Oceania Healthcare – Half Year Result and Interim Report

INTERIM REPORT 2019

Contents
02 Oceania at a glance
04 Highlights & results
06 Chair and CEO's Report
14 Financial Statements
19 Notes to the Consolidated
Interim Financial Statements
50 Independent Review Report
In the six months to
30 November 2018 Oceania
Healthcare has continued to
execute its strategy; delivering
key developments on time and
on budget, and exceptional
care for our residents.
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Oceania Healthcare is a leading
provider and developer of healthcare
services in New Zealand being
the third largest in residential
aged care and sixth largest in
retirement village. Our properties
are located in prime metropolitan
areas across New Zealand and
we provide a full continuum of
care offering to our residents.
We have a strong platform for
growth given our substantial
brownfield land bank, with proven
expertise and experience in managing
and delivering construction projects.
We have sufficient land to build
2,065 new residences (1,417 net
of decommissions) with 1,516
of these already consented.
We pride ourselves in being a
recognised industry leader in the
provision of clinical care to our
residents. In September 2018, we
won both the Innovative Service
Delivery and the Excellence in
Food awards at the annual
New Zealand Aged Care
Association Conference.
Oceania at a glance
Locations
Oceania site locations
~2,550
STAFF
~3,600
RESIDENTS
26
EXISTING FACILITIES WITH
MATURE OPERATIONS
17
EXISTING FACILITIES WITH
BROWNFIELD DEVELOPMENTS
(CURRENT AND PLANNED)
3
UNDEVELOPED SITES
46
TOTAL SITES
AS AT 30 NOVEMBER 2018
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Highlights & results
1
This is a non-GAAP measure
2
The 30 November 2017 figure does not include the recognition of unsettled ORAs.
Refer to note 2.1 in the interim financial statements.
3
Underlying net profit after tax – Continuing operations contains a proforma adjustment
that excludes the earnings from sites divested in 1HY2019. Earnings have been
excluded in both 1HY2019 and 1HY2018.
Note: Percentages above are calculated based on the numbers in the interim financial
statements for each respective financial period and may have rounding differences.
4
As at 25 January 2019
2,5801,088
UNDERLYING NET PROFIT AFTER TAX
1
$
20.9M
UNIT SALES
NEW
UNITS
41
COMPLETED
At The BayView
(Tauranga) in
November 2018.
UNITS AND
CARE SUITES
81
RESALE
UNITS
32
SECURED
Resource consents at
Elmwood (Auckland)
142 care suites,
Eden (Auckland)
48 apartments,
Meadowbank
(Auckland) 36 care
suites, and Eversley
(Hastings) 61 care
suites.
UNITS AND
CARE SUITES
287
TO COMPLETE
A further 191 units and
care suites are due to
complete at The Sands
(Auckland) and
Meadowbank Stage 4
(Auckland) by the end of
the 2019 financial year.
UNITS AND
CARE SUITES
191
UNDER
CONSTRUCTION
4

587 units and
care suites under
construction at
Meadowbank and
The Sands (Auckland),
The BayView (Tauranga),
Gracelands (Hawkes
Bay), Whitianga,
Trevellyn (Hamilton),
Windermere
(Christchurch) and
Green Gables (Nelson).
UNITS AND
CARE SUITES
587
NEW CARE
SUITES
24
RESALE CARE
SUITES
47
TOTAL
SALES
144
CARE BEDS AND CARE SUITESUNITS
Financial
Operational
Developments
FOR THE SIX MONTHS TO 30 NOVEMBER 2018
FOR THE SIX MONTHS TO 30 NOVEMBER 2018
AS AT 30 NOVEMBER 2018
+5.3%
Ahead of 30 November 2017 underlying
net profit after tax of $19.9m
2
+8.7%
Ahead of 30 November 2017 underlying
net profit after tax – continuing operations
3
+56.5%
Ahead of total sales for the
six months to 30 November 2017
REPORTED TOTAL COMPREHENSIVE INCOME
$
19.5M
FOR THE SIX MONTHS TO 30 NOVEMBER 2018FOR THE SIX MONTHS TO 30 NOVEMBER 2018
Below 30 November 2017 reported total
comprehensive income of $42.9m
OPERATING CASH FLOW
$
4 7.1M
Above 30 November 2017 reported
operating cash flow of $17.1m
TOTAL ASSETS
$
1.2B
+5.4%
Higher than 31 May 2018 total
assets of $1.1b
Your Board of Directors is pleased to report the
interim result for the six months to 30 November 2018.
73.4%
of the total
development pipeline
is now consented.
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Financial Review
Oceania Healthcare reported a strong
six month result to 30 November 2018,
with underlying net profit after tax
1
of
$20.9m representing a 5.3% increase
over the prior corresponding period.
Our continuing operations increased
underlying net profit after tax by 8.7%
over this same period which reflected
growth in deferred management fees
from our Village business and realised
development gains from sites
completed earlier in the year.
In accordance with our proven growth
strategy for our aged care business, we
converted a number of care rooms into
premium care suites over the period,
as we set out in detail below. These
conversions, as well as the completion
of the new care suite facility at The
BayView (Tauranga) and increase in
revaluations of our existing care suite
sites, increased total comprehensive
income attributable to shareholders to
$19.5m during the period. Due to the
classification of our care facilities in the
financial statements as property, plant
and equipment rather than investment
property, these increases in valuation
are not recorded in our statutory
reported profit.
Operating cashflow of $47.1m
was 175.9% higher than the prior
corresponding period with sale
proceeds from our developments
completed earlier in 2018 contributing
$43.5m, which represents an increase
of 287.8%. The selldown of the
Meadowbank Stage 3 development
(completed in February 2018) and
Elmwood development completed
in the previous year contributed to
this strong cash generation in the
reporting period.
Total assets increased by $61.7m to
$1.2b due to significant development
capital expenditure, acquisition of land
adjoining existing sites and revaluations.
Occupancy at care homes that are not
impacted by our redevelopment activity
increased to 92.0% compared with
89.9% in the corresponding period last
year. The national average is 87.6%
2
.
Care revenue represented 82.6% of total
operating revenue.
We increased and extended our debt
facilities to July 2023 which has provided
us with sufficient headroom and
flexibility to accelerate the execution
of our development pipeline. With net
debt of $197.3m as at 30 November
2018, our gearing remains prudent
with net debt to net debt plus equity
of 26.7%.
We have a very busy second half
(financial year) ahead of us with stage
4 of the redevelopment of Meadowbank
Village and The Sands (Browns Bay,
Auckland) on track to complete before
31 May 2019, and the first residents
moving into these new villages by the
end of that month or early on in the
next. Presale applications at The Sands
have been strong as expected at this
premier location with 13 applications
already received. Of course our
development programme continues at
a very full rate with stage 1 of Trevellyn
(Hamilton) also expected to be
substantially complete around the
same time.
The Board has declared an interim
dividend of $12.8m, or 2.1 cents per
share (not imputed), to be paid on 18
February 2019. The record date for
entitlement is 11 February 2019.
Highlights
Highlights of the period under review
include the completion of 81 care suites
at The BayView in Tauranga and the
settlement of the purchase of properties
adjoining our Waimarie Street site
(acquired in February 2018) and also
properties neighbouring facilities at
Eden, Elmwood, and Lady Allum
(all in Auckland).
We have continued to develop our
innovative aged care service delivery
model which was initially implemented
at Meadowbank in Auckland and has
since been introduced at The BayView.
This new service delivery model has
been exceptionally well received by our
aged care residents and their families
with standards previously unheard of
in the aged care industry.
We continue to be recognised by
our peers as an industry leader in
the provision of excellent care to our
residents, and recently won both the
Innovative Service Delivery and the
Excellence in Food awards at the
New Zealand Aged Care Association
Conference.
1
This is a non-GAAP measure.
CHAIR AND CEO'S REPORT –––––––
We are pleased to report that Oceania Healthcare
continues to make great progress with the execution of
its strategy to provide excellent contemporary care that
reflects our residents’ individuality and their right to
choice, respect and dignity.
CHAIR AND CEO'S REPORT –––––––
2
For the quarter ended Sept 18 – Source: NZACA
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Developments
During the six months to 30 November
2018, we have made excellent progress
on our development sites. We continue
to progress our key developments on
time and on budget and have delivered
the projects that we indicated would be
completed during this first half of FY2019.
We are continuing our extensive
programme of capital works on our
sites with nine major projects currently
underway. In undertaking these projects,
our team works hard to build quality
products that exceed the expectations
of our residents and reflect the local
communities in which we operate.
The construction of the new care facility
at The BayView was completed in
October 2018, on time and on budget.
Ministry of Health Certification for the
81 care suites was obtained with no
partial attainments, an outstanding
achievement for a new facility.
Residents of the previous care facility on
the site were transferred to the new care
facility in December 2018 and demand
for the remaining care suites is expected
to be strong. Construction of stage two
of the development (which involves the
demolition of the previous care facility
and the construction of 74 independent
living apartments and community
facilities) has just commenced. It is
expected that stage two will be
completed during FY2020.
The fourth stage of Meadowbank
(comprising 49 independent living
apartments and an additional 34 luxury
care suites) is progressing comfortably
and is expected to be completed by
May 2019. The first residents will move
in to the independent living apartments
during May, with the first care suite
residents moving in once Ministry of
Health Certification is completed.
Construction of stage five (comprising
The Sands, Auckland
Trevellyn, Hamilton
26 independent living apartments) has
just commenced and this stage, which
is the final stage of independent living
apartments to be constructed at
Meadowbank, is expected to be
completed during FY2020.
The construction of The Sands (in
Browns Bay, Auckland) is also progressing
well. This waterfront development on
Auckland’s North Shore comprises
64 independent living apartments and
44 luxury care suites. Construction is
scheduled to be completed in May 2019,
with the first residents moving in by the
end of that month or early the next.
Construction of 90 new care suites at
Trevellyn in Hamilton is well advanced,
with construction expected to be
substantially complete around the same
time, somewhat earlier than previously
anticipated. Following certification of
the care suites, we anticipate that the
first residents will move in during
August 2019.
The redevelopment of our Green Gables
site in central Nelson commenced in
June 2018 with the demolition of the
previous care facility. This development
comprises 28 independent living
apartments and 61 care suites and it is
expected to be completed in FY2020.
We have also recently commenced
construction of 22 independent living
apartments and 71 care suites at
Windermere in Papanui, Christchurch.
Construction of this boutique
development is expected to be
complete during FY2021.
In addition to the larger development
projects set out above, we commenced
groundworks for the development of
17 new villas at Gracelands (Hawkes Bay)
in November 2018 and the construction
of seven villas at Whitianga (Coromandel)
in January 2019.
CHAIR AND CEO'S REPORT –––––––CHAIR AND CEO'S REPORT –––––––
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CHAIR AND CEO'S REPORT –––––––CHAIR AND CEO'S REPORT –––––––
In total, we expect to deliver 113
independent living apartments and
78 care suites during the second half
of the financial year, in addition to the
81 care suites already delivered during
the first half. This brings the full year
development output to 272 residences,
which is precisely what we indicated
would be delivered earlier this year.
With the increase and extension of
our debt facilities in July 2018, we have
also been able to accelerate our future
development pipeline. In the six month
period to 30 November 2018, we have
obtained resource consents to develop
142 care suites over three levels at
Elmwood (in The Gardens, Auckland),
to develop stage six at Meadowbank
(comprising 36 large dementia care
suites) and to develop 48 new
independent living apartments and
a community centre on the recently
acquired land adjacent to Eden Village
(also in Auckland). Our team is now
busy working on the building consent
applications for each of these
developments.
We have significantly enlarged the
development area of our premium
Waimarie Street site (in St Heliers,
Auckland) by acquiring a number of
neighbouring properties. Settlement
of these purchases occurred between
June and September 2018 and these
acquisitions will enhance the overall
development by providing uninterrupted
street frontage on Waimarie Street and
increasing the development yield.
Our team is now finalising concept plans
for this premium boutique aged care
facility and retirement village with
expansive views over the Waitemata
Harbour and Auckland city.
Care
Aged Care is our core competency and
we are recognised as a market leader in
the delivery of excellent clinical care. We
have a significantly higher weighting of
aged care beds in our portfolio and this
focus will remain as we build out our
development pipeline. We have a clear
growth strategy in aged care both in the
transformation of our portfolio through
the development of premium care suites
as well as the roll out of our innovative
aged care service delivery model.
An important component of our aged
care delivery is the provision of nutritious
food and quality dining experiences for
our residents. We have recently
appointed a National Culinary Manager
who is responsible for championing
excellence in our food service offering
throughout the country by working with
and developing our chefs and kitchen
teams, as well as driving innovation and
excellence in food service delivery.
As mentioned above, care suites are at
the core of our growth strategy in aged
care. During FY2018, we reviewed our
existing aged care portfolio and assessed
opportunities to enhance returns at
each facility.
Following this review, we have already
commenced a programme of upgrading
and converting standard rooms to
premium care suites and beds that will
meet enhanced resident expectations at
a number of sites across New Zealand.
We have recently completed the
conversion of an additional five care
suites at Woodlands (in Motueka, Nelson)
and four care suites at Holmwood
(in Rangiora, Canterbury) as well as
completing the conversion of nine
existing independent living apartments
into care suites at St Johns Wood
(in Taupo) in September 2018. We are
also in the process of converting
standard rooms to care suites at
Atawhai (in Hawkes Bay), Middlepark
and Addington Gardens (both
in Christchurch).
Along with the redevelopment of our
premium sites in Auckland, Tauranga,
Hamilton, Nelson and Christchurch,
we expect our aged care portfolio to
comprise 68% care suites by the
completion of our current brownfields
development pipeline.
The sale of five facilities to Heritage
Lifecare was also completed in
September 2018.
Our People
Over the past six months we have made
significant wage increases for all of our
staff. Our registered nurses received
increases to reflect the recent DHB
settlement, and do an exceptional job
caring for our residents. Our Healthcare
Assistants received the second year of
the equal pay adjustment and our
housekeeping staff were also rewarded
with our starting rate now well above the
minimum wage. These wage increases
are well-deserved recognition for all the
hard work that our incredible staff do 24
hours a day, seven days a week.
We remain focused on the safety of
our teams and, in addition to continuing
to roll out our moving and handling
training programme and our injury
management processes, we are in
the process of implementing robust
contractor management programmes
to ensure quality of services as well
as making sure that health and safety
requirements are met.
We have entered into a national
agreement with KidsCan, a charity which
supports low decile schools throughout
New Zealand by providing students with
food, clothing, health and hygiene
supplies. This arrangement provides an
opportunity for staff, residents and their
families across all of our facilities to be
part of a cause that impacts their local
communities. We are looking forward
to working with KidsCan and partnering
with schools across New Zealand.
We would like to thank our staff, Board
members, contractors and suppliers
for all their dedication, work and
commitment to enhance the lives of
our residents.
Yours sincerely
Earl Gasparich
Chief Executive Officer
Elizabeth Coutts
Chair
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Directors’ Report
30 November 2018
The Board has pleasure in presenting the interim report of Oceania Healthcare
Limited and its subsidiaries, incorporating the consolidated interim financial
statements and the independent review report, for the six months ended
30 November 2018.
The Board of Directors of the Company authorised these consolidated interim
financial statements for issue on 25 January 2019.
For and on behalf of the Board
Elizabeth Coutts Alan Isaac
Chairman Director
Consolidated Statement of Comprehensive Income
For the six months ended 30 November 2018
$’000 Notes
Unaudited
Six months
30 Nov 2018
Unaudited
Six months
30 Nov 2017
Operating revenue94,28290,207
Change in fair value of investment property
3.1
1,62434,147
Other income 2,1321,916
Total income98,038126,270
Employee benefits59,32554,476
Depreciation and amortisation4,3294,062
Finance costs2,0141,448
Impairment / (reversal of impairment) of property,
plant and equipment
3.35,659(1,118)
Other expenses29,96622,991
Total expenses101,29381,859
(Loss) / profit before income tax(3,255)44,411
Income tax benefit / (expense)
5.1
4,507(1,890)
Profit for the period 1,25242,521
Other comprehensive income
Items that will not be subsequently reclassified
to profit or loss
Gain on revaluation for the period, net of tax
3.3
18,197370
Items that may be subsequently reclassified
to profit or loss
Movement in interest rate swaps, net of tax63(19)
Other comprehensive income for the period, net of tax
18,260351
Total comprehensive income for the period attributable to
shareholders of the parent19,51242,872

Basic earnings per share (cents per share)
4.2
0.27.0
Diluted earnings per share (cents per share)
4.2
0.27.0
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.

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Consolidated Balance Sheet
As at 30 November 2018
$’000 Notes
Unaudited
30 Nov 2018
Audited
31 May 2018
Assets
Cash and cash equivalents10,64418,288
Trade and other receivables20,49932,693
Assets held for sale
3.3
-19,653
Property, plant and equipment
3.3
357,216303,561
Investment property
3.1
804,439755,561
Intangible assets16,02717,398
Total assets1,208,8251,147,154
Liabilities
Trade and other payables31,52737,592
Derivative financial instruments185283
Deferred management fees
3.2
24,17221,923
Refundable occupation right agreements
3.2
383,306358,213
Borrowings
4.3
206,980168,711
Deferred tax liabilities
5.1
21,68923,335
Total liabilities667,859610,057
Net assets540,966537,097
Equity
Contributed equity
4.1
579,498579,498
Retained deficit(141,517)(127,899)
Reserves102,98585,498
Total equity540,966537,097
Consolidated Statement of Changes in Equity
For the period ended 30 November 2018
$’000 Notes
Contributed
equity
Retained
deficit
Asset
revaluation
reserve
Interest
rate swap
reserve
Total
equity
Balance as at 1 June 2017 (audited)579,498(195,966)84,603(182)467,953
Profit for the period - 42,521 - -42,521
Other comprehensive income
Revaluation of interest rate swaps---(19)(19)
Revaluation of assets net of tax
3.3 - -370-370
Total comprehensive income - 42,521370(19)42,872
Transactions with owners
Employee share scheme-79--79
Total transactions with owners-79 - -79
Balance as at 30 November
2017 (unaudited) 579,498(153,366)84,973(201)510,904
Balance at 1 June 2018 (audited)579,498(127,899)85,601(103)537,097
Profit for the period - 1,252 - -1,252
Other comprehensive income
Revaluation of interest rate swaps
net of tax---6363
Revaluation of assets net of tax
3.3--18,197-18,197
Total comprehensive income-1,25218,1976319,512
Transfer of revaluation reserve
for assets held for sale
3.3-773(773)--
Transactions with owners
Dividends paid-(15,713)--(15,713)
Employee share scheme-70--70
Total transactions with owners-(15,643)--(15,643)
Balance as at 30 November
2018 (unaudited)579,498(141,517)103,025(40)540,966
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes.

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Consolidated Cash Flow Statement
For the six months ended 30 November 2018
$’000
Unaudited
Six months
30 Nov 2018
Unaudited
Six months
30 Nov 2017
Cash flows from operating activities
Receipts from residents for membership fees, village and care fees86,20878,521
Payments to suppliers and employees(84,281)(76,070)
Rental expense in relation to right to use asset(4,815)-
Receipts from new occupation right agreements73,71234,411
Payments for outgoing occupation right agreements(22,316)(18,550)
Interest received8372
Interest paid(1,520)(1,325)
Net cash inflow from operating activities47,07117,059
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and
investment property19,678165
Payments for property, plant and equipment and intangible assets(40,811)(14,278)
Payments for investment property and investment property
under development(53,136)(34,645)
Net cash outflow from investing activities(74,269)(48,758)
Cash flows from financing activities
Proceeds from borrowings96,26744,812
Repayment of borrowings(61,000)(17,726)
Dividends paid(15,713)-
Net cash inflow from financing activities19,55427,086
Net increase in cash and cash equivalents(7,644)(4,613)
Cash and cash equivalents at the beginning of the period18,28810,861
Cash and cash equivalents at end of period10,6446,248
Notes to the
Consolidated
Interim Financial

Statements
For the six months ended 30 November 2018
1. General Information 20
1.1 Basis of Preparation 20
1.2 Accounting Policies 22
1.3 Significant Events and Transactions 23
2. Operating Performance 23
2.1 Operating Segments 23

3. Property Assets 30
3.1 Investment Property 30
3.2 Refundable Occupation Right Agreements 35
3.3 Property, Plant and Equipment 36
4. Shareholder Equity and Funding 39
4.1 Shareholder Equity and Reserves 39
4.2 Earnings Per Share 41
4.3 Borrowings 41
5. Other Disclosures 43
5.1 Income Tax 43
5.2 New Accounting Standards 46
5.3 Contingencies and Commitments 49
5.4 Events After Balance Date 49
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.

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21
1. General Information
1.1. Basis of Preparation
(i) Entities reporting
The consolidated interim financial statements of the “Group” entity are for the
economic entity comprising Oceania Healthcare Limited (the “Company”) and
its subsidiaries, together “the Group”. Refer to the 31 May 2018 annual report
and note 4.1 for details of the Group structure.
The consolidated interim financial statements incorporate the assets and
liabilities of all subsidiaries of Oceania Healthcare Limited as at 30 November
2018 and the results of all subsidiaries for the six months then ended.
The Group owns and operates various rest homes and retirement villages
around New Zealand. The Group's registered office is Affinity House,
2 Hargreaves Street, St Mary's Bay, Auckland 1011, New Zealand.
The consolidated entity is designated as a profit oriented entity for financial
reporting purposes.
(ii) Statutory base
Oceania Healthcare Limited is a limited liability company which is domiciled
and incorporated in New Zealand. It is registered under the Companies Act
1993 and is a FMC Reporting Entity in terms of Part 7 of the Financial Markets
Conduct Act 2013. The Company is also listed on the NZX Main Board (“NZX”)
and the Australian Securities Exchange (“ASX”) as a foreign exempt listing.
The consolidated interim financial statements have been prepared in accordance
with the requirements of the NZX and ASX listing rules, and Part 7 of the
Financial Markets Conduct Act 2013.
The consolidated interim financial statements have been prepared in
accordance with New Zealand Generally Accepted Accounting Practice
(“NZ GAAP”). They comply with New Zealand Equivalent to International
Accounting Standard 34 Interim Financial Reporting (“NZ IAS 34”) and
International Accounting Standard 34 Interim Financial Reporting (“IAS 34”).
The accounting policies that materially affect the measurement of the
Consolidated Statement of Comprehensive Income, Consolidated Balance
Sheet and the Consolidated Cash Flow Statement have been applied on a
basis consistent with those used in the audited consolidated annual financial
statements for the year ended 31 May 2018 with the exception of the tax
treatment of deferred management fees (“DMF”) as set out in note 5.1 and
the application of new standards as set out in note 5.2.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
1.1. Basis of Preparation (Continued)
The consolidated interim financial statements do not include all the notes
of the type normally included in the consolidated annual financial statements.
Accordingly, these consolidated interim financial statements are to be read in
conjunction with the consolidated annual financial statements for the year
ended 31 May 2018, prepared in accordance with New Zealand Equivalents
to International Financial Reporting Standards (“NZ IFRS”).
The consolidated interim financial statements for the six months ended
30 November 2018 and comparatives for the six months ended 30 November
2017 are unaudited. The consolidated annual financial statements for the year
ended 31 May 2018 were audited and form the basis for the comparative
figures for that period in these statements. They are presented in New Zealand
dollars which is the Group’s presentational currency.
The consolidated interim financial statements have been prepared in accordance
with the going concern basis of accounting, which assumes that the Group will
be able to realise its assets and discharge its liabilities in the normal course of
business as they come due into the foreseeable future.
(iii) Key estimates and judgements
The preparation of the consolidated interim financial statements in conformity
with IAS 34 and NZ IAS 34 requires the use of certain critical accounting
estimates. It also requires management to exercise their judgement in the
process of applying the Group’s accounting policies.
The Group makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related
actual results. Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.

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1.1. Basis of Preparation (Continued)
The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial
statements are disclosed in the following notes:
– Fair value of investment property and investment property under
development (note 3.1)
– Classification of accommodation with a care or service offering
(refer 31 May 2018 audited consolidated financial statements
notes 3.1 and 3.3)
– Fair value of freehold land and buildings (note 3.3)
– Revenue recognition of deferred management fees (refer 31 May 2018
audited consolidated financial statements note 3.2)
– Recognition of deferred tax (note 5.1).
1.2. Accounting Policies
(i) New and amended standards adopted by the Group
During the period the Group adopted NZ IFRS 15 Revenue from contracts
with customers and NZ IFRS 9 Financial Instruments. Refer to note 5.2 for
further details.
(ii) Measurement of fair value
The Group classifies its fair value measurement using the fair value hierarchy
that reflects the significance of the inputs used in making the measurements.
The fair value hierarchy has the following levels.
Level 1: Quoted prices (unadjusted) in active markets for the identical
assets or liabilities.
Level 2: 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 3: Inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The carrying amount of all financial assets and liabilities is considered to
approximate to their fair value.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
1.3 Significant Events and Transactions
The financial position and performance of the Group was particularly
affected by the following events and transactions during the six months
to 30 November 2018:
– Disposals – five facilities were sold during the period resulting in a gain
of $0.6m (net of goodwill disposal of $1.6m) recognised in the Consolidated
Statement of Comprehensive Income (note 3.3)
– New accounting standards – NZ IFRS 9 Financial Instruments and NZ IFRS 15
Revenue from contracts with customers were adopted during the period
(note 5.2)
– Recognition of tax on DMF revenue – during the period there was a change
in the timing of recognition of DMF income for tax purposes (note 5.1).
2. Operating Performance
2.1. Operating Segments
The Group's chief operating decision-maker is the Board of Directors.
The operating segments have been determined based on the information
reviewed by the Board of Directors for the purposes of allocating resources
and assessing performance. The assets and liabilities of the Group are
reported to the chief operating decision-maker in total and are not allocated
by operating segment.
The Group comprises two segments, care operations and village operations and
operates in New Zealand. There have been no changes to the segments from
those disclosed in the 31 May 2018 consolidated annual financial statements.
Information regarding the operations of each reportable segment is included
below. Amongst other criteria, performance is measured based on segmental
underlying earnings before interest, tax, depreciation and amortisation
(“EBITDA”); being the most relevant measure in evaluating the performance
of segments relative to other entities that operate within the aged care and
retirement village industries.
Additional segmental reporting information
Capital expenditure
Refer to notes 3.1 and 3.3 for details on capital expenditure. Chattels, freehold
land and buildings, including related property held for development, classified
as property, plant and equipment principally relate to care operations.
Investment property assets principally relate to village operations. Capital
expenditure on intangibles and other property, plant and equipment are
unallocated to these segments.

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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
2.1. Operating Segments (Continued)
Goodwill
Goodwill is allocated to care cash generating units.
Underlying profit
Underlying Profit is a non-GAAP measure used by the Group to monitor
financial performance and determine dividend distributions. Underlying Profit
measures require a methodology and a number of estimates to be approved by
the Directors in their preparation. Both the methodology and the estimates may
differ among companies in the retirement village sector that report underlying
financial measures. Underlying Profit is a measure of financial performance and
does not represent cash flow generated during the period.
Oceania calculates Underlying Profit by making the following adjustments to
reported Net Profit after Tax:
– Removing the change in fair value of investment properties (including right
to use investment property assets) and any impairment or reversal of
impairment of property, plant and equipment;
– Removing any impairment of goodwill;
– Removing any gains or losses on the sale or decommissioning of assets;
– Removing any DMF income and rental expenditure in relation to right to use
investment property assets;
– Adding back the Directors’ estimate of realised gains on resale of occupation
right agreement (“ORA”) units and care suites
1
;
– Adding back the Directors’ estimate of realised development margin on the
first sale of new ORA units or care suites following the development of an
ORA unit or care suite, conversion of an existing care bed to a care suite or
conversion of a rental unit to an ORA unit; and
– Adding back the deferred taxation component of taxation expense so that
only the current tax expense is reflected.
Following the sale of certain assets during the six months to 30 November 2018
the definition of the Underlying Profit measure has been adjusted to include the
gain or loss on the sale of assets. This has resulted in a reduction in Underlying
Profit for the six months to 30 November 2018 of $0.2m.
1
Units and care suites sold under an Occupation Right Agreement.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
2.1. Operating Segments (Continued)
Resale gain – underlying profit
The Directors’ estimate of realised gains on resales of ORA units and care
suites (i.e. the difference between the incoming residents’ ORA licence
payment and the ORA licence payment previously received from the
outgoing resident) is calculated as the net cash flow received, and receivable,
at the point that the ORA contract becomes unconditional and has either
“cooled off” or where the resident is in occupation at balance date.
In the interim period ended 30 November 2017 there were resale gains of
$1.0m that related to units and care suites that had cooled off or where the
resident was in occupation but had not completed cash settlement. In the
interim period ended 30 November 2017 only resale gains for ORAs for
which settlement in cash had occurred were recognised. In 2017, following
a review of the Group’s revenue recognition criteria, ORA contracts that
are unconditional and have either cooled off or where the resident was
in occupation have been included as this more accurately reflects the
transfer of legal and economic benefits associated with these transactions.
These resale gains amounted to $1.0m for the six month period to
30 November 2018.

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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
2.1. Operating Segments (Continued)
Development margin – underlying profit
The Directors’ estimate of realised development margin is calculated as the
cash received, and receivable, in relation to the first sale of new ORA units
and care suites, at the point that the ORA contract becomes unconditional
and has either “cooled off” or where the resident is in occupation at balance
date, less the development costs associated with developing the ORA units
and care suites. In the interim period ended 30 November 2017 there was
realised development margin of $0.2m that related to units and care suites
that had cooled off or where the resident was in occupation but had not
completed cash settlement. This development margin amounted to $0.8m for
the six month period to 30 November 2018.
In the interim period ended 30 November 2017, only realised development
margin for ORAs for which settlement in cash had occurred was recognised.
In 2018, following a review of the Group’s revenue recognition criteria, ORA
contracts that are unconditional and have either cooled off or where the
resident was in occupation have been included as this more accurately
reflects the transfer of legal and economic benefits associated with these
transactions. The development costs include:
– Construction costs directly attributable to the relevant project, including
any required infrastructure (e.g. roading) and amenities related to the units
(e.g. landscaping) as well as any demolition and site preparation costs
associated with the project. The costs are apportioned between the ORA
units and care suites, in aggregate, using estimates provided by the
project quantity surveyor. The construction costs for the individual ORA
units or care suites sold are determined on a pro rated basis using gross
floor areas of the ORA units and care suites;
2
Brownfield land refers to land previously utilised by, or part of, an operational aged care facility or
retirement village.
3
The timing of a change of use is a Directors’ estimate. It is based on a range of factors including evidence of
steps taken to secure a resource consent and/or building consent for a particular development or stage of a
development and the decommissioning of existing operations (either through the buy-back of existing village
ORA units or decommissioning of an existing care facility). Note the cost of buybacks is not included in the
development cost as an independent fair value of the land on an unencumbered basis is used as the value
ascribed to the development land.
4
Greenfield land refers to land not previously utilised by, or as part of, an operational aged care facility or
retirement village. Greenfield land is typically bare (undeveloped) land at the time of purchase.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
2.1. Operating Segments (Continued)
– An apportionment of land value based on the gross floor area of the ORA
units and care suites developed. The value for Brownfield
2
development land
is the estimated fair value of land at the time a change of use occurred
3
(from
operating as a care facility or retirement village to a development site), as
assessed by an external independent valuer. Greenfield
4
development land
is valued at historical cost; and
– Capitalised interest costs to the date of project completion apportioned
using the gross floor area of ORA units and care suites developed.
Development costs do not include:
– Construction, land (apportioned on a gross floor area basis) and interest
costs associated with common areas and amenities or any operational or
administrative areas.
The Directors’ estimate of development margin for conversions is calculated
based on the difference between the ORA licence payment received, and
receivable, in relation to sales of newly converted ORA units and care suites, at
the point that the ORA contract becomes unconditional and either “cooled off”
or where the resident is in occupation at balance date, and the associated
conversion costs. Conversion costs comprise:
– In the case of conversion of care beds to care suites, the actual
refurbishment costs incurred; and
– In the case of conversions of rental units to ORA units, the actual
refurbishment costs incurred and the fair value of the rental unit prior
to conversion.

5
Includes rental expenses in relation to right to use asset of $4.8m (30 November 2017: nil).
6
Includes change in fair value of right to use asset.
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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
2.1. Operating Segments (Continued)
$’000
Care
Operations
Village
OperationsOtherTotal
Six months ended 30 November 2018
(unaudited)
Operating revenue82,01912,263-94,282
Other income8811,0051632,049
Revaluation of investment property-1,624-1,624
Total income82,90014,89216397,955
Operating expenses
5
(68,250)(11,897)(9,144)(89,291)
Impairment of goodwill----
Impairment of property, plant and equipment(5,659)--(5,659)
Segment EBITDA8,9912,995(8,981)3,005
Interest income-156883
Finance costs--(2,014)(2,014)
Depreciation and amortisation(4,075)-(254)(4,329)
Profit / (loss) before income tax4,9163,010(11,181)(3,255)
Taxation (expense) / benefit(4,275)8,6651174,507
Profit / (loss) for the period attributable
to shareholders64111,675(11,064)1,252
Adjusted for underlying profit items
Add / (Less): Change in fair value of
investment property
6
and reversal of
impairment of property, plant and
equipment5,659(1,624)-4,035
Add: Impairment of goodwill----
Less: DMF in relation to right to use asset-(309)-(309)
Add: Rental expenses in relation to right to
use asset
-4,815-4,815
Less: (Gain) / loss on the sale or
decommissioning of assets
(590)-435(155)
Add: Realised gain on resale-5,950-5,950
Add: Realised development margin-9,861-9,861
Underlying net profit / (loss) before tax5,71030,368(10,629)25,449
Add / (Less): Deferred tax4,275(8,665)(117)(4,507)
Underlying net profit / (loss) after tax9,98521,703(10,746)20,942
Less: Interest income-(15)(68)(83)
Add: Finance costs--2,0142,014
Add: Depreciation and amortisation4,075-2544,329
Underlying EBITDA14,06021,688(8,546)27,202
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
2.1. Operating Segments (Continued)
$’000
Care
Operations
Village
OperationsOtherTotal
Six months ended 30 November 2017
(unaudited)
Operating revenue79,26010,947-90,207
Other income6715895841,844
Revaluation of investment property-34,147-34,147
Total income79,93145,683584126,198
Operating expenses(63,523)(5,957)(7,987)(77,467)
Reversal of impairment of property,
plant and equipment
1,118--1,118
Impairment of goodwill-
---
Segment EBITDA17,52639,726(7,403)49,849
Interest income296172
Finance costs - - (1,448)(1,448)
Depreciation and amortisation(3,796) - (266)(4,062)
Profit before income tax13,73239,735(9,056)44,411
Taxation (expense) / benefit(1,553)1,104(1,441)(1,890)
Profit for the period attributable
to shareholders12,17940,839(10,497)42,521
Adjusted for underlying profit items
Less: Change in fair value of investment
property and reversal of impairment of
property, plant and equipment(1,118)(34,147)-(35,265)
Add: Impairment of goodwill----
Add: Gain on the sale or
decommissioning of assets
----
Add: Realised gain on resale-6,664-6,664
Add: Realised development margin-4,078-4,078
Underlying net profit before tax11,06117,434(10,497)17,998
Add: Deferred tax expense / (benefit)1,553(1,104)1,4411,890
Underlying net profit after tax12,61416,330(9,056)19,888
Less: Interest income(2)(9)(61)(72)
Add: Finance costs--1,4481,448
Add: Depreciation and amortisation3,796-2664,062
Underlying EBITDA16,40816,321(7,403)25,326

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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3. Property Assets
3.1. Investment Property
$’000 Notes
Unaudited
30 Nov 2018
Audited
31 May 2018
Investment property under development at fair value
Opening balance108,20479,486
Transfer from / (to) property, plant and equipment
3.3
3,869 (2,801)
Capitalised expenditure44,10783,259
Capitalised interest and line fees1,9411,070
Transfer within investment property-(56,970)
Disposals-(57)
Change in fair value during the period744,217
Closing balance158,195108,204
Completed investment property at fair value
Opening balance647,357531,530
Transfer within investment property-56,970
Transfer to property, plant and equipment
3.3
(4,955)(18,686)
Transfer to held for sale-(2,338)
Capitalised expenditure2,29214,132
Capitalised interest and line fees-1,646
Change in fair value during the period1,55064,103
Closing balance646,244647,357
Total investment property804,439755,561
Change in Fair Value Recognised in the Statement of Comprehensive Income
$’000
Unaudited
30 Nov 2018
Unaudited
30 Nov 2017
Increase in fair value of investment property48,87870,245
Add / (Less): Transfers during the period1,086(376)
Less: Capitalised expenditure including capitalised interest(48,340)(35,779)
Plus: Disposals-57
Change in fair value recognised in Consolidated Statement
of Comprehensive Income1,62434,147
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.1. Investment Property (Continued)
Investment property includes both freehold land and buildings and land and
buildings under development, comprising independent units, certain care
suites, serviced apartments and common facilities, provided for use by
residents under the terms of an ORA. Investment property is held for long-term
yields and is not occupied by the Group.
Valuation process and key inputs
Completed investment property
The fair value of completed investment property, including the right to use
asset under a lease (Everil Orr), is calculated every six months by CBRE Limited,
an independent registered valuer and associate of the New Zealand Institute
of Valuers.
As required by NZ IAS 40 Investment Property, the valuation of investment
property is adjusted for cash flows relating to refundable occupation licence
payments, residents’ share of resale gains and management fees receivable
recognised separately on the Consolidated Balance Sheet and also reflected
in the valuation model.
CBRE Limited performed a “roll forward” of the valuation of completed
investment property that was completed at 30 April 2018 for the period from
1 May 2018 to 31 October 2018 for all sites. This involved the Group confirming
the movements in the sales, resales and repurchases of ORAs during the
period, an assessment by the valuer of the general market conditions and
the impact of the changes, where appropriate, in the completed value of
investment properties. The “roll forward” provides an assessment by the valuer
of the financial impact of the changes for the six month period since the most
recent full valuation as at 30 April 2018. CBRE Limited will perform a full
valuation as at 30 April 2019.
The CBRE Limited valuation is reviewed by management for accuracy of
inputs and reasonableness of assumptions.
The CBRE Limited valuation completed at 31 October 2018 has been
adjusted downwards by management for the impact of any sale, resale and
repurchase of ORAs between 1 November 2018 and 30 November 2018 of
$9.8m (31 May 2018: adjusted downwards by $20.0m), with a corresponding
increase in refundable occupation licence payments of $11.0m (31 May 2018:
$23.9m), to arrive at the fair value of completed investment properties at
30 November 2018.

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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.1. Investment Property (Continued)
Investment property under development
The fair value of investment property under development is determined by the
Directors having taken into consideration the valuation conducted by CBRE as
an independent registered valuer and the cost of work undertaken, whereas
previously the fair value of investment property under development was held
at the CBRE valuation plus the cost of work undertaken.
A valuation of land classified as under development was undertaken on
31 October 2018 by CBRE Limited (31 May 2018: valuation dated 30 April
2018 by CBRE Limited). Management and the Board do not envisage a material
movement in the land value between 31 October 2018 and 30 November 2018
and therefore no adjustment has been made to this value. Any costs incurred to
30 November 2018 on the developments are included in arriving at the 30
November 2018 fair value.
The Group has applied the following methodology in relation to the measurement
of investment property under development
:
Practical completion not achieved
Where the development still requires substantial work such that practical
completion is not going to be achieved, and a reliable estimate of fair value
cannot be made, at or close to balance date, the fair value recognised is
the fair value of the development land per CBRE Limited valuation plus the
cost of any work in progress, a value of $67.3m as at 30 November 2018
(31 May 2018: $31.1m).
Where an individual development is of both investment property and freehold
buildings in nature, the fair value of land and work in progress is apportioned
between investment property under development and freehold land and
buildings under development, by applying the estimated gross floor area for
these respective areas of the development based on information obtained
from the project quantity surveyors at the planning and design stages.
Practical completion achieved
Where a development is practically completed, or likely to be completed at, or
close to, balance date the investment property is measured at its completed fair
value as determined by CBRE Limited with an adjustment made for any estimated
costs, in accordance with the project budget, to be incurred to complete the
development, and is then transferred to completed investment property.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.1. Investment Property (Continued)
Property specific assumptions
Seismic and weather tightness assessments
The CBRE Limited valuation, and accordingly the fair value of investment
property, incorporates an allowance in relation to remediation to properties
where seismic strength testing has been carried out in prior years. The 30 April
2018 valuation incorporated the estimated costs to address weather tightness
at certain sites based on estimates provided in building condition reports
completed by CoveKinloch New Zealand Limited in February 2017. As at
30 November 2018 all weather tightness issues have been addressed and
as such no allowance has been made in the 31 October 2018 valuation.
Lease of investment property
The Group leases one site, Everil Orr, which meets the definition of investment
property and is accounted for in accordance with the accounting policy as
outlined in the 31 May 2018 consolidated annual financial statements.
Rental payments are recognised as a rental expense in the Consolidated
Statement of Comprehensive Income as incurred. The right to use asset is
held at fair value in accordance with NZ IAS 40 Investment Property and has
been valued by CBRE Limited as at 31 October 2018. The valuation has
been adjusted by management for the impact of any sale of ORAs between
1 November 2018 and 30 November 2018 to arrive at the fair value as at
30 November 2018 and any changes in fair value are taken to the Consolidated
Statement of Comprehensive Income.
The carrying value of the right to use asset as at 30 November 2018 in respect
of this leased site is $12.2m (31 May 2018: $7.7m). It is included as completed
investment property above.
Assets held for sale
Investment property assets are classified as 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 their fair value. Refer to note 3.3
for details of assets held for sale as at 31 May 2018 but settled during the 2019
interim period.

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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.1. Investment Property (Continued)
A reconciliation between the valuation and the amount recognised on the
Consolidated Balance Sheet as investment property is as follows:
$’000
Unaudited
30 Nov 2018
Audited
31 May 2018
Completed investment property
Valuation288,390312,109
Plus: Refundable occupation licence payments408,576383,323
Plus: Residents‘ share of resale gains6,8567,562
Less: Management fee receivable(56,957)(52,665)
Less: Resident obligations for units not included in valuation (621)(2,972)
646,244647,357
Investment property under development
Valuation158,195108,204
158,195108,204
Total investment property at fair value804,439755,561
Where an incoming resident has an unconditional ORA in respect of a retirement
village unit or care suite and the corresponding outgoing resident for that same
accommodation has not yet been refunded, the CBRE Limited valuation is
adjusted for the incoming resident balances only. An adjustment of $0.6m
(31 May 2018: $3.0m) is included in the above reconciliation to reflect this.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.2. Refundable Occupation Right Agreements
$’000
Unaudited
30 Nov 2018
Audited
31 May 2018
Village
Refundable occupation licence payments 408,576383,323
Residents share of resale gains6,8567,562
Less: Management fee receivable (per contract)(77,973)(72,269)
337,459318,616
Care suites
Refundable occupation licence payments57,17247,734
Accommodation rebate806825
Less: Management fee receivable (per contract)(12,131)(10,763)
45,84737,796
Held for sale
Refundable occupation licence payments-2,108
Residents share of resale gains-20
Less: Management fees receivable (per contract)-(327)
-
1,801
Total refundable occupation right agreements383,306358,213
The management fee receivable is recognised in accordance with the terms of
the resident's ORA.
Reconciliation of management fees recognised under NZ IFRS
and per ORA
$’000
Unaudited
30 Nov 2018
Audited
31 May 2018
Village
Management fees receivable (per contract)(77,973)(72,269)
Deferred management fees21,01619,604
Management fees receivable (per NZ IFRS)(56,957)(52,665)
Care suites
Management fees receivable (per contract)(12,131)(10,763)
Deferred management fees3,1562,222
Management fees receivable (per NZ IFRS)(8,975)(8,541)
Held for sale
Management fees receivable (per contract)-(327)
Deferred management fees-97
Management fees receivable (per NZ IFRS)-(230)

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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.3. Property, Plant and Equipment
$’000
Freehold
Land
Freehold
Buildings
Freehold Land
and Buildings
Under
Development
Chattels and
Leasehold
ImprovementsTotal
At 30 Nov 2018 (unaudited)
Cost---42,45942,459
Valuation70,997213,72156,930-341,648
Accumulated depreciation---(26,891)(26,891)
Net book amount70,997213,72156,93015,568357,216
At 31 May 2018 (audited)
Cost - - - 46,526 46,526
Valuation 67,124 177,697 44,363 - 289,184
Accumulated depreciation - - - (32,149)(32,149)
Net book amount 67,124 177,697 44,363 14,377 303,561
Key accounting estimates and judgements
All land and buildings have been determined to be Level 3 in the fair value
hierarchy as the fair value is determined using inputs that are unobservable.
Valuation process and key inputs
Land and buildings
Land and buildings are held at fair value. Independent valuations are
performed with sufficient regularity (i.e. every two years) to ensure that the
carrying amount does not differ materially from the asset's fair value at the
balance date. Based on information available, the Directors have determined
that there has been no material valuation movement since 31 May 2017
with respect to freehold land and buildings with the exception of care suites.
No external valuation has been sought in relation to the 30 November 2018
balance date except as it relates to care suites (31 May 2018: care suites at
Meadowbank facility only). CBRE Limited have valued all care suites as at
31 October 2018.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.3. Property, Plant and Equipment (Continued)
An independent valuation in respect of freehold land and buildings was
undertaken as at 31 May 2017 by independent registered valuers CBRE Limited.
CBRE Limited are appropriately qualified valuers with experience of valuing
residential aged care and retirement village property in New Zealand.
The 31 May 2017 valuation of the Group’s care facilities was apportioned to land,
improvements, chattels and goodwill. The fair value of land and buildings as
determined by CBRE Limited is based on the level of rent able to be generated
from the maintainable net cash flow of the facility subject to average efficient
management. The fair value of the Group’s land and buildings is based on
these apportionments. Chattels, however, are carried at historic cost less
depreciation and goodwill is not recorded in the consolidated financial
statements. The 31 May 2017 CBRE Limited valuation included $59.1m of
goodwill. An additional $10.2m has arisen in the 18 months since 31 May 2017
on the valuation of existing and newly developed care suites (31 May 2018:
$2.5m) and a reduction of $3.0m has occurred as a result of the sale of five sites
(refer below) and $0.9m as the result of decommissioning of the original care
facility at The BayView. This goodwill is not recognised in the consolidated
financial statements. There is $15.2m (31 May 2018: $16.8m) of goodwill
recognised on acquisition included in these consolidated financial statements
as an intangible asset.
In arriving at the fair value of freehold land and buildings as at 30 November
2018, the 31 May 2017 carrying amounts have been adjusted for the cost of any
additions or work in progress incurred, less any disposals and depreciation
recognised since 1 June 2017. An adjustment for the reversal of previous
impairment has been made as below.
The 31 May 2017 CBRE Limited valuation, and accordingly the fair value of
freehold buildings, incorporates an allowance in relation to remediation to
properties where seismic strength testing has been carried out in prior years.
The CBRE Limited valuation as at 31 May 2017 incorporated the estimated
costs to address weather tightness at certain sites based on building condition
reports completed by CoveKinloch New Zealand Limited in February 2017.
The estimated costs were $3.7m. In the period to 30 November 2018
management have undertaken the necessary remediation work to address the
weather tightness issues identified. The costs incurred have been recognised
within freehold buildings offsetting the remaining CBRE Limited cost allowance
in the 31 May 2017 valuation. The costs actually incurred were $1.7m, $2.0m
below the estimates included in the 31 May 2017 valuation.

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Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.3. Property, Plant and Equipment (Continued)
Total net revaluation gains of $12.5m have been recognised in the current
period in respect of land and buildings, refer table below:
$’000
Unaudited
30 Nov 2018
Unaudited
30 Nov 2017
(Impairment) / reversal of impairment recognised in
Consolidated Statement of Comprehensive Income
(5,659)
1,118
Movement in revaluation reserve
21,031
442
Deferred tax on movement in revaluation reserve
(2,834)
(72)
Total revaluation gains12,538
1,488
Land and buildings under development
When the Group undertakes development of a new site, the classification
between freehold land and buildings and investment property is reviewed.
For sites with a care facility, including those with care suites, these properties
are classified as freehold land and buildings. For sites with a retirement village,
the properties are classified as investment property. Refer to note 3.1 for
further information, including the principles applied by the Group in
determining the appropriate apportionment between freehold land,
buildings and investment property.
The Group's land under development was revalued on 31 October 2018
(31 May 2018: 30 April 2018) by independent registered valuers CBRE Limited.
This has been adjusted for any costs incurred between 1 November 2018 to
30 November 2018 to arrive at the fair value as at 30 November 2018.
Assets held for sale
Assets are classified as 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, except for investment property assets held for sale which are
carried at fair value.
As at 31 May 2018, five facilities met the definition of held for sale. These
facilities and their respective land, buildings, investment property and plant
and equipment were reclassified for reporting purposes and held on the
Consolidated Balance Sheet at $19.7m which was the lower of their fair value
less costs to sell and their carrying amount at that time. The revaluation reserve
totalling $3.7m in respect of the properties held for sale was reclassified to
retained earnings on reclassification of the properties to held for sale.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
3.3. Property, Plant and Equipment (Continued)
On 27 September 2018 the sale of these properties was settled and funds of
$19.7m received. These funds were applied to the bank borrowings of the Group.
A net gain of $0.6m has been recognised as other income in the Consolidated
Statement of Comprehensive Income (representing a gain on the carrying value of
assets held for sale of $2.2m, offset by the derecognition of goodwill associated
with these assets of $1.6m). Further, the remaining revaluation reserves in respect
of these sites (of $0.8m) have been reclassified to retained earnings.
Finance leases
The Group leases various equipment and motor vehicles under finance lease
agreements. The lease terms are between 3 and 6 years and have a net book
value as at 30 November 2018 of $7.1m (31 May 2018: $6.6m).
4. Shareholder Equity and Funding
4.1. Shareholder Equity and Reserves
Shares
Unaudited
30 Nov 2018
Audited
31 May 2018
Share capital
Authorised, issued and fully paid up capital 610,254,535 610,254,535
Total contributed equity610,254,535 610,254,535
$’000
Unaudited
30 Nov 2018
Audited
31 May 2018
Share capital
Authorised, issued and fully paid up capital579,498 579,498
Total contributed equity579,498 579,498
Ordinary shares are classified as equity. Incremental costs directly attributable
to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
All ordinary shares are authorised and rank equally with one vote attached
to each fully paid ordinary share. The shares have no par value.

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4.1. Shareholder Equity and Reserves (Continued)
Recognition and measurement
None of the above issued shares are held by the Company or its subsidiaries
with the exception of shares issued to OCA Employees Trustee Limited,
a subsidiary, on behalf of Oceania employees in relation to a Long Term
Incentive Plan (“LTIP”).
The 3,164,556 shares issued to OCA Employees Trustee Limited for the LTIP
are classified as Treasury Shares as the Company has a beneficial interest in the
shares until the vesting conditions are met.
Group structure
The Group’s parent entity is Oceania Healthcare Holdings Limited (“OHHL”)
and its ultimate owners are The Trust Company Limited (interest 98.8%) and
Ngakuta Trust Company Limited (interest 1.2%). On 5 September 2018 OHHL
sold 15.56% of its holding resulting in a remaining 41.65% shareholding as at
30 November 2018 (31 May 2018: 57.21%).
Dividends
On 25 January 2019, an interim dividend of 2.1 cents per share (not imputed)
was declared and will be paid on 18 February 2019 (31 May 2018: full year
dividend of 4.7 cent per ordinary share). The record date for entitlement is
11 February 2019.
Asset revaluation reserve
The asset revaluation reserve is used to record the revaluation of freehold land
and buildings and land and buildings under development.
Interest rate swap reserve
The interest rate swap reserve is used to record gains or losses on instruments
used as cash flow hedges. The amounts are recognised in the Consolidated
Statement of Comprehensive Income when the hedged transaction affects
profit and loss.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
4.2. Earnings per Share
Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit after tax of the
Group by the weighted average number of ordinary shares outstanding
during the period.
$’000
Unaudited
30 Nov 2018
Unaudited
30 Nov 2017
Profit after tax ($’000)1,25242,521
Weighted average number of ordinary shares
outstanding ('000s)604,359604,359
Basic earnings per share (cents per share)0.27.0
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. As at 30 November 2018 there were 2,730,772
shares with a dilutive effect (30 Nov 2017: 1,820,515).
$’000
Unaudited
30 Nov 2018
Unaudited
30 Nov 2017
Profit after tax ($’000)1,25242,521
Diluted weighted average number of ordinary shares
outstanding ('000s)605,546605,047
Diluted earnings per share (cents per share)0.27.0
4.3. Borrowings
$’000
Unaudited
30 Nov 2018
Audited
31 May 2018
Secured
Bank loans201,779163,283
Capitalised loan costs(946)(413)
Finance leases6,1475,841
Total borrowings206,980168,711
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018

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4.3. Borrowings (Continued)
Financing arrangements
At 30 November 2018, the Group held committed bank facilities with drawings
as follows:
Unaudited 30 Nov 2018Audited 31 May 2018
$’000CommittedDrawnCommittedDrawn
General Corporate Facility135,00083,26975,00062,157
Development Facility215,000118,510160,000101,126
Total350,000201,779235,000163,283
The Group’s revolving Development Facility is utilised to cover costs associated
with current development projects. The revolving General Corporate Facility
is used for general corporate purposes as well as to fund the acquisition
of development land and consent costs for projects not currently funded by the
Development Facility.
Interest on the General Corporate Facility is typically payable quarterly. Interest
on the Development Facility is capitalised and repaid together
with principal using the ORA licence proceeds received upon settlement of
initial sales of newly developed units and care suites. Line fees are payable
quarterly on the committed General Corporate Facility and the Committed
Development Facility.
The Group increased its borrowing limits on 6 July 2018 to $135m (31 May
2018: $75m) for the General Corporate Facility and $215m (31 May 2018:
$160m) for the Development Facility and extended both facilities to July 2023.
Finance lease
Finance lease liabilities relate to the lease of various equipment and motor
vehicles and are effectively secured as the rights to the leased asset revert to
the lessor in the event of default.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
5. Other Disclosures
5.1. Income Tax
$’000
Unaudited
30 Nov 2018
Unaudited
30 Nov 2017
Income tax (benefit) / expense
Current tax--
Deferred tax(4,507)1,890
(4,507)1,890
Taxation expense is calculated as follows:
(Loss) / profit before income tax(3,255)44,411
Tax at the New Zealand tax rate of 28% (911)12,435
Adjusted by the tax effect of:
Non-deductible expenditure6888
Capitalised interest deductible for tax(739)(259)
Taxable deferred management fees630-
Non-assessable revaluation of investment property(455)(9,561)
Taxable depreciation(1,573)(1,862)
Accounting depreciation1,2231,084
Non-deductable impairment / (reversal of non-
deductable impairment) of fixed asset1,585(313)
Adjustment for timing difference of provisions(333)(92)
Other--
Losses not recognised / (utilised)505(1,520)
Current tax expense
--
Impact of movements in investment property787(1,098)
Impact of movements in property, plant and equipment 1,1421,311
Other adjustments332157
Deferred management fees(630)-
Prior period adjustment: treatment of DMF income(6,138)-
Losses derecognised-1,520
Deferred tax (benefit) / expense(4,507)1,890
Income tax (benefit) / expense (4,507)1,890
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018

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5.1. Income Tax (Continued)
Movement in the deferred tax balance
$’000
Balance

1 June 2018
(audited)
Recognised in
Consolidated
Statement of
Comprehensive
Income
Recognised
in Other
Comprehensive
Income
Balance

30 Nov 2018
(unaudited)
Investment property(9,624)(787)-(10,411)
Property, plant and equipment(18,470)(1,142)(2,834)(22,446)
Provisions and other assets / liabilities4,759(332)(27)4,400
DMF revenue in advance-6,768-6,768
Tax losses----
Deferred tax liabilities
(23,335)4,507(2,861)(21,689)
$’000
Balance

1 June 2017
(audited)
Recognised in
Consolidated
Statement of

Comprehensive
Income
Recognised
in Other
Comprehensive
Income
Balance

31 May 2018
(audited)
Investment property(12,179)2,555-(9,624)
Property, plant and equipment(19,126)358298(18,470)
Provisions and other assets / liabilities4,158522794,759
DMF revenue in advance----
Tax losses2,339(2,339)--
Deferred tax liabilities
(24,808)1,096377(23,335)
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
5.1. Income Tax (Continued)
Recognition and measurement
No income tax was paid or payable during the period (30 November 2017: nil).
Key accounting judgements
(i) Deferred tax on investment property
Deferred tax on investment property is assessed on the basis that the asset
value will be realised through use (“Held for Use”). This is a key accounting
judgement. Refer to the 31 May 2018 consolidated annual financial statements
for details.
(ii) Recognition of DMF
The interpretation of NZ tax laws in relation to DMF involves significant
judgements and uncertainty. As at 31 May 2018, the Group recognised DMF
for tax purposes in a manner consistent with the revenue recognition policy.
As explained in the 31 May 2018 consolidated annual financial statements, the
Inland Revenue was disputing the tax treatment adopted by the Group in
respect of the 2016 income year.
During October 2018, the Group obtained a binding ruling from the IRD,
applicable for ORAs entered into after 1 June 2018 with certain revisions to
the DMF term. Pursuant to this ruling DMF revenue is recognised as derived
on the exit of a unit or care suite by a resident. On 20 November 2018, as a
result of the binding ruling and associated certainty of the tax position going
forward, the Group resolved the dispute with the IRD. The Group have included
an adjustment in the 31 May 2018 tax return to recognise tax on deferred
management fees in accordance with the contractual term of the resident’s
ORA as opposed to the average expected occupancy for the relevant
accommodation.
This resulted in the recognition of a tax liability of $6.1m, being the tax effect
of the cumulative difference between the two treatments of $21.9m. This was
fully met by the application of $21.9m of the $64.6m available tax losses that
had not previously been recognised on this Consolidated Balance Sheet.
A corresponding deferred tax asset of $6.1m was recognised at this point for
tax paid on DMF revenue in advance of its accounting recognition. A movement
of $0.6m has been recognised in the six month period resulting in a closing
deferred tax asset of $6.7m in respect of DMF revenue.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018

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5.1. Income Tax (Continued)
(iii) Recognition of tax losses
The Company and its subsidiaries exited the former OHHL tax consolidated
group from 31 May 2015. All tax losses incurred by the Company and its
subsidiaries until 31 May 2015 remain within the tax consolidated group
(of which OHHL is the sole member).
On 5 September 2018 the Group forfeited all losses generated prior to IPO
as a result of the sale of 15.56% of OHHL’s shareholding in the Company
(refer note 4.1).
The Group utilised $21.9m of losses to offset additional tax liabilities due
following the change in recognition of DMF revenue noted above. Following
the utilisation, forfeit and inclusion of losses generated in the 2019 interim
period, the Group has an estimated $26.2m (31 May 2018: $64.6m) of available
tax losses at 30 November 2018.
As the timeframe for any further forfeiture of losses is uncertain no tax losses
have been recognised as at 30 November 2018 (31 May 2018: nil).
5.2. New Accounting Standards
(a) New and amended standards adopted by the Group
In the current year, the Group adopted all mandatory new and amended
standards and interpretations, including:
NZ IFRS 9, Financial Instruments (“NZ IFRS 9”) (effective for the Group from
1 June 2018)
The standard addresses the classification, measurement and recognition of
financial assets (cash, trade receivables and sundry receivables) and financial
liabilities, the impairment of financial assets and hedge accounting.
In summary:
(i) Classification and measurement – Financial assets are required to be
classified into two measurement categories: those measured at fair value
and those measured at amortised cost. The determination is made at initial
recognition. The classification depends on the entity's business model
for managing its financial instruments and the contractual cash flow
characteristics of the instrument. For financial liabilities, the standard retains
most of the NZ IAS 39 Financial Instruments: Recognition and Measurement
(“NZ IAS 39”) requirements. Trade receivables are amounts due from
residents and various government agencies held to collect contractual cash
flows in the ordinary course of business. These balances shall continue to be
held at amortised cost less a provision for impairment.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
5.2. New Accounting Standards (Continued)
(ii) Impairment – The expected credit loss model for impairment of financial
assets replaces the incurred loss model used in NZ IAS 39. The Group
has applied the simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade receivables and
requires recognition from initial recognition of the trade receivables.
To measure expected credit losses, trade receivables have been grouped
and reviewed on the basis of number of days since resident departure and
the funding stream, type of debtor. Judgement is used in selecting the
inputs to the impairment calculation and is based on past history and
forward looking assumptions. Application of the NZ IFRS 9 impairment
model has not had a material impact on the carrying value of expected
credit losses. No material impact was noted with respect to the opening
provision therefore no adjustments have been made to opening balances.
(iii) Hedge accounting – The rules on hedge accounting have been amended to
align accounting treatment with risk management practices of the reporting
entity. The Group have elected to continue to apply the hedge accounting
requirements of NZ IAS 39 to existing hedge instruments on transition.
NZ IFRS 9 will require several new disclosures with respect to credit risk,
expected credit losses and hedge accounting, from the point of time that
new hedge arrangements are entered into.
NZ IFRS 15, Revenue from contracts with customers (“NZ IFRS 15”) (effective
for the Group from 1 June 2018)
The Group have determined that NZ IFRS 15 has not resulted in a change
to either recognition or measurement of revenue and therefore there is no
requirement to restate revenue reported in prior periods. The Group will
continue to recognise each of care fees, village service fees and rental
income in line with the date that the service is rendered.
The following are noted in relation to the main revenue streams:
(i) Deferred management fees – A contract is in place with all village residents
by means of an ORA, which gives the residents the right to occupy a unit.
This type of arrangement is considered a lease under NZ IAS 17 Leases and
NZ IFRS 16 Leases after its adoption and is excluded from the scope of NZ
IFRS 15. There is no change to the recognition or measurement of deferred
management fee revenue from ORA. Deferred management fee revenue
continues to be recognised on a straight-line basis over the greater of the
term specified in a resident’s ORA and the average expected occupancy
for the relevant accommodation.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018

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5.2. New Accounting Standards (Continued)
(ii) Rest home, hospital and dementia fees – A contract is in place with all care
residents by means of an admission agreement. The resident receives the
benefit as the daily care is administered and each resident incurs an agreed
upon contracted daily care fee. Rest home, hospital and dementia service
fees are recognised in the accounting period in which the services are
rendered and are specifically linked to the day the service is delivered.
(iii) Village service fees – Village service fees are charged to residents to
recover village operating costs. A contract is in place with all village
residents by means of an ORA. The resident receives the benefit of service
as they occupy the accommodation and have a contracted agreed weekly
fee. Village service fees are recognised in the accounting period in which
the services are rendered and are specifically linked to the day the service
is delivered.
(iv) Rental income – Contracts are in place with all rental residents in the form
of rental agreements which detail the relevant weekly / monthly rental fee.
Rental agreements to occupy and accommodation are considered a lease
under NZ IAS 17 Leases and NZ IFRS 16 Leases after its adoption and are
excluded from the scope of NZ IFRS 15. The resident receives the benefit
as they occupy the accommodation and revenue shall continue to be
recognised on a straight-line basis.
(b) Standards, amendments and interpretations to existing
standards that are not yet effective and have not been early
adopted by the Group
The following relevant standard has not been early adopted by the Group
but is to be adopted from 1 June 2019 which is the Group’s mandatory
adoption date.
NZ IFRS 16, Leases (“NZ IFRS 16”) (effective for the Group from 1 June 2019)
NZ IFRS 16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases. The objective of the standard is to
ensure that lessees and lessors provide relevant information in a manner that
faithfully represents those transactions.
The standard does not change the accounting treatment from the perspective
of lessors and the Group does not expect a change in recognition of rental and
DMF income.
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
Notes to the Financial Statements (Continued)
For the six months ended 30 November 2018
5.2. New Accounting Standards (Continued)
The standard requires a lessee to recognise a lease liability on the balance
sheet reflecting the future lease payments and a right-of-use asset for all lease
contracts except those which are of low value or short term. This standard
will affect primarily the accounting of the Group’s operating leases. As at
30 November 2018 the Group had non-cancellable operating lease
commitments of $13.8m. Many of the Group’s leases relate to leases of low
value assets, however, the Group currently leases three care facility sites and
the impact of recognising these properties on balance sheet will be material
to the Group.
The Group has commenced the process of estimating the impact of NZ IFRS 16
with respect to those lease contracts which extend beyond 1 June 2019. Work
has focused on the identification and understanding of the provisions of the
standard which will most impact the Group, discount rate determination and
the review of system requirements. A lease management system has been
implemented and all current leases have been loaded to establish the financial
impact of adoption.
The adoption of NZ IFRS 16 will have no effect on the Group’s cashflow and the
change is for financial reporting purposes only. The Group has chosen to not
early adopt the standard to allow further time to fully understand the impact
and determine which transition approach to apply.
5.3 Contingencies and Commitments
At 30 November 2018, the Group had no contingent liabilities or assets
(31 May 2018: nil).
At 30 November 2018, the Group has a number of commitments to develop
and construct certain facilities totalling $91.2m (31 May 2018: $104.6m).
5.4 Events After Balance Date
Dividends
On 25 January 2019 an interim dividend of 2.1 cents per share (not imputed)
was declared and will be paid on 18 February 2019. The record date for
entitlement is 11 February 2019.
There have been no other significant events after balance date.

Independent Review Report (Continued)
To the shareholders of Oceania Healthcare Limited
Independent Review Report
To the shareholders of Oceania Healthcare Limited
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Report on the consolidated interim financial statements
We have reviewed the accompanying consolidated interim financial statements of
Oceania Healthcare Limited (the Company) including its subsidiaries (together, the
Group) on pages 15 to 49 which comprise the consolidated balance sheet as at
30 November 2018, and the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated cash flow
statement for the six months ended on that date, and a summary of significant
accounting policies and selected explanatory notes.
Directors’ responsibility for the consolidated interim financial
statements
The Directors are responsible on behalf of the Company for the preparation and
presentation of these consolidated interim financial statements in accordance with
International Accounting Standard 34 Interim Financial Reporting (IAS 34) and
New Zealand Equivalent to International Accounting Standard 34 Interim Financial
Reporting (NZ IAS 34) and for such internal control as the Directors determine is
necessary to enable the preparation of consolidated interim financial statements that
are free from material misstatement, whether due to fraud or error.
Our responsibility
Our responsibility is to express a conclusion on the accompanying consolidated
interim financial statements based on our review. We conducted our review in
accordance with the New Zealand Standard on Review Engagements 2410 Review of
Financial Statements Performed by the Independent Auditor of the Entity (NZ SRE
2410). NZ SRE 2410 requires us to conclude whether anything has come to our
attention that causes us to believe that the consolidated interim financial statements,
taken as a whole, are not prepared in all material respects, in accordance with IAS 34
and NZ IAS 34. As the auditors of the Company, NZ SRE 2410 requires that we
comply with the ethical requirements relevant to the audit of the annual financial
statements.
A review of consolidated interim financial statements in accordance with NZ SRE
2410 is a limited assurance engagement. The auditor performs procedures, primarily
consisting of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. The
procedures performed in a review are substantially less than those performed in an
audit conducted in accordance with International Standards on Auditing (New
Zealand) and International Standards on Auditing. Accordingly, we do not express an
audit opinion on these consolidated interim financial statements.
We are independent of the Group. Our firm carries out other assurance services for
the Group in the areas of trustee reporting and tax advisory. The provision of these
other services has not impaired our independence as auditor of the Group.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that
these consolidated interim financial statements of the Group are not prepared, in all
material respects, in accordance with IAS 34 and NZ IAS 34.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our review
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 our review 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 shareholders, as a body, for our review
procedures, for this report, or for the conclusion we have formed.
For and on behalf of:
Chartered Accountants Auckland
25 January 2019

Notes
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oceaniahealthcare.co.nz

---

MEDIA RELEASE
25 January 2019
Oceania Healthcare grows profit for the six months ended
30 November 2018

Highlights
• Underlying net profit after tax of $20.9m representing a 5.3% increase over the prior
corresponding period. Continuing business operations increased underlying net
profit after tax by 8.7% over this same period.
• Total comprehensive income attributable to shareholders of $19.5m delivered during
the period, driven by the completion of new care developments, revaluations and
conversions of care suites.
• Operating cashflow improved from $17.1m to $47.1m (175.9%) with $43.5m of sales
proceeds from our developments completed earlier in 2018, an increase of 287.8%.
• Total assets increased by $209.7m over the prior corresponding period to $1.2bn
due to significant development capital expenditure, acquisition of land adjoining
existing sites and revaluations.
• First stage of The BayView (Tauranga) delivered on time and on budget. Premium
aged care facility comprising 81 Care Suites with 60 rooms already occupied by
residents transferring from old facility, opening the way for Stage 2 (74 independent
living units and new community centre) which commenced in December 2018.
• All apartments at Meadowbank Stage 3 now sold or under application.
• Development programme across other key sites continuing to accelerate with 587
units and care suites now under construction across nine projects.
• Strong increase in aged care occupancy levels across the Group; 92.0% occupancy
recorded as at 30 November 2018 at care homes that are not impacted by our
redevelopment activity (up from 89.9% in prior corresponding period).
• Winner of Excellence in Food and Innovative Service Delivery categories at New
Zealand Aged Care Association annual awards.
• Significant increase in pay for Registered Nurses to reflect DHB settlement and
retain key staff.
• Interim dividend per share announced of 2.1 cents per share (not imputed) payable
on 18 February 2019.

$’m

Growth

Nov 2018
$m
Nov 2017
*

$m
$m %
Operating Revenue 96.4 92.1 4.3 4.7%
Underlying NPAT 20.9 19.9 1.0 5.3%
Underlying NPAT – continuing
operations*
20.5 18.8 1.7 8.7%
Total Comprehensive Income 19.5 42.9 (23.4) (54.5)%
Reported NPAT 1.3 42.5 (41.3) (97.1)%
Total Assets 1,208.8 999.1 209.7 21.0%
Operating Cashflow 47.1 17.1 30.0 175.9%

*Underlying NPAT – continuing operations contains a proforma adjustment that excludes divested site earnings in both
1HY2019 and 1HY2018. Sites were divested in 1HY2019.

Earl Gasparich, Chief Executive Officer, commented:
We have delivered a strong result for the first half of the year with 8.7% growth achieved
across our continuing business operations reflecting increases in deferred management fees
from our Village business and realised development gains from sites completed earlier in the
year.
In accordance with our strategy for our aged care business, we converted a number of care
rooms into premium care suites over the period. These conversions, as well as the
completion of the new care suite facility at The BayView (Tauranga) and increase in
revaluations of our existing care suites, sites, increased total comprehensive income
attributable to shareholders to $19.5m during the period. Due to the classification of our
care facilities in the financial statements as property, plant and equipment rather than
investment property, these increases in valuation are not recorded in our statutory reported
profit.
Underlying net profit after tax attributable to our Retirement Village business increased by
$5.4m or 32.9% in the period due to the sale of new units completed earlier in the year, as
well as the continuation of strong resale margins for existing independent living units
(30.3%). Sales at our Meadowbank Village have been particularly strong, with all 62
apartments in Stage 3 now either sold or under application, less than a year since this stage
was completed.
We have focused heavily on generating higher revenues in our Care business through
occupancy and premium room charges given the increase in operating costs particularly

staff costs associated with the equal pay settlement and registered Nurse pay rates.
Occupancy across our non-development sites has increased materially over the six-month
period and across all sites is now 92.0%. This has been driven by site refurbishments
including conversion of standard beds to Care Suites and our new operational management
structure put in place earlier this year. We are continually enhancing our service delivery
and once again achieved recognition for our industry-leading care offering by winning both
the Excellence in Food and Innovative Service Delivery categories at New Zealand Aged
Care Association annual awards.
Operating cashflow was particularly strong over the period, increasing from $17.1m to
$47.1m (175.9%) with sales proceeds from our developments completed earlier in 2018
contributing $43.5m, which represents an increase of 287.7% compared to the prior
corresponding period. Our total assets are now $1.2bn given that significant development
capital expenditure, as well as the acquisition of land adjoining existing sites and
revaluations.
While our developments are funded from our bank facilities that we increased and extended
earlier in the year to July 2023, our net debt of $197.3m as at 30 November 2018 represents
a prudent gearing level of 26.7% (net debt to net debt plus equity).
We continue to deliver all of the development projects in our pipeline on time and on budget,
an excellent achievement in the current construction market. This is testimony to our highly
skilled and experienced internal project management team and the quality of our designs.
As well as completing Stage 1 of The BayView in Tauranga (81 Care Suites) in October this
year, we are well on track to complete The Sands (Browns Bay, Auckland) and
Meadowbank Stage 4 (Auckland) by the end of the current financial year, followed shortly
thereafter by Stage 1 of Trevellyn (Hamilton) comprising 90 Care Suites. With Green
Gables (Nelson) progressing well and on track to be completed in the 2020 financial year,
Stage 2 of The BayView (74 apartments and new community centre) now commenced and
Windermere (71 Care Suites, 22 apartments, and new community centre) also underway in
January 2019, we have 587 units and beds under construction throughout the country.
We have also recently obtained new resource consents for the development of a new 142
care suite home at Elmwood Village (The Gardens, Auckland), and the expansion of
Eversley (Hastings) and Eden Villages (Auckland). Of the 2,065 beds and units in our total
development pipeline, 73.4% already has resource consents in place, considerably reducing
the risk associated with delivery of this new product over the next six years.
In the second half of the year we will complete The Sands and Meadowbank Stage 4
developments, continue the conversion of standard rooms to Care Suites and drive higher
occupancy levels across our Care portfolio. We have already received presale applications
for 13 apartments at The Sands with strong pricing that reflects the high quality of the
product. We will also continue to roll out our new Clinical Information System after a
successful pilot in Auckland and of course rollout our new, higher care service delivery
standards across all premium facilities.

On behalf of the Board, Oceania Chair Liz Coutts confirmed that an interim dividend of 2.1
cents per share (not imputed) would be paid to shareholders on 18 February 2019. This
dividend reflects Oceania’s steady earnings and cash flow and is in line with the Board
policy.
ENDS

For all media enquiries, please contact Miriam Carter of Oceania Healthcare on (09) 361 0350.
Oceania Healthcare Limited is New Zealand’s third largest residential aged care provider and sixth largest
retirement village operator. Oceania Healthcare has a total of 3,668 beds, suites and units located at 46 sites in
the North and South Islands.
This release should be read in conjunction with the Financial Statements contained within the Interim Report.

---

1
Underlying profit is a non GAAP measure. Underlying profit determines the dividend payout
to shareholders, and a reconciliation to reported profit is included in note 2.1 in the interim
financial statements attached to this release.
Oceania Healthcare Limited
Results for announcement to the market

Reporting Period 6 months to 30 November 2018
Previous Reporting
Period
6 months to 30 November 2017

Amount (000s) Percentage change
Revenue from ordinary
activities
$NZ 96,415 4.7%
Change in fair value of
investment properties
$NZ 1,624 (95.2)%
Total Revenue $NZ 98,038 (22.4)%
Underlying Net Profit
After Tax
1

$NZ 20,942 5.3%
Reported Net Profit
(loss) from ordinary
activities after tax
attributable to security
holder
$NZ 1,252 (97.1)%
Reported Net Profit
(loss) attributable to
security holders
$NZ 1,252 (97.1)%
Reported Total
Comprehensive Income
$NZ 19,512 (54.5)%

Final Dividend Amount per security Imputed amount per
security
$NZ 0.0210 $NZ 0.0000

Record Date 11 February 2019
Dividend Payment Date 18 February 2019

30 November 2018 30 November 2017
Net tangible assets per
security
$NZ 0.86 $NZ 0.81

Comments: A brief Please refer to other attached documents (unaudited
consolidated financial statements and interim report,
media release and results presentation).

m

The fi

---

APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumber
Date
Nature of event
BonusIf ticked,
Rights Issue
Tick as appropriate
Issue
state whether:Taxable
/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change
a
whether:
Interim
a
YearSpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per security
Payment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
Supplementary
Amount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceWithholding Tax(Give details)
Foreign
FDP Credits
Withholding Tax(Give details)
Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
EMAIL: announce@nzx.com
Notice of event affecting securities
Oceania Healthcare Limited (OCA)
Anna ThorburnDirectors Resolution
+ 64 9 213 102225012019
Ordinary SharesNZOCAE0002S0
NA
In dollars and cents
Interim Dividend ex Retained Earnings
$0.021
Enter N/A if not
applicable
NA$0.006930NA
NANA
New Zealand DollarsNA
NZD$12,815,345
Date Payable
NA
11 February, 201918 February, 2019
NANA

---

22

3
STRICTLY CONFIDENTIAL
3
The BayView,

4

5
●
●
●
●
●
●
●
●
●
●

6
●
●
●
●
●
●
●
●
●

7

8
STRICTLY CONFIDENTIAL
3

9

10
1. Refer to glossary

11
1. Lost time injury frequency measures the average number of injuries for the workforce for every one million hours worked inthe previous 12 month period

12

13

14
1. Average occupancy at care homes not affected by redevelopment activity in the period

15

16
STRICTLY CONFIDENTIAL
3

17
⚫Stage 1 new care facility (81 care suites) at
The BayView(formerly Melrose)
commissioned in December 2018.
⚫Stage 4 at Meadowbank(34 care suites, 49
apartments) on trackfor completion in
FY2019
⚫The Sands (44 care suites, 64 apartments)on
trackfor completion in FY2019
⚫Green Gables (61 care suites and 28
apartments) commenced in June 2018
⚫Resource consent obtained for 61 care suites
at Eversley in Hawkes Bay
⚫Stage 1 at Elmwood (142 care suites) received
resource consent
⚫A new dementia unit at Meadowbank(Stage
6, 36 care suites) received resource consent
⚫Windermere Stage 1 (71 care suites and 22
apartments)commenced in January 2019
⚫Stage 2 at The BayView(74 apartments)
commenced in December 2018
⚫Gracelands Stage 1 (17 villas) commenced in
January 2019
⚫7villas at Whitiangacommenced in January
2019
⚫Stage 5 at Meadowbank(26 apartments)
commenced January 2019

18
●
●
●
●

19

20

21

22

23

24
1. Median house price calculated using data from sales within 2.0km radius of the Windermere Village, 3+ bedrooms, over 150 square meters

2525

26

27
1. The fair value of investment property includes a fair value movement of $4.5m in relation to the right to use asset at EverilOrr. The contribution to DMF is $0.3m.This is offset by the rental expenses of $4.8m.
⚫
⚫
⚫
⚫
⚫
⚫

28
1. Other is an aggregation of line items that are individually less than $2.0m and includes: Impairment of goodwill; Gain on Sale/Loss on disposal of chattels at decommissioned
sites; DMF in relation to right to use asset; See note 2.1 of the interim financial statements for a further detail.
2. Rental expense of $4.8m relates to the right to use asset at Everil Orr village.
⚫
⚫
⚫
⚫
⚫

29
⚫
⚫
⚫
⚫

30
⚫
⚫
⚫

31
1. Note Care Suite DMF is included in the Care segment but is also presented here to provide an aggregate view of DMF for theGroup.
Villa and Apartment DMF of $8.6m in 1HY2019 excludes $309k of DMF revenue at Everil Orr.
⚫
⚫
⚫

32
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
0
10
20
30
40
50
60
70
1HY20151HY20161HY20171HY20181HY2019
VillaApartmentCare SuiteDevelopment Margin
⚫
⚫
⚫
⚫

33
⚫
⚫
⚫

34
⚫
▬
⚫
▬

35
1. Calculated as the current/estimated sale or resale price of all units/care suites as determined by CBRE. The FY2018 and FY2017 have been adjusted for the divestment of Dunblane Village. 2. The value of
unsold stock represents the sales prices of units/care suites which are not under contract, as they either newly constructed or have been bought-back from the previous outgoing residents.
⚫
⚫
⚫
̶
̶
⚫
495.4604.8
(33.6)(91.8)
(279.7)(312.4)
equals: Embedded value

36
311
341
286
368
504
440
683
943
772
188
211
154
186
263
1HY20151HY20161HY20171HY20181HY2019
VillaApartmentCare Suite
⚫
⚫
⚫
⚫
⚫
27
12
15
9
17
14
14
7
24
13
15
10
7
24
10.3%
18.4%
15.1%
36.4%
29.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
0
10
20
30
40
50
60
70
1HY20151HY20161HY20171HY20181HY2019
VillaApartmentCare SuiteDevelopment Margin

37
●
●
1. Refer to Note 4.3 in the interim financial statements. Includes capitalised loan costs.

38
1. No independent valuation was undertaken with respect to the PPE as at 1HY2019 and FYFY2018.
CBRE performed a valuation of our care suites as at 31 October 2018. Management performed a roll
forward for settlements in the month of November.
NZ$m
⚫
⚫
⚫
NZ$m

39
NZ$m
1HY20172HY20171HY20182HY20181HY2019
Development capital expenditureLand acquisitions

40
⚫
⚫
⚫
1. The $73.7m of receipts from new ORAs comprises $43.5m of sales proceeds from first time sales
2. The $35.4m of payments for outgoing ORAs comprises $2.9m of development buybacks

41
⚫
⚫
⚫

42
⚫
⚫
⚫
⚫

4343

44
7832,728
305940
1,0883,668
1,2592,065
(108)(648)
-(21)
1,1511,396
2,2395,064
1.Comprising 43 operating villages and 3 undeveloped sites. Facility numbers as at 30 November 2018.
2.Current and planned developments
3.Includes 408care studios which may be initially sold with a PAC, and may subsequently be sold under an ORA

45
1
Recognised leaderin
clinical care
Attractive
demographic trends
and industry structure
–especially in the
care segment
Highly cashflow and
value accretive
brownfield development
projects in key urban
locations
Establishedcorporate
platformwith strong
governance
Clear growth strategy
in aged care
2
4
Growing development
track recordand
capability
3
5
6

46
⚫Total dividend declared of 2.10 cps for
1HY2019. 4.3% yield (gross) based on
share price of $1.10 (as at 22 January
2019) and dividends paid during FY2019
⚫Robust cash generation from:
―stable “needs-based” care service
―“annuity-like” DMF earnings from
mature village portfolio
Increase in portfoliofrom
~3,700 to 5,100 units as brownfields
sites redeveloped over
approximately 7 years
Transformation of care portfolio
through premium chargingand
care suitemodel (change from
34% at FY2018 of beds to 68%) over
this period
Development cashflowsfrom
existing brownfields landbank -73%
already consented
Trail incomefrom care earnings
and DMFfrom developments

47
⚫Aged care is a difficult business to replicate –
there are significant barriers to entry
⚫Residential aged care homes require MoH
certification in order to receive government
funding (and are regularly audited by MoH)
⚫Processes, systems and well-trained staff are
required to achieve scale, maintain high
standards of service delivery and comply with
regulatory requirements
⚫Funding contracts and relationships with DHBs
⚫Care revenue and cash flows are stable
⚫Governments have funded increases to the
sector at greater than CPI over the last
decade
⚫Aged care services are “needs based” -
demand is less affected by residential house
prices and economic cycles
⚫Providing a “continuum of care” on site allows
residents to age in place, which is a key
attraction to residents and their families when
choosing a retirement village

48

49

50
83
26
36
108
74
161
90
134
89
93
46
120
137
17
33
7
11
48
61
142

51
⚫We have a highly experienced in-house development team
with a proven track record of delivering projects on time and
budget
⚫Our philosophy is based on “ownership” of what we do all the
way from design, master planning, consenting, design
management, procurement, construction management, quality
control and after care
⚫Our development margins have increased over time. We are
targeting an average range of 15-25% over the entire pipeline
CY2018

52
●
●
●
●
●

53
●
Eden
Auckland

54

55
1HY20141HY20151HY20161HY20171HY20181HY2019
Villa
302736313224
Apartment
14162820128
Care Suite
42826322547
Total487190836979
Resales Margin18.3%22.1%24.7%25.4%28.4%23.4%
1HY20141HY20151HY20161HY20171HY20181HY2019
Villa6271215917
Apartment1714140724
Care Suite7131510724
Total305441252365
Development Margin
12.6%10.3%18.4%15.1%36.4%29.5%
1HY20141HY20151HY20161HY20171HY20181HY2019
Villa61,36378,352100,190112,506127,926148,958
Apartment32,92975,99469,05099,34596,54275,875
Care Suite17,50020,56322,71229,81856,48037,606
Total49,41555,03068,11977,45596,58275,310

56

57
1. Net Buybacks is the difference between the gross ORA payments made in relation to units bought back (and not resold) during the year and the gross ORA receipts from units resold during the year that
were bought back in prior financial years

58
Underlying Profit is a non-GAAP measure used by the Group to monitor financial
performance and is a consideration in determining dividend distributions. Underlying
profit measures require a methodology and a number of estimates to be approved by
Directors in their preparation. Both the methodology and the estimates may differ
among companies in the retirement village sector that report underlying financial
measures. Underlying profit is a measure of financial performance and does not
represent business cash flow generated during the period.
Oceania calculates Underlying Profit by making the following adjustments to Net Profit
after Tax:
•Removing the change in fair value of investment properties (including right to use
investment property assets) and any impairment or reversal of impairment of
property, plant and equipment;
•Removing any impairment of goodwill;
•Removing any gains or loses from the sale or decommissioning of assets;
•Removing any DMF income and rental expenditure in relation to right to use
investment property assets;
•Adding back the Directors’ estimate of realised gains on resale of occupation right
agreement units and care suites ;
•Adding back the Directors’ estimate of realised development margin on first sale of
new ORA units or care suites following the development, or conversion of an existing
care bed to a care site or conversion of a rental unit to an ORA Unit; and
•Adding back the deferred taxation component of taxation expense so that only
current tax expense is reflected.
Directors’ estimate of realised gains on resales of ORA units and care suites (i.e. the
difference between the incoming residents ORA licence payment and the ORA licence
payment previously received from the outgoing resident)is calculated as the net cash
flow received, and receivable, at the point that the ORA contract becomes
unconditional and has either ‘cooled off’ or where the resident is in occupation at
balance date.
The Directors’ estimate of realised development margin is calculated as the cash
received, and receivable, in relation to the first sale of new ORA units and care suites, at
the point that the ORA contract becomes unconditional and has either ‘cooled off’ or
where the resident is in occupation at balance date, less the development costs
associated with developing the ORA units and care suites.
•Construction costs directly attributable to the relevant project, including any
required infrastructure (e.g. roading) and amenities related to the units (e.g.
landscaping) as well as any demolition and site preparation costs associated with
the project. The costs are apportioned between the ORA units and care suites, in
aggregate, using estimates provided by the project quantity surveyor. The
construction costs for the individual ORA units or care suites sold are determined on a
pro-rated basis using gross floor areas of the ORA units and care suites;
•An apportionment of land valued based on the gross floor area of the ORA units and
care suites developed. The value for Brownfield development land is the estimated
fair value of land at the time a change of use occurred (from operating as a care
facility or retirement village to a development site), as assessed by an external
independent valuer. Greenfield development land is valued at historical cost; and
•Capitalised interest costs to the date of project completion apportioned using the
gross floor area of ORA units and care suites developed.
Development costs do not include:
•Construction, land (apportioned on a gross floor area basis) and interest costs
associated with common areas and amenities or any operational or administrative
areas.
The Directors’ estimate of development margin for conversions of care beds to care
suites and rental units to ORAs is calculated based on the difference between the ORA
licence payment received on the settlement of sales of newly converted ORA units and
care suites and the associated conversion costs. Conversion costs comprise:
•In the case of conversion of care beds to care suites, the actual refurbishment costs
incurred; and
•In the case of conversions of rental units to ORA units, the actual refurbishment costs
incurred and the fair value of the rental unit prior to conversion.

59
A room or studio certified for the provision of care by the Ministry of
Health which has been licensed under an ORA
Deferred management fees, charged under an ORA, which accrue to a
specified maximum and are deducted from the refund paid to the
departing resident upon resale of the unit or care suite. These are in
consideration for the right to use communal facilities etc over the entire
length of stay.
Held for sale
Independent living units (villas and apartments) sold under an
Occupation Right Agreement
Investment Property
Ministry of Health
A globally recognised metric for measuring customer satisfaction, the Net
Promoter Score system is designed to gauge customers’ willingness to
recommend a product or service to others.
An occupation right agreement that confers on a resident the right to
occupy a unit or care suite subject to certain terms and conditions set out
in the agreement
Premium accommodation charge on a care bed for accommodation
provided above the mandated minimum
Property, Plant and Equipment
Resale gain, as included in the definition of underlying profit, divided by
the ORA licence payment previously received from the outgoing resident
Includes independent villas and apartments
Work in progress

60
This presentation has been prepared solely by Oceania Healthcare Limited
("Oceania"). You must read this disclaimer before making any use of this presentation
and the accompanying material or any information contained in it ("Document").
The presentation includes non-GAAP financial measures for development sales and
resales which assist the reader with understanding the volumes of units settled during
the period and the impact that development sales and resales during the period had
on occupancy as at the end of the period.
The addition of totals and subtotal within tables and percentage movements may
differ due to rounding.
The information set out in this Document is an overview and does not contain all
information necessary to make an investment decision. It is intended to constitute a
summary of certain information relating to the performance of Oceania for the period
ending 30 November 2018. Please refer to the Financial Statements for the period
ended 30 November 2018 that have been released along with this presentation.
The information in this presentation does not purport to be a complete description of
Oceania. In making investment decisions, investors must rely on their own examination
of Oceania, including the merits and risks involved. Investors should consult their own
legal, tax and/or financial advisors in connection with any acquisition of financial
products.
The information contained in this presentation has been prepared in good faith by
Oceania. No representation or warranty, expressed or implied, is made to the
accuracy, adequacy or reliability of any statements, estimates or opinions or other
information contained in this presentation, any of which may change without notice. To
the maximum extent permitted by law, Oceania, its directors, officers, employees and
agents disclaim all liability and responsibility (including without limitation any liability
arising from fault or negligence on the part of Oceania, its directors, officers,
employees and agents) for any direct or indirect loss or damage which may be
suffered by any person through the use of or reliance on anything contained in, or
omitted from, this presentation.
This presentation is not a product disclosure statement, prospectus, investment
statement or disclosure document, or an offer of shares for subscription, or sale, in any
jurisdiction.
Receipt of this Document and/or attendance at this presentation constitutes
acceptance of the terms set out above in this disclaimer.