Metlifecare : 18 October 2018 Annual Meeting Chair & CEO Addresses

It is my pleasure to report to you about Metlifecare's performance for the 2018 financial year and other matters. The company's focus on continued performance improvement resulted in us meeting our targets in all key areas, with strong results being achieved financially and operationally. This has enabled Metlifecare to lift the dividend to its shareholders as well as being well positioned for another solid performance in the coming year.

I will take the next few minutes to summarise Metlifecare's financial performance as well as providing some insight into the strategic areas that the Board has been giving the most attention to over the past year. Glen will follow with an overview of the company's operating performance and also take you through some of the key initiatives under way this year.

The Board was pleased to report a further improvement in our financial performance for the year, highlighted by a healthy underlying profit and underlying operating cash flow. The 7% increase in underlying profit was driven primarily by a 13% lift in realised resales gains and supported by a very creditable 27% development margin on the occupation right agreements for new homes settled during the year.

This result is especially satisfying in that it was achieved against a backdrop of Metlifecare repurchasing 44 homes during the year, to provide temporary accommodation for residents as we work through a number of regeneration and betterment projects. This initiative has effectively removed those homes from resales stock until the projects are complete. As most of the repurchasing took place in the first half, it contributed to a subdued interim result. However this was more than offset by a strong second half performance. Overall, the company achieved 7% higher resales volumes and an 8% average price uplift across the portfolio - a commendable outcome.

This operating result was also a demonstration of the competitiveness of our villages and our care offering. Continued demand across the portfolio was reflected in the high levels of village occupancy at 98% as well as the high resales margins the company is continuing to achieve. Care home occupancy at 95% was well above the industry average.

Our net reported profit of $125.1 million fell short of last year's result due to a lower rate of increase in the fair value movement of our property portfolio. While moderating house price growth has resulted in a more modest increase than last year, the value of our investment property still rose by 10%.

Our total assets are now valued at $3.3 billion. Net assets per share rose 8% to $6.93.

The Board was pleased to declare a final dividend of 6.75c per share. This took the total dividend to 10 cents for the full year, 24% higher than last year, thanks to the improvement in our underlying operating cash flow. This dividend has been calculated in the middle of our indicative payout range of 30 to 50% of underlying operating cash flow.

Delivering shareholder value is one of the board's core accountabilities, and here I will give you a brief reminder about Metlifecare's key value drivers, and how we are aiming to deliver sustained value growth in the future.

First, through profitable, targeted expansion. We have established the capability to increase both the rate and efficiency of our development programme. The improvements in our development volumes and realised development margins demonstrate this. While we set a relatively conservative margin hurdle of 15%, we are currently achieving well above this due to the development efficiencies that have been captured as well as the quality of our villages and sites.

Realised resales are the engine of our business, and our high realised resales gains reflect the strength of our village locations in quality residential areas. The strong ongoing demand for our villages has enabled Metlifecare to consistently outperform the market in price growth, and consequently to deliver a solid increase in underlying earnings and cash generation year on year.

Embedded value reflects the future cash that will be released by every home in our portfolio at resales time - being a combination of the unrealised resales gains and deferred management fees attributable to each home. Of the major listed retirement village operators, Metlifecare has the highest embedded value portfolio by some margin, on a per unit basis. This is due to the consistently high market values and solid long term average price growth of the homes in our villages.

The company's growth programme, with its three pillars of Accelerated Growth, Commercial Intensity, and Customer Experience has underpinned Metlifecare's value growth over the past two years. Glen will update you further about this in his address.

At Board level, we devote a considerable amount of our attention to the opportunities, risks and challenges facing the business. With management, we have established clear priorities and criteria, and all our decisions are considered against these. I'd like to briefly outline for you some of the key areas that we have focused on around the Board table this year, and that I believe, will continue to dominate our thinking.

• 1. We are investing in our people: Ours is a people-centric business, and we are clear that our success is dependent on relationships. With the need to attract and retain high-quality, skilled staff being stronger than ever, we are continuing to prioritise investment - particularly in learning and development, health and safety and providing a rewarding and enjoyable working environment. We believe this is starting to pay dividends - our metrics were strong this year including staff engagement and retention levels, and we were particularly pleased with the 96% satisfaction rating given to our staff by village residents.

• 2. We are setting new standards in care: One of the things the Board is most proud of, is how our care offering has developed over the past couple of years. With our resident-directed approach and homestead-style care homes, we now have a true point of difference in the market, and our audit results over the past year demonstrate the increase in the quality of care we're providing. We will continue to invest in the growth of our care business with the long-term aim of ensuring our villages are supported by a high-quality care offering.

3.

We are investing in growth:

• a. In our 'home' markets: As a Board, we are continually talking with management about how - and where - we can best invest in growth. We are the leader in two of New Zealand's fastest growing and most highly-valued regions, being Auckland and Tauranga. Management knows these areas well, and we back our ability to meet the needs of our customers there. We believe the fundamentals of these markets remain very solid with strong underlying cashflows and high embedded values, and we will continue to invest prudently in targeted suburbs that meet our investment criteria.

• b. Diversifying our land bank: Having built up a quality development land bank located primarily in the golden triangle, management is continuing to actively investigate nationwide opportunities that meet our strict investment criteria.

c.

Strengthened development capability: We have invested significantly in creating the in-house expertise and resources to deliver our development, maintenance and refurbishment programmes. The Board acknowledges that this was an area where the company had previously struggled to consistently perform. Metlifecare has now clearly demonstrated it can comfortably deliver 200+ quality homes and care beds per year and is well on track to achieve 300+ from 2020 onwards. Given our intention to continue securing quality land bank opportunities, we believe the build rate from 2020 is likely to increase year on year as the company continues to scale up.

4. We are investing in our existing villages: As part of the ongoing review of our village portfolio, Management has identified a range of opportunities to invest in protecting and enhancing the value and marketability of these assets. The Board fully supports this seven-year programme - we are taking a long-term view of our asset ownership, and our confidence in this approach already been reinforced by the value being captured to date from the projects at Pinesong and Coastal Villas.

• 5. Reviewing our debt structure: With growth momentum now well established, the Board and management have been working together to consider the best debt structure to support the next phase in our growth trajectory. While the company has support from our four banks to fund our current growth plans, we have also been contemplating the optimal way to fund future growth over the long term and will work through this with a view to communicating any such decisions to the market when we announce the half-year

• result in February 2019.

• 6. Our share price discount to value: Lastly, I want to briefly comment on our share price, which continues to be at a significant discount to the net tangible value of our assets. This is an ongoing source of frustration to us, and I'm sure, to investors. Whilst we continue to have high conviction in the value and long-term economics of Metlifecare's existing portfolio and the quality of our development land bank, there are a number of initiatives that we could take to try and narrow the gap, such as a possible share buyback and diversification of the share register to assist with creating marginal buying support. We will advise any decisions on these matters at the half-year.

As you can see, there is a lot happening around the Board table - we are an active, engaged group of directors with a diverse range of skills and views - and I would like to acknowledge the commitment and energy of my fellow Board members who work with diligence on your behalf. I would also like to take this opportunity to acknowledge Glen and his Executive Team for the proactive and constructive way they engage with us.