Metlifecare Limited Annual Report 2014 Crestwood

This Annual Report is signed for and on behalf of the Board of the Company by:

K.R. Ellis A.B. Ryan Chair Director 15 September 2014 15 September 2014

C over image: Ros from Pinesong was one of the first vets in New Zealand. One of her passions as a girl and young woman was sailing on the family launch with her father (a violinist) and mother. Ros still loves the ocean and her home is filled with landscapes of the sea and NZ beaches. The heart Ros is holding features a rope from a sailing boat with a sailing slip knot.

2 | METLIFECARE LIMITED annual REPORT 2014 1 & ove Hig h lig r view h t s C ontents 2 s fin t a a tement n c i a

Section 1 - Highlights & Overview l our Business 6 s Our Five Year Transition 8 FY14 At a Glance 10 Chair’s Report 12 3 info S

Chief Executive Officer’s Report 15 t a tut

Director Profiles 18 r m o a r Executive Team Profiles 20 tion y Overview of Financials 22 Family of Villages 24 Construction & Development Locations 25

Section 2 - Financial Statements Directors’ Report 28 Statements of Comprehensive Income 29 Statements of Movements in Equity 30 Balance Sheets 31 Cash Flow Statements 32 Notes to the Financial Statements 33 Independent Auditor’s Report 69

Section 3 - Statutory Information Corporate Governance Statement 74 Interests Register 83 Other Director Information 86 Other Statutory Information 88 Shareholder Information 90 Directory 92

annual REPORT 2014 METLIFECARE LIMITED | 3 Dannemora Gardens

4 | METLIFECARE LIMITED annual REPORT 2014 1 & ove Hig & overview h lig r view h ts t s Highlights 2 statements s fin f inancial t a a tement

& Overview n c i a l Our Business 6 s

Our Five Year Transition 8 FY14 At a Glance 10 3 informationinfo S t atutorya

Chair’s Report 12 tut r m o a r Chief Executive Officer’s Report 15 tion y Director Profiles 18

Executive Team Profiles 20

Overview of Financials 22

Family of Villages 24

Construction & Development Locations 25

annual REPORT 2014 METLIFECARE LIMITED | 5 Our Business

Metlifecare Limited is an aged care and retirement lifestyle company listed on the NZX and ASX. Established in 1984, the Company has a proven track record of successfully developing and operating retirement villages in New Zealand. Metlifecare currently owns and operates 23 retirement villages, incorporating eight care facilities, in prime locations throughout the North Island of New Zealand, plus two development villages. Many of our villages provide a continuum of care from independent villas and apartments through to serviced apartments, rest homes and hospitals.

Our Core Purpose

To continuously develop and grow Metlifecare whilst meeting or exceeding the expectations of our residents, staff and shareholders.

At Metlifecare we want to see everyone rewarded for being part of the Metlifecare family. We want our residents to experience the best years of their lives, our shareholders to feel confident and be rewarded for their investment and our staff to view Metlifecare as their employer of choice. The achievement of these goals will ensure we are able to further grow and develop our” business.

Our Vision

To provide quality, innovative and sustainable solutions for the lifestyle and “ care needs of older people. At Metlifecare we want to be the best at meeting the lifestyle and care needs of our residents now and into the future. To do this, we aim to be innovative and creative in developing and maintaining a leadership position in the industry. To be the best of the best requires every individual in our organisation to be passionate, empowered and fully engaged in our team-based process of continuous improvement as we strive for excellence in our business” to ensure that we deliver against the requirements of our vision.

6 | METLIFECARE LIMITED annual REPORT 2014 1 & ove Hig & overview h lig r view h ts t s

2 statements s fin f inancial t a a tement n c i a l s

3 As at 30 June 2014 informationinfo S t atutorya tut r m o a r tion y 23 operating retirement villages

Incorporating 8 care facilities

Prime locations in the North Island of New Zealand

3,900 units and 359 care beds

More than 5,000 residents

More than 1,000 staff

90% rating in resident satisfaction survey

Construction and development pipeline of 1,058 units and care beds of which 160 are currently under construction

annual REPORT 2014 METLIFECARE LIMITED | 7 Our Five Year Transition

Over the past five years, Metlifecare Limited has been transformed and has taken its place as one of New Zealand’s leading retirement village operators. We are providing our residents with a desirable place to live, building our reputation as an employer of choice in the industry and rewarding our shareholders with increasing returns on their investment.

FY10 FY11 FY12

FINANCIAL YEAR FINANCIAL YEAR FINANCIAL YEAR 2010 2011 2012 Debt restructuring and Positioning for growth C apital raising and repayment major merger initiated • Five brownfield developments • Successfully completed identified • Successful capital raising Stage 2 of The Poynton in generated $45.5m to offset • Sale of Merivale village in Takapuna debt Christchurch assisted the Company to reduce debt by • majority shareholder, $44.5m Retirement Villages New Zealand (RVNZ), sold down from 82% to 50% • Acquired development site in Glenfield

Bank Debt

180,000 160,000 140,000 120,000 100,000

$’000 80,000 60,000 40,000 20,000 0 FY10 FY11 FY12 FY13 FY14

Total Assets

2.5

2.0 2 1.9

1.5 1.3 1.3 1.2

$ billion 1 FY14: Total Assets 0.5 surpass $2 billion

0 FY10 FY11 FY12 FY13 FY14

8 | METLIFECARE LIMITED annual REPORT 2014 1 & ove Hig & overview h lig r view h ts t s Our Five Year Transition 2 statements s fin f inancial t a a tement n c i a

FY13 FY14 l s

FINANCIAL YEAR FINANCIAL YEAR 2013 2014 3 informationinfo S t atutorya tut r

Merger with Vision Senior Living Record underlying profit as benefits m o a r and Private Life Care Holdings, of growth strategy start to be tion y positioning Metlifecare as one realised of the largest retirement village operators in New Zealand F ocus on consolidation following Growth continues with focus on merger development opportunities • Non-development debt substantially • Sell down by RVNZ with 38% stake sold to eliminated following $80m capital Infratil and New Zealand Superannuation raising Fund • Sale of Ilam land in Christchurch and • Commenced construction of The Orchards Oakwoods village in Nelson village in Glenfield in January 2014 • Acquisition of large site in Unsworth • Secured resource consent for Greenwich Heights Gardens village in Unsworth Heights • Completion of Forest Lake Gardens in • Completed construction of Stage 3 and Hamilton commenced construction of Stage 4 of The Poynton in Takapuna • Commenced construction of Stage 3 of The Poynton in Takapuna

Number of Units and Care Beds Gross Resales & Sales Cash Flows

5,000 250,000

4,000 200,000

3,000 150,000

2,000 $’000 100,000

1,000 50,000

0 FY10 FY11 FY12 FY13 FY14 0 FY10 FY11 FY12 FY13 FY14

Independent Units Serviced Units Care Beds Sales Cash Resales Cash

annual REPORT 2014 METLIFECARE LIMITED | 9 FY14 At a Glance F or the Year Ended 30 June 2014

Key Events • Secured resource consent for Greenwich Gardens village in Unsworth Heights with construction due to commence in September 2014 • Commenced construction of The Orchards village in Glenfield in January 2014 • completed construction of Stage 3 and commenced construction of Stage 4 of The Poynton in Takapuna • Over-subscription for the share purchase plan, completing the $80 million capital raising initiated in FY13 • Secondary listing on the ASX completed in October 2013 • Sell down by RVNZ of its 38% stake to Infratil and New Zealand Superannuation Fund • resignations of Geoff Grady, David Hunt, John Loughlin and Alan Edwards from the Metlifecare Board. Appointments of Kevin Baker, William Smales and Carolyn Steele as directors • final dividend of 2.5 cents per share (cps); taking the full year dividend to 3.75 cps, a year on year increase of 25%

Financial Results • fair value uplift of investment properties of $65.7 million • compared to the relevant FY13 period: - Net profit after tax $68.8 million - up 18% (excluding non-recurring items1 in FY13) - Underlying profit2 $46.0 million - up 38% - finance costs $1.7 million - down 81% - total assets $2,010 million - up 6%

Operational Summary • Sales of 61 new units generating $34.4 million in gross cash flow • Resales of 397 existing units generating $140.3 million in gross cash flow • Total sales and resales cash flow of $174.7 million • total occupancy remains strong at over 96%

1 Non-recurring items include items associated with the acquisition of Vision Senior Living and Private Life Care Holdings and the disposal of the Oakwoods village which occurred in the prior period and not in the current period. Net profit after tax excluding non-recurring items for FY14 was $68.8 million and for FY13 was $58.1 million. This is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS. Metlifecare believes this assists readers to understand the operating performance of the business on a comparable basis.

2 Underlying profit removes the impact of unrealised gains on investment properties and excludes one-off gains and deferred taxation. Underlying profit for FY14 was $46.0 million and for FY13 was $33.4 million. This is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS. Underlying profit is an industry-wide measure and Metlifecare believes it assists readers to understand the operating performance of the business. Underlying profit is reconciled to reported profit on page 23.

10 | METLIFECARE LIMITED annual REPORT 2014 Kapiti Village 1 & ove Hig & overview h lig r view h ts t s

2 statements s fin f inancial t a a tement n c i a l s

3 informationinfo S t atutorya tut r m o a r tion y

annual REPORT 2014 METLIFECARE LIMITED | 11 Chair’s Report

On behalf of the Board, I am pleased to present the 2014 Annual Report for Metlifecare. I was delighted to take over as Chair of Metlifecare from 1 September 2014 and am looking forward to seeing shareholder value increase as the Company grows into the future.

The Company delivered a net profit after tax of The Company’s investment properties are valued $68.8 million, which was an 18% increase on the by independent valuers and are influenced by previous year (after excluding FY13 non-recurring various factors including the performance of the items associated with the merger with Vision property market. In FY14, there was a $65.7 million Senior Living and Private Life Care Holdings and the increase in the fair value of investment properties disposal of Oakwoods).1 as reported in our financial statements. The nature of the retirement village industry means Two new cornerstone shareholders invested in that the Company’s financial reporting includes Metlifecare in late 2013. Infratil and New Zealand a number of non-cash items such as the change Superannuation Fund each hold a stake of just in fair value of investment properties. Therefore, under 20% in the Company. Metlifecare also reports underlying profit2, which removes these non-cash items, one-off gains In November 2013, we welcomed three new and deferred taxation. The directors believe this directors representing our new cornerstone measure provides shareholders with a useful shareholders; Kevin Baker and William Smales additional measure of the Company’s operating on behalf of Infratil and Carolyn Steele on behalf performance. of New Zealand Superannuation Fund. Between them, they have valuable expertise in the financial, In FY14, Metlifecare’s underlying profit was up property and investment sectors which will be of 38% to $46 million. This was at the top end of the significant benefit to Metlifecare. guidance provided to the market on 23 May 2014 of $43 million to $46 million. The Board has formed the Care and Occupational Health & Safety subcommittees during FY14 to The Company has achieved significant progress add focus to these areas. during the last five years through the merger transaction with Vision Senior Living and Private Life We appreciate the support of our shareholders. Care Holdings, a number of capital raisings to retire The Board has been pleased to be able to reward debt, renegotiation of funding facilities, continued shareholders for their investment through the improvements to operational performance, re-commencement of dividend payments. For completion of new village facilities and expansion FY14, the directors confirmed a final dividend of of the Company’s development pipeline. 2.5 cents per share (cps), taking the full year dividend to 3.75 cps, a year on year increase of 25%. Metlifecare has refocused its portfolio and targets high population regions with large numbers of Metlifecare’s debt is at historically low levels people in the retirement age group, particularly ($42.5 million). We now have $137.5 million in in Auckland, Waikato and the Bay of Plenty. undrawn debt facilities, providing us with sufficient Metlifecare has 23 operating villages and more capacity to progress with our current and planned than 4,000 units and care beds around the North development activity. Island with 12 of them in the Auckland region. The sentiment from the investment market has Metlifecare’s asset base is valued at over $2 billion improved as Metlifecare has made progress on the as at 30 June 2014, a remarkable increase of nearly turnaround of the business. The share price has $800 million from five years ago. increased significantly in the past two years. This

1 Non-recurring items include items associated with the acquisition of Vision Senior Living and Private Life Care Holdings and the disposal of the Oakwoods village which occurred in the prior period and not in the current period. Net profit after tax excluding non-recurring items for FY13 was $68.8 million and for FY13 was $58.1million. This is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS. Metlifecare believes this assists readers to understand the operating performance of the business on a comparable basis. 2 Underlying profit removes the impact of unrealised gains on investment properties and excludes one-off gains and deferred taxation. Underlying profit for FY14 was $46.0 million and for FY13 was $33.4 million. This is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS. Underlying profit is an industry-wide measure and Metlifecare believes it assists readers to understand the operating performance of the business. Underlying profit is reconciled to reported profit on page 23.

12 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig h ts

Chair’s Report

Metlifecare Board members 2 statements as at 10 September 2014 f inancial

3 information S t atutory

has increased the Company’s market capitalisation strategy, risk management, continuously improving to over $900 million and placed Metlifecare firmly the Company’s care offering and a remuneration in the top 50 companies on the NZX. review to ensure that we attract, retain, train and appropriately reward our employees. The Company Metlifecare’s success is due to the committed will also review directors’ remuneration in coming people who work for the Company. Their passion months to establish fee levels that are consistent and drive to deliver excellence is much appreciated. with comparative New Zealand companies. Metlifecare was voted as one of the most trusted I would like to acknowledge the contribution of brands in the retirement village industry in New retiring chair, Peter Brown, who joined the Board in Zealand in 2014 and we look forward to offering 2005 and has been chair for the past three years. more New Zealanders the opportunity to live in a During Peter’s tenure, Metlifecare has achieved a Metlifecare village as we expand our portfolio. number of major strategic milestones which have The Company has a range of growth initiatives positioned the business well for the future. underway including investing in capabilities, especially within the development team, and plans to capitalise on the quality of our existing portfolio. Plans are currently progressing on four existing brownfield sites. Metlifecare is also committed to deliver on the expectations of residents and upgrade existing facilities with remedial works undertaken at Bayswater and The Links apartments at Hibiscus Coast Village. Also, a community centre is being built at Oakridge Villas. The Company is committed to profitable growth through investment in procurement capability. Kim Ellis The Board and management are leading various Chair strategic initiatives around land acquisition

annual REPORT 2014 METLIFECARE LIMITED | 13 Hibiscus Coast Village

14 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig

Chief Executive h ts Officer’s Report

2014 was a successful year for the Company and 2 statements f we were pleased to achieve the goals we set for inancial ourselves last year. Our focus for the year was on portfolio growth and continuing to realise benefits from our increased scale. We have made excellent progress in these areas.

Our villages are strategically located in residential in Glenfield on Auckland’s North Shore, is well markets where local residents are demanding underway with excellent initial sales of apartments. 3 information S quality retirement living options. As a result, we When completed, this village will offer 96 apartments t atutory have seen strong demand for our offering across and a 36-bed care facility. It is a smaller village and our portfolio. will provide a more intimate, small neighbourhood environment for residents. A wide range of facilities The residential real estate market continues to will be provided, including Cox House Café located perform strongly and this has had a positive impact in the original heritage homestead, which has been on our business. Most of our prospective residents relocated and renovated. This café will be open to need to sell their home before moving into one of residents and the public to enjoy. We have had a very our villages. A strong real estate market often helps good response from prospective residents and expect them to sell their home more quickly and at a better to be settling apartments later in the FY15 year. price. The new Loan to Value restrictions seem to have had little impact on us and applications have During the year, we received a resource consent remained very strong. for the $160 million Greenwich Gardens village in Unsworth Heights, also on Auckland’s North Settlement of 458 occupation right agreements for Shore. A large earthworks programme has now FY14 was the Company’s second highest in the last been completed and construction has recently six years. commenced. Plans for this high quality village An occupancy level of 96% constrained the stock include 75 villas, 235 apartments and a 61-bed care available for sale in FY14, particularly in villages facility. It will be one of our larger villages and we with full occupancy. This impacted on our volume have already received a number of applications. of settlements during the year. Pleasingly, the We have also continued our development of The average capital gain uplift we achieved was Poynton in Takapuna with the completion of Stage 3, higher than the previous year. Overall, settlement which offers 55 apartments, and commencement volumes are expected to increase as new stock of construction on Stage 4 which will offer a further from Metlifecare’s development pipeline becomes 62 apartments. Five years ago, we had just available later in FY15. celebrated the official opening of Stage 1 of P ortfolio Growth this village. It is considered one of the premium retirement village developments in the country. We currently have a land-bank of over 1,000 units We have had consistently strong demand for and care beds. apartments at The Poynton and look forward to meeting more of this demand as we open up new We have a number of large developments underway apartments in Stage 4 for sale. including two new villages in the Auckland area and the expansion of several existing villages, with new A resource consent application has been submitted care facilities on several sites. We are continually for a further development at The Avenues in identifying and carefully assessing land acquisitions Tauranga, for 42 units and a 38-bed care facility. and other opportunities to expand our portfolio. Our Building consent has been obtained for 15 units and development pipeline allows us to progress towards construction has now commenced at Coastal Villas our target build rate of 200 plus units and care beds in Paraparaumu. per year from FY15 onwards. Integrating a continuum of care, where possible, Construction of The Orchards, a $40 million village is important as we look to ensure that residents

annual REPORT 2014 METLIFECARE LIMITED | 15 Chief Executive Officer’s Report

Construction at The Orchards is in full swing

requiring a higher level of care can remain in the committed to providing and maintaining equitable village they have chosen as their home. Providing pay levels. first class care in resident-directed environments We ask for feedback from our staff every year and will remain a crucial area of focus for our team into we continue to maintain good staff satisfaction the future. levels. Our People P art of our Communities The success of our business is dependent on the Our villages are an integral part of their communities efforts of our people. We are focused on creating and we play a role in supporting local and national a culture where our people feel rewarded and initiatives. We donate to organisations such as the respected for their work. Auckland Rescue Helicopter Trust and support local We encourage our staff to take advantage of training community groups, clubs and sports organisations. opportunities within our organisation, which will In 2014, we became the patron sponsor of the allow them to be rewarded with higher pay rates. Senior New Zealander of the Year category in the While the Government, to a degree, determines the Kiwibank New Zealander of the Year Awards. The level of wages we can pay our care staff, we are Award recognises the achievements of those aged

16 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig h ts

Chief Executive Officer’s Report

60 and over. This year, the Metlifecare Senior New We are now looking to take our company to the 2 statements f

Zealander of the Year Award was presented to next level with our goal to be the best operator inancial Frances Denz. of retirement villages and care facilities in New Zealand. Our staff are essential to the achievement Frances has spent forty years developing innovative of this goal. teaching practices and learning experiences for those that many would have considered We are pleased with the progression of our business ‘unteachable’. She has been the inspiration and the and are confident in our ability to continue to build source of hope for thousands of students, who have our company as a leading operator of retirement ranged from the most traumatised to those with a village services. We are looking forward to delivering history of drug dependency, from refugees to those another positive year of results for Metlifecare in 3 who are disabled. FY15. information S t atutory We are also aware of our responsibility to reduce our impact on the environment and incorporate sustainable building practices into new developments, support sustainable village projects and encourage recycling throughout our villages. Outlook The population of those aged over 65 years is expected to double to over one million by 2036. Our villages are currently home to over five thousand residents. However, we expect this number to grow significantly as we expand our portfolio of high Alan Edwards quality villages and meet projected increases in Chief Executive Officer demand. We are focused on continuing to improve the delivery of services to older people in New Zealand. We will do this by providing desirable independent living options and a range of facilities in our villages; by delivering professional in-home care services for those seeking more support; and by offering quality rest home and hospital care to enable our residents to stay in their village despite needing higher levels of care. In FY15, we will progress the developments we started in FY14 and continue to seek new, suitable greenfield sites for further expansion. We have identified a number of opportunities to rejuvenate our existing villages and will progress these. Our marketing and promotional activity will continue as we focus on selling new stock and reselling existing stock as it comes to market. While it is hard to predict, we believe the real estate market will remain strong, particularly in the high demand Auckland area, where we have a large number of villages. This will provide additional support for our sales activity.

annual REPORT 2014 METLIFECARE LIMITED | 17 Director Profiles As at 10 September 2014

The Metlifecare Board has undergone a significant refresh over the past year - Peter Brown, Geoff Grady, John Loughlin and alternate director, David Hunt, resigned and Kevin Baker, William Smales and Carolyn Steele were appointed to the Board as representatives of our new cornerstone shareholders, Infratil and New Zealand Superannuation Fund. Kim Ellis was appointed as an independent director on 25 August 2014 and Chair in place of Peter Brown from 1 September 2014. In addition, Alan Edwards stepped down as Managing Director in order to provide separation between the functions of the Board and management. He continues to lead the Company in his role as Chief Executive Officer.

Kim Ellis Christopher Kevin Baker Alistair Ryan BCA(Hons), BEng(Hons) Aiken BMS MCom(Hons) BA

Chair & Independent Independent Director Non-Executive Director Independent Director Director Roles: Roles: Roles: Roles: Chair of Nominations & Chair of Acquisition Chair of Remuneration Chair of Audit & Risk Corporate Governance & Development Committee. Member Committee. Member Committee. Member Committee. Member of Audit & Risk and of Nominations & of Acquisition & of Nominations & Nominations & Corporate Governance Development, Audit & Corporate Governance Corporate Governance and Remuneration Risk and Remuneration and Occupational Committees. Committees. Committees. Health & Safety Committees.

Experienced director Over 25 years Extensive corporate, Extensive corporate and and CEO. experience in the financial and business financial experience experience. in the listed company Former CEO of Waste property sector. sector in New Zealand Current CFO of Infratil Management NZ Ltd Current CEO of and Australia. for 13 years. Hobsonville Land Ltd and its manager, H.R.L. Morrison & Co. Former CFO and a Company. Current Chair of NZ member of the senior Chair of NZ Bus, Social Infrastructure Former director of executive team at director of Lumo Energy Fund and director of SKYCITY Entertainment Auckland City Council and Infratil Energy Freightways, Port of Property Board. Group for over 16 years. Tauranga, Fonterra Australia Pty. Current director of Shareholders’ Fund, various prominent New Ballance and Zealand companies. Envirowaste.

18 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig h ts

Director Profiles 2 statements f Peter Brown inancial Former Chair and Director (Independent)

Was the Chair of the Board, Nominations & Corporate Governance and Remuneration Committees, and a member of the Acquisition & Development Committee up to the date of 3

his resignation. information S t

William C arolyn Dr Noeline atutory Resigned from the Metlifecare Smales Steele Whitehead Board on 31 August 2014. LLB(Hons), BCom, MBA BMS(Hons) Phd, MN(Hon), PG Dip Health (INSEAD France) Sciences, RN Geoff Grady Non-Executive Director Non-Executive Director Independent Director Former Director (Non-Executive)

Roles: Roles: Roles: Was a member of the Audit Member of Acquisition Chair of Occupational Chair of Care and Nominations & Corporate & Development, Care Health & Safety Committee. Member Governance Committees up to and Nominations & Committee. Member of Nominations & the date of his resignation. Corporate Governance of Acquisition & Corporate Governance Resigned from the Metlifecare Committees. Development and and Occupational Board on 28 November 2013. Nominations & Health & Safety Corporate Governance Committees. Committees. David Hunt

Former Director (Non-Executive, Alternate for Geoff Grady) Widespread investment Substantial experience Senior manager and experience across a in capital markets, senior nurse with over Resigned from the Metlifecare number of industry mergers & acquisitions 30 years experience in Board on 28 November 2013. sectors. and investment residential aged care. management. Current Senior Recent Clinical Nurse John Loughlin Executive and Head of Director for residential Currently Portfolio Former Director (Independent) Investment at H.R.L. Manager at Guardians care and the Morrison & Co. of New Zealand Community Geriatric Was the Chair of the Audit Service with Counties Committee and a member of Former director of Superannuation, the Acquisition & Development, Vubiquity Holdings, The the Crown entity Manukau District Nominations & Corporate Mill and The Foundry. which manages Health Board. Current Governance and Remuneration Director of Nursing at Committees up to the date of Previously a principal the New Zealand his resignation. with The Carlyle Group. Superannuation Fund. Bethesda Care and Honorary Teaching Resigned from the Metlifecare Board on 24 October 2013. Member of the Fellow at the University Institute of Directors of Auckland. and alternate director Eden Guide, appointed A lan Edwards at Datacom Group by the Board of Eden Limited. Former Managing Director Alternative in Australia and New Zealand. Resigned from the Metlifecare Board on 13 December 2013.

annual REPORT 2014 METLIFECARE LIMITED | 19 Executive Team Profiles As at 10 September 2014

Our Company is led by an experienced and professional team of senior executives. During the year, we strengthened the team with several new appointments. We were pleased to welcome Grant Arbuckle, General Manager Development & Assets. Andrew Peskett, General Counsel & Company Secretary and Blanka Ros, General Manager Marketing, were promoted to the Executive Team during the year.

A lan Edwards T ristram van Grant Lynne MBA, BA, HED der Meijden Arbuckle Abercrombie BSc, BCom, CA BA, BTP, MBA MBA, Dip Occ Ther

Chief Executive Chief Financial General Manager General Manager Officer Officer Development Operations & Assets

Significant experience 16 years accounting 25 years experience in Significant experience in senior executive, and finance experience. property development in the public and private general management in New Zealand and health services industry Significant experience and organisational with two of the United as both a clinician and in a number of senior development roles. Kingdom’s largest manager. finance and accounting retirement village 14 years experience in roles in the property 14 years experience developers. leading companies in and financial services with Metlifecare. the retirement village sectors. Eight years direct industry. experience in the Appointed January 2011. retirement village Appointed August 2009. industry. Appointed to Metlifecare June 2013 and to the Executive Team in November 2013.

20 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig h ts

Executive Team Profiles 2 statements f inancial

3 information S t atutory

Jan Martin Colleen Tang Andrew Blankas Ro BCom Dip Bus (HR) Peskett MCom(Hons) BA(Hons) LLB

General Manager General Manager General Counsel & General Manager Sales Human Resources Company Secretary Marketing

17 years experience in 21 years human Significant legal and Marketing professional sales management and resources experience corporate expertise. with 16 years business development. in the manufacturing marketing experience 20 years legal and service industry. in several of New International experience in New Zealand’s leading experience in Ten years experience Zealand and the companies. the property and with Metlifecare. United Kingdom. telecommunications Five years experience Seven years experience sectors. with Metlifecare. with Metlifecare. Five years experience with Metlifecare.

annual REPORT 2014 METLIFECARE LIMITED | 21 Overview of Financials

The retirement village industry is a mixture of different things - the sale of Occupation Right Agreements and the provision of lifestyle and healthcare services, as well as property ownership and development. This can make the financial results more challenging to comprehend. To help shareholders more easily understand the Company’s business and performance, we have provided a summary and explanation of the financial results. Two terms you will come across quite often are Occupation Right Agreements (ORA) and Deferred Membership Fee (DMF). At Metlifecare, residents provide a capital sum as consideration for entering into an ORA which entitles them to a lifetime occupation right. Included in the capital sum is a DMF, which is an agreed percentage paid by the resident, or their estate, when the unit is resold. This covers the cost of refurbishing and reselling the unit, as well as contributing towards the upkeep of the village and community facilities during the period of tenure. Residents also pay a weekly village fee which is a contribution towards the costs associated with the daily operations of the village. Finally, there are additional “user pays” fees for any rest home, hospital and in-home care services provided.

Revenue Increased in FY14 Income is generated primarily from DMF earned in the period; the fees we charge for rest home, hospital and in-home care services; as well as weekly village fees.

$000 FY14 FY13

T otal income 94,778 92,796

Expenses and Net Operating Cash Flow were down in FY14

The largest expenses are operating costs such as employee costs, property costs, resident costs, marketing and promotion. Operating expenses1 returned to more normalised levels, compared to the previous year which included the one-off costs in relation to the merger. As we continue to expand Metlifecare’s business, we expect operating costs to increase in line with growth. Net operating cash flow was down slightly, as the previous year included revenue from Oakwoods village which was sold in FY13. We also had lower DMF cash flow as a result of resale volumes being slightly lower. In FY13, the merger provided us with a one-off uplift in stock available for sale and this was sold progressively throughout FY13.

$000 FY14 FY13

Operating expenses1 (80,885) (88,331)

Operating cash flow 59,495 60,188

1 Operating expenses excludes interest, merger and integration costs and expenses associated with the Oakwoods village disposal.

22 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig h ts

Overview of Financials

Strengthened Balance Sheet 2 statements f The Company’s largest asset is its investment properties - Metlifecare’s villages. The fair value of the inancial Company’s investment properties reported in the balance sheet includes any change in their value during the year. In FY14, the fair value of the Company’s properties increased by $65.7 million. This was as a result of stronger pricing activity during the year, which meant we could sell the stock at better prices, and the completion of new units which have a higher value.

$000 FY14 FY13 3 information S

Fair value movement 65,720 58,913 t atutory Carrying value of investment properties 1,960,972 1,845,138

Net Profit after Tax (18%) and Underlying Profit (38%) both Increased Net profit after tax includes a number of non-cash items such as the change in fair value of investment properties. Therefore, we also report underlying profit, which removes these non-cash items, one-off gains and deferred taxation. We believe this metric provides shareholders with a meaningful measure of the Company’s operating performance. Net profit after tax increased by 18% after excluding FY13 non-recurring2 items associated with the merger with Vision Senior Living and Private Life Care Holdings and the disposal of Oakwoods village. Underlying profit3 was up 38% to $46 million.

$000 FY14 FY13

Net Profit After Tax 68,776 120,271

Gain on acquisition - (63,620)

Merger & integration costs - 3,589

Oakwoods - (2,118)

Adjusted Net Profit 68,776 58,122

Fair value movement (65,720) (58,913)

Realised gain on resales 26,025 27,307

Realised development margin 7,338 8,139

Deferred tax expense/(benefit) 9,611 (1,257)

Underlying Profit3 46,030 33,398

2 Non-recurring items include items associated with the acquisition of Vision Senior Living and Private Life Care Holdings and the disposal of the Oakwoods village which occurred in the prior period and not in the current period. Net profit after tax excluding non-recurring items for FY13 was $58.1 million. Net profit after tax excluding non-recurring items is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS. Metlifecare believes this assists readers to understand the operating performance of the business on a comparable basis.

3 Underlying profit removes the impact of unrealised gains on investment properties and excludes one-off gains and deferred taxation. Underlying profit for FY14 was $46.0 million and for FY13 was $33.4 million. This is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS and is reconciled to reported profit in the table above. Underlying profit is an industry-wide measure and Metlifecare believes it assists readers to understand the operating performance of the business.

annual REPORT 2014 METLIFECARE LIMITED | 23

F amily of Villages

As at 30 June 2014

Oakridge Villas 48 Units

Bayswater 232 Units, 6 Care Crestwood 135 Units, 41 Care Greenwood Park 240 Units Dannemora Gardens 201 Units Papamoa Beach Village 50 Units Hibiscus Coast Village 269 Units Somervale 94 Units, 40 Care Highlands 199 Units, 41 Care The Avenues 90 Units Hillsborough Heights Village 218 Units

Longford Park Village 193 Units

Pakuranga Village F orest Lake Gardens 87 Units, 60 Care 198 Units

Pinesong 359 Units, 10 Care Palmerston North Village Powley 99 Units, 38 Care 80 Units, 45 Care Wairarapa Village 7 Saint Vincent 81 Units, 41 Care 93 Units, 2 Care

The Poynton 195 Units, 5 Care

Waitakere Gardens 324 Units

C oastal Villas 190 Units, 30 Care

Kapiti Village 225 Units

24 | METLIFECARE LIMITED annual REPORT 2014

1 & ove Hig & overview h lig r view

C onstruction & h ts t Development Locations s

As at 30 June 2014 2 statements s fin Brownfield f inancial t a a tement Greenfield n c i

Oakridge Villas a 63 Units l s

Greenwood Park 34 Units, 60 Care 3 informationinfo S t

Papamoa Beach Village atutorya tut

118 Units, 36 Care r m o a r tion Somervale y 5 Units, 30 Care Crestwood 44 Units The Avenues 42 Units, 38 Care The Poynton 62 Units

The Orchards 96 Units, 36 Care

Greenwich Gardens 310 Units, 61 Care

C oastal Villas 23 Units

annual REPORT 2014 METLIFECARE LIMITED | 25 Coastal Villas

26 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 27 |

ITED M LI

ETLIFECARE 28 29 30 31 32 33 69 2014 M T R EPO l R a nnu a nded 30 June 2014 nded 30 June inancial Statements inancial E F low Statements low F inancial Statements inancial otes to the to otes or the Y ndependent Auditor’sndependent Report F F ear I N Directors’ Report Report Directors’ Income Comprehensive of Statements in Equity Movements of Statements Sheets Balance Cash Directors’ Report

The directors have pleasure in presenting the Financial Statements of Metlifecare Limited, for the year ended 30 June 2014. The Financial Statements presented are signed for and on behalf of the Board and were authorised for issue on 25 August 2014.

P.R. Brown A.B. Ryan Chair director 25 August 2014 25 August 2014

28 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 29 ------| (226) (106) (228) 2,767 7,697

10,464 (9,505) (5,514) (6,603) (22,182) (11,718) (11,718) (11,718) (11,718) (11,718) (11,718) (11,718) ITED 30 June 2013 M LI

ent ar ------P (5) (304) (143) (391) 3,557 5,135 8,692 (3,970) (7,002) (7,007) (7,007) (7,007) (7,007) (7,007) (7,007) (6,328) (4,558) (15,694) ETLIFECARE 30 June 2014 (1) 2014 M 22 T 117 605 R 65.8 65.8 (231) (420) (281) (259) (259) 1,257 1,356 91,440 92,796 63,620 58,913 (1,358) (8,589) EPO 119,014 120,271 119,990 120,530 120,271 120,249 119,990 (35,052) (26,498) (25,192) (96,920) Restated l R 30 June 2013 a nnu roup - - - a G 21 290 230 130 477 (81) 32.7 32.7 (392) come 78,431 68,776 69,006 68,776 68,776 69,006 69,006 94,648 94,778 65,720 (1,340) (1,659) (9,655) (35,641) (21,668) (21,844) (82,544) n I 30 June 2014 7 9 7 5 6 13 10 15 10 24 24 17 15 ote N mprehensive mprehensive o C ent company ent company ar ar P P ther expenses roperty costs roperty mployee costs mployee inance costs inance inance income inance Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated Depreciation Amortisation for the year tax before Profit/(loss) (expense)/benefit tax Income for the year Profit/(loss) income Other comprehensive subsequently reclassified that will not be Items or loss: profit to arising income other comprehensive of Share tax net of joint venture, from facilities care of Gain/(loss) on revaluation care of revaluation on (expense)/benefit Tax facilities tax of income, net Other comprehensive 13 income comprehensive Total to: attributable Profit/(loss) the of Shareholders interests Non-controlling to: income attributable comprehensive Total the of Shareholders interests Non-controlling per share Earnings (cents) - Basic F O E P expenses Total (cents) - Diluted Income revenue Operating F Total income Total properties investment value of in fair Change Living Senior Vision of Gain on the acquisitions Holdings Care Life and Private (VSL) Limited (PLC) Limited tax of net joint venture, arising from profit of Share Expenses $000 Statements of of Statements 2014 30 June ended year the For The above statements of comprehensive income should be read in conjunction with the accompanying notes. notes. with the accompanying in conjunction read should be income comprehensive of statements The above (1) Statements of Movements in Equity For the year ended 30 June 2014

Group Retained Non- Contributed Earnings / Revaluation Option controlling $000 Note Equity (Deficit) Reserve Reserve Interests Total Equity Balance at 1 July 2012 Restated(1) 126,717 302,557 9,611 - - 438,885

Comprehensive income Profit for the year - 120,530 - - (259) 120,271 Other comprehensive income - - (281) - - (281) Total comprehensive income - 120,530 (281) - (259) 119,990

Transfer to retained earnings - 1,471 (1,471) - - - on disposal of village Proceeds from shares issued 22 160,425 - - - (370) 160,055 Non-controlling interest arising on - - - - 629 629 business combination Share option scheme 29 - - - 82 - 82 Dividends paid to shareholders 23 - (1,845) - - - (1,845) Balance at 30 June 2013 Restated(1) 287,142 422,713 7,859 82 - 717,796

Balance at 1 July 2013 287,142 422,713 7,859 82 - 717,796

Comprehensive income Profit for the year - 68,776 - - - 68,776 Other comprehensive income - - 230 - - 230 Total comprehensive income - 68,776 230 - - 69,006

Proceeds from shares issued 22 11,624 - - - - 11,624 Share option scheme 29 - - - 218 - 218 Dividends paid to shareholders 23 - (6,841) - - - (6,841) Balance at 30 June 2014 298,766 484,648 8,089 300 - 791,803

Parent Retained Non- Contributed Earnings / Revaluation Option controlling $000 Note Equity (Deficit) Reserve Reserve Interests Total Equity Balance at 1 July 2012 126,717 (78,133) - - - 48,584

Comprehensive income Loss for the year - (11,718) - - - (11,718) Other comprehensive income ------Total comprehensive income - (11,718) - - - (11,718)

Proceeds from shares issued 22 160,425 - - - - 160,425 Share option scheme 29 - - - 82 - 82 Dividends paid to shareholders 23 - (1,845) - - - (1,845) Balance at 30 June 2013 287,142 (91,696) - 82 - 195,528

Balance at 1 July 2013 287,142 (91,696) - 82 - 195,528

Comprehensive income Loss for the year - (7,007) - - - (7,007) Other comprehensive income ------Total comprehensive income - (7,007) - - - (7,007)

Proceeds from shares issued 22 11,624 - - - - 11,624 Share option scheme 29 - - - 218 - 218 Dividends paid to shareholders 23 - (6,841) - - - (6,841) Balance at 30 June 2014 298,766 (105,544) - 300 - 193,522

The above statements of movements in equity should be read in conjunction with the accompanying notes.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

30 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 31 ------| 82 239 260 384 267

2,146 55,459 221,202 165,073 387,425 134,292 191,897 195,528 287,142 195,528 (91,696) ITED 30 June 2013 M ent LI

ar ------P 48 129 321 256 300 3,081 42,529 234,055 167,599 402,360 163,180 208,838 193,522 298,766 193,522 (105,544) ETLIFECARE 30 June 2014 (1) - - - - 104 358 2014 M 1,160 T 31,262 40,153 R 438,885 438,885 Restated 1,215,509 EPO l R (1) - - a - - 16 82 267 nnu 1,296 9,125 7,148 6,890 7,859 9,611 a 12,706 14,657 26,765 16,819 14,568 55,476 68,779 72,686 41,976 58,086 roup 972,441 609,988 717,796 287,142 126,717 422,713 302,557 717,796 Restated G 1,845,138 1,153,113 1,893,320 1,175,524 776,624 30 June 2013 1 July 2012 - - - - 839 236 256 300 7,045 8,089 12,470 27,866 18,196 42,542 77,854 67,778 791,803 298,766 484,648 791,803 1,960,972 2,009,684 1,011,511 1,217,881 30 June 2014 11 12 27 13 14 17 15 11 19 27 20 17 10 22 29 ote N ade and other payables r Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated ntangible assets ntangible nterest bearing liabilities bearing nterest $000 Assets equivalents Cash and cash Trade receivables and other assets receivables Trade Amounts due from related parties related Amounts due from Property, plant and equipment Property, I Investments in controlled entities in controlled Investments Investment properties Investment Investment in joint venture in joint Investment Total assets Total Liabilities Bank overdraft T Amounts due to related parties related Amounts due to Derivative financial instruments Derivative financial I Deferred membership fees membership Deferred Refundable occupation right agreements right occupation Refundable 18 Deferred tax liabilities tax Deferred Total liabilities Total Net assets Net Equity equity Contributed Revaluation reserve Revaluation Option reserve Option Retained earnings/(deficit) Retained Total equity Total Balance Sheets June 2014 As at 30 The above balance sheets should be read in conjunction with the accompanying notes. notes. with the accompanying in conjunction read sheets should be balance The above (1) C ash Flow Statements For the year ended 30 June 2014

Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (1) $000 Note Restated Restated(1) Cash flows from operating activities Receipts from residents for village fees, care fees and other income 75,663 78,411 - - Receipts from residents for refundable occupation right agreements 174,692 196,220 - - Payments to suppliers and employees (73,648) (79,146) (10,750) (9,106) Payments to residents for refundable occupation right agreements (114,288) (120,043) - - Net GST (paid)/received (1,237) (2,015) 894 585 Management fees and other income received - - 2,945 2,406 Interest received 69 111 12,644 9,033 Interest paid (1,756) (9,210) (11,435) (12,575) Acquisition and integration costs - (4,140) - (3,729) Dividends received - - 600 368 Net cash inflow/(outflow) from operating activities 8 59,495 60,188 (5,102) (13,018)

Cash flows from investing activities Disposal of business 21 - 28,114 - - Payments for property, plant and equipment (1,811) (1,444) (35) (253) Payments for intangibles (232) (147) (232) (147) Net repayments from/(advances to) subsidiaries - - 16,571 (48,135) Net (advances to)/repayments from jointly- controlled entity (252) 120 (252) 120 Dividends received from joint venture 600 368 - - Payments for investments in subsidiaries - - (2,500) (20,000) Payments for investment properties (47,149) (35,952) - - Disposal of investment properties - 9,400 - - Capitalised interest paid (2,371) (1,547) - - Cash acquired on acquisition of VSL and PLC - 7,694 - - Net cash (outflow)/inflow from investing activities (51,215) 6,606 13,552 (68,415)

Cash flows from financing activities Proceeds from issuance of ordinary shares 22 9,941 68,045 9,941 68,045 Net (repayments of)/proceeds from borrowings (13,519) (141,446) (13,519) 6,519 Dividends paid (5,159) (1,222) (5,159) (1,222) Net cash (outflow)/inflow from financing activities (8,737) (74,623) (8,737) 73,342

Net decrease in cash and cash equivalents (457) (7,829) (287) (8,091) Cash and cash equivalents at the beginning of the financial year 1,296 9,125 239 8,330 Cash and cash equivalents at the end of the financial year 11 839 1,296 (48) 239

The above cash flow statements should be read in conjunction with the accompanying notes. Refer note 2(k) for more detail.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

32 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 33 |

ITED M LI

ETLIFECARE

roup will continue to meet all meet to will continue roup 2014 M G T R

EPO

l R a nnu a

roup’s operating performance the performance operating roup’s

G

nancial Statements Statements nancial i ecare Limited and subsidiaries and its jointly-controlled entity. and its jointly-controlled and subsidiaries Limited ecare F awn limits under the Core and Development Facilities. awn limits under the Core nformation

I reenlane, Auckland 1051. reenlane, G Group’s Group’s cash flow forecast for perioda of 12 months from the date of signing financial the regard to all the matters noted above, the directors believe it remains appropriate that the financial financial the that appropriate remains it believe directors the above, noted matters the all to regard financialstatements have been approved for issue by the Board Directors of on 25 August June 2013: Metlifecare Limited and subsidiaries and its jointly-controlled entities incorporating June 2013: Metlifecare Limited and subsidiaries and its jointly-controlled entities incorporating ecare ecare Limited (“the Company” or “the Parent”) and its subsidiaries (together “the Group”) own and

Company’s acquisitions of Private Life Care Holdings Limited (PLC) and Vision Senior Living Limited (VSL) Limited Living Senior Vision and (PLC) Limited Holdings Care Life Private of acquisitions Company’s ecent past performance in light of the underlying economic environment; economic underlying the of in light performance past ecent orecast covenant compliance; and compliance; covenant orecast 30 June 2014: Metlif 30 the results of PLC and VSL from the date of acquisition, 23 July 2012, through to the reporting date. date. the reporting to 23 July 2012, through acquisition, of the date PLC and VSL from of the results statements; r f available undr the he directors, in concluding, considered the following: the considered in concluding, he directors, ntities reporting ntities

Notes to the to the Notes For the year ended 30 June 2014 30 June ended year the For E 2. Summary of Significant Accounting Policies Accounting Significant 2. Summary of preparation (a) Basis of The principal accounting policies adopted in the stated. otherwise unless preparation presented, periods the all to applied consistently been have of policies These below. these financialstatements are set out Limited and (“theParent”) theconsolidated Company” or “thefor Metlifecare The statements are financial as at 30 June 2014. “the Group”) (together and its subsidiaries Limited Metlifecare comprising Group purposes. reporting for financial entity as a profit-oriented is designated The Group base Statutory Metlifecare Limited is a New the on listed is Company The 1978. Act company Securities the of terms in issuer an is and 1993 Act Companies incorporated and domiciled in have statements financial The New (ASX). Exchange Securities Australian the and (NZX) Exchange Stock Zealand Zealand, registered under Companies the and 1993 Act Reporting the Financial the of requirements the with accordance in prepared been Act 1993. These financialstatements have been prepared Accounting accordance in Practice (NZ GAAP). with New Zealand They Generally comply Accepted with Reporting New (IFRS). Standards Standards Zealand Reporting Financial Equivalents (NZ International with comply to They IFRS) entities. International profit-oriented for Financial and appropriate other applicable New Zealand Financial Reporting The Standards, balance sheet for as the Group and Company is presented on the liquidity their liquidity. of basis in the order presented are liabilities where the assets and • • • Having • were completed on 23 July 2012. The financial statements presented here are for: are here presented statements July 2012. The financial on 23 completed were • • T convention. concern under the going prepared have been statements These The 1. General General 1. Metlif incorporated company, liability limited a is Limited Metlifecare Zealand. New in villages retirement operate and isdomiciled in office House, Level New The 302 2,of its Zealand. address Great Metlifecare registered South Road, 2014. approving In issued. once statements financial these amend to power the have not do directors Group’s The these financial statementsfor issue the directors haveconsidered andconcluded that in the absenceof the of deterioration unanticipated any obligations under the funding facilities, including compliance with financialof liquidity. levels sufficient covenants and maintaining Notes to the Financial Statements

Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties and land & buildings. Critical accounting estimates and judgements The preparation of financial statements in line with NZ IFRS requires the use of certain critical accounting estimates and judgements. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3. (b) Foreign currency translation Functional and presentation currency Both the functional and presentation currency of Metlifecare Limited and its subsidiaries is New Zealand dollars ($). Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the statement of comprehensive income of each Group entity. (c) Segment reporting An operating segment is a component of an entity that engages in business activities which earn revenue and incur expenses and where the chief operating decision maker reviews the operating results on a regular basis and makes decisions on resource allocation. (d) Principles of consolidation Subsidiaries Subsidiaries are those entities (including special purpose entities) controlled by the Company. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control potential voting rights that are substantive are taken into account. The financial results of subsidiaries included in the consolidated financial statements from the dateon which control commences until the date that control ceases. Jointly-controlled entities The Group has applied NZ IFRS 11 with effect from 1 July 2013. Under this standard jointly-controlled entities are accounted for using the equity method. Under the equity method of accounting, interests in jointly-controlled entities are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. Unrealised gains on transactions between the Group and its jointly-controlled entities are eliminated to the extent of the Group’s interest in the jointly-controlled entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Prior to the adoption of NZ IFRS 11, jointly-controlled entities were accounted for using the proportionate consolidation method. The change to the equity method is a change in accounting policy. The effects of the change on the financial position, comprehensive income and the cash flows of the Group at 30 June 2013 are shown in note 16. Acquisition accounting The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary or joint venture entity acquired, the difference is recognised directly in the statement of comprehensive income.

34 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 35 o | N

ITED M LI

roup companies companies roup G he membership fee fee he membership T ETLIFECARE 2014 M T R EPO

l R a nnu a

nancial Statements Statements nancial i F is recognised as part of the cost of the asset or as an expense, as applicable. the asset or as an expense, of the cost of as part is recognised T roup. S G G ue recognition ue even R embership fee embership he income tax expense for the period is the tax payable on the current period’s taxable income based based income taxable period’s the current on payable is the tax the period for expense tax he income nterest income nterest ntercompany between on transactions gains and unrealised balances transactions, ntercompany on the company income tax rate, adjusted by changes in deferred tax assets and liabilities attributable attributable assets and liabilities tax in deferred changes by adjusted rate, tax income on the company amounts in the carrying and their assets and liabilities of bases the tax between differences temporary to tax losses. available to and changes statements, financial to expected rates at the tax differences temporary for recognised are assets and liabilities tax Deferred apply when the assets are or recovered liabilities are settled, based on those tax rates which are enacted or substantively enacted at to applied date. the are balance The tax cumulative amounts rates relevant of An exception asset or liability. tax the deferred measure to differences temporary deductible and taxable an asset or a liability. of recognition the initial arising from differences temporary certain is made for I method. rate interest effective using the basis on an accrual is recognised income Interest tax (f) Income T (e) A membership fee is payable facilities. common in the use and enjoyment of share to the right for apartments by the residents of the Group’s independent living units and serviced in a if they arose differences these temporary to in relation is recognised asset or liability tax deferred either not affect did the transaction that at the time of other than a business combination, transaction, or loss. profit taxable or profit accounting Deferred tax assets are recognised only if it is probable that future taxable amounts will and losses. be differences utilise those temporary available to the carrying between differences temporary for not recognised and assets are liabilities tax Deferred amount and tax bases of investments in controlled entities where the parent entity is in reverse able not will to differences control the that the probable is it and differences temporary the of reversal the of timing future. the foreseeable recognised also are equity in directly recognised amounts to attributable balances tax deferred and Current directly in equity. The associated current or deferred tax balances usual. are recognised in these accounts as (GST) Tax and Services (g) Goods All amounts are shown exclusive of goods and services tax (“GST”), other than trade receivables and trade payables, except where the amount of GST incurred is not from recoverable the taxation authority. When the this occurs Revenue comprises the fair value of services provided, net of goods and services tax. Revenue is recognised recognised is Revenue tax. services and goods of net provided, services of value fair the comprises Revenue as follows: M I I Notes to the to the Notes are are eliminated. Unrealised losses are policies the with also consistent are subsidiaries of policies Accounting eliminated transferred. asset the of impairment unless the transaction provides evidence of by the adopted the a set monthly, for amount and accrues agreement right the occupation of as a percentage is calculated period, based on the terms of the individual contracts. The current disclosure statement and years. three of a maximum occupation for annum 10% per of at the rate fees membership accrues agreement right The membership fee apartments. is recognised in serviced the for statement of comprehensive years income over 4 the and average expected units living independent for years 8 is which residents, of stay of length The membership fee is by payable the at resident the refundable time (by of repayment the the Group to the of resident) of set-off of right the has Group The due. amount agreement right occupation refundable the receivable. fee amount and the membership agreement right occupation comprehensive of statement the in recognised be to yet has that receivable fee membership the end, year At fee). membership (deferred sheet as a liability is held on the balance revenue fee as membership income fees and village fees, and service home, hospital Rest basis. on an accrual recognised are fees and village fees, and service home, hospital Rest Notes to the Financial Statements

(h) Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. (i) Impairment of non-financial assets Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). (j) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and call deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (k) Cash flow statements The following are definitions of the terms used in the cash flow statements: • cash comprises cash at bank, bank overdraft, cash on hand and call deposit facilities; • operating activities include all transactions and other events that are not investing or financing activities; • investing activities are those activities relating to the acquisition, holding and disposal of property, plant and equipment, investment properties and other investments. Investments can include securities not falling within the definition of cash; and • financingactivities are those activities which result in changes in the size and composition of the capital and funding structure of the Group. (l) Trade receivables Trade receivables are recognised initially at fair value plus transaction costs. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivable. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the loss is recognised in the statements of comprehensive income within ‘other expenses’. When a trade receivable is uncollectible, it is written off against the trade receivable. Subsequent recoveries of amounts previously written off are credited against ‘other expenses’ in the statements of comprehensive income. (m) Occupation right agreement receivables Occupation right agreement receivables are recognised once an occupation right agreement becomes unconditional. The receivable is recorded at its nominal value and collection terms are based on the specific terms of individual occupation right agreements. (n) Financial assets The Group classifies its financial assets in the following category: loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Group’s loans and receivables comprise trade receivables and other assets,

36 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 37 |

hese are hese are T ITED

M LI

ETLIFECARE 2014 M T R EPO

l R a nnu a

ears ears ears 25 - 50 y 3 - 10 y 5 - 7 y

nancial Statements Statements nancial i

F

e and equipment or vehicles or vehicles eehold buildings ntangible assets ntangible nvestment properties Fr Plant, furnitur Mot I I ains and losses on disposals are determined by comparing proceeds with the carrying amount. with the carrying proceeds by comparing determined are ains and losses on disposals roup has transferred substantially all the risks and rewards of ownership. of all the risks and rewards substantially has transferred roup

Investment Investment properties include completed freehold land and buildings under buildings, development freehold comprising of development independent living land units, serviced and apartments and facilities, common provided for use by residents under the terms of yields. long-term the held for are properties occupation right agreement. Investment The fair values of completed investment properties and development land are determined by a qualified independent external As valuer. by required NZ IAS the 40 fair value ‘Investment as Property’, determined by the independent valuer is adjusted for assets and value carrying the derive to adjustments These model. liabilities flow cash discounted the in reflected already also are which recognised in the balance sheet 17. disclosed in note are properties investment of • within other expenses. income comprehensive of included in the statement (p) software Computer bring and acquire to incurred costs the of basis the on capitalised are licenses software computer Acquired to use the specific Thesecosts software. are amortised on a linebasis straight over their estimated useful lives (3 years). Costs associated with maintaining computer software programmes are recognised as when incurred. expense an (q) G • • The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet balance each at appropriate, if adjusted and reviewed, are lives useful and values residual assets’ The date. amounts due amounts from subsidiaries, due from joint venture entities and cash and cash equivalents in costs. at value on date fair plus trade transaction recognised the sheet. are balance Loans and receivables the and transferred been have or expired have flows cash receive to rights the when derecognised are They G plant and equipment (o) Property, All property, plant and equipment is initially recorded at cost. Cost includes attributable expenditure that to is directly the acquisition of the its for condition working its the asset to bringing to attributable directly asset. other costs and any labour, direct The cost of self-constructed assets includes use. intended material and Subsequent to initial recognition, land and buildings for care facilities are carried at a which revalued is amount, the fair value at the date of the revaluation less buildings any subsequent and accumulated depreciation accumulated on impairment any. if losses, impairment and losses, depreciation accumulated less cost at if measured subsequently is equipment any, since the assets were value Fair is determined to last by market based evidence, which reference is the amount for which the assets revalued. Plant and willing seller in an arm’s and a knowledgeable willing buyer knowledgeable a between exchanged be could decrease revaluation date. as at the valuation length transaction a reverses it unless income comprehensive other in recognised is surplus revaluation Any of the same surplus asset previous a offsets previously directly it unless recognised income comprehensive in of statements the in the recognised is deficit statements of comprehensive income. Any revaluation 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 to restated the revalued amount of the asset. Upon disposal, date. any sheet revaluation reserve balance relating the to at the annually particular performed asset are being valuations sold Independent is earnings. retained to transferred Depreciation is provided on a straight line basis on property, plant land, and at rates calculated to equipment, allocate the assets’ other cost or valuation, than less estimated residual freehold value, over their use, as follows: for held ready the time the assets are from useful lives, commencing estimated Notes to the to the Notes Notes to the Financial Statements

The movement in the carrying value of completed investment properties and development land, net of additions to completed investment properties and development land are recognised as a fair value movement in the statements of comprehensive income. If the fair value of investment property under construction cannot be reliably determined but it is expected the fair value of the property can be reliably determined when construction is complete, then investment property under construction will be measured at cost until either its fair value can be reliably determined or construction is complete. (r) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade payables are recognised initially at fair value less transaction costs and subsequently measured at amortised cost using the effective interest method. (s) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statements of comprehensive income over the period of the borrowings using the effective interest method. Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed as incurred. (t) Assets held for sale Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell. (u) Refundable occupation right agreements Occupation right agreements confer the right of occupancy of the unit or serviced apartment until such time as the right is effectively terminated. Amounts payable under occupation right agreement repurchase arrangements, which are firm monetary obligations, are shown in the balance sheet as liabilities. At Greenwood Park, The Avenues, Powley, Kapiti Village and Dannemora Gardens villages, certain occupation right agreements include the right to a proportion of the capital gain arising on resale. The amount of the capital gain relating to these agreements is recognised by way of a liability on the balance sheet. (v) Employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non- accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (w) Contributed equity Ordinary shares are classified as equity net of incremental costs directly attributable to the issue of new shares. (x) Fair value hierarchy The Group classifies its fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); • Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); • Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs) (Level 3).

38 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 39 |

ITED M LI

hey are deconsolidated deconsolidated are hey ETLIFECARE T roup. roup. 2014 M G T R EPO

l R a nnu a

. NZ IFRS 10 introduces a new control model that is applicable applicable is that model control new a introduces 10 IFRS NZ . . Under NZ IFRS 11 the Group classifies its interests in joint arrangements nancial Statements Statements nancial i F arative information arative omp hanges in accounting policy in accounting hanges ividends C C nvestments subsidiaries in D I as either joint operations or joint ventures depending on the Group’s rights to the assets and obligations for the of liabilities the the arrangement, legal form of any vehicles, the separate terms contractual of the the sole was the arrangement of the structure Previously and circumstances. and other facts arrangement classification. of focus Prior to the adoption of NZ IFRS 11 on 1 July 2013, the Group’s Limited interest was in accounted Metlifecare Palmerston for North using the proportionate consolidation method. Under NZ IFRS 11 Palmerston Metlifecare North Limited has been classified as a joint venture and has accountedbeen for using the NZ IFRS 11 ‘Joint arrangements’ The following changes to accounting standards have been adopted in the preparation of the financial report: financial the of preparation the in adopted been have standards accounting to changes following The NZIFRS 10 ‘Consolidated financial statements’ Where necessary, certain comparative information has been reclassified in order to conform to in changes conform to inhas order been reclassified information comparative certain necessary, Where year. in the current presentation Group comparative information in relation agreement contracts issued prior to 2006 has been reclassified to fromcosts property to revenue. operating resident refurbishment recoveries Comparative Group income has increased on by $2.9m and the comparative Group expenses have increased occupation right by $2.9m. The of these receipt funds has been inreclassified thecash statement. Group flow Comparative payments and $2.9m by increased have income other and fees care fees, village for residents from receipts to suppliers and employees has increased by $2.9m. There is relation no in comparatives impact Parent the in on changes no are the There activities. Group’s operating from net inflow/(outflow) cash profit or net this reclassification. to (ac) Investments in subsidiaries in the Parent financial statements are stated at cost less impairment. at stated are statements financial in the Parent in subsidiaries Investments payments (aa) Share-based The Group operates an equity-settled share value based of the in-substance compensation options granted is plan recognised as for an employee expense senior in profit executives. or corresponding loss entry with The a in fair the option reserve. The total amount to determined by be reference expensed to over the the fair vesting value period of is the in-substance options any vesting non-market vesting Non-market conditions. are included conditions in granted, assumptions about the excluding the impact of sheet At each date, the balance exercisable. to become expected that are options in-substance of number exercisable. become to expected are that options in-substance of number the of estimates its revises Group It recognises the impact of the revision of original estimates, if any, in profit or loss, and a corresponding adjustment to equity over the remaining vesting cash a period. by vest, that options in-substance As for settled be will which dates grant part at executives the to provided of this scheme, interest-free loans are bonus (forfeited in-substance options offset the remaining loan element balance). of The this PAYE bonus will be treated as a cash-settled share based payment transaction with a market the to liability accruing for reference by adjusted over PAYE is liability this exercise, of date the to vesting, After period. vesting the or loss. in profit recognised will be this liability value of in the fair Changes the shares. value of (ab) Provision is made for the amount of any dividend declared on or before the balance date but not distributed distributed not but date balance the before or on declared dividend any of amount the for made is Provision date. at balance (z) The level in the fair value within hierarchy which the fair value measurement is categorised is determined observable uses measurement value fair a If measurement. value fair the to input lowest the of basis the on inputs that require significant adjustmentbased on unobservable inputs, the measurementmeasurement. is a Level 3 (y) Notes to the to the Notes returns from its involvement with the investee and ability to use its power to affect those returns. Subsidiaries Subsidiaries returns. those affect to to variable to rights an exposure over investee, on whether has power the power to all focussing Group investees, its use to ability and investee the with involvement its from returns the to transferred is control which on date the from consolidated fully are from from the date that control ceases. The adoption of NZ of the Group. statements financial IFRS on the consolidated impact 10 from 1 July 2013 has had no significant Notes to the Financial Statements

equity accounting method, in that the Group recognises its share of assets and liabilities that it is jointly responsible for in the consolidated statement of financial position within investment in joint venture and the consolidated statement of comprehensive income of the Group includes its share of income and expenses of the joint venture entity in share of profit arising from joint venture, net of tax and share of other comprehensive income arising from the joint venture. Refer to note 16 for further details. Due to the introduction of NZ IFRS 10 and NZ IFRS 11, amendments were made to NZ IAS 27 ‘Separate financial statements’ and NZ IAS 28 ‘Investments in associates and joint ventures’. The Group has adopted these corresponding amendments from 1 July 2013 consistent with the adoption of NZ IFRS 10 and NZ IFRS 11. NZ IFRS 12 ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles. The additional disclosures required by NZ IFRS 12 are included in note 15. NZ IAS 1 ‘Presentation of financial statements’ (amendment as part of the annual improvements 2009 - 2011 cycle). The amendment clarifies that when an entity is required to present an additional balance sheet as the result of a change in accounting policy, it need not present the related notes to accompany the additional balance sheet presented. NZ IFRS 13 ‘Fair value measurement’. NZ IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other NZ IFRSs. In accordance with the transitional provisions of NZ IFRS 13, the Group has applied the new fair value measurement guidance prospectively, and has not provided any comparative information for new disclosures. Notwithstanding the above, the adoption of NZ IFRS 13 on 1 July 2013 has had no material impact on the measurement of the Group’s assets and liabilities. XRB A1 ‘Accounting Standards Framework (For-profit entities update)’.XRB A1 establishes a for-profit tier structure and outlines which suite of accounting standards entities in different tiers must follow. The Company is a Tier 1 entity. There was no impact on the current or prior year financial statements. All other accounting policies have been applied on a basis consistent with the prior annual financial statements. (ad) Standards, interpretations and amendments to published standards that are not yet effective NZ IFRS 9 ‘Financial Instruments’ (effective for annual periods beginning on or after 1 January 2017). NZ IFRS 9 replaces the multiple classification and measurement models for financial assets in NZ IAS39 with a model that has only two classification categories: amortised cost and fair value. The recognition and measurement guidance relating to financial liabilities is unchanged from NZ IAS 39. An additional presentational requirement has been added for liabilities designated at fair value through profit or loss. The Group will apply this standard from 1 July 2017 and is currently evaluating the impact of the amendment. IFRS 9 ‘Financial Instruments’ (effective for annual periods beginning on or after 1 January 2018). IFRS 9 was issued by the International Accounting Standards Board in July 2014 as a complete version of the standard. This standard adds to the requirements of NZ IFRS 9 by incorporating the expected credit loss model for calculating the impairment of financial assets. The Group is yet to assess the impact of this standard and does not expect to adopt it before its effective date. NZ IFRS 15 ‘Revenue from contracts with customers’ (effective for annual periods beginning on or after 1 January 2017). NZ IFRS 15 addresses recognition of revenue from contracts with customers. It replaces the current revenue recognition guidance in NZ IAS 18 Revenue and NZ IAS 11 Construction contracts and is applicable to all entities with revenue. It sets out a five step model for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Group has yet to assess NZ IFRS 15’s full impact. The Group will apply this standard from 1 July 2017.

40 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 41 |

ITED M LI

) included in the f this timing was f this timing was I (1) ETLIFECARE

2014 M n determining the position, the the position, n determining I T ) and a corresponding reduction R (1) he resulting accounting estimates estimates accounting he resulting T EPO ) would be recognised on the balance

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) would also be recognised. The directors, in determining (1)

stimates and Judgements stimates E

nancial Statements Statements nancial i F

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gnificant judgement is required in determining whether shareholder continuity and other income income other and continuity shareholder whether determining in required is judgement gnificant Si

es and judgements are continually evaluated and are based on historical experience and other factors, factors, other and experience historical on based are and evaluated continually are judgements and es ership fees are recognised as revenue on a straight-line basis. This requires management to estimate estimate to management requires This basis. straight-line a on revenue as recognised are fees ership roup makes estimates and assumptions concerning the future. the future. concerning and assumptions estimates makes roup roup recognises tax losses in the balance sheet to the extent that tax losses offset deferred income income deferred offset losses that tax the extent sheet to losses in the balance tax recognises roup ritical ritical sell down in November 2013 by Retirement Villages New Zealand Limited of its shareholding in ritical judgements in applying the entity’s accounting policies the entity’s accounting in applying judgements ritical ritical accounting estimates and assumptions estimates accounting ritical G G fair value of completed investment properties, development land and care facilities land and buildings and land facilities care and land development properties, investment completed of value fair erred tax assets and liabilities have been offset in accordance with NZ IAS 12 Income Tax. The deferred deferred The Tax. Income 12 IAS NZ with accordance in offset been have liabilities and assets tax erred erred erred tax in respect of investment properties has been assessed on the basis of the asset value being IAS 12 requires deferred tax to be recognised in respect of taxable temporary differences. The carrying differences. temporary tax in of taxable to respect IAS be deferred recognised 12 requires C C C evenue recognition evenue Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated he he air value of investment properties and care facilities and care properties investment air value of ncome taxes ncome adopted treatment prior to the utilisation of any available tax losses at the time. any available tax of the utilisation to prior treatment adopted (1) directors directors considered the timing of the membership receipt and whether it is the fees. received of off set of at the right due to deposit agreement right the the occupation of receipt time of the tax tax liabilities arising from temporary differences and the requirements of income tax legislation satisfied. can be the Company meant the Group did not maintain sufficient shareholder forfeited. 23 July 2012 have been to prior generated continuity levels and tax losses NZ the period of occupancy for units and serviced apartments. Management estimates are based on experience experience on based are estimates Management apartments. serviced and units for occupancy of period the 2 (e). in note detailed and are periods occupancy of The value of the Group’s investment properties is determined on a discounted cash cash flow flowsbasis and that includes are both taxable tax and consequence, taxable non primarily in respect in of the membership fees, future. result determining in the taxable a Onlytemporary the difference, directors taxable have used temporary the contractual those difference. cash flows In on cash the flows cash gross two comprise agreement with a future right flows an occupation for arrangements that the contractual basis upon this deposit of the unit and the refund entering upon deposit agreement right an occupation (being arising differences temporary taxable the determine to excluded be to need and non-taxable are that exit) on investment properties. Contractually, membership fees are received upon a unit by a resident. on exit of set off of by way deposit refund agreement right of the occupation (b) I Def T used, an additional deferred tax liability of $32.5m (2013: $29.5m R Memb law or circumstances. in tax no change will be that there on the assumption calculated has been tax to recognised be to losses tax for order in future the in met be to continue will requirements legislation tax liabilities. tax income absorb any deferred T F The processes, valuation for 17 and 13 notes to Refer valuer. qualified independent an by determined been have key assumptions made and sensitivity analysis. The fair value of investment and properties care facilities fair value. and the on profit impact have a significant the assumptions to is subjective and changes 3. Estimat (a) including expectations of future events that are believed to be reasonable under the circumstances. reasonable be to believed events that are future of including expectations will, by definition, seldom equal related the actuala results.significant riskof causing The aestimates material adjustment and to assumptions thecarrying that have discussed below. amounts of assets and liabilities are Def the appropriate treatment, have carefully evaluated all the available information and consider the adopted adopted the consider and information available the all evaluated carefully have treatment, appropriate the appropriate. be to policy realised through use. If the asset value was realised by sale, the sale would trigger a $90.0m (2013: $89.4m) (2013: $90.0m a trigger would sale the sale, by realised was value asset the If use. through realised the at losses tax available any of utilisation the to prior recovered depreciation tax to relation in liability tax time. This compares to the “in use” deferred tax net liability of $115.3m (2013: $77.6m sheet. An additional current year tax expense of $32.5m (2013: $29.5m in net profit aftertax of $32.5m (2013: $29.5m Notes to the to the Notes Notes to the Financial Statements

4. Segment Information The Group operates in one operating segment. The chief operating decision maker, the Board of Directors, reviews the operating results on a regular basis and makes decisions on resource allocation based on the review of Group results and cash flows as a whole. The nature of the products and services provided and the type and class of customers have similar characteristics within the operating segment. Information about major customers Included in total revenue are revenues derived from the Group’s largest customers as follows: The Group derives care fee revenue in respect of eligible Government subsidised aged care residents who receive rest home or hospital level care. Government aged care subsidies received from the Ministry of Health included in rest home, hospital and service fees, and villages fees amounted to $12.3m (2013: $13.8m(1)).

5. Operating Revenue

Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (1) $000 Restated Membership fees 38,612 35,851 - - Rest home, hospital and service fees and village fees 52,244 51,416 - - Dividends received from joint venture - - 600 368 Other* 3,792 4,173 2,957 2,399 94,648 91,440 3,557 2,767

* Other revenue for the Group includes resident refurbishment recoveries and administration fees collected on occupation right agreement contracts issued prior to 2006. Other revenue for the Parent includes management fees charged to subsidiaries and the jointly-controlled entity (refer note 27).

6. Finance Income Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (1) $000 Restated Interest on advances to subsidiaries (note 27) - - 5,129 6,503 Change in the fair value of derivatives - 1,160 - 1,160 Other interest income 130 196 6 34 130 1,356 5,135 7,697

Interest on advances to subsidiaries of $5.1m (2013: $6.5m) is the net of $12.6m (2013: $9.0m) of interest on advances from the Parent and $7.5m (2013: $2.5m) of interest on advances to the Parent.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

42 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 43 4 2 ------2 | 32 32 42 76 222 226 243 424 788 251 527 787 373 3,100 6,603

ITED 30 June 2013 M LI

ent ar 2 ------5 P 25 84 39 59 302 304 643 306 289 684 563 4,558 1,945 ETLIFECARE 30 June 2014 (1) - 2014 M 2 42 T 38 32 28 584 496 R 387 111 527 394 373 5,010 4,015 1,906 1,787 1,744 1,601 3,206 3,989 10,890 15,024 26,498 25,192 EPO Restated

l R 30 June 2013 a nnu roup a - - - 9 9 G 15 25 39 59 20

552 306 499 563 395 1,567 5,359 3,955 2,113 2,730 4,680 10,586 10,530 21,668 21,844 30 June 2014 nancial Statements Statements nancial i F al property costs al property al other expenses ot T ther expenses roperty costs roperty ot Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated

- Repairs and maintenance on investment properties on investment and maintenance - Repairs plant, on property, and maintenance - Repairs and equipment furniture O and promotion - Marketing P costs and other property - Utilities costs - Resident Profit/(loss) before income tax includes the following following tax includes the income before Profit/(loss) expenses: specific - Other employment costs - Communication costs - Communication lease expenses and operating - Rental plant and equipment property, of - Loss on disposal $000 - Donations - Bad debts - Doubtful debts gain capital of share - Residents' 21) (note - Loss on business disposal - Costs associated with the acquisitions of VSL and PLC of acquisitions with the - Costs associated - Integration costs - Integration - Other (no items of individual significance) individual of - Other (no items Fees paid to PricewaterhouseCoopers New Zealand PricewaterhouseCoopers to paid Fees - Audit - Other assurance - Tax compliance - Tax - Other non-assurance T Total fees paid to PricewaterhouseCoopers New Zealand PricewaterhouseCoopers to paid fees Total fees Directors' - Parent (1) Fees paid to PricewaterhouseCoopers New by Zealand to paid the Fees PricewaterhouseCoopers Group for other totalled services $25,000assurance (2013: $42,000). In 2014 this related to work performed at shareholder meetings, on the financial of covenants the bank facilities, on the ASX prospectus and the interim testing of internal controls. In to 2013 this work related performed at shareholder meetings and work performed on paid New to PricewaterhouseCoopers Zealand by the the Group for other non-assurance services totalled $20,000 interim financialstatements. Fees (2013: $28,000). In 2014 this related to advisory services on executive remuneration. In 2013 this benchmarking and related advisory services toon executive and remuneration due diligence services in connection with (PLC). Holdings Limited Care Life (VSL) and Private Living Limited Senior Vision of the acquisitions 7. Expenses Notes to the to the Notes Notes to the Financial Statements

8. Reconciliation of Profit/(Loss) after Tax with Cash Inflow/(Outflow) from Operating Activities Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (1) $000 Restated Profit/(loss) after tax 68,776 120,271 (7,007) (11,718) Adjustments for: Change in fair value of investment properties (65,720) (58,913) - - Change in fair value of residents’ share of capital 2,730 1,744 - - gains Change in fair value of derivative financial - (1,160) - (1,160) instruments Share option scheme 218 82 218 82 Gain on the acquisitions of VSL and PLC - (63,620) - - Depreciation 1,340 1,358 143 106 Amortisation 392 231 391 228 Movement in deferred tax expense 9,611 (1,257) - - Loss on business disposal - 1,601 - - Loss on disposal of property, plant and equipment 15 111 5 2 Share of profit arising from joint venture, net of tax (477) (605) - -

Changes in working capital relating to operating activities: Trade receivables and other assets 317 2,761 211 (13) Trade and other payables 785 (3,202) 937 (545) Deferred membership fees 5,168 6,834 - - Refundable occupation right agreements 36,340 53,952 - - Net cash inflow/(outflow) from operating activities 59,495 60,188 (5,102) (13,018)

9. Finance Costs

Group Parent

$000 30 June 2014 30 June 2013 30 June 2014 30 June 2013 Interest expense 2,260 7,078 2,200 6,497 Facility costs 1,770 3,058 1,770 3,008 Less: interest expense and facility costs capitalised (2,371) (1,547) - - 1,659 8,589 3,970 9,505

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

44 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 45 (1) ------| 654 5,239 2,512 1,016 1,611

Balance (3,281) (11,718) Restated (97,269) (67,778) ITED 30 June 2013 30 June 2013 M LI

ent ar (1) ------4,661 - - 16,716 - 3,276 - 4,838 - 5 5 5 P 246 erger erger 189 (263) M 7,214 20,681 2,040 Merger 30 June 2014 (7,002) (1,961) (19,307) (58,086) Restated Acquired on Acquired ETLIFECARE 30 June 2014

I (1) (1) - - - - - (29,675) (90,986) C - - - - 2014 M T O R 448 176 117 117 2,908 4,468 (81) (81) in in OCI (936) 4,468 5,239 2,615 2,512 33,324 20,681 (1,257) (1,257) (3,636) (1,257) EPO 119,014 (16,752) (16,496) (90,986) (58,086) Restated Restated Recognised

l R 30 June 2013 a nnu roup (1) - a G 44

470 260 870 274 764 (469) (448) ncome ncome (401) 1,257 2,512 1,714 9,655 9,611 4,661 4,838 6,283 9,655 3,276 I (1,224) 78,431 21,961 16,716 (3,965) in Restated (18,402) (97,269) (67,778) Recognised Recognised 30 June 2014 (1) - 573 6,217 4,468 2,512 5,239 Balance Balance 11,753 Balance Recognised Recognised on Acquired Balance 20,681 (40,153) (58,696) (2,615) Restated (90,986) (6,283) (58,086) (9,611) 1 July 2012 1 July 2013 in Income nancial Statements Statements nancial i F fect of amounts which are not deductible are amounts which of fect et deferred tax liability tax et deferred ther items et deferred tax liability tax et deferred on taxable income and non deductible expenditure income on taxable ther items ther ther items liability tax et deferred he deferred tax balance comprises: balance tax he deferred ax ef Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated Movement in the deferred tax balance comprises: balance tax in the deferred Movement N O Recognised tax losses tax Recognised Deferred membership fees membership Deferred Investment property Investment Property, plant and equipment Property, Property, plant and equipment Property, Deferred tax Deferred expense tax income of reconciliation (b) Numerical payable tax facie prima to tax expense income before Profit/(loss) T Tax at the New Zealand tax rate of 28% of rate tax at the New Zealand Tax income: taxable in calculating (taxable) costs) (net of on acquisitions gain Non taxable (a) Income tax expense/(benefit) tax (a) Income tax Current $000 Investment property Investment O N T O plant and equipment Property, N property investment of impact Non taxable revaluation tax deferred for valuations in property Movement property in investment change of impact Tax base tax depreciable losses tax in unrecognised Movement / (benefit) expense tax Income 28% (2013: 28%). was rate tax The applicable liability tax deferred (c) Recognised property Investment fees membership Deferred losses tax Recognised Deferred membership fees membership Deferred Recognised tax losses tax Recognised O N 10. Income Tax Expense/(Benefit) Tax 10. Income (1) Notes to the to the Notes Notes to the Financial Statements

Expected maturity of deferred tax liability: Group 30 June 2014 30 June 2013 $000 Restated(1) Deferred tax liability to be recovered within 12 months 906 624 Deferred tax liability to be recovered after more than 12 months (68,684) (58,710) (67,778) (58,086)

(d) Unrecognised deferred tax asset Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $000 Restated(1) Restated(1) T emporary differences arising from normal operations - - - - Unused tax losses - 73,081 - 31,609 Unrecognised deferred tax balances - 73,081 - 31,609 Unrecognised deferred tax balances @ 28% (2013: 28%) - 20,463 - 8,851

No income tax was paid or payable during the year. There are no unrecognised tax losses for the Group at 30 June 2014 (2013: $73.1m). The sell down in November 2013 by Retirement Villages New Zealand Limited of its shareholding in the Company meant the Company did not maintain sufficient shareholder continuity levels and tax losses generated prior to 23 July 2012 have been forfeited. Critical accounting judgements in respect of deferred tax are set out in note 3.

(e) Imputation credits The imputation credit balance for the Group and Parent at 30 June 2014 is nil (2013: nil). No tax payments were made during the year and any dividends paid were unimputed. 11. Cash and Cash Equivalents

Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (1) $000 Restated Restated(1) Cash at bank and in hand 839 1,296 - 239 Cash and cash equivalents per balance sheet 839 1,296 - 239 Less bank overdraft - - (48) - Cash and cash equivalents per cash flow statement 839 1,296 (48) 239 12. Trade Receivables and Other Assets

Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (1) $000 Restated Trade receivables 3,853 3,550 5 - Provision for doubtful receivables (8) (2) - - 3,845 3,548 5 - Occupation right agreement receivables 7,622 8,231 - - Prepayments 238 391 108 251 Other receivables 765 536 16 9 Total receivables and other assets 12,470 12,706 129 260

Past due but not impaired receivables 1 to 3 months 116 186 - - Over 3 months 132 140 - - 248 326 - - All trade receivables and other assets are expected to mature within 12 months of balance date.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

46 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 47 - - - - - | 97 384 254 384 254 Total

ent ar P ITED M LI

(95) Total 26,765 26,765 43,237 1,397 ETLIFECARE - (420) - 290 (29) (90) (4,336) 2014 M (44) (44) (17) Plant, T 3,272 2,593 31,262 3,272 2,593 31,262 R (15,449) (15,449) (872) Furniture & Furniture EPO

Motor Vehicles Motor l R Equipment andEquipment a roup - 1,331 1,331 236 - - 381 381 - (16,404) (16,404) (963) - (16,472) (16,472) (1,013) - - 2,195 2,195 G nnu (60) a (388) (952) (1,340) (143) 19,728 19,728 19,728 19,744

Buildings - (444) (914) (1,358) (106) ------(420) - - - (6) 60 230 (700) (3,546) 3,765 4,471 24,198 3,765 4,471 24,198 18,997 47,666 1,217 3,765 4,471 24,198 3,825 19,570 4,471 27,866 321 3,825 19,570 19,920 43,315 1,193 3,825 19,570 4,471 27,866 321 3,765 19,728 3,272 26,765 384 Freehold LandFreehold Freehold ) quipment (1) E ) ) (1) (1) nancial Statements Statements nancial i F pening net book amount net book pening pening net book amount net book pening Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated Net book value Net book Accumulated depreciation Accumulated At 30 June 2014 Cost or valuation Closing net book amount Closing net book At 30 June 2013 (Restated Disposals Closing net book amount Closing net book Depreciation Disposals Additions Business disposal (note 21) (note Business disposal Revaluation of care facilities care of Revaluation Depreciation Year ended 30 June 2013 (Restated ended Year O Year ended 30 June 2014 ended Year Additions Net book value Net book value Net book Assets acquired on acquisition on acquisition Assets acquired Accumulated depreciation Accumulated Accumulated depreciation Accumulated Revaluation of care facilities care of Revaluation At 30 June 2012 (Restated Cost or valuation Cost or valuation O $000 Notes to the to the Notes 13. Property, Plant and Plant 13. Property, (1) Notes to the Financial Statements

The Group’s care facilities encompassing freehold land and buildings were valued on 30 June 2014 by independent registered valuer CBRE Limited (CBRE) (2013: CBRE Limited). CBRE determined the fair value of all care facility assets using an earnings-based multiple approach where the lower of actual or projected earnings before interest, tax, depreciation, amortisation and rent is capitalised at rates of between 11% to 16% (2013: 13% to 16%). The valuation prepared has been split between land, improvements, chattels and plant and goodwill to determine the fair value of the assets. The revaluation, net of applicable deferred income taxes, was recognised in other comprehensive income and is shown in ‘revaluation reserve’ in shareholders equity. In valuing the care facilities CBRE gave consideration to relevant general and economic factors, investigated recent comparable property transactions and reviewed the components that contribute to the value of the assets. CBRE consider the key influences fall into four major categories being; age and quality of the facility, management expertise, government regulation and policy, and investor profile and demand to enter the sector. Once the outcome of this process is known, it is analysed on a per bed basis and allowances are made for any revenue that is derived from delivering services into the wider village if required. As the fair value of freehold land and 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 of the Group’s portfolio of land and buildings are the capitalisation rates applied to individual unit earnings. A significant decrease (increase) in the capitalisation rate would result in a significantly higher (lower) fair value measurement. If freehold land and buildings were stated on a historical cost basis, the amounts would be as follows:

Freehold land Freehold $000 buildings At 30 June 2014 Cost 2,905 15,096 Accumulated depreciation - (4,606) Net book value 2,905 10,490

At 30 June 2013 Restated(1) Cost 2,905 15,096 Accumulated depreciation - (4,236) Net book value 2,905 10,860

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

48 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 49 |

(7,755) 172,828 165,073

30 June 2013 ITED

M LI

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imited L (7,755) L 175,354 167,599

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30 June 2014 on his encompasses receipts receipts his encompasses imited T L imited * imited rchards rchards oynt L arapa arapa imited O P 2014 M L T wley R air o he he roup roup P T T W imited are currently engaged in the engaged currently are imited L G EPO

l R a e Life Care Holdings Limited * Holdings Limited Care e Life ecare Somervale Limited ecare Limited The Avenues ecare akere akere on Senior Living Investments Limited * Limited Living Investments on Senior * Living Limited on Senior * Limited on (Christchurch) on (Bay of Islands) Limited * Islands) Limited on (Bay of * Limited on (Dannemora) * No. 2) Limited on (Papamoa nnu rchards rchards ovider Care NZ Limited Care ovider ait a etlifecare etlifecare etlifecare etlifecare etlifecare etlifecare O hird Age Care Care Age hird

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ent on a daily basis and without restriction. and without restriction. ent on a daily basis

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nancial Statements Statements nancial C ardens ardens imited imited i imited **** imited L L G L imited * imited imited F imited * imited L L incent incent L roup to fully control these assets without undergoing a consultation process with all process a consultation these assets without undergoing fully control to roup V G

illage Holdings Holdings illage illage illage uranga uranga

es V V akwoods akwoods reenwich reenwich ardens ardens inesong ak O P P G G ast Village Holdings Limited * Holdings Limited ast Village ark ark P P ake ake L roup operates its daily treasury functions as a whole with all subsidiaries interacting through through interacting as a whole with all subsidiaries functions its daily treasury operates roup eviously Metlifecare Stanley Road Limited. Limited. Road Stanley Metlifecare eviously Metlifecare Metlifecare Oakwoods Limited (a retirement village in Richmond, Nelson) ceased to provide nvestment in ecare Merivale Limited Merivale ecare ecare Highlands Limited Highlands ecare Limited Kapiti ecare ecare Coastal Villas Limited Coastal ecare Limited Crestwood ecare ** Limited Gardens Greenwich ecare Limited Park Greenwood ecare f Plenty Retirement Village Limited Village f Plenty Retirement

orough Heights Village Holdings Limited * Holdings Limited Village Heights orough I G est etlifecare 7 Saint etlifecare etlifecare etlifecare etlifecare etlifecare etlifecare etlifecare etlifecare etlifecare Bayswater Bayswater etlifecare perating entities perating he ongford ongford ongford ongford or $000 Investment in controlled entities in controlled Investment investment of impairment for Provision value at carrying entities in controlled Investment A provision of $7.8m (2013: $7.8m) has been made against investments in subsidiaries as the book value of of value book the as subsidiaries in investments against made been has $7.8m) (2013: $7.8m of provision A the net assets. value of carrying the recorded exceeds in subsidiaries the investments O F Hibiscus Co Hillsb 14. All subsidiary companies are 100% owned and incorporated in New Zealand June. with a balance date of 30 L M M M L M development of retirement villages. All other subsidiaries, except the dormant entities, own and manage villages. retirement parties. affected on 23 July 2012. the acquisitions of as part acquired were * These companies Limited. Heights Unsworth Metlifecare ** Previously *** Pr **** business the of assets the of sale the following 2012 November 30 on aged the for care and accommodation 21). note (refer M T with the accounts intercompany Dormant entiti Bay o Metlif Metlif Metlif Metlif Metlif Metlif right under occupation residents to and payments and receipts suppliers, to payments residents, from agreements. The village residents hold occupation right agreements giving them the right to occupy the investment properties of the Group and these rights are protected by the statutory supervisor restricting the the ability of Metlif M Notes to the to the Notes Notes to the Financial Statements

15. Investment in Joint Venture

Place of Principal 30 June 2014 30 June 2013 Business Activity Interest held by Group Metlifecare Palmerston North Limited Palmerston Ownership and 50% 50% North Management of a Retirement Village

The jointly-controlled company is incorporated in New Zealand and has a balance date of 30 June. Set out below is summarised financial information for Metlifecare Palmerston North Limited, which is accounted for using the equity method (whilst they meet the definition of a joint venture as set out in note 2).

$000 30 June 2014 30 June 2013 Cash and cash equivalents 396 518 Trade receivables and other assets 574 293 Total current assets 970 811 Amount due from parent - 16 Property, plant and equipment 3,689 3,591 Investment properties 32,267 31,812 Total non-current assets 35,956 35,419

Trade and other payables 879 733 Total current liabilities 879 733 Amount due to parent 236 - Deferred membership fees 1,266 1,269 Refundable occupation right agreements 18,102 17,755 Deferred tax liability 2,352 2,177 Total non-current liabilities 21,956 21,201 Net assets 14,091 14,296

Operating revenue 4,404 4,473 Finance income 20 11 Total revenue 4,424 4,484 Change in the fair value of investment properties 289 332 Employee costs (2,194) (2,151) Property costs (465) (590) Depreciation (101) (99) Amortisation - - Finance costs (2) (1) Other expenses (839) (826) Profit for the period before income tax 1,112 1,149 Income tax (expense)/benefit (159) 60 Profit for the period after income tax 953 1,209 Other comprehensive income, net of tax 42 43 Total comprehensive income, net of tax 995 1,252

50 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 51 - - - - - | 43 31 (5) 605 (49) (31) (737) (166) (295) (414) 7,148 7,148 1,209

13,781 14,296 (2,237) (2,242) (1,076)

roup G NZ IAS 31 ITED 30 June 2013 30 June 2013 M LI

42 953 7,045 7,045 14,296 14,091 (1,200) ETLIFECARE 30 June 2014 2014 M T R EPO

l R a nnu a

rrangements’ A

S 11 ‘Joint S 11 ‘Joint the Group’s share of assets, liabilities, revenue, income and expenses of Metlifecare Metlifecare and income expenses of revenue, assets, of liabilities, share the Group’s

IFR nancial Statements Statements nancial i F roup or earnings per share. or earnings per roup doption of NZ of doption G esulting adjustments from applying NZ IFRS 11 to the prior periods are shown below as follows: below shown are NZ IFRS periods applying the prior 11 to esulting adjustments from A e of profit, net of tax of net profit, e of ease/(Decrease) $000 ease/(Decrease) al income on adoption of NZ on of IFRSadoption 11 on 1 July 2013, has to the be a determined underthis Group joint interest venture 30 June 2014, Metlifecare Palmerston North Limited had an overdraft facility of $650,000, of which $650,000 which $650,000, of of facility had an overdraft North Limited Palmerston 30 June 2014, Metlifecare ther expenses et assets at the end of the year et assets at the end of et assets at beginning of the year of et assets at beginning roperty costs roperty mployee costs mployee inance costs inance inance income inance ot Incr Change in fair value of investment properties investment value of in fair Change tax of net joint venture, arising from profit of Share E P Depreciation Amortisation F O tax income before Profit benefit tax Income period for the Profit tax net of income, Other comprehensive tax net of income, comprehensive Total Operating revenue Operating F T Shar @ 50% in joint venture Interest the year value at the end of Carrying N $000 N Other comprehensive income, net of tax net of income, Other comprehensive declared Dividends The r items income comprehensive of on statement Impact Palmerston North Limited were proportionately consolidated in the consolidated financial statements. financial in the consolidated consolidated proportionately were North Limited Palmerston Up NZ IFRS 11 and to required be accounted for using the equity method. The Group its recognised investment in joint venture at 1 July 2012, (being the earliest period presented) as the total carrying amounts of the assets and liabilities previously proportionately consolidated by the Group. This is the investment deemed in joint ventures for cost applying equity accounting. NZ of IFRS 11 the has been applied withretrospectively, Group’s from effect 1 July 2012. The adoption of NZ IFRS 11 has not impacted total comprehensive income, net assets the of 16. As at 30 June 2014, the Group has a 50% interest in Metlifecare Palmerston North Limited. Under At $650,000 undrawn). (2013: $650,000 overdraft, undrawn was Under the terms of the overdraft agreement entered into with BNZ North on Limited may not make any 8 distribution, using the of proceeds the June or overdraft exceeding the amount of 2012, Metlifecare Palmerston year. financial in the previous achieved (CFADS) for debt servicing available flow cash Metlifecare Palmerston North Limited had no capital commitments or contingent liabilities at (2013: nil). 30 June 2014 Reconciliation Reconciliation of the summarised financial information in joint venture investment presented to carrying the amount theof Group’s ‘Interests in Joint Ventures’ Notes to the to the Notes Notes to the Financial Statements

Impact on balance sheet items

Group

Increase/(Decrease) $000 30 June 2013 30 June 2012 Cash and cash equivalents (259) (96) Trade receivables and other assets (146) (401) Amounts due from related parties - 52 Property, plant and equipment (1,796) (1,794) Investment properties (15,906) (15,667) Investment in joint venture 7,148 6,890 Trade and other payables (367) (467) Amounts due to related parties 8 - Interest bearing liabilities - (2) Deferred membership fees (634) (610) Refundable occupation right agreements (8,878) (8,826) Deferred tax liabilities (1,088) (1,111) Contributed equity - - Revaluation reserve - - Option reserve - - Retained earnings - -

The deemed cost of the investment in joint venture of $6.89m at 1 July 2012 has been determined based on the aggregation of the individual impact to each asset and liability by the items disclosed above as at 1 July 2012.

Impact on cash flow statement items

Group

Increase/(Decrease) $000 30 June 2013 Net cash inflow from operating activities (688) Net cash outflow from investing activities 525 Net cash outflow from financing activities - Net decrease in cash and cash equivalents (163)

52 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 53 (1) | (540) (199) 7,271 1,210 3,122 1,139 4,592

16,000 21,425 15,395 22,593 59,112 41,238 21,530 10,800 (9,400) (3,122) estated 634,606 (56,846) (22,593) R 1,845,138 1,129,843 1,793,100 ITED 30 June 2013 M LI

NZ IFRS 13 ‘Fair roup ------G 136 1,347 4,818 1,393 41,238 10,800 39,630 65,584 37,949 47,374 18,544 (4,818) (39,630) ETLIFECARE 1,960,972 1,793,100 1,904,479 30 June 2014 2014 M T R EPO

l R a nnu a

nancial Statements Statements nancial i F

easurement’. nvestment Properties M I the fair value of investment property is determined using inputs that are unobservable, the Group has pening balance pening pening balance balance pening pening balance balance pening Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated aluati alue Acquired through the acquisitions of VSL and PLC of the acquisitions through Acquired property investment Sale of properties investment Total O Acquired through the acquisitions of VSL and PLC of the acquisitions through Acquired development land of Acquisition development land Sale of O VSL and PLC of the acquisitions through Acquired 21) (note Business disposal subsequent expenditure Capitalised development land from Land transferred under development properties investment from developments transferred Completed during the year value recognised in fair Change Closing balance Development land Development O Capitalised subsequent expenditure Capitalised properties investment completed to Land transferred during the year value recognised in fair Change Closing balance development under properties Investment subsequent expenditure Capitalised properties investment completed to developments transferred Completed Closing balance properties investment Completed $000 17. (1) As categorised investment property as Level 3 under the fair value hierarchy in accordance with V Completed investment properties and development land valued at fair value at 30 June 2014 are determined by on processes CBRE Limited (CBRE) (2013: CBRE Limited) who are an independent registered valuer and associate of New the Institute Zealand CBRE of Valuers. is qualifiedappropriately and in experienced valuingretirement village properties in New Zealand. The Group engages with CBRE reporting twice dates annually with in full line independent with valuations being the carried Group’s out financial at least end the annually. Group verifies all majorAt inputsto theeach independent valuationreports,financial and assessesyear property valuation purposes. reporting financial for movements Notes to the to the Notes V Notes to the Financial Statements

Development land The Group’s development land at 30 June 2014 is held at fair value as determined by CBRE (2013: CBRE). CBRE valued development land at a total of $37.95m (2013: $41.24m). CBRE determines surplus land can be comprised of a standalone title and/or part of the principal site. Where standalone they have subscribed a value which can be captured independently, if desired, from the overall village. Where part of the principal site they have identified if there is potential, be it town planning or economic, to expand the village and has assessed a value accordingly. This latter value, whilst identified as surplus land value, cannot be independently captured. Development land is based on recent comparable transactions which had land values ranging between $25 per square metre (psm) and $537 psm. An increase (decrease) in the psm rate would result in a higher (lower) fair value of development land. As a general rule, CBRE have treated units in the early stages of construction, land with approvals and other vacant land clearly identified for future development as land for development in its highest and best use.

Investment properties under development The Group has determined that fair value of investment properties under development cannot be reliably determined at this point in time and is therefore carried at cost less any impairment. The cost of investment properties under development at 30 June 2014 is $18.5m (2013: $10.8m).

Completed investment properties The Group’s completed investment properties at 30 June 2014 are held at fair value as determined by CBRE (2013: CBRE). CBRE valued completed investment properties at a total of $817.5m (2013: $752.0m). To assess the market value of the Group’s Interest in the village, CBRE have undertaken a cash flow analysis to derive a net present value. This analysis includes unobservable inputs and the valuation is classified within Level 3 of the fair value hierarchy. The following assumptions/sensitivities have been used to determine the fair value:

Significant Input Description 2014 2013 Nominal growth rate Anticipated annual property price growth 1.8% - 3.4% 1.8% - 3.4% over the cash flow period Discount rate The pre-tax discount rate 12.3% - 16.5% 12.3% - 16.5%

Investment Property Sensitivity

Adopted Value Discount Rate Discount Rate Growth Rate Growth Rate 30 June 2014 (ILU, SA, ILA)* + 50 bp – 50 bp + 50 bp - 50 bp Valuation ($000) 781,060 Difference ($000) (30,080) 32,150 48,037 (49,038) Difference (%) (4%) 4% 6% (6%)

Adopted Value Discount Rate Discount Rate Growth Rate Growth Rate 30 June 2013 (ILU, SA, ILA)* + 50 bp – 50 bp + 50 bp - 50 bp Valuation ($000) 724,330 Difference ($000) (27,930) 29,850 40,562 (39,838) Difference (%) (4%) 4% 6% (6%) * ILU (Independent Living Unit), SA (Serviced Apartment), ILA (Independent Living Apartment) excluding unsold stock. The completed investment property value on page 31 includes unsold stock.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

54 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 55 (1) |

29,822 72,686 41,238 10,800 (8,231) estated 752,030 804,068 R (234,590) 1,181,383 1,845,138 ITED 30 June 2013 M LI

roup G 29,503 77,854 37,949 18,544 (7,622) 817,495 873,988 ETLIFECARE (258,162) 1,245,411 1,960,972 30 June 2014 2014 M

T R

EPO

l R a nnu a

nancial Statements Statements nancial i

F

e or lifestyle orientated village orientated e or lifestyle elevant information cupancy periods for existing residents and current absolute age levels age absolute and current residents existing for periods cupancy onal variables which will influence the stabilised occupancy period outputs (and recycle profile) by village profile) recycle outputs (and period occupancy thewill stabilised influence which onal variables ecare Limited holds a second registered mortgage and second registered general security agreement over agreement security general registered second and mortgage registered second a holds Limited ecare esident densities where a high proportion of couples will logically extend/prolong the recycle profile the recycle extend/prolong will logically couples of proportion a high where densities esident valuation valuation of investment properties is adjusted for cash flows relating to refundable occupation right valuation calculates the expected cash flows for a 20 year period (2013: 20 years), with stabilised departing stabilised with years), 20 (2013: period year 20 a for flows cash expected the calculates valuation owing owing costs of $2.4m (2013: $1.5m) arising from financing specifically entered into for the construction CBRE valuation also includes within its forecast cash flows, the Group’s expected costs relating to any known any to relating costs expected Group’s the flows, cash forecast its within includes also valuation CBRE Car R Oc lus: Refundable occupation right agreement amounts agreement right occupation lus: Refundable gains capital of share lus: Residents’ fee membership lus: Deferred Restated to the extent required to reflect the adoption of NZ IFRS 2 and 16. 11 as explained in notes the adoption reflect to required the extent to Restated egistered egistered mortgages in favour of the statutory supervisors of the village-owning subsidiary companies are

Less: Membership fee receivables fee Less: Membership P P P Development land Investment properties under development properties Investment properties investment Completed receivables agreement right Less: Occupation properties investment Total $000 all its not wholly-owned operating subsidiaries currently in engaged the development of villages retirement to 14). (see note these subsidiaries each of made available to funding secure (1) R recognised as firstover charges the freehold landof thosecompanies to protect the interestsof theresidents theunder obligations observe to villages the of operators as companies subsidiary the by failure of event the in agreements. and lifecare agreements right occupation supervision, deeds of Metlif properties is as follows: of investment under properties development were capitalised during the year. Capitalisation rates of 4.80% - the finance to used loans the of costs borrowing the representing used, were pa) 5.25% - 3.92% (2013: pa 5.43% as projects. The is agreements, residents’ share of capital gains, deferred which membership are already fees recognised separately and on the membership balance sheet fee and also receivables reflected in the between reconciliation the cashvaluation amount and flowthe amount model. recognised on the balance sheet as investment A properties or anticipated remediation works. remediation anticipated or Other r Borr • The 11.2% - of 14.5% (2013: pa 11.3% occupancy units - 14.2% and for pa) 20.9% - 24.9% (2013: pa 21.1% - 25.2% apartments. serviced for pa) The will include: Additi will • • The occupancy period is a significant component of simulation. the The CBRE simulations are valuation dependent upon and the is driven demographic profile of residents) and thea from village death and (age a Monte Carlo non-death probability as genderand the reason of for departing a in the An increase residents. for term unit. the long run occupancy of is an estimate period occupancy The departing resulting stabilised stabilised departing occupancy period will have a negative valuation. on the impact have a positive would occupancy departing stabilised impact on the valuation and a decrease in the Notes to the to the Notes Notes to the Financial Statements

18. Refundable Occupation Right Agreements

Group 30 June 2014 30 June 2013 $000 Restated(1) Refundable security deposits 1,245,411 1,181,383 Residents’ share of capital gains 29,503 29,822 Loans to residents (5,241) (4,174) Membership fees receivable (258,162) (234,590) Total refundable occupation right agreements 1,011,511 972,441

A new resident is charged a refundable security deposit, on being issued the right to occupy one of the Group’s units or serviced apartments, which is refunded to the resident subject to a new occupation right agreement for the unit or serviced apartment being issued to an incoming resident, net of any amount owing to the Group. The Group has a legal right to set off any amounts owing to the Group by a resident against that resident’s security deposit. Such amounts include membership fees, rest home/hospital fees, loans receivable, service fees and village fees. As the refundable occupation right is repayable to the resident upon vacation (subject to a new occupation right agreement for the unit or serviced apartment being issued to an incoming resident), the fair value is equal to the face value, being the amount that can be demanded.

Expected maturity The security deposit is refundable to the resident on vacation of the unit, apartment or serviced apartment or on termination of the occupation right agreement (subject to a new occupation right agreement for the unit or serviced apartment being issued to an incoming resident). In determining the fair value of the Group’s investment properties CBRE (2013: CBRE) estimate the established length of stay to be 6.9 - 8.9 years for independent living units and apartments (2013: 7.0 - 8.9 years) and 4.0 - 4.8 years for serviced apartments (2013: 4.0 - 4.7 years). Therefore, it is not expected that the full obligation to residents will fall due within one year. Based on historical turnover calculations the expected maturity of the total refundable obligation to refund residents is as follows:

Group 30 June 2014 30 June 2013 $000 Restated(1) Within 12 months 93,969 98,217 Beyond 12 months 917,542 874,224 1,011,511 972,441

19. Trade and Other Payables

Group Parent 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (1) $000 Restated T rade creditors 2,214 1,916 500 201 Sundry creditors and accruals 11,576 11,220 1,528 1,384 Employee entitlements 4,406 3,683 1,053 561 Total trade and other payables 18,196 16,819 3,081 2,146

All trade and other payables are expected to mature within 12 months of balance date.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

56 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 57 - - | (547)

56,006 56,006 55,459 55,459 56,006 ITED 30 June 2013 M LI

ent ar P 508 231 (467)

42,996 42,488 42,021 42,529 42,765 ETLIFECARE 30 June 2014 4 2014 M T 17

R (547) 56,023 56,006 55,459 55,476 56,019 EPO

l R 30 June 2013 a

nnu roup a G

521 243 (467)

43,009 42,488 42,021 42,542 42,766 30 June 2014 Bill Rate plus a margin and line fees. and line fees. plus a margin Bill Rate M

term term loan facility of $50.0m, expiring 31 October 2017 (2013: $50.0m, working working capital facility of $10.0m, repayable on demand (2013: $10.0m term term loan facility of $120.0m, expiring 31 October 2018 (2013: $100.0m

expiring 30 September 2015). expiring 30 September a a a 2016). expiring 30 September on demand). repayable

- - - imited. imited. iabilities L L

nancial Statements Statements nancial orth i N

F

ston ston acility F acility al

almer P

al covenants ans are secured as set out in note 17. as set out in note secured ans are nterest Bearing nterest ecare ecare Limited has issued a letter of support for the bank borrowings of the 50% jointly-controlled entity I e Revolving Credit Facility Credit e Revolving al interest bearing liabilities excluding capitalised capitalised excluding liabilities bearing al interest al interest bearing liabilities bearing al interest 30 June 2014, the Group had $180.0m (2013: $160.0m) of committed bank facilities, including overdraft, of erest rates applicable in the year to 30 June 2014 ranged from 4.92% to 5.98% pa (2013: 4.95% to 5.48% pa). (2013: 4.95% to 5.98% pa 4.92% to from 30 June 2014 ranged to in the year applicable rates erest ithin one year Negative Pledge Deed has been entered into by the operating subsidiaries in favour of the banks in which the which in banks the of favour in subsidiaries operating the by into entered been has Deed Pledge Negative orking Capit etlifecare etlifecare ater than one year than one year ater ot ot inance leases inance nterest on the bank loan is charged using the BKB is charged loan on the bank nterest debt costs W L T Bank loan debt costs Capitalised F T maturity Expected $000 20. Metlif M Financi Ratio. Value to and Loan Ratio Cover with include Interest comply must that the Group covenants The financial During the year ended 30 June 2014, the Company was in compliance compliance). with its financialcovenants (2013: in Int Security Bank lo A their assets or over or other charge exist any mortgage to or permit create not to have undertaken subsidiaries bankers. the Group’s of consent written the prior without obtaining revenues At I Development F comprised 2014 June 30 at facility the under drawn amount The $104.0m). (2013: undrawn was $137.5m which $6.0m (2013: $19.0m) under $28.1m Facility, the Credit (2013: Revolving Core $28.3m) under the Development Facility. Capital and $8.4m (2013: $8.7m) under the Working Facility, Interest Cor Bank loan The bank loan comprises the Core Revolving Credit Facility, Development Facility and Working Capital Facility, as follows: time time to 2012 as amended from 8 March effective During the year the bank facilities were renegotiated and extended extended. from 30 The September 2015 Core to 31 Revolving October Credit 2017 and Facility the Development was Facility was extended from 30 2018. 31 October 2016 to September W Notes to the to the Notes Notes to the Financial Statements

21. Business Disposal Disposal of Metlifecare Oakwoods Limited The assets and liabilities of Metlifecare Oakwoods Limited, a subsidiary company, were disposed on 30 November 2012. The net assets were sold for $29.0m (less adjustments) to Oakwoods Lifecare (2012) Limited, an unrelated company. Allocation of proceeds from sale:

$000 30 June 2013 Sale price 29,000 Less occupation right agreement adjustments on disposal (437) Net sale price prior to disposal costs 28,563

Less assets and liabilities disposed: Investment properties 56,846 Deferred membership fees (1,924) Refundable occupation right agreements (29,543) Property, plant and equipment 4,336 Total assets and liabilities disposed 29,715 Loss from business disposal (1,152) Costs associated with business disposal (449) Total loss on business disposal (1,601)

Net proceeds after disposal costs 28,114

58 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 59 - $ - - - - | $000 $000 3.46

(1,955) 126,717 162,380 287,142 ITED 30 June 2013 30 June 2013 30 June 2013 M LI

roup - $ - - - - G etlifecare shares in shares etlifecare (59) $000 $000 3.75 M 11,683 287,142 298,766 ETLIFECARE ent ent 30 June 2014 30 June 2014 ar 30 June 2014 ar P P - - 2014 M - - T R roup and roup Shares roup and roup Shares G G EPO 610,000 610,000

l R 30 June 2013 30 June 2013 63,120,803 a 144,115,209 207,236,012 nnu imited 168,094 ordinary 168,094 ordinary imited - a L

Shares

Shares 610,000 286,919 796,919 (100,000) (100,000) 3,971,082 30 June 2014 30 June 2014 207,236,012 211,107,094 apa Racing Racing apa e R T imited issued imited L nancial Statements Statements nancial i quity F E etlifecare etlifecare ecare Limited cancelled 100,000 treasury shares under the senior executive share plan. share executive under the senior shares 100,000 treasury cancelled Limited ecare M

ember 2012 Metlifecare Limited issued 610,000 shares under the senior executive share plan. share executive under the senior issued 610,000 shares Limited 2012 Metlifecare ember

ctober 2012 ctober ont O

C 6 June 2013 Metlifecare Limited issued 22,580,645 ordinary shares at $3.10 per share under a share 17 April 2013 Metlifecare Limited issued 200,158 ordinary shares at $3.11 per share under a dividend 8 April 2014 Metlifecare Limited issued 286,919 treasury shares under the senior executive share plan (refer (refer plan share executive senior the under shares treasury 286,919 issued Limited Metlifecare 2014 April 8 12 July 2013 Metlifecare Limited issued 3,226,396 ordinary shares at $3.10 per share under a share purchase share a under share per $3.10 at shares ordinary 3,226,396 issued Limited Metlifecare 2013 July 12 23 July 2012 Metlifecare Limited issued 39,561,906 ordinary shares as part of the acquisitions of VSL and PLC and VSL of acquisitions the of part as shares ordinary 39,561,906 issued Limited Metlifecare 2012 July 23 n 8 ssue costs Shares issued Shares cancelled Shares Issued and fully paid up capital paid and fully Issued the year of at beginning Balance Balance at end of the year at end of Balance I Net tangible assets per share (basic) share assets per Net tangible Treasury shares Treasury the year of at beginning Balance plan share executive under the senior cancelled Shares plan share executive issued under the senior Shares the year at end of Balance 22. ributed On 3 Dec O On share. at $2.31 per On placement. On plan. reinvestment village. Lake Forest in the Vision its share for consideration On 29). note On 8 April 2014 Metlif On plan. On 17 April 2014 Metlifecare Limited issued plan. reinvestment 325,484 ordinary shares at $3.91 per share under a dividend On 17 October 2013 Metlifecare Limited issued 132,283 ordinary shares at $3.10 per share under a plan. reinvestment dividend Notes to the to the Notes Notes to the Financial Statements

The Company incurred transaction costs of $59,140 issuing shares during the year (2013: $1,955,506). All ordinary shares are authorised and rank equally with one vote attached to each fully paid ordinary share. The shares have no par value. Treasury shares relate to shares issued under the Senior Executive Share Plan that are held on trust by the Group. These shares are accounted for as Treasury Shares by the Group until such time as they are cancelled or vest to members of the senior management team.

23. Dividends

Group and Parent Cents per 30 June 2014 30 June 2013 Share $000 $000 Recognised amounts Interim dividend for 2013 1.00 - 1,845 Final dividend for 2013 2.00 4,209 - Interim dividend for 2014 1.25 2,632 - 6,841 1,845

On 25 August 2014 the directors approved a dividend of 2.5 cents per share amounting to $5.28m. The dividend record date is 3 October 2014 and payment will occur on 17 October 2014.

24. Earnings Per Share Basic Basic earnings per share is calculated by dividing the profit attributable to equity holders by the weighted average number of ordinary shares on issue during the year. Diluted Diluted earnings per share is calculated by dividing the profit attributable to equity holders by the weighted average number of ordinary shares on issue during the year adjusted to assume conversion of dilutive potential of ordinary shares.

Group

30 June 2014 30 June 2013 Profit attributable to equity holders ($000) 68,776 120,530 Basic and Diluted Weighted average number of ordinary shares on issue (thousands) 210,558 183,181 Earnings per share (cents) 32.7 65.8

60 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 61 - - - | 208 289 497

ITED 30 June 2013 M LI

ent ar - - P 290 1,631 1,767 3,688 ETLIFECARE 30 June 2014 2014 M - T R 303 293 596 21,375 21,375 EPO

l R 30 June 2013 a nnu roup a G

296 1,635 1,767 3,698 54,754 54,754 30 June 2014 nancial Statements Statements nancial i

F ments encies cancellable operating leases are leases are operating cancellable ‑ ommit onting C C ithin one year stimated commitments contracted for at balance date at balance for contracted commitments stimated Operating lease commitments lease Operating in lease payments minimum Commitments for non to relation W years than five but not later than one year Later years than five Later Capital commitments Capital E or develop construct purchase, to for but not provided properties investment as follows: payable $000 Notes to the to the Notes The escalation Group terms, leases varying support with office arrangements premisescommercial and normal variousreflect property,leases plantThe and equipment agreements. underlease non-cancellable operating rights. clauses and renewal 26. 25. liabilities Contingent June 2014 (2013: nil). as at 30 liabilities contingent no material are There

Notes to the Financial Statements

27. Related Party Transactions

On 24 November 2013 Retirement Villages New Zealand Limited sold all of its shares in Metlifecare Limited, leaving it with no stake in Metlifecare Limited (2013: 38.31%). (a) Key management personnel compensation Key management personnel compensation for the year ended 30 June 2014 and the year ended 30 June 2013 is set out below. The key management personnel are all executives with the greatest authority for the strategic direction and management of the Company. The directors are remunerated through directors’ fees and expenses.

Group and Parent Group and Parent

$000 30 June 2014 30 June 2013 Salaries and other short term employee benefits 3,019 2,357 Senior executive share plan 486 195 Termination benefits 75 40 Total 3,580 2,592

(b) Transactions Group Parent

$000 30 June 2014 30 June 2013 30 June 2014 30 June 2013 (i) Subsidiaries Net repayments from/(advances to) subsidiaries - - 16,287 (48,505) Interest received from subsidiaries - - 12,638 8,999 Interest paid to subsidiaries - - (7,509) (2,496) Management fees charged to subsidiaries - - 2,787 2,119

(ii) Joint venture Advance to joint venture 252 60 252 60 Management fees charged to joint venture - - 80 80 Dividends received from joint venture - - 600 368

(iii) Other Recharges to other related parties - 12 - 12

62 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 63 - - | (16)

221,202 (134,276) ITED 30 June 2013 M LI

ent ar - - P 236 233,819 ETLIFECARE (163,180) 30 June 2014 - - - - 2014 M T R (16) EPO

l R 30 June 2013 a nnu roup - - - - a G

236 30 June 2014

nancial Statements Statements nancial i F

tanding balances tanding ement fees charged to subsidiaries are set annually by the Parent based on a predefinedformula that (i) Subsidiaries subsidiaries to owed Advances $000 Advances owed from subsidiaries from owed Advances Provision for impairment of advances owed to parent to owed advances of impairment for Provision (ii) Joint venture entity jointly-controlled from/(to) owed Advance (iii) Other parties related other from Amounts owing (c) Outs allocates various support office costs to the subsidiaries. to costs office support various allocates Management fees charged to the joint venture are agreed in agreement advance under at the a terms fixed of level, the that joint venture canpartners. be amended from time to time the with consent of the joint venture Advances Advances due to and and from subsidiaries joint ventures are secured by way of General Security Agreements relation in given been not had notice date, balance At notice. months’ 12 of minimum a with repayable are and funds. of cost average Treasury Group the on based monthly calculated are charges Interest advances. these to 3.75%(2013: 5.71% to 5.20% from ranged 2014 June 30 to period month twelve the in applicable rates Interest 4.02%). to Manag (d) Terms and conditions (d) Terms Subsidiaries and joint venture entity advances Notes to the to the Notes Notes to the Financial Statements

28. Financial Risk Management The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme considers financial markets volatility and seeks to minimise potential adverse effects on the financial performance of the Group. From time to time the Group uses derivative financial instruments such as interest rate swap contracts to manage certain interest rate risk exposures. Derivatives are exclusively used for economic hedging purposes (while hedge accounting is not applied as the Group does not meet the hedge accounting criteria) and not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rates to determine market risk and ageing analysis for credit risk. Risk management is carried out centrally by the support office under policies approved by the Board of Directors. The Board and Group has approved policies covering overall risk management, as well as policies covering treasury and financial markets risks. The Group and the Parent entity hold the following financial instrument categories:

As at 30 June 2014 Group Parent Loans and Loans and $000 Receivables Receivables Financial Assets Cash and cash equivalents 839 - Trade receivables and other assets * 12,232 21 Amounts due from related parties 236 234,055 13,307 234,076

Other Financial Other Financial Liabilities at Liabilities at $000 Amortised Cost Amortised Cost Financial Liabilities Bank overdraft - 48 Trade and other payables * 13,790 2,028 Amounts due to related parties - 163,180 Bank loans and finance leases 42,542 42,529 Refundable occupation right agreements 1,011,511 - 1,067,843 207,785

As at 30 June 2013 Group Parent Loans and Loans and Receivables Receivables $000 Restated(1) Financial Assets Cash and cash equivalents 1,296 239 Trade receivables and other assets * 12,315 9 Amounts due from related parties - 221,202 13,611 221,450

Other Financial Other Financial Liabilities at Liabilities at Amortised Cost Amortised Cost $000 Restated(1) Financial Liabilities Trade and other payables * 13,136 1,585 Amounts due to related parties 16 134,292 Bank loans and finance leases 55,476 55,459 Refundable occupation right agreements 972,441 - 1,041,069 191,336

* Trade receivables and other assets above excludes prepayments and trade and other payables above excludes employee entitlements.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

64 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 65 he | T

ITED

M LI

roup does not breach not does roup G ETLIFECARE 2014 M T R EPO

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he amounts disclosed in the tables below are the contractual the contractual are below he amounts disclosed in the tables T

acility. F al nancial Statements Statements nancial

i

F orking Capit W

he consideration to enter into interest rate swaps is monitored regularly by management. by management. regularly is monitored swaps rate interest into enter to he consideration T imited has at times entered into interest rate swap agreements to reduce the impact of changes of the impact reduce to agreements swap rate interest into has at times entered imited L

w and fair value interest rate risk rate value interest w and fair liquidity risk management implies maintaining sufficient cash and the availability of funding through an through funding of availability the and cash sufficient maintaining implies management risk liquidity

oup does not have a material exposure to foreign exchange risk. exchange foreign to exposure not have a material oup does the expose rates issued at variable Borrowings borrowings. long term risk arises from rate oup’s interest edit risk flowforecasting is regularly performed by Group finance.Group finance monitors rollingforecasts of the and cash equivalents of the Company and deposited are Group with one of the major banks. trading Non Group Group receivables represent distinct trading relationships with each of the residents. There are no following following table analyses the Group’s and the Parent entity’s financialliabilities into relevant maturity Group has no significant concentrations of credit risk. The Group policy is to require a security deposit from deposit security a require to is policy Group The risk. credit of concentrations significant no has Group oreign exchange risk exchange oreign Liquidity risk Liquidity 30 June 2014, it is estimated that a general increase of one percentage point in interest rates would reduce

edit risk arises from cash and cash equivalents, derivative instrumentsfinancial and deposits withbanks and etlifecare etlifecare efer efer to the trade receivables and other assets note (note 12) for more information on impairment of trade he position is managed depending on the timeframe, underlying interest rate exposure and the economic and the economic exposure rate interest underlying on the timeframe, depending is managed he position The maturity relevant into categorised are and settled net are swaps rate interest derivative Group’s The groupings. maturity dates. on contractual based groupings Cash Group’s liquidity requirements to ensure it has sufficientcash to meetthe that so times operationalall at facilities needs,borrowing committed undrawn its on headroom while maintaining concentrations concentrations of credit risk with Noneresidents. The Zealand. New only Income large and receivables relate Work to and the Boards residential care Health subsidies District various the via aggregate in received are which risk. a credit considered are these entities of (c) Prudent facilities. credit committed amount of adequate borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans andcovenant compliance. Surpluscash held by the operatingentities is usedto the debt in repay payments. of interest inclusive flows cash undiscounted R receivables. considered. Cash performance of obligations by the bank is not expected due to the Standard & Poor’s AA- credit rating of the counterparty The receivables. with outstanding receivables trade from exposure well as credit as institutions, financial The significant face not does Group the Therefore, unit. a occupy to right the granted are they before residents new credit risk. The values attached to each financial asset risk. No is collateral in held with respect to balanceany the financial assets. The Group enters into financial instruments represent withsheet the maximum credit various counterparties in accordance with established limits as to credit rating and dollar limits, and does not instruments. the financial support or other security to collateral require At the Group’s profits aftertax by approximately $0.4m (2013: $0.5m) andwould $0.5m). decrease equity by $0.4m (2013: (b) Cr Cr T conditions. The Gr risk. rate interest flow cash to Group (a) Market risk risk (a) Market (i) F The Gr (ii) Cash flo M in interest rates on its floatingrate longterm debt. The useof interestrate swapsvalue exposes interest the rate Groupto risk. fair The objective of the interest rate swaps is to to cash flows protect which arisesthe outof movementCompany in interestfrom rates. the The Group doesimpact not currently hold any interest swaps. rate Notes to the to the Notes ultimate decision to enter into interest rate swaps is held by the Board. swaps rate interest into enter to decision ultimate The cash flow andfair value interestrate risks are monitored by the Board on a monthlybasis. Management monitors the existing interest rate swaps. rate profile any interest into entering to prior and approval consideration for and the Board to strategies appropriateas presents interest hedging rate analysis and Notes to the Financial Statements

Group Restated(1) P arent Less than 3 Less than 1 Between 1 Less than 3 Less than 1 Between 1 $000 Months Year and 5 Years Months Year and 5 Years 30 June 2014 Bank overdraft - - - 48 - - Trade and other payables 13,790 - - 2,028 - - Bank loans and finance leases* 42,186 181 271 42,173 181 271 Amounts due to related parties - - - 2,448 7,343 163,180 Refundable occupation right agreements** 1,011,511 - - - - -

30 June 2013 Trade and other payables 13,136 - - 1,585 - - Bank loans and finance leases* 55,582 5 13 55,580 - - Amounts due to related parties - - - 2,686 8,058 134,292 Refundable occupation right agreements** 972,441 - - - - -

* The bank loans are drawn down from the committed bank facilities for fixed periods (typically 1 to 3 months). At the conclusion of the draw down period the loans are rolled over for a further fixed period. The maturity of the committed bank facilities are shown in note 20. ** The refundable occupation right agreement is repayable to the resident on vacation of the unit or serviced apartment or on termination of the occupation right agreement (subject to a new occupation right agreement for the unit or serviced apartment being issued to an incoming resident). The expected maturity of the refundable occupation right agreement liability is shown in note 18.

(d) Capital risk management The Group manages its capital risk with regard to its gearing ratios (net debt to total capital), as a guide to capital adequacy, borrowing ratios such as interest cover and loan to value ratios, exposure to liquidity and credit risk and exposures to financial markets volatility. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The bank loans are subject to bank covenants. The covenants require the Group to maintain agreed ratios of cash flow to debt, and debt to valuation (see note 20). There have been no financial covenant breaches during the year (2013: nil).

(e) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or disclosure purposes. The carrying value of financial assets and financial liabilities are assumed to approximate their fair values unless otherwise disclosed.

(1) Restated to the extent required to reflect the adoption of NZ IFRS 11 as explained in notes 2 and 16.

66 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 67 |

ITED M

LI

he scheme is therefore he scheme is therefore T ETLIFECARE . E Y A P 2014 M

T SR of the peer group; group; the peer SR of R T EPO

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roup which is also grossed up for up for is also grossed which roup G

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nancial Statements Statements nancial i

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erformance hurdle is initially measured three years from the date of the scheme, being 6 September 6 September being the scheme, of the date from years three measured is initially hurdle erformance articipants will receive one share for every vested right at no cost; and at no cost; right every vested for one share will receive articipants SR return is between the 50th percentile and 75th percentile of the of and 75th percentile the 50th percentile is between SR return performance performance hurdles include an assessment of Total Shareholder Return (TSR), comprising annual share share performance rights will lapse at the end of the relevant measurement and re-test period if not number number of share rights performance that vest on a vesting date will be 100% if the TSR return exceeds number of share performance rights that rights vest on a performance vesting date share will of be 50% number if the equals TSR thereturn T number of share performance rights that vest on a vesting date will be scaled between 50% and 100% if 100% and 50% between scaled be will date vesting a on vest that rights performance share of number participants will receive a one-off bonus in the vesting year equivalent to the dollar amount of the vesting the of amount dollar the to equivalent year vesting the in bonus one-off a receive will participants Board Remuneration Board Committee Remuneration took advice from executive consultants remuneration as to the form of Group introduced a Group introduced long term share incentive plan for the senior management team in 2012. This plan is share share performance right that gives the participant the right, subject to satisfaction of all performance or executive share plan share or executive the performance hurdles are not met, they will be re-tested at six monthly intervals for one year following following year one for intervals monthly six at re-tested be will they met, not are hurdles performance the at no cost to the executive. to at no cost 50th percentile of the TSR of the peer group (being members of the NZSX 50 Index at the Grant Date); Date); the NZSX 50 Index at the Grant of members (being group the peer the TSR of of 50th percentile the 2015; date; testing the original growth; price share and paid dividends the of the 75th percentile the from their loans repay to order in shares hurdles, to acquire shares in the future; shares acquire to hurdles, and exercised; vested the the the the p the the the a the p if

he scheme is summarised as follows: he scheme is summarised

Notes to the to the Notes

T • the long term share incentive plan and determined that the plan initially had the following characteristics: had the following that the plan initially plan and determined incentive share the long term intended intended to align the interests of key employees with the interests of shareholders and provide a continuing horizon. the long term over employees key to incentive • • • • • • • • • Scheme The Seni The 29. Share-Based Payments 29. Share-Based Notes to the Financial Statements

Scheme issued In December 2012, the Group issued 610,000 share performance rights under the scheme to senior executives. In April 2014, the group cancelled 100,000 share performance rights relating to the December 2012 issue of share performance rights for senior executives. A valuation was prepared on the rights (in-substance options) issued for the scheme and the expense was $106,432 for the current year (2013: $82,366). The total fair value of $452,390 will be recognised over the vesting period. A further accrual of $146,089 has been recognised in the current year to accrue for the estimated PAYE component (2013: $113,056). These rights are first capable of vesting on 6 September 2015. The valuation was prepared using a Monte Carlo simulation based on share price volatility. The key assumptions adopted were: • Share price volatility estimated at 20.55%; • Index volatility estimated at 9.85%; • Correlation with the index of 50%; and • Assumed price on issue of $3.095. In April 2014, the Group issued 286,919 share performance rights under the scheme to senior executives, with an effective grant date of 19 September 2013. A valuation was prepared on the rights (in-substance options) issued for the scheme and the expense was $111,600 for the current year (2013: nil). The total fair value of $430,680 will be recognised over the vesting period. A further accrual of $122,212 has been recognised in the current year to accrue for the estimated PAYE component (2013: nil). These rights are first capable of vesting on 19 September 2016. The valuation was prepared using a Margrabe model based on share price volatility. The key assumptions adopted were: • Share price volatility estimated at 21.90%; • Index volatility estimated at 7.70%; • Correlation with the index of 36%; and • Assumed price on issue of $3.21.

30. Subsequent Events

On 25 August 2014, the directors approved a dividend of 2.5 cents per share amounting to $5.28m. The dividend record date is 3 October 2014 and payment will occur on 17 October 2014.

There are no further subsequent events between 30 June 2014 and the date that the financial statements were authorised for use.

68 | METLIFECARE LIMITED annual REPORT 2014 1 & ove Hig h lig r view h t s

Independent Auditor’s Report to the shareholders of Metlifecare Limited 2 s fin t a a tement n c

Report on the Financial Statements i a We have audited the financial statements of Metlifecare Limited (“the Company”) on pages 29 to l s 68, which comprise the balance sheets as at 30 June 2014, the statements of comprehensive income, the statements of movements in equity and the cash flow statements for the year then ended, and the notes to the financial statements that include a summary of significant accounting policies and other explanatory information for both the Company and the Group. The Group comprises the Company and the entities it controlled at 30 June 2014 or from time 3 info S

to time during the financial year. t a tut r

Directors’ Responsibility for the Financial Statements m o a r The Directors are responsible for the preparation of these financial statements in accordance tion y with generally accepted accounting practice in New Zealand and that give a true and fair view of the matters to which they relate and for such internal controls as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand) and International Standards on Auditing. These standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls relevant to the Company and the Group’s preparation of financial statements that give a true and fair view of the matters to which they relate, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

We have no relationship with, or interests in, Metlifecare Limited or any of its controlled entities other than in our capacities as auditor, providers of tax, advisory and other assurance services. These services have not impaired our independence as auditor of the Company and the Group.

PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz

annual REPORT 2014 METLIFECARE LIMITED | 69 Independent Auditor’s Report Metlifecare Limited

Opinion In our opinion, the financial statements on pages 29 to 68:

(i) comply with generally accepted accounting practice in New Zealand;

(ii) comply with International Financial Reporting Standards; and

(iii) give a true and fair view of the financial position of the Company and the Group as at 30 June 2014, and their financial performance and cash flows for the year then ended. Report on Other Legal and Regulatory Requirements We also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act 1993. In relation to our audit of the financial statements for the year ended 30 June 2014:

(i) we have obtained all the information and explanations that we have required; and

(ii) in our opinion, proper accounting records have been kept by the Company as far as appears from an examination of those records. Restriction on Use of our Report This report is made solely to the Company’s shareholders, as a body, in accordance with Section 205(1) of the Companies Act 1993. Our audit work has been undertaken so that we might state to the Company’s shareholders those matters which 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.

Chartered Accountants Auckland 25 August 2014

70 | METLIFECARE LIMITED annual REPORT 2014 Highlights financial Statutory

1 & overview 2 statements 3 information 71 |

ITED M LI

ETLIFECARE 2014 M T R EPO l R a nnu a 7 Saint Vincent The Poynton

72 | METLIFECARE LIMITED annual REPORT 2014 1 & ove Hig h lig r view h t s

Statutory Information 2 s fin t a a tement n c i a l s

Corporate Governance Statement 74 3

Interests Register 83 info S t a tut r

Other Director Information 86 m o a r tion Other Statutory Information 88 y

Shareholder Information 90

Directory 92

annual REPORT 2014 METLIFECARE LIMITED | 73 C orporate Governance Statement

Our Approach to Corporate governance The Board believes that strong principles of corporate governance protect and enhance the assets of the Company for the benefit of all shareholders. The Board is committed to ensuring that strong principles of corporate governance are adopted and implemented by the Company according to recommendations issued by NZX Limited, ASX Limited and the New Zealand Securities Commission, including the NZX Corporate Governance Best Practice Code, and the Corporate Governance Principles and Recommendations issued by the ASX Corporate Governance Council. Metlifecare is incorporated in New Zealand and is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act 2001. The acquisition of securities in Metlifecare may be limited under New Zealand law by the Takeovers Code (which restricts the acquisition of control rights of more than 20% of the Company other than via a takeover offer under the Code) or the effect of the Overseas Investment Act 2005 (which restricts the acquisition of New Zealand assets by overseas persons).

Framework Metlifecare shares are listed on the NZX Main Board (NZX) and on the Australian Securities Exchange (ASX). Metlifecare’s Investor Centre website www.metlifecare.co.nz/investor-centre contains copies of the following corporate governance policies, practices and charters, adopted or followed by the Company and referred to in this Corporate Governance section: Policies & Charters • Corporate Governance Statement • Code of Ethics • Shareholder Communications Policy • Stakeholder/Residents Policy • Risk Management Policy • trading Policy • Conflicts of Interest Policy • Diversity Policy • Dividend Policy • Auditor Independence Policy

Committee Charters • Board Charter • Audit & Risk Committee Charter • Remuneration Committee Charter • Nominations & Corporate Governance Committee Charter • Acquisition & Development Committee Charter • occupational Health & Safety Committee Charter • Care Committee Charter

Constitution • metlifecare Constitution This section sets out the Company’s commitment to good corporate governance and measures its compliance with the eight fundamental principles of the ASX Recommendations throughout the financial

74 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig h ts

C orporate Governance Statement 2 statements f

year ended 30 June 2014 (and through that, its compliance with the NZX Code). Metlifecare considers inancial that, during the reporting period, the corporate governance principles adopted and followed by it did not materially differ from NZX’s Corporate Governance Best Practice Code.

Principle 1 – Lay Solid Foundations for Management and Oversight A listed entity should establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated. Roles and responsibilities of the board and management 3

The Board of Directors, elected by the shareholders, is responsible for supervising and directing the information S t management of the business of the Company, including the performance of the Chief Executive Officer, so atutory that it acts in the best interests of its shareholders. It is responsible for guiding the corporate strategy of the Company. The Board has adopted a formal Board Charter that details the Board’s roles and responsibilities and the items that have been delegated to the Chief Executive Officer, as follows: • supervising and directing the management of the business and affairs of the Metlifecare Group; • setting the objectives and strategic direction of the Metlifecare Group and monitoring management’s performance against those benchmarks within that framework; • ensuring there are adequate resources available to meet Metlifecare Group objectives; • appointing and removing the Chief Executive Officer, determining conditions of employment and monitoring performance against established objectives; • approving executive appointments, remuneration and monitoring performance against objectives; • overseeing succession and development plans for the Chief Executive Officer and Executive Team; • establishing and reviewing employment and remuneration practices to ensure that talented and motivated staff are recruited and retained across the Metlifecare Group; • approving and monitoring financial reporting and capital and other management systems; • ensuring (via the Audit & Risk Committee) that adequate risk management procedures exist to identify and manage business risks, protect Metlifecare’s assets and to minimise the possibility of the Company operating beyond legal or regulatory requirements or beyond acceptable risk parameters as determined by the Board; • overseeing Metlifecare’s Health and Safety policies and implementation and well-being of its residents and staff; • reporting to shareholders; • setting Metlifecare’s capital structure and capital management policies including dividend policy; • ensuring that the Metlifecare Group has appropriate corporate governance structures in place including standards of ethical behaviour; • appointing directors to the Board, as recommended by the Nominations & Corporate Governance Committee and filling vacancies on the Board between annual meetings of shareholders; and • ensuring that the Board is and remains appropriately skilled to meet the changing needs of Metlifecare. The Board Charter is publicly available on the Company’s website. The Company undertakes appropriate checks on people before they are put forward, or elected, as a director. The Company has also established a Nominations & Corporate Governance Committee, as described under the heading “Nominations & Corporate Governance Committee” of this Corporate Governance

annual REPORT 2014 METLIFECARE LIMITED | 75 C orporate Governance Statement

Statement, an Audit & Risk Committee, as described under the heading “Audit & Risk Committee” of this Corporate Governance Statement and has an Acquisition & Development Committee, Care Committee and Occupational Health & Safety Committee.

Agreements with directors and executives The Company has a written agreement with each director and executive setting out the terms of their appointment.

Accountability of the company secretary The Board, facilitated by the Chief Executive Officer, reviews the performance of the company secretary annually. The company secretary is accountable to the Board for the proper functioning of the Board.

Diversity The Board has adopted a Diversity Policy which aims to ensure that the Company has a focus on diversity throughout the organisation. This recognises that a diversified work force (including at Board and management levels) contributes to improved business performance, enables innovation and is fair to all. The Diversity Policy establishes measureable objectives for achieving gender diversity for the Board. The Diversity Policy also sets up requirements for the Board to assess its progress in achieving the objectives and the objectives themselves. The Diversity Policy is published on the Company’s website. As at 30 June 2014, the gender composition of the Company’s Board is: five males and two females. The gender composition of the Company’s Executive Team is: four males and four females. As at 30 June 2013, the Company’s Board consisted of six males and one female and the Executive Team consisted of three males and three females. The Board considers that the Diversity Policy is being successfully implemented across the business, as highlighted by the above statistics.

Performance of the Board and senior management The Board, led by the Chair, reviews its performance and the performance of its Committees annually. The Board undertook a performance evaluation in the year ended 30 June 2014. Two new committees (Care Committee and Occupational Health & Safety Committee) were set up as a result of this review and the Audit Committee was extended to an Audit & Risk Committee following the review. The Company has a Remuneration Committee that makes recommendations to the Board regarding remuneration of the Chief Executive Officer and members of the Executive Team, as described below under the heading “Remuneration”. The Remuneration Committee establishes an annual performance agreement with the Chief Executive Officer and conducts an annual review of the Chief Executive Officer’s performance. Such annual review takes the form of an interview between the Chief Executive Officer and the Chair and/or members of the Remuneration Committee at which the performance of the Chief Executive Officer is reviewed and assessed. The Chief Executive Officer reviews the performance of executives annually by way of one-on-one interviews and the Remuneration Committee then considers the Chief Executive Officer’s evaluation. A performance evaluation for executives has taken place in the reporting period to 30 June 2014 in accordance with this process.

Principle 2 – Structure the Board to Add Value A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties effectively.

Nominations & Corporate Governance Committee The Company has established a Nominations & Corporate Governance Committee, whose responsibilities

76 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h

C orporate Governance Statement lig h ts include identifying and recommending to the Board individuals for appointment (and removal) as members of the Board and its committees, taking into account Board policies and such necessary and desirable competencies as it deems appropriate, including experience, qualifications, current Board composition and skill set, independence, judgement and the ability to work with other directors. 2 statements The Nominations & Corporate Governance Committee has adopted a formal Nominations & Corporate f inancial Governance Charter, which is published on the Company’s website. The current members of the Nominations & Corporate Governance Committee are: Kim Ellis (Chair), Christopher Aiken, Alistair Ryan, Dr Noeline Whitehead, Carolyn Steele, Kevin Baker and William Smales and their attendance at meetings of the committee, and the number of times this committee has met, as at 30 June 2014, are set out on page 82.

Skills of the Board When considering appointment of a new director, the Company’s Nominations & Corporate Governance Committee considers the skills of the existing Board and any gaps. The Board currently comprises directors 3 information S t

with a range of backgrounds and skills, including those with particular healthcare and aged care sector atutory expertise.

Independent directors The Board currently has seven non-executive directors, four of whom are independent directors. The independent directors of the Company are Kim Ellis, Christopher Aiken, Alistair Ryan and Dr Noeline Whitehead. As at the date of this Annual Report, Christopher Aiken, Alistair Ryan and Dr Noeline Whitehead have been directors of the Company for 2 years, 2 years and 1 year 3 months respectively. Kim Ellis was appointed a director on 25 August 2014 and Chair from 1 September 2014. Kim Ellis is the independent Chair of the Board. Given the nature of the Company, Mr Ellis is considered the most appropriate director to act as Chair as a result of his considerable governance experience in New Zealand. Alan Edwards is Chief Executive Officer of the Company but is not currently a member of the Board.

Director development New directors are provided with copies of key Company documents, an introduction to the activities of the group and the opportunity to ask questions of management. Directors are encouraged to undertake development of any further skills if they wish to.

Principle 3 – Act ethically and Responsibly A listed entity should act ethically and responsibly.

Code of conduct The Company is committed to maintaining high ethical standards through on-going attention to values and behaviour, particularly in respect of its responsibilities to those who reside in its retirement villages. The Board has adopted a formal Code of Ethics, Board Charter, Conflicts of Interest Policy and Trading Policy, all of which are available on the Company’s website. The Code of Ethics describes the practices that all employees are expected to follow to help maintain confidence in the Company’s integrity. The Code of Ethics governs the conduct of the Company and includes details on the responsibility of employees to report concerns. This policy requires all directors, managers, staff and contractors acting on behalf of the Company to maintain high standards of ethical behaviour in all decision making and in their conduct. Pursuant to the Board Charter, the directors are expected to comply with their legal duties and obligations when discharging their responsibilities as directors, including: • acting in good faith and in the best interests of the Company; • acting with care and diligence and for proper purposes; • avoiding conflicts of interest or managing them appropriately, including filing declarations of interest with the Board Secretary and keeping them current; and

annual REPORT 2014 METLIFECARE LIMITED | 77 C orporate Governance Statement

• refraining from making improper use of information gained as a director and from taking improper advantage of the appointment as a director. Directors are encouraged to undertake appropriate training, in order to ensure they best perform their duties as directors of the Company. As set out in the Board Charter, directors have access to: • the senior management team, via the Chief Executive Officer, to access relevant information or explanations; • external auditors without management present, to seek explanations or additional information; and • with prior notification to the Chair, professional advisors (at the Company’s expense) to assist the director in carrying out his or her duties. The Conflicts of Interest Policy details the process to be adopted in relation to potential conflicts of interest. Directors are required to disclose to the Board any actual or potential conflict of interest. The Trading Policy addresses the Company’s requirements for all employees and representatives in relation to trading the Company’s shares. The policy applies to directors and employees and incorporates all trading restraints. Directors and employees are restricted from trading in Company shares during “black-out” periods from the balance date and the half-year balance date and, in any event, if they are in possession of non-publicly available price sensitive information.

Principle 4 – Safeguard Integrity in Corporate Reporting A listed entity should have formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting.

Audit & Risk Committee The Audit & Risk Committee, together with the external auditors, has a pivotal role in ensuring the integrity of financial reporting and other information provided in the Company’s public disclosure documents. The responsibilities of the Audit & Risk Committee include: • ensuring that processes are in place and monitoring those processes so that the Board is properly and regularly informed and updated on accounting and financial matters; • reviewing the financial reports to ensure that they properly and accurately reflect the financial performance and position of the Company; • ensuring the Company has adequate funding facilities in place to facilitate business continuity and development; • meeting regularly to monitor and review the external audit practices; • having direct communication with, and unrestricted access to, the independent auditors and Company accountants; and • recommending the appointment and removal of the independent auditor. The Audit & Risk Committee has adopted a formal Audit & Risk Committee Charter, which is published on the Company’s website. The Audit & Risk Committee members are currently Alistair Ryan (Chair), MCom(Hons), Kevin Baker, BMS, and Kim Ellis, BCA(Hons) & BEng(Hons). The attendance of committee members and the number of times this committee has met, as at 30 June 2014, are set out on page 82.

CEO and CFO sign-offs As a New Zealand company, section 295A of the Corporations Act has not been applicable to Metlifecare. However, the Company’s Chief Executive Officer and Chief Financial Officer do provide assurances to the Board, by way of six-monthly Management Warrants of Fitness, as part of the process for finalising the half- yearly and annual financial statements.

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C orporate Governance Statement lig h ts

External auditor The Company, under its Audit & Risk Committee Charter, has established policies relating to the appointment and the independence of the external auditor. The Board, via the Audit & Risk Committee’s recommendations, is responsible for ensuring the independence of the external auditor and for obtaining a 2 statements confirmation of this independence from the external auditor. f inancial The external auditor does not provide any other services unless specifically approved by management and/ or the Board in accordance with the policy on auditor independence. The fees paid to the auditor for both audit and any non-audit work are disclosed in the financial statements within this Annual Report. The Company’s external auditor for the 2014 financial statements, PricewaterhouseCoopers, will be available to answer questions on the audit and the auditor’s independence at the Company’s 2014 Annual Meeting. Principle 5 - Make Timely and Balanced Disclosure 3 information S

A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable t person would expect to have a material effect on the price or value of its securities. atutory

Disclosure All information received by the Company is considered in the context of the Company’s obligations as a listed company with regards to continuous disclosure of material information relating to the market. The Company’s processes are designed to ensure compliance with the Company’s continuous disclosure obligations. The Board examines whether there is material information that is required to be disclosed to the market at each Board meeting. The Company has written policies to ensure compliance with the NZX Main Board Listing Rule and the ASX Listing Rule disclosure requirements and to ensure accountability at an executive level for that compliance. The Company’s Market Disclosure Policy is being finalised and will be available on the Company’s website. Board and Committee Charters, policies of public relevance, media releases, annual reports and other investor-focused material are available on the Company’s website. Metlifecare has been listed on the NZX Main Board since July 1994, and the ASX since October 2013, and has, to the best of its directors’ and officers’ knowledge and belief, at all times complied with its continuous disclosure obligations under the NZX Listing Rules, the ASX Listing Rules and the Securities Markets Act 1988.

Principle 6 – Respect the Rights of Security Holders A listed entity should respect the rights of its security holders by providing them with appropriate information and facilities to allow them to exercise those rights effectively.

Investor information The Board fosters constructive relationships with shareholders and encourages them to engage with the Company. The Company provides information about itself and its governance to investors on its website. The Company has a Shareholder Communications Policy. The Board has a system for conveying the Board’s views to shareholders. The Company’s Chair is responsible for ensuring that shareholders’ meetings are conducted efficiently and shareholders have adequate opportunity to air their views and to obtain answers to their queries. The Company’s website contains a section for electronic shareholder communications. All corporate governance policies are available on the website. All information released to the NZX and ASX, including reports to shareholders, may be found on the Company’s website.

Other stakeholder interests The Board respects the interests of stakeholders within the context of the Company’s ownership type and its fundamental purpose.

annual REPORT 2014 METLIFECARE LIMITED | 79 C orporate Governance Statement

The Board recognises that in addition to its shareholders, the residents of the Company’s retirement villages are stakeholders of the Company. The Company respects the rights and interests of its residents as they are set out in the relevant contractual documents. The Company is an accredited member of The Retirement Villages Association of New Zealand. The Company adheres to the Retirement Villages Act 2003 and the Retirement Villages Code of Practice 2008 which identifies and protects the rights of residents and sets out the obligations of retirement village operators. The Company delivers its services in a manner that enhances the quality of residents’ experiences and respects the residents’ rights to be involved as members of a community within their village.

Principle 7 – Recognise and Manage Risk A listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework.

Risk management The Board is responsible for the Company’s risk management and internal control. The Company does not currently have a separate internal audit function. The Board monitors policies and processes that identify significant business risks and implements procedures to monitor these risks. The Board also uses the following methods to monitor risks: outsourcing various functions to external providers, Audit & Risk Committee reviews and recommendations, financial and compliance reporting procedures and ensuring that the Company has insurance policies in place with a reputable insurer.

The Company has established an Audit & Risk Committee whose responsibilities are contained in the Audit & Risk Committee’s Charter. The Company has also developed a Risk Management Policy. Both of these documents are published on the Company’s website. Details of the Audit & Risk Committee are set out under the heading “Audit & Risk Committee” of this Corporate Governance Statement. Management provides monthly reports to the Board that include risk management issues. Management is required to immediately report urgent matters to both the Chair of the Board and the Chief Executive Officer. Financial risks are to be reported to the Chair of the Audit & Risk Committee. The sustainability of the Company’s buildings is considered, particularly for its new developments where necessary, by the Company’s Acquisition & Development Committee and, ultimately, the Board.

Principle 8 – Remunerate fairly and responsibly A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders.

Remuneration Metlifecare is committed to providing fair and reasonable remuneration for directors and executives and acknowledges the need to provide competitive remuneration to attract high calibre directors and executives to serve the Company. Director remuneration is currently paid in the form of directors’ fees. The total monetary sum of fees approved for directors is currently $500,000 as approved at the Company’s Annual Meeting on 30 October 2012. This amount has been increased, following the appointment of an additional director in December 2013, as permitted in NZX Listing Rule 3.5.1 and as confirmed by the ASX waiver dated 7 February 2014 allowing the sum to be increased. The material terms of the waiver are summarised in this Annual Report. A breakdown of the Chair’s and directors’ fees are set out in the Statutory Information section of this Annual Report. Directors do not currently receive any remuneration in the form of Metlifecare shares, except for the (former) Managing Director’s shares under the Executive Long Term Incentive Plan scheme (described below under the heading “Equity-based remuneration”).

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C orporate Governance Statement lig h ts

The Company has established a Remuneration Committee, whose responsibilities include: • reviewing and recommending to the Board the level and type of remuneration for the Chief Executive Officer and members of the Executive Team; and • reviewing and recommending to the shareholders the level and type of remuneration for directors. 2 statements f inancial The Remuneration Committee adopted a formal Remuneration Committee Charter, which is published on the Company’s website. The members of the Remuneration Committee are currently Kevin Baker (Chair), Kim Ellis and Alistair Ryan. The attendance of committee members and the number of times this committee has met, as at 30 June 2014, are set out on page 82. Metlifecare distinguishes the structure of non-executive directors’ remuneration from that of executive directors and executives. The total monetary sum of fees approved for directors is allocated as decided by the Board, by way of fees payable to all directors and additional fees payable to the Chair. 3 information S

Chief Executive Officer and executive remuneration is recommended by the Remuneration Committee t with reference to market surveys, job size and individual responsibilities, skills, knowledge, experience, atutory competencies and accountabilities. Executive remuneration is structured to include a base salary and an ‘at risk’ component paid upon achievement of Company and individual targets agreed at the commencement of each financial year. Executive remuneration is reviewed annually and the levels of remuneration are disclosed in this Annual Report.

Equity-based remuneration The Company currently has an Executive Long Term Incentive Plan, which is a long term share incentive plan for the senior management team, introduced in 2012. This plan is intended to align the interests of key employees with the interests of shareholders and provide a continuing incentive to key employees over the long term horizon. The Company does not have a policy on whether participants can enter into transactions which limit the economic risk of participating in the scheme.

annual REPORT 2014 METLIFECARE LIMITED | 81 C orporate Governance Statement

The Committee memberships have been modified since 30 June 2014 - please refer to pages 18 and 19 of this Annual Report for confirmation of the current memberships as at 10 September 2014.

Attendance at Board and Committee Meetings in the Year Ended 30 June 2014:

BOARD COMMITTEE ATTENDANCE ATTENDANCE

Total number of 6 3 6 3 4 7 4 2 meetings held

Nominations Occupational Board Audit & Acquisition & Director Board Remuneration & Corporate Care Health Other Risk Development Governance & Safety

P .R. Brown 6 3 3 4 7

C.G. Aiken 6 3 5 1 4 7

K.M. Baker 3 1 5 1 2 (Appointed 13/12/13)

A.B. Ryan 6 1 6 2 4 2

W.O.C Smales 2 1 1 2 4 (Appointed 13/12/13) C.M. Steele 3 1 2 3 4 2 (Appointed 13/12/13)

N.B. Whitehead 6 3 4 4 2

Former Director

W.A. Edwards 3 2 (Resigned 13/12/13) J.J. Loughlin 2 1 1 2 1 2 (Resigned 24/10/13) G.E Grady 1 1 (Resigned 28/11/13) D.A. Hunt (Alternate for G.E. Grady) (Resigned 28/11/13)

82 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h Interests Register lig h ts

(a) General Disclosures The following directors of Metlifecare Limited gave general notice of their commencement or cessation of interests in the following entities, pursuant to section 140(2) of the Companies Act 1993 for the year ended 30 June 2014:

Director Entity Nature of Interest 2 statements f P.R. Brown * Banool Road Pty Ltd Director inancial * Classey Pty Ltd Director * Diamdale Investments Pty Ltd Director * Retirement Services Australia (R.S.A.) Pty Ltd Director * Retirement Villages Australia Ltd Director * Retirement Villages Group R.E. Ltd Director * Retirement Villages Group Management Pty Ltd Director * RSA Holdings Pty Ltd Director * RSA Real Estate Pty Ltd Director 3 information S t

* Retirement Villages New Zealand Ltd Director atutory * RVNZ Holdings Ltd Director * RVNZ Investments Ltd Director C.G. Aiken * Utility Computing Ltd Director/Shareholder K.M. Baker + H.R.L. Morrison & Co Ltd & various subsidiary companies Director/Officer/Shareholder (appointed 13/12/13) + New Zealand Bus Ltd Director + New Zealand Bus Finance Ltd Director + Infratil Ltd & various subsidiary companies Director/Officer/Shareholder + Infratil Energy Australia Pty Ltd Director + Lumo Energy Pty Ltd Director + KM & KJ Baker Family Trust Trustee + New Zealand Markets Disciplinary Tribunal Member + Fenn Lanes Consultants Ltd Shareholder A.B. Ryan + Lewis Road Creamery Ltd Director/Shareholder W.O.C. Smales + H.R.L. Morrison & Co Ltd Officer (appointed 13/12/13) + Infratil Ltd Officer C.M. Steele + Datacom Group Ltd Director (Alternate) (appointed 13/12/13) + Larry Trust Trustee + Steele Family Trust Trustee + NZ Football Foundation Trustee + Guardians of New Zealand Superannuation Fund Officer

Notes: * Interest ceased or withdrawn during the year + New

annual REPORT 2014 METLIFECARE LIMITED | 83 I nterests Register

(b) Specific Disclosures During the year there were no specific disclosures by the directors of the Company or any subsidiary of any interests in transactions entered into by the Company or any subsidiary.

(c) indemnity & Insurance The Company has effected insurance and given indemnities to its directors including directors of subsidiary companies in accordance with the Companies Act 1993.

(d) Use of Company Information During the year the Board received no notices from directors of the Company requesting to use Company information.

(e) directors’ Share Dealings & Relevant Interests During the year three directors disclosed to the Board, under section 148 of the Companies Act 1993 and section 19T of the Securities Markets Act 1988, particulars of acquisitions or dispositions of relevant interests in ordinary shares in the Company. As at 30 June 2014, two directors had a relevant interest in the ordinary shares in the Company.1

Directors’ Interests Number of Shares Cameron Trust (C.G. Aiken, W.A. Aiken as Trustees) 9,051 A.B. Ryan 6,732 W.A. Edwards (resigned as Managing Director 13/12/13) 6,5981

Note: 1 W.A. Edwards relinquished his position as Managing Director on 13/12/13. He also has a relevant interest in 327,882 shares in the Long Term Incentive Plan scheme.

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I nterests Register lig h ts

(f) remuneration of Directors Remuneration and other benefits paid to directors during the year from 1 July 2013 to 30 June 2014. The fees shown in the table below are based on fees earned during the accounting period. Cash payments may differ from the accruals depending on the timing of invoices submitted by directors. 2 statements f inancial Director Directors’ Fees $ P.R. Brown $125,000 C.G. Aiken $75,000 K.M. Baker (appointed 13/12/13) $41,331 A.B. Ryan $75,000 W.O.C. Smales (appointed 13/12/13) $41,331 C.M. Steele (appointed 13/12/13) $41,331 3 information S t

Dr N.B. Whitehead $75,000 atutory J.J. Loughlin (resigned 24/10/13) $23,589 G. Grady (resigned 28/11/13) $30,753 Salary & Bonuses W.A. Edwards (resigned from the additional position of Managing Director on 13/12/13) $511,0401

The differences between the above amounts and the amounts set out on page 43 of this Annual Report are primarily GST payments.

Remuneration and other benefits paid to directors of Metlifecare Palmerston North Limited (a jointly- controlled entity) during the year from 1 July 2013 to 30 June 2014.

Director Directors’ Fees $ W.A. Edwards 2,8752 K.T. Hindle 2,050 Dr C.M.A. Love 1,675 T.M. van der Meijden 2,8752 L.A. Abercrombie 2,8752 R.E. Mellish 1,675

Notes: 1 for the period whilst employed in the additional position of Managing Director. W.A. Edwards also received rights under the Long Term Incentive Plan scheme as set out on page 59.

2 Directors’ fees paid to Metlifecare Limited.

annual REPORT 2014 METLIFECARE LIMITED | 85 Other Director Information

C ompany Directors

The directors as at 10 September 2014 are set out in the directory on pages 18 and 19.

During the year to 30 June 2014 four directors resigned: John Loughlin (resigned on 24 October 2013), Geoffrey Grady (resigned on 28 November 2013), David Hunt (alternate for GE Grady resigned on 28 November 2013) and Alan Edwards (resigned from the additional position of Managing Director on 13 December 2013).

Kevin Baker, William Smales and Carolyn Steele were appointed by the Board as non-executive directors on 13 December 2013.

Subsidiary Company Directors

The following persons held the office of director of the Company’s wholly owned subsidiaries listed below during the year:

Subsidiaries (Wholly Owned) as at 30 June 2014

C ompany Name Current Directors Resigned Directors

Bay of Plenty Retirement Village Limited W.A. Edwards None Hibiscus Coast Village Holdings Limited T.M. van der Meijden Hillsborough Heights Village Holdings Limited Longford Park Village Holdings Limited Longford Park Village Limited Metlifecare Bayswater Limited Metlifecare Coastal Villas Limited Metlifecare Crestwood Limited Metlifecare Greenwood Park Limited Metlifecare Highlands Limited Metlifecare Kapiti Limited Metlifecare Merivale Limited Metlifecare Oakwoods Limited Metlifecare Pakuranga Limited Metlifecare Pinesong Limited Metlifecare Powley Limited Metlifecare 7 Saint Vincent Limited Metlifecare Somervale Limited Metlifecare The Avenues Limited Metlifecare The Orchards Limited Metlifecare The Poynton Limited Metlifecare Wairarapa Limited Private Life Care Holdings Limited Provider Care NZ Limited Third Age Care Limited

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Other Director Information 2 statements C ompany Name Current Directors Resigned Directors f inancial

Forest Lake Gardens Limited W.A. Edwards M.A. Oliver T.M. van der Meijden (Resigned 30/9/13) Metlifecare Greenwich Gardens Limited Vision (Bay of Islands) Limited Vision (Christchurch) Limited Vision (Dannemora) Limited Vision (Papamoa No.2) Limited Vision Senior Living Investments Limited Vision Senior Living Limited 3 information S

Waitakere Group Limited t atutory

No director of any wholly owned subsidiary company received any director’s fees or other benefits as a director of a subsidiary.

Jointly-Controlled Entity (50% Shareholding) as at 30 June 2014 The following persons held the office of director of Metlifecare Palmerston North Limited, a jointly-controlled entity, during the year.

C ompany Name Current Directors Resigned Directors

Metlifecare Palmerston North Limited W.A. Edwards None T.M. van der Meijden L.A. Abercrombie K.T. Hindle Dr C.M.A. Love R.E. Mellish

annual REPORT 2014 METLIFECARE LIMITED | 87 Other Statutory Information

Employees’ Remuneration Over $100,000

The number of employees or former employees of the Company, or any subsidiary, not being directors, who during the year, received remuneration and other benefits valued at or exceeding $100,000, are stated below. Remuneration paid to W.A. Edwards whilst he was a director, as referenced on page 85 of this Annual Report, is excluded from the table below.

R emuneration Number of Employees $100,000 - $110,000 12 $110,000 - $120,000 5 $120,000 - $130,000 3 $130,000 - $140,000 3 $140,000 - $150,000 5 $150,000 - $160,000 2 $160,000 - $170,000 3 $200,000 - $210,000 3 $220,000 - $230,000 1 $290,000 - $300,000 1 $320,000 - $330,000 2 $370,000 - $380,000 1 $380,000 - $390,000 1

Donations The Group paid a total of $39,000 in donations in the year to 30 June 2014.

Waivers NZX No waivers were granted by the NZX in favour of the Company in the 12 month period preceding 30 June 2014. ASX The following is a summary of all ASX waivers granted in favour of the Company which were relied on by the Company in the 12 month period preceding 30 June 2014: • a waiver from ASX Listing Rule 10.17, to permit the Company to increase the total amount of directors’ fees payable by it as a result of an additional director being appointed to the Company’s Board without shareholder approval, on certain conditions (including that the Company’s shareholders approve the increase in accordance with ASX Listing Rule 10.17 at its next general meeting); • a waiver from ASX Listing Rule 15.12, to permit the Company’s Constitution not to contain provisions relating to restricted securities required by Listing Rules 15.12.1 to 15.12.3 on the condition that the Company undertakes not to acquire any classified assets in circumstances under which the ASX Listing Rules would require the issue of restricted securities, without the written consent of the ASX;

88 | METLIFECARE LIMITED annual REPORT 2014 1 Hig & overview h lig h ts

Other Statutory Information

• a waiver from ASX Listing Rules 15.13, 15.13A and 15.13B, to permit the Company to divest small holders 2 statements f in accordance with the procedures set out in the Company’s Constitution; inancial • confirmation that ASX will accept financial accounts prepared in accordance with New Zealand GAAP and New Zealand Auditing Standards, and denominated in New Zealand dollars; • confirmation that the Company can provide substantial security holder information in accordance with the NZX Listing Rules and the New Zealand Securities Markets Act 1988; and • confirmation that (subject to certain standard conditions) the Company may lodge its half year and full year results in the form of Appendix 1 of the NZX Listing Rules. 3 information S t Use of Cash and Cash Equivalents atutory In accordance with ASX Listing Rule 4.10.19, the Company confirms that it has used the cash and cash equivalents that it had at the time of its admission to the ASX in a way that is consistent with its business objectives from the period of its admission to the ASX on 21 October 2013 to 30 June 2014.

Limitations on the Acquisition of Company Securities The Company is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act dealing with the acquisition of shares (including substantial holdings and takeovers). Limitations on the acquisition of securities imposed under New Zealand law are as follows: • in general, securities in the Company are freely transferable and the only significant restrictions or limitations in relation to the acquisition of securities are those imposed by New Zealand laws relating to takeovers, overseas investment and competition; • the New Zealand Takeovers Code creates a general rule under which the acquisition of 20% or more of the voting rights in the Company or the increase of an existing holding of 20% or more of the voting rights of the Company can only occur in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by an ordinary resolution, a creeping acquisition (in certain circumstances), or compulsory acquisition of a shareholder holding 90% or more of the shares; • the Overseas Investment Act 2005 and Overseas Investment Regulations 2005 (New Zealand) regulate certain investments in New Zealand by overseas interests. In general terms, the consent of the New Zealand Overseas Investment Office is likely to be required where an ‘overseas person’ acquires shares in the Company that amount to 25% or more of the shares issued by the Company, or if the overseas person already holds 25% or more, the acquisition increases that holding; and • the Commerce Act 1986 is likely to prevent a person from acquiring shares in the Company if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in the market.

Place of Incorporation The Company is incorporated in New Zealand under Certificate of Incorporation number 237544.

Credit Rating The Company has no credit rating.

annual REPORT 2014 METLIFECARE LIMITED | 89 Shareholder Information

T wenty Largest Shareholders (as at 13 August 2014) Number of Percentage fully paid of issued and ordinary paid up share shareholders shares capital

1 Infratil RV Limited 42,042,321 19.9 2 New Zealand Superannuation Fund Nominees Limited 41,917,469 19.9 3 BNP Paribas Nominees (NZ) Limited 17,211,290 8.2 4 Accident Compensation Corporation 9,832,839 4.7 5 Citibank Nominees (New Zealand) Limited 8,447,883 4.0 6 JPMorgan Chase Bank NA 6,544,925 3.1 7 MFL Mutual Fund Limited 6,518,291 3.1 8 ANZ Wholesale Australasian Share Fund 4,444,477 2.1 9 ANZ Wholesale Trans-Tasman Property Securities Fund 4,041,652 1.9 10 HSBC Nominees (New Zealand) Limited 3,757,649 1.8 11 Custodial Services Limited 3,659,287 1.7 12 Westpac NZ Shares 2002 Wholesale Trust 2,809,041 1.3 13 Forsyth Barr Custodians Limited 2,199,445 1.0 14 HSBC Nominees (New Zealand) Limited 2,031,394 1.0 15 ANZ Wholesale Property Securities 1,858,997 0.9 16 TEA Custodians Limited 1,842,521 0.9 17 ANZ Wholesale NZ Share Fund 1,424,366 0.7 18 BNP Paribas Nominees (NZ) Limited 1,345,593 0.6 19 JBWere (NZ) Nominees Limited 1,319,150 0.6 20 National Nominees New Zealand Limited 1,223,879 0.6 TOTAL 164,472,469 77.9

Net Tangible Assets Per Security

30 June 2014 30 June 2013 $3.75 $3.46

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Shareholder Information 2 statements f Spread of Holdings inancial (as at 13 August 2014)

Size of holdings Number of % Number of % shareholders shares held

1 – 1,000 964 23.66 537,494 0.26 1,001 - 5,000 1,777 43.60 4,669,580 2.21 5,001 - 10,000 618 15.17 4,491,517 2.13 3

10,001 - 100,000 639 15.68 13,835,998 6.55 information S t 100,001 and over 77 1.89 187,572,505 88.85 atutory TOTAL 4,075 100.00 211,107,094 100.00

In accordance with ASX Listing Rule 4.10.8, the Company confirms that as at 13 August 2014, there were 59 shareholders holding less than a marketable parcel of shares as defined in the ASX Listing Rules, based on the closing price of NZD$4.28. The NZX closing price has been used as there has been no trading on the ASX to date. The ASX Listing Rules define a marketable parcel as a parcel of shares of not less than AU$500. The NZX has no equivalent provision to ASX Listing Rule 4.10.8. There is no share buy-back in place.

Substantial Security Holders The following information is given pursuant to Section 35F of the Securities Markets Act 1988. The persons who, according to the file kept by the Company pursuant to Section 35C of the Securities Markets Act 1988, are substantial security holders in the Company as at 10 September 2014 are as follows:

Number of Percentage of Substantial security holders shares shares

New Zealand Superannuation Fund Nominees Limited 41,908,344 19.85 Infratil RV Limited 41,908,343 19.85 ANZ New Zealand Investments Limited 21,434,614 10.15 AMP Capital Investors (New Zealand) Limited and AMP Capital Investors Limited 12,222,187 5.79

Notes: 1 The total number of voting securities of the Company on issue at 10 September 2014 was 211,107,094 ordinary fully paid shares. All shares carry one vote per share. 2 The column entitled “Percentage of Shares” in the table above reflects each security holder’s holding as a percentage of the current issued share capital of the Company. This percentage may have changed from the percentage that was disclosed by the security holder in the relevant disclosure notice, due to further shares being issued after disclosure was made.

annual REPORT 2014 METLIFECARE LIMITED | 91 Directory As at 10 September 2014

Directors Nominations & Corporate Kim Ellis - Chair Governance Committee Christopher Aiken William Smales Kim Ellis - Chair Kevin Baker Carolyn Steele Christopher Aiken William Smales Alistair Ryan Dr Noeline Whitehead Kevin Baker Carolyn Steele Alistair Ryan Dr Noeline Whitehead

Acquisition & Development Occupational Health & Safety Committee Committee Christopher Aiken - Chair Carolyn Steele - Chair Kim Ellis Carolyn Steele Christopher Aiken Dr Noeline Whitehead William Smales Remuneration Committee Audit & Risk Committee Kevin Baker - Chair Alistair Ryan - Chair Kim Ellis Alistair Ryan Kim Ellis Kevin Baker Chief Executive Officer Care Committee Alan Edwards Dr Noeline Whitehead - Chair Company Secretary William Smales Andrew Peskett

Auditor Solicitors PricewaterhouseCoopers Chapman Tripp PwC Tower Level 35, ANZ Centre 188 Quay Street, Auckland 1142 23 Albert Street, Auckland 1010 Registered Office (New Zealand) Minter Ellison Rudd Watts Level 2, Metlifecare House Level 20, Lumley Centre 302 Great South Road, Greenlane 88 Shortland Street, Auckland 1010 Auckland 1051 Postal Address: P O Box 37463 Parnell, Auckland 1151 Bankers Telephone: 09 539 8000 Facsimile: 09 539 8001 ANZ National Bank Limited www.metlifecare.co.nz Level 13, The National Bank Tower 209 Queen Street, Auckland 1010 Registered Office (Australia) Bank of New Zealand Thomson Geer Corporate & Institutional Banking, Level 4 Level 39, Rialto South Tower BNZ Tower, 80 Queen Street, Auckland 1010 525 Collins Street, Melbourne VIC 3000 Australia ASB Bank Limited Telephone: +61 3 8080 3500 ASB North Wharf, 12 Jellicoe Street Facsimile: +61 3 8080 3599 Auckland 1010

Share Registrar New Zealand Share Registrar Australia Computershare Investor Services Pty Limited Computershare Investor Services Pty Limited Level 2, 159 Hurstmere Road, Takapuna Postal Address: GPO Box 3329, Melbourne Auckland 0622 Victoria 3001, Australia Postal Address: Private Bag 92119 Investor Enquiries (Freephone): 1 800 501 366 Victoria Street West, Auckland 1142 [email protected] Investor Enquiries: 09 488 8777 www.computershare.co.nz/investorcentre

92 | METLIFECARE LIMITED annual REPORT 2014 The Avenues

annual REPORT 2014 METLIFECARE LIMITED | 93 www.metlifecare.co.nz