FKP Property Group Half Year Results Presentation · 2020-02-08 · Mandated step downs comprise $10m in June 2010, $60m in July 2011 and $15m in December 2011. The core $225m portion

1

FKP Property GroupHalf Year Results Presentation

25 February 2010

2

CONTENTS1. Overview2. Summary of Group Results3. Gearing and Covenants4. Divisional Commentary5. Cash Flow and Funding6. Summary and Outlook7. Appendices

3

Overview

• Significant lifts in operating profit and cash flow further strengthen the

Group's financial position as it sets itself for growth

A strong six months from operations

• The Group's deliberate reweighting towards residential set to underpin profit

growth going forward

Quality residential asset base

4


5

Key Outcomes

• From FKP Property Trust, in line with guidance

0.5 cpsDistribution

• Impact of capital raising4.6 cpsOperating EPS

• 90% increase on pcp$115.1mOperating cash flow (before development investment spend)

• Reduced from 42% at June

• Increase from $1.22 (pro forma June 09)

• Write-down cycle has slowed

• 40% increase on pcp

$48.8mStatutory profit after tax

28%Gearing

$1.27NTA

$49.2mOperating profit after

tax

6

0

10

20

30

40

50

60

70

80

EBITDA before revaluation

$17.1m

Retirementvaluation$51.7m

0

10

20

30

40

50

60

70

80

90

100

Retirementvaluation$37.9m

EBITDA before revaluation

$48.9m

Quality Operating Result

Dec 08 Dec 09

• Lift in operating profit occurs despite lower retirement revaluation1

186% lift in EBITDA before revaluation

1 “Retirement Revaluation” is a reference to the non-cash, operating component of the revaluation

Total $68.8m

Total $86.8m

7

Reporting Format Changes with New Platform• Effective July 1, 2009, FKP revised its management structure to introduce national

platforms for development sectors in place of the former state-based development and land divisions

• Operating results are now reported as:

• Retirement (as before)

• Residential Communities (medium-density and land)

• Commercial and Industrial (development activity plus FKP Property Trust)

• Funds Management and Investments

• Results for National Construction are not shown separately, but reported within either Residential Communities or Commercial and Industrial depending on type of work

• Prior period allocations have been reconstituted to reflect new structure

8

Divisional Contribution to Operating Profit

40% increase

Tax percentage varies from period to period based on Trust proportion

Reduced debt levels partly offset by higher margins

Improved trading in RVG, but lower revaluation increase

Pre-sale of Energex plus construction activity

Returned to profit through modest pick-up in Peregianand apartment sales

62% lift in cash DMF / Capital Gains but lower revaluation increase

(2.6)(3.0)Depreciation and Amortisation

66.283.8EBIT

(1.1)5.5Residential Communities

(2.4)(1.5)Outside Equity Interests

68.886.8EBITDA

(19.4)(16.6)Interest

46.867.2Profit Before Tax

10.75.4Funds and Investments

(7.6)(7.5)Unallocated Overhead

(9.2)(16.5)Tax

35.2

37.6

3.4

63.4

Dec 08Dec 09Division

49.2

50.7

27.3

56.1

NET OPERATING PROFIT1

Profit After Tax

Commercial and Industrial

Retirement

1 Refer to Appendix 2 for a Reconciliation of Segment Notes to Divisional Operating Profit and Appendix 3 for December 2009 Summary Balance Sheet

9


10

Gearing Reduced to 28%

28%31%40%“LOOK THROUGH GEARING” *

38%42%55%COVENANT GEARING4

28%30%42%DEBT GEARING3

743

(34)

(20)

797

Actual Dec 09

1,102

(14)

(37)

1,153

Actual Jun 09

793

(14)

(37)

844

Jun 09 Pro Forma for Entitlement

Offer 1

Less: Cash

Less: Non-bank items2

“Borrowings” per Accounting Standards

NET BANK DEBT DRAWN

1 Pro forma for the July 2009 Entitlement Offer2 Includes $19m advance from Mulpha FKP joint venture plus vendor finance and lease payables3 Net bank debt to assets net of resident loans4 Adjusted Total Liabilities (total liabilities less resident loans less deferred tax liabilities) divided by adjusted Total Tangible Assets (total assets less intangibles

less resident loans less deferred tax liabilities)

* Note: There are no FKP covenants relating to performance of external vehicles –“look through gearing” is provided for information purposes only

11

Significant Headroom Under Bank Facilities

Jun-12

Dec-11

Jun-12

Jun-10 – Jul-122

Mar-11

Nov-10

Mar-10

Maturity

�12Forest Place Group

1,045Total Cash Banking Facilities3,4

743Net Bank Debt Drawn as at 31 Dec 2009

302Available Capacity December 2009

SecuredFacility

Limit ($m)Cash Banking Facilities

�14Peregian Springs Shopping Centre

�375Retirement Syndicate

�30Currumbin Development

�3101Development Multi-Option Facility

FKP Limited Facilities

�150Wilbow Development

FKP Property Trust Facilities

�154General Trust

1 The lender also provides $45m of bank guarantee facilities comprising a general $25m bank guarantee facility plus a specific $20m Energex building bank guarantee facility2 The Development Multi-Option Facility amortises incrementally across its term. Mandated step downs comprise $10m in June 2010, $60m in July 2011 and $15m in

December 2011. The core $225m portion matures in July 20123 Excludes $19m advance from Mulpha FKP joint venture4 Refer to Appendix 4 for details on Interest Rates / Hedging

FPG has agreed a term sheet to

refinance

Refinanced in November 2009

12

All Key Covenants Comfortably Met

Loan amount outstanding / Mortgaged Property Valuation

Net Rent / Interest Expense

Loan amount outstanding / Mortgaged Property Valuation

Cash receipts (as defined) / Net Finance Costs - Loan Establishment

Fees

The amount by which total tangible assets exceeds total liabilities

(Operating EBITDA - Net non-cash component of retirement revaluation) /

Net Finance Costs - Loan Establishment Fees

(Total Liabilities - Resident Obligations - Deferred Tax Liability) / (Total

Tangible Assets - Resident Obligations - Deferred Tax Liability)

��1.3x2.2xInterest Cover

Retirement Syndicate

��<60%35%LVR

General Trust Facility

Corporate

��>$1.0b$1.5bNTA

��>1.2x1.9xInterest Cover

��>1.5x3.7xInterest Cover

��<55%38%Gearing

52%

Dec 09 Actual

<60%

Required

��LVR

StatusCovenant

The figure of 35% is based on the December 2009

book value of the assets pledged as security under the facility. Not all assets

have been formally valued, and FKP obtains formal valuations on enough

assets from time to time in order to remain within the

covenant requirement

No interest cover covenant was applied for the half

year, but 1.5x is the requirement over the full

year

The actual result is higher than 1.9x, but after

eliminating for one-off and abnormal results, this is a

more representative outcome

13

$115m Operating Cash Flow Before Development Investment

86.9

(28.2)

115.1

Dec 09 ($m)

(35.2)

(95.2)

60.0

Dec 08 ($m)$m

Net Cash Flow from Operations per Statutory Account s

Expenditure on development for future period realisation

Cash generated from recurring income and past development activity

• As stated in August 2009, FKP currently has minimal development commitments

• The $28m development expenditure in the six months was largely Point Cook and Rosebery

Analysis of cash flow and funding capacity is contained in Section 5

14


15

RC 80%

C&I 5%

Retirement15%

Retirement59%

RC6%

C& I Trading

19%

C & I Recurring

10%F & I6%

Residential Communities Set to Prosper

Dec 09 HalfEarnings Composition

DevelopmentPipeline 1

Future Earnings Composition

Deliberate re-weighting of the development book towards residential will see much stronger profit contribution from that division in future compared with the past six months

1 Based on estimated end values of inventory

16

Retirement – Cash Generation Returns to Growth

7%10%Portfolio Turnover (measured on sales)

28%29%Average DMF Rate of Contracts in Place

$1.7b$1.8bUnderlying Property Value

81.782.0Average Age of Residents

$8.6m$8.2mNew Sales Revenue

50%

$12.7m

Dec 08Dec 09Key Statistics

50%

$20.6m

Average Capital Gain Share of Contracts in Place

Cash Receipts from DMF / Capital Gain

• Cash earnings from DMF / Capital Gains up 62% on same period last year

• 62% growth largely attributable to:

• 30% lift in resales volume to a record 273 units (this figure does not include sales of refurbished buy-back units)

• Higher transaction pricepoint ($214k to $237k)

• Property price growth of 2.8% on like-for-like basis (5.6% annualised)

• Average age of residents increased to 82 (FKP figure does not include residents in aged care facilities)

• Slightly reduced new sales due to lower completion of new stock

Current period cash and accounting reconciliations and valuation sensitivities are

included as Appendix 7

17

Retirement Division Outlook• Second half cash generation budgeted

to be higher than first half through volume and price increases

• Average DMF rate under existing contracts continues to increase. Now 29% compared with 27% in 2006

• Continuing drive on overheads –efficiencies being extracted from national platform established in 2008 following multiple acquisitions

• Development of St Georges Basin (180 units) on NSW South Coast expected to commence mid-year

• Petrie development compulsorily acquired in September 2009 reduces forward pipeline to 609 units (but with a further 873 in managed syndicates and RVG)

10,213

224

4,000

5,989

Existing

1,482

257

616

609

Pipeline

11,695Total

481Managed for Syndicates

4,616Managed for RVG 1

6,598On FKP Balance Sheet

TotalAveo Units (Dec 09)

1 RVG also has villages in New Zealand which are not managed by FKP

Geographic Distribution(By units owned and managed)

QLD38%

SA11%

NSW / ACT20%

VIC29%

TAS2%

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Residential Communities Returns to Profitability

198376Land Lots Sales Pipeline (exchanged contracts)

932Apartment Sales

$(1.1m)$5.5mOperating Profit

9776Built-form Sales Pipeline (exchanged contracts)

$14.7m$34.0mSales Revenue

49

Dec 08Dec 09Key Statistics – Residential Communities

77Lot Sales

• Land Lots

• Point Cook sales continue strongly with increased prices on Stages 5 and 6

• Signs of recovery in Sunshine Coast market with approximately 60 lot sales at Sunshine Coast up threefold on same period last year

• Early signs of turnaround in other centres with improved sales recorded at Maitland and Cowes

• Development approval received for Rochedale

• Built Form

• Focus on recycling completed inventory.

• Successful launch of Aerial Apartments, Melbourne. Pre-sales exceed 25% within two months of launch

• Revised development consent achieved for Milton

Geographical Distribution of Land Lots

QLD39%

VIC44%

NSW17%

19

Residential Communities Outlook

85%% of lots with planning approval

$3.5bEnd Value

15Future Development Projects

100%

7,500

% of lots zoned

Lots Controlled

Assets/ Pipeline

Rebound in “Upgrader” house prices(Established house price quarterly change %) 1

1 Source ABS

• Residential Communities positioned to again become a significant profit contributor as Point Cook (FY10) and Rochedale (FY11) come on stream

• FKP well placed to capitalise on the rebound of the “upgrader” market with products not reliant on first home buyers

• Strong pre-sales activity continues at Point Cook with >300 pre-sales. Works on target for completion before June

• Peregian showing signs of stronger activity. Stage 41 comprising 38 lots substantially sold out in short period

• Rosebery project 80% of apartments pre-sold

• Future development activities not impacted by urban planning red tape and deemed “market ready”

-10.0

-5.0

0.0

5.0

10.0

15.0

Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09

20

Energex Contributes to Solid Result in C&I

104On-Balance Development Projects

3.427.3Divisional Profit Contribution

Trading Metrics

101,616m2110,291m2NLA

4.7yrs4.5yrsWALE

$338m$342mTotal Property Value

1111# of Properties

Recurring Income Metrics

86%90%Occupancy

7.60%7.85%WACR

$0.9b$0.4bEnd-Value of Controlled Projects

(3.2)18.2- Trading

66Joint-Venture Projects

$214m$42mOn-Balance Sheet Inventory

6.69.1- Recurring

$m

Dec 08Dec 09Key Statistics – Commercial & Industrial

$mOperating profit

• Trading (development) highlights include

• Pre-sale of Energex development with continuing FKP involvement as project manager and builder

• Improvement in sales of industrial land subdivision projects

• Active and profitable construction activity including government schools program

• Trust asset managers remain focused on key strategies of value-managed re-positioning and divestment of non-core assets:

• Completion and refurbishment of Clarence St, Sydney

• Continuation of divestment of non-core assets with sale of Redbank Retail Centre

• Continued focus on leasing of completed project

− Positive take-up of leasing at Browns Plains (more than 70%). JB Hi-Fi secured February 2010

− Successful leasing of Spring St

− ~25% of Clarence St leased, with healthy pipeline

21

VIC 12%

QLD 36%NSW 52%

Commercial and Industrial Outlook• Short-term focus on clearing remaining

inventory of strata and industrial units

• Planning underway on retail and commercial component of NewsteadRiverpark

• Monitoring market conditions for selective re-entry to project activity

• Trust asset management focus is on lease-up of completed space and renewals strategies

• Key commercial construction activities on track, especially Energex for completion early 1H FY11

Geographical Distribution of Property Trust Assets(By value)

0%

5%

10%

15%

20%

25%

30%

Vacant 2010 2011 2012 2013 2014 2015 2016 2017 2018+

Property Trust Lease Expiry Profile(By area)

22

Funds Management and Investments Performance

0.60.6FKP Core Plus Fund

0.40.4US Senior Living Group

1.51.0Funds Management Operations

8.03.0Retirement Villages Group

10.7

0.2

Dec 08Dec 09Operating Profit Contribution ($m)

5.4

0.4

Total

FKP Core Plus Fund Two

• Funds management result reflects no performance fees and lower base fees as a result of asset divestment and repositioning

• Core Plus Funds performing satisfactorily in tough market conditions, with asset values stabilised

• RVG core operations rebounded:

• Portfolio resales volume up 25% on pcp

• Interest expense lower following December 2008 recapitalisation

• Reduction in reported earnings because of lower revaluation, with below trend price growth in New Zealand

• US investments performance reflects resilience of retirement asset despite a continuation of tough economic environment

127.817%Retirement Villages Group

9.128%FKP Core Plus Fund Two

16.115%FKP Core Plus Fund

181.2

28.2

Book Value ($m)

HoldingPortfolio Investments 1

50%

Total

US Senior Living Group

1 Where investments are less than 100%, book value shown is value of FKP investment

23

Office69%

Industrial20%

Retail6%

Development5%

Funds Management and Investments Outlook

100%$0.3bFKP Property Trust

FM Ownership

FUMFund

100%$0.2bFKP Core Plus Fund

100%$0.4bFKP Core Plus Fund Two

50%

Summary of Funds Under Management

$1.2bRetirement Villages Group

Core Plus Funds Sector Allocation (By value)

• Focus of Core Plus Funds remains on capitalising on repositioning of assets

• Leasing focus on recently refurbished space and upcoming expiries

• Continue improvement program on portfolio quality through DA approval for Mosman Cache

• Delivery of key retirement fundamentals remains the focus of RVG fund

• Settlement pipeline replenished with strong level of deposits taken in first half

• Valuation cycle expected to have bottomed

• Rebranding of US operations completed under new management

24


25

Cash Analysis – Half Year to Dec 2009

Cash Inflows Cash Outflows

Development investment

$28m

Dividend$5m

• Strong operating cash flow easily covered all commitments and enabled additional debt reduction to the $312m repaid from the July 2009 capital raising

Net investment properties sold less

new investment$27m

Operatingcash flow$115m

Reduction of bank debt

$50m

Reduction of other loans and

borrowings$20m

Cash interest$39m

26

$555m

$188m

$743m$302m

$302m

Debt Available Debt Drawn

FKP’s Funding Capacity Needs to be Considered From Two Perspectives

+ =

The recurring income parts of the business have fully-drawn facilities. ICR covenants are

based on cash cover, and are being exceeded

The development part of the business has $490m of

capacity which is drawn to $188m. Interest can be capitalised and whole of

business covenants are framed accordingly

Retirement & Trust Development FKP Total

Total facilities and

undrawn component

as per Section 3

27

Near-Term Development PipelineCurrent Material Projects

~ $30m (80% pre-sold)~ $10m / 1Q FY2011Rosebery

~ $75m (80% pre-sold)~ $15m / 4Q FY2010Point Cook initial phase

Estimated End ValueEstimated Remaining Project

Spend Until CompletionProject

~ $190m~ $125m / Mid CY2012Milton

~ $135m~ $85m / Mid CY2012Aerial

Estimated End ValueEstimated Remaining Project

Spend Until CompletionProject

Imminent Material Built Projects

28

Development Funding Capacity• FKP has the following current or near-term sources of liquidity for development:

• Existing lines available ~ $300m

• Estimated cash surplus to arise from Point Cook / Rosebery ~ $80m

• Completed inventory available for sale ~ $150m1

• In addition, both recurring income business components (retirement and trust) are producing surplus cash over funding costs

• FKP has no significant development projects currently committed beyond Point Cook and Rosebery

• Land projects such as Point Cook and Rochedale are undertaken in stages, such that the maximum outlay before initial stage revenues are generated is typically in the range of $25m –$30m per project

• The available development liquidity is more than sufficient to cover estimated outlays for imminent developments (Rochedale, Aerial, and Milton)

• Other projects such as Albion and the next stage of Newstead can be accommodated within existing lines (depending on project timing) but they will probably straddle the existing maturity dates of the facilities

1 This figure includes completed retirement units that are available for immediate occupation. The value of these units is included under “Investment Properties” under AIFRS rather than “Inventory”

29


30

Summary

FKP has come throught the GFC in strong financial shape and with its key assets intact. It is set to deliver on growth and has funding in place to do so

Retirement had only a temporary downturn during the GFC, and cash and earnings growth has resumed and is set to continue through stronger volumes, price growth and margins

The deliberate reweighting to residential sees FKP position for growth in the profitability of Residential Communites as Point Cook and Rochedale come on stream and Peregian Springs / Ridges continue to recover

Medium density developments at Aerial and Milton are expected to commence construction over the next six months when adequate pre-sales are in place

31

Outlook

32


33

Appendices

Retirement Division Detailed Financials and Asset SensitivitiesAppendix 7

Summary of FKP Property Trust AssetsAppendix 6

Reconciliation of Investment Property AssetsAppendix 5

Statutory (AIFRS) ProfitAppendix 1

Reconciliation of Segment Notes to Divisional Operating ProfitAppendix 2

About FKPAppendix 8

Appendix 4

Appendix 3

Interest Rates / Hedging

December 2009 Summary Balance Sheet

34

Statutory (AIFRS) Profit

1.4Non-operating gains on equity investments

4.1Non-operating gains in retirement portfolio

7.6Mark to market of interest rate swaps

(5.6)Non-cash share-based payments under AASB2

48.8Headline Profit After Tax

49.2Operating Profit After Tax

1.9Other (including bad debts recovered)

(9.8)FKP Property Trust asset write-downs

$m

Appendix 1

35

Reconciliation of Segment Notes to Divisional Operating ProfitAppendix 2

(2.1)

-

0.9

-

(3.0)

-

(3.0)

-

-

(2.0)

-

-

(1.0)

Non Operating Investment

Gains

86.80.1(10.9)-9.8(5.2)5.690.4EBITDA

(7.6)

-

3.3

-

(10.9)

-

-

(10.9)

-

-

-

-

Interest Rate Derivatives

-

-

-

-

-

-

(8.6)

-

7.1

(0.1)

-

1.6

Share of Equity

Investments

9.8

-

-

-

9.8

-

-

-

-

9.8

-

-

Trust Asset Write-downs

(3.0)

0.5

1.7

-

(5.2)

-

-

-

-

-

-

(5.2)

Retirement Portfolio

Write-down

---8.6Equity Investments

(16.5)0.4-(22.8)Income Tax

49.2(2.3)5.648.8NPAT

(1.5)--(2.0)Minority Interest

(16.6)0.2-(16.8)Unallocated/ Interest Expense

83.8(2.9)5.690.4EBIT

(3.0)(3.0)--Depreciation and Amortisation

1.9

0.3

0.9

(3.4)

0.4

Other

5.6

-

-

-

-

AASB2 Non-Cash

Share Payments

(7.5)

5.4

27.3

5.5

56.1

Operating Profit

Reported Segment

ProfitDivision

(4.1)

-

16.7

8.9

60.3

Other/ Unallocated

Funds Management and Investments

Commercial and Industrial

Residential Communities

Retirement

36

December 2009 Summary Balance Sheet

3,803Total Assets

3Intangibles

33PP&E

330Investments

154Cash/ Receivables/ Other

610

2,673

$m

Investment Properties

Assets

Inventories

Appendix 3

1,477Net Assets

2,326Total Liabilities

12Hedge Liability

176Deferred Tax

20Other Borrowings

178Payables & Provisions

777

1,163

$m

Resident Loans

Liabilities

Bank Debt

37

--

100

200

300

400

500

600

Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12

Hed

ged

Deb

t ($m

)

Interest Rates / Hedging

6.13%6.91%4.20%

Avg Base Rate

100%70%30%

% of Bank Debt

NA2 years

NA

Weighted Avg Maturity

Debt Type

Total / Weighted AvgFixed Rate Bank DebtFloating Rate Gross Bank Debt

• Average portfolio base rate expected to fall as interest rate hedges continue to expire1

1 Counterparties hold options to extend swaps in some cases. This chart shows a worst case outcome based on current market conditions assuming those options are exercised

Appendix 4

38

Reconciliation of Investment Property Figure in Statutory Accounts

2Investment properties under construction – FKP Property Trust

18Investment properties under construction - Retirement

342Investment properties – FKP Property Trust

2,673Total Investment Properties per Balance Sheet

(5)Straight-lining adjustment

2,334Investment properties – Retirement

68New units available for first occupancy

1,020NPV of annuity streams

65

1,163

$m

Resident loans

Deferred Income net of Accrued DMF

Appendix 5

39

Summary of FKP Property Trust Assets

8.2525.5RetailQLDBrowns Plains JV8.2537.2RetailQLDBrowns Plains TC

7.85%342.2Total

8.7521.0RetailNSWIllawong

8.007.758.507.75

8.007.508.007.25

Cap. Rate 31 Dec 09

27.3Bulky goodsQLDBrowns Plains

12.0RetailQLDIndooroopilly31.9OfficeNSW52 Clarence St

18.5RetailQLDPeregian Springs19.8OfficeNSW17 Bridge St

40.1OfficeVIC399 Lonsdale St33.9OfficeNSW8 Spring St75.0OfficeNSW Vero Tower

Book Value ($m) 31 Dec 09

SectorStateAsset

Appendix 6

40

Retirement Division Assets at December 2009Appendix 7

1,152FKP Balance Sheet Retirement Assets 3

1Bed licences (Intangibles)

32Investment in syndicates (Equity-Accounted Investment)

13Nursing homes (Property, Plant and Equipment)

1,020NPV of annuity streams (discount rate of 12.5%)(shown on balance sheet under Investment Properties, see Appendix 6)

18

68

$m

New units available for first occupancy (Investment Properties)2

Retirement Division Assets 1

Retirement properties under construction (Investment Properties) SOTP valuations often

consider only the value of the annuity streams, but the

division has material additional “hard” assets

1 Refer to Appendix 5 for further details of the Investment Property Assets2 Includes refurbished buyback stock3 Excludes working capital accounts

41

Retirement Value DriversProperty Price Growth SensitivityAppendix 7 (continued)

1,577

132

1,445

7%

1,344

132

1,212

6%

1,152

132

1,020

5%

993

132

861

4%

860Total Divisional Assets ($m)

132Hard Assets1 ($m)

3%Property Growth Sensitivity

728Annuity Streams ($m)

Using 5% growth rate adopted for

accounting purposes

If actual long-term growth rate is used

• Under accounting standards, retirement villages cannot be valued as a portfolio, but rather they must be valued as the sum of discrete single village valuations

• In June 2008, an external valuation commissioned by FKP suggested a portfolio premium of approximately $60m across all retirement assets on the FKP balance sheet

• More recently, valuers have indicated that portfolio premiums are difficult to establish given the difficult financial markets, but a premium may be expected to re-emerge as the economy recovers

1 If different long term growth rates were to be adopted, the value of inventory and development assets might change to a small degree. These possible changes would not be material and are ignored for the purposes of this table

If FKP’s villages were valued at the actual long term growth rate, the valuation would be nearly $200m higher

42

Retirement Value DriversTurnover SensitivityAppendix 7 (continued)

• This table shows sensitivities to the December 2009 valuation arising from different assumptions on the tenure of future resident intake

• No sensitivity is appropriate for existing residents since these are actuarially determined on a resident by resident basis1,1521321,0209.0 / 4.0

1,09713296510.0 / 4.0

1,2071321,0758.0 / 4.0

1,2971321,1657.0 / 3.0

900

Annuity Streams

($m)

132

Hard Assets 1

($m)

1,03211.0 / 5.0

Total ($m)

Turnover ILUs / SAsSensitivity (years)

1 If different turnover rates were to be adopted, the value of inventory and development assets might change to a small degree. These possible changes would not be material and are ignored for the purposes of this table

Assumption adopted for accounting purposes

43

Retirement Value DriversDiscount RateAppendix 7 (continued)

• As with property growth, it should not be expected that all retirement villages would have the same discount rate any more than all commercial properties should have the same cap rate

• Village quality, location and maturity are all relevant in determining discount rates

• FKP’s villages are overwhelmingly in reduced competition, capital city locations

• The high average age of FKP residents implies that projected cash receipts are relatively closer to collection point – a lower risk proposition

• FKP’s in-house valuation was borne out by external valuation at June 2008

1,09313296113.0%

907

1,020

1,084

1,155

Annuity Streams

($m)

132

132

132

132

Hard Assets 1

($m)

1,03913.5%

1,15212.5%

1,21612.0%

1,28711.5%

Total ($m)

Discount Rate Sensitivity

1 If different discount rates were to be adopted, the value of inventory and development assets might change to a small degree. These possible changes would not be material and are ignored for the purposes of this table

This matrix shows the impact on division assets of a change in the discount rate, keeping other assumptions constant

44

Retirement Accounting and Cash ReconciliationAppendix 7 (continued)

(9.8)

(8.4)

Property Trust

7.8

5.2

Retirement Non-

Operating

38.6

(33.6)

72.2

Retirement Operating

(33.6)Change in Fair Value of Resident Obligations

35.4Net Disclosed in Income Statement

69.0

Statutory Accounts Income

Statement

Revaluation within Statutory Accounts

($m)

Change in Fair Value of Investment Properties

2.5Working Capital Reduction

(37.9)Net Non-Cash Component of Operating Revaluation

Less:

7.5Realisation of past period development expenditure

(0.6)Share of Syndicate Profits

27.6Segment Contribution

56.1

Dec 09 ($m)

Cash Flow from Operations

Operating Profit

5.2Non-Operating Revaluation Component (Contract Uplift)

Less:

1.0Non-Operating syndicate profits

(0.4)Depreciation

60.3Statutory Segment Note

(1.6)Share of Syndicate Profits

56.1

Dec 09($m)

Profit & Loss

Operating Profit

--Net movement in deferred income/accrued DMF

(0.7)Cash component (relates to development)

37.9Net Non-Cash Component of Operating Revaluation

38.6

($m)Non-Cash Operating Revaluation

Component disclosed separately in Income Statement

45

Cash Flow from Operations –RetirementAppendix 7 (continued)

8.2Development Cash flow from Operations

2.1

20.6

(3.3)Other – Includes aged care trading, management fees, change in working capital, all net of overheads

Cash DMF/CG

Represented by:

22.7DMF per Statutory Accounts

Other Resident Receipts

27.6

Dec 09 ($m)

Retirement Cash Flow from OperationsRetirement share of $87m Cash

Flow from Operations per Statutory Accounts

Total Cash DMF/CG represents approximately 4.7% yield on

opening valuation.

46

About FKPFKP is a leading Australian property and investment group. Our strategy of diversification and integration has enabled us to build a comprehensive property portfolio that capitalises on our proven expertise in development, construction, land subdivision, retirement village ownership and management, property investment and asset management. Over more than thirty years our portfolio has grown to include mixed-use, land, retail, residential, retirement, industrial and commercial assets that define how hundreds of thousands of people live, work, retire and invest.

Appendix 8

47

Our BusinessAppendix 8 (continued)

RetirementWe are a leading owner and operator of Australian retirement villages with eighty villages in prime locations under FKP management.

Our scale enables us to offer senior Australians unrivalled access to a full scope of lifestyle choices.

48


Residential CommunitiesWe have a well positioned portfolio of apartments and masterplannedcommunities providing a pipeline for future growth.

The key to developing our successful residential communities is our ability to instill a shared sense of identity and belonging.

49


Commercial and IndustrialWe have specialist expertise in creating integrated work, retail, storage and utility spaces and facilities.

We are committed to keeping pace with the country’s changing working styles; creating working environments and communities that encourage sociability and redefine what it means to come to work.

50


ConstructionOur experienced, integrated construction team delivers for FKP, private external clients and government agencies.

Our diversified trade record spans residential, commercial, retail, industrial and retirement developments, including environmentally friendly and energy efficient buildings.

51


Funds ManagementWe are a manager of listed and unlisted property funds specialising in core and value add property assets.

Our size enables us to provide specialist services to the investor.

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DISCLAIMERThe content of this presentation is for general information only. Information in this presentation including, without limitation, any forward-looking statements or opinions (Information ) may be subject to change without notice. To the maximum extent permitted by law, FKP Property Group, its officers and employees do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of the Information and disclaim all responsibility and liability for the Information (including, without limitation, liability for negligence).

The information contained in this presentation should not be considered to be comprehensive or to comprise all the information which a security holder or potential investor in FKP may require in order to determine whether to deal in FKP securities. This presentation does not take into account the financial situation, investment objectives and particular needs of any particular person.

This presentation contains “forward-looking statements” including indications of, and guidance on, future earnings, financial position and performance. Such forward looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of FKP and its officers and employees, that may cause actual results to differ materially from those predicted or implied by any forward-looking statements. You should not place undue reliance on these forward-looking statements. There can be no assurance that actual outcomes will not differ materially from these forward-looking statements.

All dollar values are in Australian dollars (A$) unless otherwise stated.

Documents

FKP Property Group Half Year Results Presentation · 2020-02-08 · Mandated step downs comprise $10m in June 2010, $60m in July 2011 and $15m in December 2011. The core $225m portion