Chairman's and CEO's Addresses to Annual Meeting

Metlifecare Limited Ordinary shares | 2:00 pm, 22 Oct

MET
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Market Announcement
Type:MEETING

Chairman's and CEO's Addresses to Annual Meeting

22 October 2009

CHAIRMAN’S ADDRESS TO ANNUAL MEETING

I have set out in the Chairman’s Report a summary of the movement in NZ housing sales volumes and prices prior to and during the trading period, because the decline in NZ housing sales volumes had a very direct impact on the ability of people to move into our retirement villages. Housing sale volumes began to decline in March 2007 and continued well into FY2009. The economic climate though most of FY2009 was the worst we have seen in an extremely long time. It is very encouraging to see that since January 2009 NZ housing sales volumes have trended up, and the NZ economy is now showing signs of rebounding back.

The Company’s trading revenue last year was $58.4M which was relatively flat and the same level $58.2M as the 2008 year.

The Company reported a loss of $115.7 million (2008: $(53.1) million) after accounting for non-operating non-cash items including a $106.9 million downward revaluation of investment properties and financial instruments as required under the International Financial Reporting Standards (IFRS).

At 30 June 2009, the Group’s investment properties were valued at $1.128 billion (2008: $1.175 billion).

These valuations are highly dependent on the independent valuer’s assessment of property price growth and discount rates. As the economy improves and we return to normality in the housing market, we expect the investment properties valuations to improve. Unfortunately, as mentioned in my predecessor’s report to shareholders last year, these changes in valuation bring a lot of volatility to the profit and loss account reported under IFRS. Also, as noted these investment properties’ valuation movements do not affect the Company’s cash flow.

Cash flow

Cash flows from relicensing activities last year were down on the prior year as a result of the slower rate of sale of RV units, but occupancy levels were maintained.

Management took various initiatives last year to respond to the trading conditions by reducing cash operating expenses although this was partly offset by higher financing costs.

In my Chairman’s Report, I have shown our trading cash flows from a management perspective.

Net cash flows from licensing and relicensing amounted to $27.2M down from $38.9M in the prior year. Whilst under IFRS, these items are categorised as a financing issue, generating cash on the licensing and rollover of residents units is arguably a major operating activity of any retirement village business. Under previous NZGAAP, these licensing and relicensing cash flows would have been treated as operating cash flows.

In addition to these amounts, net cash out flows from operating activities were $(13.8) million compared to $(15.2) million in the prior year. The Board and management intend to improve on these figures and steps have been taken to ensure the villages run on a more efficient basis going forward.

Funding

Metlifecare proactively engaged with its banks to secure its funding lines during the year. Also, in March the Company completed a highly successful and oversubscribed renounceable rights issue which raised $37.4 million of new capital.

We set out in the Annual Report details of the Group’s Cash Advance Facility and Development Facility as some of our shareholders requested this analysis of the different applications of the borrowings. The Board expects the Group’s finance facilities to be renegotiated by their expiry date of 30 June 2010.

Leads and Inquiries

On a continuing positive note, it was very pleasing to see that leads and inquiries for the Company’s products and services were at an all time high last year despite the difficulty many potential residents had in selling their homes in the market. The inquiry and leads have continued at a high level this year, and as the market has improved we are now seeing a greater rate of conversion into deposit taking which Alan can confirm later.

Dividend

Despite the improvements in recent trading conditions, the Company is not yet in a position to pay dividends. Accordingly, the directors resolved not to declare a dividend for last year.

Board of Directors

There have also been some changes at board level.

The Hon. Jim McLay retired as Chairman on 1 May 2009 to take up the post of New Zealand Ambassador and Permanent Representative at the United Nations in New York. On behalf of the Board, I would like to acknowledge and thank Jim for his 4 years’ leadership of the Board.

I was appointed a Director and Chairman, by the Board on 1 May 2009.

Paul Cochrane was appointed as an Alternate Director for Darryl Guihot on 24 July 2008.

John Perry resigned as an Alternate Director for Mark Gibson on 31 March 2009.

Subsequent to balance date, Paul Cochrane resigned as an Alternate Director on 4 September 2009 and Mark Gibson resigned as a Director on 30 September 2009.

Also, Guy Eady was appointed a Director, by the Board on 30 September 2009. He retires at this meeting, as required under the NZSX Listing Rules and will be re-appointed by the Board. He retires at this meeting, as required under the NZSX Listing Rules and will be reappointed by the Board.
Pursuant to the Constitution of the Company Peter Brown and Darryl Guihot retire by rotation and, being eligible, offer themselves for re-election at this annual meeting.

I, having been appointed during the year by the Board, hold office under the Constitution until the annual meeting and, being eligible, also offer myself for election at this annual meeting.

Appreciation

I wish to take this opportunity to record appreciation to the Directors for their service on the Company’s board and for their careful attention to its affairs.

To the residents of our villages, thank you for your ongoing confidence in Metlifecare.

To all members of our Executive team and staff, we recognise that last year was a very tough environment to work in, and you are still putting in a great effort. We are now seeing the benefits coming through from your many endeavours on the Company’s behalf. We thank you for making this such a great business.

I would also like to take the opportunity to acknowledge the contribution of Richard de Haast who was CEO of the Company for 4 years and resigned on 31 July 2009.

22 October 2009

CHIEF EXECUTIVE OFFICER’S ADDRESS TO ANNUAL MEETING

Good afternoon ladies and gentlemen. I am pleased to have the opportunity to address you today and inform you about the opportunities that we face in the immediate short term, to introduce the executive team and finally speak to you about our vision and our future.

Metlifecare is exceptionally well positioned to take advantage of the growing positive sentiment in the market. There has been an accumulation of villas and apartments for sale and we are now experiencing both increased interest from potential residents and further, sales conversion rates are up. This increased sales activity will unlock the previously delayed cash flows. We have set exceptionally challenging targets for our teams and we are expecting an extraordinary response.

At an operational level we are seeking to achieve improved levels of efficiency and effectiveness across our retirement villages and our hospitals and rest homes. Our leadership group is committed to the core values of Metlifecare and the principles of continuous improvement. Benchmarking and the pursuit of identified best practises will measure our progress towards the goal. We have over the years enjoyed exceptional levels of both resident and staff satisfaction and it is our aim to continue delivering services that the residents find attractive.

Executive Team

Our Executive Team, Lynne Abercrombie, Jan Martin, Michael Barker, Colleen Tang and Craig Fletcher form a group of highly experienced individuals, however it is the collective experience of this team that drives my confidence. Recently, at our leadership group conference I was encouraged by the talent and commitment of the Metlifecare team as a whole. The core purpose, vision and core values have ensured that Metlifecare provides an environment that people are proud to work in and a business that we are all proud of. These standards will be maintained and enhanced over to coming years.

The Future

The events of the past months on the global financial stage have been unprecedented and have, understandably, caused considerable concern and disquiet.

Metlifecare enjoys the confidence and support of its residents, ongoing interest from prospective residents and the full support of its bankers, our staff. I know too that the Shareholders continue to be supportive of the business.

Metlifecare has 17 unique villages in 17 unique locations, and the strength of its service delivery, means that Metlifecare is well positioned to continue providing desired village in new locations for the discerning resident.

There is also the impact of a rapidly growing demographic resulting in an ever-increasing number of individuals seeking to secure a home in premium villages.

These factors, combined with Metlifecare’s strong business model and the continued strength of the industry fundamentals, means the Company is well positioned to ride out the tough operating conditions in the domestic economy, and then take full advantage of the inevitable upturn in the residential housing market.

-End-

Contact:

Dr Charles MacDonald
Chairman
Metlifecare Limited

Ph: +61 404 811 855

Alan Edwards
Chief Executive Officer
Metlifecare Limited

Ph: 09 539 8000