2021 Annual Report To 31 March 2021 About this Report SCOPE, BOUNDARY AND EXTERNAL AUDIT AND ASSURANCE REPORTING CYCLE An independent audit of Arvida’s consolidated This Annual Report and Financial Statements annual financial statements was performed (Annual Report) of Arvida Group Limited by the Group’s independent external auditor, (Arvida or Group) is prepared in accordance Ernst & Young in accordance with International with the International Financial Reporting Standards on Auditing (New Zealand). Standards, NZX Listing Rules and Corporate The rest of this Annual Report has not been Governance Code, Companies Act 1993 and subjected to independent audit or review. with due consideration of the International Information reported, other than that Integrated Reporting Council’s (IIRC) mentioned above, is derived from Arvida’s International Integrated Reporting Framework. own internal records and publicly disclosed The information is supplemented by additional information. disclosures, including: The Executive Management and the Board • 2021 Annual Results Presentation have collectively reviewed the contents of • 2021 Notice of Annual General Meeting, this Annual Report and agree that it reflects a balanced view of business performance and which are also available on the Group’s website outlook. (www.arvida.co.nz). Additionally, audit reports for each of our FORWARD-LOOKING STATEMENTS care facilities are available at the Ministry of The Annual Report contains certain forward- Health’s website (www.health.govt.nz) along looking statements with respect to Arvida’s with audited financial statements for each of financial position and operational results. our retirement villages at the New Zealand This involves a degree of risk and uncertainty Companies Office website because they relate to events and depend on (www.companiesoffice.govt.nz). circumstances that may or may not occur in We have continued to focus on selected the future. elements of the Integrated Reporting <IR> Factors that could cause our actual results to framework in a pragmatic approach to differ materially from those in the forward- improving our reporting. looking statements include global, national and regional economic conditions; levels of TARGET AUDIENCE AND securities markets; interest rates; credit or APPLICATION other risks of lending and investment activities; This report has been primarily prepared pandemic events; as well as competitive and for current investors to outline how we are regulatory factors. Because of this uncertainty, delivering on our strategy. The report is also all forward-looking statements have not been relevant for prospective investors or any reviewed or reported on by our auditor. other stakeholder who has an interest in our We welcome your feedback on this report. performance and prospects. Please address any queries or comments to the Investor Relations team at [email protected]. Arvida is a Toitū carbonreduce certified organisation in line with ISO 14064-1. 2 Contents 2 About this Report 4 Living a ‘life with soul’ 6 Arvida at a Glance 8 Our Direction 10 Our Business Model 12 Chair’s Letter 15 Chief Executive’s Report 18 Financial Commentary 23 The Operating Environment 26 Materiality 28 Buying + Building Well 33 Living Well 36 Engaging Well 38 Nurturing Well 42 Historical Summary 43 Financial Statements 75 Governance 76 Board of Directors 77 Senior Leadership Team 88 Remuneration 94 Disclosures 101 Directory Produced on paper that uses ECF (Elemental Chlorine Free) FSC® Certified pulp from Responsible Sources. 3 Living a fulfilling life is a goal that applies to any age, but for older people it’s not always easy. Too often they’re required to fit into a pattern of living that dictates what they do and when they do it, irrespective of preferences and personalities. We’re making it possible for older people to live by their own rules, to be free to be themselves and have meaningful connections to the people, community and activities they love. We call this ‘living a life with soul’. Natter Café at Arvida Good Friends at Park Lane Living Well Centre, Christchurch. 4 5 Arvida at a Glance We were formed in 2014 when we listed on the New Zealand stock exchange with 18 retirement villages. Since then, we have grown to become a group spread across 33 locations nationally, with our newest greenfield development launched during the year in Kerikeri. Arvida now offers retirement living accommodation and aged care services to over 4,950 residents. We are one of the largest providers of aged care services in New Zealand. Our mission, which guides us in what we do and why, is to improve the lives of New Zealanders by transforming the ageing experience. We are doing this by breaking free from institutional models to put our residents’ quality of life at the centre of everything we do. Our purpose is to enable a more fulfilling life as people age. Everyday over 2,600 team members strive to improve the lives and wellbeing of our residents, making it possible for older people to live by their own rules. Our way of working ensures they’re free to be themselves, have meaningful connections to the things they know and love – and live a life with soul. With this vision, we are reimagining how communities will age and setting strategy accordingly. Our focus is on the resident – we are resident-led in our outcomes. This resonates through strategy from new builds and acquisitions, to We own and operate our care model which all our retirement we call The Attitude of communities, other than Living Well.™ Village at the Park in which we have a 50% interest but manage the operations. We have support offices in Auckland and Christchurch. 6 Total Aged Care Beds 780 629 263 1,672 TOTAL AGED CARE BEDS HOSPITAL REST HOME DEMENTIA CARE 95% OCCUPANCY OF AGED CARE BEDS Total Retirement Units 2,695 1,893 688 114 TOTAL RETIREMENT UNITS VILLAS/ SERVICED CARE APARTMENTS APARTMENTS SUITES 81 years CURRENT AVERAGE AGE OF INDEPENDENT LIVING RESIDENTS 87 years CURRENT AVERAGE AGE OF SERVICED APARTMENT RESIDENTS 7 Our Direction Our Purpose To enable a more fulfilling life as people age. We call this ‘living a life with soul’. Our Mission Transform the ageing experience Buying + Building Well Growth and expansion of our operations through Inputs careful selection of greenfield and brownfield development projects and Shareholder, bondholder and existing village acquisitions resident capital that deliver long term value 33 retirement communities across New Zealand Managing our business The Attitude of Living Well™ in a responsible and Internal development team sustainable way, to help create thriving Nurturing communities whilst 2,600 limiting our impact on the environment employees Well 4,950 residents Community and commercial partnerships Passion Authenticity Fairness 8 Our strategic approach is underpinned by the values we embrace: passion; authenticity; fairness; can-do; innovative; and nimble and flexible. Our Business Model shows our key inputs interacting with our business activities (which has our values at its core) to create outputs of sustainable, commercial value. Living The outcomes of our activity are measured and take us towards mid-term and long- Well term goals that reflect our mission. Investment in our employees and organisation’s culture to deliver a truly resident- Outputs led service offering that transforms the ageing experience of our residents and future customers Leading provider of quality retirement accommodation and aged care services in New Zealand Investment in the health and wellbeing of our communities, leveraging 4,367 The Attitude of Living Well units/beds with planned and new delivery platforms future development adding to provide innovative high Engaging 1,324 units/beds quality services Well 57% needs-based Can do Innovative Nimble and flexible 9 Our Business Model OUR STRATEGIC PILLARS FY21 OUTCOMES MID-TERM GOALS HOW WE MEASURE OUTLOOK LONG-TERM GOALS Sufficient land bank to support target • Portfolio size and needs- Reviewing acquisition and 50 integrated communities Buying + 247 new units delivered, build rate for >7 years; enhance based composition divestment opportunities; market of scale, with a needs-based including 114 new Building Well development capacity to support for good land remains competitive composition of 50-55% care suites, with 1,324 units • Number of units able to be target delivery of 300+ units annually in development pipeline delivered sustainably over Target completion timeframes Balanced portfolio, by location, size the long term have not been impacted by new community +1 and type disrupted supply lines launched in Kerikeri • Brand recognition Combine design IP, cost reduction Residential housing market 15% development margin and sustainability to increase continues to outperform development margin to exceed 15% Transition all villages to the Attitude • Employee engagement, Sector funding model continuing A zero harm organisation with Living Well 86% staff engagement indexed; of Living Well model; increasing learning and turnover to place unsustainable pressure on a culture that makes it the 45,000+ training modules EBITDA and lowering turnover rates care margins workplace of choice in the sector completed • No notified injuries and attracting, developing and Aligning health and safety systems clinical standards Workforce constraints with notified H&S injury retaining a talented, diverse and Nil to ISO 45001; focus on risk continuing border closures incidents; 83% of • Diversity and inclusion engaged team