia. This year we
announced the purchase of four
pieces of land - Masterton and
Rotorua in New Zealand, and Mernda
and Drysdale in Victoria, Australia.
Our Australian business continues
to move forward well; we now
have two of our seven pieces of
land consented, with our Chirnside
Park property gaining consent late
2022. Cranbourne North is the most
advanced of our properties with the
first residents expected to move in
early 2024.
Sadly this year the first death on one
of our construction sites occurred
when Marin Construction (one of our
CHAIR AND CEO’S REPORT
sub contractors) scaffolder Michael
Noche died following an incident at
our St Johns site in November. Our
thoughts are with Michael's family
and colleagues after this tragedy
and we have offered ongoing
support to them. The incident is still
being investigated by WorkSafe NZ
and we have cooperated fully with
them throughout.
Business performance
Underlying profit for 2022 is
$171.4 million, an increase of 21.5%
on 2021. Our IFRS net profit after
tax is $269.1 million, down 50.5%
on 2021. Operating cash flows
of $369.2 million have decreased
4% from last year. The value of
our investment property is now
$5.4 billion, up 18.3% on 2021.
We are pleased with the overall
performance of the business for
2022. We have weathered multiple
challenges to deliver an increase in
our underlying profit, while the net
(IFRS) profit after tax includes the
impact of reduced fair value gain on
investment property compared to
the prior year. We have shown how
we can run the business effectively
during turbulent times, and continue
to position ourselves for growth into
the future. Despite these challenges,
we have kept our debt to an
appropriate level, and have achieved
strong growth in our balance sheet
during 2022.
The Board is pleased to declare
a final dividend of 11.6 cents per
share, payable on 23 March 2023.
Combined with our interim dividend
of 10.7 cents per share, shareholders
have received 22.3 cents per share
for the 2022 financial year — a 20.5%
increase over 2021.
Villages and care
Our care offering, and our
continuum of care model, is a very
important part of why our residents
choose to live at Summerset, it's
an integral part of our model as
a business. Residents want the
peace of mind that their needs will
be met if their care requirements
change while they’re living in our
villages. We have invested more
in care this year with our care
centre refurbishment programme,
which has been reviewing our
first generation facilities around the
country to ensure they meet the
needs and expectations of our
residents now and into the future.
Our Havelock North, Trentham and
Levin villages are all in various
stages of major upgrades to their
care centres to provide modern
and state-of-the-art facilities for our
current and future residents.
Our newest care centre (including
memory care centre) at our
Kenepuru village was completed
this year with residents moving in
February 2023. Our Te Awa (Napier),
Pāpāmoa (Tauranga) and Bell Block
(Taranaki) main buildings will be
ready for residents later in 2023 –
all will have our world-class care and
memory care centres.
As well as investing in new and
improved buildings, we've invested
in improving our residents' care
further with our new Kaitiaki
(wellbeing assistant) role. Our 70
Kaitiaki around the country provide
more one-to-one care for our
residents and support them both
physically and emotionally. This can
be from working with residents on
their physical health and increasing
their mobility, through to simply
spending more individual time with
residents to talk and provide much
needed interaction for their mental
health and wellbeing.
We, along with many of our
competitors, continue to be very
concerned about underfunding
in the wider aged care sector.
Summerset is part of a group called
Aged Care Matters that has spent
much of the year lobbying the
government about the serious risks
facing our sector.
Public funding for care services,
including daily care rates, is
insufficient to provide the exacting
standards of service that are rightly
expected. On average, providers get
$170 per night for providing rest-
home level aged care – less than a
hotel room or what the government
spends on emergency housing. The
bed is only a small part of the need
too; the funding doesn’t account
for the very complex needs that
aged care residents present with.
Providing care, meals, a room and
everything else for $170 a day is
unrealistic at best.
Well over 50% of the aged care
beds in New Zealand are provided
by not-for-profit providers who can’t
continue to run with funding gaps.
It's not just not-for-profit providers
either, a number of aged care
businesses around the country have
closed beds this year. More than
1,000 aged care beds closed in 2022
and with nowhere else to go our
elderly will fall back on the public
health system.
It’s estimated that in 40 years’
time New Zealand will need over
12,000 more aged care nurses,
7,700 more dementia beds and
15,000 aged care beds, but the
current funding model is pushing the
industry backwards and there’s no
way we’ll meet that demand.
In terms of our own services, we will
not compromise on standards. Our
residents expect a high-quality care
option if they need it, and we will
continue to invest in and provide
our care centres, as they are an
integral part of our offering for our
target audience. We can continue to
provide care because we are a large
business - our wider sector faces
systemic challenges though.
In addition to funding, finding
nursing staff has been an ongoing
issue for the sector this year. While
the borders opened up halfway
through the year, finding nurses
continues to be very difficult. It’s
07
Annual Report 2022
08
MultiBall wall in action with Summerset residents
estimated that there are more than
1,200 nursing vacancies in the sector
(nearly 25% of nurses required in
sector). Also, funding for aged care
nurses' salaries have been set at
between $15,000 to $20,000 a year
less than nurses with the same
qualifications and experience in
public hospitals.
Late in 2022, after years of
lobbying by industry groups, the
government announced a $200m
funding increase for aged care
nurses' salaries and that nurses
would be put on the fast-track
residency pathway. To date health
officials have not provided any detail
on the extra funding in terms of
how it will be allocated or when it
will start. Also the announced public
funds don't go far enough. Without
the ability to allocate the funding or
have certainty around when it will be
received the industry will continue to
see beds close and operators close
their doors. More funding and better
immigration pathways will be good
steps in the right direction, and they
will help the sector to retain nursing
staff, if we can get moving.
If the systemic funding issues within
aged care are not addressed, we
will see more providers closing
beds or shutting entirely. We will
continue to push for funding that will
ensure the health of our wider sector
and gives elderly New Zealanders
options when they need care.
Design and technology
We continue to evolve our
design and offering to give our
residents meaningful and useful
facilities. Our dedicated research
and development team apply best-
practice design and innovation,
and importantly also gather insights
from residents’ experience of life
in our villages to continually look
at opportunities to improve our
offering. As an example, we've
focused on upskilling on dementia
care design and incorporating
our residents' experience and use
of our existing memory care
facilities in order to improve
our care offering further. Our
landscaping designs focus on
creating more communal areas,
including children’s playgrounds,
vegetable gardens, breakout spaces
for residents to use around the
village, petanque and bowling
greens and much more.
Outside of the physical environment
we continued to test and invest
in technology to enhance our
residents’ experience and lives.
Bringing the Best of Life is at
the heart of everything we do,
and we are always looking at
innovative ways to support all
aspects of wellbeing, and have
adapted since the pandemic to
ensure that we can offer quality
engagement opportunities both in
our recreation centres and at home.
Each of our villages has a dedicated
activities coordinator who provides
a calendar of activities for health
and wellbeing, catering for a broad
range of interests and supporting
social interaction.
We have designed our own
signature exercise programme, CB
Fit, which is an accredited falls-
prevention class as a part of the
“Live Stronger for Longer” initiative.
This is built on a foundation of
the 4Ps: Prevent, Protect, Progress
and Preserve, and we have recently
CHAIR AND CEO’S REPORT
developed our own chair-based
exercise classes as an extension
of the standing strength and
balance class.
Our entertainment series
“Summerset Sessions” continues
to deliver a variety of content
live and on-demand to residents
regardless of where in the county
they are. These sessions include
“Cooking with a MasterChef”,
musical series “Summerset Sings”,
and “An Interview With...”
featuring well-known icons and
hosted by Summerset Ambassador
Jude Dobson.
We’ve invested in experience and
fitness technology such as virtual
reality to allow our residents to
“travel” to far-flung corners of the
world, and our MultiBall interactive
exerplay walls. We are utilising
health technology like PainChekTM
to improve the quality of life of
residents living with pain.
Costs and procurement
We worked hard to secure long-term
contracts through our procurement
programme, which gave us certainty
during this time of inflation and
price volatility. We have very strong
relationships with our suppliers, and
we are a preferred partner with
many of them. Our relationships and
planning have meant that we’ve kept
a tight lid on construction costs over
the last 12 months.
This has led to a very healthy
development margin through 2022
of 29.7%. However, many of our
contracts are coming up for renewal
in 2023 and while we will work
hard to get the very best price
with our suppliers, we do expect
to see our costs increase. Over
the coming year we expect to see
our development margins return to
the 20-25% range we've provided
historically as market guidance.
We’re also seeing costs such as
rates and insurance increasing, like
any other business. Unlike many of
our competitors we don’t fix our
fees, so it means we have some
ability to flex our fees to meet
some of these costs while sticking
to our commitment to residents to
not increase our fees beyond the
increase to NZ Superannuation.
We continue to keep a tight lid on our
costs to ensure we set ourselves up
for long-term growth.
Growth and development
Our design and consenting
programme is very well positioned
in both New Zealand and Australia
and has continued well in 2022.
In New Zealand we have a very well-
diversified portfolio with 76% of our
land bank consented. Our highly
consented portfolio gives us a lot
of flexibility in how and where we’re
building, depending on demand and
supply around the country.
We continue to hold the largest land
bank in the New Zealand retirement
village sector, allowing us to double
our current village population.
This year, we delivered a record
of 625 homes under Occupation
Right Agreement (ORA) and 26 care
beds in New Zealand to keep up
with customer demand. Our delivery
programme has become extremely
sophisticated, and we expect to
build 600-700 homes next year. Our
build rate means we continue to be
one of the top residential builders in
the country.
With an uncertain year ahead
we'll continue to monitor demand
and flex our build programme as
required. As part of a strategic review
of our building programme we made
the decision in December to put
our proposed Parnell village on hold.
Construction costs have escalated
significantly and with a declining
property market we considered it
prudent to pause in this environment
on the relatively complex build.
During 2023 we are building a lot
of need-based products, with three
main buildings opening around the
country which will all feature care
and memory care facilities, homes
that remain in high demand.
In Australia we are building a strong
land bank and like our New Zealand
programme, we plan to have a high
proportion of our sites consented
so we can move from one site to
another quickly.
In terms of land, we announced
the purchase of our Mernda site in
August and Drysdale in November,
our sixth and seventh Australian
sites respectively. We continue to
see huge growth opportunities in
Australia and we are very pleased
with our progress. We're looking
forward to welcoming our first
Australian residents in early 2024.
We are pleased with progress on our
Cranbourne North site where we will
deliver our first homes in Q4 of 2023.
Our Cranbourne North village has
a pipeline of 341 homes (including
72 care units) while our Chirnside
Park development, which received
consent in November, will provide
267 homes (including 72 care units).
Construction is planned to begin at
Chirnside Park later in 2023.
At our other five Australian sites our
planning process is well advanced
and we’re moving through the
various stages with the local
councils. We aim to have more
consents in place in 2023.
Our people
We continue to invest in our people
and focus on creating a positive
culture that supports our staff and
their careers and enables them to
bring the best of life to our residents.
In our care centres, we created a new
Kaitiaki role and have employed 70+
dedicated employees in our villages
around New Zealand in this role. The
Kaitiaki role was introduced as part
of our safe staffing programme to
support our care centre residents
and provide them with opportunities
09
Annual Report 2022
Artist impression of Summerset Cambridge
10
and assistance to live their lives to
the fullest.
Our Kaitiaki come from diverse
professional backgrounds including
nursing, caregiving, and diversional
therapy, and their mission is to
deliver person-centred care to our
residents by engaging in one-on-
one activities and therapy sessions
to improve their overall health
and wellbeing. This dedicated role
is already reducing the number
of falls in the care centres and
helping to alleviate the workload
of our caregivers and therapists so
they can focus on their own roles
and duties.
Our staff have a lot to do when
caring for residents and their time
is limited. This year we’ve invested
in technology to make their lives
easier and to allow them more
time to focus on residents. These
include a mobile app for our
resident information management
and digital noticeboards.
year. Summerset’s nursing pay is
aged-care-market leading and an
important strategy for us retaining
nursing staff to care for our most
vulnerable residents.
In addition to pay we have continued
our work on diversity and inclusion
to understand the make-up of our
various sites around the country. The
more we know, the better we can
tailor our work to suit the needs of
staff in various locations.
We have also commenced
developing a new three-to-five-year
Health, Safety & Wellbeing strategy
to further improve our practices
right across Summerset.
We are pleased to report that just
over 600 permanent staff received
free Summerset shares this year as
part of the vesting of our annual
staff share scheme, and nearly 2,000
eligible staff received $1,000 of
Summerset shares which vest in
July 2025.
Paying and recognising our staff
for the work they do is important,
particularly in the tight labour
market we found ourselves in this
Sustainability
We have short-, medium- and long-
term sustainability goals to help us
focus not just on the here and now,
but to be strategic about what we’re
doing and how we’re doing it.
This year was the last year of
our short-term goal set off our
2017 base. The goal was to reduce
our emissions intensity by 5%
per million dollars of revenue, a
target we’re pleased to say we have
overachieved with a 16% reduction.
One of our biggest areas of
focus has been waste reduction
in our construction business. Our
construction teams have worked
extremely hard to identify where we
can do better and have teamed up
with Waste Management NZ to look
at all aspects of our waste across
our sites.
Our work with Waste Management
NZ has been recognised by
the Sustainable Business Network,
where we were a finalist for their
Outstanding Collaboration Award.
We were also pleased to be
recognised as a leader by Forsyth
Barr in their Inaugural Carbon and
ESG Ratings report. Summerset
was the 11th ranked company on
the NZX and the top retirement
village operator.
CHAIR AND CEO’S REPORT
New Zealand and Australia over the
coming years.
We remain optimistic for the year
ahead and that we are well prepared
to deal with an uncertain economic
period in 2023 while continuing to
grow. We have a prudent capital
structure, we can flex our build
rate as demand dictates, we are
focused on our cash generation, and
we'll continue to closely monitor our
costs during this period.
While we are managing our costs
closely, we will continue to invest
in bringing the best of life to
our residents with new technology,
village upgrades and care.
Subject to economic conditions we
look forward to continued growth in
the year ahead.
Finally, on behalf of the Board
and management, we’d like to
thank our investors, residents and
partners for your commitment to,
and belief in, Summerset’s goals and
future. We’d also like to thank our
Summerset team, their families and
their support networks for another
very successful year.
Mark Verbiest
Chair
Scott Scoullar
Chief Executive Officer
Our medium- and long-term targets
are progressing well as we
continue to embed sustainability
into our business practices.
We are continually testing new
opportunities too, including solar
panels at our Nelson and Karaka
villages and to meet the needs
of our future residents, electric
vehicle (EV) charging infrastructure
is being installed into all new
Summerset villages.
our construction sites were
also impacted with Omicron
repeatedly affecting our teams and
subcontractors. In the face of this we
had to stay flexible in order to keep
delivering. Where we had people
or teams isolating, we changed our
plans and focused on other parts
of the site to stay on time. Even
with these issues we’ve done what
we said and delivered 625 homes
this year.
Our COVID-19 response
Our Operations team were aware of
the threat that the highly contagious
Omicron variant posed early in the
year and prepared ahead of the
first cases arriving in our villages in
January, including purchasing more
Personal Protective Equipment (PPE)
and Rapid Antigen Tests (RATs).
We had to remain nimble in our
response to this new variant and how
we balanced appropriate measures
with allowing our residents to
continue their lives as normally as
possible. At times we closed our care
centres and memory care centres
to protect our most vulnerable
residents, with our staff assisting
residents to stay in touch with their
loved ones electronically during
these times. As soon as we were
able, we reopened to allow that
all important face-to-face contact
to occur.
COVID-19 impacted our staffing
throughout the year too, and we
had to work hard to make sure we
had enough staff in place to care
for our residents. We’re very proud
of the response from our staff and
the effort they put in, often above
and beyond, to keep our residents,
visitors and each other safe.
We’d like to thank our residents’
families and loved ones who worked
with us and followed the various
precautions we had in place to
protect residents and staff.
It wasn’t just our villages that
saw the impact of COVID-19,
Board changes
We are sorry that Anne Urlwin
will retire after nearly nine years
on the Summerset Board on
28 February 2023. Anne has
provided great experience and
leadership throughout her time at
Summerset. During her tenure we
have grown from 18 villages to 38,
and resident numbers have more
than doubled.
The Summerset Board has
welcomed Andrea Scown this
year. She has joined as part of
the Institute of Directors Future
Directors programme which aims
to develop New Zealand’s next
generation of directors and provide
experience in large companies
around the country.
Andrea is currently CEO of Mitre10
and we feel that while we can
provide her with a valuable insight
into governance of a large and
successful listed company, we in
turn will gain valuable insight from
Andrea into the New Zealand
consumer and construction sectors.
Looking forward
Despite the rocky economic
conditions New Zealand has
experienced during 2022, we have
continued to grow and achieve.
We’ve met our target build rate,
and our first retirement village in
Australia is taking shape, with the
second consented and now under
construction. We are adding to our
significant land bank and have the
ability to grow significantly in both
11
Annual Report 2022
12
10DIVERSIFIED PORTFOLIOWe benefit from a geographically diverse portfolio that gives us the flexibility to adapt our build rate depending on local market conditions. For investors, we are primarily a growth stock, with a clear strategy to continue expanding in New Zealand and Australia.LOOK AFTER OUR RESIDENTSWe want our residents to feel secure and respected, and our consistently high satisfaction rates reflect that. Our villages are part of their local communities and provide jobs and amenities. ONE TEAM STRONG ENOUGH TO CARE STRIVE TO BE THE BESTBUY LAND IN DESIRABLE PLACES WHERE PEOPLE WANT TO RETIREBUILD AND MAINTAIN HIGH-QUALITY VILLAGESHIRE SKILLED STAFF AND HELP THEM THRIVELOOK AFTER OUR RESIDENTS AND PROVIDE EXCELLENT CARECREATE SUSTAINABLE VALUE FOR STAKEHOLDERS WHILE PROTECTING THE ENVIRONMENT Bringing the best of lifeDELIVERING VALUE TO OUR STAKEHOLDERSBUILD HIGH-QUALITY ASSETSWe pride ourselves on building and maintaining villages that are well designed, well located, and that enable our residents to interact with the community. Our expanding geographical presence is based on being in growing regions with strong potential for investment gains. PROTECT THE ENVIRONMENTWe have short-, medium- and long-term sustainability plans in place to reduce our carbon emissions intensity over time and to monitor our progress and performance. Our innovative medium-term sustainability linked loan arrangement was a first for the sector in New Zealand.HIRE SKILLED STAFF AND HELP THEM THRIVEWe recognise our people as our most important asset. They underpin our ability to deliver the best of life to our residents. We celebrate their diversity and are committed to ensuring all our staff are well remunerated, motivated and safe. CHAIR AND CEO’S REPORT
13
11INFLUENCE WHAT WE DOINFLUENCE AND BENEFIT FROM THE VALUE WE CREATEOur stakeholdersPUBLICREGULATORSCOMPETITORSSTATUTORY SUPERVISORRESIDENTS AND FAMILIESINVESTORSCOMMUNITIESEMPLOYEESSUPPLIERSGOVERNMENTRESIDENTS AND FAMILIESOur residents are the thousands of New Zealanders who choose to live in our villages, and their family and whānau. Families are important to us for the enormous role they play in residents’ lives and their decision-making around retirement living and care.GOVERNMENTThrough our villages, we help the government take care of elderly New Zealanders. In particular we offer specialised care for those who are frail or are living with dementia. EMPLOYEESOur highly trained staff combine expertise in clinical care, design, construction and operations. That combination of knowledge enables us to provide a high-quality offering.COMMUNITIESOur villages form part of local communities and we also provide significant sponsorship for local community groups. We help boost residential housing supplies and provide invaluable services, including rest-home, hospital and dementia care. SUPPLIERSWe invest in national infrastructure in the form of our villages, and generate work and incomes through our supply chain, benefitting businesses and local economies. INVESTORSOur investors range from individuals to institutions. As a growth-focused company, we manage risks prudently and look to provide our shareholders with an appropriate return through our dividend policy and share price appreciation. Annual Report 2022
Snapshot
Our people
Our portfolio
Our performance
$269.1m
Net profit after tax
FY21 $543.7m
$171.4m
Underlying profit
FY21 $141.1m
$369.2m
Operating cash flow
FY21 $383.4m
7,400+
Residents
2,400+
Staff members
95%
Village resident
satisfaction
Our care
94%
Care resident
satisfaction
14
1,161
Care units
(which includes beds)
in portfolio
1,379
Care units
(which includes beds)
in land bank in
New Zealand and Australia
5,518
Retirement units
$5.8b
Total assets
FY21 $4.9b
5,985
Retirement units
in land bank in
New Zealand
and Australia
39
Villages completed or
under development
1,007
Sales of
Occupation Rights
11
Greenfield sites
HIGHLIGHTS
15
13OUR PHILOSOPHY OF CAREINDEPENDENT LIVING4,570Villas, cottages, townhouses and independent apartments(TOTAL UNITS)ASSISTED LIVING948Serviced apartments(TOTAL UNITS)SPECIALISED CARE1,161Rest-home care, Memory care, Hospital care(TOTAL UNITS) 16
2022HighlightsAPRILQ1 sales results released – our highest Q1 ever with 279 sales. Announcement of our 2021 staff Applause Award winners (winners were celebrated at a Covid-delayed event in October). JUNEPurchased 10 virtual reality kits to travel around our villages to give our residents experiences they may not otherwise be able to witness. Rolled out PainChek® an iPhone app that uses artificial intelligence to identify the presence of pain in an older person when it cannot be verbalised.JULYPrincipal sponsor of the new Wellington Free Ambulance ‘Onesie Day Ambulance’ JUNOCTOBERAnnounced our partnership with Hato Hone St John sponsoring their therapy pet programme. FEBJUNOCTJUL HIGHLIGHTS
17
FEBRUARYOrdered our first two EVs to begin our fleet change to electric.MARCHCelebrated Caregiver and Frontliner Day by creating a gratitude wall where staff, residents, their families and anyone else could publicly share messages of gratitude for our frontliners. NOVEMBERCelebrated our 25th birthday.DECEMBERSummerset Chairman Mark Verbiest named Chairperson of the Year at the Deloitte Top 200 awardsOCTDECMARSEPAUGAUGUSTAnnounced a half-year underlying profit of $82.5m (up 9.2% on last year). Purchase of Fairy Springs site in Rotorua, Lansdowne in Masterton and Mernda in Melbourne. SEPTEMBERNamed as a finalist in the Sustainable Business Network’s Outstanding Collaboration award for our work on construction waste with Waste Management NZ. Building consent granted for the first of our five lightweight and mass timber main buildings – to be built at Summerset Mt Denby (Whangārei). Flew the flag in solidarity with MATES in Construction who are aiming to reduce suicide and mental health issues. NOV Annual Report 2022
Portfolio growth
25 years of consistent growth and delivery (total units1 in portfolio)
'98
'99
247247
247247
247247
9090
337337
'00
337337
256256
593593
18
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
'21
'22
593593
656656
755755
879879
959959
1,022
1,022
1,196
1,196
1,258
1,258
1,384
1,384
1,599
1,599
1,679
1,679
1,813
1,813
1,973
1,973
2,297
2,297
2,601
2,601
3,035
3,035
3,576
3,576
4,084
4,084
4,590
4,590
4,944
4,944
5,357
5,357
6,028
6,028
6363
656656
9999
755755
124124
879879
8080
959959
6363
1,022
1,022
174174
1,1961,196
6262
1,258
1,258
126126
1,384
1,384
215215
1,599
1,599
8080
1,679
1,679
122122
1,801
1,801
160160
1,973
1,973
324324
2,297
2,297
304304
2,601
2,601
434434
3,035
3,035
541541
3,576
3,576
508508
4,084
4,084
506506
4,590
4,590
354354
4,944
4,944
413413
5,357
5,357
671671
6,028
6,028
651651
6,679
6,679
0
1,200
2,400
3,600
4,800
6,000
7,200
New units delivered
Existing stock
1 Units include all retirement units and care units (including care beds)
PORTFOLIO GROWTH
25 years of consistent growth and delivery (total units1 in portfolio)
247247
9090
337337
'00
337337
256256
593593
6363
656656
9999
755755
124124
879879
8080
959959
6363
1,022
1,022
174174
1,1961,196
6262
1,258
1,258
126126
1,384
1,384
'98
'99
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
'21
'22
247247
247247
593593
656656
755755
879879
959959
1,022
1,022
1,196
1,196
1,258
1,258
1,384
1,384
1,599
1,599
1,679
1,679
1,813
1,813
1,973
1,973
2,297
2,297
2,601
2,601
3,035
3,035
3,576
3,576
4,084
4,084
4,590
4,590
4,944
4,944
5,357
5,357
6,028
6,028
215215
1,599
1,599
8080
1,679
1,679
122122
1,801
1,801
160160
1,973
1,973
324324
2,297
2,297
304304
2,601
2,601
434434
3,035
3,035
541541
3,576
3,576
508508
4,084
4,084
506506
19
4,590
4,590
354354
4,944
4,944
413413
5,357
5,357
671671
6,028
6,028
651651
6,679
6,679
0
1,200
2,400
3,600
4,800
6,000
7,200
New units delivered
Existing stock
1 Units include all retirement units and care units (including care beds)
Annual Report 2022
20
OUR PEOPLE AND COMMUNITY
Our people and
community
Our 31 retirement villages are vibrant
and diverse communities. Summerset is proud
to be home to over 7,400 residents and to
employ over 2,400 staff.
Our COVID-19 response
This year was another challenging
one for residents with the ongoing
COVID-19 pandemic changing the
landscape again with the arrival
of the Omicron variant. We were
prepared, having invested early
in Personal Protective Equipment
(PPE), Rapid Antigen Tests (RATs),
air purifiers and air quality monitors
before cases arrived in our villages
in January, but the need to lock
down parts of our villages and cancel
communal activities at times was
tough on residents and staff alike.
Also, we had extremely high rates
of vaccination in all of our villages
which helped to provide further
protection to our residents during
this challenging year.
Our care and memory care
facilities, are home to a population
particularly vulnerable to COVID-19,
and we were forced to close the
centres to visitors at times. During
these lockdowns we concentrated
on giving our residents every
opportunity to connect with their
family and friends digitally, and on
containing the outbreaks as quickly
as we could to allow visits and
valuable human interaction. We’re
extremely proud of how our team
responded and protected each
other, our residents and our visitors.
We’re also grateful to our residents’
families and friends for working with
us while we had to change and
restrict visits during these outbreaks.
Influenza immunisation was also
prioritised for vulnerable groups,
and we facilitated immunisation
clinics at all villages for residents
and staff who valued the access to
added protection.
21
We have learnt a lot about managing
COVID-19 over the last few years
and our team understand how best
to care for our residents when
we do experience cases. COVID
precautions are now a core part
of how we manage the health and
wellbeing of our residents in care.
Protecting our villages
We can’t say enough about the
dedication of our staff in protecting
our residents during 2022. Very early
on we invested in ‘fit testing’ of N95
masks to make sure our staff had
not only the right mask, but the
best possible fit. N95s have been a
very important tool in protecting our
staff, residents and visitors from the
spread of COVID-19.
As the country moved down
alert levels and settings there
remained an increased risk of
community transmission so we
typically maintained a more cautious
approach with our vulnerable
care and memory care residents.
Infection prevention and control
remained a priority throughout the
year and we continued with many
of the hygiene and safety measures
introduced early in the pandemic,
including good ventilation, use of
extensive PPE and cohorting of our
teams to minimise any chance of
cross-contamination. We welcomed
the government’s easing of PPE
requirements in the latter part of
the year, and we removed the
requirement for our care centre
visitors to provide RATs prior to
seeing their loved ones.
Engaging residents
We pride ourselves on the
opportunities - socially, physically
and mentally - that we can provide
our residents to bring them the
best of life. Naturally COVID-19 has
made us think and work differently
to provide meaningful and engaging
activities for our residents.
Annual Report 2022
22
Annual Report 2022391,720MESSAGES LAUNCHED258VIDEO CALLS1,452RADIO LAUNCHED2,390NEWS ARTICLES LAUNCHED447COMMUNITY ACTIVITIES LAUNCHED105LUMINS IN USELUMIN KENEPURU TRIAL 1 AUG TO 9 NOV 2021 KEY STATISTICSImage above: Paul Wilson, CEO and Co-Founder of Lumin; Kirsty Herbert, Summerset Lumin Project Manager & Ross McKenna, Summerset on the Landing resident. LUMIN KENEPURU INSTALL NOV 2022 KEY STATISTICS980NEWS ARTICLES LAUNCHED1,613RADIO LAUNCHED327MESSAGES LAUNCHED540VIDEO CALLS OUR PEOPLE AND COMMUNITY
While, as restrictions changed, we
were able to bring more and
more in-person activities back to
our villages, we had to move
many of our events and activities
online to protect residents. One
positive of the pandemic was how
it challenged us to think differently
about making events accessible to
residents throughout the country
and creating some memorable and
unique opportunities.
We developed a suite of options for
our residents including “Summerset
Sessions” – a virtual entertainment
programme, to be enjoyed at home
or together in village lounges where
possible. The programme included
concerts, cooking lessons (with
former Master Chef winner Brett
McGregor) and interviews with well-
known Kiwis including Dame Valerie
Adams, Sir Graham Henry and
David Lomas.
We are still very focused on in-
person and interactive activities,
particularly now that the threat
of COVID-19 has reduced, and
we now have a national activities
programme that is accessible to our
residents who are less mobile or are
concerned about mixing in larger
groups. It’s also a great way to link
our wider village network.
We have also been using virtual
reality (VR) technology to enhance
our resident experience, whether
during times of limited visiting or for
those who struggle to get outdoors.
VR is one way to enhance the
quality of life of all Summerset
residents, with studies showing
positive physical, psychological,
and emotional outcomes after VR
engagement. VR kits have been
purchased to be rotated through
villages, offering residents access to
a diverse library of immersive virtual
content such as swimming in the
Caribbean or visiting the Louvre.
Rather than our annual satisfaction
survey, we have adopted a
continuous listening approach to
drive improvements that our
residents tell us are important to
them. We survey our residents
regularly on a number of aspects of
village life to understand what is and
isn’t working for them. This allows
our village managers to understand
and change things within their
village to better reflect the needs
and wants of their residents.
Our food services are very important
to our residents, so based on
their feedback and needs we
have completed moving our food
services in-house earlier this year
with the goal of increasing the
consistency of service for our
residents. We were pleased that
existing staff were transferred across
from our outsourcing providers and
became Summerset employees,
receiving our market-leading staff
benefits and higher wage rates.
Technology
We committed to investing $4.5m
in frontline staff as well as digital
innovations this year, not just to
keep our residents safer, but also
to improve their experiences every
day. These included:
•
PainChek®
After a successful trial in
our Levin village, we are
proud to be the first New
Zealand aged care provider
to implement this innovative
tool throughout our villages.
PainChek is an app available on
smart phones and tablets, that
uses artificial intelligence and
facial recognition technology to
identify the presence of pain
in people who can’t verbalise
it. Additionally, PainChek has
the ability to capture data
directly into our resident
management system. This smart
system is far faster and more
accurate than the traditional
pain assessment tools, it helps
vulnerable residents and frees
up our staff to do more for our
•
residents by automating many of
our processes.
Lumin
In Kenepuru (Wellington), we
completed the trial of a
digital services platform, called
Lumin, for our independent-
living residents. Kenepuru
has since had Lumin rolled
out permanently and we’re
preparing to roll this out
nationally. Lumin is run through a
dedicated 17-inch screen or iPad.
Lumin allows residents to stay
connected to village life from
the comfort of their home,
providing the ability to receive
newsletters, instant messages
and emergency alerts from the
village team, view and book
village activities, special events
and outings, and to connect with
loved ones.
• MultiBall Wall
Summerset is one of the first
in the world, and the first in
Australasia, to introduce MultiBall
exergaming technology into a
retirement village and aged care
environment. MultiBall enables
our residents to enjoy sports
and brain-stimulating games in
a fun and intuitive manner.
While physical activities help with
balance, agility and directional
changes, memory games have
interactive components that
help with cognitive skill
development. Residents with
mobility issues who may
require a walker, wheelchair
or other assistive devices can
still participate as there are
options for games that can be
played while seated. Allowing
for multiple players at once,
MultiBall has the added benefit
of increasing our resident’s social
engagement, not to mention
great fun for the family and
grandchildren to enjoy when
they visit.
23
Annual Report 2022
24
A resident and staff member from Summerset at Avonhead enjoy a puzzle
Enhancing our services
and our care
We continued to introduce and roll
out new measures and initiatives to
improve the lives of our residents
and to ensure that those who are
more vulnerable receive excellent
care. Our care offering, and our
continuum of care model, is a very
important part of why our residents
choose us, and we want to ensure
we continue to be ahead of best
practice to bring the best of life to
our residents.
Our memory care centres are a
specialist feature of our villages and
are tailored for those needing secure
dementia care. We have once again
been re-accredited as a dementia-
friendly organisation, recognising
our demonstrated commitment to
person-centred care.
To support our memory care teams
at a national level, and to continue to
upskill our team, we have appointed
two new dementia specialists. These
roles are in place to offer knowledge
and expertise in the growing field
of dementia care that will continue
to give our residents the best
possible experience in our care.
Person-centred care means to put
the person, our resident, at the
centre of all decisions made around
their wellbeing – especially in the
care centre where they may not be in
a position to take care of themselves.
To empower residents in this way,
we introduced 70 new Kaitiaki
(Wellbeing Assistant) roles in our
villages who will provide the desired
level of personalised care and
quality one-on-one time for each
resident. Our Kaitiaki roles were
introduced as part of our safe
staffing programme to support our
care centre residents and provide
them with more opportunities for
personalised care and support.
Kaitiaki come from diverse
professional backgrounds including
nursing, caregiving and diversional
therapy, and their mission is to
deliver person-centred care to our
residents by engaging in one-on-
one activities and therapy sessions
to improve their overall health and
wellbeing. This can be as simple as
spending more time with residents
through to helping residents at meal
times or improving their physical
movement (see case study).
We are seeing an improvement
in the physical, mental and social
wellbeing of numerous residents,
and staff and family are seeing the
meaningful impact on the lives of
our residents.
Having provided aged care services
for more than two decades it
is necessary for us to invest in
upgrading our older care centres
and facilities to provide modern,
state-of-the-art facilities that meet
the needs and expectations of our
current and future residents. This
year our care centre refurbishment
programme has seen our Havelock
North, Trentham and Levin villages
commence with the rollout of
upgrades to their care centres.
The Havelock North refurbishment
is the first of these to get underway
and does require care residents to
relocate to other facilities, preferably
nearby and within the Summerset
village network. We understand
how disruptive this is for our care
residents and our team will work
very closely with residents and their
OUR PEOPLE AND COMMUNITY
families to ensure the moves are as
easy as possible with minimal
disruption. For our Havelock North
residents, they have the opportunity
to move to our brand new care
facility in Te Awa, once it has opened
and we deliberately held off on the
refurbishment programme to allow
these transfers to take place, if
residents choose to stay with
Summerset. We recognise that this
is not always easy on our residents
and staff but we believe it’s a
necessary imposition in order to
provide the best possible care
offering for our residents now and
into the future.
This year we completed the
construction of our Kenepuru village
main building which accommodates
our new care and memory care
centres, with residents moving in in
February of 2023. Additionally, our
Te Awa (Napier), Pāpāmoa
(Tauranga) and Bell Block (Taranaki)
main buildings will be ready for
residents later in 2023, also offering
our world-class care and memory
care centres.
However, across the aged care
sector nationally, the strong and
increasing demand for care and
memory care continues to be
unmet. We have joined forces with
providers from around the country
and the Aged Care Association of
New Zealand in a group called Aged
Care Matters to continue to
advocate for realistic government
funding in aged care, including the
issue of pay parity for aged care
nurses.
Public funding for care services,
including daily care rates, is
insufficient to provide the exacting
standards of service that are rightly
expected. On average providers get
$170 per night to provide rest home
level aged care; however, this
funding doesn’t account for the very
complex needs that aged care
residents often present with.
Kaitiaki case study
Our Kaitiaki roles are part of our commitment to providing the best of
life to our residents. Every Summerset village has at least one Kaitiaki,
dedicated to providing more one-to-one care for our care centre
residents to improve their health and wellbeing.
One of the best success stories we’ve seen in the last year, which
highlights the benefits of our Kaitiaki role, comes from our Summerset
in the Vines (Havelock North) village. Our resident, Iona, had been
bedbound for 18 months following a stroke. Iona had been told that
she may not walk again and told the team that she didn’t think she
ever could.
Our Kaitiaki carer started working with Iona to assist with her exercise
and the rehabilitation exercises from her physiotherapist. They decided
on a goal of being able to walk to her son’s car so she could go on an
outing with him.
From April to July the Kaitiaki, Iona and her physiotherapist worked
towards this goal, making incremental improvements with our Kaitiaki
encouraging and motivating Iona throughout the process. It started
small with Iona learning to stand unaided followed by small steps within
her room to build her movement and confidence. Later the exercises
included working on car transfers to ensure Iona could get into and out
of a car safely and confidently.
In July Iona was able to use her walking frame to independently walk to
her son’s car and have her first outing. Since then she’s been out and
about a lot more. Iona continues to work with the team at Summerset in
the Vines to improve her walking and she’s taking part in more and more
of village life.
In addition to funding, rates for aged
care nurses salaries have long
needed adjusting. While Summerset
has market leading salary packages
for nurses, public funding for aged
care nurses has been between
$15,000 to $20,000 a year less than
nurses with the same qualifications
and experience in public hospitals.
Late in 2022, after years of
lobbying by industry groups, the
government announced a $200m
funding increase for aged care
nurses' salaries and that nurses
would be put on the fast-track
residency pathway. We're pleased to
see some recognition of the issues in
the sector and these are good steps
in the right direction, as they will help
to retain nursing staff in aged care,
but it doesn’t go far enough. To date
health officials have not given any
further detail on the new funding,
including how it will be allocated and
when it will start, they're moving too
slowly. Without the ability to allocate
the funding or have certainty around
when it will be received the industry
will continue to see beds close
and operators close their doors.
More funding for nurses and better
immigration pathways will be good
steps in the right direction, and they
will help the sector to retain nursing
staff, if we can get moving.
The $200m increase doesn't
address aged care's funding issues.
If the systemic lack of funding within
aged care is not addressed, we will
see more providers closing beds or
shutting entirely. We will continue
to push for funding that will ensure
the health of our wider sector and
25
Annual Report 2022
Summerset is proud to sponsor Netball NZ.
Photo by Michael Bradley Photography
26
give elderly New Zealanders options
when they need care.
For us at Summerset we will not
compromise on our standards of
care and we will continue to provide
care to the very best of our ability to
our residents. Our care centres have
been, and continue to be, an integral
part of our offering and we intend
to keep providing the continuum
of care offering that makes us
attractive to prospective residents.
Elevating our clinical care
Older people continue to enter
aged care services with complex
health and social needs, and
deserve access to specialised
clinical care delivered by competent
and appropriately remunerated
registered nurses. We were
delighted that our Head of Clinical
Services was appointed to the
national Nursing Leadership Group
(NLG) this year. The NLG has
members from throughout the aged
care sector as part of the New
Zealand Aged Care Association
and is the recognised voice
of aged care nursing in New
Zealand. The NLG has a focus
on workforce recruitment, retention
and development, including
supporting registered nurses in aged
care to work to their full potential,
and promoting effective leadership
in the sector.
We have continued the excellent
work in clinical care with medication
optimisation. Many of our residents
have been prescribed a range
of medications for multiple health
conditions, and sometimes people
are on medications that they no
longer need or are no longer the best
option for them. Working closely
with our clinical pharmacist, other
experts and our prescriber networks
we make sure only medications
necessary are being given to
residents for better quality of life and
to ensure better outcomes for them.
We continue to lead and support a
cross-sector clinical benchmarking
group to share anonymous data for
key clinical indicators, and look to
share learnings and improvements
in clinical outcomes across the
aged care sector. The group now
represents all major aged care
operators in New Zealand with the
benchmarking data covering half of
all aged care beds.
Lifting our profile
The retirement village sector is
a highly competitive environment
and we’re seeing an increase in
advertising spend and reach across
a number of our competitors.
Summerset’s brand of an active,
vibrant life, where age is just a
number, continues to be strong,
and research indicates we are the
market leader on consideration. It
is also pleasing that one year on
from the roll out of our television
commercials our research shows
our advertising campaign has been
well received by audiences and
continues to retain relevance.
Our marketing activities are
designed to reach older New
Zealanders in their communities
and to reinforce the support
we offer locally. We are proud
to be increasing the range of
organisations we’re supporting, and
finding sponsorship opportunities
that align with our brand and
our values.
OUR PEOPLE AND COMMUNITY
In September, World Alzheimer’s
Month, we announced our new
partnership with Alzheimers NZ. We
are committed to being dementia
friendly and were among the first
aged residential care providers
accredited under Alzheimers NZ’s
Dementia Friendly Recognition
Programme. Dementia is a growing
problem in New Zealand and
services aren’t always available to
meet the demand. For this reason,
partnerships are crucial for the
work that needs to be done to
ensure everyone has access to the
education and support they need.
The partnership will provide support
for Alzheimers NZ’s work, including
information and advice, advocacy,
support for frontline services, and
Dementia Friends.
COVID-19 has made fundraising
extremely difficult for many charities.
Street appeals were very difficult
under the traffic light system and
meant a big source of annual income
was interrupted. We were pleased
to partner with Wellington Free
Ambulance (WFA) to be the principal
sponsor of their brand new ‘Onesie
Day Ambulance’ and to kickstart
their annual appeal with a donation.
WFA is the only free ambulance
service in the country and has been
vital to many of our residents and
their families.
Hato Hone St John is similarly
valuable and we were proud
this year to become the major
sponsor of the St John Therapy
Pets Programme. Therapy pets is
a popular community programme
bringing canine companions to rest
homes, bedsides and classrooms
around the country, where a dose
of unconditional love from an animal
has the potential to reduce stress
and put a smile on everyone’s
face. Our support will allow St
John to grow this highly beneficial
programme. Additionally, all our
1 NZACA 2021-22 Industry Profile published July 2022
villages will support St John by
fundraising for their annual appeal.
reputation, pay and benefits in the
aged care industry.
In addition to Alzheimers NZ, WFA
and Hato Hone St John, we provided
our continued support through
partnerships with organisations
in key areas that are important
to our residents and their
families. These include:
•
Bowls NZ
• Dementia NZ
• Netball NZ
• New Zealand
Symphony Orchestra
Our villages continue with
grassroots support and are currently
working with around 190 local
community clubs, including bowls,
golf, croquet, bridge and tennis. We
also work with Age Concern, Rotary,
the RSA, Working Men's Clubs and
Women's Groups.
Engaging our people
Our people are an integral part
of everything that Summerset
offers and we are immensely
proud of them and the work they
do. The COVID-19 challenges of
2021 continued with us into the
early part of 2022, but despite
this, we are pleased that our
employee engagement score has
increased even though the median
score for organisations we have
benchmarked against has fallen.
Giving our staff the right tools
when they join us assists them to
perform at their best. This year we
have continued our work to further
improve our induction, orientation
and onboarding processes and
tools, and we're tailoring these for
a number of key roles.
Emphasis on retaining talent in the
current environment is critical, and
our nursing turnover at 31 December
2022 is at its lowest in the past five
years, it's also 20% below the rest
of the sector1. Summerset is among
the leading employers in terms of
We have continued to roll
out our leadership development
programmes as it is important
to us to build leadership
capability internally. We’ve also
undertaken talent mapping and
succession planning more widely
across the company, which is
particularly important in a tight
employment market.
Our employee benefits provide
another opportunity for us to
differentiate ourselves as an
employer of choice in a competitive
environment and we are one of
the market leaders in terms of our
benefits package.
We are committed to the
protection and promotion of the
health and wellbeing of all our
staff. We’ve surveyed our staff
to build our knowledge around
what impacts their wellbeing and
supplemented this with a series
of Wellbeing by Design workshops.
We have promoted and delivered
resilience training and mental health
awareness to the majority of
our frontline managers, through
programmes including Mindfulness
Month, Mental Health Awareness
Week, the GoodYarn and MATES
in Construction.
Attracting those with
the right skills
We were very pleased to see
the borders reopen earlier in
the year as this allows us to
supplement our hiring in the
current market conditions. We
successfully achieved accredited
employer status for Immigration
New Zealand's new (2022)
programme and are already
recruiting key positions across
nursing, construction and design.
Where we are bringing in overseas
nurses we are helping them
to upskill, complete Competency
27
Annual Report 2022
Staff engagement1
)
%
(
e
g
a
t
n
e
c
r
e
P
70
60
50
40
30
20
10
0
8
4
0
P
e
a
k
o
n
53%53%
67%67%
69%69%
67%67%
7.77.7
7.87.8
7.77.7
7.87.8
2016
2017
2018
2019
2019 2020 2021
2022
Past survey provider
Peakon
1 Peakon was provided with the 2019 raw data to ensure year-on-year consistency,
noting different scoring scales (67% = 7.7)
Employee retention
28
2022
2021
2020
2019
2018
73%73%
75%75%
82%82%
79%79%
74%74%
0
20
40
60
80
100
Percentage (%)
Workplace injury rates (Summerset Group)
2022
2021
2020
2019
2018
2017
4.924.92
3.673.67
4.534.53
4.254.25
5.055.05
4.614.61
6.216.21
6.226.22
5.625.62
2.732.73
2.152.15
2.522.52
0
1
2
3
4
5
6
7
Recordable injury frequency rate
Lost-time injury frequency rate
Assessment Programmes and we
have partnered with Lonsdale
Education Centre to assist with
navigating through these skills and
qualification requirements.
Attracting talent in a highly
competitive market is very
tough, particularly in nursing and
construction, and keeping them
is tougher. New Zealand is a less-
attractive destination due to pay and
immigration requirements making
us one of the lowest in the OECD. We
want to give our future talent more
confidence about coming here,
and we have specialist recruiters
in place to support this and to
find quality people to bring to join
our Summerset team. We are also
focusing on building the pipeline
for nursing, construction and design
talent, through both recruitment
initiatives and the development of
well structured career pathways.
Building safety into
everything we do
We remain committed to creating
safe work environments for our
people and ensuring that we are
leaders in health and safety. During
FY22 we started developing a new
three-to-five-year strategy which
will be completed and in place
during FY23.
Within Construction, we are
extremely conscious of the
industry's poor statistics around
suicide and poor mental health,
and we became a foundation
partner of MATES in Construction
to build awareness of the issue. As
part of this we are doing regular
“health checks” with our people
and our subcontractors to provide
a supportive environment in which
good conversations, awareness
and support are available. We
are also working on behavioural
safety through building capability
and having better conversations to
engage our teams and suppliers
in a positive way to drive our
safety culture.
OUR PEOPLE AND COMMUNITY
Summerset is partnering with MATES in Construction
It is encouraging that we are a
market leader in the industry with
health and safety reporting. In
construction, our total recordable
injury frequency rate is less
than three incidents per 200,000
operative hours. This is our lowest
ever at a time when we we’re doing
more than ever.
It is paramount our sites are safe,
and to this end we continue to use
SiteWise prequalification as well as
quarterly external Site Safe audits
to check our performance against
best practice. Both Operations and
Construction have robust site-based
processes and internal audits. All
these measures are in addition to the
extensive processes and practices
we used to manage the Health &
Safety of our residents and staff at
our villages because of COVID-19.
However, sadly we had our the first
death on one of our construction
sites in November this year
when Marin Construction scaffolder
Michael Noche died following an
incident at our St Johns site. This,
of course, was devastating for us as
a company and we'll do everything
we can to avoid it happening again.
WorkSafe NZ are still completing
their investigation into the incident
and we have cooperated fully with
them throughout this time. We
will assess their report when it's
completed and look at what, if
anything, should be improved on
our construction sites to prevent a
future tragedy.
Expanding our commitment to
diversity and inclusion
At Summerset we celebrate diversity
in all its forms. We are committed to
an inclusive culture where everyone
feels a sense of equity, inclusion
and belonging at work. In 2021
we launched a three-year plan to
progress this important aspect of
our culture, the COVID-19 pandemic
delayed a number of initiatives
which are now being fast tracked to
be completed in FY23.
Research with our staff provided
important insights on how we
can best accommodate the needs
and expectations of our diverse
multicultural workforce. To help
us create a more inclusive
environment, we need to ensure we
29
meet the needs of different staff
across our many work sites and help
to build awareness of those needs
with managers.
To support this, senior leaders have
completed Diversity and Inclusion
Leadership training this year and
we're rolling this out to all people
managers in FY23. Our Diversity
and Inclusion Steering Group
continues to influence change
across the organisation.
In order to understand more
about our people, we undertook
demographic data gathering from
employees across the company,
with 72% of our people so far having
shared information to the level to
which they are comfortable. This
information will allow us to target
future programmes and efforts in the
right areas and to give us a better
understanding of the make-up of our
staff around the country, and what's
important to them.
Annual Report 2022
30
STRONG WAVE OF GROWTH
Strong wave
of growth
The New Zealand population aged 75 and over is forecast to almost triple in the next 50 years.
New Zealand population 75+
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
18
15
12
9
6
3
0
P
e
r
c
e
n
t
a
g
e
(
%
)
31
2
0
0
2
7
0
0
2
2
1
0
2
6
1
0
2
1
2
0
2
3
2
0
2
8
2
0
2
3
3
0
2
8
3
0
2
3
4
0
2
8
4
0
2
3
5
0
2
8
5
0
2
3
6
0
2
8
6
0
2
3
7
0
2
New Zealand population 75+
(left axis)
% population 75+
(right axis)
Per annum New Zealand population growth 75+
30,000
25,000
20,000
15,000
10,000
5,000
0
2
0
0
2
–
7
9
9
1
7
0
0
2
–
2
0
0
2
2
1
0
2
–
7
0
0
2
6
1
0
2
–
2
1
0
2
0
2
0
2
–
6
1
0
2
3
2
0
2
–
0
2
0
2
8
2
0
2
–
3
2
0
2
3
3
0
2
–
8
2
0
2
8
3
0
2
–
3
3
0
2
3
4
0
2
–
8
3
0
2
8
4
0
2
–
3
4
0
2
3
5
0
2
–
8
4
0
2
8
5
0
2
–
3
5
0
2
3
6
0
2
–
8
5
0
2
8
6
0
2
–
3
6
0
2
3
7
0
2
–
8
6
0
2
New Zealand population 75+
per annum growth
Source: Statistics New Zealand – National Population Projections
Annual Report 2022
32
Our villages Protecting our residents, staff and
visitors from COVID-19 was a huge
focus for much of the year after
the Omicron variant arrived in our
villages, on our construction sites
and around New Zealand, in January.
COVID-19 has not impacted sales at
our villages. In fact, over the year,
the continued restrictions further
highlighted the positives of being
part of a safe and welcoming
village community where residents
can benefit from our continuum of
care model if they need it, along
with the opportunities to build new
friendships and pursue a range
of activities.
This strong interest and subsequent
sales drove a record level of sales
that has carried through to our full-
year result.
Record levels of interest
Until COVID-19 restrictions eased
in the latter part of the year,
we were again challenged to
be adaptable in capturing and
managing interest from prospective
residents. We adopted the use of
online presentations and undertook
a lot more phone calls throughout
the sales process, particularly in
the Auckland market where village
visits were often restricted due to
COVID-19 outbreaks.
We were pleased, as restrictions
eased, to welcome our prospective
residents back to our villages face-
to-face and to be able to run open
days at developing villages around
the country. There’s nothing like
being able to show people our
villages and letting them touch and
experience our product.
OUR VILLAGES
We had record levels of interest in
our developing villages with presale
rates in 2022 being the highest we
have ever achieved and we recorded
1,007 Occupation Right sales for
the year. Our development pipeline
remains strong to continue to meet
the demand for our retirement
living offering, with more developing
villages coming around the country.
The first block of new villas at
our new Prebbleton village in
Canterbury were completed and
we welcomed our first residents
in October. In Cambridge the
first of our villas for delivery
were completed in December
and received strong interest and
presales. At the end of the year
we also completed the Kenepuru
village main building and we look
forward to welcoming residents into
the serviced apartments, care centre
and memory care centre at the
village in February 2023. In Lower
Hutt we were delighted to kick off
presales of the much-anticipated
Boulcott village development.
We also continued with record levels
of interest with strong waitlists at our
completed villages.
Selling down our
Ellerslie village has
been a significant
milestone for us given
that it is such a large
village. We achieved a
record 125 unit sales at
our Avonhead village -
the largest number of
units we’ve sold in one
year at one village.
While demand has been high
and sales strong we were also
cognisant that with the easing in
the residential property market,
settlement timing will move back to
the more regular level seen before
the pandemic property bubble.
Largely, our incoming residents are
not experiencing much delay, but if
necessary we have mechanisms in
place to assist prospective residents
with affordability challenges to help
them to move into their new village
community while in the process of
selling their home.
Our residents are motivated to move
to Summerset based around factors
such as their lifestyle, health and
desire for more community. This
motivation doesn’t change during
property market cycles. We have
a range of products from villas
through to serviced apartments to
cater to different demands and
price point,s and we continue to be
priced below the median property
price. We remain optimistic that we
can weather an uncertain economic
period comfortably and continue
to see high demand and sales
throughout 2023.
To further encourage those who are
looking to downsize to consider one
of our villages, we introduced in
2021 an in-house moving service to
support residents moving into our
villages. We are the only retirement
village provider offering this in-
house service and the response has
been so overwhelmingly positive
we now have moving specialists
across our four busiest markets
- Auckland, Hamilton, Wellington
and Christchurch.
33
Annual Report 2022
34
Kenepuru village winning the coveted
Developing Village of the Year Award
Our consultants are available to
help those interested in moving
into one of our villages. We
have also had significant success
with delivering downsizing and
decluttering seminars to our
database of prospective residents.
These are examples of how we
continue to innovate our customer
service to help people make what
can be challenging choices about
their retirement years.
Strength in our
building programme
We have invested approximately
$428 million into our build
programme this year. Year-on-year
increases mean we remain the
largest constructor in the New
Zealand retirement village sector
and are in the top five residential
construction companies in New
Zealand. To this end, we successfully
completed our annual New Zealand
building target of 600 units under
Occupation Right Agreement with
625 units completed during the year.
That impetus and consistency to
deliver year-on-year ensures we are
well positioned to meet ongoing
increases in sector demand, and
we expect to build 600-700 homes
in FY23.
This year’s delivery achievement
is even more remarkable given
the impact of COVID-19 within the
construction sector across resource
and materials. The construction
industry has reported that more than
70 percent of major construction
projects have been delayed,
whereas we have been able to meet
our delivery targets. All our villages
under construction met their year-
end delivery targets, and several new
sites were mobilised despite supply
chain issues and material shortages.
There are a number of reasons
for this significant achievement,
including robust procurement,
planning and consenting processes,
and designing most of the villages in-
house. We also have long-standing
reliable supply agreements that have
enabled us to secure materials well
in advance.
Our teams
were simultaneously
building on 16
sites this year,
including completing
our main building
at our Kenepuru
(Porirua) village.
Kenepuru is our largest commercial
build ever – a 13,000 square metre
building. Our Te Awa, Pāpāmoa
and Bell Block main buildings will
be ready for residents later in
2023 too, and like Kenepuru these
buildings will have our world-class
care and memory care centres. The
number of sites we have delivering
means we have the ability to
accelerate or decelerate deliveries
across regions to ensure the best
return on investment.
OUR VILLAGES
35
Artist impression of Waikanae village where
villa construction started in early January 2023
We completed the first release
of villas at our Prebbleton
(Canterbury) village in August.
This village showcases a grand
entrance avenue, indicative of the
distinctiveness and individuality
we aspire to in future village
master plans.
Our Waikanae village
development is also
progressing well.
A major earthworks exercise saw us
move approximately 300,000 cubic
metres of earth in record time to
enable the site to be prepared. Villa
construction started in early January.
We have invested in our
procurement programme and it
has reaped dividends. We now
have a very mature procurement
function which has seen us through
these uncertain times. This is
contributed to by securing and
maintaining excellent relationships
with our suppliers. We are also highly
regarded by our subcontractors,
which has been crucial as with so
much work on they have options,
but they continue to choose to work
with us thanks to our reputation and
commitment to quality.
We remain confident that we’ll get
the best value for money we can
with our procurement function but
we’re conscious that many of our
contracts are up for renewal in 2023
and we will see cost rises. Currently
we're not seeing any reduction of
prices on the horizon so we continue
to closely monitor our costs and look
for the best possible ways to buy and
build at scale without compromising
on quality.
As part of a strategic review of our
building programme we made the
decision in December to put our
proposed Parnell village on hold.
Construction costs have escalated
significantly and with a declining
property market we considered it
prudent to pause in this environment
on the relatively complex build.
During 2023, other than at our St
Johns and Boulcott sites, the vast
majority of our building will be
low-intensity structures which will
help us to keep a lid on costs.
Also, we're starting to see early
signs of more labour supply with
increased subcontractor availability.
Many construction companies are
pausing or rationalising some of
their programme in light of cost
increases which means, coupled
with the now open borders, we hope
to have more labour available for
our projects around the country.
Also, while New Zealand continues
to face high levels of inflation we are
hopeful that the construction sector
is starting to normalise.
Commitment to vibrancy
and innovation
It is important to us to build vibrant
villages with superior amenities, and
we want our built environments to
lead the sector. For each village’s
design we consider its unique
setting and work to create great
passive and active outdoor spaces
for residents to enjoy communally
or by themselves. These include
children’s playgrounds, outdoor
BBQ areas, and as featured in our
Cambridge and Milldale villages, a
lovely wintergarden.
Annual Report 2022
The largest land bank in the sector
To meet demand, we have further
strengthened our development
pipeline both in New Zealand
and Australia and we continue
to have the largest land bank of
any retirement village operator in
New Zealand.
Our highly consented
portfolio gives us a lot
of flexibility to how and
where we're building
depending on demand
and supply around
the country.
This year we announced land
acquisitions in Masterton and
Rotorua in New Zealand, and Mernda
and Drysdale in Victoria, Australia.
The Wairarapa, where our proposed
Masterton village will be located, has
a rapidly growing aging population
with the number of people aged
75+ forecast to increase 50% in
the next six years. It’s also just
over the hill from Wellington and
we believe many Wellingtonians will
relish the chance to retire among the
Wairarapa’s vineyards, golf courses
and settled climate. Development
can follow a plan change to rezone
the land to residential, for which
a council hearing is scheduled in
early 2023.
The Rotorua area doesn’t have a
retirement village offering like ours
currently, and with a strong 75+
population expected to increase by
30% in the next six years we believe
demand for the proposed village will
be very high.
Our Mernda site is a 30km drive
north-east of Melbourne’s CBD
in a growing suburban area that
is very well serviced by a wide
range of social, recreational and
retail amenities.
Drysdale is on the popular Bellarine
Peninsula, not far from Geelong,
an area with significant planned
investment. The site itself provides
excellent access to numerous
amenities in the area including
Clifton Springs Foreshore Reserve,
Clifton Springs Golf Club and the
Lake Lorne Recreation Reserve.
Also, we continue to see growth
opportunities throughout Auckland.
Earlier in the year we lodged a fast-
track resource consent application
under COVID-19 legislation enacted
to accelerate shovel-ready projects
for our proposed Half Moon
Bay village.
Our plans in Australia are
well advanced
Our Australian business is
progressing at pace, and we have
continued to invest in building the
capability and capacity of the team.
We are excited to introduce
Australians to our high-quality
integrated model of village living,
which includes a full range of
retirement units, from independent
living villas, townhouses and
apartments to serviced apartments,
care and memory care beds.
Australia’s rapidly growing elderly
population is forecast to see those
aged 75+ increase by 140% to
4.1 million in the next 30 years and
we are building a strong land bank
like our New Zealand programme.
Our current pipeline will see
us build more than 2,140 units
accommodating some 2,500
residents with an aggregate project
investment of $1 billion.
At both our Bell Block and
Cambridge villages we have
collaborated with local iwi on
landscape features and pocket parks
to make the villages not only a really
nice, enjoyable place to live, but also
acknowledge the land’s history.
We believe that part of our point of
difference is these added touches
that give residents something more
than just a high-quality home.
It adds to their community and
gives the village a sense of place
containing varied elements for
residents to enjoy.
To accelerate our drive for
innovation and sustainability in
design and construction, this year
we have embedded a design
Research and Development team
to ensure we fully meet the
customer’s built-form needs of
today and tomorrow.
A major sustainability initiative has
been the introduction of significant
cross-laminated timber elements
into our main building structures,
saving 50 tonnes of embodied
carbon per building. Our Summerset
Mt Denby village in Whangārei
will have our first such lightweight
main building, eliminating 760
cubic metres of concrete in favour
of timber. The main buildings
at Summerset Cambridge and
Prebbleton will follow the same
sustainable design.
We’ve also invested in an innovation
and performance manager looking
at onshore/offshore opportunities
as we want to find better and
faster methods that still maintain our
exacting quality requirements.
We are proud of our building designs
and quality and were delighted to
also achieve external recognition
of our commitment to excellence
with industry awards. Our Richmond
main building was a finalist in the
Property Council awards, the first
time a Summerset building has
been entered.
36
OUR VILLAGES
We plan to have a high proportion of
our sites consented so we can move
from one site to another quickly,
much like we do in New Zealand.
This year we acquired additional
new sites at Mernda and Drysdale,
bringing our number of Australian
sites to seven, all in Victoria.
Cranbourne North is our first
Australian site to have begun
construction. A significant piece of
work being undertaken by Major
Road Projects Australia on the road
running parallel to the village slowed
us down initially as we had to work
within their timeline to connect
our facilities infrastructure to the
site. We are now pleased to be in
alignment with them and progress
is well underway to see us deliver
our first units in Q4 2023 with the
first residents moving in in 2024. The
development will deliver 145 villas
and townhouses, 72 aged care units,
50 serviced apartments and a one-
hectare public reserve.
Our site in Chirnside Park was
consented in early November
following a unanimous vote by the
Yarra Ranges Council. It is pleasing
to have secured the permit in under
nine months, which now paves the
way for construction to start in 2023.
At our other five sites,
our planning processes
are well advanced.
We’re moving through the various
stages with local councils, expecting
to have more consents in place
in 2023.
While the New Zealand and
Australian markets have many
similarities, there are also important
differences. As our Victorian sites are
climatically different, the footprint
of our villas in Australia is larger
and there is more emphasis on
outdoor living.
37
Cranbourne North - Summerset's first
Australian site to begin construction.
Our integrated offering of
independent living and care is also
relatively new in the Australian
market, with aged care often being
a stand-alone offering. Our designs
are contemporary in nature, and the
build form matches the expectations
of the market and tailors our villages
to the locations we’re building in.
Our proposed village in Torquay,
for example, will reflect the coastal
identity of where it will be built.
2
new land acquisitions
in Australia in 2022
Annual Report 2022
38
11Our villagesCompleted villagesIn developmentProposed villagesAuckland Region4321NorthlandWaikato2211TaranakiHawke’s Bay31Manawatū – WanganuiWellington Region331MarlboroughCanterbury1Otago31Bay of Plenty1111Nelson – Tasman1114 OUR VILLAGES
39
Bay of PlentyPORTPHILLIPBASS STRAITVictoria61GreaterGeelongWesternMelbourneNorth EasternMelbourneEasternMelbourneSouthern MelbourneFrankston-MorningtonBaysideChirnside ParkCraigieburnCranbourne NorthOakleigh SouthMerndaMELBOURNETorquayDrysdaleWESTERN AUSTRALIA Annual Report 2022
Our pipeline
40
* New sites purchasedNEW ZEALAND LAND BANKDESIGNCONSENTINGCONSTRUCTIONVILLAGE OPENFINAL STAGESHobsonville, AucklandRototuna, HamiltonCasebrook, ChristchurchAvonhead, ChristchurchRichmond, TasmanKenepuru, WellingtonTe Awa, NapierPāpāmoa Beach, TaurangaBell Block, New PlymouthWhangārei, NorthlandPrebbleton, CanterburyCambridge, WaikatoSt Johns, AucklandLower Hutt, WellingtonWaikanae, KāpitiBlenheim, MarlboroughRangiora, CanterburyMilldale, AucklandParnell, AucklandHalf Moon Bay, AucklandKelvin Grove, Palmerston NorthFairy Springs, Rotorua*Landsdowne, Masterton* OUR VILLAGES
41
Summerset’s Mernda site in Melbourne acquired in 2022* New sites purchasedAUSTRALIAN LAND BANK DESIGN CONSENTINGCONSTRUCTIONVILLAGE OPENFINAL STAGESCranbourne North, MelbourneChirnside Park, MelbourneCraigieburn, MelbourneOakleigh South, MelbourneTorquay, VictoriaMernda, Melbourne*Drysdale, Victoria* Annual Report 2022
42
OUR COMMITMENT TO SUSTAINABILITY
From going green
to thinking green
We take our commitment to sustainability very
seriously and we’ve worked hard to embed
sustainability right across our business.
43
Since our base year, 2017, we
have been measuring, managing
and reporting on our carbon
footprint and we’re proud that we
were the first net carbonzero™
retirement village operator in
New Zealand. Toitū Envirocare
began independently auditing our
emissions to the ISO14064-1
standard in 2018, and we have
been increasing our commitment
to sustainability ever since (see
verified audit on the Toitū
website www.toitu.co.nz).
Over the last five years
we’ve significantly reduced our
construction waste (and exceeded
our targets), became the first
retirement village operator to
obtain sustainability linked lending,
introduced a science-aligned target,
joined the Climate Leaders Coalition
(the only retirement village operator
to do so) and changed many
practices across our business from
fertiliser use to travel.
We’ve moved past the ‘going green’
phase to thinking green right across
the company. We’ve integrated
sustainability into business decisions
and we’re challenging ourselves in all
parts of our business to do better.
We were very pleased to have
Forsyth Barr, in their Inaugural
Carbon and ESG Ratings for NZX
listed companies, name us as one
of the 'Leaders' on the NZX and 11th
overall. We were also the top-rated
listed retirement village operator.
It was very pleasing to have this
external acknowledgement of our
work to date.
All this is not to say there’s not more
to do – there is. We have three
sustainability targets across the
short, medium and long term and
these targets guide our approach
covering activities within operations,
construction and development, as
well as involving our residents.
Our emissions profile
Summerset’s total emissions in
2022 were 8,549 tCO2e, which
is an increase on our 2017
base year of 5,939 tCO2e. As
Summerset’s portfolio grows and
the number of villages in operation
increases, it means our absolute
carbon emissions will continue to
increase. We are pleased that the
growth in emissions per square
metre of developed land has
decreased by 17% when compared
to our base year of 2017. Our existing
and new buildings are becoming
more efficient and less carbon
intensive as our portfolio grows.
Our emissions profile includes
Scope 3 mandatory and additional
emissions from residents captured
under waste to landfill and
electricity. Resident electricity
consumption contributes to 26% of
our overall footprint with energy
consumption overall accounting for
77% of our total carbon emissions.
Final year of our first short-
term target
Our short-term target was put in
place in 2018 and ran until the
end of 2022. It kicked off our
sustainability activity and has been
an important driver for us to learn
more about what we do and how
we do it, and how to educate
and engage our staff, residents and
other stakeholders.
The Toitū-verified net carbonzero
target aimed to reduce our
emissions intensity by 5% from our
2017 base year. This target was
intensity-based and focuses on the
key areas of energy, waste to landfill,
paper use, fertiliser and travel.
2022 key focus areas
Annual Report 2022
Energy 77%
Travel 12%
Waste 11%
Paper 0.3%
Fertiliser 0.1%
Emissions intensity – tCO2e per $million of revenue
44
2022
2021
2020
2019
2018
2017
3636
3535
3737
4242
4949
5454
0
20
40
60
tCO2e
We used intensity-based targets
because they helped us to analyse
lowering our emissions while we’re
growing as a business. To measure
these areas, we used two key
measures of efficiency: total
emissions per $million of revenue,
and total emissions per square
metre.
Throughout the five years of the
short-term target our emissions
intensity has steadily dropped, and
against our mandatory target of
emissions per $million of revenue
we have achieved an excellent 16%
reduction based on a rolling average
and adjusted for inflation.
We’re very proud of the progress
we’ve made: a 16% reduction
demonstrates our commitment over
the last five years to reduce our
carbon footprint. A new five-year
target that will run until the end of
2027 has been set for scopes 1 &
2 and scope 3. Our new scope 1
& 2 target is to reduce emissions
intensity per square metre by 34% by
2027 (against base year 2022). This
target is science-aligned and in line
with the 1.5 degree of warming limit.
We have defined focus areas that
keep us on track to meeting
our targets:
ENERGY
We’ve decreased our energy
consumption per square metre
(including resident consumption
and losses) by 14% when compared
to our 2017 base year. This has been
achieved through energy efficiency
programmes, LED lighting upgrades
and fuel switching opportunities.
WASTE
Our construction sites have invested
a huge amount of time and effort
into waste diversion in partnership
with Waste Management NZ. Our
waste avoidance programme was
recognised by the Sustainable
Business Network which made
us a finalist in their Outstanding
Collaboration Award in 2022. The
programme diverted 1,276 tonnes of
waste from landfill and saved ~238
tCO2e in its first year.
PAPER
Our paper use has decreased by
50% per resident when compared
to our 2017 base year. Initiatives
such as follow me print, the use of
low carbon paper, and transitioning
resident invoices and newsletters to
email and online have all contributed
to this improvement.
Emissions intensity – tCO2e per square metre
2022
2021
2020
2019
2018
2017
0.0129
0.0129
0.0122
0.0122
0.0122
0.0122
0.0133
0.0133
0.0149
0.0149
0.0156
0.0156
0
0.006
0.012
0.018
tCO2e
FERTILISERS
Energy emissions – tCO2e per square metre
45
2022
2021
2020
2019
2018
2017
We have reduced the amount of
nitrogen-based fertiliser we use
around our village gardens and
landscaping and we’ve increased
the number of drought-friendly
plants in our gardens.
TRAVEL
We expected a rise in travel
emissions as the country reopened
following COVID-19, our expansion
into Australia and increase in the
number of villages across New
Zealand. The increased adoption
of remote and virtual working
will assist in keeping our travel
emissions down.
Alongside actively working to
reduce our emissions, we offset the
emissions we can’t avoid through
purchasing carbon credits. This year
we chose to again invest in Hinewai,
an ecological restoration project on
the Banks Peninsula of New Zealand.
The primary aim of this project is
to foster regeneration of native
vegetation and wildlife.
0.00995
0.00995
0.00964
0.00964
0.00944
0.00944
0.00947
0.00947
0.01112
0.01112
0.01157
0.01157
0
0.005
0.01
0.015
tCO2e
Annual Report 2022
Summerset Mt Denby in Whangārei, our first of five
lightweight and mass timber buildings
46
Continued progress on our
medium-term target
Our medium-term (2026)
performance targets are based on
our sustainability linked lending
facility which we announced
last year.
We were the first
retirement village
operator in New
Zealand to link
sustainability to our
funding arrangements.
The facility enables us to access
reduced lending rates by linking
our sustainability targets to our
medium-term business strategy.
There are three key deliverables
associated with this arrangement:
ongoing dementia certification and
increasing provision of dementia
beds; reduction in our emissions
intensity per square metre; and
a reduction in construction waste
going to landfill.
We are very pleased with our
progress – we have exceeded our
first term target for our construction
waste avoidance programme where
we’ve made significant changes
to our processes and looked right
throughout our supply chain to
find efficiencies.
Similarly we remained on track
with meeting our carbon emission
intensity reduction targets.
While we continue to be dementia
accredited there were some delays
which caused us to miss our target
for new memory care beds this year.
Our two new memory care centres
at Kenepuru (Wellington) opens in
February 2023 and Te Awa (Napier)
will open mid 2023.
This is a cumulative medium-term
goal though, and as we have a
number of dementia beds opening
in 2023, we are very confident we’ll
meet this target.
Our long-term goals
We introduced our long-term
science-aligned target in late 2020
which supports our involvement
in the Climate Leaders Coalition,
Carbon Disclosure Project (CDP),
Toitū and our sustainability linked
lending arrangements.
This target means we have
committed to reducing our
emissions intensity by 62% per
square metre by 2032, from our 2017
base year. This year we invested
in a decarbonisation plan to assist
in the transition to a low-carbon,
climate-resilient future and to define
the pathway toward meeting our
science-aligned target.
Energy use currently accounts for
77% of our carbon emissions, so
to achieve this target we recognise
that we will need to move to more
renewable energy sources. We have
taken a number of steps to start this
process including the introduction
of a biomass boiler that uses
wood pellets, and we’ve successfully
introduced solar panels on the
clubhouse at our Nelson village.
OUR COMMITMENT TO SUSTAINABILITY
47
We have a further solar installation
planned at our Karaka village and
we’re in the process of scoping
incorporating solar panels into
our new builds. We recognise
reducing our absolute emissions is
a challenge, particularly when we’re
growing so quickly. Reducing our
reliance on the national grid will help
us to achieve this goal.
Governance and reporting
Governance of our sustainability is
important to keep us on target.
This year we have invested further
in innovation by introducing a
research and development forum to
support our efforts to build quality,
sustainable housing in changing
climatic conditions.
Increasingly, we are being asked to
disclose more about what we are
doing in relation to environmental,
social and governance (ESG)
activities. We are committed
to transparent governance and
reporting and will continue to report
in line with the recommendations
of the Taskforce on Climate-related
Financial Disclosures (TCFDs) and
participate in the annual CDP
disclosure process, an international
non-profit organisation that helps
companies and cities disclose
their environmental impact. This
year we maintained our B result
which puts us in the top 13
companies in New Zealand to be
highly scored and among 30 who
submitted a response to climate
change questions. Our CDP Supplier
Engagement Rating also scored high
with an A-.
To meet the Task Force on Climate-
Related Financial Disclosures (TCFD)
and External Reporting Board
(XRB) disclosure timeframes and
obligations we undertook a gap
analysis process in 2022 to evaluate
our disclosure progress. Progress
was determined as advancing
according to plan, with the findings
from the gap analysis being used to
refine our implementation pathway
and roadmap.
We have been a member of the
Climate Leaders Coalition since its
inception in 2018 when it was
launched to promote business
leadership and collective action on
climate change.
We are now discussing a
more ambitious science-aligned
commitment for scopes 1, 2 and 3
emissions to support the delivery
of the reductions needed to limit
future global warming to 1.5 degrees
Celsius. We will also continue
to encourage our employees and
residents to reduce their emissions
as we continue our journey.
We also have an
ongoing plan to
actively identify and
work to eliminate
all forms of modern
slavery in our
supply chain.
Much of our business relies on
international sourcing – so we
are extremely attuned to supply
risk. The range of risk we consider
and assess is growing in both scope
and depth, and as a business we feel
we are taking the necessary steps
to deepen our assessment of human
Annual Report 2022
rights risk as part of our wider supply
chain assessment activities.
Summerset’s modern slavery
statements are available on
the online register at
www.modernslaveryregister.gov.au.
Summerset also notes the
ongoing consultation and legislative
proposals in New Zealand and will
ensure that we are fully compliant
with its requirements once it is
enacted and in force.
Other initiatives this year
At our villages, our residents
have taken a keen interest in
sustainability. In Summerset at
Karaka our residents wanted to
recycle their food waste and
worked with village management
to implement a solution. Other
residents around the country have
created gardens around their
villages, including at Palmerston
North where raised gardens were
created using recycled materials.
The process of replacing the
Summerset fleet with Electric
Vehicles (EVs) started this year, and
public EV charging points have been
installed at a number of villages
with plans to put more in around
the country.
To meet the needs
of our future
residents, EV charging
infrastructure is being
installed into all new
Summerset villages.
Biodiversity and doing more to
protect the land we purchase and
build on has been a focus too.
At our developing Waikanae village
we are replanting more trees than
we’ve removed as part of our
earthworks and we’ve designated a
large area of emerging Mahoe forest
as protected.
Water conservation is a big part
of protecting the land and the
surrounding areas where our villages
are located too. Our proposed Half
Moon Bay village will have water
tanks onsite to collect rainwater
to use in our gardens and we’re
recycling collected storm water at
a number of villages around the
country to be used in our irrigation.
We’ve also made changes that
will impact our embodied carbon
figures with our newly consented
main building at Whangārei,
which is a lightweight design
that utilises cross-laminated timber
and significantly cuts down the
use of concrete and structural
steel. This lightweight design will
become the standard for many
of our new builds around the
country. Reducing the embodied
carbon of construction materials
within design and construction
remains a key focus across
all typologies.
A-
CDP Supplier
Engagement Rating
Our commitment to sustainability
extends to our Australian villages
too. We are currently working
through the feasibility of green star
certification for our villages. Solar
power will be provided on all main
buildings after Cranbourne North,
demonstrating a commitment
towards the use of renewable
energy. Our Australian villages also
integrate initiatives such as drought-
resistant landscaping, reticulated
greywater use (where available),
rainwater collection for use in the
village, and water-efficient fittings
and fixtures used throughout. We
are also planning on creating
100% electric villages that are
completely fossil gas free after
Cranbourne North.
We’re committed
to leading positive
change within
our industry.
To achieve this, we must
consistently demonstrate how we’re
meeting the goals and targets that
we’ve set through real action. This
includes transparent climate-related
governance systems, improved
policies, regular reporting, further
investment in capability building and
taking our residents on the journey
with us.
48
49
Annual Report 2022
50
38THIS TABLE PROVIDES A ROADMAP OF PROGRESS AGAINST THE TCFD RECOMMENDATIONS ON CLIMATE-RELATED FINANCIAL DISCLOSURES. FROM FY23 SUMMERSET WILL REPORT AGAINST THE XRB REQUIRED DISCLOSURES. Climate-Related DisclosuresGOVERNANCEA.Describe the Board’s oversight of climate-related risksand opportunities.B. Describe management’s role in assessing and managingclimate-related risks and opportunities.COMPLIANCE KEYAlignedProgressingIn ProgressRISK MANAGEMENTA. Describe the organisation’s processes for identifyingand assessing climate-related risks.B. Describe the organisation’s processes for managing climate-related risks.C. Describe how processes for identifying, assessing andmanaging climate-related risks are integrated into theorganisation’s overall risk management.METRICS AND TARGETSA. Disclose the metrics used by the organisation to assessclimate-related risks and opportunities in line with its strategyand risk management process.B. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3greenhouse gas (GHG) emissions and the related risks.C. Describe the targets used by the organisation to manageclimate-related risks and opportunities and performanceagainst targets.SECTIONFY22ROADMAP TO COMPLIANCE AGAINST TCFD AND XRB DISCLOSURE OBLIGATIONS The Company has developed a roadmap to support the implementation of the Taskforce for Climate Related Financial Disclosure guidelines and the External Reporting Board’s climate-related financial disclosure standards. Summerset is aiming for its full disclosure to be ready for the FY23 reporting cycle, published in 2024. In working towards this, Summerset is evaluating the systems, processes, resourcing, strategy and governance measures that will be necessary for it to meet TCFD/XRB disclosure requirements and effectively address climate change issues.STRATEGYA. Describe the climate-related risks and opportunities theorganisation has identified over the short, medium, and long term.B. Describe the impact of climate-related risks and opportunitieson the organisation’s businesses, strategy and financial planning.C. Describe the resilience of the organisation’s strategy, taking intoconsideration different climate-related scenarios, including a 2°Cor lower scenario. 51
39SUMMERSET IS PROUD TO BE AFFILIATED WITH:Casebrook construction team trial new reusable and changeable waste and recycling signage1STNET CARBONZEROTM RETIREMENT VILLAGE OPERATOR IN NZ1.5°SCIENCE-ALIGNED TARGET16%REDUCTION IN tCO2e PER $MILLION OF REVENUE AGAINST 2017 BASELINE 5NEW LIGHTWEIGHT SUSTAINABLE MAIN BUILDINGS PLANNEDDISCLOSURE INSIGHT ACTIONA-CDP SUPPLIER ENGAGEMENT RATING SCORE1,276 TONNES OF CONSTRUCTION WASTE DIVERTED FROM LANDFILL Annual Report 2022
52
Artist impression of Summerset MilldaleOur performance OUR PERFORMANCE
Summerset has delivered another
year of strong financial performance
and maintained balance sheet
resilience despite a challenging
operating environment.
Financial performance overview
Underlying profit1 for the year ended
31 December 2022 increased by 21%
on the prior year to $171.4 million
(2021: $141.1 million), driven primarily
by increased margins on sales of
new and existing units. This is a result
of our new sales mix shifting more
towards villa sales which attract
higher margins. Villas made up 67%
of total new sales (2021: 62%). Resale
margins increased, reflecting higher
sale prices across the board. We
maintained our delivery of units
to a similar rate on prior year to
625 (2021: 619). Sale volumes of
new units remained at similar levels
to 2021, decreasing three units to
537, while sales on existing units
increased by 7.3% to 470 (2021:
438). Realised gains on investment
property are $175.1 million (2021:
$138.4 million). Revenue for the
year grew 16% to $238.7 million
(2021: $205.3 million), reflecting
village revenue growth from
deliveries within our developing
villages and continued high rates
of care occupancy in existing
villages. Profits from operations have
reduced due to wages and costs
increasing at a rate higher than
the increases to public funding,
in particular nurses wages, council
rates, insurance, and power.
Long-term growth
A key component of underlying
profit is the realised development
margin on new sales, which was
$104.9 million in 2022 (2021:
$78.5 million). The increase was
driven by a higher proportion of
new sales being villas, which attract
higher margins. The development
margin was 29.7%, up from 23.1%
in the previous year. We expect
that development margins will
be maintained within the 20-25%
range over the medium term.
This will continue to be an
area of focus for the Board
and Management. Good margins
reflect the advantage of having
strong in-house capabilities for
each stage of village development
including land acquisition, planning,
consenting, design, procurement
and construction management.
We continue to work to manage
cost inflation across our build
pipeline through leveraging from
scale, standardisation and mature
procurement planning.
Summerset continues
to maintain the
largest land bank
for a retirement
village operator in
New Zealand.
We acquired four new sites in New
Zealand and Australia in 2022.
These are Fairy Springs (Rotorua),
Landsdowne (Masterton), Mernda
(Melbourne), and Drysdale (Victoria).
This brings our total land bank to
7,364 units.
Summary of sales
and developments
Summerset had a record sales year,
with 1,007 unit sales of Occupation
Rights (2021: 978), 537 of them new
unit sales and 470 sales of existing
units. Average gross proceeds per
new sale settlement of $658,000
was up from $630,000 in 2021 due
to the mix of units sold along with
the strong housing market in the first
half of the year. Realised resale gain
increased by 17% to $70.2 million in
2022. Average gross proceeds per
resale settlement were $561,000,
up 6% from 2021. Key development
milestones included the delivery of
the Kenepuru main building and
beginning construction of three
new villages, Whangārei (Northland),
Lower Hutt (Wellington), and Milldale
(Auckland). For developing villages
still under construction, new unit
sales were particularly strong at
Bell Block (Taranaki), Te Awa
(Napier), Kenepuru (Wellington), and
Whangārei (Northland). We had
our highest year of presales ever
in 2022, with 302 villa deliveries
pre-sold (60%). In Australia we
have continued to acquire land,
purchasing two additional sites
taking our total Australian sites to
seven. Civil works for our first village,
at Cranbourne North (Melbourne),
have begun and we expect the first
deliveries in late 2023.
Net profit after tax
Summerset recorded a net profit
after tax of $269.1 million for the
year ended 31 December 2022,
down from $536.8 million in 2021.
This decrease is largely due to the
large fair value recognised in 2021.
Fair value movement in 2022 of
$255.8 million reflects the delivery
of 588 retirement units in the
financial year.
Business growth and expenses
Summerset derives its revenue from
selling units (deferred management
fees) and providing village and
care services. The company’s
revenue increased as a result
of higher volumes, reflective
of the continuing growth and
scale of our operations. Deferred
management fees on Summerset’s
units sold under Occupation Right
Agreement were $92.3 million in
2022 (2021: $75.2 million). The
growth reflects the increase in the
number, occupancy and value of
Summerset’s portfolio of units. At
1 Underlying profit is a non-GAAP measure. A detailed explanation is included in Note 2 to the Financial Statements (see page 67). In general terms, underlying profit
removes the fair value movement of investment property and reinstates the realised gains associated with our resales and the development margin associated with our
new sales. Underlying profit is used to determine the dividend pay-out to shareholders.
53
Annual Report 2022
171.4171.4
141.1
141.1
Underlying profit
FY22
FY21
FY20
FY19
FY18
FY17
FY16
98.398.3
106.2
106.2
98.698.6
81.781.7
56.656.6
54
0
25
50
75
100
125
150
175
200
$ million
Land bank over time (units)
FY22
FY21
FY20
FY19
FY18
FY17
FY16
7,364
7,364
6,614
6,614
6,1716,171
6,206
6,206
4,450
4,450
3,237
3,237
2,975
2,975
0
3,000
6,000
9,000
31 December 2022, Summerset’s
total unit portfolio reached 6,679
(2021: 6,028), and at year end there
were only 308 new units and 150
resale units available for sale.
Occupancy in our mature care
centres was 92% (2021: 97%), which
is above the industry average of
90%. Total expenses increased in
2022 by 18% to $225.7 million (2021:
$190.6 million), largely due to the
increased care wage costs at a rate
above the level of public funding
increases, and general cost growth
across head office functions. We
experienced growing employee
costs due to tight labour conditions,
higher rates across our properties
and increased insurance premiums.
We incurred $4.0 million of one-off
operational costs due to COVID-19
in 2022. This was predominantly
from PPE, RATs and staff stand
downs.
Net cash from operating activities
Summerset’s net cash from
operating activities was
$369.2 million for the year, down
4% from 2021 (2021: $383.4 million).
This was principally driven by
increased costs of providing care
and reduced receipts from resales
due to the timing of resale
settlements. Gross receipts from
new Occupation Right Agreement
sales were $347.3 million, up from
$337.6 million in 2021. Summerset
is a growth company and reinvests
operating cash flows back into
the business to finance future
growth. In 2022 Summerset invested
$651.7 million, primarily in relation
to land acquisitions and new and
existing retirement villages and care
centres (2021: $425.0 million).
Assets rose to $5.8 billion
Total assets rose 19% to $5.8 billion
at 31 December 2022 (2021:
$4.9 billion), mainly due to growth
in the size and value of Summerset’s
investment property, which reached
$5.4 billion (2021: $4.6 billion).
At balance date, Summerset also
had property, plant and equipment
valued at $326.1 million (2021:
$277.7 million), most of this
being care centres (these are
operated to provide services and
are therefore not included as
investment property). An increased
embedded value of $1.5 billion (2021:
$1.4 billion) demonstrates future
cash that can be generated when
units are resold. Interest-bearing
debt of $1,060.5 million was 18%
of total assets at year end (2021:
$747.0 million). The year-end debt
at face value is made up of
$699.4 million of bank borrowings
and $375.0 million of retail bonds.
Summerset also has residents' loans
of $2.2 billion (2021: $1.8 billion). This
is in the form of licences paid by
residents under Occupation Right
Agreements. These are repayable
when residents vacate units and
the associated Occupation Rights
are resold.
2022 dividends
Summerset will pay a final dividend
of 11.6 cents per share (cps) on
23 March 2023, making a full
pay-out for the 2022 year of
22.3 cps (2021: 18.5 cps). Board
policy remains for shareholder
distributions in the range of 30–50%
of each year’s underlying profit. The
2022 distribution of $51.6 million
represents 30% of underlying profit
($171.4 million), which is consistent
with the last seven years. Summerset
continues to offer shareholders
a dividend reinvestment option,
including a 2% discount to market
share price.
OUR PERFORMANCE
Expense breakdown
Employee expenses
Revenue breakdown
Employee
expenses 59%
Property-related
expenses 10%
Repairs and
maintenance
expenses 3%
Depreciation,
amortisation
and impairments 6%
Other operating
expenses 22%
55
Deferred
management
fees 39%
Care fees and
village services 60%
Other 1%
Revenue breakdown
Dividends (cents per share)
FY22
FY21
FY20
FY19
FY18
FY17
FY16
FY15
11.611.6
8.68.6
10.710.7
9.99.9
66
6.46.4
66
77
7.77.7
7.27.2
3.93.9
7.17.1
2.62.6
5.15.1
1.851.85
3.43.4
FY14
1.41.4
2.12.1
FY13
00
33
0
5
10
15
20
25
Final
Interim
Annual Report 2022
Five-year
summary
Key operational and financial statistics for
the five-year period up to and including
FY22 are shown below.
56
Results highlights – operational
New sales of Occupation Rights
Resales of Occupation Rights
Total sales of Occupation Rights
Development margin
New Occupation Right
units delivered
Retirement units in portfolio
Care units in portfolio
Results highlights – financial
Net operating cash flow
Total assets
Net assets
Underlying profit
Profit before income tax (IFRS)
Profit for the period (IFRS)
Dividend per share
Basic earnings per share
Unit
FY22
FY21
FY20
FY19
FY18
No.
No.
No.
%
No.
No.
No.
537
470
1,007
540
438
978
404
381
785
329
323
652
339
301
640
29.7%
23.1%
19.6%
27.9%
33.2%
625
619
356
354
454
5,518
1,161
4,930
1,098
4,385
4,076
3,722
972
868
868
Unit
FY22
FY21
FY20
FY19
FY18
$m
$m
$m
$m
$m
$m
cents
cents
369.2
383.4
266.8
237.9
217.8
5,840.3
4,923.7
3,893.2
3,337.9
2,766.4
2,193.0
1,924.5
1,354.8
1,131.9
978.8
171.4
265.1
269.1
22.3
141.1
543.6
543.7
18.5
98.3
221.7
230.8
13.0
116.7
238.2
102.3
106.2
173.6
175.3
14.1
78.6
98.6
216.2
214.5
13.2
97.1
FY21 to
FY22 %
Change
-1%
7%
3%
29%
1%
12%
6%
FY21 to
FY22 %
Change
-4%
19%
14%
21%
-51%
-51%
21%
-51%
57
Financial statements Annual Report 2022
Income Statement
For the year ended 31 December 2022
Care fees and village services
Deferred management fees
Other income
Total revenue
Reversal of impairment of property, plant and equipment
Fair value movement of investment property
Total income
Operating expenses
Depreciation and amortisation expense
Total expenses
NOTE
4
4
4
9
11
2022
$000
2021
$000
144,631
126,884
92,332
75,174
1,749
3,291
238,712
205,349
-
3,431
268,757
537,497
507,469
746,277
5
(211,795)
(179,045)
9, 10
(13,597)
(11,555)
(225,392)
(190,600)
58
Operating profit before financing costs
282,077
555,677
Finance costs
Profit before income tax
Income tax credit
Profit for the period
Basic earnings per share (cents)
Diluted earnings per share (cents)
The accompanying notes form part of these financial statements.
6
7
20
20
(16,960)
(12,040)
265,117
543,637
3,955
27
269,072
543,664
116.66
116.36
238.18
236.86
Statement of Comprehensive Income
For the year ended 31 December 2022
Profit for the period
Fair value gain on interest rate swaps
Tax on items of other comprehensive income
(Loss)/gain on translation of foreign currency operations
Other comprehensive income that will be reclassified subsequently to
profit or loss for the period net of tax
Net revaluation of property, plant and equipment
Tax on items of other comprehensive income
Other comprehensive income which will not be reclassified
subsequently to profit or loss for the period net of tax
NOTE
2022
$000
2021
$000
269,072
543,664
14
7
9
7
30,272
(8,718)
24,443
(6,881)
(68)
222
21,486
17,784
4,566
35,783
(1,278)
3,288
(10,019)
25,764
Total comprehensive income for the period
293,846
587,212
The accompanying notes form part of these financial statements.
59
Annual Report 2022
Statement of Changes in Equity
For the year ended 31 December 2022
SHARE
CAPITAL
$000
HEDGING
RESERVE
$000
REVALUATION
RESERVE
$000
RETAINED
EARNINGS
$000
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$000
TOTAL
EQUITY
$000
As at 1 January 2021
303,499
(20,267)
34,508
1,037,325
(220)
1,354,845
Profit for the period
Other comprehensive
income for the period
Total comprehensive
income for the period
Dividends paid
Shares issued
Employee share plan
option cost
-
-
-
-
20,602
798
-
-
543,664
-
543,664
17,562
25,764
-
222
43,548
17,562
25,764
543,664
222
587,212
-
-
-
-
-
-
(38,943)
-
-
As at 31 December 2021
324,899
(2,705)
60,272
1,542,046
As at 1 January 2022
324,899
(2,705)
60,272
1,542,046
-
-
269,072
60
Profit for the period
Other comprehensive
income for the period
Total comprehensive
income for the period
Dividends paid
Shares issued
Employee share plan
option cost
-
-
-
-
18,629
684
21,554
3,288
-
(68)
24,774
21,554
3,288
269,072
(68)
293,846
-
-
-
-
-
-
(44,650)
-
-
-
-
-
(44,650)
18,629
684
As at 31 December 2022
344,212
18,849
63,560
1,766,468
(66)
2,193,023
The accompanying notes form part of these financial statements.
-
-
-
2
2
-
(38,943)
20,602
798
1,924,514
1,924,514
269,072
Statement of Financial Position
As at 31 December 2022
Assets
Cash and cash equivalents
Trade and other receivables
Interest rate swaps
Property, plant and equipment
Intangible assets
Investment property
Total assets
Liabilities
Trade and other payables
Employee benefits
Revenue received in advance
Interest rate swaps
Residents’ loans
Interest-bearing loans and borrowings
Lease liability
Deferred tax liability
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to shareholders
The accompanying notes form part of these financial statements.
Authorised for issue on 23 February 2023 on behalf of the Board
Mark Verbiest
Director and Chair of
the Board
Anne Urlwin
Director and Chair of the
Audit and Risk Committee
NOTE
2022
$000
2021
$000
8
14
9
10
11
12
13
4
14
15
17
16
7
25,347
36,727
27,228
8,422
44,992
5,723
326,050
277,715
7,251
6,664
5,417,719
4,580,196
5,840,322
4,923,712
178,556
202,257
27,565
21,580
161,569
141,393
10,299
7,243
2,165,352
1,847,136
1,060,494
747,015
15,970
27,494
12,638
19,936
3,647,299
2,999,198
2,193,023
1,924,514
19
19
344,212
324,899
82,343
57,569
1,766,468
1,542,046
2,193,023
1,924,514
61
Annual Report 2022
Statement of Cash Flows
For the year ended 31 December 2022
Cash flows from operating activities
Receipts from residents for care fees and village services
Interest received
Payments to suppliers and employees
Receipts for residents’ loans - new occupation right agreements
2022
$000
2021
$000
142,482
127,045
413
55
(206,871)
(171,804)
347,278
337,566
Net receipts for residents' loans - resales of occupation right agreements
85,877
90,543
Net cash flow from operating activities
369,179
383,405
Cash flows to investing activities
Sale of investment property
Payments for investment property:
- land
- construction of retirement units and village facilities
- refurbishment of retirement units and village facilities
62
Payments for property, plant and equipment:
- construction of care centres
- refurbishment of care centres
- other
Payments for intangible assets
Capitalised interest paid
Net cash flow to investing activities
Cash flows from financing activities
Net proceeds from bank borrowings
Proceeds from issue of shares
Interest paid on borrowings
Payments in relation to lease liabilities
Dividends paid
Net cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Foreign currency translation adjustment
Cash and cash equivalents at end of period
The accompanying notes form part of these financial statements.
6,335
15,201
(185,469)
(87,164)
(385,096)
(285,234)
(9,727)
(8,164)
(42,819)
(33,084)
(1,246)
(7,580)
(1,908)
(380)
(7,980)
(1,725)
(24,235)
(16,472)
(651,745)
(425,002)
342,207
67,100
1,633
4,943
(14,258)
(12,407)
(1,920)
(1,767)
(28,166)
(23,712)
299,496
34,157
16,930
(7,440)
8,422
15,817
(5)
25,347
45
8,422
Reconciliation of Operating Results and Operating Cash Flows
For the year ended 31 December 2022
Profit for the period
Adjustments for:
Depreciation and amortisation expense
Reversal of impairment of property, plant and equipment
Fair value movement of investment property
Net finance costs paid
Gain on sale of investment property
Income tax credit
Deferred management fee amortisation
Employee share plan option cost
Other non-cash items
Movements in working capital
Net increase in trade and other receivables
Net increase in employee benefits
Net increase/(decrease) in trade and other payables
Increase in residents’ loans net of non-cash amortisation
2022
$000
2021
$000
269,072
543,664
13,597
11,555
-
(3,431)
(268,757)
(537,497)
16,960
12,040
(1,336)
(3,955)
(3,236)
(27)
(92,332)
(75,174)
1,196
(26)
1,459
431
(334,653)
(593,880)
(8,371)
(1,619)
5,985
5,485
6,142
(141)
431,661
429,239
434,760
433,621
63
Net cash flow from operating activities
369,179
383,405
The accompanying notes form part of these financial statements.
Annual Report 2022
Notes to the
financial
statements
For the year ended 31 December 2022
1. Summary of accounting policies
64
Reporting entity
The consolidated financial statements presented for the year ended 31 December 2022 are for Summerset Group Holdings Limited
(the "Company") and its subsidiaries (collectively referred to as the "Group"). The Group develops, owns and operates integrated
retirement villages.
Summerset Group Holdings Limited is registered in New Zealand under the Companies Act 1993 and is a FMC Reporting Entity for
the purposes of the Financial Markets Conduct Act 2013. The Company is listed on the New Zealand Stock Exchange (NZX), being
the Company’s primary exchange, and is listed on the Australian Securities Exchange (ASX) as a foreign exempt listing.
Basis of preparation
These consolidated financial statements have been prepared in accordance with generally accepted accounting practice in New
Zealand (NZ GAAP), except for Note 2: Non-GAAP underlying profit, which is presented in addition to NZ GAAP compliant information.
They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) as appropriate for profit-oriented
entities. These financial statements also comply with International Financial Reporting Standards and the requirements of the
Financial Markets Conduct Act 2013.
These financial statements are expressed in New Zealand dollars, which is the Company’s and New Zealand subsidiaries' functional
currency. The functional currency of the Company's Australian subsidiaries is Australian dollars. All financial information has been
rounded to the nearest thousand, unless otherwise stated.
All amounts are shown exclusive of goods and services tax (GST), except for trade receivables and trade payables, and except where
the amount of GST incurred is not recoverable. When this occurs, GST is recognised as part of the cost of the asset or as an expense
as applicable.
The measurement basis adopted in the preparation of these financial statements is historical cost, with the exception of the items
noted below.
•
•
•
•
Buildings – Note 9
Investment property – Note 11
Interest rate swaps – Note 14
Retail bonds – Note 17
Basis of consolidation
Subsidiaries are fully consolidated at the date on which the Group obtains control, and continue to be consolidated until the date
when such control ceases. The financial statements are prepared for the same reporting period as the Company, using consistent
accounting policies. All intra-group transactions and balances arising within the Group are eliminated in full.
All subsidiary companies are 100% owned and incorporated in New Zealand or Australia with a balance date of 31 December.
The New Zealand subsidiaries are:
Summer Land Developments Limited
Summerset Care Limited
Summerset Holdings Limited
Summerset LTI Trustee Limited
Summerset Management Group Limited
Summerset Properties Limited
Summerset Retention Trustee Limited
Summerset Villages (Aotea) Limited
Summerset Villages (Avonhead) Limited
Summerset Villages (Bell Block) Limited
Summerset Villages (Blenheim) Limited
Summerset Villages (Cambridge) Limited
Summerset Villages (Casebrook) Limited
Summerset Villages (Dunedin) Limited
Summerset Villages (Ellerslie) Limited
Summerset Villages (Half Moon Bay) Limited
Summerset Villages (Hamilton) Limited
Summerset Villages (Hastings) Limited
Summerset Villages (Havelock North) Limited
Summerset Villages (Hobsonville) Limited
Summerset Villages (Karaka) Limited
Summerset Villages (Katikati) Limited
Summerset Villages (Kelvin Grove) Limited
Summerset Villages (Kenepuru) Limited
Summerset Villages (Levin) Limited
Summerset Villages (Lower Hutt) Limited
Summerset Villages (Manukau) Limited
Summerset Villages (Milldale) Limited
Summerset Villages (Napier) Limited
Summerset Villages (Nelson) Limited
Summerset Villages (New Plymouth) Limited
The Australian subsidiaries are:
Summerset Villages (Number 42) Limited
Summerset Villages (Number 44) Limited
Summerset Villages (Number 46) Limited
Summerset Villages (Number 47) Limited
Summerset Villages (Number 48) Limited
Summerset Villages (Number 49) Limited
Summerset Villages (Number 50) Limited
Summerset Villages (Number 51) Limited
Summerset Villages (Number 52) Limited
Summerset Villages (Number 53) Limited
Summerset Villages (Number 54) Limited
Summerset Villages (Number 55) Limited
Summerset Villages (Palmerston North) Limited
Summerset Villages (Papamoa) Limited
Summerset Villages (Paraparaumu) Limited
Summerset Villages (Parnell) Limited
Summerset Villages (Prebbleton) Limited
Summerset Villages (Rangiora) Limited
Summerset Villages (Richmond) Limited
Summerset Villages (Rotorua) Limited
Summerset Villages (Rototuna) Limited
Summerset Villages (St Johns) Limited
Summerset Villages (Taupo) Limited
Summerset Villages (Te Awa) Limited
Summerset Villages (Trentham) Limited
Summerset Villages (Waikanae) Limited
Summerset Villages (Wanganui) Limited
Summerset Villages (Warkworth) Limited
Summerset Villages (Whangarei) Limited
Summerset Villages (Wigram) Limited
Welhom Developments Limited
Summerset Care (Australia) Pty Limited
Summerset Holdings (Australia) Pty Limited
Summerset Management Group (Australia) Pty Limited
Summerset Villages (Cranbourne North) Pty Limited
Summerset Villages (Mernda) Pty Limited
Summerset Villages (Number 2) Pty Limited
Summerset Villages (Number 3) Pty Limited
Summerset Villages (Number 4) Pty Limited
Summerset Villages (Number 5) Pty Limited
Summerset Villages (Number 6) Pty Limited
Summerset Villages (Number 7) Pty Limited
Summerset Villages (Number 8) Pty Limited
Summerset Villages (Number 9) Pty Limited
Summerset Villages (Number 10) Pty Limited
Summerset Villages (Number 11) Pty Limited
Summerset Villages (Number 12) Pty Limited
Summerset Villages (Number 13) Pty Limited
Summerset Villages (Number 14) Pty Limited
Summerset Villages (Number 15) Pty Limited
Summerset Villages (Number 16) Pty Limited
Summerset Villages (Number 17) Pty Limited
Summerset Villages (Number 18) Pty Limited
Summerset Villages (Number 19) Pty Limited
Summerset Villages (Number 20) Pty Limited
Summerset Villages (Number 21) Pty Limited
65
Annual Report 2022
Notes to the financial statements (continued)
Accounting policies
Accounting policies that summarise the measurement basis used and that are relevant to the understanding of the financial
statements are provided throughout the accompanying notes.
The accounting policies adopted have been applied consistently throughout the periods presented in these financial statements.
The Group adopted all mandatory new and amended NZ IFRS Standards and Interpretations and there has been no material impact
on the Group's financial statements.
There are no other new standards, amendments or interpretations that have been issued and are not yet effective, that are expected
to have a significant impact on the Group.
Disclosure of residents' loans
During the period, the Group reviewed its liquidity disclosure for residents' loans. Disclosures have been revised to reflect that
residents' loans are repayable on demand and therefore fully repayable within 12 months of balance date. Previously, disclosures
in relation to residents' loans were made based on the expected cash flows. Based on historical information, including estimated
periods of tenure as disclosed in Note 4, it is estimated that only $202.8 million (2021: $168.6 million) is expected to become payable
in the 12 months following balance date. For further information refer to Note 18.
Critical accounting estimates and judgements
In preparing the financial statements, management has made estimates and assumptions about the future that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during
the period. Actual results may differ from those estimates.
Estimates and assumptions are regularly evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances. The principal areas of judgement in preparing these
financial statements are described in the following notes:
66
•
•
•
•
•
•
•
•
Deferred management fees – Note 4
Deferred taxation – Note 7
Interest rate swaps – Note 14
Leases – Note 16
Revenue in advance – Note 4
Valuation of investment property – Note 11
Valuation of buildings – Note 9
Valuation of retail bonds – Note 17
Comparative information
The Statement of Cash Flows presentation has been amended to include the foreign exchange movement on the cash balance. For
the comparative periods, this foreign exchange movement of $45k has been reclassified from net (repayments of)/proceeds from
borrowings to foreign currency translation adjustment.
The impact of these reclassifications on the comparative period is shown below.
Statement of Cash Flows
Net proceeds from bank borrowings
Net cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
Foreign currency translation adjustment
2021
2021
Reported
Reclass
Reclassified
$000
$000
$000
67,145
34,202
(7,395)
-
(45)
(45)
(45)
45
67,100
34,157
(7,440)
45
2. Non-GAAP underlying profit
Profit for the period
Less fair value movement of investment property
Less reversal of impairment of assets
Add realised gain on resales
Add realised development margin
Less deferred tax credit
Underlying profit
Ref
a)
b)
c)
d)
e)
2022
$000
2021
$000
269,072
543,664
(268,757)
(537,497)
-
(3,431)
70,191
104,869
59,905
78,525
(3,955)
(27)
171,420
141,139
Underlying profit is a non-GAAP measure and differs from NZ IFRS profit for the period. Underlying profit does not have a standardised
meaning prescribed by GAAP and therefore may not be comparable to similar financial information presented by other entities.
The Directors have provided an underlying profit measure in addition to IFRS profit to assist readers in determining the realised
and unrealised components of fair value movement of investment property, impairment and tax expense in the Group’s income
statement. The measure is used internally in conjunction with other measures to monitor performance and make investment
decisions. Underlying profit is a measure that the Group uses consistently across reporting periods. Underlying profit is used to
determine the dividend pay-out to shareholders.
This statement presented is for the Group, prepared in accordance with the Basis of preparation: underlying profit described below.
Basis of preparation: underlying profit
Underlying profit is determined by taking profit for the period determined under NZ IFRS, adjusted for the impact of the following:
67
a)
b)
c)
d)
Less fair value movement of investment property: reversal of investment property valuation changes recorded in NZ IFRS
profit for the period, which comprise both realised and non-realised valuation movements. This is reversed and replaced with
realised development margin and realised resale gains during the period, effectively removing the unrealised component of
the fair value movement of investment property.
Less reversal of impairment of assets: remove the impact of non-cash care centre valuation changes recorded in NZ IFRS profit
for the period. Care centres are valued annually, with fair value gains flowing through to the revaluation reserve unless the
gain offsets a previous impairment to fair value that was recorded in NZ IFRS profit. Where there is any impairment of a care
centre, or reversal of a previous impairment that impacts NZ IFRS profit for the period, this is eliminated for the purposes of
determining underlying profit.
Add realised gain on resales: add the realised gains across all resales of occupation rights during the period. The realised gain
for each resale is determined to be the difference between the licence price for the previous occupation right for a unit and the
occupation right resold for that same unit during the period. Realised resale gains are a measure of the cash generated from
increases in selling prices of occupation rights to incoming residents, less cash amounts repaid to vacated residents for the
repayment of the price of their refundable occupation right purchased in an earlier period, with the recognition point being
the cash settlement. Realised resale gains exclude deferred management fees and refurbishment costs.
Add realised development margin: add realised development margin across all new sales of occupation rights during the
period, with the recognition point being the cash settlement. Realised development margin is the margin earned on the first
time sale of an occupation right following the development of a unit. The margin for each new sale is determined to be the
licence price for the occupation right, less the cost of developing that unit.
Components of the cost of developing units include directly attributable construction costs and a proportionate share of the
following costs:
◦
◦
◦
Infrastructure costs
Land cost on the basis of the purchase price of the land
Interest during the build period
◦ Head office costs directly related to the construction of units
All costs above include non-recoverable GST.
Development margin excludes the costs of developing common areas within the retirement village (including a share of the
proportionate costs listed above). This is because these areas are assets that support the sale of occupation rights for not just
Annual Report 2022
Notes to the financial statements (continued)
the new sale but for all subsequent resales. It also excludes the costs of developing care centres, which are treated as property,
plant and equipment for accounting purposes.
Where costs are apportioned across more than one asset, the apportionment methodology is determined by considering the
nature of the cost.
Where a unit not previously sold under occupation right agreement is converted to a unit sold under occupation right
agreement, realised development margin recognised on the new sale of these units includes the following costs:
◦ Conversion costs
◦
A fair value apportionment reflecting the value of the property immediately prior to conversion
e)
Add/(less) deferred tax expense/(credit): reversal of the impact of deferred taxation.
Underlying profit does not include any adjustments for abnormal items or fair value movements on financial instruments that are
included in NZ IFRS profit for the period.
3. Segment reporting
The Group operates in one industry, being the provision of integrated retirement villages. The services provided across all of the
Group’s villages are similar, as are the type of customer and the regulatory environment. The chief operating decision makers, the
Chief Executive Officer and the Board of Directors, review the operating results of the Group as a whole on a regular basis. On
this basis, the Group has one reportable segment, and the Group results are the same as the results of the reportable segment. All
resource allocation decisions across the Group are made to optimise the consolidated Group’s result.
The Group continues to proceed with its expansion into Australia with seven sites purchased to date. These sites are currently being,
or will be, developed into retirement villages. To date the activities in Australia have been immaterial to the Group and so are not
reported as a separate operating segment as at 31 December 2022.
68
Health New Zealand is a significant customer of the Group, as the Group derives care fee revenue in respect of eligible government
subsidised aged care residents. Fees earned from Health New Zealand for the year ended 31 December 2022 amounted to
$36.1 million (2021: $34.6 million). No other customers individually contribute a significant proportion of the Group revenue. All
revenue is earned in New Zealand, apart from a small amount of interest income earned in Australia.
4. Revenue
Care fees and village services income are charged to residents on a monthly basis, as agreed, and are recognised over time. A portion
of village services is considered lease income based on the nature of the services provided.
Deferred management fees, which entitle residents to accommodation and the use of the community facilities within the village,
are recognised over the period of service, being the greater of the expected period of tenure or the contractual right to revenue.
The expected periods of tenure, being based on historical Group averages, are estimated to be seven to eight years for villas,
five years for apartments, three years for serviced apartments and memory care apartments, and two years for care suites. Where
the deferred management fees over the contractual period exceed the amortisation of the deferred management fee based on
estimated tenure, the amount is recorded as a liability (revenue in advance). At balance date, the majority of the revenue in advance
balance is non-current. Deferred management fees are recognised on a gross basis in the receipts for residents’ loans section of the
statement of cash flows.
Other income comprises:
Interest received
Other income
Total other income
2022
$000
413
1,336
1,749
2021
$000
55
3,236
3,291
Interest income is recognised in the income statement as it accrues, using the effective interest method. Other income is recognised
in the income statement in the period in which the performance obligations have been satisfied.
5. Operating expenses
Employee expenses
Property-related expenses
Repairs and maintenance expenses
Other operating expenses
Total operating expenses
2022
$000
2021
$000
132,937
105,621
22,479
18,543
7,771
7,118
48,608
47,763
211,795
179,045
Employee expenses include post-employment benefits (KiwiSaver/Superannuation) of $4.0 million (2021: $2.9 million).
Other operating expenses include:
Remuneration paid to auditors:
- Audit and review of financial statements
- Other assurance services - sustainability linked lending assurance
- Executive remuneration review market analysis provided to the Group
- Tax policy advice provided to the Group
Donations
Rent1
1 Short term and low value amounts exempt under NZ IFRS 16 - Leases and outgoings.
6. Finance costs
Interest on bank loans, retail bonds and related fees
Interest on interest rate swaps
Interest on lease liability
Capitalised finance costs
Fair value movement of interest rate swaps through profit or loss
Fair value movement of retail bonds designated as fair value through profit
or loss
Finance costs
69
2022
$000
2021
$000
304
26
5
-
158
290
254
27
135
5
57
291
2022
$000
2021
$000
41,737
26,234
159
557
2,148
496
(25,493)
(16,841)
11,817
16,243
(11,817)
(16,240)
16,960
12,040
Interest expense comprises interest payable on borrowings and is calculated using the effective interest rate method.
Borrowing costs are capitalised for property, plant and equipment (Note 9), and investment property (Note 11), if they are directly
attributable to the construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities
to prepare the asset commence and expenditure and borrowing costs are incurred. Capitalisation of borrowing costs continues until
the assets are substantially ready for their intended use.
Borrowing costs of $25.5 million (2021: $16.8 million) have been capitalised during the period of construction in the current year. The
weighted average capitalisation rate on funds borrowed representing the borrowing costs of the loans used to finance projects is
3.42% per annum (2021: 3.00% per annum).
Annual Report 2022
Notes to the financial statements (continued)
Two of the Group's retail bonds are designated in a fair value hedging relationship. Details of fair value hedging are included in Note 14.
7. Income tax
Tax expense comprises current and deferred tax, calculated using the tax rate enacted or substantively enacted at balance date and
any adjustment to tax payable in respect of prior years. Tax expense is recognised in the income statement, except when it relates to
items recognised directly in the statement of comprehensive income, in which case the tax expense is recognised in the statement
of comprehensive income.
Deferred tax expense is recognised in respect of temporary differences between the carrying amounts of assets and liabilities in
the financial statements and the amounts used for taxation purposes. A deferred tax asset is recognised only to the extent that it is
probable it will be utilised. Temporary differences for the initial recognition of assets or liabilities that affect neither accounting nor
taxable profit, unless they arise from business combination, are not provided for.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
(a) Income tax recognised in the income statement
Tax expense comprises:
Deferred tax relating to the origination and reversal of temporary differences
Total tax credit reported in income statement
2022
$000
(3,955)
(3,955)
2021
$000
(27)
(27)
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the
financial statements as follows:
70
Profit before income tax
Income tax using the corporate tax rate
Capitalised interest
Other non-deductible expenses
2022
2021
$000
265,117
74,233
(7,138)
348
%
$000
%
543,637
28.0%
152,218
28.0%
(2.7%)
0.1%
(4,722)
197
(0.9%)
0.0%
Non-assessable investment property revaluations
(70,917)
(26.7%)
(150,339)
(27.7%)
Transfer of investment property to property, plant
and equipment
Other
Prior period adjustments
Total income tax credit
-
0.0%
2,472
(560)
79
(3,955)
(0.2%)
0.0%
(1.5%)
100
47
(27)
0.5%
0.0%
0.0%
(0.0%)
Total Group tax losses available amounted to $450.7 million at 31 December 2022 ($126.7 million tax effected) (2021: $341.1 million
($95.8 million tax effected)). There are no unrecognised tax losses for the Group at 31 December 2022 (2021: nil).
(b) Amounts charged or credited to other comprehensive income
Tax expense comprises:
Net gain on revaluation of property, plant and equipment
Fair value movement of interest rate swaps
Total tax expense reported in statement of comprehensive income
(c) Amounts charged or credited directly to equity
Tax expense comprises:
Deferred tax relating to employee share option plans
Total tax expense/(credit) reported directly in equity
2022
$000
1,278
8,718
9,996
2022
$000
1,517
1,517
2021
$000
10,019
6,881
16,900
2021
$000
233
233
(d) Imputation credit account
There were no imputation credits received or paid during the year and the balance at 31 December 2022 is nil (2021: nil).
71
Annual Report 2022
Notes to the financial statements (continued)
(e) Deferred tax
Movement in the deferred tax balance comprises:
BALANCE
1 JAN 2022
$000
RECOGNISED
IN INCOME
$000
RECOGNISED
DIRECTLY IN
EQUITY
$000
RECOGNISED
IN OCI*
$000
BALANCE
31 DEC 2022
$000
Property, plant and equipment
Investment property
Revenue in advance
Interest rate swaps
28,896
42,664
49,465
(1,001)
147
11,771
16,694
-
Income tax losses not yet utilised
(95,779)
(30,883)
-
-
-
-
-
Other items
Net deferred tax liability
(4,309)
19,936
(1,684)
(3,955)
1,517
1,517
1,278
-
-
8,718
-
-
30,321
54,435
66,159
7,717
(126,662)
(4,476)
9,996
27,494
BALANCE
1 JAN 2021
$000
RECOGNISED
IN INCOME
$000
RECOGNISED
DIRECTLY IN
EQUITY
$000
RECOGNISED
IN OCI*
$000
BALANCE
31 DEC 2021
$000
72
Property, plant and equipment
Investment property
Revenue in advance
Interest rate swaps
14,171
35,231
35,159
(7,882)
4,706
7,433
14,306
-
Income tax losses not yet utilised
(70,309)
(25,470)
Other items
(3,540)
(1,002)
Net deferred tax liability
2,830
(27)
-
-
-
-
-
233
233
10,019
-
-
28,896
42,664
49,465
6,881
(1,001)
-
-
(95,779)
(4,309)
16,900
19,936
* Other comprehensive income
8. Trade and other receivables
Trade and other receivables are stated at amortised cost less impairment losses. Trade receivables are not significant on an individual
basis and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate, less an
allowance for doubtful debts. The allowance for doubtful debts is made up of expected credit losses based on assessment of trade
receivables debt at the individual level for impairment, plus an additional allowance on the remaining balance for potential credit
losses not yet identified. The expected credit losses allowance requirement on the remaining balance has been set at 2%.
Trade receivables
Allowance for doubtful debts
Net trade receivables
Prepayments
Accrued income
Sundry debtors
Total trade and other receivables
2022
$000
4,923
(239)
4,684
2021
$000
3,541
(109)
3,432
13,550
13,349
3,001
15,492
36,727
1,057
27,154
44,992
9. Property, plant and equipment
Property, plant and equipment includes care centres (including memory care apartments and care suites), both complete and under
development, and corporate assets held.
All property, plant and equipment is initially recorded at cost. Cost includes expenditure that is directly attributable to the acquisition
of the asset. The cost of self-constructed care centres includes directly attributable construction costs and other costs necessary to
bring the care centres to working condition for their intended use. These other costs include professional fees and consents, interest
during the build period and head office costs directly related to the construction of the care centres. Where costs are apportioned
across more than one asset, the apportionment methodology is determined by considering the nature of the cost.
Subsequent to initial recognition, completed care centres are carried at a revalued amount, which is the fair value at the date of
the revaluation less any subsequent accumulated depreciation and accumulated impairment losses, if any, since the assets were
last revalued. Other corporate assets are subsequently measured at cost less accumulated depreciation and impairment losses, if
any. Where an item of plant and equipment is disposed of, the gain or loss recognised in the income statement is calculated as the
difference between the net sales price and the carrying amount of the asset.
Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged
between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date.
Any revaluation surplus is recognised in other comprehensive income unless it reverses a revaluation decrease of the same asset
previously recognised in the income statement. Any revaluation deficit is recognised in the income statement unless it directly offsets
a previous surplus in the same asset in other comprehensive income. Any accumulated depreciation at revaluation date is eliminated
against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal,
any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. Independent valuations are
performed with sufficient regularity to ensure that the carrying amount does not differ materially from the asset’s fair value at the
balance sheet date.
Note 6 provides details on capitalised borrowing costs.
Depreciation is charged to the income statement on a straight-line (SL) basis over the estimated useful life of each item of property,
plant and equipment, with the exception of land, which is not depreciated. Depreciation methods, useful lives and residual values
are reassessed at each reporting date.
73
Major depreciation rates are as follows:
•
Buildings (2% to 14% SL)
• Motor vehicles (8% to 10% SL)
•
•
Furniture and fittings (7% to 20% SL)
Plant and equipment (7% to 50% SL)
Also included in the buildings category is building fit-out.
Right of use assets are depreciated on an SL basis over the term of their lease. Refer to Note 16.
Annual Report 2022
Notes to the financial statements (continued)
BUILDINGS
$000
MOTOR
VEHICLES
$000
PLANT AND
EQUIPMENT
$000
FURNITURE
AND
FITTINGS
$000
RIGHT OF USE
ASSETS
$000
TOTAL
$000
Cost
Balance at 1 January 2021
155,372
2,450
21,795
39,697
-
18,718
3,431
30,210
901
(28)
5,344
(92)
-
-
-
-
-
-
247,428
3,323
27,047
42,719
1,888
5,745
-
(2,512)
(51)
-
-
-
8,790
600
-
-
-
-
9,390
1,277
-
-
11,009
199,416
2,795
49,337
(111)
(231)
-
-
-
18,718
3,431
30,210
13,693
300,881
5,064
56,693
(654)
(705)
-
(2,512)
287,635
5,160
32,792
10,667
18,103
354,357
5,573
-
(5,573)
244
(28)
-
2,323
(23)
-
5,198
1,038
-
-
2,054
18,318
1,341
10,519
(47)
(98)
-
(5,573)
-
1,354
12,228
6,236
3,348
23,166
7,078
-
(7,078)
303
(49)
-
2,681
908
1,651
12,621
-
-
-
-
(353)
(402)
-
(7,078)
-
1,608
14,909
7,144
4,646
28,307
Additions
Disposals
Transfer
Reversal of impairment
through profit or loss
Net revaluations through
other comprehensive income
Balance at
31 December 2021
Additions
Disposals
Net revaluations through
other comprehensive income
Balance at
31 December 2022
Depreciation charge for
the year
Disposals
Net revaluations through
other comprehensive income
Balance at
31 December 2021
Depreciation charge for
the year
Disposals
Net revaluations through
other comprehensive income
Balance at
31 December 2022
Carrying amounts
74
Accumulated depreciation
Balance at 1 January 2021
-
1,138
9,928
As at 31 December 2021
As at 31 December 2022
247,428
287,635
1,969
3,552
14,819
17,883
3,154
3,523
10,345
277,715
13,457
326,050
Buildings include $49.4 million of care centres under development carried at fair value, which reflects cost due to the proximity of
completion to 31 December 2022 (2021: $23.9 million).
Right of use assets relate to the Group's leased office premises and car park spaces; refer to Note 16 for further information.
Classification between investment property and property, plant and equipment
On initial recognition, the Group performs an assessment to determine whether a unit type should be classified as investment
property or property, plant and equipment. The assessment is based on the significance of ancillary services provided to residents
who occupy accommodation under an occupation right agreement. For the purposes of this assessment, the Group considers
that portion of weekly fees that gives rise to a separate performance obligation for the Group, as ancillary services. In addition
to a quantitative assessment, the business model (being the provision of accommodation) is considered when determining the
classification of the property as either investment property or property, plant and equipment. Subsequent reclassification of unit
types between investment property or property, plant and equipment, occur only when there has been a change in use.
Revaluations
An independent valuation to determine the fair value of all building assets related to completed care centres was carried out as at
31 December 2022 by CBRE Limited ("CBRE NZ"), an independent registered valuer. Valuations are carried out annually.
CBRE NZ determines the fair value of care centres (excluding units under occupation right agreement) using an earnings-based
multiple approach and the amount apportioned to goodwill of $9.7 million is not recognised (2021: $16.0 million). Significant
assumptions used in the most recent valuation include market value per care bed of between $63,100 and $204,000 (2021: $68,200
and $227,600), and individual unit earning capitalisation rate of between 11.50% and 14.75% (2021: 11.50% and 14.75%).
Revaluation of units under occupation right agreement held as property, plant and equipment
To assess the market value of the Group's interest in the units under occupation right agreement held as property, plant and
equipment, CBRE NZ undertook a cash flow analysis to derive a net present value. Significant assumptions used by CBRE NZ include
a discount rate of between 14.50% and 15.50% (2021: 14.75% to 15.50%), and a growth rate of between 0.5% and 3.0% (2021: 0.5% to
3.0%). Other assumptions used include the average entry age of residents of between 79 and 86 years (2021: 81 and 90 years), and
the stabilised departing occupancy periods of units of between 3.0 and 3.1 years (2021: 2.9 and 3.1 years).
Manager's net interest
2022
$000
2021
$000
51,592
49,027
75
Plus: revenue received in advance relating to property, plant and equipment
1,875
1,201
Plus: liability for residents' loans relating to property, plant and equipment
24,127
14,087
Total property, plant and equipment - units under occupation
right agreement
77,595
64,315
Annual Report 2022
Notes to the financial statements (continued)
Sensitivity analysis to significant changes in unobservable inputs within Level 3 of the hierarchy
As the fair value of buildings is determined using inputs that are unobservable, the Group has categorised property, plant and
equipment as Level 3 under the fair value hierarchy in accordance with NZ IFRS 13 – Fair Value Measurement.
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of
the entity’s portfolio of care centres (excluding units under occupation right agreement) are the capitalisation rates applied to
individual unit earnings and the market value per care bed. A significant decrease (increase) in the capitalisation rate would result in
a significantly higher (lower) fair value measurement, and a significant increase (decrease) in the market value per care bed would
result in a significantly higher (lower) fair value measurement.
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy
of the entity’s portfolio of units under occupation right agreement, held as property, plant and equipment, are the discount
rates and growth rates. A significant decrease (increase) in the discount rate would result in a significantly higher (lower) fair
value measurement, and a significant increase (decrease) in the growth would result in a significantly higher (lower) fair value
measurement. Other key components in determining the fair value of units under occupation right held as property, plant and
equipment are the average entry age of residents and the average occupancy of units. A significant decrease (increase) in the
occupancy period of units would result in a significantly higher (lower) fair value measurement, and a significant increase (decrease)
in the average entry age of residents would result in a significantly higher (lower) fair value measurement.
Cost model
If buildings were measured using the cost model, the carrying amounts would be as follows:
Cost
Accumulated depreciation and impairment losses
76
Net carrying amount
2022
2021
BUILDINGS
$000
BUILDINGS
$000
227,359
184,640
(31,622)
(24,544)
195,737
160,096
Security
At 31 December 2022, all care centres held by retirement villages registered under the Retirement Villages Act 2003 are subject to
a registered first mortgage in favour of the Statutory Supervisor.
10. Intangible assets
Intangible assets acquired by the Group are measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised in the income statement on an SL basis over the estimated useful lives of intangible assets from the date
that they are available for use. The intangible assets are software and the amortisation rates at 31 December 2022 are between 10%
and 20% SL basis.
Cost
Opening balance
Additions
Disposals
Closing balance
Accumulated amortisation
Opening balance
Amortisation
Disposals
Closing balance
Carrying amount
2022
$000
12,251
1,563
-
2021
$000
11,039
2,380
(1,168)
13,814
12,251
5,587
976
-
6,563
5,330
1,036
(779)
5,587
7,251
6,664
77
11. Investment property
Investment property is held to earn current and future rental income and capital appreciation. It comprises land and buildings,
and associated equipment and furnishings, relating to retirement units and common facilities in the retirement village. Investment
property includes buildings under development, excluding care centres under development which are included in property, plant
and equipment. Initial recognition of investment property is at cost and it is subsequently measured at fair value, with any change
in fair value recognised in the income statement.
The cost of retirement units includes directly attributable construction costs and other costs necessary to bring the retirement units
to working condition for their intended use. These other costs include professional fees and consents, interest during the build period
and head office costs directly related to the construction of the retirement units. Where costs are apportioned across more than one
asset, the apportionment methodology is determined by considering the nature of the cost.
Land acquired with the intention of constructing investment property on it is classified as investment property from the date
of acquisition.
Depreciation is not charged on investment property.
Note 6 provides details on capitalised borrowing costs.
Annual Report 2022
Notes to the financial statements (continued)
Balance at beginning of period
Additions
Disposals
Transfer to property, plant and equipment
Fair value movement
Foreign exchange movement
Total investment property
Development land measured at fair value1
Retirement villages measured at fair value2
Retirement villages under development measured at cost
Total investment property
2022
$000
2021
$000
4,580,196
3,638,760
573,389
434,643
(4,999)
(12,034)
-
(18,718)
268,757
537,497
376
48
5,417,719
4,580,196
2022
$000
2021
$000
603,829
485,225
4,351,031
3,772,522
462,859
322,449
5,417,719
4,580,196
1 Included in development land are pieces of land that were acquired close to balance date and as such were excluded from the valuation of investment property. These pieces
of land have been accounted for at fair value, which has been determined to be cost due to the proximity of the transaction to balance date. At 31 December 2022 the land
at cost was $162.5 million (2021 $95.3 million).
2 Included in retirement villages measured at fair value is $45.0 million related to completed retirement units at cost, which reflects fair value due to the proximity of completion
78
to balance date (2021: nil).
Manager's net interest
2022
$000
2021
$000
3,116,800
2,606,955
Plus: revenue received in advance relating to investment property
159,694
140,192
Plus: liability for residents' loans relating to investment property
Total investment property
2,141,225
1,833,049
5,417,719
4,580,196
The Group is unable to reliably determine the fair value of the non-land portion of retirement villages under development at
31 December 2022 and therefore these are carried at cost. This equates to $462.9 million of investment property
(2021: $322.4 million).
The fair value of investment property as at 31 December 2022 was determined by independent registered valuers CBRE NZ and
Jones Lang LaSalle Limited ("JLL") for villages including land in New Zealand, and CBRE Valuations Pty Limited ("CBRE AU") for land
in Australia. The fair value of the Group’s investment property is determined on a semi-annual basis, based on market values, being
the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing
seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and
without compulsion.
As required by NZ IAS 40 - Investment Property, the fair value as determined by the independent registered valuer is adjusted for
assets and liabilities already recognised on the balance sheet which are also reflected in the cash flow analysis.
To assess the fair value of the Group's interest in each New Zealand village, CBRE NZ and JLL have undertaken a cash flow analysis
to derive a net present value. The Group's development land has been valued by CBRE NZ using the direct comparison approach.
The valuers' view is that the most pressing issues facing the property market both nationally and globally are high inflation, high oil
prices, sharply increasing energy costs, and ongoing disruption to global supply changes and the wider economic fallout from the
current geopolitical crisis stemming from events in Ukraine. With these factors in mind, the valuers reiterate that their conclusions are
based on data and market sentiment as at the date of the valuation and that a degree of caution should be exercised when relying
upon the valuation.
Significant assumptions used by CBRE NZ and JLL in relation to the New Zealand investment property include a discount rate of
between 13.5% and 16.5% (2021: 13.5% to 16.5%), and a long-term nominal house price inflation rate (growth rate) of between 0% and
3.5% (2021: 0% to 3.5%). Other assumptions used include the average entry age of residents of between 73 and 88 years (2021: 73
and 89 years), and the stabilised departing occupancy periods of units of between 3.9 and 8.6 years (2021: 3.5 and 8.8 years).
Sites under development in Australia have been valued separately by CBRE AU. Land is valued under the same methodology as
development land in New Zealand.
As the fair value of investment property is determined using inputs that are unobservable, the Group has categorised investment
property as Level 3 under the fair value hierarchy in accordance with NZ IFRS 13 – Fair Value Measurement.
Sensitivity analysis to significant changes in unobservable inputs within Level 3 of the hierarchy
To assess the market value of the Group's interest in a retirement village, CBRE and JLL have undertaken a cash flow analysis to
derive a net present value. As the fair value of investment property is determined using inputs that are significant and unobservable,
the Group has categorised investment property as Level 3 under the fair value hierarchy in accordance with NZ IFRS 13 - Fair
Value Measurement.
79
The sensitivities of the significant assumptions are shown in the table below:
31 December 2022
Valuation ($000)
Difference ($000)
Difference (%)
31 December 2021
Valuation ($000)
Difference ($000)
Difference (%)
1 Completed units excluding unsold stock.
Adopted
value1
Discount rate
+50 bp
Discount rate
-50 bp
Growth rates
+50bp
Growth rates
-50bp
1,705,010
1,574,940
(61,655)
66,100
102,685
(94,300)
(3.6%)
3.9%
6.0%
(5.5%)
(55,660)
59,760
92,180
(84,440)
(3.5%)
3.8%
5.9%
(5.4%)
Annual Report 2022
Notes to the financial statements (continued)
Other key components in determining the fair value of investment property are the average entry age of residents and the average
occupancy of units. A significant decrease (increase) in the occupancy period of units would result in a significantly higher (lower) fair
value measurement, and a significant increase (decrease) in the average entry age of residents would result in a significantly higher
(lower) fair value measurement.
Operating expenses
Direct operating expenses arising from investment property during the period amounted to $57.7 million (2021: $46.6 million).
Security
At 31 December 2022, all investment property relating to registered retirement villages under the Retirement Villages Act 2003 are
subject to a registered first mortgage in favour of the Statutory Supervisor to secure the Group’s obligations to the occupation right
agreement holders.
12. Trade and other payables
Trade and other payables are carried at amortised cost. Due to their short-term nature they are not discounted.
Trade payables
Accruals - development of retirement units and care centres
Accruals - other
Sundry payables
Total trade and other payables
80
13. Employee benefits
2022
$000
4,413
2021
$000
4,535
140,020
174,650
21,791
12,332
16,354
6,718
178,556
202,257
A provision is made for benefits accruing to employees in respect of wages, salaries, annual leave and short-term incentives when
it is probable that settlement will be required and the amount can be estimated reliably.
Leave liabilities
Other employee benefits
Total employee benefits
14. Interest rate swaps
2022
$000
15,373
12,192
27,565
2021
$000
10,905
10,675
21,580
The Group uses interest rate swaps to manage its risk associated with interest rate fluctuations. Interest rate swaps are initially
recognised at fair value on the date a contract is entered into and are subsequently measured at fair value on each reporting date.
The fair values of the interest rate swaps are determined based on cash flows discounted to present value using current market
interest rates.
Cash flow hedges
The Group has entered into interest rate swaps to manage its interest rate risk in relation to its floating rate debt. These interest
rate swaps qualify for cash flow hedge accounting. When interest rate swaps meet the criteria for cash flow hedge accounting, the
effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income, while the ineffective
portion is recognised in the income statement. Amounts taken to reserves are transferred out of reserves and included in the
measurement of the hedged transaction when the forecast transaction occurs. When interest rate swaps do not meet the criteria
for cash flow hedge accounting, all movements in fair value of the hedging instrument are recognised in the income statement.
Under the interest rate swap agreements that qualify for cash flow hedge accounting, the Group has a right to receive interest at
variable rates and to pay interest at fixed rates. At 31 December 2022, the Group had interest rate swap agreements in place with a
total notional principal amount of approximately $762.3 million, made up of $442.0 million denominated in NZD and $320.3 million
in AUD (2021: $444.7 million, made up of $312.0 million denominated in NZD and $100.0 million in AUD). Of the swaps in place, at
31 December 2022 $535.5 million (2021: $339.8 million) are being used to cover approximately 78% (2021: 91%) of the floating rate
debt principal outstanding. These agreements effectively change the Group’s interest exposure on the principal covered by the
interest rate swaps from a floating rate to fixed rates, which range between 0.56% and 4.85% (2021: 0.56% and 3.87%).
The fair value of these agreements at 31 December 2022 is a $26.5 million asset, comprised of $0.7 million of swap liabilities and
$27.2 million of swap assets (2021: liability of $3.7 million, comprised of $7.2 million of swap liabilities and $3.5 million of swap assets).
Of this, a liability of nil is estimated to be current (2021: $881,000). The agreements cover notional amounts for terms of up to
seven years.
The notional principal amounts and the period of expiry of the cash flow hedge interest rate swap contracts are as follows:
Less than 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Between 5 and 6 years
Between 6 and 7 years
Total
Current
Forward starting
Total
2022
$000
45,000
60,000
76,694
84,032
178,130
2021
$000
70,000
45,000
60,000
51,536
83,844
190,081
124,302
128,388
10,000
762,325
444,682
535,550
339,766
226,775
104,916
762,325
444,682
81
Fair value hedges
The Group has entered into interest rate swaps to manage its interest rate risk in relation to its fixed rate debt arising from the retail
bonds. The hedge is for the future fair value movements in the retail bonds as a result of market interest rate movements. The Group
has designated $225.0 million of its retail bonds in fair value hedge relationships.
Both the hedging instrument (interest rate swap) and the hedged risk are recognised at fair value. The change in the fair value of both
items offset in the statement of comprehensive income to the extent the hedging relationship is effective. The reduction in fair value
of the interest rate swaps of $11.8 million (2021: reduction of $16.2 million) has been recognised in finance costs and has been offset
with a similar fair value gain on the retail bonds to leave an ineffective amount in finance costs of nil (2021: $3,000).
Under the interest rate swap agreements that qualify for fair value hedge accounting, the Group has a right to receive interest at
fixed rates and to pay interest at floating rates. At 31 December 2022, the Group had interest rate swap agreements in place with
a total notional principal amount of $225.0 million (2021: $225.0 million). Of the interest rate swaps in place, at 31 December 2022
$225.0 million (2021: $225.0 million) are being used to cover 60% (2021: 60%) of the fixed interest rate retail bonds outstanding.
Annual Report 2022
Notes to the financial statements (continued)
The notional principal amounts and the period of expiry of the fair value hedge interest rate swap contracts are as follows:
Less than 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Total
Current
Total
15. Residents’ loans
2022
$000
100,000
2021
$000
-
-
100,000
125,000
-
-
125,000
225,000
225,000
225,000
225,000
225,000
225,000
Residents’ loans are amounts payable under occupation right agreements. An occupation right agreement confers a right of
occupancy to a villa, apartment, serviced apartment, care suite or memory care apartment. The consideration received on the grant
of an occupation right agreement is allocated to the resident's loan in full. These loans are non-interest bearing and are payable when
both an occupation right agreement is terminated and there has been settlement of a new occupation right agreement for the same
unit and the proceeds from the new settlement have been received by the Group. Residents’ loans are initially recognised at fair value
and subsequently measured at amortised cost.
The Group holds a contractual right to set-off the deferred management fee receivable on termination of an agreement against the
resident's loan to be repaid. Residents’ loans are therefore recognised net of the deferred management fee receivable on the balance
sheet. Deferred management fees are payable by residents in consideration for the supply of accommodation and the right to share
in the use of community facilities. Deferred management fees are paid in arrears, with the amount payable calculated as a percentage
of the resident's loan amount as per the resident's occupation right agreement. Deferred management fee receivable is calculated
and recorded based on the current tenure of the resident and the contractual right to deferred management fee earned at balance
date. Refer to Note 4 for further detail on recognition of deferred management fee revenue.
82
Balance at beginning of period
2022
$000
2021
$000
2,276,945
1,872,736
Net receipts for residents' loans - resales of occupation right agreements
51,481
63,832
Receipts for residents' loans - new occupation right agreements
Total gross residents’ loans
Deferred management fees and other receivables
Total residents’ loans
353,411
340,377
2,681,837
2,276,945
(516,485)
(429,809)
2,165,352
1,847,136
16. Leases
The leases to which NZ IFRS 16 applies are the leases of office premises and car parks occupied by the Group in New Zealand and
Australia. In respect of these leases, a right of use asset is disclosed along with a corresponding lease liability. The right of use assets
are depreciated on an SL basis, while the lease liability is measured at the present value of the lease payments that are not yet paid,
discounted using the Group's incremental borrowing rate.
The Group has elected not to recognise right of use assets and lease liabilities for short-term leases that have a lease term of 12 months
or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as incurred as a rental
expense over the lease term.
Right of use assets are classified as property, plant and equipment, and lease liabilities are disclosed as such in the Group's statement
of financial position.
The weighted average incremental borrowing rates used to measure lease liabilities at the date of application are between 3.19% and
4.67% (2021: 3.19% and 4.67%).
When the Group has the option to extend a lease, management uses its judgement to determine whether or not an option would be
reasonably certain to be exercised. Management considers all facts and circumstances, including their past practice and any cost
that will be incurred to change the asset if an option to extend is not taken, to help determine the lease term. Other assumptions and
judgements used by management include calculating the appropriate discount rate.
As a lessee
Right of use assets disclosed:
Balance at beginning of period
Additions
Disposals
Depreciation charge for the year
Balance at end of period
Lease liabilities disclosed:
Less than 1 year
Between 1 and 5 years
More than 5 years
83
2022
$000
10,345
5,064
(301)
2021
$000
8,955
2,795
(64)
(1,651)
(1,341)
13,457
10,345
2022
$000
1,709
8,106
6,155
2021
$000
1,412
6,506
4,720
Total lease liabilities at end of period
15,970
12,638
Annual Report 2022
Notes to the financial statements (continued)
Amounts recognised in the profit and loss:
Interest on lease liabilities
Expenses relating to short-term and low-value asset leases
Depreciation on right of use assets
Total amounts recognised in profit or loss
Amounts recognised in statement of cash flows:
Total cash outflows for leases
2022
$000
557
371
1,651
2,579
2022
$000
2,431
2021
$000
496
200
1,341
2,037
2021
$000
2,081
As a lessor
The Group acts as a lessor under occupation right agreements with village residents, along with a small number of residential rental
properties. The assets leased by the group as a lessor are disclosed as investment property and lease income on occupation right
agreements is generated in the form of deferred management fees. The lease term is determined to be the greater of the expected
period of tenure or the contractual right to revenue. The Group uses the portfolio approach to account for leases of units to village
residents and allocates individual leases to different portfolios depending on the type of unit. The Group does not have any subleases.
84
17. Interest-bearing loans and borrowings
Interest-bearing loans and borrowings include secured bank loans and unsubordinated fixed-rate retail bonds.
Interest-bearing loans and borrowings are recognised initially at fair value net of directly attributable transaction costs. Subsequent to
initial recognition, the borrowings are measured at amortised cost, with any difference between the initial recognised amount and the
redemption value being recognised in profit or loss over the period of the borrowing using the effective interest rate. Two of the three
retail bonds, SUM010 and SUM020, are designated in fair value hedge relationships, which means that any change in market interest
rates results in a change in the fair value adjustment of that debt. SUM030 is not hedged. Transaction costs incurred in arranging
financing are capitalised and amortised over the term of the relevant debt instrument.
Repayable within 12 months
Retail bond - SUM010
Repayable after 12 months
Secured bank loans
Retail bond - SUM010
Retail bond - SUM020
Retail bond - SUM030
Total loans and borrowings at face value
Transaction costs for loans and borrowings capitalised:
Opening balance
Capitalised during the period
Amortised during the period
Closing balance
Total loans and borrowings at amortised cost
Fair value adjustment on hedged borrowings
Carrying value of interest-bearing loans and borrowings
Coupon
2022
$000
2021
$000
4.78%
100,000
-
Floating
699,400
374,940
4.78%
4.20%
2.30%
-
100,000
125,000
125,000
150,000
150,000
1,074,400
749,940
85
(5,096)
(521)
1,357
(3,888)
(2,194)
986
(4,260)
(5,096)
1,070,140
744,844
(9,646)
2,171
1,060,494
747,015
The non-cash movements included in the table above are the transaction costs for loans and borrowings amortised during the period
and the fair value adjustment on hedged borrowings.
A summary of the changes in the Group's borrowings is provided below:
Borrowings at the start of the year
Net cash borrowed
Cash change in deferred financing costs
Non-cash change in deferred financing costs
Non-cash change in fair value adjustment
Borrowings at the end of the year
2022
$000
2021
$000
747,015
687,099
324,460
77,364
(521)
1,357
(2,194)
986
(11,817)
(16,240)
1,060,494
747,015
Annual Report 2022
Notes to the financial statements (continued)
The weighted average interest rate for the year to 31 December 2022 was 3.42% (2021: 3.00%). This includes the impact of interest
rate swaps (see Note 14).
Effective 11 November 2022, the Group refinanced an AUD tranche of the syndicated facility that was due to expire within the next
year and obtained new AUD facilities. The secured bank loan facility at 31 December 2022 has a limit of approximately $1,160 million
(2021: $1,110 million). Lending of NZ$310 million expires in November 2024, lending of NZ$50 million and AU$130 million expires in
September 2025, lending of NZ$315 million and AU$185 million expires in September 2026 and lending of AU$170 million expires in
September 2027.
The Group has issued three retail bonds listed on the NZDX:
ID
SUM010
SUM020
SUM030
Amount
$100 million
$125 million
$150 million
Maturity
11 July 2023
24 September 2025
21 September 2027
Security
The bank loans and retail bonds rank equally with the Group’s other unsubordinated obligations and are secured by the following
securities held by a security trustee:
•
•
•
•
•
•
a first-ranking registered mortgage over all land and permanent buildings owned (or leased under a registered lease) by each
New Zealand-incorporated guaranteeing Group member that is not a registered retirement village under the Retirement Villages
Act 2003;
a second-ranking registered mortgage over the land and permanent buildings owned (or leased under a registered lease) by each
New Zealand-incorporated guaranteeing Group member that is a registered retirement village under the Retirement Villages Act
2003 (behind a first-ranking registered mortgage in favour of the Statutory Supervisor);
a first-ranking registered mortgage over all land and permanent buildings owned (or leased under a registered lease) by each
Australian-incorporated guaranteeing Group member;
a General Security Deed, which secures all assets of the New Zealand- incorporated guaranteeing Group members, but in respect
of which the Statutory Supervisor has first rights to the proceeds of security enforcement against all assets of the registered
retirement villages to which the security trustee is entitled;
a General Security Deed, which secures all assets of the Australian-incorporated guaranteeing Group members; and
a Specific Security Deed in respect of each marketable security of Summerset Holdings (Australia) Pty Limited, held by
Summerset Holdings Limited.
18. Financial instruments
Exposure to credit, market and liquidity risk arises in the normal course of the Group’s business. The Board adopts policies for
managing each of these risks as summarised below.
Categories of financial instruments
Financial assets
All financial assets of the Group are classified at amortised cost except for interest rate swaps, which are classified as fair value
through profit and loss, and those assets that are designated in a hedge relationship.
Financial liabilities
All financial liabilities except interest rate swaps and retail bonds are classified as liabilities at amortised cost. Refer to Note 17 for detail
on the retail bonds.
Credit risk
Credit risk is the risk of financial loss to the Group if a resident or counterparty to a financial instrument fails to meet their contractual
obligations. The Group’s exposure to credit risk relates to receivables from residents and bank balances. The Group manages
its exposure to credit risk. The Group’s cash is held with its principal banker, with the level of exposure to credit risk considered
minimal, with low levels of cash generally held. Receivables balances are monitored on an ongoing basis and funds are placed
with high-credit-quality financial institutions. The level of risk associated with sundry debtors is considered minimal due to the
recoverability of this balance being assessed as high. The Group does not require collateral from its debtors and the Directors
consider the Group’s exposure to any concentration of credit risk to be minimal.
86
The carrying amount of financial assets represents the Group’s maximum credit exposure. The status of trade receivables is
as follows:
Not past due
Past due 31 to 60 days
Past due 61 to 90 days
Past due more than 90 days
Total
2022
2021
GROSS
RECEIVABLE
$000
IMPAIRMENT
$000
GROSS
RECEIVABLE
$000
IMPAIRMENT
$000
3,991
385
210
337
4,923
(56)
(18)
(17)
(148)
(239)
3,029
260
88
164
(45)
(13)
(10)
(41)
3,541
(109)
In summary, trade receivables are determined to be impaired as follows:
Gross trade receivables
Impairment
Net trade receivables
2022
$000
4,923
(239)
4,684
2021
$000
3,541
(109)
3,432
Market risk
Market risk is the risk that changes in market prices such as interest rates will affect the Group’s income. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
87
Interest rate risk
The Group’s exposure to interest rate risk is managed by seeking to obtain the most competitive rate of interest at all times. The Group
has entered into interest rate swap agreements in order to provide an effective cash flow hedge against the variability in floating
interest rates. The Group has also entered into other interest swap agreements to reduce interest rate repricing risk in relation to retail
bonds. See Note 14 for details of interest rate swap agreements.
To comply with the Group’s risk management policy, the hedge ratio is based on the interest rate swap notional amount to hedge
the same notional amount of bank loans or retail bonds. This results in a hedge ratio of 1:1. This is the same as used for actual risk
management purposes, and such a ratio is appropriate for the purposes of hedge accounting as it does not result in an imbalance
that would create hedge ineffectiveness.
In these hedge relationships the main sources of ineffectiveness are:
•
a significant change in the credit risk of either party to the hedging relationship;
• where the hedge instrument has been transacted on a date different to the rate set date of the bank loan or retail bonds, interest
rates could differ; and
•
differences in repricing dates between the swaps and the borrowings.
Other than these sources, due to the alignment of the hedged risk in the hedged item and hedged instrument, hedge ineffectiveness
is not expected to arise.
At 31 December 2022 it is estimated that a general increase of one percentage point in interest rates would decrease the Group’s
profit by approximately $6.7 million (2021: decrease by $3.7 million) and increase total comprehensive income by approximately
$14.3 million (2021: decrease by $1.8 million).
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity
by maintaining adequate reserves and undrawn banking facilities, by continuously monitoring forecast and actual cash flows, and
matching the maturity profiles of financial assets and liabilities. The Group manages liquidity risk on residents’ loans and related
sundry debtors through the contractual requirements of occupation right agreements, whereby a resident’s loan is repaid only on
receipt of the loan monies from the incoming resident.
Annual Report 2022
Notes to the financial statements (continued)
The following table sets out the contractual cash flows for all financial liabilities for the Group (including contractual interest
obligations on bank loans and retail bonds):
Financial liabilities
Trade and other payables
Residents’ loans
2022
2021
LESS THAN
1 YEAR
$000
GREATER
THAN
1 YEAR
$000
LESS THAN
1 YEAR
$000
GREATER
THAN
1 YEAR
$000
178,556
2,165,352
-
-
202,257
1,847,136
-
-
Interest-bearing loans and borrowings
145,751
1,075,950
21,819
812,625
Interest rate swaps
Lease liability
Total
(839)
1,709
5,341
14,261
6,378
1,412
18,061
11,226
2,490,529
1,095,552
2,079,002
841,912
Residents’ loans are non-interest bearing and are not required to be repaid following termination of an occupation right agreement
until receipt of cash for the new resident loan from the incoming resident. Residents' loans are classified as being repayable on
demand, and therefore fully repayable within 12 months, because the Group does not have an unconditional right to defer repayment
of residents' loans for at least 12 months after balance date. Based on historical information including estimated periods of tenure
as disclosed in Note 4, it is estimated that $202.8 million (2021: $168.6 million) is expected to become payable in the 12 months
following balance date. To date, cash for new residents’ loans received has exceeded cash to repay residents’ loans, net of deferred
management fees.
88
Foreign currency risk
Foreign currency risk is the risk that the value of the Group's assets, liabilities and financial performance will fluctuate due to changes
in foreign currency rates.
The Group is primarily exposed to currency risk through its subsidiaries in Australia.
The risk to the Group is that the value of the overseas subsidiaries' financial position and financial performance will fluctuate in
economic terms and as recorded in the Group financial statements due to changes in foreign exchange rates. Due to limited activity
in the Australian subsidiaries in 2022, the Group did not have a material exposure to foreign exchange risk.
Fair values
The carrying amounts shown in the balance sheet approximate the fair value of the financial instruments, with the exception of retail
bonds, shown below:
Retail bonds
Total
2022
2021
CARRYING
AMOUNT
$000
FAIR VALUE
$000
CARRYING
AMOUNT
$000
FAIR VALUE
$000
(363,207)
(343,417)
(374,153)
(374,328)
(363,207)
(343,417)
(374,153)
(374,328)
The fair value of retail bonds is based on the price traded at on the NZX market as at 31 December 2022. The fair value of the retail
bonds is categorised as Level 1 under the fair value hierarchy in accordance with NZ IFRS 13 – Fair Value Measurement.
The fair value of interest rate swaps is determined using inputs from third parties that are observable, either directly (i.e. as prices) or
indirectly (i.e. derived from prices). Based on this, the Company and Group have categorised these financial instruments as Level 2
under the fair value hierarchy in accordance with NZ IFRS 13 – Fair Value Measurement.
Capital management
The Group’s capital includes share capital, reserves and retained earnings. The objective of the Group’s capital management is
to ensure a strong credit position to support business growth and maximise shareholder value. The Group is subject to capital
requirements imposed by the bank lenders (through covenants in the Syndicated Facility Agreement) and bondholders (through
covenants in the Master Trust Deed). The Group has met all of these externally imposed capital requirements for the year ended
31 December 2022 (2021: all requirements met). The Group capital structure is managed, and adjustments are made, with Board
approval. There were no changes to objectives, policies or processes during the year ended 31 December 2022 (2021: none).
19. Share capital and reserves
At 31 December 2022, there were 232,116,894 ordinary shares on issue (2021: 230,215,366). All ordinary shares are fully paid and have
no par value. All shares carry one vote per share and carry the right to dividends.
Share capital
On issue at beginning of year
Shares issued under the dividend reinvestment plan
Shares paid under employee share plans
Employee share plan option cost
On issue at end of year
Share capital (in thousands of shares)
On issue at beginning of year
Shares issued under the dividend reinvestment plan
Shares issued under employee share plans
On issue at end of year
2022
$000
2021
$000
324,899
303,499
16,484
15,230
2,145
684
5,372
798
344,212
324,899
2022
2021
229,427
227,073
1,504
629
1,102
1,252
231,560
229,427
89
The total shares on issue at 31 December 2022 of 232,116,894 for the Company differs from the share capital for the Group due
to shares held in 100% owned subsidiary, Summerset LTI Trustee Limited. As at 31 December 2022, 557,242 shares are held by
Summerset LTI Trustee Limited for employee share plans, which are eliminated on consolidation. Refer to Note 21 for further details
on employee share plans.
Revaluation reserve
The revaluation reserve is used to record the revaluation of care centre buildings.
Hedging reserve
The hedging reserve is used to record gains or losses on instruments used as cash flow hedges.
Foreign currency translation reserve
The foreign currency translation reserve is used to record the gain on translation of foreign currency subsidiaries to the Group's
reporting currency.
Dividends
On 23 March 2022 a dividend of 8.6 cents per ordinary share was paid to shareholders and on 19 September 2022 a dividend of 10.7
cents per ordinary share was paid to shareholders (2021: on 22 March 2021 a dividend of 7.0 cents per ordinary share was paid to
shareholders and on 20 September 2021 a dividend of 9.9 cents per ordinary share was paid to shareholders).
A dividend reinvestment plan applied to the dividends paid. 688,127 ordinary shares were issued in relation to the plan for the March
2022 dividend and 815,721 ordinary shares were issued in relation to the plan for the September 2022 dividend. (2021: 493,015
ordinary shares were issued in March 2021 and 608,493 ordinary shares were issued in September 2021).
Annual Report 2022
Notes to the financial statements (continued)
20. Earnings per share and net tangible assets
Basic earnings per share
Earnings ($000)
Weighted average number of ordinary shares for the
purpose of basic earnings per share (in thousands)
Basic earnings per share (cents per share)
Diluted earnings per share
Earnings ($000)
Weighted average number of ordinary shares for the
purpose of diluted earnings per share (in thousands)
Diluted earnings per share (cents per share)
Number of shares (in thousands)
90
Weighted average number of ordinary shares for the
purpose of basic earnings per share
Weighted average number of ordinary shares issued under
employee share plans
Weighted average number of ordinary shares for the
purpose of diluted earnings per share
2022
2021
269,072
543,664
230,656
228,256
116.66
238.18
2022
2021
269,072
543,664
231,233
229,525
116.36
236.86
2022
2021
230,656
228,256
577
1,269
231,233
229,525
At 31 December 2022, there were a total of 557,242 shares issued under employee share plans held by Summerset LTI Trustee Limited
(2021: 788,621 shares).
Net tangible assets per share
Net tangible assets ($000)
Shares on issue at end of period (basic and in thousands)
Net tangible assets per share (cents per share)
2022
2021
2,185,772
1,917,850
231,560
229,427
943.93
835.93
Net tangible assets are calculated as the total assets of the Group less intangible assets and less total liabilities. This measure is
provided as it is commonly used for comparison between entities.
21. Employee share plans
Senior employee share plan - share option scheme
The number of options granted to each participant equals the incentive remuneration value divided by the volume weighted average
price on the NZX during the 10 trading day period. Where applicable, the exercise price of the granted share options is determined
from the volume weighted average price on the NZX during the 10 trading day period determined by the Board prior to the grant.
Effective from the 2021 annual option grant, the option exercise price is set at nil and therefore no option valuation is required.
Balance at beginning of period
Granted during the year
Exercised during the year
Forfeited during the year
Balance at end of period
Exercisable at end of period
2022
2021
NUMBER OF
OPTIONS
000's
WEIGHTED
AVERAGE
EXERCISE
PRICE
NUMBER OF
OPTIONS
000's
WEIGHTED
AVERAGE
EXERCISE
PRICE
2,306
-
(514)
(165)
1,627
972
$6.73
-
$6.82
$8.08
$6.57
$8.31
2,612
535
(412)
(429)
2,306
903
$7.78
$1.89
$6.34
$7.43
$6.73
$6.90
Options outstanding as at 31 December 2022 have a weighted average remaining life of 1.93 years (2021: 2.55 years).
There was no annual option grant in 2022 as the scheme was under review as at 31 December 2022.
For the 2021 annual option grant, 50% of the vesting criteria is time-based only (non-hurdled) for all Participants; for the remaining
50% of the vesting criteria, the following performance hurdles apply to all Participants:
91
•
•
•
•
50% underlying net profit after tax
20% relative earnings growth
20% customer initiatives
10% employee initiatives
For annual option grants made between 2018 and 2020, while there is a requirement to remain employed by Summerset up to vesting
date, there are no performance hurdles for vesting of share options to senior management team members, other than the members
of the Executive Leadership Team.
For certain one-off option grants outside of the annual option grant process, performance hurdles are set relating to specific
performance milestones for the relevant Participant.
The maximum terms for options granted range between three and six years.
The share option scheme is an equity-settled scheme and measured at fair value at the date of the grant. The fair value determined at
the grant date of the equity-settled share-based payments is expensed over the vesting period, based on the Group’s estimate that
the share options will vest. Where applicable, these options were valued using the Black-Scholes valuation model, and the option cost
for the year ending 31 December 2022 of $2,147,000 has been recognised in the income statement of the Company and the Group
for that period (2021: $995,000). The Group has no legal or constructive obligation to repurchase or settle the share options in cash.
Valuation assumptions for those options with an exercise price:
Discount to reflect options may not meet vesting criteria
Risk free rate of return
Volatility
2022
15%
2021
15%
0.5% - 2%
0.5% - 2%
23% - 26%
23% - 26%
All-staff employee share plan
The Group operates an all-staff employee share plan. A total of 1,706 employees participated in the share issue under the plan for the
year ended 31 December 2022 (2021: 1,368 employees). In 2022, the Group contributed $1,000 per participating employee (being
the total value of the shares issued). A total of 167,188 Company shares were issued under the scheme at $10.16 per share (2021:
Annual Report 2022
Notes to the financial statements (continued)
99,864 shares at $13.53 per share). The shares are held by Summerset LTI Trustee Limited and vest to participating employees after
a three-year period.
The cost for the year ending 31 December 2022 of $566,000 has been recognised in the income statement of the Company and the
Group for that period (2021: $368,000).
22. Related party transactions
Refer to Note 21 for employee share plan details.
Transactions with companies associated with Directors
The Group also enters into transactions with other entities that some of the Directors may sit on the board of. These transactions are
entered into in the normal course of business. For a full list of all material director interests, please refer to the Disclosures section on
page 126 of this report.
23. Key management personnel compensation
The compensation of the key management personnel of the Group is set out below:
Directors’ fees
Short-term employee benefits
Share-based payments
Termination payments
92
Total
2022
$000
877
5,485
1,273
62
7,697
2021
$000
782
4,572
542
-
5,896
Refer to Note 21 for employee share plan details for key management personnel.
24. Commitments and contingencies
Guarantees
As at 31 December 2022, the Group had the following guarantees in place:
•
•
•
•
NZX Limited holds a guarantee in respect of the Group, as required by the NZX Listing Rules, for $75,000 (2021: $75,000).
Summerset Retention Trustee Limited holds guarantees in relation to retentions on construction contracts on behalf of the
Group. As at 31 December 2022, $13.0 million was held for the benefit of the retentions beneficiaries (2021: $10.0 million).
Auckland Transport holds a performance guarantee for $65,000 (2021: $65,000).
Tauranga City Council holds a performance guarantee for $350,000 (2021: $350,000).
• Quattro RE Limited holds a demand guarantee in relation to the lease of the office premises for $120,819 (2021: nil).
Capital commitments
At 31 December 2022, the Group had $63.2 million of capital commitments in relation to construction contracts (2021: $210.5 million).
Contingent liabilities
WorkSafe New Zealand is investigating a construction site fatality which occurred at the Group’s St Johns site on 4 November
2022. This investigation is ongoing, and the Group is cooperating fully with this process. The directors of Summerset cannot
reasonably estimate the adverse financial effect (if any) on the Group if the ongoing investigation is ultimately resolved against the
Group’s interests.
There were no other known material contingent liabilities at 31 December 2022 (2021: nil).
25. Subsequent events
On 20 February 2023, the Group announced it was considering making an offer of up to NZ$125 million guaranteed, secured,
unsubordinated fixed rate bonds, for a five year period. Under the proposed offer, the Group will have the ability to accept an
additional NZ$50 million of oversubscriptions at its discretion. The offer is scheduled to open during the week commencing
27 February 2023.
On 23 February 2023, the Directors approved a final dividend of $26.9 million, being 11.6 cents per share. The dividend record date
is 10 March 2023 with a payment date of 23 March 2023.
There have been no other events subsequent to 31 December 2022 that materially impact on the results reported.
93
Annual Report 2022
Independent Auditor’s Report to the Shareholders of Summerset Group
Holdings Limited
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Summerset Group Holdings Limited (“the company”) and its subsidiaries (together “the
Group”) on pages 58 to 93, which comprise the statement of financial position of the Group as at 31 December 2022, and the income
statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended
of the Group, and the notes to the consolidated financial statements including a summary of significant accounting policies.
In our opinion, the consolidated financial statements on pages 58 to 93 present fairly, in all material respects, the consolidated
financial position of the Group as at 31 December 2022 and its consolidated financial performance and cash flows for the year
then ended in accordance with New Zealand equivalents to International Financial Reporting Standards and International Financial
Reporting Standards.
94
This report is made solely to the Company's shareholders, as a body. Our audit has been undertaken so that we might state to the
Company's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's
shareholders, as a body, for our audit work, for this report, or for the opinions we have formed.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance
Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Ernst & Young provides other assurance related and remuneration advisory services to the Group. Partners and employees of our
firm may deal with the Group on normal terms within the ordinary course of trading activities of the business of the Group. We have
no other relationship with, or interest in, the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each
matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of
the audit report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying
consolidated financial statements.
Valuation and classification of investment property and freehold land and buildings
Why significant
How our audit addressed the key audit matter
As disclosed in notes 9 and 11 of the consolidated
financial statements:
•
•
the Group’s investment property portfolio was valued
at $5,418 million at 31 December 2022 and included
completed investment property and investment
property under development.
the Group’s freehold land and buildings were valued
at $288 million at 31 December 2022. This included
freehold land and buildings operated by the Group for
the provision of care services and land and buildings
to be developed into care facilities in the future.
The Group’s accounting policy is to measure these assets
at fair value.
Independent valuations of all investment property and
freehold land and buildings were carried out by third
party valuers, CBRE Limited and Jones Lang LaSalle
Limited (the Valuers). The valuation of investment
property and freehold land and buildings is inherently
subjective given that there are alternative assumptions
and valuation methods that may result in a range
of values.
Investment property and freehold land and buildings are
recorded in the consolidated financial statements based
on the value determined by the Valuers.
Summerset derives revenue from properties it holds from
both deferred management fees and the provision of
services to residents. NZ IAS 40 requires properties to be
classified as an investment property where the revenue
from the supply of ancillary services is insignificant to the
arrangement as a whole. Judgement is required to assess
the significance of ancillary services in this context.
To address the key audit matter, we:
External valuations
•
•
read the valuation reports and discussed them with
the Valuers. We assessed the valuation approach and
confirmed that this was in accordance with the relevant
accounting standards; and
tested, on a sample basis, whether property specific
information supplied to the Valuers by the Group
reflected the underlying property records held by
the Group.
Assumptions and estimates
•
•
•
held discussions with the Valuers to gain an
understanding of the assumptions and estimates used
and the valuation methodology applied. This included
understanding the impact that market uncertainty had on
their assessment of significant inputs and assumptions.
We also sought to understand and consider whether any
restrictions had been imposed on the valuation process;
considered whether the valuation incorporated
appropriate assumptions for a sample of individual
properties to reflect their characteristics, overall quality,
geographic location and desirability as a whole; and
engaged our in-house Real estate valuation experts to
challenge the work performed by the Valuers and assess
the reasonableness of the assumptions used based
on their knowledge gained from reviewing valuations
of similar properties, known transactions and available
market data.
Our work over the assumptions focused on the largest
properties within the portfolio and those properties where the
assumptions used and/or year-on-year fair value movement
suggested a possible outlier compared to the rest of the
portfolio and the market data for the sector.
Estimated valuation range
As a result of the judgement involved in determining
valuations for individual properties and the existence of
alternative assumptions and valuation methods, there is a
range of values which can be considered reasonable when
evaluating the independent property valuations used by the
Group. If we identified an error in a property valuation or
determined that the valuation was outside of a reasonable
range, we evaluated the error or difference to determine
if there was a material misstatement in the consolidated
financial statements.
Classification
We considered management’s assessment of the
classification of each type of property as either investment
property or freehold land and buildings, including
assessment against the requirements of the accounting
standards, including the significance of ancillary services.
Disclosures
We considered the adequacy of the disclosures made in
notes 9 and 11 to the financial statements. These notes explain
the key judgements made in relation to the classification
and valuation of investment property and freehold land
and buildings and the estimation uncertainty involved in
the process.
95
Annual Report 2022
Deferred Management Fee Revenue Recognition
Why significant
How our audit addressed the key audit matter
Deferred management fee (“DMF”) revenue is 39%
of the Group’s total revenue. The Group recognises
deferred management fee revenue from residents over
the expected period of tenure.
The amount of revenue recognised in each year is
subject to the Group’s judgement of each resident’s
expected tenure in the village as well as the terms of
the occupational right agreement and the type of unit
occupied. A change in the assumed tenure may have a
material impact on revenue recognised in the year.
Disclosures in relation to DMF revenue and the
associated DMF receivable and revenue in advance
balances are included in note 4 to the consolidated
financial statements.
To address the key audit matter, we:
•
•
•
•
for a sample of residents, assessed the accuracy of a
sample of the factual inputs to, and calculation of, the
DMF revenue recognised during 2022 with reference to
the occupancy right agreements;
assessed the movements year on year in revenue
recognised by each village based on an expectation
derived from underlying village data;
compared the Group’s assessment of assumed tenure
against actual observed tenure; and
assessed the adequacy of the related financial
statement disclosures.
Information other than the financial statements and auditor’s report
The Directors of the company are responsible for the Annual Report, which includes information other than the consolidated financial
statements and auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
96
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge
obtained during the audit, or otherwise appears to be materially misstated.
If, based upon the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Directors’ responsibilities for the financial statements
The Directors are responsible, on behalf of the entity, for the preparation and fair presentation of the consolidated financial
statements in accordance with New Zealand equivalents to International Financial Reporting Standards and International Financial
Reporting Standards, and for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing on behalf of the entity the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing
(New Zealand) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the financial statements is located at the External Reporting
Board’s website: https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/. This
description forms part of our auditor’s report.
The engagement partner on the audit resulting in this independent auditor’s report is Grant Taylor.
Chartered Accountants
Wellington
23 February 2023
97
Annual Report 2022
98
Artist impression Summerset Boulcott
Governance
Summerset has adopted the principles below as an appropriate way to demonstrate its commitment to best practice
governance and to provide transparency in the Company’s approach to corporate governance for the benefit of its
shareholders and other stakeholders. These principles are from the NZX Corporate Governance Code issued in June
2022 ('NZX Code'). Each principle of the NZX Code is set out below with an explanation on how Summerset meets it.
As at 31 December 2022, Summerset considers that it was in full compliance with NZX Listing Rules and the NZX Code.
The Code of Ethics Policy, Diversity and Inclusion Policy, Securities Trading Policy and Guidelines, Whistle Blowing
Policy, Supplier Code of Conduct, Modern Slavery Policy and Anti-Bribery and Corruption Policy can be found on the
Company’s website and internal intranet alongside other governance documents.
Principle 1: Code of ethical behaviour
'Directors should set high standards of ethical behaviour, model this behaviour and hold management
accountable for these standards being followed throughout the organisation.'
Ethical standards
The Board maintains high standards of ethical conduct and expects the Company’s employees to act legally and
with integrity in a manner consistent with the policies, guiding principles and values that are in place. These include
the following:
• Code of Ethics This guide sets out the basic principles of legal and ethical conduct expected of all employees
and Directors. The Company encourages open and honest communication by staff about any current or potential
problem, complaint, suggestion, concern or question.
99
• Diversity and Inclusion Policy This policy outlines the Company’s guiding principles for diversity and inclusion.
Refer to Principle 2 for further details.
• Securities Trading Policy In accordance with the Company’s Securities Trading Policy, the NZX Listing Rules and
the Financial Markets Conduct Act 2013, Directors and employees of the Company are subject to limitations on
their ability to buy or sell Company shares.
• Whistle Blowing Policy This policy encourages employees to come forward if they have concerns regarding
serious wrongdoing, and ensures that employees have access to a confidential process in which they can report
any issues in relation to serious wrongdoing without fear of reprisal or victimisation.
• Supplier Code of Conduct and Modern Slavery Policy These documents set out the minimum standards
expected of Summerset’s suppliers and support Summerset’s commitment to sustainable, ethical and
inclusive procurement.
• Anti-Bribery and Corruption Policy This policy sets out Summerset’s zero-tolerance approach to bribery and
corruption. It also makes clear that donations to political parties are not permitted.
• Code of Conduct This policy sets out the expected behaviours while in employment with the Company. Company
employees are expected to act honestly, conscientiously, reasonably and in good faith, while at all times having
regard to their responsibilities, the interests of Summerset, and the welfare of our residents and staff.
• Gift Policy This policy governs the acceptance and reporting of benefits given to staff by third parties.
• Conflicts of Interest Summerset's Code of Ethics outlines the standards of integrity, professionalism and
confidentiality to which all employees and Directors of the Company must adhere with respect to their work and
behaviour. To maintain integrity in decision-making, each Director must advise the Board of any potential conflict
of interest if such arises. If a conflict of interest exists, the Director concerned will have no involvement in the
decision-making process relating to the matter.
•
Interests Register In accordance with the Companies Act 1993 and the Financial Markets Conduct Act 2013,
the Company maintains an Interests Register in which all relevant transactions and matters involving the Directors
are recorded.
Annual Report 2022
Principle 2: Board composition and performance
'To ensure an effective board, there should be a balance of independence, skills, knowledge, experience
and perspectives.'
Role of the Board of Directors
The Board of Directors is elected by Shareholders and has responsibility for taking appropriate steps to protect and
enhance the value of the assets of the Company in the best interests of its Shareholders. The Board has adopted
a formal Board Charter detailing its authority, responsibilities, membership and operation. The key responsibilities
of the Board include setting the overall direction and strategy of the Company, establishing appropriate policies
and monitoring performance of management. The Board appoints the Chief Executive Officer and delegates the
day-to-day operating of the business to the Chief Executive Officer. The Chief Executive Officer implements policies
and strategies set by the Board and is accountable to it. The Board also has responsibility for ensuring the Company’s
financial position is sound, and financial statements comply with generally accepted accounting practice, and that the
Company adheres to high standards of ethical and corporate behaviour.
A summary of the Board mandate is as follows:
• A majority of the Board should be Independent Directors as defined in the NZX Listing Rules,
•
•
The Chair of the Board should be independent,
The Chair and the Chief Executive Officer should be different people,
• Directors should possess a broad range of skills, qualifications and experience, and remain current on how best to
perform their duties as Directors,
•
•
100
Information of sufficient content, quality and timeliness, as the Board considers necessary, will be provided by
management to allow the Board to discharge its duties effectively, and
The effectiveness and performance of the Board and its individual members should be re-evaluated on an
annual basis.
Directors receive an induction upon appointment to the Board to ensure their full knowledge of the Company and the
industry in which it operates. The Directors are expected to keep themselves abreast of changes and trends in the
business and to keep themselves up to date to ensure they best perform their duties as Directors of the Company.
All Directors have been issued letters setting out the terms and conditions of their appointment.
Delegation of authority
The Board delegates to the Chief Executive Officer responsibility for implementing the Board’s strategy and for
managing the Company’s operations. The Chief Executive Officer and management have Board-approved levels of
authority and, in turn, sub-delegate authority in some cases to direct reports. This is documented in the Delegated
Authority Policy.
Retirement and re-election
In accordance with the Company’s Constitution and the NZX Listing Rules, Directors are required to retire three years
after their appointment or at the third Annual Shareholder Meeting following their appointment (whichever is later).
Directors who have been appointed by the Board must also retire at the next Annual Shareholder Meeting following
their appointment.
The Board Charter states that it is not generally expected that a non-executive Director would hold office for more
than 10 years or be nominated for more than three consecutive terms. The Board Charter also provides that Directors
may accept other board appointments only where that does not detrimentally affect their performance as a Director of
Summerset. In making this assessment, the number and nature of a Director’s other governance roles may be relevant.
Directors may offer themselves for re-election by Shareholders each year at the Annual Shareholder Meeting.
Procedures for the appointment and removal of Directors are also governed by the Constitution.
The People and Culture Committee identifies and nominates candidates to fill Director vacancies for Board approval.
Information about candidates for election or re-election is included in the Notice of Meeting to assist Shareholders in
deciding whether or not to elect or re-elect the candidate.
Board composition
The Company’s Constitution prescribes that the Board shall be comprised of a minimum of three Directors, with at
least two Directors ordinarily resident in New Zealand. As at 31 December 2022, the Board was comprised of seven
non-executive Independent Directors. In determining whether a Director is Independent, the Board has regard to the
NZX Listing Rules.
The Board considers all current Directors to be Independent in that they are not executives of the Company and do
not have a direct or indirect interest or relationship that could reasonably influence, in a material way, their decisions
in relation to the Company.
As at 31 December 2022, the non-executive Independent Directors were Mark Verbiest (Chair), Dr Andrew Wong, Anne
Urlwin, Gráinne Troute, Dr Marie Bismark, Stephen Bull and Venasio-Lorenzo Crawley.
Andrea Scown is a Future Director under the Institute of Directors’ Future Directors programme, which aims to develop
New Zealand’s next generation of directors and provide experience in large companies around the country. Andrea
joined the Board as a Future Director in November 2022. Future Directors fully participate in all Board matters but do
not have voting or decision rights.
The Board is comprised of Directors who have a mix of skills, knowledge, experience and diversity to adequately
meet and discharge its responsibilities and to add value to the Company through efficient and effective governance
leadership. The current Directors have a varied and balanced mix of skills relevant to the Group’s operations. A
summary of the key skills and experience held across the Board as at 31 December 2022, is set out in the table on the
following page.
101
Annual Report 2022
Mark
Verbiest
Dr
Andrew
Wong
Anne
Urlwin
Gráinne
Troute
Dr Marie
Bismark
Stephen
Bull
Venasio-
Lorenzo
Crawley
Governance
Experience in listed company governance
Executive leadership
NZ and international business leadership
and CEO experience
Finance and accounting
Senior executive or board experience
in financial accounting and reporting,
corporate finance and internal controls
Customer and operations
Deep understanding of business operations
and sales, marketing and brand strategies
Health and clinical
Health and clinical industry
experience (in New Zealand and/or
Australian environments)
Property and construction
Property, construction and development
management experience
Health and safety
Experience and understanding of health
and safety and wellbeing requirements
People and culture
People and performance strategy and
management experience
Digital and technology
Experience overseeing IT and digital
innovation, and an understanding of the
opportunity and risks associated with
technological development
Strategy
Experience in the development and
execution of growth strategies, and the
ability to assess strategic options and
business plans
Australian experience
Australian property and business
experience, Australian clinical/
sector experience
102
More information on the Directors, including their interests, qualifications and security holdings, is provided on our
website and in the Disclosures sections of this report. As a term of their appointment, Directors are required to acquire
and hold shares in the Company to the value of one year’s worth of director fees, though the Board has the ability to
waive this requirement and would do so in the appropriate circumstances. They have two years in which to acquire
the shares. Once this requirement has been achieved at a point in time, it is deemed satisfied and is not affected by
future fluctuations in share price. This shareholding requirement may be satisfied by a Director holding shares through
an associated person or entity.
The Board holds regular scheduled meetings. The Directors generally receive material for Board meetings five working
days in advance, except in the case of special meetings, for which the time period maybe shorter owing to the urgency
of the matter to be considered.
The Company Secretary attends all Board meetings, and in this capacity is accountable directly to the Board, through
the Chair, on all matters to do with the proper functioning of the Board.
All Directors have access to the Executive Leadership Team to discuss issues or obtain information on specific areas
in relation to items to be considered at Board meetings or other areas as considered appropriate. Key executives and
managers are invited to attend and participate in appropriate sessions at Board meetings. Directors have unrestricted
access to Company records and information.
Directors are entitled to obtain independent professional advice relating to the affairs of the Company or other
responsibilities. Prior approval of the Chair is required before seeking such advice and Directors are expected to
ensure that the cost of such advice is reasonable.
Diversity and inclusion
The Company and its Board are committed to a workplace culture that promotes and values diversity and
inclusiveness. This is outlined in the Company’s Diversity and Inclusion Policy, which is available on the
Company’s website.
Diversity is defined as the characteristics that make one individual different from another. Diversity encompasses
gender, race, ethnicity, disability, age, sexual orientation, physical capability, family responsibilities, education, cultural
background and more.
Inclusion is defined as a sense of belonging, respecting and valuing all individuals, providing fair access to opportunity,
and removing discrimination and other barriers to involvement. The Board recognises that inclusion leads to a better
experience of work for Summerset’s employees, makes teams stronger, leads to greater creativity and performance,
contributes to a more meaningful relationship with residents, their families and stakeholders, and ultimately increases
value to Shareholders.
The Board believes that diversity across the workforce makes Summerset stronger and better able to connect with,
and bring the best of life to, residents on a day-to-day basis. When there is a variety of thinking styles, backgrounds,
experiences, perspectives and abilities, employees are more able to understand residents’ needs and to respond
effectively to them.
103
The Diversity and Inclusion Policy states that the objective of Summerset’s Diversity and Inclusion Policy is to:
'Actively engage, communicate and develop our people leaders and our employees to enhance the awareness
and understanding of diversity and inclusion that enhances our organisational culture and positively contributes to
delivering the “best of life” for our customers.'
In 2022 we completed collection of broader diversity data from our employees and embedded diversity data
collection into our onboarding processes to better understand the breadth of our staff demographic and help
drive future diversity and inclusion initiatives. We also designed and developed a Diversity Inclusion Awareness and
Inclusive Leadership programme, which was completed by all Executive Leadership Team members and senior
managers during 2022, with plans in place to roll out to all people leaders during 2023. We have also established a
national diversity and inclusion steering group made up of a broad cross-section of our staff to support the design and
development of Diversity & Inclusion initiatives centred around meaningful goals and targets.
Each year the Board reviews and assesses performance against the financial year objectives. The Board notes that the
Omicron outbreak during the first half impacted the achievement of some FY22 plans; however, significant progress
was achieved for the year ended 31 December 2022.
As at 31 December 2022 (and 31 December 2021 for the prior comparative period), the mix of gender of those
employed by the Company is set out in the table on the following page.
The Executive Leadership Team comprises the Chief Executive Officer, the CFO and all General Managers who report
to the Chief Executive Officer.
These figures include permanent full-time, permanent part-time, fixed-term and casual employees, but not
independent contractors.
Annual Report 2022
Directors
Total
GENDER
Male
Female
Executive Leadership Team
Male
Female
Male
Female
Gender diverse1
Total
All staff
Total staff
1 Self-identified
2022
2021
4
3
7
6
3
9
626
1,839
3
2,468
4
3
7
8
3
11
535
1,594
2
2,131
Board performance
The Board is committed to evaluating its performance on a regular basis, generally with a formal, external review
bi-annually and an internal self-review each intervening year. The process, including evaluation criteria, is considered
by the People and Culture Committee and approved by the Board.
104
Executive Leadership Team performance
The Board evaluates the performance of the Chief Executive Officer annually. The Chief Executive Officer reviews
the performance of direct reports, and reports to the Board on those reviews. The evaluation is based on criteria
that include the performance of the business and the accomplishment of longer-term strategic objectives. It may
include quantitative and qualitative measures. During the most recent financial year, performance evaluations were
conducted in accordance with this process.
Principle 3: Board committees
'The Board should use committees where this will enhance its effectiveness in key areas, while still retaining
Board responsibility.'
Board committees
The Board has four standing committees: the Audit and Risk Committee, the People and Culture Committee, the
Clinical Governance Committee, and the Development and Construction Committee. Each committee operates
under a charter approved by the Board, and any recommendations they make are to the Board. The charter for each
committee is reviewed annually. All Directors are entitled to attend committee meetings.
Audit and Risk Committee
While the ultimate responsibility for ensuring the integrity of the Company’s financial reporting rests with the Board,
the Company has in place processes to ensure the accurate presentation of its financial position. These include:
• An appropriately resourced Audit and Risk Committee operating under a written charter, with specific
responsibilities for financial reporting and risk management;
•
Review and consideration by the Audit and Risk Committee of the financial information and preliminary releases
of results to the market, before making recommendations to the Board;
• A process to ensure the independence and competence of the Company’s external auditors and a process to
ensure their compliance with the Company’s External Audit Independence Policy (available on the
Company’s website);
•
Responsibility for appointment of the external auditors residing with the Audit and Risk Committee;
• Monitoring by the Audit and Risk Committee of the strength of the internal control environment by considering
the effectiveness and adequacy of Summerset’s internal controls, reviewing the findings of the external auditor's
review of internal control over financial reporting, and being involved in setting the scope for the internal audit
programme; and
•
Ensuring that management has established a risk management framework and monitoring the Company’s risk
profile and reporting of risk, including new and emerging sources of risk (including climate risk).
One of the main purposes of the Audit and Risk Committee is to ensure the quality and independence of the external
audit process. The Committee makes enquiries of management and the external auditors so that it is satisfied as to the
validity and accuracy of all aspects of the Company’s financial reporting. All aspects of the external audit are reported
back to the Audit and Risk Committee and the external auditors are given the opportunity at Committee meetings to
meet with Directors.
The Audit and Risk Committee must comprise a minimum of three Directors, the majority of whom must be
Independent. The Committee is chaired by an Independent Director who is not the Chair of the Board. The Committee
currently comprises Anne Urlwin (Chair), Mark Verbiest, Gráinne Troute, Stephen Bull and Venasio-Lorenzo Crawley.
The Audit and Risk Committee generally invites the Chief Executive Officer, Chief Financial Officer and General
Manager Corporate Services, Head of Finance, internal auditors and external auditors to attend meetings. The
Committee also meets and receives regular reports from the external auditors without management present,
concerning any matters that arise in connection with the performance of their role.
People and Culture Committee
The role of the People and Culture Committee is to assist the Board in establishing and reviewing remuneration
policies and practices, culture, leadership and capability, succession, employee development, inclusion, diversity and
engagement for the Company and in reviewing Board composition. Specific objectives include:
•
Supporting the Board in ensuring the Company's vision and commitment to its people strategy is aligned with, and
an enabler of, the Company's business strategy;
• Assisting the Board in planning the Board’s composition;
•
•
Evaluating the competencies required of prospective Directors (both non-executive and executive);
Identifying those prospective Directors and establishing their degree of independence;
• Developing the succession plans for the Board, and making recommendations to the Board accordingly;
• Overseeing the process of the Board’s annual performance self-assessment and the performance of the Directors;
• Assisting the Board in establishing remuneration policies and practices, and setting and reviewing the
remuneration of the Company’s Chief Executive Officer, Executive Leadership Team and Directors; and
• Monitoring remuneration policy and practice and making recommendations to the Board in relation to any
substantive changes.
The People and Culture Committee must comprise a minimum of three Directors, the majority of whom must be
Independent. The Committee currently comprises Gráinne Troute (Chair), Mark Verbiest, Dr Marie Bismark, Anne
Urlwin and Venasio-Lorenzo Crawley. The Board’s policy is that the Board needs to have an appropriate mix of skills,
experience and diversity to ensure that it is well equipped. The Board reviews and evaluates on a regular basis the skill
mix required, and identifies any existing gaps.
105
Annual Report 2022
Clinical Governance Committee
The role of the Clinical Governance Committee is to assist the Board in ensuring a systematic approach to maintaining
and improving the quality of care provided by the Company. Specific objectives include:
•
•
Providing oversight that appropriate clinical governance mechanisms are in place and are effective throughout
the organisation;
Supporting the leadership role of the Chief Executive Officer in relation to issues of quality, safety and clinical risk;
• Working with management to identify priorities for improvement;
•
•
Ensuring that the principles and standards of clinical governance are applied to the health improvement and health
protection activities of the Board; and
Ensuring that appropriate mechanisms are in place for the effective engagement of representatives of residents
and clinical staff.
The Clinical Governance Committee must comprise a minimum of three Directors. The Committee currently
comprises Dr Marie Bismark (Chair), Anne Urlwin, Gráinne Troute and Dr Andrew Wong.
Development and Construction Committee
The role of the Development and Construction Committee is to assist the Board in:
•
•
Supporting management to establish and achieve development and construction objectives within the
Company’s long-term plan;
Supporting management to develop and implement strategies to achieve the Company’s development and
construction objectives in line with best practice;
• Helping the Company maintain appropriate risk management strategies to identify, mitigate and manage
development and construction risks;
• Maintaining a good understanding of, and confidence in, the Company’s frameworks, systems, processes and
106
personnel required to manage the Company’s development and construction activities effectively, including the
assessment and realisation of opportunities and the application of appropriate risk management; and
• Working with management to identify areas for improvement and innovation in construction and
development practices.
The Development and Construction Committee must comprise a minimum of three Directors. The Committee
currently comprises Stephen Bull (Chair), Mark Verbiest, Anne Urlwin, Venasio-Lorenzo Crawley and Dr Andrew Wong.
Attendance at Board and committee meetings
A total of eight Board meetings, seven Audit and Risk Committee meetings, six People and Culture Committee
meetings, three Clinical Governance Committee meetings and three Development and Construction Committee
meetings were held in 2022. Director attendance at Board meetings and committee member attendance at
committee meetings is shown on the table on the next page.
Board Audit and Risk
Committee
People and
Culture
Committee
Clinical
Governance
Committee
Development
and Construction
Committee
Total number of meetings held
Mark Verbiest1
James Ogden3
Anne Urlwin4
Dr Andrew Wong5
Gráinne Troute
Dr Marie Bismark
Stephen Bull6
Venasio-Lorenzo Crawley7
8
8
3
8
8
8
8
7
8
7
7
3
7
72
7
72
52
72
6
62
2
6
62
6
6
42
6
3
22
12
3
3
3
3
22
32
3
3
1
3
32
32
32
2
32
1 Mark Verbiest: appointed to the People and Culture Committee from 1 May 2022
2 Attended the meeting as a non-committee member (where relevant, prior to appointment to the committee, as noted in this table and its footnotes)
3 James Ogden: retired as a director effective 27 April 2022
4 Anne Urlwin: appointed as Chair of the Audit and Risk Committee from l May 2022; retired as Chair of the Development and Construction Committee from 1 May 2022
5 Dr Andrew Wong: appointed to Development and Construction Committee from 1 May 2022
6 Stephen Bull: appointed as a director effective 1 March 2022; appointed to the Audit and Risk Committee, and Development and Construction Committee (as Chair), from
1 May 2022
7 Venasio-Lorenzo Crawley: appointed to the Audit and Risk Committee, and Development and Construction Committee from 1 May 2022
Principle 4: Reporting and disclosure
'The Board should demand integrity in financial and non-financial reporting, and in the timeliness and balance
of corporate disclosures.'
107
Making timely and balanced disclosures
The Company is committed to promoting Shareholder confidence through open, timely and accurate market
communication. The Company has in place procedures designed to ensure compliance with its disclosure obligations
under the NZX and ASX Listing Rules. The Company’s Market Disclosure and Communications Policy sets out the
responsibilities of the Board and management in disclosure and communication, and procedures for managing
this obligation.
Copies of key governance documents, including the Code of Ethics, Securities Trading Policy and
Guidelines, Board and Committee Charters, Diversity and Inclusion Policy, Board and Executive Remuneration
Policy, and Market Disclosure and Communications Policy are all available on the Company’s website
at https://www.summerset.co.nz/investor-centre/governance-documents.
Non-financial disclosures, such as the Company’s approach to health and safety, our people, the community and the
environment are included within this Annual Report.
Principle 5: Remuneration
'The remuneration of Directors and executives should be transparent, fair and reasonable.'
Remuneration of Directors and the Executive Leadership Team is reviewed by the Board’s People and Culture
Committee. Its membership and role are set out under Principle 3. The committee makes recommendations to the
Board on remuneration packages, keeping in mind the requirements of the Board and Executive Remuneration Policy.
The level of remuneration paid to the Directors and the Executive Leadership Team will be determined by the Board.
However, Directors’ fees must be within the limits approved by the Shareholders of the Company.
Further details on remuneration are provided in the Remuneration section of this Annual Report.
Annual Report 2022
Principle 6: Risk management
'Directors should have a sound understanding of the material risks faced by the issuer and how to manage them.
The Board should regularly verify that the issuer has appropriate processes that identify and manage potential
and material risks.'
108
The Board is responsible for overseeing the management of risks across Summerset’s business. Summerset has
robust risk management and reporting frameworks in place, whereby material business risks are regularly identified,
monitored and managed. Summerset’s Audit and Risk Committee is responsible for providing oversight over the
Company’s risk management framework and compliance with that framework. Key risks are regularly reported to the
Board, together with Summerset’s approach to risk management. Summerset's risk management framework was
reviewed by the Board in the 2021 financial year and a move to an enterprise risk management policy effective from
2022 was endorsed by the Board.
The members of Summerset’s Executive Leadership Team are required to regularly identify the major risks affecting
the business, record them in the Risk Register (which identifies the likelihood and consequence of each risk to
Summerset’s business), and develop structures, practices and processes to manage and monitor these risks.
Summerset has a co-sourced model for internal audit and an in-house Risk and Assurance Manager. As part of
the co-sourced model, Summerset has engaged KPMG as its partner to assist with carrying out internal audit work
on various parts of the Group’s operations, and all major risk and internal control issues are reported on at each
Board meeting.
Health and safety (including in relation to risks, performance and management) is discussed regularly at Board
meetings and specific reviews are sought as required. Monthly reporting is prepared and used to assist in risk
management, covering areas such as health and safety incidents, injury and near-miss frequency rates, and actions
undertaken. Further information is covered in the health and safety section of this Annual Report on pages 28 and 29.
Summerset has a Tax Governance Policy in place, which sets out its tax risk management objectives, tax reporting
requirements to the Audit and Risk Committee, and policies and processes to manage tax risk. This Tax Governance
Policy is reviewed by the Board every two years. The Board is satisfied that Summerset has effective policies and
processes in place to ensure the Company is meeting its obligations. Summerset adopts a risk-averse stance in
relation to tax issues and, where possible, seeks certainty on tax positions through proactive engagement with
tax authorities.
Summerset has considered whether it has any material exposure to economic, environmental and social sustainability
risks (as defined in the ASX Corporate Governance Principles) and has determined the following:
• Climate change risk Summerset expects to operate in a climate that will progressively experience more acute
challenges and risks arising from increasing climate variability. This is likely to have various impacts on the
longer-term plans and operation of the Group – specifically in relation to the design, build and construction
of villages, as well as in the provision of care services to frail residents and the overall lifestyle satisfaction
enjoyed in Summerset’s villages. As such this requires a planned approach to assessing climate change risks
and opportunities, and public disclosure from 2024 under the TCFD mandatory reporting requirements and the
XRB’s climate-related financial disclosure standards. Summerset is committed to progressing towards TCFD/XRB
compliant reporting as outlined in the roadmap table on page 50.
•
Property market risk Property market factors could adversely affect sales volumes, occupancy levels or prices.
This may have a flow-on impact to the value of Summerset’s property assets and the associated property
valuations, which would in turn impact Summerset’s financial performance.
• Staff retention and capability risk In a tight and highly competitive labour market, Summerset is at risk of staff
shortages. Key areas within our construction and nursing teams will continue to be monitored closely.
• Corporate governance and compliance risk Failure to comply with regulatory, societal and investor
expectations in relation to corporate governance and environmental sustainability could impact Summerset’s
reputation and financial performance over the longer term. Summerset's governance procedures are
continually monitored.
• Strategy and innovation risk There is a moderate risk with regard to Summerset’s strategic direction and ability
to continue to innovate. Summerset’s intention is to stay at the forefront in all areas of its business, including
technology, design, development and care. Summerset fosters a culture of continuous improvement and invests
in innovation through a programme that enables the organisation to anticipate and respond to changes.
• Diversity and inclusion risk While our Diversity and Inclusion Strategy and annual plans fulfil all our obligations
in this area and we continue to improve our culture, there is always some level of risk, particularly in a tight labour
market. This will continue to be monitored regularly through staff surveys and employees being actively engaged
in this area. Page 103 provides more information on the Company's Diversity and Inclusion Strategy.
• Construction and development risk Summerset faces construction and property development risks when
developing new villages. These risks include project delays, default risk, governance and design risk, and
potential labour and materials shortages. Supply chain cost inflation due to COVID-19 related shortages and delays
remains ongoing.
• Clinical care risk This is a high-risk area for Summerset, which requires constant monitoring, management
and policy review. Good training and professional development, retention of staff, and investment in health and
safety all help mitigate risk in this area. The increasing level of investment required in this area is likely to affect
care profitability.
• Resident and customer experience risk Providing top-level resident and customer experience at all times is a
challenge due to the nature of the organisation. Summerset has various methods in which it manages and monitors
these issues closely, including move-in surveys, ongoing resident feedback surveys, close one-on-one feedback
sessions, and close contact with residents, families, next of kin and prospective residents.
• Occupational health and safety risk The physical and mental wellbeing of all Summerset staff is one of our top
priorities. Summerset maintains a strong focus on managing the increased risk to staff associated with COVID-19.
109
Annual Report 2022
• Australia market entry risk Entering a new market requires a measured and well-researched approach.
Summerset is mitigating many new market entry risks through having established a local team, entering a
well-researched market, and developing product and service offerings, procedures and processes tailored for the
new market. Progress in Australia will be closely managed and has tracked well to date.
• Data privacy and confidentiality risk Summerset actively monitors and manages these risks through its risk
management and reporting frameworks.
• Asset maintenance and upgrades risk Summerset has a coordinated approach to asset management and
upgrades in all areas of the business. The Summerset Asset Management Plan dictates likelihood of replacement,
and coupled with reactive maintenance analysis and trending directs a proactive application to our replacement
programme. Asset upgrade standards are clearly defined and well documented, and industry accepted national
asset grading methodology is enforced.
• Sector penetration rates risk Summerset is fortunate to operate in the high-growth New Zealand retirement
sector. The risk is a declining penetration (or participation) in the market. Current forecasts show this is unlikely
to be the case in New Zealand, but it is a risk to be monitored. Competitors making significant changes to their
revenue models or pricing strategy could impact on the revenue earned by Summerset.
• Reputational risk Summerset operates in a sensitive market involving care of vulnerable members of society.
Summerset’s performance and reputation could be adversely impacted should it suffer adverse publicity,
particularly in respect of care or health and safety issues.
• Regulatory change risk Changes in regulation could have a material impact on Summerset’s business operations.
The existing New Zealand retirement villages regulatory regime is currently being reviewed. In addition, Australia
introduced changes to its aged care regime in April 2022 following the Royal Commission into Aged Care Quality
and Safety and we will continue to implement further changes as recommended by the Royal Commission.
Principle 7: Auditors
110
'The Board should ensure the quality and independence of the external audit process.'
The Board’s relationship with its auditors, both external and internal, is governed by the Audit and Risk Committee
Charter, External Audit Independence Policy and the Internal Audit Charter. These charters and policies set out the
types of engagements that can be performed by the external and internal auditors. The Audit and Risk Committee
actively monitors the amount of any non-audit work completed by the external auditor to ensure that independence
is maintained.
The external auditor (Ernst & Young) attends the Company’s Annual Shareholder Meeting and is available to answer
questions from Shareholders in relation to the external audit.
Ernst & Young was first appointed as external auditor of Summerset in 2004. In 2017, a full tender for the external audit
services was completed and Ernst & Young was reappointed through this process. The lead audit partner was last
changed in 2018, with the appointment of Grant Taylor. The lead audit partner will rotate for the 2023 audit.
KPMG was appointed in the role of internal auditor of the Company in December 2016. With the establishment of
a co-source model approach to internal audit in 2020, it currently remains the Company's co-source partner. The
internal audit role is governed by the Internal Audit Charter, which states the objectives and scope of internal audit
activities. The primary objective of internal audit is to increase the strength of the Company’s control environment.
This is guided by a philosophy of adding value to improve the operations of the Company. The internal audit assists
the Company in accomplishing its objectives by bringing a systematic and disciplined approach to evaluating and
improving the effectiveness of its governance, risk management and internal controls. The Internal Audit Programme
is set annually by the Audit and Risk Committee.
The Internal Audit Charter sets out the scope of internal audit activities and this encompasses, but is not limited
to, objective examinations of evidence to provide independent assessments on the adequacy and effectiveness of
operations, governance, risk management and control processes for Summerset. This includes evaluating whether:
•
•
The actions of Summerset’s officers, directors, staff, and contractors comply with Summerset’s policies,
procedures and applicable laws, regulations and governance standards;
The results of operations or programmes are consistent with established goals and objectives;
• Operations or programmes are being carried out effectively and efficiently, with adequate internal controls;
•
•
•
Established processes and systems enable compliance with the policies, procedures, laws and regulations that
could significantly impact Summerset;
Information and the means used to identify, measure, analyse, classify and report such information is reliable and
has integrity; and
Resources and assets are acquired economically, used efficiently and protected adequately.
Principle 8: Shareholder rights and relations
'The Board should respect the rights of shareholders and foster constructive relationships with shareholders
that encourage them to engage with the issuer.'
Respecting the rights of Shareholders
The Company seeks to ensure that its Shareholders understand its activities by communicating effectively with them
and giving them ready access to clear and balanced information about the Company.
To assist with this, the Company’s website is maintained with relevant information, including copies of presentations
and reports. The Company’s key corporate governance policies are also included on the website.
The Company’s major communications with Shareholders during the financial year include its annual and half-year
reports and the Annual Shareholder Meeting. The annual and half-year reports are available in electronic and
hard-copy format.
Communicating with Shareholders
The Company welcomes communication and feedback from Shareholders. The Company’s investor centre (on its
website) provides a Company phone number and email address for communications from Shareholders and investor
relations enquiries. All Shareholder communications are responded to within a reasonable timeframe.
The Company provides options for Shareholders to receive and send communications electronically, to and from both
the Company and its share and bond registrar. The Company’s investor centre includes contact details for Link Market
Services, through which all Company shares and bonds are managed.
111
Shareholder voting rights
Shareholders have the right to vote on major decisions as required by the NZX Listing Rules. Further information on
Shareholder voting rights is set out in the Company’s Constitution.
Notice of Annual and Special Shareholder Meetings
Notice of Annual and Special Shareholder Meetings are sent to Shareholders and published on the Company’s website
at least 20 working days prior to the relevant meeting.
112
Board of DirectorsMARK VERBIEST Chair, IndependentVENASIO-LORENZO CRAWLEY IndependentGRÁINNE TROUTE IndependentANDREA SCOWNFuture DirectorVIEW DIRECTOR BIOGRAPHIES AT:www.summerset.co.nz/investor-centre/board-of-directors 113
MARK VERBIEST Chair, IndependentSTEPHEN BULL IndependentANNE URLWIN IndependentDR MARIE BISMARK IndependentDR ANDREW WONG Independent 114
Executive Leadership TeamVIEW EXECUTIVE LEADERSHIP BIOGRAPHIES AT:www.summerset.co.nz/investor-centre/our-leadership-team/STEWART SCOTT General Manager Development – AustraliaSCOTT SCOULLARChief Executive OfficerDEAN TALLENTIRE General Manager ConstructionELEANOR YOUNGGeneral Manager Operations and Customer Experience 115
FAY FRENCHGeneral Manager SalesWILL WRIGHT Chief Financial Officer and General Manager Corporate ServicesKAY BRODIE General Manager Marketing and CommunicationsAARON SMAILGeneral Manager DevelopmentDAVE CLEGGGeneral Manager People and Culture Annual Report 2022
Remuneration
Remuneration overview
Remuneration philosophy
Summerset’s purpose is to 'Bring the Best of Life' to our residents. Achieving this is dependent on motivated
employees performing at a consistently high level. A competitive and affordable remuneration structure that is
equitable and attractive is an important contributory factor for maintaining this high level of employee engagement.
Remuneration encompasses wages, salaries, incentives, non-reimbursing allowances and a range of employee
benefits including KiwiSaver.
Executive remuneration is set by the People and Culture Committee in accordance with the principles laid out in the
People and Culture Committee Charter.
Market position
Summerset benchmarks pay rates, comparing market rates while ensuring affordability (i.e. paying at the level
necessary to attract and retain good people while controlling costs). A review of market relativity is conducted annually
to ensure that Summerset remains competitive and has cost-effective pay practices. The market review draws on
several data sources, for example:
•
Remuneration survey data from the New Zealand Aged Care Association;
• Competitive remuneration information available by subscription to remuneration specialist databases; and
116
• Wage and employment information produced by Statistics New Zealand.
The market review helps us to determine whether we've remained competitive with the market and implement
strategies to adjust pay ranges as required in the annual remuneration review process.
Benefits
Summerset offers an attractive benefits package to permanent employees, including:
•
•
•
•
•
•
•
Southern Cross Health Essentials health insurance;
Employee Share Scheme – currently $1,000 worth of Summerset shares each year subject to Trust Deed and
Scheme Rules;
Birthday leave;
10 days of sick leave available from day one of employment;
Long-service leave and additional surgical health insurance after five years;
Employee Assistance Programme;
Recruitment referral payments;
• Quarterly draw to win vouchers worth $3,000;
• Contributions to fundraising and sports teams;
•
Interest-free loans during times of hardship;
• Weekend allowance, uniforms and overtime for care centre roles;
•
Professional Development and Recognition Programme payments and indemnity insurance for nurses;
• Meals for night shift staff; and
•
Short-term incentives and long-term incentive share option plan for specific roles.
Director remuneration
The total amount of remuneration and other benefits received by each Director during the year ended 31 December
2022 is provided below. These amounts reflect actual payments to directors during the year, and consequently,
depending on each Director's quarterly billing cycle, payroll periods and the actual payment date, the amounts
stated may vary between directors and may not be representative of the directors' fees earned for the year ended
31 December 2022.
Director
Board fees
Mark Verbiest
Anne Urlwin
$180,000
(Chair)
$95,000
Dr Andrew Wong
$94,760
Gráinne Troute
$96,250
James Ogden1
$15,000
Dr Marie Bismark
$90,000
Stephen Bull2
$86,878
Venasio-
Lorenzo Crawley
$94,760
Audit and
Risk
Committee
Clinical
Governance
Committee
People and
Culture
Committee
Development
and Construction
Committee
$13,333
(incoming
Chair)
$3,000
(outgoing
Chair)
$2,500
(outgoing Chair)
$13,750
(Chair)
$15,000
(Chair)
$11,058
(incoming Chair)
Total
remuneration
$180,000
$110,833
$94,760
$110,000
$18,000
$105,000
$97,936
$94,760
Total
$752,647
$16,333
$15,000
$13,750
$13,558
$811,288
1 Retired from Board on 27 April 2022
2 Appointed to Board on 1 March 2022
Directors’ fees were reviewed during 2022 and increases were approved by Shareholders, effective from 1 May
2022. As at 31 December 2022, the maximum aggregate amount of remuneration payable by Summerset to
Directors (in their capacity as Directors) was $904,450 per annum for the non-executive Directors (2021: $840,000)
and annualised standard Directors’ fees were $831,200, inclusive of additional remuneration for committee Chairs
(2021: $768,000).
In respect of Australian-based directors, the Board has decided to pay those Directors in Australian dollars at the
same face value the New Zealand directors are paid. This results in those Directors receiving slightly more fees (as
recorded in the table above). As at 31 December 2022, the only Director who received payment in Australian dollars
was Stephen Bull.
As at 31 December 2022, the standard Director fees per annum are as follows:
Board of Directors
Audit and Risk Committee
Clinical Governance Committee
People and Culture Committee
Development and Construction Committee
Position
Fees
(per annum)
Chair
$181,200
Member
$97,500
Chair
Chair
Chair
Chair
$20,000
$15,000
$15,000
$15,000
117
Annual Report 2022
No additional fees are paid to committee members.
Directors’ fees exclude GST, where appropriate. Directors are entitled to be reimbursed for costs directly associated
with carrying out their duties, including travel costs.
Directors and Officers also have the benefit of Directors’ and Officers’ liability insurance. Cover is for damages,
judgements, fines, penalties, legal costs awarded and defence costs arising from wrongful acts committed while
acting for Summerset. There are some exclusions within the policy. The insurance cover is supplemented by the
provision of Director and Officer indemnities from the Company, but this does not extend to criminal acts.
Executive remuneration
The remuneration of members of the Executive Leadership Team (Chief Executive Officer and direct reports) is
designed to promote a high-performance culture and to align Executive reward to the development and achievement
of strategies and business objectives that create sustainable value for Shareholders.
The Board is assisted in delivering its responsibilities and objectives for Executive remuneration by the People and
Culture Committee. The role and membership of this committee is set out in the Governance section of this report.
Summerset’s remuneration policy for members of the Executive Leadership Team provides the opportunity for
them to receive, where performance merits, a potential total remuneration package in the upper quartile for
equivalent market-matched roles. The People and Culture Committee reviews the annual performance outcomes for
all Executive Leadership Team members, including the Chief Executive Officer. The review takes into account external
benchmarking to ensure competitiveness with comparable market peers, along with consideration of an individual’s
performance, skills, expertise and experience.
118
Market alignment of Executive remuneration 2020-2022
Over the past two years the People and Culture Committee has been progressively reviewing and adjusting Executive
remuneration to more closely align with the market, and the rest of the NZX. The overarching goal was to ensure
this was achieved whilst retaining strongly performing members of the Executive Leadership Team who successfully
managed the business through the COVID-19 environment (which resulted in considerable operational complexities).
This remuneration alignment journey has seen significant adjustments to the structure of the Long-Term Incentive
(LTI) scheme. Related adjustments were made to the Executive fixed remuneration that in part compensated for the
stepped changes in the Executive LTI Scheme. Detail on the changes made to the LTI scheme are set out below under
the heading Long-term incentives.
Total remuneration for Executives is made up of three components: fixed remuneration, short-term incentive (STI) and
long-term incentive (LTI).
The remuneration packages for members of the Executive Leadership Team, including the CEO, do not include
severance or exit payments, payable on termination of their appointment.
Fixed remuneration
Fixed remuneration consists of a base salary and benefits. Summerset’s policy is to pay fixed remuneration with
reference to the market median.
Short-term incentives
Short-term incentives (STIs) are at-risk payments designed to motivate and reward for performance, for the financial
year that they relate to. The target value of an STI payment is set annually, as a percentage of the Executive Leadership
Team member’s fixed remuneration. For 2022, the relevant percentages were 20–30% (2021: 20–40%).
A proportion of the STI (80% for CEO and 40-60% for the other Executive Leadership Team members) is related
to achievement of annual business performance metrics, which aim to align executives to a shared set of key
performance indicators (KPIs) based on business priorities for the next 12 months. Target areas which applied to the
shared KPIs for 2022 are outlined on the table on the next page.
Target
Underlying EBITDA*
New sales development margin*
Resales net cash*
Retirement unit delivery
Customer satisfaction
Customer clinical quality of care
Health and safety
People and culture
Total payable
Minimum performance
On-target weighting
Maximum performance
36%
9%
9%
20%
2.5%
5%
5%
5%
40%
10%
10%
20%
5%
5%
5%
5%
80%
20%
20%
20%
5%
5%
5%
5%
91.5%
100%
160%
There are three performance levels within each financial (*) target – gate-opener, on-target and maximum
performance – with 100% of the amount allocated to that target area being payable when the on-target level
is achieved.
The Retirement unit delivery target has 100% payable when on-target performance is achieved. The Customer
satisfaction target has two performance levels – gate opener and on-target performance with 50% and 100%
respectively being payable. The three remaining non-financial measures and the % payable for each target area are
assessed against Board approved annual objectives each year.
The balance of the STI is related to individual performance measures.
If the gate-opener underlying EBITDA performance against budget is not achieved, no STI payment will be made.
The gate-opener is based on achieving 100% of underlying EBITDA performance target (90% pay-out in relation to
this target). In addition, the areas of new sales development margin and the resales net cash pay out at 90% on
achievement of performance targets. Minimum performance is when all of the gate-opener performance targets are
achieved and there is full achievement of all other targets, which results in 91.5% of the shared targets being payable.
119
A 100% pay-out is based on achieving 110% of the financial targets (*) and meeting all the other Shared KPI
targets criteria.
The maximum performance levels allow employees to be rewarded for exceptional performance results.
The maximum amount of an STI payment for an Executive Leadership Team member is 160% of the STI on-target
amount for that individual and would require material overachievement at 125% or more of the financial targets (*) and
maximum achievement of every other KPI target and individual performance measures.
Long-term incentives
Long-term incentives (LTIs) are at-risk payments made through a share options plan, designed to align the reward of
Executive Leadership Team members with the enhancement of shareholder value over a multi-year period.
LTI Plan
The Executive Leadership Team members are participants in an LTI option plan. Under this plan, Executive Leadership
Team members are granted share options. These share options are exercisable in relation to shares in Summerset
Group Holdings Limited.
Option grants are made annually, with the value of each grant being set at the date of each grant and determined as
a percentage of the Executive Leadership Team member’s fixed remuneration.
As noted above there have been progressive changes to the LTI plan which were implemented in relation to the 2021
and 2022 grants.
For certain one-off option grants made for strategic reasons from time to time outside of the annual option grant
process, performance hurdles are set relating to specific performance milestones for the relevant participant.
Annual Report 2022
2018, 2019 and 2020
For the three option grants made under the LTI plan in 2018, 2019 and 2020, the relevant participation percentages for
Executives ranged from 20% to 40% of fixed remuneration. The number of Options granted was calculated utilising
the Black Scholes risk-weighted methodology, with an option exercise price based on a 10-day volume weighted
average price (VWAP) of Summerset shares prior to grant date. Vesting of share options was subject to achievement
of performance hurdles, which are assessed over two- and three-year periods.
2021
This was the first step by the People and Culture Committee to closer align Executive Remuneration to the market with
the relevant participation percentages for Executives ranging from 20% to 30%. The number of Options granted was
based on a 10-day VWAP prior to grant date. Options were zero priced and vesting is in two tranches at three and four
years. 50% of each tranche vests based on time (retention) and 50% vests based on performance hurdles.
Consistent with prior years, the performance hurdle portion of each tranche is based on the following measures:
50% Absolute earnings (cumulative actual underlying net profit after tax for the Group against budget)
20%
Relative earnings (earnings per share growth of the Group compared to a defined peer group)
10%
Clinical strategy delivery
10%
People (5% staff engagement; 5% staff turnover)
10%
Customer satisfaction (5% village residents; 5% care centre residents)
The Absolute and Relative Earnings performance hurdles both have gate-openers, which, if met, result in 50% of the
options related to that performance hurdle vesting for that tranche. The Clinical Strategy hurdle and the % of related
options vesting is assessed by the Board relative to the improvements in clinical systems and quality achieved during
the vesting period. The People and Customer hurdles each have targets which if met result in 100% of the related
options vesting. Where all performance hurdles for a tranche meet their gate-opener and target criteria requirements,
and including that tranche's time-based options, a total of 55.6% of that tranche's options vest.
On-target performance of all performance hurdles for tranche results, including that tranche's time-based portion,
results in a total of 74.1% of that tranche's options vesting.
100% of the options for each tranche vests when the absolute and relative earnings financial performance hurdles
achieve 125% (or above) of the on-target performance requirements, and all other performance hurdles meet their
on-target performance criteria – this includes the tranche's time-based options.
With the change in vesting periods from two and three years to three and four years, the Board approved a one-off
transition grant for existing participants in 2021. The transition grant consisted of two tranches with the first tranche
vesting at two years and the second tranche at three years. The options granted were zero-priced and are time
(retention) based with no performance hurdle requirements. 173,238 options were issued in December 2021 (including
73,740 transition grant options).
2022
In 2022 the LTI plan was further amended and is now more closely aligned with broader practice in other NZX-listed
companies. Options remain zero-priced and vesting occurs in two tranches at three and four years. The vesting of
all options is now subject to the achievement of two financial performance hurdles – 75% based on absolute Total
Shareholder Return (aTSR) and 25% based on relative Total Shareholder Return (rTSR) (compared to a defined peer
group). Non-financial hurdles and time-based vesting have been removed.
In 2022 the option grants as a percentage of the Executive Leadership Team member’s fixed remuneration increased
to a range between 30% and 50% as part of the alignment to market. A 10-day VWAP prior to the original planned
December 2022 grant date was used to calculate the number of Options granted.
Performance hurdles are set by the Board with the objective of aligning executive reward to the development and
achievement of strategies and business objectives creating sustainable value for shareholders. The Board considers
the 2022 LTI performance hurdles now better reflect the drivers of sustainable value for shareholders.
120
Senior Leadership Team LTI Plan
In addition to the LTI share option plan in place for Executive Leadership Team members, Summerset also operates
an LTI share option plan for other senior managers. The 2018, 2019 and 2020 LTI grants for senior managers were
time (retention) based. For this group, no individual performance hurdles applied to LTI grants. The number of Options
granted were calculated utilising the Black Scholes risk-weighted methodology, with an option exercise price based
on a 10-day VWAP prior to grant date. Vesting of share options was over two- and three-year tranche periods.
Effective from 2021, and including the changes made in 2022, all senior managers invited to participate do so on
the same terms and conditions as the Executive Leadership Team (as detailed above). The number of options to be
granted for the 2022 LTI are based on a percentage of base remuneration ranging from 15% to 25% (2021: 10–18%).
2022 LTI Option grants delayed
Due to the changes to the schemes’ performance hurdles noted above made in late 2022, the issuing of options was
deferred to facilitate implementation of the changes and no share options were granted to Executive Leadership Team
members or Senior Managers in December 2022 as would usually occur. Options will be issued to participants early
in 2023.
Options vested in 2022
348,803 Executive share options vested as at 31 December 2022. The 2019 tranche 2 grant performance hurdles
resulted in a 90% vesting (167,840 Options) and the 2020 tranche 1 grant performance hurdle resulted in a 95% vesting
(180,963 Options). These Options are therefore currently exercisable subject to Board confirmation of satisfaction of
performance hurdle achievement and approval.
The Executive Leadership Team includes the Chief Executive Officer. The Chief Executive Officer Remuneration
section provides further details of share option movements under the LTI Plan for the Chief Executive Officer.
Chief Executive Officer remuneration
121
Remuneration for years ended 31 December 2020 to 2022
TABLE A – FY2022 remuneration package of the CEO
TABLE A
Fixed remuneration
Pay for performance
Salary
Other ↵
benefits1
Subtotal
STI
LTI
Subtotal
Total remuneration
FY2022
$649,631
$25,369 $675,000
$202,5002
$337,5003 $540,000
$1,215,000
1 Other benefits for the current CEO include a car park and KiwiSaver.
2 STI component in CEO package, based on 30% of fixed remuneration at target (based on 100% payout).
3 LTI component in CEO package, based on 50% of fixed remuneration target (see LTI section above).
Annual Report 2022
TABLE B – provides the FY2020–2022 remuneration packages actually paid to the current and former CEO. Note the
current CEO was appointed on 29 March 2021 (Remuneration includes both his time as CFO and his time as newly
appointed CEO), and the former CEO's employment ended 26 March 2021.
TABLE B
Fixed remuneration
Pay for performance
Salary
Other
benefits1
Subtotal
STI
LTI
Subtotal
Total remuneration
FY2022
$649,631
$25,369 $675,000
$206,0712
$337,5003 $543,571
$1,218,571
FY20214
$607,155
$24,095
$631,250
$166,071
$475,8885 $641,959
$1,273,209
Former CEO
FY2021
$166,410
$681
$167,091
$291,2406
$07 $291,240
FY2020
$623,242
$1,758 $625,000
$261,6258
$09 $261,625
$458,331
$886,625
1 Other benefits for the current CEO include a car park and KiwiSaver.
2 STI for FY2021 performance period (paid FY2022) for current CEO.
3 LTI component in current CEO package, based on 50% of fixed remuneration (see LTI section above)
4 STI component in CEO package, based on 30% of fixed remuneration (based on 100% payout).
5 LTI value granted in FY2021 period (which will vest based on performance criteria, in future years) for current CEO. This includes one-off transition options granted above the
base LTI entitlement (see LTI section above).
6 STI for FY2020 performance period (paid FY2021) for former CEO.
7 No LTI awarded in the FY2021 period to former CEO.
8 STI for FY2019 performance period (paid FY2020) for former CEO.
9 No LTI awarded in the FY2020 period to former CEO.
122
KiwiSaver
The Chief Executive Officer is a member of KiwiSaver. As a member of this scheme, the Chief Executive Officer is
eligible to contribute and receive a company contribution of 3% of gross taxable earnings. For FY22, the company’s
contribution for Scott Scoullar was $19,489.
The CEO’s STI payable in relation to the FY22 period (payable in February 2023) is $211,432 and is based on
achievement of shared KPI targets as follows:
FY2022 KPI
Underlying EBITDA
FY2022 KPI performance
% STI payable
On-target performance exceeded
New sales development margin
On-target performance exceeded
Resales net cash
101% of gate opener achieved
Retirement unit delivery
On target performance achieved
Customer satisfaction
On target performance achieved
Customer clinical quality of care
On target performance achieved
People and culture
Health and safety
Total payable
On target performance partially achieved
On target performance partially achieved
1 No payment of this STI component following the death of scaffolding contractor on St Johns construction site.
52.49%
13.51%
9.1%
20%
5%
5%
2.5%
0%1
107.6%
Components of CEO FY2022 annualised remuneration
1,500,000
1,000,000
500,000
0
Fixed
On-plan
Maximum
Fixed
Short-term incentives
Long-term incentives
The Chief Executive Officer’s fixed remuneration comprised annual salary and taxable benefits set at $675,000
per annum. The STI and LTI (based on the value granted in the FY2022), were 30% and 50% respectively of fixed
remuneration. STI had a maximum available payment of 160% of the on-target as noted above. The standard LTI grant
for 2022 will vest based on performance to 31 December 2025 (tranche 1) and 31 December 2026 (tranche 2), subject
to retention and performance criteria being met. Further details are included in the LTI Plan entitlements section.
123
Description of Chief Executive Officer remuneration for performance for the year ended 31 December 2022
Plan Description
Performance measures
Percentage
awarded against on-
plan performance
LTI
In February 2022, vesting for 63,889 options
granted under the LTI Plan at $6.34 on
10 December 2018 was assessed per the Plan
Rules. The assessment period was 1 January 2019
to 31 December 2021. The vesting criteria were
assessed and 95% of the options vested.
50% based on absolute earnings
95.0%
25% based on relative earnings
10% based on employee
strategy initiatives
10% based on customer satisfaction
5% based on clinical
strategy initiatives
In February 2022, vesting for 64,655 options
granted under the LTI Plan at an exercise price
of $7.62 on 9 December 2019 was assessed per the
Plan Rules. The assessment period was 1 January
2020 to 31 December 2021. The vesting criteria
were assessed and 95% of the options vested.
50% based on absolute earnings
25% based on relative earnings
10% based on employee
strategy initiatives
10% based on customer satisfaction
95.0%
5% based on clinical
strategy initiatives
Annual Report 2022
Chief Executive Officer – LTI Plan entitlements
Tranche
T2 2022
T1 2022
T2 2021
T1 2021
Transition T2 2021
Transition T1 2021
T2 2020
T1 2020
T2 2019
T1 2019
T2 2018
Performance and
retention period
No. of Options
Exercise price
at grant
2023-2026
2023-2025
2022–2025
2022–2024
2022–2024
2022–2023
2021–2023
2021–2022
2020–2022
2020–2021
2019–2021
17,815
17,815
10,635
10,635
7,877
7,877
31,780
34,927
50,000
61,422
60,694
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$10.85
Status
Unvested
Unvested
Unvested
Unvested
Unvested
Unvested
Unvested
$10.85 Vested – Not exercised
$7.62 Vested – Not exercised
$7.62 Vested – Not exercised
$6.34 Vested – Not exercised
Note the Chief Executive Officer is also a participant of the Employee Share Scheme:
124
Issue date
18 July 2022
19 July 2021
17 August 2020
22 July 2019
No. of shares
Status
98
73
Vesting 18 July 2025
Vesting 19 July 2024
107 Vesting 17 August 2023
140
Vested 22 July 2022
Current Chief Executive Officer LTI share option movements for the year ended 31 December 2022
Balance at
1 January 2022
Forfeited
Granted
Exercised
Balance at
31 December
2022
Dec 2018
grant
Dec 2019
grant
Dec 2020
grant
Dec 2021
grants
Dec 2022
grant
137,361
116,978
68,545
37,024
-
-
(76,667)
(5,556)
(1,838)
-
-
-
-
-
-
-
-
-
35,6301
-
Total
359,908
(7,394)
35,630
(76,667)
60,694
111,422
66,707
37,0242
35,630
311,477
Vesting status
Vested
Vested
Partially
vested
Unvested
Unvested
Exercise price
at grant
$6.34
$7.62
$10.85
Nil
Nil
1 To be granted in early 2023, relates to the year ended 31 December 2022
2 Includes 15,754 one-off transition options granted in December 2021
The table above includes options granted under the LTI plan prior to 29 March 2021, when the Chief Executive Officer
took up this role (previously Chief Financial Officer).
Employee remuneration
The number of employees or former employees (including employees holding office as Directors of subsidiaries),
who received remuneration and other benefits valued at or exceeding $100,000 during the financial year ended
31 December 2022 is specified in the following table.
The remuneration figures shown in the 'Remuneration' column include all monetary payments actually paid during
the course of the year ended 31 December 2022. The table also includes the value of options relating to the 2022
financial year, which will be granted to individual employees under Summerset’s LTI Plan in early 2023. The table does
not include amounts paid after 31 December 2022 that relate to the year ended 31 December 2022.
The method of calculating remuneration is consistent with the method applied for the previous year.
Remuneration
No. of employees
Remuneration
No. of employees
$100,000 to $109,999
83
$110,000 to $119,999
$120,000 to $129,999
$130,000 to $139,999
$140,000 to $149,999
$150,000 to $159,999
$160,000 to $169,999
$170,000 to $179,999
$180,000 to $189,999
70
43
46
36
23
17
11
16
$190,000 to $199,999
7
$200,000 to $209,999 4
$210,000 to $219,999
$220,000 to $229,999
5
1
$230,000 to $239,999 5
$240,000 to $249,999 6
$250,000 to $259,999 2
$260,000 to $269,999 2
$270,000 to $279,999
2
$280,000 to $289,999 4
$310,000 to $319,999
$320,000 to $329,999
$330,000 to $339,999
$340,000 to $349,999
$350,000 to $359,999
$360,000 to $369,999
$380,000 to $389,999
$390,000 to $399,999
$400,000 to $409,999
$440,000 to $449,999
$450,000 to $459,999
$470,000 to $479,999
$490,000 to $499,999
$630,000 to $639,999
$650,000 to $659,999
$700,000 to $709,999
$770,000 to $779,999
$850,000 to $859,999
2
2
1
2
1
2
1
1
1
2
1
1
1
1
1
1
1
1
$1,230,000 to $1,239,999 1
Pay gap
The pay gap represents the number of times greater the Chief Executive Officer remuneration is to the remuneration
of an employee paid at the median of all Summerset employees. For the purposes of determining the median paid
to all Summerset employees, all permanent full-time, permanent part-time and fixed-term employees are included,
with part-time employee remuneration adjusted to a full-time equivalent amount. At 31 December 2022, the Chief
Executive Officer’s salary of $649,631 was 11.0 times (2021: 11.4 times) that of the median employee at $58,760 per
annum. The Chief Executive Officer’s total remuneration, including STIs and LTIs, of $1,218,571, was 18.8 times (2021:
21.6 times) the total remuneration of the median employee at $64,784 per annum.
125
Annual Report 2022
Disclosures
Director changes during the year ended 31 December 2022
Stephen Bull was appointed to the Board on 1 March 2022. James Ogden retired from the Board on 27 April 2022.
Directors’ interests
The following is an excerpt from the Company's Interests Register, showing the material interests of Directors as at
31 December 2022, together with any entries in the Interests Register made during the year for the purposes of section
211(1)(e) of the Companies Act 1993. Interests no longer held as at 31 December 2022 are disclosed in italics.
126
Director
Entity
Mark
Verbiest
Anne
Urlwin
Dr Marie
Bismark
Meridian Energy Limited
Freightways Limited (retired 31 March 2022)
ANZ Bank New Zealand Limited (retired 31 December 2022)
Willis Bond
Te Rūnanga Audit and Risk Committee of Te Rūnanga O Ngāi Tahu
City Rail Link Limited
Precinct Properties New Zealand Limited
Cigna Life Insurance New Zealand Limited (retired 21 February 2022)
Queenstown Airport Corporation Limited
Vector Limited
Ventia Services Group Limited
Infratil Limited (appointed 1 January 2023)
GMHBA Health Insurance
Royal Australasian College of Physicians
Veteran's Health Advisory Panel
Melbourne Health (retired 22 August 2022)
Public Health Medicine Specialist registered with New Zealand Medical Council
Royal Women's Hospital, Melbourne
North Western Mental Health (retired 22 August 2022)
University of Melbourne
Te Whatu Ora - Capital & Coast (appointed 22 August 2022)
Australian Institute of Company Directors (Victoria) (appointed
1 December 2022)
Position
Chair
Chair
Director
Consultant
Independent Chair
Director
Director
Director
Director
Director
Director
Director
Director
Fellow
Member
Psychiatry Registrar
n/a
Director
Psychiatry Registrar
Professor
Psychiatry Registrar
Council Member
Director
Entity
Gráinne
Troute
Dr
Andrew
Wong
Venasio-
Lorenzo
Crawley
Stephen
Bull
Tourism Holdings Limited
Investore Property Limited
Tourism Industry Aotearoa
Tourism Industry Transformation Plan
Duncan Cotterill (appointed June 2022)
HealthCare Holdings Limited
QCS (Quipt Clinical Supplies) Limited
Health Tick Limited
The Drug Detection Agency Group Limited
Kakariki Hospital Limited
Ascot Hospitals and Clinics Limited
New Zealand Radiology Group Limited
MercyAscot Properties Limited
Endoscopy Auckland Limited
Auckland Radiation Oncology Limited
Kensington Hospital Limited
MercyAscot Orthopaedics Limited
Auckland University of Technology
Endoscopy Governance Group New Zealand
AUT Business School
Added Value Limited
Contact Energy Limited
Wingate Direct Property (added 1 March 2022 on appointment)
MaxCap Industrial Opportunites Fund (added 1 March 2022 on appointment)
Bridge Housing Limited (added 1 March 2022 on appointment)
Position
Director
Director
Chair
Co-Chair
Board Member
Managing Director
Director
Director
Director
Director
Managing Director
Director
Director
Chair
Chair
Director
Chair
Adjunct Professor
Member
Advisory Board Chair
Director / Shareholder
Shareholder
Investment
Committee Member
Investment
Committee Member
Director
127
Effective 27 April 2022, James Ogden ceased to be a Director. He did not make any entries in the Company's Interests
Register during the period 1 January 2022 to 27 April 2022.
Information used by Directors
There were no notices from Directors of the Company requesting to disclose or use Company information received
in their capacity as Directors that would not otherwise have been available to them.
Directors’ security holdings
Securities in the Company in which each Director has a relevant interest as at 31 December 2022 are specified in the
table below:
Director
Mark Verbiest
Anne Urlwin
Dr Marie Bismark
Gráinne Troute
Dr Andrew Wong
Venasio-Lorenzo Crawley
Stephen Bull
Total
Ordinary shares
SUM010
retail bonds
SUM020
retail bonds
SUM030
retail bonds
11,500*
32,046
24,438
25,409
10,500
4,285
6,700
–
30,000
–
–
–
–
–
114,878
30,000
–
–
–
–
–
–
–
0
–
30,000
–
–
–
–
–
30,000
*Sarah Verbiest has a legal and beneficial interest in 11,500 SUM ordinary shares.
Annual Report 2022
Securities dealings of Directors
During the year, Directors disclosed the following transactions in respect of Section 148(2) of the Companies Act 1993.
These transactions took place in accordance with the Company’s Securities Trading Policy.
Director
Mark
Verbiest
Anne
Urlwin
Nature of
relevant interest
Power to acquire
or dispose
Beneficial interest
Beneficial interest
Beneficial interest
Date of
transaction
1 September
2022
23 March
2022
19 September
2022
25 September
2022
Dr Marie
Bismark
Legal and
beneficial interest
23 March
2022
Legal and
beneficial interest
19 September
2022
Gráinne
Troute
Legal and
beneficial interest
23 March
2022
Legal and
beneficial interest
19 September
2022
Number of
securities
acquired/
(disposed)
4,500
164
212
32,046
157
205
129
168
128
Stephen
Bull
Beneficial interest
19 April 2022
6,700
Director appointment dates
Consideration
On-market acquisition of ordinary shares at an
average price of $11.02 per share
Issue of shares under dividend reinvestment
plan at $11.20 per share
Issue of shares under dividend reinvestment
plan at $10.76 per share
Transfer of legal ownership of shares at $9.05
per share (no change in beneficial interest)
Issue of shares under dividend reinvestment
plan at $11.20 per share
Issue of shares under dividend reinvestment
plan at $10.76 per share
Issue of shares under dividend reinvestment
plan at $11.20 per share
Issue of shares under dividend reinvestment
plan at $10.76 per share
On-market acquisition of ordinary shares at an
average price of $11.45 per share
The date of each Director’s first appointment to the position of Director is provided below. Since the date of
appointment, Directors have been re-appointed at Annual Meetings when retiring by rotation as required.
Director
Mark Verbiest
Anne Urlwin
James Ogden*
Dr Marie Bismark
Gráinne Troute
Dr Andrew Wong
Venasio-Lorenzo Crawley
Stephen Bull
Appointment date
1 July 2021
1 March 2014
2 September 2011
1 September 2013
1 September 2016
1 March 2017
1 February 2020
1 March 2022
*James Ogden retired on 27 April 2022. He was also a Director from 1 October 2007 to 26 March 2009.
Indemnity and insurance
In accordance with Section 162 of the Companies Act 1993 and the constitution of the Company, the Company
has arranged insurance for, and indemnities to, Directors and Officers of the Company, including Directors of
subsidiary companies, for losses from actions undertaken in the course of their legitimate duties or costs incurred in
any proceeding.
Directors of subsidiary companies
The remuneration of employees acting as Directors of subsidiaries is disclosed in the relevant banding of remuneration
set out under the heading ‘Employee remuneration’ in the Remuneration section of the Annual Report. Employees did
not receive additional remuneration or benefits for acting as Directors during the year.
Scott Scoullar, Will Wright, Aaron Smail and Robyn Heyman were Directors of all the Company’s
New Zealand incorporated subsidiaries as at 31 December 2022, with the exception of Summerset LTI Trustee Limited
(the Directors of which are Mark Verbiest and Dr Marie Bismark). Scott Scoullar, Will Wright, Stewart
Scott and Robyn Heyman were Directors of all the Company’s Australian incorporated subsidiaries as at 31 December
2022. No extra remuneration is payable to any Director of the Company for any Directorship of a subsidiary.
Top 20 Shareholders as at 31 December 2022
Rank
Registered Shareholder
Number of shares
% of shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Custodial Services Limited
Tea Custodians Limited*
BNP Paribas Nominees NZ Limited (BPSS40)*
HSBC Nominees (New Zealand) Limited*
Citibank Nominees (NZ) Ltd*
New Zealand Superannuation Fund Nominees Limited*
Accident Compensation Corporation*
HSBC Nominees (New Zealand) Limited*
Forsyth Barr Custodians Limited
JPMORGAN Chase Bank*
FNZ Custodians Limited
Hobson Wealth Custodian Limited
New Zealand Depository Nominee
New Zealand Permanent Trustees Limited*
Premier Nominees Limited*
National Nominees New Zealand Limited*
JBWERE (NZ) Nominees Limited
BNP Paribas Nominees (NZ) Limited*
MFL Mutual Fund Limited*
Cogent Nominees Limited*
Total
* Shares held through the New Zealand Central Securities Depository Limited
24,123,993
23,275,169
13,835,243
11,064,559
10,537,917
10,302,253
9,775,132
9,773,264
8,485,935
7,711,786
7,461,459
4,773,029
4,677,415
3,783,818
3,477,772
3,290,752
2,443,948
2,391,847
2,236,900
2,011,613
10.39%
10.03%
5.96%
4.77%
4.54%
4.44%
4.21%
4.21%
3.66%
3.32%
3.21%
2.06%
2.02%
1.63%
1.50%
1.42%
1.05%
1.03%
0.96%
0.87%
165,433,804
71.28%
129
Annual Report 2022
Spread of Shareholders as at 31 December 2022
Size of shareholding
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Shareholders
Number
Shareholders
%
4,007
4,209
1,128
761
52
49
39.26%
41.24%
11.05%
7.46%
0.51%
0.48%
Shares
Number
1,742,402
10,304,738
8,155,052
14,532,900
3,580,389
193,801,413
Total
10,206
100.00%
232,116,894
Shares
%
0.75%
4.44%
3.52%
6.26%
1.54%
83.49%
100.00%
Substantial product holder notices received as at 31 December 2022
According to the records kept by the Company and notices given under the Financial Market Conducts Act 2013, the
following were substantial holders in the Company as at 31 December 2022. The total number of voting products on
issue at 31 December 2022 was 232,116,894 ordinary shares.
Shareholder
Fisher Funds Management Limited
Harbour Asset Management Limited*
Relevant interest
16,753,143
16,015,699
% held at date
of notice
Date of notice
7.2175%
21 September 2022
6.925%
29 August 2022
130
* Includes the holding of related body corporate, Jarden Securities Limited
Top 20 Bondholders as at 31 December 2022
SUM010
Rank
Registered Bondholder
Number of bonds
% of bonds
1
2
3
4
5
6
7
8
9=
9=
11
12
13
14
15
16
17
18=
18=
18=
Custodial Services Limited
FNZ Custodians Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
Hobson Wealth Custodian Limited
Pt (Booster Investments) Nominees Limited*
Tea Custodians Limited*
Forsyth Barr Custodians Limited
Robert Andrew Wakelin & David Andrew Wakelin
Alistair Wyatt White & Elisabeth Anne Marie White
JBWERE (NZ) Nominees Limited
Custodial Services Limited
Investment Custodial Services Limited
Craig Paul Werner & Lea Lynn Werner
Commonwealth Bank Of Australia*
Custodial Services Limited
Hobson Wealth Custodian Limited
Wellspring Television Limited
Dunedin Diocesan Trust Board
Green Lane Research & Education Fund Board
45,186,000
14,997,000
9,141,000
1,557,000
1,475,000
1,204,000
1,173,000
595,000
500,000
500,000
490,000
465,000
390,000
360,000
334,000
330,000
264,000
250,000
250,000
250,000
45.19%
15.00%
9.14%
1.56%
1.48%
1.20%
1.17%
0.60%
0.50%
0.50%
0.49%
0.47%
0.39%
0.36%
0.33%
0.33%
0.26%
0.25%
0.25%
0.25%
131
Total
79,711,000
79.72%
* Bonds held through the New Zealand Central Securities Depository Limited
Annual Report 2022
SUM020
Rank
Registered Bondholder
Number of bonds
% of bonds
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16=
16=
18
19
20
Custodial Services Limited
FNZ Custodians Limited
Hobson Wealth Custodian Limited
Forsyth Barr Custodians Limited
Private Nominees Limited*
FNZ Custodians Limited
Best Farm Limited
Investment Custodial Services Limited
Tea Custodians Limited*
Hobson Wealth Custodian Limited
JBWERE (NZ) Nominees Limited
Forsyth Barr Custodians Limited
Hobson Wealth Custodian Limited
FNZ Custodians Limited
Custodial Services Limited
Social Service Council Of The Diocese Of Christchurch
Investment Custodial Services Limited
Forsyth Barr Custodians Limited
Kiwigold.Co.Nz Limited
Custodial Services Limited
Total
* Bonds held through the New Zealand Central Securities Depository Limited
25,379,000
24,165,000
20,479,000
20,151,000
1,720,000
1,647,000
1,500,000
1,403,000
1,393,000
1,225,000
1,147,000
756,000
735,000
701,000
671,000
500,000
500,000
470,000
415,000
337,000
20.30%
19.33%
16.38%
16.12%
1.38%
1.32%
1.20%
1.12%
1.11%
0.98%
0.92%
0.60%
0.59%
0.56%
0.54%
0.40%
0.40%
0.38%
0.33%
0.27%
105,294,000
84.23%
132
SUM030
Rank
Registered Bondholder
Number of bonds
% of bonds
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Custodial Services Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
Tea Custodians Limited*
Hobson Wealth Custodians Limited
NZ Permanent Trustees Ltd Grp Invstmnt Fund No 20*
Mmc Limited*
Commonwealth Bank Of Australia*
Westpac Banking Corporation*
Investment Custodial Services Limited
FNZ Custodians Limited
JBWERE (NZ) Nominees Limited
Forsyth Barr Custodians Limited
JPMORGAN Chase Bank*
FNZ Custodians Limited
Jml Capital Limited
Forsyth Barr Custodians Limited
Hobson Wealth Custodian Limited
Public Trust Rif Nominees Limited*
Forsyth Barr Custodians Limited
43,708,000
19,420,000
17,835,000
17,096,000
10,323,000
4,000,000
2,800,000
2,335,000
1,326,000
1,300,000
1,225,000
1,183,000
1,173,000
957,000
784,000
700,000
668,000
590,000
497,000
455,000
29.14%
12.95%
11.89%
11.40%
6.88%
2.67%
1.87%
1.56%
0.88%
0.87%
0.82%
0.79%
0.78%
0.64%
0.52%
0.47%
0.45%
0.39%
0.33%
0.30%
133
Total
128,375,000
85.60%
* Bonds held through the New Zealand Central Securities Depository Limited
Spread of bondholders as at 31 December 2022
SUM010
Size of bondholding
1 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Total
Bondholders
Number
Bondholders
%
9.87%
25.44%
54.56%
6.84%
3.29%
Bonds
Number
390,000
1,950,000
11,681,000
4,521,000
81,458,000
Bonds
%
0.39%
1.95%
11.68%
4.52%
81.46%
100.00%
100,000,000
100.00%
78
201
431
54
26
790
Annual Report 2022
Bondholders
Number
Bondholders
%
100.00%
125,000,000
Bonds
Number
215,000
1,211,000
10,974,000
3,762,000
108,838,000
Bonds
Number
235,000
1,591,000
11,187,000
3,771,000
133,216,000
6.58%
19.46%
62.17%
6.58%
5.21%
6.62%
23.10%
58.87%
6.34%
5.07%
Bonds
%
0.17%
0.97%
8.78%
3.01%
87.07%
100.00%
Bonds
%
0.16%
1.06%
7.46%
2.51%
88.81%
100.00%
43
127
406
43
34
653
47
164
418
45
36
710
Bondholders
Number
Bondholders
%
SUM020
Size of bondholding
1 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Total
SUM030
Size of bondholding
1,001 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Total
100.00%
150,000,000
134
Waivers from the NZX Listing Rules
No waivers from the application of NZX Listing Rules have been utilised by the Company during the year ended
31 December 2022.
Credit rating
The Company has no credit rating.
Auditor fees
Ernst & Young Wellington has continued to act as auditors of the Company. The amount payable by Summerset
and its subsidiaries to Ernst & Young Wellington in respect of FY22 audit fees was $304,500 (noting that this fee
includes assurance services in relation to Summerset's long-term incentive plan). In addition, Ernst & Young Wellington
undertook assurance services in relation to Summerset's sustainability linked lending arrangements during the year;
the fee for this engagement was $26,300. Ernst & Young also performed non-audit work in relation to remuneration
advisory services, the fees for this engagement was $5,300.
Donations
In accordance with section 211(1)(h) of the Companies Act 1993, Summerset records that it donated $158,500 during
the year ended 31 December 2022.
Dividend reinvestment plan
The last date of receipt for a participation election from a shareholder who wishes to participate in the dividend
reinvestment plan is 13 March 2023.
This Annual Report is authorised for and on behalf of the Board by:
Mark Verbiest
Director and
Chair of the Board
Anne Urlwin
Director and
Chair of the Audit and
Risk Committee
Authorised for issue on 23 February 2023
135
Annual Report 2022
Directory
New Zealand
Northland
Summerset Mount Denby
7 Par Lane, Tikipunga,
Whangārei 0112
Phone (09) 470 0282
Auckland
Summerset Falls
31 Mansel Drive,
Warkworth 0910
Phone (09) 425 1200
Summerset Milldale
Argent Lane, Milldale,
Wainui 0992
Phone (0800) 786 637
Summerset at Monterey Park
1 Squadron Drive, Hobsonville,
Auckland 0618
Phone (09) 951 8920
Summerset at Heritage Park
8 Harrison Road, Ellerslie,
Auckland 1060
Phone (09) 950 7960
Summerset by the Park
7 Flat Bush School Road,
Flat Bush 2019
Phone (09) 272 3950
Summerset at Karaka
49 Pararekau Road,
Karaka 2580
Phone (09) 951 8900
Summerset Parnell1
23 Cheshire Street, Parnell,
Auckland 1052
Phone (09) 950 8212
1 Proposed village
Summerset Half Moon Bay1
25 Thurston Place,
Half Moon Bay,
Auckland 2012
Phone (09) 306 1422
Summerset St Johns
180 St Johns Road, St Johns,
Auckland 1072
Phone (09) 950 7982
Waikato – Taupō
Summerset down the Lane
206 Dixon Road,
Hamilton 3206
Phone (07) 843 0157
Summerset Rototuna
39 Kimbrae Drive,
Rototuna North 3210
Phone (07) 981 7822
Summerset by the Lake
2 Wharewaka Road, Wharewaka,
Taupō 3330
Phone (07) 376 9470
Summerset Cambridge
1 Mary Ann Drive,
Cambridge 3493
Phone (07) 839 9482
Bay of Plenty
Summerset by the Sea
181 Park Road,
Katikati 3129
Phone (07) 985 6890
Summerset by the Dunes
35 Manawa Road,
Pāpāmoa Beach, Tauranga 3118
Phone (07) 542 9082
Summerset Rotorua1
171-193 Fairy Springs Road,
Rotorua 3010
Phone (0800) 786 637
Hawke’s Bay
Summerset in the Bay
79 Merlot Drive, Greenmeadows,
Napier 4112
Phone (06) 845 2840
Summerset in the Orchard
1228 Ada Street, Parkvale,
Hastings 4122
Phone (06) 974 1310
Summerset Palms
136 Eriksen Road,
Te Awa, Napier 4110
Phone: (06) 833 5852
Summerset in the Vines
249 Te Mata Road,
Havelock North 4130
Phone (06) 877 1185
Taranaki
Summerset Mountain View
35 Fernbrook Drive, Vogeltown,
New Plymouth 4310
Phone (06) 824 8900
136
Summerset at Pohutukawa Place
70 Pohutukawa Place, Bell Block,
New Plymouth 4371
Phone (06) 824 8532
Summerset Lower Hutt
1 Boulcott Street,
Lower Hutt 5010
Phone (04) 568 1442
Manawatū – Wanganui
Summerset in the River City
40 Burton Avenue, Wanganui East,
Wanganui 4500
Phone (06) 343 3133
Summerset Masterton1
Landsdowne
Masterton 5871
Phone (06) 370 1792
Nelson – Tasman
Summerset on Summerhill
180 Ruapehu Drive, Fitzherbert,
Palmerston North 4410
Phone (06) 354 4964
Summerset in the Sun
16 Sargeson Street, Stoke,
Nelson 7011
Phone (03) 538 0000
Summerset Prebbleton
578 Springs Road,
Prebbleton 7604
Phone (03) 353 6312
Otago
Summerset at Bishopscourt
36 Shetland Street, Wakari,
Dunedin 9010
Phone (03) 950 3102
Summerset Richmond Ranges
1 Hill Street North, Richmond,
Tasman 7020
Phone (03) 744 3432
Marlborough
Summerset Blenheim
183 Old Renwick Road, Springlands,
Blenheim 7272
Phone (03) 520 6042
Canterbury
Summerset Rangiora
141 South Belt, Waimakariri,
Rangiora 7400
Phone (03) 364 1312
Summerset at Wigram
135 Awatea Road, Wigram,
Christchurch 8025
Phone (03) 741 0870
Summerset at Avonhead
120 Hawthornden Road, Avonhead,
Christchurch 8042
Phone (03) 357 3202
Summerset on Cavendish
147 Cavendish Road, Casebrook,
Christchurch 8051
Phone (03) 741 3340
Summerset Kelvin Grove1
Stony Creek, Kelvin Grove,
Palmerston North 4470
Phone (06) 825 6530
Summerset by the Ranges
104 Liverpool Street,
Levin 5510
Phone (06) 367 0337
Wellington
Summerset Waikanae
28 Park Avenue,
Waikanae 5036
Phone (04) 293 0002
Summerset on the Coast
104 Realm Drive,
Paraparaumu 5032
Phone (04) 298 3540
Summerset on the Landing
1-3 Bluff Road, Kenepuru,
Porirua 5022
Phone (04) 230 6722
Summerset at Aotea
15 Aotea Drive, Aotea,
Porirua 5024
Phone (04) 235 0011
Summerset at the Course
20 Racecourse Road, Trentham,
Upper Hutt 5018
Phone (04) 527 2980
1 Proposed village
137
Annual Report 2022
Australia
Victoria
Summerset Cranbourne North
98 Mannavue Boulevard,
Cranbourne North VIC 3977
Phone (1800) 321 700
Summerset Oakleigh South1
52 Golf Road,
Oakleigh South VIC 3167
Phone (1800) 321 700
Summerset Mernda1
305 Bridge Inn Road,
Mernda VIC 3116
Phone (1800) 321 700
Summerset Drysdale1
145 Central Road,
Drysdale, VIC 3167
Phone (1800) 321 700
Summerset Torquay1
Grossmans Road and Briody Drive,
Torquay VIC 3228
Phone (1800) 321 700
Summerset Chirnside Park1
266-268 Maroondah Hwy,
Chirnside Park VIC 3116
Phone (1800) 321 700
Summerset Cragieburn1
1480 Mickleham Road,
Craigieburn VIC 3064
Phone (1800) 321 700
138
1 Proposed village
Company
information
Statutory Supervisor
Public Trust
Bond Supervisor
The New Zealand Guardian Trust
Company Limited
Share Registrar
Link Market Services,
PO Box 91976, Auckland 1142,
New Zealand
Phone: +64 9 375 5998
Email: enquiries@linkmarketservices.co.nz
Directors
Mark Verbiest
Dr Marie Bismark
Stephen Bull
Venasio-Lorenzo Crawley
Gráinne Troute
Anne Urlwin
Dr Andrew Wong
Company Secretary
Robyn Heyman
Registered offices
New Zealand
Level 27, Majestic Centre,
100 Willis Street
Wellington 6011
PO Box 5187,
Wellington 6140
Phone: +64 4 894 7320
Email: reception@summerset.co.nz
www.summerset.co.nz
Australia
Deutsche Bank Place,
Level 4, 126 Phillip Street,
Sydney, NSW 2000
Auditor
Ernst & Young
Solicitor
Russell McVeagh
Bankers
ANZ Bank New Zealand Limited
Australia and New Zealand Banking Group Limited
Bank of New Zealand
National Australia Bank Limited
Commonwealth Bank of Australia
Westpac New Zealand Limited
Westpac Banking Corporation
Industrial and Commercial Bank of China Limited
Bank of China Limited
139
The text of this document is printed on 120gsm Lenza Green 100% recycled paper sourced from recovered fibre certified FSC Recycled, cover is 350gsm Satin FSC Mix board from responsible sources printed using vegetable oil inks and manufactured under a strict ISO14001 Environmental Management System. summerset.co.nzsummerset.com.au