Ann: ADDRESS: SUM: Annual Meeting - Chairman'

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• Summary: ADDRESS: SUM: Annual Meeting - Chairman's address and CEO address
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SUM
24/04/2012 13:00
ADDRESS

REL: 1300 HRS Summerset Group Holdings Limited

ADDRESS: SUM: Annual Meeting - Chairman's address and CEO address

Annual Meeting - 24 April 2012

Chairman's Address

Fellow shareholders,

Welcome to the first Annual Meeting of Summerset as a listed company. Thank
you for joining us on this journey to being the best retirement village
business in the market.

2011 showed we are well on the path to achieving this goal.

We out-performed our listing forecast figures in all key areas. Your
confidence in this company was rewarded with an underlying profit of $8.1
million for the 12 months ended 31 December 2011. This exceeded forecast for
the period by 35%.

I am pleased to be able to tell you that 2012 is also looking positive. We
are trading well and are in line with our forecasts.

Through the 2011 year we saw our asset portfolio grow and the quality of our
assets increase. Net tangible assets per share increased from 99.8 cents in
2010 to 109.3 cents in 2011. We established a land bank of 1,052 units across
the country which gives us a very clear development pipeline. Recently this
land bank increased again with the purchase of Summerset 18th site at
Hobsonville, Auckland. We estimate the site adds over 300 extra units to our
land bank.

 It also sees Summerset increase its presence in the critical Auckland
market.  Given the staggering demographics in the city resulting from it
having both an aging and a growing population, it is a region we must take a
strong interest in.

In the annual report you will see net operating cash flow for 2011 was $43.7
million, up 14% on the IPO forecast and 29% on 2010.

The second half of 2011 was very strong, this saw yearly sales increase 25%
on 2010. We attribute the year's results to this as well as the early
delivery of new developments and we an increase in our operational
performance through sound management.

Net profit before tax for the year was $4.4 million, up 2.3% on forecast,
7.8% on 2010. Net profit after tax was down 13%, Norah will discuss
accounting outcome in her speech but I can assure you, it does not reflect on
the operations of Summerset.

What does reflect the strength of operations at this company is the fact that
in 2011 more residents than ever before chose to make a Summerset village
their home. That 122 new units were completed across five villages, and that
the internalisation of our development process continued with the
introduction of an in-house design team. At the same time we saw the
beginning of a process that will see Summerset construction managers on each
developing site.

2011 was a milestone year for Summerset, but the drive to become the best in
the market has not abated.
What do we need to do to achieve this goal?

To be the best is all about what we do ourselves. We respect and look closely
at what our competitors do, but we can only control our own actions.

We need to grow our coverage so that there is a Summerset village in every
market which can sustain the type of service we provide. We have many
opportunities ahead of us across New Zealand. Methodically we will increase
our coverage to the point where in every substantial urban area the choice is
"which Summerset village shall I buy into?"

At the same time we will continue to refine and enhance the quality of the
physical facilities we provide. These are very good at present, but the
market expectation is always changing and we have to change with the tastes
and expectations of our clients, whose demand for quality is never to be
underestimated.

As we deliver this we must also ensure that we recruit, retain and grow our
staff skills in all areas of our business. Summerset people are the
residents, the managers, the owners, and the service providers who make a
village and facility work.

Our management team, lead by Norah is very capable of delivering the best
outcomes.

As a board our job is to make sure this is all happening harmoniously and
that we have the capital resources required to do the job. In doing that we
ensure that investors are well rewarded for their support.

Quite rightly investors will expect to see ongoing growth in the value of
their shares. In Summerset this will be the product of a mix of annual
earnings and asset value growth over time. There is no fast track in this
business. No place to hide poor location choice, poor design and
construction, poor service delivery. There are no super profits lying in
unknown places or financial engineering to make the outcomes look like
something they are not.

But if you look at the statistics, it is obvious this is a solid business
with strong fundamentals and a secure future. Our number of potential
customers is growing rapidly. By 2031 the number of New Zealanders over 65 is
predicted to increase from 586,000 to 1,072,000. Over 75s will increase from
261,000 to 516,000. We want to be in the position to meet the demand of these
people for quality housing, facilities and care.

You can trust that in years to come Summerset will continue to work it's
hardest for its shareholders and strive to deliver results you can be proud
of.

You may be assured that your board will diligently pursue the objective and
report objectively as we go along.

Thank you.

CEO Address

Ladies and Gentleman, it is a pleasure to speak with you today. I would like
to welcome you - our shareholders - to Summerset.

I am very pleased to be speaking at my first Annual Meeting as the CEO of a
listed company and tell you that your business is doing extremely well.

Listing on the New Zealand Stock Exchange was a great achievement for
Summerset. It proved what we have known for some time - that we are a company
with a solid foundation, excellent operations and a bright future.

Listing wasn't our only success for 2011. This was a year was full of
achievements. We welcomed more residents into our villages than ever before.
We saw the highest level of sales in our history. We started construction on
two new villages, and then welcomed the first residents into those villages
before Christmas.

That momentum continues. Since we released our 2011 results, we have
announced new stages at our villages in Nelson, Warkworth, Hamilton and
Hastings. This is almost $60 million worth of building across the country.
Between them, these developments will add more than a hundred units to
Summerset's stock. This goes a long way towards us realising our forecast of
building 155 units in the 2012 year.

We have had a mandate to grow the business since we listed on the NZX at the
end of last year, and we will be doing just that over the next few years. I
will go into more detail on the year later in this speech, as well as
outlining the progress since the annual results were released at the end of
February.   But now, as this is our first Annual Meeting, I would like to
take this opportunity to introduce myself.

My name is Norah Barlow, Summerset CEO. I have been CEO at Summerset since
2001, but I have been part of the company since the beginning, initially
acting as the external accountant.

When we started back in 1997, Summerset was more an idea than anything else,
but it wasn't long after our first village opened in Wanganui that I realised
this was a company, and an industry, with an exciting future and I wanted to
be a part of it.

The founder of Summerset, John O'Sullivan, a long-time associate and now very
good friend, didn't need to do much to convince me to come on staff as the
company's group financial accountant in 1999. Though I would say the group
part of that title was a bit overblown, as it was a group of about two! I
sold my accounting practice, and continued in a finance role until being
appointed CEO.

Within four years of being established, Summerset had seven villages spread
across the lower North Island.

After ten years, we had ten villages and two high quality sites. Today we
have 14 wonderful villages and four other superb sites. It won't be too long
before both of those numbers increase again.

Summerset's growth from a family-run company on the Kapiti Coast to its
position today as a growing corporation holding its own on the New Zealand
Stock Exchange, has been a wonderful thing to watch and be a part of.

I expect this growth to continue. Our 2011 results confirm Summerset's
history as a high performing and rapidly expanding company. We out-performed
all of our key metrics, and as Rob outlined, posted an underlying profit of
$8.1 million. This exceeded the IPO forecast by 35%.

This is the kind of result we are committed to continuing. As many analysts
have pointed out, not all recent company financial results were quite as
good. I am pleased to quote one commentator who named Summerset as one of the
"few shining lights" out of a slew of results posted at the end of the 2011
financial year.

It's a great thing to be given such a label. And particularly pleasing in our
maiden year of listing.

However, some of you may have noted our net profit after tax was below IPO
forecast. This reflects non-cash accounting tax adjustments as opposed to
real performance. When the figures were forecast, it was expected a larger
portion of the Quadrant shares would be sold, which had an impact on tax
losses able to be offset. I would like to reiterate, that this is a non-cash,
accounting adjustment and certainly does not impact on the performance in any
operational areas of the company.

I do need to now say that this will continue into next year, as our forecast
has already been set.  I would repeat, however, that this non cash accounting
adjustment does not reflect the company's performance, for this I would
direct you to the underlying net profit after tax figure as previously
mentioned. I would also remind you that our operational figures all exceeded
forecast.

Between our annual report and annual review, as well as these speeches, I
hope you will have an idea of how we have been working for you over the past
year to keep our light shining.

And as I have already mentioned, Summerset is certainly not going to slow
down now. Since you received your annual report we have added a brand new
site to our portfolio.

The 7.6 hectares at Hobsonville make up Summerset's 18th land acquisition. If
anyone knows the area, they may remember is as the former Monterey Park, a
breath taking site that was a model railway and vintage car museum. It's got
a wonderful history and has been lovingly landscaped by its former owner. It
will make a very special village.  We have started the resource consent
process and I very much look forward to seeing the walls go up and the first
residents move in.

This year we saw record sales of Occupation Rights in 2011, an increase of
25% on the previous year and up 6% on forecast. We have attributed this to a
number of factors.

Firstly, the quality of our product. This is something we stand by and have
always seen as key to our ability to grow and perform. In this industry you
have to do what you do well or people will hear about it. Our customers drive
us to deliver the best and we respect and value them for that.

Then the quality of our people. As we often point out to those new to this
industry, we are the only business in the world that sells to its customers
and then lives with them. It's not about the transaction; it's about the
ongoing relationship.

Lastly the quality of our brand. The increased profile of Summerset as a
company, along with the retirement village sector as a whole cannot be
underestimated.

People are becoming ever more aware of the benefits that come with village
living. We know that the provision of aged care on the same site as
independent living is a very important factor for people in making a decision
to move from their home. Providing ongoing care is a core business and
operations focus for this company. We want our residents to know that they
can come to us and they will be looked after in almost every eventuality.

Another example of our commitment to our residents is our relationship with
Lifetime design. Our new homes are designed to ensure accessibility, from the
level entrance, to the placement of the kitchen bench. Our residents know
they will not have to leave their home if they need a walker or require a
wheelchair.
In 2011 we signed on for another three years with Lifemark to ensure our
buildings are independently assessed to be accessible and inclusive for all
of our residents and their families. We remain the only retirement village
developer to place voluntary accessibility standards on our buildings.

Another step to ensuring quality care and living for our residents was the
introduction of a new induction programme for our caregivers, which leads
them into training towards an NZQA level 2 qualification.

We aim to have 100% of our caregivers either with the National Certificate in
Health, Disability and Aged Care support (Foundation Skills) or working
toward it. This will mean we can ensure our staff are well qualified and have
the skills to provide excellent car to our residents.

Summerset is a company that is committed to providing solutions. We are
always striving to be the best. This drive was awarded for the second time
last year when we were named the best retirement village in Australasia at
the Australasian Over 50s Housing Awards in Melbourne.

Our next step is to be the number one choice for customers. Clearly this is
an ambitious project and it is a challenge we have not taken lightly.
Extensive research has gone it to how we do this.

It has been an ongoing project and I feel that our most recent successes, our
great year of sales, and our listing, are in part to do with our constant
reviewing of how we do things at Summerset and how we can do them better. Of
course, we don't always get everything 100% right, we wish we did, but we try
our hardest and we are always evolving.

This is what has seen me stay at Summerset for the past 12 years. This is a
company in an industry that is evolving very quickly. Fifteen years ago
retirement villages looked very different to what is being built today.
People walk into a Summerset village and are often blown away. The comparison
with a resort is something we hear every day. And it's absolutely true.

This is what our customers expect. People at the end of their working lives
want to live in a place where they can feel looked after should they need to
be, where they can relax if they want, where they can be as independent or
not as they want and are able to be, and where daily stresses such as blocked
drains or leaking roofs are dealt with by somebody else.

Summerset villages are though not just places where people go to sit around
until the end. They are vibrant communities that provide security,
companionship, care, and stimulation.
Our residents live fully independent lives and many provide amazing services
to their local community.  They often have the time, the energy and the
support to be able to do so, and we are very proud of their work.

Summerset villages can provide the kind of holistic care that the public
sector is not in the position to supply. We see ourselves as the solution to
both the public question of how we look after people as they age and the
individual's quest to continue to live life to the full.

That is why our business has such a bright future. We have a winning formula
here at Summerset and I thank you for recognising that. Our results for 2011
certainly prove it and our goal for 2012 is to give you the same outcome, or
better.

To all of the Summerset team who made 2011 the year it was, you have shown
exceptional commitment and loyalty to this company. I wouldn't be standing
here today talking about Summerset's successes if you hadn't been 100 percent
behind us and if you weren't as passionate as I am about this business. I
thank you for that.

To our shareholders, you can be assured the Summerset team is committed to
working their hardest to grow your business.

Welcome to the Summerset family.

ENDS

For more information contact:

Harriet Palmer
Summerset Group Holdings Ltd
Phone: 027 601 2001
Email: [email protected]
End CA:00222151 For:SUM    Type:ADDRESS    Time:2012-04-24 13:00:13