Annual Report2023 Cover: Residents at Summerset Avonhead enjoy socialising in the village centre Inside cover: Summerset PrebbletonABOUT 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 2023. 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. 02
Contents
Chair and CEO’s report
Summerset Strategy
Highlights
Snapshot
2023 highlights
Our people and community
Our villages
Embedding sustainability
Our performance
Five-year summary
Financial statements
Governance
Board of Directors
Executive Leadership Team
Remuneration
Disclosures
Directory
Company information
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11
14
14
16
20
32
42
50
54
55
94
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108
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122
131
134
03
Annual Report 2023
Chair and CEO’s
report
Mark Verbiest
Chair
04
Scott Scoullar
Chief Executive Officer
Welcome to our annual report for
the 12 months ended 31 December
2023. Despite significant challenges,
Summerset has had a year of
considerable achievements.
We have been able to continue to
deliver value for our residents and
shareholders during a year which has
been one of the most challenging
we’ve seen as a company. Increasing
inflation, recruitment shortages and
a falling residential property market
made business difficult throughout
the year, and yet we continued
to grow.
Over 2023 we saw a record 1,103
sales of Occupation Rights, our
highest year to date, and an
excellent result in a very difficult
macroeconomic environment.
The downturn in the New Zealand
property market presented a new
challenge for our Sales team in 2023.
With housing turnover reportedly
at its lowest in decades we had
to adapt to help our prospective
residents who wanted to join our
village communities.
To make it easier for our future
residents to join their chosen village,
we employed a number of sales
mechanisms to assist them move
into our villages while they were
still selling their home. Providing
flexibility helped new residents to
sell their homes and get organised
at a time when selling homes was
taking longer.
However, while the residential
property market certainly has an
influence on our business, our strong
sales and demand pipeline shows
that we are not solely dependent
upon the property market to grow.
This is because our residents are
often motivated by life events when
moving to Summerset. They come to
us for a change in lifestyle, security,
health, desire for community and
more. We continued to see these
motivating factors prompting shifts
into our villages while the residential
property market was in a state of flux.
Throughout the year demand
for our retirement living offering
significantly increased, with our
waitlists and prospective resident
databases increasing considerably.
The underlying factors driving
demand in the market look set
to continue. To meet this demand
we have continued to strengthen
our development pipeline in both
New Zealand and Australia. This
year we announced the purchase
of two pieces of land – Rolleston
and Mosgiel in New Zealand. We
continue to explore opportunities
in both countries to expand our
portfolio and land bank.
This year was a landmark for
our Australian business with
the first homes delivered at
our Cranbourne North village
in December. Summerset’s first
Australian residents will move into
their new village in March 2024.
Our hard work has been recognised
with Summerset receiving a number
of awards this year, including
winning Gold for the Reader's Digest
2024 Quality Service Award in
the Retirement Villages category,
it is an honour that New
CHAIR AND CEO’S REPORT
Zealand consumers named us for
this accolade.
Business performance
Underlying profit for 2023 is
$190.3 million, an increase of 11.0%
on 2022. Our IFRS net profit after
tax is $436.3 million, up 62.2%
on 2022. Operating cash flows
of $398.2 million have increased
8.0% from last year. The value of
our investment property is now
$6.4 billion, up 18.3% on 2022,
largely as a result of new purchases
and development.
We are very pleased with the
overall performance of the business
for 2023. We have been able to
withstand significant challenges to
deliver an increase in our underlying
and net (IFRS) profits.
We have continued to show how
we can run our business efficiently
and effectively in unpredictable and
difficult conditions, and at the same
time position ourselves for growth
into the future.
Levels of uncontracted stock have
increased on FY22 but this is
unsurprising as we opened two
new main buildings at our Bell
Block (New Plymouth) and Te Awa
(Napier) villages. Both villages have
had very high demand for their
apartments, and care and memory
care facilities but historically we
know main buildings take 18–24
months to sell down. When we
exclude the new main buildings our
uncontracted stock is down 19%
year-on-year, a very pleasing result
in a tough market.
The Board is pleased to declare
a final dividend of 13.2 cents per
share, payable on 22 March 2024.
Combined with our interim dividend
of 11.3 cents per share, shareholders
have received 24.5 cents per share
for the 2023 financial year — a 9.9%
increase over 2022.
Our dividend policy has been to pay
out 30-50% of underlying profit for
the full year period and we have
traditionally paid at the lower end of
this range to balance the desire to
invest for growth with the preference
of some shareholders for yield.
Summerset's growth strategy is to
deliver on expansion opportunities
in New Zealand and Australia that
will produce competitive returns for
our shareholders.
We are expecting strong underlying
profit growth over the medium
term as our business matures,
which is why we signalled at
our half-year results announcement
that we were undertaking a
review of our Dividend Policy to
ensure it remained appropriate for
Summerset moving forward.
As part of our review we
benchmarked our current policy
against NZX and ASX companies,
tested alternatives and obtained
feedback from our retail and
institutional investors, as well as
investment analysts in our sector.
Our analysis found that our dividend
policy had broad acceptance with
our shareholders and was consistent
with our peers. Many of our
stakeholders highlighted that it
was important to them that the
dividend policy is free from technical
adjustments, can be forecast by the
investment community and is easily
understood by retail investors.
With this information in mind,
the Board has decided to leave
the dividend measure unchanged.
However, the policy range of paying
30–50% of underlying profit was
slightly narrower than it needed to
be, so in order to be more flexible
and prudent in our approach we
have opted to move to 20–50% of
underlying profit.
This gives us more scope to reinvest
our profits when we need to, in
order to maintain long-term financial
health, while ensuring we continue
to give our investors an appropriate
return on their investment where
we can.
Care
Our continuum of care model
remains a key part of our appeal
to prospective residents. We are
committed to providing high-quality
care, and we continue to invest
to provide our residents with the
peace of mind that should their
needs change they have options
at Summerset.
During 2023 we opened new main
buildings at our Kenepuru, Bell Block
and Te Awa villages, which all feature
our world-class care and memory
care centres.
In the care centres, we are
commencing a move to a household
model approach, creating smaller,
family grouping sized environments
which help to grow relationships and
create a sense of home.
In addition to opening new facilities,
we have continued the work to
refurbish our older, first-generation,
facilities around the country. Our
Levin, Havelock North and Trentham
(Upper Hutt) villages’ care centres
are all in varying stages of
development. At each village we will
create a modern facility that better
caters to the needs and demands of
our current and future residents.
We’re also investing in new
technology, including ceiling hoists
above beds being rolled out at all
care centres over the next two years.
These are easier to operate and safer
for both our residents and staff.
Regulation and funding
Throughout the year we’ve
continued, along with many of
our competitors, to advocate for
adequate funding for the aged care
sector. Successive governments
have failed to invest adequately
in aged care and the sector has
become unsustainable.
Aged care beds are closing around
the country, and without change a
large proportion of New Zealand’s
growing aged population will need
to be cared for in hospitals, which
05
Annual Report 2023
06
has a flow-on effect to the entire
health sector.
Act. We welcome any changes that
make operators raise their standards.
The New Zealand Aged Care
Association (NZACA), with support
from Summerset and other aged
care providers, ran a compelling
campaign highlighting this risk,
called the Domino Effect. More
elderly New Zealanders in hospital
beds or requiring home care
will impact the health system
dramatically, affecting people of all
ages who need hospital care.
As a large company Summerset
can, and will, continue to keep
providing care. While we continue to
be committed to providing the very
best care possible for our residents
and we are investing in care, we are
rationalising our care offering. Our
future care centres will be smaller
and will be targeted primarily at
providing a continuum of care to our
independent residents.
As well as funding, finding nursing
staff continues to be an issue for the
sector. It's estimated that there are
more than 1,200 nursing vacancies
in the sector (nearly 25% of nurses
required). While aged care nurses’
salaries were increased 11% this year
to achieve parity with public sector
nurses, Te Whatu Ora increased pay
for hospital nurses shortly after this,
which meant rather than pay parity
the gap remains at least $4,000 per
annum depending on their level.
This has again made aged care
nursing a less attractive option for
nurses when they earn less than
nurses with the same qualifications
and experience in public hospitals.
We continue to advocate with
health officials for a more
equitable outcome.
Summerset also welcomed the
review by the Ministry of Housing
and Urban Development (MHUD) of
the Retirement Villages Act. MHUD
released a discussion document to
the public asking for views about a
number of proposals to change the
Most of Summerset’s practices
already align with the proposals in
the review, for instance we stop
weekly fees after someone vacates
their home, there are no charges
for maintenance and repairs and we
have worked hard to create plain
English documentation.
Resident initiatives and events
Our purpose is “bringing the
best of life” and we continually
look for opportunities to innovate
and improve on the experience
we provide our residents in all
our villages.
In 2023 we have run a successful
pilot of our Holiday Homes
programme which gives residents
and their families the opportunity
to rent a fully furnished apartment
in one of our villages. The pilot at
three villages was very successful
and popular and we plan to roll it out
to more villages in 2024.
Our entertainment series
“Summerset Sessions” continues
to deliver a mixture of content
live and on-demand to residents
regardless of where they are in
the country. These sessions include
“Cooking with a MasterChef”, our
musical series “Summerset Sings”,
and “An Interview With...” featuring
well-known personalities and
hosted by Summerset Ambassador
Jude Dobson.
Popular singer Will Martin performed
for Summerset residents in
Wellington, Christchurch and
Hawke’s Bay during the year, and
we held resident competitions
including Summerset’s Best Garden
and the Summerset Challenge. The
challenge tested residents' quiz
skills, with regional finalists travelling
to Wellington to compete to be the
best quiz team in our villages.
Our efforts have been recognised
by residents, with our satisfaction
scores remaining extremely high –
96% of village residents and 95%
of care residents tell us they are
very satisfied or satisfied with their
experience with us.
We were also named the Best
Provider Nationwide in Aged
Advisor’s annual "Peoples’ Choice
Awards". As well as the nationwide
win, five of our villages were named
finalists in their categories. The most
satisfying aspect of this award is that
it’s voted on by consumers, including
retirement village residents and their
families. We were honoured that
many of our residents nominated us.
Design and technology
We have continued to modify the
designs and features of our villages
to meet the needs of our current
and future residents, and to tailor
designs for their varying locations
around the country.
Our first provincial main building
(PMB), the village centre that
provides resident amenities and
care facilities, will be built at our
Blenheim village. Built to our usual
high specification, it will be single
storey to be in keeping with its
location and be constructed faster
for our residents.
Similarly, we have been designing
our refreshed regional main building
(RMB). Our current RMBs have been
built successfully and to the delight
of residents around the country for a
number of years, but the needs and
demands of our residents has meant
it’s time to refresh the design.
We continue to look at how the
quality and greenspace in our
villages can be maximised too,
with children’s playgrounds, wider
streets, small parks and indoor/
outdoor golf ranges all being
investigated in our designs.
We also continue to invest in
technology to enhance the lives and
experiences of our residents around
the country. Our resident experience
services and experiences platform
Lumin is now rolled out to seven
CHAIR AND CEO’S REPORT
07
Wellington region residents' Summerset Sings concert with Will Martin
villages and will go to a further eight
by 2025. Lumin allows residents to
communicate with each other, book
activities, access entertainment and
much more, all on a specially
designed tablet with a system
designed for elderly users.
Summerset is one of the few village
operators in the country to offer
anything like this to its residents
and we believe it’s a huge step
forward in how we communicate
with, and enable, our residents to get
on and enjoy their retirement with
technology that makes their lives in
the village easier.
New Zealand construction
and development
Our design and consenting
programme continues to position us
well for growth across New Zealand.
In New Zealand we have a very well
diversified portfolio with 73% of our
land bank having resource consent.
Those consents allow flexibility in the
rate and location of development, so
we can respond to localised demand
and supply, and the changing
economic conditions.
This past year has been an excellent
example of the flexibility we can
bring to our build programme.
We back-weighted deliveries to the
second half of the year where we saw
economic and market conditions
improving, to better enable the sale
and settlement of our homes.
We also opted to prudently deliver
a total number of units at the
lower end of our market guidance
while market conditions were less
favourable. This year we delivered
633 homes under Occupation Right
Agreement and 49 care beds in
New Zealand. This reflects growth of
around 5% in construction numbers,
another record year for Summerset.
Our construction team worked
across 17 New Zealand sites this
year, including delivering two new
main buildings complete with indoor
pools, memory and care centres,
cafes and other facilities, and
completing our Kenepuru (Porirua)
and Hobsonville (Auckland) villages.
We also handed over the first
homes at our Cambridge, Boulcott
(Lower Hutt), Waikanae, Milldale
(Auckland) and Blenheim villages,
and commenced construction at a
number of sites including Rangiora.
We expect to increase our output
of homes next year with the
market picking up. Our sophisticated
delivery programme means that we
can scale up and we expect to
build 675–725 homes next year. This
includes delivering our St Johns
(Auckland) village, where 60% of
the 329 homes, as well as the main
building and the care centre, will be
completed in the first stage.
We began the process of divesting
our Parnell site this year, as part
of actively managing our portfolio
weighting of capital deployed
across intensive metropolitan
developments and the regional
developments (which recycle cash
faster). The economics of this
village were very strong over
the long term, and it was
consented, but it fell outside our
current strategy of minimising
the number of concurrent capital-
intense metropolitan projects
under development.
In 2022 we advised shareholders
of the tragic death of Michael
Annual Report 2023
08
Noche, a scaffolding contractor who
worked for Marin Construction on
our St Johns site. We worked with
WorkSafe NZ during 2023 while they
investigated Michael’s death.
WorkSafe advised late in 2023 that
they were not taking any action
against either Marin or Summerset.
While we were reassured that
Worksafe didn't feel any action was
warranted, we have not lost sight of
the fact that this was, of course, a
terrible tragedy for Michael’s family,
colleagues and for us as a business
and we needed to learn from it.
As a company we have made
modifications to our processes and
worked across the construction
industry to lead change that we
hope will make our people as safe
as possible when using temporary
work structures.
Costs and procurement
We have worked hard to keep a tight
lid on our costs to ensure we set
ourselves up for long-term growth.
Construction costs have been a
focus for us this year as inflation and
materials shortages saw prices rise
sharply, but we are seeing the market
stabilise now.
Our Procurement team works hard
to secure value-for-money long-
term contracts through the strong
relationships we have with our
suppliers and we’re confident we’re
tightly managing our construction
costs. This work and the diligence of
our Construction team has meant
that we’ve delivered our forecast
homes on time and within budget.
Our hard work has seen us deliver
a very healthy development margin
through 2023 of 31.6%, well above
the 20–25% guidance we gave
last year.
Like most New Zealand businesses,
we saw overhead costs such as
rates and insurance increasing in
2023. While we can flex our weekly
fees to meet these costs, we opted
to keep our weekly fee increase
as low as possible this year in
recognition that inflation was having
a big impact on our residents too. We
are committed to not increasing fees
beyond the percentage increase to
NZ Superannuation, and this year we
set our weekly fee increase at half
that of superannuation.
Australia
In Australia we achieved a major
milestone with the delivery of our
first homes at our Cranbourne North
village. Our first Australian residents
will move in March 2024.
Construction begins at our Chirnside
Park development shortly, and both
our Oakleigh South and Craigieburn
sites have been consented. We
continue to build a strong land
bank and we plan to mirror our
New Zealand programme where
we have a high percentage of our
sites consented so we can flex our
build programme as demand and
supply dictate. Our three other sites
at Torquay, Mernda and Drysdale
are all progressing through their
consent processes.
Australia continues to offer huge
growth opportunities for us if we
can access the right sites, and we
are now also looking at sites beyond
Melbourne and Victoria. We see
Queensland as the next logical step
in our strategic growth into Australia.
This move will provide us with more
diversity in our portfolio and allow
us to manage market movements
with greater flexibility, similar to
our development approach in New
Zealand where we can adapt to
changing market conditions. We
plan to continue to grow our land
bank in Victoria in parallel to our
expansion into Queensland.
We’re very pleased to have reached
the major milestone of opening
our first Australian village and look
forward to delivering more homes
and villages in the coming years.
Our people
Our people are crucial to our
success. At our heart we are a
people-centred business providing
high-quality homes, care, food,
entertainment, support, therapy and
much more to more than 8,000
people in our villages across New
Zealand, and now into Australia.
Without great people we can’t do
our work and we can’t achieve our
purpose of “bringing the best of life”.
Throughout this year we have
invested in our people, providing
them with the tools and
opportunities to flourish and grow
their careers.
Diversity & Inclusion (D&I) has been
a focus for us to ensure that all our
staff are comfortable and supported
to bring all of themselves to their
workplace. All Summerset managers
were given D&I training through the
year, and we’ve supported employee
representative groups such as our
Pride Network and our Women in
Construction forum.
We’ve supported our people’s
wellbeing by providing them with
access to financial, physical and
mental health information, and we
delivered mental health awareness
training to Summerset managers so
they can support their people more.
Our people’s health and safety is,
of course, of enormous importance
to us as a business. We have
implemented a new three-year
Health and Safety (H&S) strategy and
we’ve grown our H&S compliance
team to ensure that we are doing
everything we can to protect our
people. In 2024 we will introduce
a new H&S monitoring system that
will be a better fit for our varying
business units and allow us to
capture and analyse more of our
data to make improvements quickly
across our villages, constructions
sites and offices.
In recognising that the cost of living
was impacting our people across
CHAIR AND CEO’S REPORT
Summerset's "Green Team" wins a Construction Sector Accord Beacon Award
09
the country we gifted a one-off
payment of $250 to 65% of our
staff. They were identified through
our set criteria as needing it the
most and in order to give them a
meaningful amount.
We are also pleased to report that
659 permanent staff received free
Summerset shares this year as part
of the vesting of our annual staff
share scheme, and 1,944 eligible
staff received $1,000 of Summerset
shares which vest in July 2026.
Sustainability
Sustainability continues to be a big
focus for the business and we’ve
made huge strides since we started
measuring and reporting on our
environmental impacts. We know
there is a long way to go but we
believe we are on the right track to
meet our sustainability targets.
We were pleased to publish our
Sustainability Review in May which
detailed the many changes we have
made over the last five years.
Our Sustainability Review was our
first step into ESG (environmental,
social and governance) reporting
and cataloguing what we do across
these areas. We have evolved our
new version of this document and
included mandatory climate related
disclosures, which were legislated by
the government in 2023. Our new
Sustainability Review document and
disclosures can be found on the
Summerset website.
All parts of our business have
sustainability goals at the core,
whether it is designing and building
new villages, managing the use of
fossil fuels in our existing facilities,
or removing unnecessary plastic
packaging from our supply chain.
At the same time, we are committed
to creating vibrant, connected
communities with skilled, caring, and
dedicated staff right across New
Zealand and Australia.
Waste reduction in our construction
business continues to be a major
focus for our business and all 17
construction sites we worked on
this year worked hard to reduce
waste wherever possible, resulting
in 4,372 tonnes of waste diverted
from landfill. A great deal of work
has also been done reviewing the
entire building life cycle from design,
procurement, pre-construction
through to waste treatment.
Our work was recognised with
our construction waste avoidance
initiative, titled “Building out Waste
by Thinking Green” winning a
Construction Sector Accord Beacon
Award. Our Think Green programme
was also recognised in the
Retirement Village Association’s
Sustainability Awards where we
won the APL Operator-led
Sustainability Award for our work
in reducing our carbon emissions
and embedding sustainability across
the organisation.
Outside of awards, we were pleased
to again be recognised by Forsyth
Barr in their second Carbon and ESG
Ratings for NZX listed companies.
We were again 11th of all NZX-listed
companies based on their criteria
and we're still the top-rated listed
retirement village operator.
We have continued to roll out green
initiatives at our villages too with our
Karaka village having photovoltaic
solar panels installed this year, and
Annual Report 2023
10
the pool at our Manukau village is
now heated by solar panels too.
Further information is available
in our Sustainability Review and
Climate-related Disclosures FY23
report on the Summerset website
at www.summerset.co.nz/investor-
centre/esg-reporting/.
Emergency preparedness
and response
The catastrophic flooding in the
Auckland and Northland regions,
and Cyclone Gabrielle’s impact
across large parts of the North Island,
tested our resilience with multiple
villages suffering power outages
during these events.
Our Napier and Te Awa villages
were the most heavily impacted,
with power out for significant
periods, and Te Awa residents
having to temporarily evacuate as a
precaution during the flooding. We
were very pleased that all our village
residents and staff were physically
unharmed during this time and that
none of our villages sustained any
major damage.
The benefits of our scale and expert
staff based around the country
were evident during the cyclone.
Summerset was able to provide
extra generators to power our main
buildings, set up Wi-Fi hotspots for
residents to keep in touch with loved
ones, fly in staff to support their
colleagues and residents and cook
meals for residents for two weeks
while they got back onto their feet.
For our staff we created a disaster
relief fund so they could get
access to cash quickly to replace
anything in their homes that had
been damaged, pay bonds if they
needed to move to new rental
accommodation and anything else
that they might need to look after
themselves and their families. We’d
like to take the time here to thank
the staff of our villages who were
impacted by the flooding and
Cyclone Gabrielle. Their dedication
and support made our residents’
lives a lot easier under very
trying circumstances.
We completed a comprehensive
review of our actions and
preparedness following Cyclone
Gabrielle and have made
changes including purchasing
more generators, installing Starlink
wireless broadband, and updating
our Emergency Response and
Business Continuity plans based on
lessons learned from the event.
Board and Executive changes
We farewelled long serving Board
member, Anne Urlwin, in February
2023 and welcomed our newest
director, Fiona Oliver, who was
formally elected at our April AGM.
Fiona brings significant commercial,
investment and governance
expertise to the Summerset Board
from her experience at Freightways,
First Gas/First Gas Services,
Gentrack and others. Fiona has taken
Anne’s role as chair of our Audit &
Risk Committee.
Chris Lokum joined Summerset as
GM of People & Culture in October.
Chris replaced Dave Clegg who,
after a successful four years with
us, decided to move into a well-
earned retirement. Chris joined us
from Waka Kotahi and before that
spent many years in HR in Australia
and the UK, including her role as Vice
President of HR-Fuels in Asia Pacific
at BP.
Chris is known for delivering
organisation efficiency, increasing
organisational capability and
providing strategic leadership. She
is passionate about people and
culture, and brings a strategic,
commercial and business lens to
her work.
Looking forward
While the economic outlook remains
uncertain, we are optimistic for
the coming year. We have come
through one of the most challenging
in Summerset’s history with robust
demand and record sales numbers.
Not only this but we’ve also met
our targeted build rate, opened our
first Australian village, added to our
significant land bank, and continued
to invest in our residents' experience.
During 2023 we showed our ability
to navigate the business through
challenging times while continung
to grow. We have managed our
costs very closely through the year
and brought our gearing down
from our half-year result. We have
acted prudently where we’ve had to,
reducing our build rate to align with
market conditions, and made tough
decisions like planning to sell our
Parnell land.
Subject to economic conditions we
look forward to continued growth in
the year ahead.
Finally, on behalf of the Summerset
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
CHAIR AND CEO’S REPORT
11
SUMMERSET STRATEGYSummerset’s strategy covers our short- and long-term goals for the next 10 years. It helps us prioritise our work to ensure we stay on the path that points toward our purpose: to bring the best of life. Three principles guide us in the strategy:• Our people lead the change • Provide our residents with the best life• Deliver appropriate returns to the shareholders who help fund our businessWe have six strategic pillars, each with a number of initiatives under them, that we’ll pursue over the next 10 years to grow and continue delivering great experiences for our residents and staff. Our pillars are: Invest in our People, Deliver New Zealand’s best retirement villages, Grow in Australia, Be a good corporate citizen, Create attractive new products and services and Be a more efficient and effective business. Annual Report 2023
12
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 lifePUBLICREGULATORSCOMPETITORSSTATUTORY SUPERVISORRESIDENTS AND FAMILIESINVESTORSCOMMUNITIESEMPLOYEESSUPPLIERSGOVERNMENTDELIVERING VALUE TO OUR STAKEHOLDERSINFLUENCE AND BENEFIT FROM THE VALUE WE CREATEINFLUENCE WHAT WE DO CHAIR AND CEO’S REPORT
13
DIVERSIFIED 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.BUILD 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.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. LOOK AFTER OUR RESIDENTSWe want our residents to feel secure and respected, and our consistently high satisfaction rates reflect that. We are also committed to our continuum of care model and providing residents high quality assistance should their needs change as they age.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. We significantly overachieved our first short-term goal by reducing our emissions by 16% from 2018-2022.OUR PHILOSOPHY OF CAREINDEPENDENT LIVING5,027Villas, cottages, townhouses and independent apartments(TOTAL UNITS)ASSISTED LIVING1,060Serviced apartments(TOTAL UNITS)SPECIALISED CARE1,284Rest-home care, Memory care, Hospital care(TOTAL UNITS) Annual Report 2023
Snapshot
Our people
Our portfolio
Our performance
$436.3m
Net profit after tax
FY22 $269.1m
$190.3m
Underlying profit
FY22 $171.4m
$398.2m
Operating cash flow
FY22 $369.2m
8,000+
Residents
2,800+
Staff members
96%
Village resident
satisfaction
Our care
95%
Care resident
satisfaction
14
1,284
Care units
(which includes beds)
in portfolio
1,338
Care units
(which includes beds)
in land bank in
New Zealand and Australia
6,087
Retirement units
$6.9b
Total assets
FY22 $5.8b
5,571
Retirement units
in land bank in
New Zealand
and Australia
40
Villages completed or
under development
1,103
Sales of
Occupation Rights
11
Greenfield sites
HIGHLIGHTS
15
Annual Report 2023
16
2023HighlightsFEBMARAPRFEBRUARYStaff from Hawke’s Bay and around the country pitched in to support residents during Cyclone GabrielleMARCHTo recognise the hard work and dedication of our frontline workforce in the villages we created a gratitude wall at every village for residents, their families and anyone else to publicly share messages of thanks to our peopleSolar panels installed on our Karaka village’s poolhouseAPRILSummerset’s AGM was held in Wellington where Directors Andrew Wong, Venasio-Lorenzo Crawley and Fiona Oliver were all re-electedMAYResource Consent granted for our Half Moon Bay (Auckland) village Released our Sustainability Review ESG report detailing our five year sustainability journey HIGHLIGHTS
17
JULYSummerset’s “Think Green” programme won the RVA’s Operator-led Sustainability AwardAUGUSTSummerset wins gold for “Group Provider Nationwide” in Aged Advisor’s 2023 Peoples’ Choice annual awards.SEPTEMBERPohutukawa Place (Bell Block) main building officially opened with New Plymouth District Mayor Neil HoldomNOVEMBERWinners of the Reader’s Digest 2024 Quality Service Award for the Retirement Villages category.Resource consent granted for our Kelvin Grove (Palmerston North) village.DECEMBERSummerset Cranbourne North’s first villas deliveredSEPOCTOCTOBERChris Lokum joins summerset as the new GM People & CultureSummerset’s Annual Applause Awards held in Auckland to recognise high performing staff and teams across the company DECNOV Annual Report 2023
Portfolio growth
25 years of consistent growth and delivery (total units1 in portfolio)
18
1 Units include all retirement units and care units (including care beds)
7,3717,3716,6796,6796,0286,0285,3575,3574,9444,9444,5904,5904,0844,0843,5763,5763,0353,0352,6012,6012,2972,2971,9731,9731,8011,8011,6791,6791,5991,5991,3841,3841,2581,2581,1961,1961,0221,0229599598798797557556566565935933373372472476,6796,6796,0286,0285,3575,3574,9444,9444,5904,5904,0844,0843,5763,5763,0353,0352,6012,6012,2972,2971,9731,9731,8131,8131,6791,6791,5991,5991,3841,3841,2581,2581,1961,1961,0221,0229599598798797557556566565935933373372472472472476926926516516716714134133543545065065085085415414344343043043243241601601221228080215215126126626217417463638080124124999963632562569090New units deliveredExisting stock'23'22'21'20'19'18'17'16'15'14'13'12'11'10'09'08'07'06'05'04'03'02'01'00'99'9801,0002,0003,0004,0005,0006,0007,0008,000 PORTFOLIO GROWTH
19
25 years of consistent growth and delivery (total units1 in portfolio)
1 Units include all retirement units and care units (including care beds)
7,3717,3716,6796,6796,0286,0285,3575,3574,9444,9444,5904,5904,0844,0843,5763,5763,0353,0352,6012,6012,2972,2971,9731,9731,8011,8011,6791,6791,5991,5991,3841,3841,2581,2581,1961,1961,0221,0229599598798797557556566565935933373372472476,6796,6796,0286,0285,3575,3574,9444,9444,5904,5904,0844,0843,5763,5763,0353,0352,6012,6012,2972,2971,9731,9731,8131,8131,6791,6791,5991,5991,3841,3841,2581,2581,1961,1961,0221,0229599598798797557556566565935933373372472472472476926926516516716714134133543545065065085085415414344343043043243241601601221228080215215126126626217417463638080124124999963632562569090New units deliveredExisting stock'23'22'21'20'19'18'17'16'15'14'13'12'11'10'09'08'07'06'05'04'03'02'01'00'99'9801,0002,0003,0004,0005,0006,0007,0008,000 Annual Report 2023
20
OUR PEOPLE AND COMMUNITY
Our people and
community
We’re proud to be home to more than
8,000 retirement village residents. Our vibrant
and diverse communities are built, run and
supported by over 2,800 staff.
21
Bringing the best of life is
Summerset’s purpose, and we value
and recognise our people who
are at the core of delivering this
to our residents. Our business
functions across Australasia are
multi-faceted – we employ a
diverse range of roles to design
beautiful villages, construct high-
quality homes and buildings, give
our residents amazing experiences
and care, and bring new residents to
live in our villages every week.
For more than 25 years, Summerset
has been dedicated to creating
retirement villages that go beyond
providing homes and evolve into
thriving communities. We were
delighted to win the Aged Advisor’s
2023 "Peoples' Choice Award"
for Group Provider Nationwide,
underscoring the genuine affection
our residents have for the lifestyle
we offer.
The award is based purely on
independent reviews and ratings
from residents and their families
throughout New Zealand. We were
very proud to get this endorsement
from them to win this award.
Also, an outstanding achievement
for us this year was being named
winner of the coveted Reader’s
Digest 2024 Quality Service Award in
the Retirement Villages category. To
find those companies that provide
the highest level of customer service
and that truly understand and value
consumer needs, Reader’s Digest
approaches everyday consumers
to ask them to assess companies
across five pillars of customer
service. These prestigious awards
have been running for ten years,
and while we've been runner-up a
number of times, taking top spot this
year is a testament to our team's
commitment to bring the best of life.
Emergency preparedness
In 2021 and 2022 the global
COVID-19 pandemic challenged our
teams to think and act differently in
how we continued to safely provide
the quality experiences that village
life offers. As an aged care provider,
COVID-19 was still with us in 2023
and impacted a number of our care
centres; however, our skilled teams
have managed to care for residents
while safely continuing visits. It
meant we didn’t have to close our
care centres to visitors (except under
special circumstances) like we’d had
to in previous years.
The challenges of extreme weather
events earlier in the year further
strengthened our resilience and
adaptability to focus on the needs of
our residents and staff. Particularly in
Hawke’s Bay with Cyclone Gabrielle,
we were able to lean on our
exceptional people throughout the
business who assisted with the
logistics of procuring additional
generators, food and supplies, as
well as filling in for staff who
had been personally affected by
the event.
We are very proud of the lengths
that our people went to in finding
and delivering these solutions and in
ensuring that our residents and their
families were able to keep in touch
either directly or through our regular
communication updates during a
very difficult time for the region.
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, and our annual resident
engagement scores are an indicator
of how well we’re getting those
experiences right. This year, 96%
of village residents tell us that
Annual Report 2023
22
Team Heritage - Summerset at Heritage Park - Ellerslie, winners of The Great Summerset Challenge
they are very satisfied or satisfied
with their experience, which is an
improvement over 2022. For our
care residents, 95% are very satisfied
or satisfied, with many praising
the professionalism and care they
receive from our staff.
We maintain a continuous listening
approach to drive improvements
that our residents tell us are
important to them, surveying 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
at their village quickly to better
reflect the needs and wants of
their residents.
We’ve also committed this year
to ensure we’re keeping all our
residents and their families better
informed about what we’re doing to
bring the best of life and to bring
in innovations they’ve asked for.
This led to us launching a quarterly
email newsletter – Your Summerset –
providing regular updates.
A desire to bring loved ones closer
together was at the heart of a new
“Holiday Homes” initiative we started
trialling in February this year. The trial
involved three villages offering short-
term accommodation exclusively for
Summerset residents, families, and
friends in the village.
It offers on-site convenience
and best value for money for
residents and their families in a
fully furnished, comfortable, self-
contained apartment. During the
trial we had apartments available
at our Hobsonville, Hastings and
Richmond (Nelson) villages and it
allowed residents to travel and stay
in familiar surroundings and the
opportunity to host their family in
their village. There has been a lot of
demand and bookings so far and we
intend to roll this out further in 2024
with a view to doing this nationally
over the coming years.
Events and experiences
Our "Summerset Sessions” continue
to provide an exciting array of events
and entertainment that residents
can enjoy in person or online.
The programme includes events,
concerts, cooking lessons (with
former MasterChef winner Brett
McGregor) and interviews with well-
known Kiwis. Various Summerset
Sessions were held at villages
around the country and were filmed
at the same time so they could be
enjoyed on-demand.
We’ve also created a few new events
and initiatives this year including:
•
•
“A Summerset World”, a video
series filmed at each village
that highlights the vibrancy
and variety of village life and
showcases the residents who call
it home.
“The Great Summerset
Challenge”, a general knowledge
quiz for teams of residents.
Our first nationwide inter-village
OUR PEOPLE AND COMMUNITY
competition saw teams of
village residents from across
the country competing in six
regional events to earn a spot in
the grand final held in Wellington.
The events were live-streamed
for fellow village residents and
staff to enjoy and cheer on their
talented teams. Congratulations
to Team Heritage from our
Ellerslie village who took out the
inaugural title.
”Summerset’s Best Garden
Competition”, a seasonal event
to showcase how talented our
residents are at tending to their
gardens, plants and veggies,
judged by top New Zealand
landscape designer and well-
known TV and radio host
Tony Murrell.
•
We also continue to invest in
technology that enhances the lives
and experiences of our residents.
After a successful trial in Kenepuru of
the Lumin platform, we launched the
product at the village and installed it
at six other villages in 2023.
Lumin is run through a dedicated
17-inch tablet and 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
fellow residents and loved ones.
We plan to roll Lumin out further in
2024 across another eight villages.
Enhancing our services and
our care
We continue to introduce and roll
out new measures and initiatives
to improve the lives of our
residents. Our care offering, and our
continuum of care model, is a very
important part of why our residents
choose us, and we want to adopt
relevant best practice to bring the
best of life to our residents.
During 2023 we opened three village
centre buildings in our Kenepuru,
Bell Block and Te Awa villages, which
in addition to a range of beautiful
village amenities also contain our
serviced apartments and state-of-
the-art care and memory care
centres. These new facilities have
allowed us to develop new initiatives
in our continuum of care offering
in those villages, including the
introduction of care apartments.
Our care apartments are certified
to provide care to residents right
up to hospital-level which means
that residents can purchase a care
apartment and can remain in their
home even if their needs change.
families when we close a care
centre in order to upgrade it, and
our team worked very closely with
them to ensure minimal disruption
in moving to alternative temporary
or permanent accommodation while
this work was undertaken. Where
possible we’ve given our residents
the opportunity to move into another
Summerset care centre if they’d like
to, and for our Trentham residents
we have temporarily leased Kelvin
House, a facility eight kilometres
down the road where they can
receive care while their homes are
refurbished. This has also allowed us
to keep our staff with us and provide
continuity of care.
It also gives couples the ability to
remain in the same home even if they
have different care needs. Our care
apartments have been very popular
and are selling very well.
We are also investing in equipment
and technology to make our care
residents more comfortable and
to maximise the effectiveness of
their care.
In the care centres, we have
commenced a move to a household
model approach, creating smaller,
family grouping sized environments
which help to grow relationships and
create a sense of home.
We continue to focus on providing
high-quality aged care for our
residents already living in our care
facilities, and offering an ongoing
continuum of care with guaranteed
priority placement for our village
residents. Our care business saw
occupancy rates this year at 93% in
our developed villages.
In addition to investing in new
care facilities in new villages we
are committed to progressively
upgrading our older care centres.
Our care centre refurbishment
programme has progressed well
at our Havelock North, Trentham
and Levin villages, where extensive
refurbishment work at all three
villages is underway to modernise
these facilities and meet the needs
and expectations of our care
residents and their families.
This year we’ve commenced
installing ceiling hoists above beds
in all our care centres to aid residents
with mobility difficulties. The ceiling
hoists are far more comfortable, and
residents tell us they feel safer than
the manual hoists. They’re also easier
to operate for our staff and reduce
the risk of strains when assisting a
resident to move.
We have also completed a
successful pilot of the app version of
our resident and care management
software. The app allows staff to
enter resident care information at
the time the care is delivered, with
the benefit of saving staff valuable
time to spend with residents directly,
and also ensuring that the resident
information is shared efficiently
and effectively among care team
members. We will be rolling this out
to all our care centres in 2024.
Older people continue to enter aged
care services with complex health
and support needs and deserve
excellence in clinical care from
appropriately skilled staff.
We recognise that it is not always
easy on our residents and their
Alongside continuing our work with
medication optimisation we have
23
Annual Report 2023
24
focussed on falls prevention and
management. For older people it
is important to balance the risk
of harm alongside enabling their
independence and participation in
activities. Best practice informs us of
the need to reduce loss of muscle
for older people and maximise
bone health. We have focussed on
boosting prescription of vitamin D
for residents, and boosting protein
and calcium in food offerings. These
initiatives are delivering positive
results for residents in relation to
harm from falls and unintended
weight loss.
Sector funding
Summerset, and many other aged
care sector operators, continue to be
very concerned about underfunding
in the wider aged care sector. The
population of New Zealanders over
85 is set to triple over the next
25 years, and estimates indicate
that at least another 40,000 aged
residential care beds, including
those providing hospital-level care,
will be needed.
Instead of the necessary growth,
underfunding contributed to 1,000
aged care beds being permanently
closed across New Zealand in the
past year, and with nowhere else to
go our elderly will fall back on the
public health system.
Successive governments have failed
to invest in aged care, and the
sector has become unsustainable.
The former government made some
changes in the year: increasing
the funding to aged care facilities
with a lift in remuneration for aged
care nurses to reduce the pay gap
compared to public hospital nurses,
and a five percent cost pressures
increase which was added to the
funding for nurses.
These increases were collectively
expected to be 11%, and while
that was a meaningful change, it
only largely covers the inflationary
pressures operators have faced over
the last 12 months and does not
address the systemic pressures the
sector is under.
Also, while the nursing pay disparity
was reduced, it was only a temporary
change as Te Whatu Ora also
increased pay for public sector
nurses last year. Nurses in the
public sector continue to be paid
significantly more than aged care
nurses and this only increases
the challenges for the sector to
attract people. It’s estimated that
there are more than 1,200 nursing
vacancies in the sector (nearly 25%
of nurses required).
We continue to support the New
Zealand Aged Care Association
(NZACA) in their work to highlight the
underfunding of aged care. This year
NZACA ran a compelling campaign
highlighting this risk, called the
Domino Effect. Without aged care
beds, more elderly New Zealanders
will end up in hospital beds which will
impact all New Zealanders who need
hospital care.
Not only that, the cost of providing
a hospital bed is $1,700 a day,
four-and-a-half times the break-even
cost of providing an aged care bed
at $372. At the moment providers
receive approximately $170 per day
for an aged care bed, far below
what they need and it means small
providers are closing their doors.
Our message is clear - the current
situation is not sustainable, nor
is it fair to New Zealanders
and we’ll continue to advocate
with health officials for a more
equitable outcome.
Regulatory environment
We welcomed the review of the
Retirement Villages Act 2003 led by
the Ministry of Housing and Urban
Development (MHUD). In August,
MHUD released a public discussion
paper seeking views on a number of
proposed changes to the Act.
As in every industry around the
country there are a range of
practices between the different
operators in the retirement village
sector and some have terms that are
fairer than others. We welcome these
reviews, especially where it requires
operators to raise the bar if they are
not already doing so.
Summerset is broadly aligned with
the proposed changes from MHUD
and we do not engage in the
vast majority of the practices the
review is seeking feedback on.
For instance we do not charge
weekly fees after our residents have
vacated their units, we don’t charge
additional fees for maintenance or
repairs and our advertising does
not guarantee services which are
subject to availability.
We have developed plain English,
clear and fair contract terms and
conditions for our residents. We work
hard to make sure people joining
our villages around the country have
easy-to-understand contracts and,
of course, all residents must get
independent legal advice before
they join one of our villages.
Lifting our profile
In New Zealand, the retirement
village sector is a highly competitive
environment, with 2023 being the
most competitive we’ve seen in
media investment across the main
players in the sector.
Despite this heightened activity
our independent research shows
that Summerset has continued to
hold the number one position
for consideration amongst our
core audience. This means that
Summerset is not only top of
mind for our audience, but also a
brand of choice when making the
decision to move into a retirement
village community.
We pride ourselves on being one of
the best performing in the sector
in converting advertising spend into
leads for our sales team. This year we
have seen 22% year-on-year growth
OUR PEOPLE AND COMMUNITY
Bringing vibrant experiences to our residents with the Silver Ferns
in lead generation to support our
sales pipeline.
round series over five months and
commenced in November 2023.
Ahead of the opening of our
Cranbourne North village in
Australia, we began marketing in
the local media and via community
engagement activity to tell our local
target audience who we are, our
depth of experience and what we
have to offer. We will grow both
our brand and presence as we
open more villages and expand our
Australian footprint.
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.
In October we announced our
relationship as naming rights
partner for the GT New Zealand
Championship, the premiere
motorsport class in New Zealand.
As a brand that is about retirement
being a time for new adventures
and the freedom to pursue hobbies
and passions, partnering with
motorsport was a perfect fit. The
2023/24 Summerset New Zealand
Championship consists of a five-
We provided our continued
support through partnerships with
organisations in key areas that are
important to our residents and
their families:
• Netball NZ – We had an
active and vibrant programme
throughout the year, including
hosting Silver Fern fan
engagement events in our
villages. We also hosted game-
day match experiences and held
a competition with the prize of
seeing the Silver Ferns playing
in Melbourne.
• Wellington Free Ambulance –
In addition to kick-starting
the annual appeal drive for
Onesie Day with a $50,000
donation, our Wellington region
village residents and staff,
along with our head office
teams, again supported the
appeal by volunteering to
be street collectors and
holding fundraising events to
support this much valued
regional service.
• Hato Hone St Johns
25
◦ We proudly support Hato
Hone St Johns Therapy
Pets. This popular community
programme aims to grow
and broaden its reach to
bring animal companions
to villages, rest homes,
bedsides and classrooms
around the country. The
visits from the therapy pets
are extremely popular at
our villages.
◦ We also support Hato
Hone St John staff welfare
initiatives and community
health programmes, and this
year we also saw our villages
getting behind the annual
appeal through a range of
fundraising activites
• Alzheimer’s NZ & Dementia
NZ – We believe in the work
Alzheimer’s NZ and Dementia
NZ do in diminishing the
stigma and increasing the
education around dementia. In
recognising September’s World
Alzheimer’s Month, we held a
dance challenge in our villages
Annual Report 2023
26
Summerset Avonhead winners of the Applause Awards Care Centre of the Year 2022, received by Care Centre Manager
Raphelle Yabyabin
•
called “Boogie for Dementia”, to
not only raise awareness but
also get our residents moving
to improve their mental and
physical wellbeing.
Bowls NZ – Our partnership
with Bowls NZ continues to
go from strength to strength
with the excellent exposure at
national and local level through
championship events.
• New Zealand Symphony
Orchestra – We enjoy being able
to bring cultural and enriching
experiences to our residents.
In addition to having in-village
performances by small groups
from the orchestra, we were
also able to offer exclusive
behind-the-scenes experiences
this year, including attending
live rehearsals and meeting
the musicians.
We also like to give back to our local
communities where our villages
are and will be in the future.
Over the year we worked with
approximately 202 local community
clubs and organisations, including
bowls, golf, bridge and croquet
clubs, Age Concern, Lions, Rotary,
RSAs and more.
Engaging our people
Our people are exceptional and
valued - without them we couldn’t
deliver a quality retirement living
experience to the more than
8,000 residents who have made
Summerset their home.
We strive to ensure we create a
great place for them to work and
thrive, and we are committed to the
protection and promotion of their
health and wellbeing so they can
be at their best both at home and
at work.
Our wellbeing programme provides
an intranet hub with support
tools that sit alongside a calendar
of regular communications on
wellbeing initiatives, spanning
physical, mental and financial health.
During the year we changed our
Employee Assistance Programme
(EAP) provider as we seek to evolve
our offering to our people and
better ensure they have the support
available to them if they need it.
Recognising and celebrating
the dedication, commitment
and successes of our people
demonstrates how we, and our
residents, value them. We celebrate
their exceptional hard work at our
annual Applause Awards, which this
year had a record of more than
1,500 nominations received across
34 categories.
Held in Auckland, our Applause
Awards event, with 135 finalists in
attendance, was a great occasion
to celebrate our people. It was
also a highlight to be able to live-
stream the awards, meaning that
fellow staff and residents could
cheer on their finalists and celebrate
alongside them.
In addition to those awards, and
to allow our hardworking staff
the opportunity to be recognised
more regularly, we introduced the
Surprise and Delight monthly staff
recognition programme to support
staff to nominate their peers for their
exceptional day-to-day successes
and achievements.
OUR PEOPLE AND COMMUNITY
To increase engagement with our
village and frontline staff, we
completed a rollout of our digital
signage platform, Vibe, in all our
village staffrooms to better enable
us to communicate with those staff
who are often not at a computer
to get information they may need,
whether it’s a village-specific notice
or a national update.
We also recognised that the cost
of living was impacting our people
across the country and gifted 65% of
our 2,500 staff a one-off payment
of $250 to help with larger than
expected bills or other necessities.
We targeted the payment to those
staff we identified as needing it
the most in order to give them a
meaningful amount.
We were pleased to see our work
to engage our people reflected in
our latest employee survey which
returned our highest engagement
score to date at 8.1.
Attracting and retaining talent
Now, some 18 months on from
the reopening of our borders since
COVID-19 restrictions, attracting
talent in a highly competitive market
continues to be challenging. This is
difficult particularly in nursing and
construction professions.
Employee benefits provide an
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 continue to enhance
our offering and look to improve
our engagement with staff through
benefits such as enhancing
our parental leave offering. All
permanent Summerset staff are
offered free health insurance and
can receive an annual $1,000 in
Summerset shares – two benefits
which our people value highly.
Providing leadership
and development
pathways is important
to us in both
attracting and retaining
our people.
Our Construction Management
Cadet programme offers a pathway
for motivated people to get hands-
on, practical experience across a
range of construction disciplines.
After a minimum two years of
work our successful management
cadets graduate to be fully trained
site supervisors or junior quantity
surveyors. We commenced this
programme four years ago with
one cadet in Christchurch and now
have six around the country. They
are important roles for Summerset
to create a talent pathway and
to give talented and enthusiastic
construction workers opportunities
to progress their careers in a market-
leading organisation.
In our villages we work with
Careerforce to provide learning
modules that upskill our frontline
staff and allow them to increase
their remuneration. Careerforce
now marks all our modules so
our motivated people can learn
and grow.
Similarly, bringing our food services
offering in-house has seen this
side of our business evolve, and
we have created ways to attract
and retain hospitality staff with
career pathways.
While we know there is more to do
we are pleased to see our retention
figures increase four percent against
2022 to 77%.
Building safety into everything
we do
Creating safe work environments for
our people and ensuring that we are
leaders in health and safety is of the
greatest importance to us, and this
year we implemented a new three-
year Health and Safety strategy.
We are also rolling out a new
Health & Safety monitoring system
across the company in early 2024,
Donesafe, allowing us to get even
better at recording and analysing our
incidents, issues and near misses to
continuously improve how we keep
our people safe.
Following the tragic incident at our
St Johns site in November last
year, where scaffolding contractor
Michael Noche lost his life, Worksafe
completed their investigation and
advised us that they were not taking
any action against Summerset. This
outcome is welcome; however,
we also haven't lost sight of
the fact that this was a tragedy.
We are committed to continuous
improvement and undertook our
own investigations into where
improvements could be made.
Michael was working on what is
called a ‘temporary works’ structure,
and since the incident we have
made a number of process and
procedural improvements to make
our people as safe as possible
on these structures. Summerset is
leading an industry working group to
look at what can be done to make
these even safer for all construction
workers and we will be engaging
with leading engineers.
27
Annual Report 2023
Staff engagement1
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
Workplace injury rates (Summerset Group)
Our commitment to diversity
and inclusion
At Summerset we celebrate diversity
in all its forms and we are committed
to an inclusive culture where
everyone feels a sense of equity,
inclusion and belonging at work.
We believe it’s
important to support
our leaders to
effectively lead their
increasingly diverse
and multi-cultural
teams, and one way
we have done this is
delivery of our Creating
an Inclusive Workplace
training programme
for managers.
The programme equips our leaders
to deepen their understanding of
others and create an inclusive
team environment where all
team members feel valued and
appreciated, and can contribute
to bringing the best of life to
our residents.
This year we have also actively
supported employee representative
groups, including the establishment
of the Summerset Pride Network
and the continuing work of our
Women in Construction Forum. We
aim to seek equity and inclusion
through building awareness of
the challenges, celebrating the
successes, and supporting the ideas
of these groups.
Percentage (%)Peakon53%53%67%67%69%69%67%67%7.77.77.87.87.77.77.87.88.18.1Past survey providerPeakon2016201720182019201920202021202220230102030405060700510Percentage (%)74%74%79%79%82%82%75%75%73%73%77%77%2018201920202021202220230204060801002.522.522.152.152.732.734.254.254.534.533.673.672.152.155.625.624.614.615.055.056.226.226.216.214.924.923.693.69Recordable injury frequency rateLost-time injury frequency rate201720182019202020212022202301234567 OUR PEOPLE AND COMMUNITY
29
Annmaree Kane, Quantity Surveyor Administrator based at our Papamoa Site, a finalist for a NAWIC (National Association of Women
in Construction) 2023 Excellence Award
Annual Report 2023
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+
30
Per annum New Zealand population growth 75+
Source: Statistics New Zealand – National Population Projections
Percentage (%)New Zealand population 75+(left axis)% population 75+(right axis)20022007201220162021202320282033203820432048205320582063206820730200,000400,000600,000800,0001,000,0001,200,0000369121518New Zealand population 75+per annum growth1997–20022002–20072007–20122012–20162016–20202020–20232023–20282028–20332033–20382038–20432043–20482048–20532053–20582058-20632063–20682068–207305,00010,00015,00020,00025,00030,000
STRONG WAVE OF GROWTH
31
Annual Report 2023
32
OUR VILLAGES
Our villages
Despite a challenging start to the year with
inflationary pressures and a volatile property
market we have seen record sales and demand
for our retirement living offering.
33
In 2023 our build programme
has continued to perform, and
we’ve delivered homes across
New Zealand as well as our first
Australian retirement homes. Even
in an economic downturn we saw
increased demand and interest,
because our residents are motivated
by many factors when deciding to
live in a retirement village – a desire
for more community, security, health
changes, lifestyle and much more.
Record levels of interest
We experienced record levels of
demand in our developing villages
with record sales settlements
and very strong presales. Our
development pipeline remains
strong to meet the growth of
demand for our retirement living
offering around the country.
It was a very busy year for our
sales teams with four new villages
welcoming their first residents
in 2023 – Cambridge in March,
Boulcott in August, Waikanae in
October, and Milldale in December.
All four new villages have sold
consistently well since opening,
particuarly Cambridge, achieving 30
settlements in 2023, followed by
Waikanae with 11 settlements.
With the completion of main
buildings at our Bell Block and
Te Awa villages, we were also
able to welcome residents into
serviced apartments, care centres
and memory care centres in
those villages.
Presales commenced for our
Blenheim village, with first residents
to move in early 2024. Our multi-
storey St Johns village in the heart of
Auckland has seen strong demand
and presales.
We also continued to generate
record levels of interest with strong
waitlists at our completed villages
throughout the country. Our resale
villages have very strong demand
with Whanganui, Dunedin and
Napier in particular seeing strong
levels of enquiry.
While demand has been high and
sales strong, we were mindful that
cost of living pressures and the
slowdown in the residential property
market had the potential to delay
settlement times and move-in dates
for some prospective residents. In
response, we were able to provide
comfort to those considering
coming into a Summerset village
with a Moving Made Easy package at
selected villages, offering six months
to sell their home (double our
standard offer), six months waiver of
weekly fees, a contribution towards
legal costs and a moving package.
To further support and encourage
people considering one of our
villages, we continue to grow
our in-house moving services to
support residents moving into our
villages. We are the only retirement
village provider offering this in-
house service. The response has
been so overwhelmingly positive
we now have moving specialists
based at key regions – Auckland,
Hamilton, Hawke's Bay, Wellington
and Christchurch, while also
servicing our New Plymouth and Bay
of Plenty villages.
To support prospective residents
to prepare for their next step
towards retirement village living, we
have delivered highly successful
downsizing and decluttering
seminars. We have also added real
estate seminars, partnering with
local agencies to provide their
expertise and insights, to assist
not only our prospective residents,
but also members of community
clubs and groups to understand
the current property market. These
events have been very well attended,
and valued.
We pride ourselves on our ability to
listen, understand and be flexible to
meet the needs of our prospective
and existing residents, allowing us to
continue to innovate our customer
service to help people make what
can be challenging choices about
their retirement years.
Annual Report 2023
Outdoor and green spaces like this one at Summerset at Monterey Park, Hobsonville, are important to residents
34
Strength in our
building programme
We have invested approximately
$500 million into our build
programme this year, and we remain
the largest constructor in the New
Zealand retirement village sector.
Once again, we have successfully
met our annual New Zealand build
target, delivering 633 units to be sold
under occupation right agreements.
Our ability to deliver year-on-year
ensures we are well positioned to
meet ongoing increases in sector
demand and we expect to deliver
675–725 homes in FY24.
All our villages under construction
met their year-end delivery targets.
There are a number of reasons
for this achievement, including
robust procurement, planning
and consenting processes, and
designing most of the villages in-
house. We also have long-standing
and reliable supply agreements
that have enabled us to secure
materials well in advance, and
after supply chain constraints
experienced during COVID-19, we
are pleased to see timber and
steel commodity pricing beginning
to ease.
We have a very mature procurement
programme and function, which
has seen us through difficult and
uncertain times, and our team
were announced as finalists in two
categories – Most Effective Team
of the Year, and Transformation of
the Year – in the New Zealand
Procurement Excellence Forum’s
2023 Awards.
Our construction teams were
simultaneously building on 17 sites
this year, including completing our
main buildings at Bell Block, and
Te Awa.
Our main buildings not only provide
village residents with an array of
amenities, but also contain our
world-class care and memory care
centres. During 2023 we also
handed over the first homes at
our Cambridge, Boulcott, Waikanae,
Milldale and Blenheim villages,
and completed our Kenepuru and
Hobsonville villages.
Work at our St Johns village has
gone very well and four of the
seven multi-level buildings will open
as a grand Stage 1 later in 2024,
comprising the main building, care
centre and 60% of all dwellings.
At our broadacre sites we take a
more staged approach, releasing
smaller quantities of new homes
as they’re built. St Johns has up to
300 subcontractors working onsite
at any one time and it’s a testament
to our team’s planning and capability
that we have continued to hit our
deadlines and this great village is
quickly taking shape.
The incredible views and location
of the St Johns village, as well
as the promised community and
amenities we’re creating there, have
led to extremely strong presales
activity with many of the penthouse
and premium apartments already
presold. When settled these will be
among the most valuable retirement
village homes in the country.
OUR VILLAGES
Summerset Palms village centre which opened in November 2023
35
Commitment to vibrancy
and innovation
Bringing the best of life to our
residents requires us to build vibrant
villages with superior amenities that
meet the expectations of our current
residents and consider the future
needs of our prospective residents.
Each village is designed with
consideration to its unique
surroundings, creating great indoor
and outdoor spaces and features
for our residents, their families and
friends to enjoy.
Residents have told us they want
more options and we're looking at
how we can incorporate additions
such as outdoor BBQ areas, winter
gardens, indoor/outdoor golf ranges
and children’s playgrounds in future
designs. This year our Te Awa
village residents enjoyed our first
installation of a pétanque piste.
We have commenced a redesign of
our regional main buildings (RMBs)
which are the heart of our villages
containing resident amenities, and
care and memory care centres.
The new buildings will be more
contemporary in architecture and
will be two storeys rather than
three in our current design, with
more flexible and scalable spaces
that can be adapted to various
uses such as private functions and
family gatherings. In supporting our
residents to enjoy social, active
and healthy lifestyles there will be
an increased emphasis on outdoor
leisure and activities.
Amenities on offer will match those
of the existing main buildings,
such as pools, libraries, cafes and
more but the buildings will be
smaller overall in keeping with our
aim to rationalise the scale of
our care offering – ensuring we
continue to meet the continuum
of care requirements of our village
residents. Larger care centres
capable of accommodating people
from outside the village are no longer
economic to operate under the
current government funding model.
For smaller areas or towns, we
have designed a single-storey main
building, and the first of these
provincial main buildings (PMBs) will
be built at our Blenheim village. Our
PMBs are designed to be modular,
allowing us to add or reduce different
elements as needed, or as the area
demands. For instance, we may not
include memory care in all locations
initially, but the PMB design means
we can add that in the future should
we want to.
Also boasting contemporary
architectural design and a high-
specification build, the PMB will have
the added benefit of being delivered
faster to residents. PMBs will also be
more in keeping with the areas they
are located in where large two-storey
buildings are less common in the
local environment.
The largest land bank in the sector
We continue to find quality sites
to grow our business where
we’ll be able to introduce more
New Zealanders to our retirement
village lifestyle.
In New Zealand we were pleased to
announce two new land acquisitions
at Mosgiel (Dunedin) and Rolleston
(Christchurch). Both sites are well
appointed with excellent local
Annual Report 2023
36
amenities available to residents,
and make strong additions to our
land bank.
The site in Mosgiel will complement
our existing Dunedin village and
offer access to a high level of
amenities and recreational and open
space areas.
Rolleston is predicted by Statistics
New Zealand to have the highest
population growth in New Zealand
over the next 30 years. Rolleston’s
attractiveness is driven by its easy
access to Christchurch, and position
as the primary satellite town for the
Selwyn District. The site is our sixth in
the Canterbury region.
The new sites will each offer over
300 units and further boost our land
bank of units, the largest in New
Zealand’s retirement village sector.
We have enough secured land to
more than double the size of our
current New Zealand business.
First deliveries from these sites are
expected from FY26 onwards.
Earlier in the year, we gained consent
for our Half Moon Bay development
in east Auckland and construction
will commence in 2024. We have
also gained resource consent for
our Kelvin Grove (Palmerston North)
village, resource consent for a
premium extension to the St Johns
village, and we received the Minister
for the Environment's referral to
use the fast-track consenting
process for our Rotorua village.
A resource consent application is
currently being processed for the
Masterton village.
We also completed a strategic
review of our land portfolio and
decided to sell our Parnell site.
Despite being consented and
promising very good long-term
returns, we elected to balance the
portfolio and prudently manage
our capital demands with a higher
weight of more regional villages with
short cash recycling profiles.
We are proud to be providing
high quality homes at reasonable
prices for retirees, and we have
the capacity, the consents, and the
development capability to continue
to do so.
Australia expansion progresses
We achieved a major milestone in
our Australian build programme this
year completing the first stage of
villas at our Cranbourne North village
and look forward to welcoming
our first Australian residents to
the Summerset community in
early 2024.
Cranbourne North was our first site
to be consented and commence
construction in Australia. The
second stage of the development
is progressing well, and work will
commence on the village’s main
building in 2024. With the delivery
of these first units our team has also
expanded as we appointed our first
Village Manager and Sales Manager
in Australia.
Once complete, the village will
provide a variety of purpose-built
homes including two- and three-
bedroom independent living villas
and townhouses, as well as serviced
apartments for residents requiring
extra support. There will also be
extensive recreational amenities and
aged care onsite, offering options
for residents in our aged care or
memory care facility.
Enablement works are underway
and construction will begin shortly
at our Chirnside Park site. In
November we held a traditional
Smoking Ceremony at the site,
performed by local Wurundjeri
elders (the traditional owners of
the land), a significant Aboriginal
custom that cleanses places and
people of bad sprits, to promote the
wellbeing of our people and guests
in attendance.
At the end of June, we were very
pleased to receive consent for our
Oakleigh South site from Victoria’s
City of Monash Council and will
begin construction early in 2024. The
Oakleigh South site is our first inner
suburban approval for a boutique
medium-density village, and it is
important to note that the upfront
funding required to build this village
is similar to our broadacre village
model. We undertook extensive
community engagement to ensure
we developed a proposal that
met the community needs and
expectations and were pleased
of the local community support
we received.
Our Cragieburn site achieved
consent in January 2024 with the
Hume City Council approving the
Planning Permit Application.
Planning processes are continuing
well at our three other Victoria sites
at Torquay, Mernda and Drysdale,
as we build a strong land bank
and have a high percentage of
our sites consented to provide
our build programme with the
flexibility required as demand and
supply necessitates.
Australia offers huge
growth opportunities
for us and we’re
very pleased with
the progress we
have made there.
We’re looking forward
to delivering more
homes and villages
in the coming
years, and we have
begun the process
of looking beyond
Victoria as part of our
expansion strategy.
OUR VILLAGES
Staff and guests celebrating the sod turning and smoking ceremony at our second Australia site, Chirnside Park
We will seek to grow our land bank in
Victoria, but in parallel to this growth
we have started to investigate
opportunities in Queensland, as we
believe it is the next logical step in
expanding our Australian operations.
Queensland appeals as it has
supportive residential house
prices and strong forecast
population growth. The state
also has a favourable lifestyle
appeal to our target audience
and is supported by excellent
economic growth prospects and
development opportunities.
Building our land bank in
Queensland also provides us
with greater diversity in our
portfolio and ability to adjust
our Australian build programme
based on market conditions, similar
to our development approach in
New Zealand.
Australian Reconciliation
Action Plan
Summerset is founded on a deep
respect for people, striving to be
the best and bringing the best
of life. As our business develops
in Australia, we recognise the
importance of taking affirmative
action towards reconciliation efforts,
and we wanted to acknowledge the
enduring connection of Aboriginal
and Torres Strait Islander peoples
to the land over tens of thousands
of years.
We initiated a Reflect Reconciliation
Action Plan (Reflect RAP) as our first
step towards supporting the self-
determination and recognition of
Aboriginal and Torres Strait Islander
peoples, and this has now been
formally endorsed by Reconciliation
Australia. With our current and
future team, we aim to embrace
diversity, cultivate an inclusive
work environment, and enrich our
business with the knowledge to
champion reconciliation efforts.
As Summerset grows, our
villages will become home to
thousands of older Australians and
workplaces for hundreds, fostering
diverse communities.
We crafted our Reflect RAP
to promote education and
cultural awareness in our villages,
empowering both residents and
37
employees to participate in
reconciliation events. Additionally,
it supports our efforts to establish
meaningful relationships with First
Australian businesses and local
communities, actively supporting
endeavours for reconciliation.
Throughout the plan's development,
we partnered with a local Victorian
artist Sam Richards from the
Wurundjeri and Dja Dja Wurrung
people. The beautiful artwork
she has created, unveiled at
our Chirnside Park Smoking
Ceremony, embodies our core
values of Bringing the best of life,
Strong enough to care, and One
team, and symbolises Summerset
communities, illustrating staff
and residents coming together
to share knowledge, strengths,
and experiences.
Annual Report 2023
38
11Our villagesCompleted villagesIn developmentProposed villagesAuckland Region5211NorthlandWaikato3111TaranakiHawke’s Bay31Manawatū – WhanganuiWellington Region421MarlboroughCanterbury1Otago31Bay of Plenty1111Nelson – Tasman111123 OUR VILLAGES
39
Bay of PlentyPORTPHILLIPBASS STRAITVictoria52GreaterGeelongWesternMelbourneNorth EasternMelbourneEasternMelbourneSouthern MelbourneFranskton-MorningtonBaysideChirnside ParkCraigieburnCranbourne NorthOakleigh SouthMerndaMELBOURNETorquayDrysdaleWESTERN AUSTRALIA Annual Report 2023
Our pipeline
40
NEW ZEALAND LAND BANKDESIGNCONSENTINGCONSTRUCTIONVILLAGE OPENFINAL STAGESBell Block, New PlymouthCasebrook, ChristchurchTe Awa, NapierBlenheim, MarlboroughCambridge, WaikatoLower Hutt, WellingtonMilldale, AucklandPāpāmoa Beach, TaurangaPrebbleton, CanterburyRichmond, TasmanWaikanae, KāpitiWhangārei, NorthlandRangiora, CanterburySt Johns, AucklandHalf Moon Bay, AucklandFairy Springs, RotoruaKelvin Grove, Palmerston NorthLansdowne, MastertonMosgiel, Dunedin*Rolleston, Christchurch** New sites purchased OUR VILLAGES
41
Construction work at our first Australian village, Summerset Cranbourne NorthAUSTRALIAN LAND BANK DESIGN CONSENTINGCONSTRUCTIONVILLAGE OPENFINAL STAGESCranbourne North, MelbourneChirnside Park, MelbourneCraigieburn, MelbourneOakleigh South, MelbourneTorquay, VictoriaMernda, MelbourneDrysdale, Victoria Annual Report 2023
42
EMBEDDING SUSTAINABILITY
Embedding
sustainability
We are committed to our sustainability goals
and in everything we do aim to be a good
corporate citizen. In 2023 we took further
steps to embed sustainability and sustainable
practices across our business.
43
We have also taken further steps
to enhance our reporting to give
our staff, residents, shareholders
and other interested stakeholders an
understanding of our sustainability
performance and activities.
In May 2023 we released our
Sustainability Review FY18–22 which
documented the first five years
of our sustainability journey since
we began measuring our impacts
in 2017. This was our first steps
into ESG (environmental, social
and governance) reporting, and
shows how we are contributing and
working to have an impact beyond
just the environmental aspects of
our operations.
In 2023 the government legislated
new disclosure requirements for
large listed companies to outline the
potential negative impacts and risks
of climate change on business and
society, and how we will mitigate and
adapt to the effects.
Alongside this Annual Report we
have released our Sustainability
Review and Climate-Related
Disclosures FY23 document which
includes our mandatory climate
disclosures. We believe the new
disclosures are a positive step in
transparent reporting.
Below we have provided a
high-level update on our
sustainability activities with more
detailed information available in
the Sustainability Review. Our
Sustainability Review and Climate-
related Disclosures FY23 report
is available on the Summerset
website at www.summerset.co.nz/
investor-centre/esg-reporting/.
We were very pleased to be again
recognised by Forsyth Barr in their
second Carbon and ESG Ratings for
NZX-listed companies. We retained
our place at 11th, and were noted
by Forsyth Barr as a "leader"
among NZX-listed companies. We
were also the highest-rated listed
retirement village operator. External
acknowledgement of our work is
very pleasing and helps validate our
approach to date.
Environment
Summerset has made a number of
changes to mitigate and reduce our
environmental impact.
Across our villages, construction
sites and offices we have focused
on waste minimisation, carbon
emissions reductions through our
decarbonisation programme and
operational efficiencies, working to
determine how and where we use
water, and protecting and enhancing
our biodiversity efforts.
Our efforts have been recognised
externally and in 2023 we won two
sustainability awards.
We won a Construction Sector
Beacon Award for our entry titled
“Building out Waste by Thinking
Green”. The Beacons identify
instances of excellence within
the construction industry, offering
valuable lessons and examples for
other companies to follow.
The panel of judges said our entry
showed, “A strong example not only
of collaboration but of sharing and
educating with the wider network for
broader outcomes. A shining
Annual Report 2023
44
Purchases goods and services 14%Resident electricity 1%Employee commuting 3%Capital goods 78%Fertiliser 0.002%Paper 0.018%Travel 1%Losses 0.199%Waste 0.447%Common electricity 0.016%Gas 2%0%25%50%75%100%Percentage of waste55%31%45%69%Diverted202120222023Emissions by sourceConstruction waste diversion progressFull value chain emissions by sourceScope 1, 2 and selected operational emissions45%55% EMBEDDING SUSTAINABILITY
example of how to embed learning
across a site and empower people to
challenge others' practices for the
betterment of all.”
process. Materials like timber create
a lot less embodied carbon than
concrete, for example, during the
building process.
As well as our construction waste
avoidance we have worked hard to
reduce the impact of our existing
villages with LED light replacement
programmes, installation of electric
vehicle (EV) charging points and
working with residents to reduce
and recycle their waste. Residents
across New Zealand have worked
with us on many projects to reduce,
reuse and recycle where they can,
including taking part in NZ Recycling
Week to learn more about how
they can minimise waste and be
more sustainable.
Think Green was
recognised in
the Retirement
Village Association’s
Sustainability Awards
where we won the
Best Operator-led
Sustainability initiative
Award for our work
over the last five
years to reduce our
carbon emissions.
The judges for this award said
they were impressed with how
much we’d learned, how we had
embedded sustainability across the
organisation, how we have taken
residents on the journey with us, and
our commitment to do more.
We know this is the beginning and
we have more to do. As a business
we’re also looking at how we can
decrease our embodied carbon.
This is the carbon that is used
and created in the construction
We have measured the embodied
carbon of two of our key housing
types – our Louisville and our stand-
alone villas which are at many of our
sites. We will use this information
to form a baseline figure we can
compare against and to help us
refine future designs and reduce
the embodied carbon found in
these homes.
As our understanding and work
around sustainability matures, we
want to look at what materials and
other aspects of our operations
we could change to lessen our
longer-term impacts. This might
mean designing out unnecessary
materials or activities, or removing
or phasing out assets that create
emissions, prioritising the use
of energy-efficient equipment or
renewable energy sources, or
choosing materials that have a
longer life cycle, or can be reused
or recycled at end of life.
Water consumption is another focus
for us in the coming years. We
installed water meters at a number
of villages this year and they’re
already providing us with a better
level of understanding of our usage
at village level in the areas of care,
grounds and independent living
residents. Over the next 12 months
we’ll look at how we can make water
savings across the villages.
For more information on our
environmental impact and work see
page 8 of our Sustainability Review
and Climate-related Disclosures
FY23 report.
Social
As a retirement village operator,
it is our impact on our residents,
staff and communities that most
defines us.
This is why one of our three
sustainability goals is focused on
creating caring communities for our
residents and employees.
Summerset supports causes,
charities and organisations that
resonate with our residents and are
part of the local communities of
our villages, including Netball New
Zealand, Hato Hone St John Therapy
Pets, golf clubs, Rotary and more.
As well as the more
than 190 organisations we
support throughout New Zealand,
Summerset's villages and
construction sites play a large part
in the communities they're located
in, employing hundreds of people,
supporting local businesses and
providing high-quality, affordable
homes, which frees up housing
stock elsewhere.
One of our strategic goals is to
“Invest in our people”. We do
this by providing a supportive and
encouraging workplace where they
can grow their careers. We also
want them to be at their best
both at work and at home so we
support our staff’s wellbeing with our
wellbeing hub, encouraging them to
be their full selves in the workplace
with cultural celebrations and
employee representative groups
like our Pride Network. Summerset
managers have also received
Diversity & Inclusion and mental
health awareness training.
Summerset also provides care and
memory care beds across the
country to not only provide peace of
mind to our residents that they can
access help if their needs change,
but to provide a supportive, dignified
and enjoyable care experience for
them and their family.
While Summerset is committed
to providing aged care, and can
continue to do so, it is getting
very difficult for smaller providers
to continue operating due to
inadequate funding. Summerset,
along with a number of other aged
care providers, supported the New
Zealand Aged Care Association’s
45
Annual Report 2023
Domino Effect campaign this year to
highlight the effects that a lack of
aged care beds has on the wider
health system.
With aged care beds closing around
the country it will mean that more
elderly people will need to be
cared for in hospitals, reducing
the capacity for other people to
receive much needed health care.
We continue to advocate for our
industry so we can all continue the
important work of aged care across
New Zealand.
For more information on our social
impact and work, see page 12 of our
Sustainability Review and Climate-
related Disclosures FY23 report.
Governance
To ensure we remain on track
and meet our ambitious goals,
strong governance and oversight
is essential.
Summerset has a Sustainability
Forum made up of executives, senior
managers and other critical staff
who are responsible for leadership,
coordination and advice on our
sustainability initiatives.
This team is overseen by the
Summerset Board who receive six-
monthly updates and reporting
against our sustainability strategy.
In addition Summerset’s Executive
team are responsible for delivering
sustainability projects in their
business units.
For more information on our
sustainability governance see page
16 of our Sustainability review
and Climate-related Disclosures
FY23 report.
Our emissions profile
Summerset’s total emissions in
2023 were 102,926 tCO2e, which
is an increase from our 2017 base
year (5,381 tCO2e1). As Summerset’s
portfolio grows and the number
of villages in operation increases,
our scope 1 & 2 carbon emissions
will continue to increase. However,
the growth in emissions per
square metre of developed land
decreased 58% when compared
to our base year of 2017 due to
greater construction, operational
efficiencies and the sourcing of
renewable energy. In 2023 we
disclosed our full value chain scope
3 emissions for the first time,
including category 1 capital goods,
2 purchased goods and services,
and employee commuting category
7. This has resulted in a significant
change to our emissions profile.
With most of our greenhouse gas
emissions now in our value chain,
we started work on establishing
our procurement sustainability
programme to work with our
suppliers to drive down our scope
3 emissions and innovate lower
carbon products and services.
We have commenced our supplier
engagement programme through
national and regional supplier
forums focused on both material
and product suppliers as well as
service providers. We work hard to
build strong relationships with our
suppliers and through this approach
we will successfully encourage
our supply chain to continually
46
Summerset Wigram residents model recycled outfits
1 FY17 has been restated as a result of historical emission factor changes
EMBEDDING SUSTAINABILITY
improve in line with Summerset’s
sustainability strategy ambitions.
Scope 1 & 2 emissions profile
Our new short-term target
As well as being Toitū Envirocare
net carbonzero certified, in 2023
we committed to a new five-year
science-aligned target (baseline year
of 2022) to keep us on track and
ensure we are on the trajectory
needed to be within the 1.5 degrees
of global warming.
After more than achieving our
previous five-year target of a 5%
reduction in carbon emissions
intensity across scopes 1, 2 and
selected 3 per $m of revenue by
2023, our new five-year target of a
34% reduction in emissions intensity
per square metre by 2027 on
baseline year 2022 is more ambitious
and meets the Science Based Target
Initiative target setting criteria.
Continued progress on our
medium-term target
Our medium-term (2028) targets
are based on our sustainability
linked lending facility. We were the
first retirement village operator in
New Zealand to link sustainability
to our funding arrangements, and
during the year further illustrated
our commitment by extending the
facility for a further two years. All our
bank funding is now sustainability-
linked.
Our sustainability-
linked lending allows
us to get favourable
rates by linking
sustainability targets
to our medium-term
business strategy. It is
also a way of keeping us
accountable externally.
Short-term science-aligned target trajectory
47
Note: market-based reporting of scope 2 emissions from FY23
tCO2ekCO2e/m2Scopes 1 & 2Emissions intensity trend (right axis)201720182019202020212022202307501,5002,2503,0003,7504,50002.557.51012.515kCO2e/m26.946.946.466.465.995.995.525.525.055.054.584.58kCO2e per m2Target20222023202420252026202702.557.5 Annual Report 2023
48
Looking South at Waikanae construction site with the mitigation Mahoe planting
Our long-term goals
We introduced our long-term
science-aligned target in late 2020.
This target means we have
committed to reducing our
emissions intensity by 62% per
square metre by 2032, from our 2017
base year.
With electricity use being a key
element of our carbon footprint we
recognise that we will need to move
to more renewable energy sources
to achieve our science-aligned
target. We have taken a number of
steps to start this process, including
the introduction of a biomass boiler
that uses wood pellets, and this
year we’ve successfully introduced
solar panels on the pool house at
our Karaka village, the pool and
gym building at our Manukau village
and on the main building at our
Richmond village.
There are three key deliverables
associated with this arrangement:
ongoing dementia certification and
increasing supply of dementia beds;
reduction in our emissions intensity;
and a reduction in construction
waste going to landfill.
We are very pleased with our
progress – we have done an
excellent job in reducing our
construction waste and all 17 New
Zealand sites we worked on this
year practiced waste avoidance
and onsite source separation.
Since we implemented our site
separation policy in 2021, over 6,000
tonnes of waste has been diverted
from landfill.
Similarly, we met our carbon
emission intensity reduction targets
and we’ve set ambitious goals for the
coming years to reduce further.
We continue to be dementia
accredited and we opened memory
care centres at our Te Awa and
Bell Block villages. We plan to open
more memory care beds in 2024
at Papamoa and St Johns so we
are confident in meeting this target
going forward.
Our Richmond village is
the first to have solar
panels on the main
building and they’re
already seeing savings
in kWh usage and cost
on our electricity bills.
We’ve also scoped solar panels
to be installed at all our future
main buildings, with Whangārei and
Cambridge the first two to be
delivered in the coming years. We
recognise reducing our absolute
emissions is a challenge, particularly
when we’re growing so quickly and
reducing our reliance on the national
grid will help us to achieve this goal.
Other initiatives this year
We continue to replace the
Summerset village fleet with EVs and
we’ve installed more EV charging
points at villages around the country.
We now have nine villages with an
EV available for residents to use as
part of our car sharing programme.
EMBEDDING SUSTAINABILITY
We anticipate a further 10 EVs to be
delivered into villages in 2024.
more people riding to work and living
healthier lives.
Our residents are also keen to help
with sustainability initiatives. At our
Avonhead village we realised that
waste diversion was very low, so staff
and residents worked together on
the barriers that were in place. With
simple changes like more recycling
bins, food collection stations and
more regular waste collections from
our property team, the village was
able to increase their diversion from
15% to 68% in a matter of months.
We worked to educate and engage
our staff about how they can be more
sustainable too – completing our first
commuting survey to understand
how our people get to work and
how we can educate them on
more sustainable travel. Following
this survey, we are investigating
a number of actions including
the implementation of a staff
Workride scheme, an employee
benefit scheme designed to get
We continue to look for
opportunities in our new and existing
villages to increase biodiversity.
At our Waikanae village we replanted
a mahoe forest adjacent to the
village and have seen significant
growth over the past year.
Our commitment to sustainability
extends to our Australian villages
too, with all villages being designed
so they are gas free and 100%
electric. Our Australian villages
will 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. Our Cranbourne
North construction site is part of
our very successful construction
waste avoidance initiative, achieving
landfill diversion rates of above 90%
across the recent reporting period.
We’re very pleased with the work
we’ve done to date, and we remain
committed to leading positive
change within our industry.
As a business we’ll continue our
regular reporting and improving the
activities and initiatives we’re already
undertaking dedicated to ongoing
investigation and experimentation
with new methods and technologies
that will help us in achieving our
sustainability goals and ensure we
continue to advance our corporate
citizenship in both New Zealand
and Australia.
For further information please
see our Sustainability Review and
Climate-related Disclosures FY23
report on the Summerset website
at www.summerset.co.nz/investor-
centre/esg-reporting/.
49
Annual Report 2023
50
Our performanceArtist impression of Summerset Cranbourne North 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 profit for the year ended
31 December 2023 increased by 11%
on the prior year to $190.3 million
(2022: $171.4 million), driven primarily
by record new sales and resales in
the year. New sales increased by
23 units on the prior year (+4%),
while resales increased by 73 on
the prior year (+16%). We maintained
our delivery of units to a similar
rate on prior year of 643 (2022:
625). Realised gains on investment
property are $209.4 million (2022:
$175.1 million). Revenue for the
year grew 14% to $272.2 million
(2022: $238.7 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 slightly on prior year, with
three new care centres opening,
which incur large fixed costs while
occupancy builds up. We continue
to see 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
$121.2 million in 2023 (2022:
$104.9 million). The increase was
driven by higher volume of new
sales on last year (+23 units) and
improving margins from higher sales
prices across the portfolio. The
development margin was 31.6%,
up from 29.7% in the previous
year. We expect that development
margins will be maintained within
the 20–25% range over the
medium term. 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 two new sites in
New Zealand in 2023. These
are Rolleston (Christchurch) and
Mosgiel (Dunedin). This brings our
total land bank to 6,909 units.
Summary of sales
and developments
Summerset had another record
sales year, with 1,103 unit sales of
occupation rights (2022: 1,007), 560
of them new unit sales and 543
sales of existing units. Average gross
proceeds per new sale settlement
of $686,000 was up from $658,000
in 2022 due to higher sales prices
across all product types, in particular
in villa sales, where the average
sale price increased to $843,000
from $730,000 in 2022. Realised
resale gain increased by 26% to
$88.1 million in 2023. Average gross
proceeds per resale settlement were
$587,000, up 5% from 2022. Key
development milestones included
the delivery of the Te Awa, and Bell
Block main buildings along with the
start of construction at two new
villages, Rangiora (Christchurch),
and Blenheim. For developing
villages still under construction, new
unit sales were particularly strong at
Bell Block (Taranaki), Cambridge, and
Te Awa (Hawke’s Bay). In Australia
we delivered our first units at
Cranbourne North, and expect first
residents in March 2024
Net profit after tax
Summerset recorded a net profit
after tax of $436.3 million for the year
ended 31 December 2023, up from
$269.1 million in 2022. This increase
is largely due to the large fair
value recognised in 2023. Fair value
movement in 2023 of $441.6 million
reflects the delivery of retirement
units in the financial year as well as
pricing, the uplift in land bank and
growth rate assumptions.
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
agreements were $104.6 million
in 2023 (2022: $92.3 million). The
growth reflects the increase in
the number, occupancy and value
of Summerset’s portfolio of units.
Underlying profit is a non-GAAP
measure. A detailed explanation
is included in Note 2 to the
Financial Statements (see page 65).
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 payout
to shareholders.
Summerset’s total unit portfolio
reached 7,371 (2022: 6,679), and
at year end there were only 408
new units and 156 resale units
available for sale. Occupancy in our
mature care centres was 93% (2022:
51
Annual Report 2023
Underlying profit
52
Land bank over time (units)
92%), which is above the industry
average of 90%. Total expenses were
managed well, increasing by 17% to
$263.8 million in 2023 (2022:
$225.7 million), mainly driven by the
increased care wage costs at a rate
above the level of public funding
increases, and general cost growth
across head office functions. We
continue to experience growing
employee costs due to tight labour
conditions, higher rates across our
properties and increased insurance
premiums. We incurred $0.5 million
of one-off operational costs due to
the impact of Cyclone Gabrielle.
Net cash from operating activities
Summerset’s net cash from
operating activities was
$398.2 million for the year, up 8%
from 2022 (2022: $369.2 million).
This was principally driven by
increased receipts from residents
but reduced by increased costs
of providing care. Summerset is
a growth company and reinvests
operating cash flows back into
the business to finance future
growth. In 2023 Summerset invested
$668.5 million, primarily in relation
to new and existing retirement
villages and care centres (2022:
$651.7 million).
$ million56.656.681.781.798.698.6106.2106.298.398.3141.1141.1171.4171.4190.3190.3FY16FY17FY18FY19FY20FY21FY22FY230501001502002,9752,9753,2373,2374,4504,4506,2066,2066,1716,1716,6146,6147,3647,3646,9096,909FY16FY17FY18FY19FY20FY21FY22FY2303,0006,0009,000
OUR PERFORMANCE
Expense breakdown
Revenue breakdown
53
Dividends (cents per share)
Assets rose to $6.9 billion
Total assets rose 19% to $6.9 billion
at 31 December 2023 (2022:
$5.8 billion), mainly due to growth
in the size and value of Summerset’s
investment property, which reached
$6.4 billion (2022: $5.4 billion).
At balance date, Summerset also
had property, plant and equipment
valued at $403.2 million (2022:
$326.1 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 $1.6 billion (2022: $1.5 billion)
demonstrates future cash that
can be generated when units
are resold. Interest-bearing debt
of $1,393.5 million was 20% of
total assets at year end (2022:
$1,060.5 million). The year-end debt
at face value is made up of
$949.0 million of bank borrowings
and $450.0 million of retail bonds.
Summerset also has residents' loans
of $2.5 billion (2022: $2.2 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.
2023 dividends
Summerset will pay a final dividend
of 13.2 cents per share (cps) on
22 March 2024, making a full
payout for the 2023 year of 24.5
cps (2022: 22.3 cps). Board policy
for shareholder distributions was
reviewed during the year and the
payout range updated to 20–50%
of each year’s underlying profit. The
2023 distribution of $57.3 million
represents 30% of underlying profit
($190.3 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.
Employee expensesEmployeeexpenses 58%Property-relatedexpenses 10%Repairs andmaintenanceexpenses 4%Depreciation,amortisationand impairments 6%Other operatingexpenses 22%Revenue breakdownDeferredmanagementfees 38%Care fees andvillage services 61%Other 1%001.41.41.851.852.62.63.93.9666.46.4669.99.910.710.711.311.3332.12.13.43.45.15.17.17.17.27.27.77.7778.68.611.611.613.213.2FinalInterimFY13FY14FY15FY16FY17FY18FY19FY20FY21FY22FY23051015202530
Annual Report 2023
Five-year
summary
Key operational and financial statistics for
the five-year period up to and including
FY23 are shown below.
54
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
FY23
FY22
FY21
FY20
FY19
No.
No.
No.
%
No.
No.
No.
560
543
537
470
1,103
1,007
540
438
978
404
381
785
329
323
652
31.6%
29.7%
23.1%
19.6%
27.9%
643
625
619
356
354
6,087
1,284
5,518
1,161
4,930
1,098
4,385
4,076
972
868
Unit
FY23
FY22
FY21
FY20
FY19
$m
$m
$m
$m
$m
$m
cents
cents
398.2
369.2
383.4
266.8
237.9
6,941.7
5,840.3
4,923.7
3,893.2
3,337.9
2,605.4
2,193.0
1,924.5
1,354.8
1,131.9
190.3
422.5
436.3
24.5
171.4
265.1
269.1
22.3
141.1
543.6
543.7
18.5
98.3
221.7
230.8
13.0
187.4
116.7
238.2
102.3
106.2
173.6
175.3
14.1
78.6
FY22 to
FY23 %
Change
4%
16%
10%
6%
3%
10%
11%
FY22 to
FY23 %
Change
8%
19%
19%
11%
59%
62%
10%
61%
55
Financial statements Annual Report 2023
Income Statement
For the year ended 31 December 2023
Care fees and village services
Deferred management fees
Other income
Total revenue
NOTE
4
4
4
2023
$000
2022
$000
165,945
144,631
104,557
92,332
1,701
1,749
272,203
238,712
Fair value movement of investment property
12
441,553
268,757
Total income
713,756
507,469
Operating expenses
Depreciation and amortisation expense
Total expenses
5
(247,983)
(211,795)
10, 11
(15,797)
(13,597)
(263,780)
(225,392)
Operating profit before financing costs
449,976
282,077
56
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
21
21
(27,496)
(16,960)
422,480
265,117
13,839
3,955
436,319
269,072
187.43
187.09
116.66
116.36
Statement of Comprehensive Income
For the year ended 31 December 2023
Profit for the period
Fair value (loss)/gain on interest rate swaps
Tax on items of other comprehensive income
Loss 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
2023
$000
2022
$000
436,319
269,072
15
7
10
7
(24,627)
7,082
(200)
30,272
(8,718)
(68)
(17,745)
21,486
33,793
(9,462)
24,331
4,566
(1,278)
3,288
Total comprehensive income for the period
442,905
293,846
The accompanying notes form part of these financial statements.
57
Annual Report 2023
Statement of Changes in Equity
For the year ended 31 December 2023
SHARE
CAPITAL
$000
HEDGING
RESERVE
$000
REVALUATION
RESERVE
$000
RETAINED
EARNINGS
$000
As at 1 January 2022
324,899
(2,705)
60,272
1,542,046
-
-
269,072
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$000
TOTAL
EQUITY
$000
2
-
1,924,514
269,072
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
58
As at 1 January 2023
344,212
18,849
63,560
1,766,468
(66)
2,193,023
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
-
-
-
-
19,501
3,199
-
-
436,319
-
436,319
(17,545)
24,331
-
(200)
6,586
(17,545)
24,331
436,319
(200)
442,905
-
-
-
-
-
-
(53,260)
-
-
-
-
-
(53,260)
19,501
3,199
As at 31 December 2023
366,912
1,304
87,891
2,149,527
(266)
2,605,368
The accompanying notes form part of these financial statements.
Statement of Financial Position
As at 31 December 2023
Assets
Cash and cash equivalents
Trade and other receivables
Interest rate swaps
Asset held for sale
Property, plant and equipment
Intangible assets
Investment property
Investments
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 2024 on behalf of the Board
NOTE
2023
$000
2022
$000
8
15
9
10
11
12
13
14
4
15
16
18
17
7
12,648
44,330
19,308
45,000
25,347
36,727
27,228
-
403,248
326,050
8,421
7,251
6,407,150
5,417,719
1,576
-
6,941,681
5,840,322
172,670
178,556
30,753
27,565
185,514
161,569
16,628
10,299
2,507,112
2,165,352
1,393,523
1,060,494
14,130
15,983
15,970
27,494
4,336,313
3,647,299
2,605,368
2,193,023
20
20
366,912
344,212
88,929
82,343
2,149,527
1,766,468
2,605,368
2,193,023
59
Mark Verbiest
Director and Chair of the Board
Fiona Oliver
Director and Chair of the Audit and Risk Committee
Annual Report 2023
Statement of Cash Flows
For the year ended 31 December 2023
Cash flows from operating activities
Receipts from residents:
- care fees and village services
- deferred management fees
- residents' loans - new occupation right agreements
- residents' loans - resales of occupation right agreements (net)
Interest received
Payments to suppliers and employees
Net cash flow from operating activities
Cash flows to investing activities
Sale of investment property
Payments for investment property:
60
- land
- construction of retirement units and village facilities
- refurbishment of retirement units and village facilities
Payments for property, plant and equipment:
- construction of care centres1
- refurbishment of care centres
- other
Payments for intangible assets
Capitalised interest paid
Acquisition of long-term investments
Net cash flow to investing activities
Cash flows from financing activities
Net proceeds from bank borrowings
Proceeds from issue of retail bonds
Repayment of retail bonds
Proceeds from issue of shares
Interest paid on borrowings
Payments in relation to lease liabilities
Dividends paid
Net cash flow from financing activities
1 Included in the construction of care centres is $1.7m relating to care centre upgrades.
The accompanying notes form part of these financial statements.
2023
$000
2022
$000
165,341
142,482
155,802
137,328
266,703
258,926
44,784
36,901
1,701
413
(236,156)
(206,871)
398,175
369,179
-
6,335
(56,489)
(185,469)
(479,809)
(385,096)
(19,391)
(9,727)
(45,230)
(42,819)
(128)
(10,760)
(2,281)
(1,246)
(7,580)
(1,908)
(52,794)
(24,235)
(1,587)
-
(668,469)
(651,745)
247,928
342,207
175,000
(100,000)
-
-
-
1,633
(28,374)
(14,258)
(2,614)
(1,920)
(34,288)
(28,166)
257,652
299,496
Statement of Cash Flows (continued)
For the year ended 31 December 2023
Net (decrease)/increase 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
2023
$000
2022
$000
(12,642)
16,930
25,347
8,422
(57)
(5)
12,648
25,347
Reconciliation of Operating Results and Operating Cash Flows
For the year ended 31 December 2023
Profit for the period
Adjustments for:
2023
$000
2022
$000
436,319
269,072
Depreciation and amortisation expense
15,797
13,597
Fair value movement of investment property
(441,553)
(268,757)
61
Net finance costs paid
Gain on sale of investment property
Income tax credit
Deferred management fees 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 in trade and other payables
Increase in residents’ loans net of non-cash amortisation
27,496
16,960
-
(13,839)
(1,336)
(3,955)
(104,557)
(92,332)
3,764
26
1,196
(26)
(512,866)
(334,653)
(7,596)
(8,371)
3,614
7,369
5,985
5,485
471,335
431,661
474,722
434,760
Net cash flow from operating activities
398,175
369,179
The accompanying notes form part of these financial statements.
Annual Report 2023
Notes to the
financial
statements
For the year ended 31 December 2023
1. Summary of accounting policies
62
Reporting entity
The consolidated financial statements presented for the year ended 31 December 2023 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.
•
•
•
•
•
•
Asset held for sale – Note 9
Buildings – Note 10
Investment property – Note 12
Investments
Interest rate swaps – Note 15
Retail bonds – Note 18
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 (Mosgiel) Limited
Summerset Villages (Napier) Limited
Summerset Villages (Nelson) Limited
The Australian subsidiaries are:
Summerset Villages (New Plymouth) Limited
Summerset Villages (Number 42) Limited
Summerset Villages (Number 44) 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 (Chirnside Park) Pty Limited
Summerset Villages (Craigieburn) Pty Limited
Summerset Villages (Cranbourne North) Pty Limited
Summerset Villages (Drysdale) Pty Limited
Summerset Villages (Mernda) Pty Limited
Summerset Villages (Number 4) 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
Summerset Villages (Oakleigh South) Pty Limited
Summerset Villages (Torquay) Pty Limited
63
Annual Report 2023
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 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.
During the period, the Group reviewed its cash flows from operating activities disclosure. The Statement of Cash Flows presentation
has been amended to more accurately reflect the nature of the cash flows and to assist users of the financial statements. Previously
cash receipts received from residents relating to expected deferred management fees were included in the receipts for residents’
loans categories. This has now been split into its own category.
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:
•
•
•
•
•
•
•
•
•
Deferred management fees – Note 4
Deferred taxation – Note 7
Interest rate swaps – Note 15
Leases – Note 17
Revenue in advance – Note 4
Valuation of investment property – Note 12
Valuation of buildings – Note 10
Valuation of retail bonds – Note 18
Valuation of asset held for sale - Note 9
64
Comparative information
The Statement of Cash Flows presentation has been amended to separately disclose cash receipts from residents relating to deferred
management fees. This amendment has been applied retrospectively and the impact on the comparative periods is shown below:
2022
2022
Reported
Reclass
Reclassified
$000
$000
$000
Statement of Cash Flows
Receipts from residents:
- residents' loans - new occupation right agreements
347,278
(88,352)
258,926
- residents' loans - resales of occupation right agreements (net)
85,877
(48,976)
36,901
- deferred management fees
-
137,328
137,328
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)
2023
$000
2022
$000
436,319
269,072
(441,553)
(268,757)
-
-
88,131
70,191
121,231
104,869
(13,839)
(3,955)
190,289
171,420
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:
65
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 2023
Notes to the financial statements (continued)
the new sale but for all subsequent resales. It also excludes the costs of developing care centres.
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, 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 2023.
Te Whatu Ora 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 Te Whatu Ora for the year ended 31 December 2023 amounted to $44.3 million
(2022: $36.1 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.
66
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.
Other income comprises:
Interest received
Other income
Total other income
2023
$000
1,701
-
1,701
2022
$000
413
1,336
1,749
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
2023
$000
2022
$000
153,478
132,937
26,643
10,041
57,821
22,479
7,771
48,608
247,983
211,795
Employee expenses include post-employment benefits (KiwiSaver/Superannuation) of $5.3 million (2022: $4.0 million).
Other operating expenses include:
Remuneration paid to auditors:
- Audit and review of financial statements
- Other assurance services - sustainability linked lending assurance
- Remuneration advisory services
- Other services - training
Donations
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 in a fair value
hedge relationship
Other
Finance costs
67
2023
$000
2022
$000
345
52
6
5
9
304
26
5
-
158
2023
$000
2022
$000
81,145
41,737
(3,584)
520
159
557
(50,974)
(25,493)
(10,394)
11,817
10,394
(11,817)
389
-
27,496
16,960
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 10), and investment property (Note 12), 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 $51.0 million (2022: $25.5 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
5.09% per annum (2022: 3.42% per annum).
Two of the Group's retail bonds are designated in a fair value hedging relationship. Details of fair value hedging are included in Note 15.
Annual Report 2023
Notes to the financial statements (continued)
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
2023
$000
(13,839)
(13,839)
2022
$000
(3,955)
(3,955)
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:
68
Profit before income tax
Income tax using the corporate tax rate
Capitalised interest
Other non-deductible expenses
2023
2022
$000
422,480
118,294
(14,267)
686
%
$000
%
265,117
28.0%
74,233
28.0%
(3.4%)
0.2%
(7,138)
348
(2.7%)
0.1%
Non-assessable investment property revaluations
(126,539)
(30.0%)
(70,917)
(26.7%)
Other
Prior period adjustments
Total income tax credit
The Group tax losses are as follows:
Tax losses available
Tax effected
Unrecognised tax losses
6,881
1,106
1.6%
0.3%
(560)
79
(13,839)
(3.3%)
(3,955)
(0.2%)
0.0%
(1.5%)
2023
$000
2022
$000
601,269
450,670
169,017
126,662
7,918
-
(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 (credit)/expense reported directly in equity
2023
$000
9,462
(7,082)
2,380
2023
$000
(52)
(52)
2022
$000
1,278
8,718
9,996
2022
$000
1,517
1,517
(d) Imputation credit account
There were no imputation credits received or paid during the year and the balance at 31 December 2023 is nil (2022: nil).
(e) Deferred tax
Movement in the deferred tax balance comprises:
BALANCE
1 JAN 2023
$000
RECOGNISED
IN INCOME
$000
RECOGNISED
DIRECTLY IN
EQUITY
$000
RECOGNISED
IN OCI*
$000
BALANCE
31 DEC 2023
$000
69
Property, plant and equipment
Investment property
Revenue in advance
Interest rate swaps
30,321
54,435
66,159
7,717
(2,026)
4,160
18,438
-
Income tax losses not yet utilised
(126,662)
(34,437)
Other items
(4,476)
26
Net deferred tax liability
27,494
(13,839)
-
-
-
-
-
(52)
(52)
9,462
-
-
(7,082)
37,757
58,595
84,597
635
-
-
(161,099)
(4,502)
2,380
15,983
Annual Report 2023
Notes to the financial statements (continued)
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
* 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%.
70
Trade receivables
Allowance for doubtful debts
Net trade receivables
Prepayments
Accrued income
Sundry debtors
Total trade and other receivables
9. Asset held for sale
2023
$000
5,392
(246)
5,146
2022
$000
4,923
(239)
4,684
18,528
13,550
2,643
18,013
44,330
3,001
15,492
36,727
Following a review of the Group’s land portfolio, land at Parnell in Auckland is being held for sale. The land is being actively marketed
for sale and a sale is expected to take place within 12 months. The land is being held at its fair value. The fair value of the land was
determined by independent registered valuers Jones Lang LaSalle Limited (“JLL”) using the direct comparison approach.
10. 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.
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 17.
71
Annual Report 2023
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 2022
247,428
Additions
Disposals
Net revaluations through
other comprehensive income
42,719
-
(2,512)
3,323
1,888
(51)
-
27,047
5,745
-
-
9,390
1,277
-
-
13,693
300,881
5,064
56,693
(654)
(705)
-
(2,512)
Balance at
31 December 2022
Additions
Disposals
Remeasurements
Net revaluations through
other comprehensive income
25,416
287,635
5,160
32,792
10,667
18,103
354,357
46,193
1,725
9,263
736
930
58,847
-
-
(28)
-
-
(7)
-
-
-
-
-
-
(691)
(35)
(691)
-
25,416
Balance at
31 December 2023
Accumulated depreciation
359,244
6,857
42,048
11,403
18,342
437,894
72
Balance at 1 January 2022
-
1,354
12,228
6,236
3,348
23,166
Depreciation charge for
the year
Disposals
Net revaluations through
other comprehensive income
7,078
-
(7,078)
303
(49)
-
2,681
908
1,651
12,621
-
-
-
-
(353)
(402)
-
(7,078)
Balance at
31 December 2022
Depreciation charge for
the year
Disposals
Net revaluations through
other comprehensive income
Balance at
31 December 2023
Carrying amounts
-
1,608
14,909
7,144
4,646
28,307
8,377
-
(8,377)
375
(28)
-
3,224
805
1,968
14,749
(5)
-
-
-
-
-
(33)
(8,377)
-
1,955
18,128
7,949
6,614
34,646
As at 31 December 2022
As at 31 December 2023
287,635
359,244
3,552
4,902
17,883
23,920
3,523
3,454
13,457
326,050
11,728
403,248
Buildings include $51.1 million of care centres under development carried at fair value, which reflects cost due to the proximity of
completion to 31 December 2023 (2022: $49.4 million).
Right of use assets relate to the Group's leased office premises, car park spaces and plant and equipment; refer to Note 17 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 2023 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 is not recognised. Significant assumptions used in the most recent
valuation are included in the table below:
Market value per care bed
$69,000 - $222,000
$63,100 - $204,000
Individual unit earning capitalistion rate
12.5% - 15.8%
11.5% - 14.8%
2023
2022
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 discounted cash flow analysis to derive a present value. Significant assumptions used by CBRE NZ
are included in the table below:
Discount rate
Growth rate
2023
14.5% - 15.5%
0.5% - 3.0%
2022
14.5% - 15.5%
0.5% - 3.0%
73
Average entry age of residents
80 years - 89 years
79 years - 86 years
Stabilised departing occupancy periods of units
3.0 years - 3.1 years
3.0 years - 3.1 years
Manager's net interest
2023
$000
2022
$000
91,612
51,592
Plus: revenue received in advance relating to property, plant and equipment
2,821
1,875
Plus: liability for residents' loans relating to property, plant and equipment
39,861
24,127
Total property, plant and equipment - units under occupation
right agreement
134,294
77,595
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
Annual Report 2023
Notes to the financial statements (continued)
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
Net carrying amount
2023
2022
BUILDINGS
$000
BUILDINGS
$000
273,552
227,359
(39,999)
(31,622)
233,553
195,737
Security
At 31 December 2023, 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.
74
11. 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 2023 are between 10%
and 20% SL basis.
Cost
Opening balance
Additions
Closing balance
Accumulated amortisation
Opening balance
Amortisation
Closing balance
Carrying amount
12. Investment property
2023
$000
2022
$000
13,814
2,218
16,032
6,563
1,048
7,611
12,251
1,563
13,814
5,587
976
6,563
8,421
7,251
75
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.
Balance at beginning of period
Additions
Transfer to asset held for sale
Disposals
Fair value movement
Foreign exchange movement
Total investment property
2023
$000
2022
$000
5,417,719
4,580,196
590,807
573,389
(45,000)
-
-
(4,999)
441,553
268,757
2,071
376
6,407,150
5,417,719
Annual Report 2023
Notes to the financial statements (continued)
Development land measured at fair value1
Retirement villages measured at fair value2
Retirement villages under development measured at cost
Total investment property
2023
$000
2022
$000
578,266
603,829
5,302,570
4,351,031
526,314
462,859
6,407,150
5,417,719
1 Included in development land are pieces of land that were acquired close to balance date. 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 2023 the land at cost was $35.7 million (2022: $162.5 million).
2 Included in retirement villages measured at fair value is $5.4 million related to completed retirement units at cost, which reflects fair value due to the proximity of completion
to balance date (2022: $45.0 million). Included in retirement villages measured at fair value is $190.4 million relating to a village under development measured at fair value
(2022: nil).
Manager's net interest
Plus: revenue received in advance relating to investment property
Plus: liability for residents' loans relating to investment property
Total investment property
2023
$000
2022
$000
3,757,207
3,116,800
182,693
159,694
2,467,250
2,141,225
6,407,150
5,417,719
The Group is unable to reliably determine the fair value of the non-land portion of retirement villages under development at
31 December 2023 and therefore these are carried at cost, with the exception of one site due to its advance stage of construction.
This equates to $526.3 million of investment property
(2022: $462.9 million).
76
The fair value of investment property as at 31 December 2023 was determined by independent registered valuers CBRE NZ and JLL
for villages including land in New Zealand, and CBRE Valuations Pty Limited ("CBRE AU") and Jones Lang LaSalle Australia Pty Limited
("JLL 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 discounted 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 discounted cash flow
analysis to derive a present value. The Group's development land has been valued by CBRE NZ using the direct comparison approach.
One of the sites under development has been valued using the residual approach where a number of blocks were valued as work in
progress together with residual land. The value of the work in progress was calculated as the market value of completed stock less
selling expenses, and an allowance for profit and risk, holding costs, and costs to complete including a contingent sum. Previously
land at this site was valued using the direct comparison with any development measured at cost. The change in valuation approach
provides a more fair and accurate representation of fair value at balance date.
The valuers' view is that the markets both nationally and globally are being heavily impacted by high interest rate rises instigated by
central banks to combat inflation. Markets are also impacted by ongoing disruption to global supply chains and geopolitical instability
in certain regions, particularly the ongoing war in Ukraine and recent events in Gaza. 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 are included in the table below:
Discount rate
Growth rate
2023
2022
13.5% - 16.5%
13.5% - 16.5%
0.5% - 3.5%
0% - 3.5%
Average entry age of residents
73 years - 91 years
73 years - 88 years
Stabilised departing occupancy periods of units
3.8 years - 8.7 years
3.9 years - 8.6 years
Sites under development in Australia have been valued separately by CBRE AU and JLL 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 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.
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 discounted cash flow
analysis to derive a present value.
The sensitivities of the significant assumptions are shown in the table below:
31 December 2023
Valuation ($000)
Difference ($000)
Difference (%)
31 December 2022
Valuation ($000)
Difference ($000)
Difference (%)
Adopted
value1
Discount rate
+50 bp
Discount rate
-50 bp
Growth rates
+50bp
Growth rates
-50bp
2,017,910
1,705,010
(74,725)
80,050
126,025
(115,665)
(3.7%)
4.0%
6.2%
(5.7%)
(61,655)
66,100
102,685
(94,300)
(3.6%)
3.9%
6.0%
(5.5%)
1 Adopted value differs to figures in other notes. It is the value of completed units, net of related resident liability. The amount does not include unsold stock, work in progress
or development land.
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.
77
Operating expenses
Direct operating expenses arising from investment property during the period amounted to $66.5 million (2022: $57.7 million).
Security
At 31 December 2023, 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.
13. 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
2023
$000
6,923
2022
$000
4,413
125,937
140,020
23,985
15,825
21,791
12,332
172,670
178,556
Annual Report 2023
Notes to the financial statements (continued)
14. Employee benefits
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
15. Interest rate swaps
2023
$000
14,195
16,558
30,753
2022
$000
15,373
12,192
27,565
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 2023, the Group had interest rate swap agreements in place with a
total notional principal amount of approximately $847.0 million, made up of $497.0 million denominated in NZD and $350.0 million
in AUD (2022: $762.3 million, made up of $442.0 million denominated in NZD and $320.3 million in AUD). Of the swaps in place,
at 31 December 2023 $673.4 million (2022: $535.5 million) are being used to cover approximately 71% (2022: 78%) 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 4.93% (2022: 0.56% and 4.85%).
The fair value of these agreements at 31 December 2023 is a $1.9 million asset, comprised of $11.9 million of swap liabilities and
$13.8 million of swap assets (2022: asset of 26.5 million, comprised of $0.7 million of swap liabilities and $27.2 million of swap assets).
Of this, a liability of nil is estimated to be current (2022: nil). The agreements cover notional amounts for terms of up to seven years.
78
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
2023
$000
60,000
76,944
84,333
179,331
2022
$000
45,000
60,000
76,694
84,032
190,832
178,130
128,888
190,081
153,888
128,388
874,216
762,325
673,384
535,550
200,832
226,775
874,216
762,325
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 $300.0 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 increase in fair value
of the interest rate swaps of $10.4 million (2022: reduction of $11.8 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 (2022: nil).
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 2023, the Group had interest rate swap agreements in place with
a total notional principal amount of $300.0 million (2022: $225.0 million). Of the interest rate swaps in place, at 31 December 2023
$300.0 million (2022: $225.0 million) are being used to cover 67% (2022: 60%) of the fixed interest rate retail bonds outstanding.
79
Annual Report 2023
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 5 and 6 years
Total
Current
Total
16. Residents’ loans
2023
$000
2022
$000
-
100,000
125,000
-
-
125,000
175,000
-
300,000
225,000
300,000
225,000
300,000
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.
80
Balance at beginning of period
2023
$000
2022
$000
2,681,837
2,276,945
Net receipts for residents' loans - resales of occupation right agreements
55,521
51,481
Receipts for residents' loans - new occupation right agreements
Total gross residents’ loans
Deferred management fees and other receivables
Total residents’ loans
384,042
353,411
3,121,400
2,681,837
(614,288)
(516,485)
2,507,112
2,165,352
17. Leases
The leases to which NZ IFRS 16 applies are the leases of plant and equipment and 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 certain 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 primarily relate to the Group's leased office premises and are classified as property, plant and equipment, and lease
liabilities are disclosed as such in the Group's statement of financial position.
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
Remeasurements
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
81
2023
$000
2022
$000
13,457
10,345
930
-
(691)
5,064
(301)
-
(1,968)
(1,651)
11,728
13,457
2023
$000
2,475
7,786
3,869
2022
$000
1,709
8,106
6,155
Total lease liabilities at end of period
14,130
15,970
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
2023
$000
587
491
1,968
3,046
2022
$000
557
371
1,651
2,579
Annual Report 2023
Notes to the financial statements (continued)
Amounts recognised in statement of cash flows:
Total cash outflows for leases
2023
$000
3,313
2022
$000
2,431
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 and a portion of care fees and village services. The lease term
is determined to be the greater of the expected period of tenure or the contractual right to revenue. The Group allocates individual
leases of units to village residents to different portfolios depending on the type of unit. The Group does not have any subleases.
18. 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, SUM020 and SUM040, 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.
82
Repayable within 12 months
Retail bond - SUM010
Repayable after 12 months
Secured bank loans
Retail bond - SUM020
Retail bond - SUM030
Retail bond - SUM040
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
2023
$000
2022
$000
4.78%
-
100,000
Floating
948,957
699,400
4.20%
2.30%
6.59%
125,000
125,000
150,000
150,000
175,000
-
1,398,957
1,074,400
(4,260)
(3,678)
1,756
(5,096)
(521)
1,357
(6,182)
(4,260)
1,392,775
1,070,140
748
(9,646)
1,393,523
1,060,494
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
2023
$000
2022
$000
1,060,494
747,015
324,557
324,460
(3,678)
1,756
(521)
1,357
10,394
(11,817)
1,393,523
1,060,494
The weighted average interest rate for the year to 31 December 2023 was 5.09% (2022: 3.42%). This includes the impact of interest
rate swaps (see Note 15).
Effective 18 September 2023, the Group refinanced NZD tranches of the syndicated facility that were due to expire within the next
year and obtained new NZD and AUD facilities. The secured bank loan facility at 31 December 2023 has a limit of approximately
$1,460 million (2022: $1,160 million). This includes lending of the following:
Currency
Lending limit
Expiration
NZD
AUD
NZD
AUD
AUD
NZD
NZD
AUD
$50 million
$130 million
$315 million
$185 million
$170 million
$310 million
$100 million
$200 million
The Group has three retail bonds listed on the NZDX:
ID
SUM020
SUM030
SUM040
Amount
$125 million
$150 million
$175 million
September 2025
September 2025
September 2026
September 2026
September 2027
November 2027
September 2028
September 2028
Maturity
24 September 2025
21 September 2027
9 March 2029
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;
83
Annual Report 2023
Notes to the financial statements (continued)
•
•
•
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.
19. 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 and investments, 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 18 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.
The carrying amount of financial assets represents the Group’s maximum credit exposure. The status of trade receivables is as follows:
84
2023
2022
GROSS
RECEIVABLE
$000
IMPAIRMENT
$000
GROSS
RECEIVABLE
$000
IMPAIRMENT
$000
Not past due
Past due 31 to 60 days
Past due 61 to 90 days
Past due more than 90 days
Total
4,631
344
174
243
5,392
(61)
(24)
(19)
(142)
(246)
In summary, trade receivables are determined to be impaired as follows:
Gross trade receivables
Impairment
Net trade receivables
3,991
385
210
337
4,923
2023
$000
5,392
(246)
5,146
(56)
(18)
(17)
(148)
(239)
2022
$000
4,923
(239)
4,684
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.
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 15 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 2023 it is estimated that a general increase of one percentage point in interest rates would decrease the Group’s
profit by approximately $9.4 million (2022: decrease by $6.7 million) and increase total comprehensive income by approximately
$16.7 million (2022: increase by $14.3 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.
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):
85
Financial liabilities
Trade and other payables
Residents’ loans
2023
2022
LESS THAN
1 YEAR
$000
GREATER
THAN
1 YEAR
$000
LESS THAN
1 YEAR
$000
GREATER
THAN
1 YEAR
$000
172,670
2,507,112
-
-
178,556
2,165,352
-
-
Interest-bearing loans and borrowings
78,116
1,598,523
145,751
1,075,950
Interest rate swaps
Lease liability
Total
(6,455)
(14,149)
2,475
11,655
(839)
1,709
5,341
14,261
2,753,918
1,596,029
2,490,529
1,095,552
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 $191.2 million (2022: $202.8 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.
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.
Annual Report 2023
Notes to the financial statements (continued)
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 2023, 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
2023
2022
CARRYING
AMOUNT
$000
FAIR VALUE
$000
CARRYING
AMOUNT
$000
FAIR VALUE
$000
(447,407)
(431,414)
(363,207)
(343,417)
(447,407)
(431,414)
(363,207)
(343,417)
The fair value of retail bonds is based on the price traded at on the NZX market as at 31 December 2023. 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.
The fair value of investments is categorised as Level 3 under the fair value hierarchy in accordance with NZ IFRS 13 – Fair Value
Measurement and its fair value is measured using valuation techniques based on discounted future cash flow forecasts and various
unobservable inputs.
86
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 2023 (2022: 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 2023 (2022: none).
20. Share capital and reserves
At 31 December 2023, there were 234,281,382 ordinary shares on issue (2022: 232,116,894). 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
Other
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
2023
$000
2022
$000
344,212
324,899
18,968
16,484
527
6
3,199
2,145
-
684
366,912
344,212
2023
2022
231,560
229,427
2,093
219
1,504
629
233,872
231,560
87
The total shares on issue at 31 December 2023 of 234,281,382 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 2023, 409,248 shares are held by
Summerset LTI Trustee Limited for employee share plans, which are eliminated on consolidation. Refer to Note 22 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 2023 a dividend of 11.6 cents per ordinary share was paid to shareholders and on 19 September 2023 a dividend of 11.3
cents per ordinary share was paid to shareholders (2022: 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).
A dividend reinvestment plan applied to the dividends paid. 1,077,198 ordinary shares were issued in relation to the plan for the March
2023 dividend and 1,016,720 ordinary shares were issued in relation to the plan for the September 2023 dividend (2022: 688,127
ordinary shares were issued in March 2022 and 815,721 ordinary shares were issued in September 2022).
Annual Report 2023
Notes to the financial statements (continued)
21. 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)
88
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
2023
2022
436,319
269,072
232,786
230,656
187.43
116.66
2023
2022
436,319
269,072
233,211
231,233
187.09
116.36
2023
2022
232,786
230,656
425
577
233,211
231,233
At 31 December 2023, there were a total of 409,248 shares issued under employee share plans held by Summerset LTI Trustee Limited
(2022: 557,242 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)
2023
2022
2,596,947
2,185,772
233,872
231,560
1,110.41
943.93
Net tangible assets are calculated as the total assets of the Group less intangible assets and less total liabilities. This non-GAAP
measure is provided as it is commonly used for comparison between entities.
22. 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
2023
2022
NUMBER OF
OPTIONS
000's
WEIGHTED
AVERAGE
EXERCISE
PRICE
NUMBER OF
OPTIONS
000's
WEIGHTED
AVERAGE
EXERCISE
PRICE
1,627
380
(475)
(75)
1,457
756
$6.57
-
$6.82
$8.08
$6.57
$8.31
2,306
-
(514)
(165)
1,627
972
$6.73
-
$6.82
$8.08
$6.57
$8.31
Options outstanding as at 31 December 2023 have a weighted average remaining life of 2.46 years (2022: 1.93 years).
For the 2023 annual option grant, the following performance hurdles apply to all participants:
•
•
75% of each Tranche will vest based on absolute total shareholder return performance
25% of each Tranche will vest based on relative total shareholder return performance
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 2023 of $2,782,606 has been recognised in the income statement of the Company and the Group
for that period (2022: $2,147,000). The Group has no legal or constructive obligation to repurchase or settle the share options in cash.
89
Valuation assumptions for those options with an exercise price:
Discount to reflect options may not meet vesting criteria
Risk free rate of return
Volatility
2023
N/A
N/A
N/A
2022
15%
0.5% - 2%
23% - 26%
All-staff employee share plan
The Group operates an all-staff employee share plan. A total of 1,944 employees participated in the share issue under the plan for
the year ended 31 December 2023 (2022: 1,706 employees). In 2023, the Group contributed $1,000 per participating employee
(being the total value of the shares issued). A total of 188,568 Company shares were issued under the scheme at $10.27 per share
(2022:167,188 shares at $10.16 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 2023 of $891,000 has been recognised in the income statement of the Company and the
Group for that period (2022: $566,000).
23. Related party transactions
Refer to Note 22 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 122 of this report.
Annual Report 2023
Notes to the financial statements (continued)
24. 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
Total
Refer to Note 22 for employee share plan details for key management personnel.
25. Commitments and contingencies
Guarantees
As at 31 December 2023, the Group had the following guarantees in place:
2023
$000
895
5,238
1,374
311
7,818
2022
$000
877
5,485
1,273
62
7,697
•
•
•
•
90
NZX Limited holds a guarantee in respect of the Group, as required by the NZX Listing Rules, for $75,000 (2022: $75,000).
Summerset Retention Trustee Limited holds guarantees in relation to retentions on construction contracts on behalf of the Group.
As at 31 December 2023, $23.0 million was held for the benefit of the retentions beneficiaries (2022: $13.0 million).
Auckland Transport holds a performance guarantee for $65,000 (2022: $65,000).
Tauranga City Council holds a performance guarantee for nil (2022: $350,000).
• Quattro RE Limited holds a demand guarantee in relation to the lease of the office premises for $120,819 (2022: $120,819).
•
•
•
Department of Transport (Melbourne) holds guarantees for $72,749 (2022: nil).
South East Water holds guarantees for $13,688 (2022: nil).
Casey City Council holds guarantees for $229,162 (2022: nil).
Capital commitments
At 31 December 2023, the Group had $70.8 million of capital commitments in relation to construction contracts (2022: $63.2 million).
Contingent liabilities
There were no known material contingent liabilities at 31 December 2023 (2022: nil).
26. Subsequent events
On 23 February 2024, the Directors approved a final dividend of $30.9 million, being 13.2 cents per share. The dividend record date
is 11 March 2024 with a payment date of 22 March 2024.
There have been no other events subsequent to 31 December 2023 that materially impact on the results reported.
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 56 to 90, which comprise the statement of financial position of the Group as at 31 December 2023, 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 material accounting policy information.
In our opinion, the consolidated financial statements on pages 56 to 90 present fairly, in all material respects, the consolidated
financial position of the Group as at 31 December 2023 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.
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.
91
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 IFRS training, other assurance 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.
Annual Report 2023
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 10 and 12 of the consolidated
financial statements:
•
•
the Group’s investment property portfolio was valued
at $6,407 million at 31 December 2023 and included
completed investment property and investment
property under development.
the Group’s care centre buildings were valued at
$359 million at 31 December 2023. This included
completed care centre buildings operated by the
Group for the provision of care services and care
centres under development.
Independent valuations of all investment property
and completed care centre buildings were carried
out by third party valuers, CBRE Limited and Jones
Lang LaSalle Limited (the Valuers). The valuation of
investment property and care centre buildings is
inherently subjective given that there are alternative
assumptions and valuation methods that may result in
a range of values.
Properties which are externally valued are recorded in
the consolidated financial statements based on the value
determined by the Valuers.
Investment property and care centre buildings under
development that are not substantially progressed to
enable fair value to be reliably determined are carried at
cost less any impairment.
Summerset derives revenue from properties it holds in the
form of 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.
92
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 of 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. 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 and measurement
We considered management’s assessment of the
classification of each type of property as either investment
property or care centre buildings. This included assessment
against the requirements of the accounting standards,
and where relevant considering the significance of
ancillary services.
We also considered management’s assessment of whether
the fair value of investment property under development
could not be reliably determined.
Why significant
How our audit addressed the key audit matter
Disclosures
We considered the adequacy of the disclosures in notes
10 and 12 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
this process.
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.
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.
93
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 Sam Nicolle.
Chartered Accountants
Wellington
23 February 2024
Annual Report 2023
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 April
2023 ('NZX Code'). Each principle of the NZX Code is set out below with an explanation on how Summerset meets it.
As at 31 December 2023, 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: Ethical standards
'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:
94
• 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.
• 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.
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 CEO and delegates the day-to-day operating
of the business to them. The CEO 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 protocols 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 CEO 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,
•
•
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.
95
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 CEO responsibility for implementing the Board’s strategy and for managing the Company’s
operations. The CEO 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
ten 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.
Annual Report 2023
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 2023, 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 and factors described in the NZX Code.
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 (or be perceived to influence), in
a material way, their decisions in relation to the Company.
As at 31 December 2023, the non-executive Independent Directors were Mark Verbiest (Chair), Dr Andrew Wong,
Gráinne Troute, Fiona Oliver, 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 comprises 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 2023, is set out in the table on the following page.
96
Capability
Governance
Experience in and commitment to the highest standards of
corporate governance, including as a non-executive director
of a listed company or other large or complex organisation
Leadership
Experience in senior leadership or management positions in
an organisation of significant size or complexity
Financal acumen
Proficiency and understanding of financial statements
and reporting, capital management, key financial and
performance drivers and internal controls
Customer and operations
Deep understanding of business operations and sales,
marketing and brand strategies
Health and clinical
Experience across the health or aged care sectors (in New
Zealand and/or Australia)
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
Experience in overseeing workplace culture, people
management, development, and succession planning,
setting remuneration frameworks and promoting diversity
and inclusion
Digital and technology
Experience in technology, use of data and analytics, digital
transformation and innovation and their impacts on business
operations and customers including cybersecurity
Level of Experience
Highly
competent1
Competent2
Aware3
7
6
3
4
3
1
5
5
1
1
3
1
1
1
4
3
1
5
1
2
5
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
Risk management
Experience in identifying, assessing, monitoring, and
managing systemic, existing, and emerging material financial
and non-financial risks
Environmental and social
Understanding and experience in sustainable practices to
manage the impact of Summerset on the environment and
community as well as the impact of climate change on
business operations
1 Extensive experience, including serving as a key resource and advising others
2 Complete understanding and experience in practical application
3 Fundamental understanding and knowledge
4
3
5
1
3
3
2
4
1
2
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 may be shorter owing to the urgency
of the matter to be considered.
97
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,
Annual Report 2023
experiences, perspectives and abilities, employees are more able to understand residents’ needs and to respond
effectively to them.
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.'
To help Summerset's leaders lead their increasingly diverse and multi-cultural teams and support diversity and
inclusion the Company started its "Creating an Inclusive Workplace" training programme for all managers in 2023. The
programme helps leaders to deepen their understanding of others and create an inclusive team environment where
all team members feel valued, appreciated, and can contribute to bringing the best of life for residents.
Summerset also supported the establishment of employee representative groups including the Summerset Pride
Network, and continued work of the Women in Construction Forum. Both groups aim to seek equity and inclusion
through building awareness of the challenges, celebrating the successes, and supporting the ideas of these groups.
Each year the Board reviews and assesses performance against the financial year objectives. The Board considers that
for the year ended 31 December 2023, the objectives for achieving diversity have been met.
As at 31 December 2023 (and 31 December 2022 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 CEO, the CFO and all General Managers who report to the CEO.
These figures include permanent full-time, permanent part-time, fixed-term and casual employees, but not
independent contractors.
98
Directors
Total
GENDER
Male
Female
Executive Leadership Team
Male
Female
Male
Female
Gender diverse1
Prefer not to say
Total
All staff
Total staff
1 Self-identified
2023
2022
4
3
7
5
4
9
715
2,075
6
3
4
3
7
5
4
9
626
1,839
3
-
2,799
2,468
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.
Executive Leadership Team performance
The Board evaluates the performance of the CEO annually. The CEO 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;
99
•
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, Fiona Oliver (Chair), Mark Verbiest, Gráinne Troute, Stephen Bull and Venasio-Lorenzo Crawley.
The Audit and Risk Committee generally invites the CO, CFO 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;
Annual Report 2023
• Assisting the Board in establishing remuneration policies and practices, and setting and reviewing the
remuneration of the Company’s CEO, 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 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.
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;
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), Gráinne Troute, Venasio-Lorenzo Crawley and Dr Andrew Wong.
100
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
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;
• 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, Fiona Oliver, Venasio-Lorenzo Crawley and Dr Andrew Wong.
Attendance at Board and committee meetings
A total of six Board meetings, seven Audit and Risk Committee meetings, five People and Culture Committee meetings,
three Clinical Governance Committee meetings and three Development and Construction Committee meetings were
held in 2023. Director attendance at Board meetings and committee member attendance at committee meetings is
shown in the table below.
Board Audit and Risk
Committee
People and
Culture
Committee
Clinical
Governance
Committee
Development
and Construction
Committee
Total number of meetings held
Mark Verbiest
Anne Urlwin2
Fiona Oliver3
Dr Andrew Wong
Gráinne Troute
Dr Marie Bismark
Stephen Bull
Venasio-Lorenzo Crawley4
1 Not a member of this committee
2 Anne Urlwin: retired as a Director effective 28 February 2023
6
6
1
5
6
6
6
6
6
7
7
2
5
31
7
71
7
7
5
5
2
21
31
5
5
41
5
3
11
1
–1
3
2
3
11
3
3
3
1
2
3
21
31
3
3
3 Fiona Oliver: appointed as a Director and as Chair of the Audit and Risk Committee from 1 March 2023; appointed to the Development & Construction Committee from
27 June 2023
4 Venasio-Lorenzo Crawley: appointed to the Clinical Governance Committee from 27 June 2023
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.'
101
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 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 and in our separate Sustainability Review and Climate-Related
Disclosures FY23 document available at www.summerset.co.nz/investor-centre/esg-reporting/.
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 (page 110).
Annual Report 2023
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.'
102
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 introduced its refreshed Risk
Management Policy and its Enterprise Risk Framework in 2023, consistent with best practice principles set out in the
ISO31000:2018 Risk Management Standard.
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 page 27.
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. For more information on how Summerset is managing climate change risks and opportunities please
review our Sustainability Review and Climate-related Disclosures FY23 found at www.summerset.co.nz/investor-
centre/esg-reporting/
•
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. Pages 99 and 100 provide 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.
• 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.
• Health and safety risk – The health, safety and wellbeing of our people and residents remain a top priority and
require systematic approach and strategic focus to ensure continued compliance with relevant legislation.
•
Executing Australian growth risk – Scaling and managing the ongoing growth of the Australian business and
associated business risks. Summerset is mitigating 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 is under close management oversight and has tracked well to date.
• Cybersecurity risk – A cyber-attack may lead to data privacy breaches, loss of integrity / availability of information
or of a control system and business disruption potentially resulting in financial loss or reputational damage
or regulatory action. 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
103
Annual Report 2023
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. Summerset has been actively involved in the regulatory change process in relation to the New Zealand
and Victorian retirement villages legislative reviews and is well placed to comply with the amendments to these
regimes, as well as the amendments to the Australian aged care regime.
Principle 7: Auditors
'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 changed in
2023, with the appointment of Sam Nicolle.
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.
104
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.
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.
105
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.
Annual Report 2023
106
MARK VERBIEST Chair, IndependentBoard of DirectorsVENASIO-LORENZO CRAWLEY IndependentGRÁINNE TROUTE IndependentANDREA SCOWNFuture DirectorVIEW DIRECTOR BIOGRAPHIES AT:www.summerset.co.nz/investor-centre/board-of-directors 107
MARK VERBIEST Chair, IndependentSTEPHEN BULL IndependentFIONA OLIVERIndependentDR MARIE BISMARK IndependentDR ANDREW WONG Independent Annual Report 2023
108
VIEW EXECUTIVE LEADERSHIP BIOGRAPHIES AT:www.summerset.co.nz/investor-centre/our-leadership-team/SCOTT SCOULLARChief Executive OfficerDEAN TALLENTIRE General Manager ConstructionExecutive Leadership TeamSTEWART SCOTT General Manager Development – AustraliaELEANOR YOUNGGeneral Manager Operations and Customer Experience 109
FAY FRENCHGeneral Manager SalesWILL WRIGHT Chief Financial Officer and General Manager Corporate ServicesKAY BRODIE General Manager Marketing and CommunicationsAARON SMAILGeneral Manager DevelopmentCHRIS LOKUMGeneral Manager People and Culture Annual Report 2023
Remuneration
Remuneration overview
Report from the Chair
Dear shareholders,
On behalf of Summerset’s People & Culture Committee I am pleased to present our 2023 Remuneration report.
In December 2023 the NZX released a suggested template for the remuneration sections of listed companies’ Annual
Reports which we have opted to follow for our FY23 Report. We believe this is a positive step in transparent and
consistent reporting.
Remuneration objectives
Our remuneration objectives remained consistent in 2023. Summerset’s purpose is to "Bring the Best of Life" to
our residents, and the Board is aware that in order to achieve this we need motivated employees performing at
a consistently high level. Our objective is that reward outcomes for executive and senor leaders are aligned with
outcomes experienced by shareholders, and a competitive and affordable remuneration structure that is equitable
and attractive is an important contributory factor for maintaining this high level of employee engagement.
Summerset's executive remuneration is set in accordance with the principles laid out in the People and
Culture Committee Charter. More broadly, remuneration encompasses wages, salaries, incentives, non-reimbursing
allowances, and a range of employee benefits including KiwiSaver. More information on Summerset's staff benefits can
be found on the careers page of the company website1.
Summerset continues to benchmark pay rates to a market median position, while also being cognisant of factors such
as incumbent experience, to create a balance between competitiveness and affordability for the business. During the
year we conducted (with expert external input) our annual market analysis of our pay to ensure we remain appropriately
positioned against the market, and we continued to offer a number of benefits to our staff to differentiate our offering.
Changes to incentive schemes
Through 2023 we have continued to refine our approach to incentives. We assessed our alignment with other listed
companies to ensure we benchmark and balance appropriately in rewarding the performance of the Summerset
Executive and Senior managers. To assist this ongoing process, we sought advice from PwC during the year.
In 2022 we moved to solely financial targets for the Long-Term Incentive (LTI) scheme hurdles. Our work during
2023 included further refining our LTI scheme regarding the comparator companies we use to measure the hurdle
for absolute total shareholder return. This has meant that, starting with our 2023 allocation, we’ve broadened our
comparator group to the NZX50.
We also completed a review of our Short-Term Incentive (STI) scheme that resulted in refining the shared set of key
performance indicators (KPIs) for 2024 and ensuring individual KPIs for the Executive Leadership team are aligned to
our new ten year Strategy. We also looked at the STI weighting for the Executive Leadership team between shared and
individual KPIs to bring them closer to NZX and ASX market practice, as well as the inclusion of some carbon specific
targets for individual KPIs.
Executive KPIs
The 2023 Shared KPIs took a balanced scorecard approach with financial, customer and staff related KPIs. The
performance outcomes against 2023 shared KPIs has been strong with all targets achieving on target performance
and several exceeding targets including our financial targets and retirement unit deliveries.
These KPIs were all stretch targets, and it’s a testament to the strength of the Executive Leadership team, and
their people, that they have continued to achieve so highly in a very difficult macroeconomic environment. The
Executives' achievements against their individual, role-specific KPIs was also very strong, with the majority fully or
partially achieved.
1 https://careers.summerset.co.nz/staff-benefits
110
Board fees
Following external benchmarking data we also increased the Board Chair’s fee from $181,200 to $195,000, within the
approved fee pool, to address a relative misalignment. At the time of writing, a market review of Director fees is being
carried out by PWC for the Committee. The outcomes of this review will determine whether an increase to the fee pool
might be sought at the forthcoming Annual Shareholder Meeting.
During the year we also established a Due Diligence Committee to oversee Summerset’s 2023 bond issue. The three
directors on the Committee (Anne Urlwin (replaced on retirement by Mark Verbiest), Stephen Bull and Gráinne Troute)
were each paid a fee of $5,000 (+GST) to recognise the additional responsibilities above and beyond the normal duties
of the Board they were undertaking.
Gráinne Troute
Chair People & Culture Committee
Remuneration Governance
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 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 CEO. The review takes into account external benchmarking to ensure competitiveness with
comparable market peers, along with consideration of each individual’s performance, skills, expertise and experience.
111
Executive Remuneration Policy
The remuneration of members of the Executive Leadership Team (CEO 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.
Total remuneration is made up of three components: fixed remuneration, short-term incentive (STI) and long-
term incentive (LTI).
Fixed remuneration
Fixed remuneration consists of a base salary and benefits. Summerset’s guiding policy is to benchmark fixed
remuneration with reference to the fixed pay market median.
Short-term incentives
Short-term incentives (STIs) are at-risk payments designed to motivate and reward for performance, typically in
that financial year. The target value of an STI payment is set annually, as a percentage of the Executive Leadership
Team member’s fixed remuneration. For 2023, the relevant percentages were 20–30% (2022: 20–30%).
A proportion of the STI (80% for CEO and 40–70% 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 KPIs based on
business priorities for the next 12 months. Target areas for the shared KPIs for 2023 are outlined below:
Annual Report 2023
Target
Underlying EBITDA*
New sales development margin*
Resales net cash*
Development numbers
Customer – satisfaction
Customer – clinical
Staff – people and culture
Staff – health and safety
Total payable
Minimum performance
On-target weighting
Maximum performance
31.5%
9%
9%
15%
10%
10%
5%
5%
35%
10%
10%
15%
10%
10%
5%
5%
70%
20%
20%
15%
10%
10%
5%
5%
94.5%
100%
155%
For 2024, the KPI scheme has been adjusted, with the removal of the health and safety and the clinical target areas.
Instead, the Board can now reduce or cancel STI payments where there are concerns around Health and Safety or
Clinical performance. This has effectively strengthened their oversight by granting the Board the explicit ability to
exercise discretion.
There are three performance levels within each target area – 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. Performance
against both financial and non-financial measures is assessed and approved by the Board each year.
The balance of the STI is related to individual performance measures.
112
In the event that 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 90% on
achievement of performance targets. Including the other targets, this would mean a total pay-out of 94.5%.
A 100% pay-out is based on achieving 110% of the financial targets (*) and meeting all the other KPI target criteria.
The maximum performance levels allow employees to be rewarded for performance above on-target levels.
The maximum amount of an STI payment for an Executive Leadership Team member is 155% of the STI on-target
amount for that Executive Leadership Team member and is based on significant overachievement being 125% or more
of the financial targets (*) and meeting all the other KPI target criteria 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. For the three annual option grants made
under this plan in 2018, 2019 and 2020, the relevant percentages were 20–40%. Vesting of these share option grants
is subject to achievement of performance hurdles, which are assessed over two and three-year periods.
In 2021 the LTI plan was amended. Options are zero priced and vesting will occur in two tranches at three and four
years. 50% of each tranche vests based on time (retention) and 50% vests based on performance hurdles. The option
grants as a percentage of the Executive Leadership Team member’s fixed remuneration ranged from 20% to 30%.
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)
Each performance hurdle has a gate opener, which if met results in 50% of the options related to that
performance hurdle vesting for that tranche. Where all performance hurdles for a tranche meet gate opener
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 a tranche, 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
requirement, 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.
In 2022 the LTI plan was amended to further improve our alignment with 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 2023 the option grants as a percentage of the Executive Leadership Team member’s fixed remuneration ranged
from 20–50% (30%-50% in 2022). The performance hurdles for 2023 are consistent with those in 2022 as explained
above. However, during the year, Summerset sought external and independent advice from PwC to review the
comparator companies we use to measure aTSR. This resulted in a broadening of our comparators to the NZX50.
113
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 performance hurdles reflect the drivers of sustainable value for shareholders.
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.
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 grants for senior managers did not have
any performance hurdles. 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. In 2023, the number of options
granted based on a percentage of fixed remuneration ranged from 15% to 25% (consistent with 2022).
As at 31 December 2023 138,756 Executive share options vested and are therefore currently exercisable subject
to Board confirmation of satisfaction of performance hurdle achievement and approval.
The Executive Leadership Team includes the CEO. The CEO Remuneration section provides further details of share
option movements under the LTI Plan for the CEO.
Summersets Remuneration Policy relating to the Board and Executive is available to view here www.summerset.co.nz/
investor-centre/governance-documents/. The number of executives to whom this policy applies is nine (9) and Board
members seven (7).
This Remuneration Report contains disclosure of the employees (other than employees who are directors) who
received remuneration and any other benefits in their capacity as employees, the value of which was or exceeded
$100,000 per annum, in brackets of $10,000, as required by the Companies Act 1993.
Annual Report 2023
FY2023 KPI Performance
% STI payable
On-target performance exceeded
Key Performance Summary
STI Company performance 2023
FY2023 KPI
Underlying EBITDA
New sales development margin
On-target performance exceeded
Resales net cash
Development numbers
Customer satisfaction
On-target performance partially met
On-target performance met
On-target performance met
Customer clinical quality of care
On-target performance met
People & Culture
Health & Safety
Total payable
On-target performance met
On-target performance partially met
LTI performance for vested options 31 December 2023
Tranche 2 – 2020
December 2020 – tranche 2 vesting assessment summary Assessment
Weighting
114
Absolute earnings
Relative earnings
Staff engagement
Staff turnover
Customer satisfaction – village residents
Customer satisfaction – care residents
Clinical strategy delivery
Total
100%
100%
0%
100%
100%
100%
100%
50%
20%
5%
5%
5%
5%
10%
100%
53%
15%
3%
15%
10%
10%
5%
5%
116.4%
Total
50%
20%
0%
5%
5%
5%
10%
95%
Tranche 1 – 2021
Special transition grant – time-based grant of zero priced options, therefore no performance hurdles.
Chief Executive Officer remuneration arrangements and outcomes
CEO FY23 Remuneration outcomes
This year we have adopted the new NZX reporting guidelines issued in December 2023. This represents a change to
STI and LTI reporting in the CEO remuneration table (below). This table refers to the STI earned in the reporting year,
i.e. the FY23 STI reported will be paid in FY24. Previous annual reports refer to STI paid in the financial year, which may
relate to a previous year's performance. The LTI value in the table refers to the market value, less exercise price of the
vested options within the reporting period at the time of vesting. Previous annual reports record the value of options
issued in the reporting year, at the time of issue.
Overall FY23 remuneration
Year
Fixed
remuneration
Short Term
Incentive (STI)
Long Term
Incentive (LTI)
Total1
Base
Salary
Other
benefits2 Earned3
Amount
earned4 Total 5
Tranche
vesting
Number
of
options
vested6
Percent
awarded7
Market
price8
LTI
value9
FY23 $683,612 $26,388 $321,346
113%
$1,031,346 T1 2021
7,877
100%
$80,739
$1,112,085
FY22 $649,631 $25,365 $211,432
104%
$886,428 T1 2020
34,927
95%
T2 2020
30,191
95%
$10.25
$8.64
$0
$0
$937,428
T2 2019
50,000
90%
$51,000
FY21
10
$607,155 $24,095 $206,071
105%
$837,321
T1 2019
61,422
95%
$338,435 $1,587,868
T2 2018
60,694
95%
$412,112
$13.13
115
FY2111 $166,410
$681 $0
N/A
$167,091
N/A
0
N/A
N/A N/A
$167,091
1 Fixed REM + STI earned + LTI vesting
2 Other benefits for the current CEO include a car park and KiwiSaver.
3 The STI is the amount assessed as Earned in the reporting period but will be paid in the next (as the assessment of the STI performance hurdle was made after the balance
date). E.g. FY23 STI earned will be paid in the FY24 period
4 As a percentage of maximum award
5 Total cash remuneration earned
6 No LTI awarded in the FY21 period to former CEO
7 Maximum precentage awarded for the relevant performance period
8 At vesting date
9 At vesting date
10Current CEO
11 Former CEO (employment ended 26 March 2021)
Note: The CEO’s remuneration package does not include a severance or exit payment, payable on termination of the
CEO’s appointment.
KiwiSaver
The CEO is a member of KiwiSaver. As a member of this scheme, the CEO is eligible to contribute and receive a
company contribution of 3% of gross taxable earnings. For FY2023, the company’s contribution for Scott Scoullar was
$27,879.05 including ESCT.
STI
The CEO’s STI payable in relation to the FY2023 period (payable in February 2024) is $321,346 and is based on
achievement of shared KPI targets as per table above (80%) and individual targets (20%).
Annual Report 2023
Components of CEO FY2023 annualised remuneration
The CEO’s fixed remuneration comprised annual salary and taxable benefits set at $710,000 per annum. The STI
and LTI (based on the value granted in the FY2023), being 40% and 50% respectively of fixed remuneration. STI
had maximum available payment of 160% of the on-target as noted above. The standard LTI grant for 2023 will vest
based on performance to 31 December 2026 (tranche 1) and 31 December 2027 (tranche 2), subject to retention and
performance criteria being met. Further details are included in the LTI Plan entitlements section.
116
Description of Chief Executive Officer remuneration for performance for the year ended 31 December 2023
Plan Description
Performance measures
Percentage
awarded against on-
plan performance
LTI
In February 2023, vesting for 34,927 options
granted under the LTI Plan at $10.85 on
18 December 2020 was assessed per the Plan
Rules. The assessment period was 1 January 2021
to 31 December 2022. The vesting criteria were
assessed and 95% of the options vested.
In February 2023, vesting for 50,000 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 2022. The vesting criteria
were assessed and 90% of the options vested.
50% based on absolute earnings
95%
25% based on relative earnings
10% based on employee
strategy initiatives
10% based on customer satisfaction
5% based on clinical
strategy initiatives
50% based on absolute earnings
90%
25% based on relative earnings
10% based on employee
strategy initiatives
10% based on customer satisfaction
5% based on clinical
strategy initiatives
FixedShort-term incentivesLong-term incentivesFixedOn-planMaximum0500,0001,000,0001,500,000 Chief Executive Offficer – LTI Plan entitlements
PSRs granted to the CEO as at 31 December 2023
Unvested
PSR Award date
Vesting date Balance of PSRs at
31 December 2023
Awarded during the reporting period
PRS lapsed
during the
reporting period
T2 2023
T1 2023
T2 2022
T1 2022
T2 2021
T1 2021
31/12/27
31/12/26
31/12/26
31/12/25
-
-
17,815
17,815
31/12/25
10,635
31/12/24
10,635
Transition T2 2021 31/12/24
7,887
Vested
PSRs Awarded
Market Price
at Award
18,924
18,924
-
-
-
-
-
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
-
-
-
-
-
-
-
PSR
award
date
Vesting
Date
Balance
of PSRs
20221
Awarded during
the reporting
period
PRSs
lapsed2
Shares Vested during the
reporting period
Shares issued/transferred
during the reporting period
PSRs
Awarded
Market
price4
Market
price5
Market
value6
Vesting
date
Shares
issued/
transferred
Market
price7
Issue/
transfer
date
Transition
T1 2021
31/12/23 7,887
T2 2020
31/12/23 31,780
T1 2020
31/12/22 34,927
-
-
-
T2 2019
31/12/22 50,000 -
T1 2019
31/12/21 61,422
T2 2018
31/12/21 60,694
-
-
$0.00
$10.85
$10.85
$7.62
$7.62
$6.34
-
-
-
-
-
-
1 As at 31 December 2022
2 During reporting period
3 As at 31 December 2023
4 At award
5 At vesting date
6 At vesting date
7 At issue/transfer date
Note the CEO is also a participant of the Employee Share Scheme:
Issue date
17 July 2023
18 July 2022
19 July 2021
17 August 2020
22 July 2019
$10.25
$80,739
31/12/23 -
$10.25
($18,115)
31/12/23 -
$8.64
($77,189)
$8.64
$51,000
-
-
$13.13
$338,435 -
$13.13
$412,112
-
-
-
-
-
-
-
-
-
-
-
61,422
61,422
$8.85
01/09/23 -
$8.85
01/09/23 -
No. of shares
Status
97
98
73
Vesting 17 July 2026
Vesting 18 July 2025
Vesting 19 July 2024
107 Vested 17 August 2023
140
Vested 22 July 2022
117
Balance
of PSRs
20233
7,887
31,780
34,927
50,000
Annual Report 2023
The table above includes options granted under the LTI plan prior to 29 March 2021, when the CEO took up this role
(previously CFO).
ESG Disclosures
CEO/Worker Ratio
The pay gap represents the number of times greater the CEO 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
employees remuneration adjusted to a full-time equivalent amount.
At 31 December 2023, the CEO’s salary of $683,612 was 10.97 times (2022: 11.0 times) that of the median employee
salary at $62,296 per annum. The CEO's total remuneration, including STIs and LTIs, of $1,319,562, was 20.24 times
(2022: 20.0 times) the total remuneration of the median employee at $65,210 per annum.
Gender pay gap
Summerset is commited to cultivating a workplace that embraces diversity and inclusivity and acknowledges the
significance of addressing gender pay equity within the unique context of New Zealand and Australia.
We are undertaking a thorough examination of the factors contributing to any gender pay gap that may exist within
our organisation. We are dedicated to fostering an environment that values all employees, and we recognise the
importance of fair compensation and equal opportunities for everyone on our team.
While we are currently in the process of reviewing our internal data, Summerset affirms its commitment to advancing
discussions and initiatives that contribute to a workplace where every individual, irrespective of gender, is accorded
respect and opportunities.
118
Remuneration bands
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 2023 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 2023. The table also includes the value of options granted
to individual employees under Summerset’s LTI Plan during the same period. The table does not include amounts paid
after 31 December 2023 that relate to the year ended 31 December 2023.
The method of calculating remuneration is consistent with the method applied for the previous year.
Remuneration
Number of employees
Remuneration
Number of employees
$100,000 to $109,999
112
$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
$190,000 to $199,999
98
55
64
35
27
20
19
17
12
$200,000 to $209,999 9
$210,000 to $219,999
10
$220,000 to $229,999
$230,000 to $239,999
8
3
$320,000 to $329,999
1
$330,000 to $339,999 5
$340,000 to $349,999 1
$350,000 to $359,999
1
$360,000 to $369,999 2
$380,000 to $389,999 3
$390,000 to $399,999 1
$430,000 to $439,999 1
$440,000 to $449,999 1
$450,000 to $459,999
1
$460,000 to $469,999 1
$470,000 to $479,999
1
$480,000 to $489,999 1
$490,000 to $499,999 1
$240,000 to $249,999
$250,000 to $259,999
$260,000 to $269,999
$270,000 to $279,999
$280,000 to $289,999
7
4
6
2
3
$290,000 to $299,999 1
$300,000 to $309,999 3
$310,000 to $319,999
2
$640,000 to $649,999 1
$690,000 to $699,999 1
$710,000 to $719,999
$750,000 to $799,999
$810,000 to $819,999
1
1
1
$990,000 to $999,999 1
$1,310,000 to 1,319,999 1
119
Annual Report 2023
Director remuneration
The Board of Directors Chair fees were increased by the Board with effect from 1 September 2023. The increase was
made utilising the pool of funds approved by shareholders for payment of Directors fees. As at 31 December 2023, 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 (2022: $904,450) and annualised standard Directors’ fees were
$845,000, inclusive of additional remuneration for committee Chairs (2022: $831,200).
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 higher fees (as
recorded in the table below). As at 31 December 2023, the only Director who received payment in Australian dollars
was Stephen Bull.
As at 31 December 2023, the standard Director fees per annum are as follows:
Fee schedule
Governance body
Board of Directors
Audit and Risk Committee
Clinical Governance Committee
People and Culture Committee
120
Development and Construction Committee
Fees
for reporting
period
Position
Chair
$195,000
Director
Chair
Chair
Chair
Chair
$97,500
$20,000
$15,000
$15,000
$15,000
No additional fees are paid to standing 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.
The Company distinguishes the structure of non-executive Directors’ remuneration from that of executive Directors.
The total amount of remuneration and other benefits received by each Director during the year ended 31 December
2023 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 2023.
Actual fees paid in CY2023
Board
fees
Audit and Risk
Committee
People and
Culture
Committee
Clinical
Governance
Committee
Development and
Construction
Committee
Director
Mark
Verbiest
Anne
Urlwin
Dr
Andrew
Wong
Gráinne
Troute
Fiona
Oliver
Dr Marie
Bismark
Stephen
Bull
Venasio
Lorenzo
Crawley
$3,333
(outgoing Chair)
$140,450
(Chair)
$16,250
$97,500
$97,500
$81,250
$16,667
(incoming Chair)
$102,404
$105,491
$97,500
$15,000
(Chair)
$15,000
(Chair)
Other Board
Committees1
Total
$2,500 $142,950
$2,500
$22,083
$97,500
$5,000
$117,500
$97,917
$117,404
$16,229
$5,467
$127,187
$97,500
Total
$738,345
$20,000
$15,000
$15,000
$16,229
$15,467 $820,041
1 A Due Diligence Committee was established in FY23 to oversee Summerset's 2023 bond issue
121
Annual Report 2023
Disclosures
Director changes during the year ended 31 December 2023
Fiona Oliver was appointed to the Board on 1 March 2023. Anne Urlwin retired from the Board on 28 February 2023.
Directors’ interests
The following is an excerpt from the Company's Interests Register, showing the material interests of Directors as at
31 December 2023, 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 2023 are disclosed in italics.
Director
Entity
Mark
Verbiest
Dr Marie
Bismark
Meridian Energy Limited
Willis Bond
WorkSafe (appointed October 2023)
GMHBA Health Insurance
Royal Australasian College of Physicians
Veteran's Health Advisory Panel
Public Health Medicine Specialist registered with New Zealand Medical Council
Royal Women's Hospital, Melbourne
University of Melbourne
Te Whatu Ora - Capital & Coast (Role changed from Psychiatry Registrar to
Consultant Psychiatrist in June 2023)
Victorian Department of Health's Voluntary Assisted Dying 5 Year Review
Governance Committee (appointed September 2023
Australian Institute of Company Directors (Victoria)
Director
Entity
122
Gráinne
Troute
Dr
Andrew
Wong
Tourism Holdings Limited
Investore Property Limited
Duncan Cotterill
Montana Group Limited (appointed June 2023)
Tourism Industry Aotearoa (retired June 2023)
Tourism Industry Transformation Plan (retired June 2023)
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
Forte Health Limited (appointed June 2023)
Careway Ltd
Mountain Road Properties Ltd
Position
Chair
Consultant
Crown Monitor
Director
Fellow
Member
n/a
Director
Professor
Consultant Psychiatrist
Member
Council Member
Position
Director
Director
Board Member
Chair
Chair
Chair
Managing Director
Director
Director
Director
Director
Managing Director
Director
Director
Chair
Chair
Director
Chair
Adjunct Professor
Director
Chair
Director
Venasio-
Lorenzo
Crawley
AUT Business School
Added Value Limited
Te Whatu Ora - People, Culture, Development and Change Committee
Chair
Director and Shareholder
Independent Board Member
Director
Entity
(appointed February 2023)
IOD Pacific Governance Advisory Board (appointed February 2023)
Stephen
Bull
MaxCap Industrial Opportunites Fund
Bridge Housing Limited (appointment changed from Director to Chair in
November 2023)
NSW Government Transport Asset Holding Entity (appointed February 2023)
Wingate Direct Property (retired June 2023)
Position
Member
Investment
Committee Member
Chair
Investment
Committee Member
Investment
Committee Member
Fiona
Oliver
Freightways Limited1
Gentrack Group Limited1
First Gas Limited (including related subsidiaries and holding companies)1
Kingfish Limited1
Barramundi Limited1
Marlin Global Limited1
New Zealand Waterpolo1
Grasmere Trust1
Bella Vista Trust1
Wilson Partners (Oliver) Trustees Limited1
Wynyard Group Limited (in liquidation)1
NZ Superannuation Fund1
Director
Director
Director
Director
Director
Director
Director
Trustee
Trustee
Director
Director
Guardian
Anne
Urlwin*
Infratil Limited (appointed January 2023)
Te Runanga Audit and Risk Committee of Te Runanga O Ngai Tahu
City Rail Link Limited
Precinct Properties New Zealand Ltd
Queenstown Airport Corporation Ltd
Vector Limited
Ventia Services Group Limited
1 Added 1 March 2023 on appointment
*Anne Urlwin ceased to be a Director with effect from 28 February 2023.
Information used by Directors
Director
Independent Chair
Director
Director
Director
Director
Director
123
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 2023 are specified in the
table below:
Director
Mark Verbiest
Dr Marie Bismark
Gráinne Troute
Dr Andrew Wong
Venasio-Lorenzo Crawley
Stephen Bull
Fiona Oliver
Total
Ordinary shares
SUM020
retail bonds
SUM030
retail bonds
SUM040
retail bonds
11,500*
24,967
25,843
10,500
4,285
6,700
9,700
93,495
–
–
–
–
–
–
–
0
–
–
–
–
–
–
–
0
–
–
–
–
–
–
–
0
*Mr Verbiest's wife has a legal and beneficial interest in 11,500 SUM ordinary shares.
Annual Report 2023
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
Dr Marie
Bismark
Nature of
relevant interest
Date of
transaction
Legal and
beneficial interest
23 March
2023
Legal and
beneficial interest
19 September
2023
Gráinne
Troute
Legal and
beneficial interest
23 March
2023
Legal and
beneficial interest
19 September
2023
Number of
securities
acquired/
(disposed)
283
246
233
201
Consideration
Issue of shares under dividend reinvestment plan
at $8.50 per share
Issue of shares under dividend reinvestment plan
at $9.65 per share
Issue of shares under dividend reinvestment plan
at $8.50 per share
Issue of shares under dividend reinvestment plan
at $9.65 per share
Fiona
Oliver
Power to acquire
or dispose
23 May 2023
9,700
On-market acquisition of ordinary shares at an
average prices of $8.75 per share
Director appointment dates
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.
124
Director
Mark Verbiest
Anne Urlwin*
Dr Marie Bismark
Gráinne Troute
Dr Andrew Wong
Venasio-Lorenzo Crawley
Stephen Bull
Fiona Oliver
*Anne Urlwin retired on 28 February 2023
Indemnity and insurance
Appointment date
1 July 2021
1 March 2014
1 September 2013
1 September 2016
1 March 2017
1 February 2020
1 March 2022
1 March 2023
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 this Annual Report. Employees did
not receive additional remuneration or benefits for acting as Directors during the year.
Scott Scoullar, Will Wright, Aaron Smail, Dean Tallentire, Sarah Theodore and Robyn Heyman were Directors of all the
Company’s New Zealand incorporated subsidiaries as at 31 December 2023, 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, Sarah Theodore and Robyn Heyman were Directors of all the Company’s Australian incorporated subsidiaries
as at 31 December 2023, with the exception of Summerset Care (Australia) Pty Limited (the Directors of which are
Scott Scoullar, Will Wright, Stewart Scott and Robyn Heyman). No extra remuneration is payable to any Director of the
Company for any Directorship of a subsidiary.
Top 20 Shareholders as at 31 December 2023
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
HSBC Nominees (New Zealand) Limited*
Tea Custodians Limited*
BNP Paribas Nominees NZ Limited (BPSS40)*
Citibank Nominees (NZ) Ltd*
New Zealand Superannuation Fund Nominees Limited*
FNZ Custodians Limited
Accident Compensation Corporation*
Forsyth Barr Custodians Limited
JPMORGAN Chase Bank*
New Zealand Depository Nominee
Hobson Wealth Custodian Limited
New Zealand Permanent Trustees Limited*
HSBC Nominees (New Zealand) Limited*
Premier Nominees Limited*
JBWERE (NZ) Nominees Limited
BNP Paribas Nominees (NZ) Limited*
Premier Nominees Limited*
Public Trust*
Pt Booster Investments Nominees Limited
23,996,219
20,121,837
19,644,791
17,154,294
14,900,170
13,426,762
8,503,512
8,258,257
6,728,914
6,684,523
5,015,193
4,797,188
3,990,722
3,717,515
3,531,903
2,843,399
2,392,446
2,131,651
2,108,204
1,785,318
10.24%
8.59%
8.39%
7.32%
6.36%
5.73%
3.63%
3.52%
2.87%
2.85%
2.14%
2.05%
1.70%
1.59%
1.51%
1.21%
1.02%
0.91%
0.90%
0.76%
125
Total
171,732,818
73.29%
* Shares held through the New Zealand Central Securities Depository Limited
Spread of Shareholders as at 31 December 2023
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
Total
Shareholders
Number
Shareholders
%
3,978
3,975
1,056
710
53
54
9,826
Shares
Number
1,679,613
9,802,616
7,619,188
13,387,995
3,602,084
198,189,886
40.48%
40.45%
10.75%
7.23%
0.54%
0.55%
100.00%
234,281,382
Shares
%
0.72%
4.18%
3.25%
5.71%
1.54%
84.60%
100.00%
Annual Report 2023
Substantial product holder notices received as at 31 December 2023
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 2023. The total number of voting products on
issue at 31 December 2023 was 234,281,382 ordinary shares.
Shareholder
Fisher Funds Management Limited
Harbour Asset Management Limited*
New Zealand Superannuation Fund
Nominees Limited
Relevant interest
13,375,316
13,344,167
% held at date
of notice
Date of notice
5.7365%
31 August 2023
5.721%
24 March 2023
11,687,398
5.017%
2 May 2023
* Includes the holding of related body corporate, Jarden Securities Limited
Top 20 Bondholders as at 31 December 2023
SUM020
Rank
Registered Bondholder
Number of bonds
% of bonds
126
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Custodial Services Limited
FNZ Custodians Limited
Hobson Wealth Custodian Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
Best Farm Limited
Private Nominees Limited*
Investment Custodial Services Limited
Tea Custodians Limited*
PT (Booster Investments) Nominees Limited*
JBWERE (NZ) Nominees Limited
Hobson Wealth Custodian Limited
Comonwealth Bank of Australia*
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Custodial Services Limited
New Zealand Permanent Trustees Limited*
Hobson Wealth Custodian Limited
Investment Custodial Services Limited
Westpac Banking Corporation*
28,907,000
22,673,000
19,038,000
17,808,000
1,762,000
1,500,000
1,445,000
1,386,000
1,368,000
1,296,000
1,192,000
1,060,000
772,000
678,000
629,000
599,000
582,000
547,000
500,000
474,000
23.13%
18.14%
15.23%
14.25%
1.41%
1.20%
1.16%
1.11%
1.09%
1.04%
0.95%
0.85%
0.62%
0.54%
0.50%
0.48%
0.47%
0.44%
0.40%
0.38%
Total
104,216,000
83.39%
* Bonds held through the New Zealand Central Securities Depository Limited
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=
17=
18
19
20
Custodial Services Limited
Tea Custodians Limited*
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Hobson Wealth Custodian Limited
Westpac Banking Corporation
NZ Permanent Trustees Ltd Grp Invstmnt Fund No 20*
FNZ Custodians Limited
Investment Custodial Services Limited
ANZ National Bank Limited*
Private Nominees Limited*
JBWERE (NZ) Nominees Limited
Hobson Wealth Custodian Limited
Forsyth Barr Custodians Limited
JPMORGAN Chase Bank
NZX WT Nominees Limited
Leveraged Equities Finance Limited
Commonwealth Bank of Australia*
JML Capital Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
44,033,000
23,260,000
17,068,000
14,363,000
10,124,000
2,340,000
2,093,000
1,590,000
1,324,000
1,265,000
1,215,000
1,195,000
1,165,000
969,000
957,000
775,000
760,000
760,000
700,000
668,000
608,000
29.36%
15.51%
11.38%
9.58%
6.75%
1.56%
1.40%
1.06%
0.88%
0.84%
0.81%
0.80%
0.78%
0.65%
0.64%
0.52%
0.51%
0.51%
0.47%
0.45%
0.41%
127
Total
127,232,000
84.87%
* Bonds held through the New Zealand Central Securities Depository Limited
SUM040
Rank
Registered Bondholder
Number of bonds
% of bonds
1
2
3
4
5
6
7
8
9
10
11
12
Custodial Services Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
JBWERE (NZ) Nominees Limited
Hobson Wealth Custodian Limited
HSBC Nominees (New Zealand) Limited*
Tea Custodians Limited*
New Zealand Permanent Custodian Limited
Investment Custodial Services Limited
Forsyth Barr Custodians Limited
Private Nominees Limited*
Pt (Booster Investments) Nominees Limited*
51,852,000
24,722,000
9,894,000
8,960,000
8,344,000
7,000,000
5,690,000
3,553,000
2,899,000
2,124,000
1,685,000
1,280,000
29.63%
14.13%
5.65%
5.12%
4.77%
4.00%
3.25%
2.03%
1.66%
1.21%
0.96%
0.73%
Annual Report 2023
13=
13=
14
15
16
17
18
19
20
Christopher William Randall
JBWERE (NZ) Nominees Limited
Phazma Holdings Limited
Yingxian Shi
JBWERE (NZ) Nominees Limited
David James Foster & Linda Joyce Foster
NZX WT Nominees Limited
Wellspring Television Limited
Custodial Services Limited
Total
1,000,000
1,000,000
935,000
900,000
750,000
600,000
580,000
509,000
502,000
0.57%
0.57%
0.53%
0.51%
0.43%
0.34%
0.33%
0.29%
0.29%
134,779,000
77.00%
* Bonds held through the New Zealand Central Securities Depository Limited
Spread of bondholders as at 31 December 2023
128
SUM020
Size of bondholding
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
Total
SUM030
Size of bondholding
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
Total
Bondholders
Number
Bondholders
%
100.00%
125,000,000
Bondholders
Number
Bondholders
%
Bonds
Number
-
215,000
1,278,000
10,763,000
3,421,000
109,323,000
Bonds
Number
-
235,000
1,565,000
11,012,000
4,088,000
133,100,000
-
6.60%
20.40%
61.66%
5.98%
5.36%
-
6.65%
22.91%
57.85%
6.93%
5.66%
100.00%
150,000,000
-
43
133
402
39
35
652
-
47
162
409
49
40
707
Bonds
%
-
0.17%
1.02%
8.61%
2.74%
87.46%
100.00%
Bonds
%
-
0.16%
1.04%
7.34%
2.73%
88.73%
100.00%
SUM040
Size of bondholding
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
Total
Bondholders
Number
Bondholders
%
-
69
179
598
106
79
-
6.70%
17.36%
58.00%
10.28%
7.66%
Bonds
Number
-
345,000
1,707,000
16,613,000
8,579,000
147,756,000
1,031
100.00%
175,000,000
Bonds
%
-
0.20%
0.98%
9.49%
4.90%
84.43%
100.00%
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 2023.
Credit rating
The Company has no credit rating.
129
Annual Report 2023
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 FY23 audit fees was $345,300 (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 $52,000. Ernst & Young also performed non-audit work in relation to remuneration
advisory services and training, the fees for this engagement was $11,400.
Donations
In accordance with section 211(1)(h) of the Companies Act 1993, Summerset records that it donated $8,800 during the
year ended 31 December 2023.
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 12 March 2024.
This Annual Report is authorised for and on behalf of the Board by:
130
Mark Verbiest
Director and
Chair of the Board
Fiona Oliver
Director and
Chair of the Audit and
Risk Committee
23 February 2024
Directory
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
1 Proposed villages
131
Summerset Half Moon Bay1
25 Thurston Place,
Half Moon Bay,
Auckland 2012
Phone (09) 306 1422
Summerset St Johns
188 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
Annual Report 2023
Summerset at Pohutukawa Place
70 Pohutukawa Place, Bell Block,
New Plymouth 4312
Phone (06) 824 8532
Summerset Lower Hutt
1 Boulcott Street,
Lower Hutt 5010
Phone (04) 568 1442
Summerset Prebbleton
578 Springs Road,
Prebbleton 7604
Phone (03) 353 6312
Manawatū
– Whanganui
Summerset Cashmere Oaks1
Lansdowne
Masterton 5871
Phone (06) 370 1792
Summerset Rolleston1
153 Lincoln Rolleston Road
Rolleston
Phone (0800) 786 637
132
Summerset in the River City
40 Burton Avenue, Whanganui East,
Whanganui 4500
Phone (06) 343 3133
Summerset on Summerhill
180 Ruapehu Drive, Fitzherbert,
Palmerston North 4410
Phone (06) 354 4964
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 villages
Nelson – Tasman
Otago
Summerset in the Sun
16 Sargeson Street, Stoke,
Nelson 7011
Phone (03) 538 0000
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
Summerset Mosgiel1
51 Wingatui Road,
Mosgiel 0616
Phone (03) 474 3930
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
Australia
Victoria
Summerset Cranbourne North
98 Mannavue Boulevard,
Cranbourne North VIC 3977
Phone (1800) 321 700
Summerset Chirnside Park
266-268 Maroondah Hwy,
Chirnside Park VIC 3116
Phone (1800) 321 700
Summerset Torquay1
Grossmans Road and Briody Drive,
Torquay VIC 3228
Phone (1800) 321 700
Summerset Cragieburn1
1480 Mickleham Road,
Craigieburn VIC 3064
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
1 Proposed villages
133
Annual Report 2023
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
Fiona Oliver
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
134
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
China Construction Bank (New Zealand Limited)
135
Artist impression of Summerset by the Ranges, Levin care centre refurbishment 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