Oceania Healthcare Limited (OCA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen and fellow shareholders. Thank you for joining us today for the Annual Meeting of Oceania Healthcare Limited. Today's meeting is being held both in person here in Eden Park in Auckland and also online. The online meeting allows shareholders, proxies and guests to attend the meeting virtually online. Shareholders and proxies who are attending the online meeting have the ability to ask questions and submit votes online. I would encourage you to send your questions through as early as possible as that will allow us to answer the questions at the appropriate time during the meeting. If you have any issues with voting or asking questions, please refer to the virtual meeting guide or use the Q&A tab to ask for help, and a member of the Computershare team will assist you. I'm pleased to advise that this meeting has been properly convened and the notice of meeting duly given. There being a quorum of shareholders present, I declare the annual meeting opening. I am Elizabeth Coutts, Chair of Oceania Healthcare Limited. To begin with, I would like to take this opportunity to introduce those people alongside me today. On my right is Brent Pattison, our Chief Executive Officer. Alongside Brent is Alan Isaac, an Independent Director. Alan also -- is also Chair of Audit Committee and a member of the People and Culture Committee. On my left is Rob Hamilton, an Independent Director. Rob joined the Board on the 17th of September 2021 and is a welcome addition to the Board with his extensive capital markets and corporate finance expertise. Rob is a member of the Audit Committee. Next to Rob is Greg Tomlinson, an Independent Director. Greg is the Chair of the Development Committee. And next to Greg is Sally Evans, an Independent Director. Sally is the Chair of the People and Culture Committee and member of the Clinical Health and Safety Committee. Next to Sally is Kathryn Waugh, our Chief Financial Officer. Unfortunately, I have to tell you that Peter Dufaur is unable to be with us today due to an injury. He is undergoing a medical procedure for the surgery today at Greenlane and sends his apologies. Peter is an Independent Director who joined the Board on 17th of September 2021 and brings significant property and development expertise. And Peter is a member of the Development Committee. Unfortunately, similarly, Dame Kerry Prendergast is unable to be with us today as she is unwell. Dame Kerry is the Chair of the Clinical and Health and Safety Committee, and she sends her apologies. When I say she's unwell, she has COVID and she's on day 7. So she is devastated not to be here today. And again, Peter as well. As you know, the health system, if you've -- they booked him for the surgery. That's today. It happens. So they really are very sorry to not be with you here today. Also in attendance today are the other members of the executive team. Anna Thorburn as our Group General Counsel, Manager of Corporate Services, she's in the front row. Dr. Frances Hughes as our Group General Manager, Nursing and Clinical Services, is in the front row. Andrew Buckingham as our Group General Manager, Property and Development, is here. Andrew joined Oceania in January 2022 and has been an outstanding addition to the team. We are also pleased to welcome Anita Hawthorne as our Group General Manager, Sales and Service. Anita is joining Oceania on the 18th of July this year and brings extensive senior leadership experience from over 20 years at Air New Zealand. We're delighted to have -- welcome Anita to Oceania. Also in attendance today are representatives from Chapman Tripp, our legal advisers. Having said that, Roger Wallis has COVID, so he is attending online. Story goes on and on. So I'm here because I've had COVID and recovered. And Greg's had COVID and he's recovered. And Sally's had COVID and she's recovered. So we will be here. We also have PricewaterhouseCoopers, our auditors, here today. This will be our lead auditor partner, Leo Foliaki's, last meeting as he reached the end of his 5-year term. I just want to take the opportunity, Leo, to just thank you so much for what you've done for Oceania and its shareholders. It's been most appreciated and of great value for all of you here today. So thank you. But he will be replaced by Lisa Crooke, who's here today. And she is also with us, so we will manage that changeover. Voting. When we come to the formal business of the meeting, I shall put various motions to the meeting that will be seconded. Where appropriate, I shall give an opportunity for discussion and then put the motion to the vote. In accordance with the NZX Listing Rules, voting will be by poll. I would ask only shareholders and/or proxy holders to vote, please. PricewaterhouseCoopers, Oceania's auditor, will act as scrutineer. The results of the meeting will be published to the market later today. For those shareholders and proxies attending the meeting online, I will shortly open the voting for all resolutions to provide you with enough time to vote. At that time, if you are eligible to vote at this meeting, a Vote icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select your voting direction from the options shown on the screen. You may vote for all resolutions at once or by each resolution. Your vote has been cast when the check appears. To change your vote, simply select Change Your Vote. You have the ability to change your vote up to until the time I declare voting closed. I now declare voting open on all items of business. For those of you attending the meeting online, please submit your votes using the Vote icon at any time. I will let you know before I move to close the voting. For those of you attending in-person, for now, you should all have a voting paper, which was given to you when you registered. If you do not, can you please indicate that now by raising your hand, and a member of the Computershare team will assist you. For those attending the meeting here in-person, should you wish to address a comment or question to the Chair, please raise your hand, and we will bring a microphone to you. By way of introduction, please advise your name, whether you are a shareholder, or if a proxy holder, the name of the shareholder represented. For those attending the meeting online, questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions from now on, I will not address questions until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, these questions may be combined. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail or posting responses on our website. The notice of meeting. The notice of meeting was mailed or e-mailed to all shareholders and contains the business to be dealt with at this meeting. Apologies. Are there any apologies that anyone would like to have recorded, please? There are none. No. A number of shareholders have appointed proxies to cast the vote. 528 shareholders holding 227,898,531 shares, which represents [ 32.09% ] of the shares on issue, are represented by valid proxies. The Board is holding 215,257,939 of these proxy votes. I will advise the number of proxies held by the Board to be voted in favor after each resolution that will be put before the meeting today. The minutes of the previous annual meeting were reviewed at the first meeting of the directors of the company following the annual meeting and were confirmed as a true and correct record of the meeting. The minutes are available for review on the company's website. The Group General Manager, Corporate Services, sitting in the front row here, also has copies available should any shareholder wish to review them at the conclusion of the meeting. The annual report. This first item of business is to consider and receive the annual report and the financial statements for the year ended 31st of March 2022 and the audit report thereon. The annual report containing the financial statements and the auditor's report for the year ended 31st of March 2022 is available to shareholders on the company's website and was circulated either electronically or in hard copy form to all shareholders on the register at the time of mailing. We shall take the annual report as having been read. Before seeking your comments on the annual report, I will provide you with an update on your company's performance. This will be followed by an address from Brent Pattison, our Chief Executive Officer. Oceania has remained focused on providing a safe environment for our people to live and work over the last year. While the company delivered a solid financial result for the year ended 31st of March 2022, it is now at a turning point in its journey, with a pivot towards greenfield development of independent living units and enhanced resident experience. Oceania is now seeking to leverage its established operating platform and strong balance sheet to accelerate its development pipeline and to grow its business through organic growth in its existing operations as well as through acquisitions. We are pleased to observe that underlying earnings before interest, tax, depreciation and amortization for the year ended 31st of March 2022 was 16% higher than the prior corresponding period of $65.6 million. This was largely as a result of strong sales and resales despite the COVID-19 lockdowns as well as increased premium charges from recently completed developments in the form of growing deferred management fees. Brent will take you through the financial results for the year ended 31st of March 2022 shortly. The acquisition of premium properties can deliver strong accretion to underlying earnings per share. Oceania has already made a tangible progress with regard to its growth ambitions, starting the last financial year the completion of the acquisition of Waterford in Hobsonville Point, Auckland in April 2021. Since acquiring this site, Oceania has obtained resource consent to develop 50 new independent living apartments as well as an underground car parking, and construction of this stage started on site last month. Oceania also acquired additional land adjacent to its Franklin site during the year ended 31st of March 2022, bringing the total site area to 7.9 hectares. The Waterford and Franklin acquisitions were complemented with the announcement on 9th of May this year that Oceania had entered into agreements to acquire Remuera Rise in Newmarket, Auckland and Bream Bay Village in Ruakaka, Northland. Since then, Oceania has entered into agreement to acquire another piece of land adjacent to Bream Bay Village. Brent will take you through these in more detail shortly, but we are looking forward to settling the Remuera Rise and Bream Bay acquisitions within the next couple of weeks and to welcoming these residents to the Oceania family. Throughout the year, Oceania further strengthened its balance sheet to ensure that the company is fit for future growth. Oceania issued a second retail bond of $100 million in September 2021, which was again heavily oversubscribed. Oceania then entered into an amended facilities agreement in May 2022, which provides for an increase in facility size from $350 million to $500 million and extension of maturity date to mid-2027. The increased facilities will be used to accelerate Oceania's development pipeline and are critical to Oceania's growth strategy moving forward. The current global macro environment -- economic environment has meant that all businesses, including Oceania, need to reassess their strategy and their appetite to risk going forward. Oceania's strategy is to achieve sustainable performance by delivering on our 4 strategic pillars, offer; resident experience; people capability; and growth, underpinned by technology, innovation and our sustainability framework. Oceania has a proven track record in developing brownfield development projects and has built significant capability and experience in this area. Oceania's brownfield pipeline opportunities are now coming to an end and with the more profitable brownfield projects such as Meadowbank and The Sands having already been delivered. Greenfield development is the next cycle for Oceania. The Franklin development represents the transition to Oceania developing a fully integrated village, including a range of on-site amenity and community facilities on a greenfield site. Greenfield development makes a lot of sense for Oceania as there is no requirement for costly and time-consuming decommissioning of existing sites. There is full scope to consider site layout without the need to factor in existing buildings on site. There is greater flexibility to stage developments and bring product to market more quickly as well as greater ability to achieve presales. In order to execute its greenfield development strategy, Oceania is actively pursuing opportunities to acquire additional land in targeted growth locations around New Zealand with favorable demographics and housing dynamics. In order to ensure that Oceania has continued development capacity throughout the next 5 years, we are working towards acquiring additional development land now and have a fit-for-purpose balance sheet that will allow us to do so. As noted in the annual report, Oceania is redirecting its focus on mix diversification from reweighting towards independent living units. Although care suites remain a necessary ingredient in any fully integrated village, the number of care suites being built needs to be balanced with the number of independent living units in any given village and, in particular, the number of villas. Oceania is focused on its cash recovery profile and the development of independent living villa products as the backbone of the next season of Oceania's development products which -- will assist this. We have recognized that although product is important, built form needs to enable recent experience rather than the other way around. Oceania has been increasing its focus on its Village business and the delivery of services to our independent living residents. An innovative operational and clinical structure will be introduced at The Helier to reflect the unique and premium nature of that village. As we noted in the annual report, Oceania has made progress with ESG initiatives and reporting over the last 6 months. The updated materiality matrix, setting out where Oceania can have its greatest impact and considering what matters most to our external stakeholders, is included in the annual report, and this helps inform the pillars of our ESG strategy and key performance indicators for success. We were very pleased to announce that Oceania has agreed a sustainability-linked loan with a syndicate of banks led by the ANZ Bank. We have linked our recent debt facility to our sustainability targets, showing our commitment to improving our environmental and social impact and being held accountable for our performance. Brent will outline the specific details in more -- targets in more detail later in the meeting. Oceania has also completed a TCFD maturity assessment with an external provider in order to support our climate-related disclosures journey. From this, we have established a TCFD road map that will be implemented over the next 2 years. At last year's annual meeting, I indicated that the Board was considering appointing additional Board members to complement the skills of existing directors as well as start planning for Board succession over the next 5 years. As a result of this review, we welcomed Rob Hamilton and Peter Dufaur to the Board in September 2021. Rob and Peter bring extensive experience in the capital markets and finance and property development sectors, respectively, and they have made a significant contribution since joining the Board. Patrick McCawe resigned as a director in February 2022 after 5 years' service. We would like to take this opportunity to thank Patrick again for his contribution to Oceania, particularly his work on capital markets-related activities. The landscape in which Oceania operates has changed significantly since our listing in 2017. As you will have seen from our corporate governance statements over the last 3 years, your directors have attended a significant number of additional meetings during this period. This has resulted in increased demands on director's time. This additional work undertaken by directors provided Oceania with a strong platform for growth. Directors have a lot of their time -- give a lot of their time for meeting preparation, attendance and travel. And directors do not wish to be overboarded, so fees need to be set at an adequate level. The company is seeking the approval of shareholders to increase the maximum fee pool for nonexecutive directors for a number of reasons, as outlined in the notice of meeting. This increase in the maximum fee pool is intended to ensure that the aggregate remuneration can accommodate payment of fees to nonexecutive directors for additional duties. This has been particularly evident in recent years where directors have taken additional duties for the capital raising and bond issues without receiving any additional payment for this significant workload. Additional duties will be funded through the proposed headroom, paid out for significant strategic work undertaken by directors outside of the normal workload of the Board and committees. It should also be noted that payments made under the $25,000 headroom will only be approved in the event of commitments such as significant work. The actual allocation of directors' fees in each financial year is and will be reported in the company's annual report, including the reasons for any additional payments. The Board is committed to setting directors' fees in a transparent manner. Accordingly, it engaged EY to complete an independent report to compare the company's director fees with comparator companies. A copy of EY's report is available on the company's website. In addition to the appointment of Rob and Peter as directors of Oceania, the Board also considers that other changes to the composition of the Board will occur in the coming years. The company needs to ensure alignment with fees paid by comparator company -- group organizations in New Zealand of similar complexity in order to attract and retain nonexecutive directors of the highest caliber and with the requisite skills, judgment and expertise in order to govern a company for the benefit of its shareholders. Shareholders will also note that the company is seeking a headroom of $25,000 and has not followed the EY recommendation to adopt a headroom of $150,000. The Board considers, in light of the realities of increased workloads and responsibilities undertaken by the Board and consideration of the EY independent report, that the proposed increased fees pool is fair and reflective of the market conditions and therefore seeks shareholder approval of this resolution later in the meeting. Dividends. We were pleased to declare and pay a final dividend of $0.023 per share, which takes full year dividends, nonimputed, to $0.044 per share and represents 53.9% of underlying net profit after tax. This reflects strong trading performance and operating cash flow throughout the period. The dividend reinvestment plan for our New Zealand and Australian shareholders was also applicable for this dividend, which was paid to shareholders earlier this week. Looking ahead, we will be releasing our financial results for the 6 months to 30th September 2022 in late November 2022. In closing, I would like to sincerely thank our team of almost 3,000 staff across all our sites. The last year, again, has been challenging -- a challenging year, and this is a word that's been overused for the last 2 years, from -- certainly from an operational perspective. And our people have worked extremely hard to continue to deliver just outstanding services for our 4,000 residents. So a sincere thank you to our staff. I would also like to thank the Board. Your directors demonstrate a range of skills with thought, experiential and social diversity and a range of relevant experiences for Oceania's business. Their hard work and commitment over the last few years has provided Oceania with a strong platform for growth. And finally, I would like to thank all of you for your support of Oceania and for attending the meeting this afternoon. We remain committed to reimagining the retirement village and aged care sector by putting our residents at the heart of everything we do. I'd now like to hand over to Brent Pattison, our CEO, who will present our financial results and talk about the execution of Oceania's strategy. Thank you, Brent.

Well, thank you very much, Liz. And good afternoon and a very warm welcome, and it is warm in this room, to everyone, both those who have joined us in person and those that are joining us online. As Liz said, it's been a very productive and rewarding year for Oceania. And as a leading provider of critical infrastructure and essential services, Oceania is well underway with the delivery of sustainable performance and its next phase of growth. We are certainly mindful of the changing macroeconomic environment, and I will discuss some of the implications and opportunities for our business in my following update. Turning to the financial results. It's pleasing to be able to address our shareholders with improved performance with underlying earnings before interest, tax, depreciation and amortization of $76.2 million. This is a 16.2% increase on last year. As well as that, we have lifted our total assets to over $2.2 billion, also up 16.6% on last year. Our care business is demonstrating the financial benefits of our intentional investment in the premiumization of care with a 24% increase in premium revenue on last year. Since the IPO in 2017, the premium care revenue over the last 5 years has more than tripled to $18.9 million in the year ended 31 March 2022. And we have lifted our average care underlying EBITDA earnings per bed to over $16,200. Nearly 60% of our care business portfolio consists of premium beds or care suites. We've delivered 854 care suites across 23 locations up and down the country. And we are continuing to increase our sales prices for new care suite delivery. And these are up 25.9% on average year-on-year. The innovation of our care suite model has allowed new residents to enjoy certainty, convenience and superior clinical care in a high-quality and well-appointed room. It has been a highly successful year for Oceania with unit sales. 450 were recognized in the year ended 31 March 2022. And I would say that, that is the best on record for the company so far. We've welcomed new residents to the Oceania family as far south as The Bellevue in Christchurch, and I was speaking to some people from Christchurch before, and as far north as The Sands in Browns Bay and everywhere in between. This strong track record of sales and the growing deferred management fee income has been a significant contributor to the operating cash flow for the 12-month period to 31 March 2022 of $105.5 million. Our retirement village offering comprising villa and apartment typologies has also seen annual price increases of new and resale stock on average at 8.4%. We are certainly mindful of market commentators' observations concerning a possible decline in residential house prices, noting that in the last 2 years, prices have grown 35% nationally. So a moderation of price growth was to be expected. We note also that the retirement village sector has historically lagged the price growth observed in the residential housing sector. And this creates for us a buffer between our pricing and the surrounding catchments. Oceania independently assesses its sales pricing strategy against the CBRE affordability ratio. This ratio measures the median house price versus our pricing for the respective surrounding catchment. The average affordability ratio of 58.5% for villas and 59.4% for apartments provide some headroom for us from a cooling housing market. This financial year, full year 2023, is already off to a good start. And while we are only 2 months in, we can report an observed uptick in our inquiries with sales volumes, average capital gain and resale margins all ahead of the same point last year. One of the hallmarks of Oceania and our long-term profitability is our disciplined approach to capital allocation and the efficiency of the recycling of our cash flow from new and existing properties. We expect to return excess positive cash flow from our first-time sales on all new developments as well as continuing to observe strong resale margins from our existing portfolio now over 2,450 ILU units and care suites. At 31 March 2022, we had 22.7% or $86 million of excess development asset coverage to our $380 million of net debt. As the business matures, we are also -- we also have an eye to those sites that may no longer fit the portfolio or meet return thresholds, and divestments of a few of these sites will likely be part of this year's activities. If I turn to the executive team. Clearly, we are a people and resident-centered business. As Liz commented, we have over 2,900 staff and 4,000 residents. It's a very large community. Our business success is directly attributable to that fantastic team, and we deliver outstanding resident experience every day. Our people are at the heart of everything we do and the key to the provision of high-quality care and other services to our residents. We remain focused on ensuring Oceania attracts the right people, then retains these people within our business with excellent learning and development opportunities for our people, including participation in an employee share scheme. We have an accomplished executive team with a strong focus on performance and delivery of our strategic objectives. Those members of the team are in the room. So starting with Dr. Frances Hughes, our clinical lead. Frances was at the forefront of protecting the well-being of our residents during the COVID-19 pandemic. It is pleasing to report to shareholders, despite having over 2,579 aged care residents, we have not had a single death from COVID at any of our 44 sites. Thank you. I agree, it is an outstanding achievement. Andrew Buckingham joined the executive team as Group General Manager of Property and Development in January. Andrew brings significant property and development experience, both in New Zealand and Australia. And he has been instrumental in the design and curation of new resident environment, and his presence is already being felt in lifting our annual build rate and increasing the units under construction. Our CFO, Kathryn Waugh, has been instrumental in the establishment, and it's being announced today, of New Zealand's first sustainability-linked loan that has well-being and resident experience as the hallmark of its social measure metric. And I'll touch on this exciting development later. Anna Thorburn has expanded her role to incorporate our enablement functions and provide the strategic and operational excellence in people and culture, legal, risk, health and safety to ensure Oceania is both a fantastic place to work but also a safe place to work. Anna also provides valuable input into sector and industry regulatory matters. I'm also pleased to announce the appointment of Anita Hawthorne, welcome, Anita, as Group General Manager of Sales and Service. Anita joins the team on 18 July 2022 but has made herself available today for the tough questions. Anita comes from a distinguished senior leadership career in customer experience, operational excellence and performance at Air New Zealand. We welcome her to the team and are excited about what she will deliver in enriching our resident experience. Anita's appointment will complete the small but highly capable executive team, which will deliver Oceania's strategic outcomes. If we turn to M&A. We are certainly pleased to have added 2 further premium villages to the Oceania family, Remuera Rise and Bream Bay Village. The acquisition strategy incorporated important and value-accretive elements for shareholders. We are expecting to settle the transaction in early July and have acquired these villages using our existing debt facilities. So there will be no share capital dilution for our existing shareholders. Remuera Rise, which is located in the heart of Newmarket with commanding views to the Hauraki Gulf, comprises 58 apartments and 12 care residences. Oceania's acquisition of this village will provide the existing apartment residents with access to Oceania's leading care suite offerings at close proximity sites such as Mt Eden, Meadowbank and The Helier. And as the residents' health needs change, we will be able to cater for those within our existing portfolio. The property itself is actually one of a kind, and we purchased it well below its replacement value with significant embedded value to be unlocked in the future sales for the benefit of our shareholders. Bream Bay Village in Ruakaka is located in a growth corridor in which until now Oceania was not located. We've been able to acquire a village that already has a vibrant resident population together with immediate access to significant adjacent greenfield land bank that we are in the process of securing a plan change for or rezoning from the Whangarei District Council. Once the plan change is operable -- operative, we can immediately get underway on building on the site. Pleasingly, the land was also acquired at a discount to prevailing observed land sales in the region. We have a strong inquiry database at Bream Bay. So as we build and deliver future independent living villas, we expect to secure significant presales capture. In addition, since this acquisition was announced, we've entered into an agreement to acquire 0.5 hectare on a key corner of the existing land that was not owned by the vendor to add to the existing village. If we turn to developments. Oceania is a designer, developer, curator and constructor of premium living spaces for retirement and aged care residents. We take a bespoke approach to all sites. And our new built form is sensitive to the prevailing neighborhoods. We have a small resident population in our villages compared to our peers, and this allows for us to deliver warm, genuine resident interactions in a contemporary and chic setting. Oceania has been developing its strategic and execution capabilities to ensure we maintain maximum flexibility and optionality in the development and construction activities. We have certainly observed some supply chain disruptions, particularly Gib, as many of you may have, as well as access to some specialty sub-trades, both of which have been well managed and the risk mitigated to date. We have entered into fixed price contracts with our construction partners for the development activities underway for the full year 2023 and for the full year 2024. We have guided to lifting our annual build rate to over 300 and currently have 640 units and care suites under construction. This is a significant uplift of 240 units from our position at last year's Annual General Meeting and provides us with flexibility if the construction sector continues to observe disruptions. In addition, as Liz mentioned in her address, we are pivoting towards greenfield development. This is basically consented land that allows staged development and a more rapid sell-down, including presales, with a greater proportion of our future construction activity weighted towards independent living units. Turning to balance sheet and funding. We spent the last 12 months focused on building a strong balance sheet and capital structure position to provide a platform for our growth. The equity raise in March 2021 allowed us to execute on the acquisitions of Waterford and Franklin and provided Oceania with the lowest gearing levels in the industry at the time. This in concert with our retail bond program and renegotiated banking facilities have provided the basis to fund the latest acquisitions fully through debt and maintain significant headroom with circa $300 million, also maintaining prudent and low levels of overall gearing. More recently, we have been working with our Tier 1 banking syndicate to bring forward the refinance and have secured long-dated facilities and an increase to our commitments of $150 million, bringing our total commitments to $500 million. We've been able to secure competitive pricing, keeping our margins low and retain favorable terms and conditions to facilitate our growth over the entire 5 years of the funding. As Liz touched on earlier, sustainability is something that has been important to Oceania's evolution. And that is one of the reasons why Oceania has been working to link its borrowings, starting with our 5-year loan, to our sustainability vision and commitments so we can drive performance even further and with greater ambition. Today, we announced that we are entering into a sustainability-linked loan with our banking partners. This sustainability-linked loan has been structured to align with the latest global sustainability principles and is underpinned by our sustainability framework, which will be published on our website in the coming days. The 3 key performance indicators, which we have selected, are noted in the slide in front of you. Each of these are measurable, quantifiable and, importantly, ambitious and have been selected because they are material to Oceania. The Helier. In line with our new strategic pillars of offer, resident experience, people, capability and growth, the business has realigned from a product to a customer-centric focus. Deep resident insights now shape our offering, including both design and experience aspects. The Helier at St Heliers, Auckland, our bespoke new property, is in a commanding location overlooking the Hauraki Gulf and inner harbors. And it's our first delivery of this thinking. Positioned as a new era in luxury living, The Helier has been shaped to attract a discerning audience who traditionally may reject retirement living. We have developed an offering that facilitates audience's existing lifestyle. That is they can remain in charge with everything they need at their fingertips. We've already enjoyed significant inquiry from future residents who are looking to make The Helier their choice, and we look forward to the building being opened by March 2023. We have a full scale model of the project in the room, and hopefully, people sighted it as they came in, as well as a virtual reality render and walk-through of what the property will look and feel like. I would encourage our shareholders who are present to go and have a look following the formalities of the AGM. It has certainly been a pleasure to observe the growth of Oceania over the last 12 months. We have worked hard to put the balance sheet on a firm footing to support our disciplined approach to growth. We look forward to adding greenfield acquisitions to our existing pipeline of over 2,000 units and care suites in the coming year. The team have provided excellent resident care and well-being to our 4,000 residents. And we are well underway on delivering on our promise of reimagining retirement and aged care living. Thank you all for your attendance and your continued support of Oceania.

Thank you, Brent. Are there any questions arising from the annual report or from my address or the presentation of Brent's address? If you wish to ask a question, please raise your hand, and we will bring a microphone to you. Please advise your name, whether you are a shareholder, or if you are a proxy holder, the name of the shareholder represented. Any questions from the floor? Yes, there's one over here.

Congratulations. My name is [ Graham Lord ]. I'm a shareholder. Congratulations on the year that you've had, the 16% increase in EBITDA and caring for the residents. Interested in the comments around possible divestment of assets that don't meet the premium model going forward. Will the proceeds of that, if it would eventuate, do you think at the current share price level being at 28% discount to net asset value, you would consider a share buyback? Or do you think you could create more value through greenfield village development?

Yes. It's a good question. Thank you for that. We -- with a number of opportunities in front of us, we will -- we believe that we can invest at -- those funds as in this future value to be created in this sector. Bruce, you've got a question?

I'm Bruce Parkes, New Zealand Shareholders' Association. Every day in the Herald newspapers, there's full scale ads from one or more of the providers in the aged care. Is that a sign of oversupply or reduced demand or what?

That's a good question for Brent to answer. I've got my personal views, but Brent will give you the executive answer.

So good question, Bruce. I think it's just a growing awareness of retirement and aged care living. What I would say is that New Zealand is very low in its penetration rate of those people that are living in retirement and age care settings. And we know that we have a very compelling demographic. Currently in New Zealand, there's about 14% of the population over 70 that live in a retirement or aged care setting. And that number, the population, at least doubles by the time we get to 2030. So I think there's a couple of things going on, Bruce. I think the first thing is that there's just a growing awareness that this is a great place to be, that this is actually a very good option for people. But it also shows that there's a bit of competition in the market. And Oceania welcomes that competition because it differentiates in the way in which we approach resident experience. We have a smaller population. We're not gated communities. We have a bespoke provider of critical infrastructure but, importantly, for services that the residents want. We do a lot with a little in our marketing budget. Our marketing team have coined the phrase reimagining retirement and aged care living. And that's what we are seeing that is showing up. You would have seen that in some of our TV advertisements, but you'll also see it in our built form, and you'll also see it in our word-of-mouth advocacy. So I think competition is a good thing. I'd love to see sort of more and more [indiscernible], but I'd love to see a lot of residents coming and enjoying our hospitality at Oceania as well.

Thank you, Bruce. Are there any more questions from...

I have a second question. Can you maintain your development margins at the time of increased building costs?

Another good question, Bruce. From our perspective, we've guided the market to a moderation of our development margins. It is tough out there. And we have already observed better development margins than we expected. If we think about the year that has just been, we had observable development margins nearly at 30%, so 28%. We've guided on a long-term basis that moderating down to sort of 15% to 20%. But what we are seeing is that there's still good sales inquiry for our end product. And as a consequence of that, part of your development margin is land, complexity of building, but also part of it is reasons choosing to come into Oceania's retirement living and aged care experience. So we are still setting price across all of our portfolio even over the last couple of months with the backdrop of housing market. But it is fair to say that it is difficult in the construction sector generally, and we have looked to hedge our portfolio by entering into fixed-price contracts for the 2023 year and 2024 year to bring certainty for shareholders as it relates to the cost of our build program.

Manage a third question for me?

Yes, of course.

You're doing very well in your aged care and premium aged care. That's a real good result. Would you consider giving your staff working there a premium for their services?

I can assure you, Bruce, we already gave our staff a premium for these services. Oceania has taken a leading position on pay for the sector. And we want to have a compelling employment value proposition. So we want to be a place that people want to work. Wages is one part of that equation. But I can assure you, as it relates to our health care assistance, as it relates to our kitchen staff, as it relates to our server staff and indeed our registered nurses, Oceania has always tried to keep itself ahead or in par with the prevailing market conditions. Where we see some competition is with DHB's for registered users. And they've got a bit of head of us. They've had some advantaged funding. And I think in time, we will see that in the sector. But Oceania wants to maintain good wages for the services that our staff provide.

Thank you. Have there been any questions submitted to the meeting from those attending the meeting online? I can't -- yes, I have a question, but I'm not sure I can read that. Can you make that a bit bigger?

Would you like me to take this one, Liz?

Thank you, Kathryn. Younger eyes.

So for the people in the room, there's a question about at what point of time we recognize development profits on our new construction buildings. I know this has been quite topical for one of our peers in the press recently. And the question is specifically asking about whether it's on completion of the unit. So the annual report, as the person has asked the question, does have the detail on this. But essentially, for us, there's a number of hurdles that we need to get past. So one is that absolutely the building must be completed and you must be able to reside in it. So we're not in the habit of recognizing development profits before things are open for business. And the next 2 hurdles for us are around the contract. So the contract must be called off. And then the final hurdle for us is we do like the residents to be in occupation. So where we have kind of a balance sheet cutoff and the rule that we have is even if it's called off a balance sheet, we require the resident to be in occupation and living in that room within 2 weeks of that balance sheet. Thanks, Liz.

Thank you, Kathryn. I've got a second question. So this looks like another one for Kathryn.

Just trying to read the rest.

I've seen some disturbing information...

So I've seen some disturbing information, really the manner in which Ryman values some of its construction work in progress at values partially complete work as if it was completed and takes up as a liability to the cost to complete the work. This amounts to counting one's chickens before they hatch. Does Oceania adopt this approach?

No.

No.

I could answer that one.

Yes. So we value our work in progress based on the actual amount spent and the actual invoices [indiscernible] at balance date if something is what the value is called substantively complete. So if it's going to complete within, we use kind of a rule of thumb of a 6- to 8-week period post balance date. We don't get many of these. But in that instance, we would have -- we would recognize it as complete and have a small reduction in the amount that we hold it at. So as I say, we don't get many of those. An example was Eden this time last year where it completed in the second week of April.

Thank you, Kathryn. As there's no more questions online, no more questions in the room, we will now move to the formal part of the meeting. All items of business are ordinary resolutions. To be passed, they require approval by a simple majority of more than 50% of the votes of shareholders entitled to vote and voting on the resolutions. Voting will be by poll. Each share held by a shareholder confers 1 vote. For those of you attending the meeting in person, please cast your vote -- cast your vote, please, and complete the voting paper by ticking for or against or abstain in the appropriate place for each resolution when I invite you to vote on the resolution. Voting papers will be collected at the end of the meeting by Computershare. If you have any difficulty, please raise your hand, and a member of Computershare team will assist you. For those of you attending the meeting online, as I mentioned before, to vote, please select the Vote icon. This will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to press a submit or enter button as the vote is automatically recorded. Reelection of directors. Thank you. We now move to the next business, which relates to the election of directors. Rob Hamilton and Peter Dufaur were appointed as directors by the Board in September 2021. In accordance with NZX Listing Rule 2.7.1 and the company's constitution, a director does not hold office without being elected past the year's Annual Shareholders' Meeting. Resolution 1. In this case, Rob Hamilton offers himself for election as a director of the company. The Board has determined that in its view, if elected, Rob Hamilton will be an independent director for the purposes of the NZX Listing Rules. Rob Hamilton stands for election with the support of other directors of the company. A brief biography regarding Rob is included on the website. And I will now invite him to briefly talk in support of his election. Rob?

Thank you, Liz, and good afternoon, everyone. My name is Rob Hamilton, and I'm standing for election to the Board following my appointment as a new director in September last year. In addition to being a director of Oceania, I'm a director of Tourism Holdings, Westpac New Zealand and Auckland Grammar School. I also have my own consulting business and have been working closely with the team from Synlait Milk over the past year. Prior to joining the Oceania Board, I was Chief Financial Officer at SkyCity for 6.5 years until February 2021. Prior to that, I led the investment banking team at Jarden for 12 years until 2014, where I worked with numerous clients across a wide range of industries, including the retirement village and aged care sector, and developed significant capital markets and corporate finance experience. I also have a good familiarity with Oceania with my mom being a resident at the Meadowbank Village for the past 7 years. I'm excited about the future opportunities for Oceania. As Liz and Brent have already outlined, we are pursuing a growth strategy, which focuses on both greenfield developments and some new acquisition opportunities, which we're seeking to fund from our existing balance sheet. As we grow, we're also focused on enhancing the experience for our residents and achieving this growth in a sustainable manner. Through successful execution of our strategy, I'm confident we can protect and enhance the interest of all stakeholders. Given my background and experience, I believe I can continue to serve Oceania effectively as a director. In particular, my capital markets and corporate finance background means that I have a strong focus on how we allocate our capital and on improving shareholder value. Furthermore, my broad governance and industry experience means that I can bring insights from other companies and sectors for the benefit of Oceania. Thank you for your consideration of me as a director. I look forward to your support and ask for your vote. Thank you.

Thank you, Rob. I now move that Rob Hamilton be elected as a director of the company. Can I have a seconder, please?

[indiscernible]

Thank you, Bruce. That's why you're sitting there. You're handy. Is there any discussion? I now put the motion and invite you to vote by marking resolution 1 on your voting card or selecting one of the options in the Vote icon. [Voting]

I advise that the Board is holding a total of 214,590,018 directed and discretionary proxies, which will be voted in favor of this resolution. Resolution 2, the election of Peter Dufaur. In this case, Peter Dufaur offers himself for election as a director of the company. The Board has determined that in its view, if elected, Peter Dufaur will be an independent director for the purpose of the NZX Listing Rules. Peter Dufaur stands for election with the support of other directors of the company. A brief biography regarding Peter is included on the website. As Peter is unable to join us here in person today, I will read a pre-prepared speech in support of his election. I did offer for Peter to do a pre-recorded video, but he said he doesn't look that smart at the moment with his painkillers, so you've got me. Peter Dufaur has a Bachelor property degree and is an experienced property developer with over 25 years' experience in the New Zealand property market, including 10 years as the Head of Development for Goodman Property Trust. Peter joined the Board of Oceania in September 2021 and has already made a significant contribution not only in the acquisition of Remuera Rise and Bream Bay Villages but also in the identification of potential greenfield development sites in other regions. Peter has extensive -- has an extensive network in the development sector and brings relevant and current experience, which is particularly valuable with the headwinds facing the property development sector at present. His past and current executive roles have ensured that he remains focused on growing shareholder wealth and the delivery of a property solution to suit the needs of the business as it grows. Peter is looking forward to contributing to Oceania's future growth prospects, particularly as it embarks on a new direction with greenfield property developments and the construction of independent living units comprising the bulk of the development pipeline going forward. Peter's entrepreneurial skills and innovative thinking will help guide Oceania through the cycle of its developments. During recent site visits, Peter has also had the opportunity to meet our operational and clinical staff and observe the importance of staff safety. Peter currently holds shares in Oceania Healthcare. So know a little bit more about, Peter. I now move that Peter Dufaur be elected as a Director of the company. Can I have a seconder, please?

[indiscernible]

Thank you, Bruce. I now put the motion and invite you to vote by marking resolution 2 on your voting card or selecting one of the options in the Vote icon. [Voting]

I advise that the Board is holding a total of 215,058,957 directed and discretionary proxies, which will be voted in favor of this resolution. The next item of business relates to the directors' fees increase. This resolution is put to shareholders in accordance with the NZX Listing Rule 2.11.1, which relates to the maximum aggregate fees payable to all nonexecutive directors. At present, the maximum fee pool for nonexecutive directors is $762,500 per annum. The pool was last fixed 5 years ago at $582,500, which -- when there were 5 directors. The pool has increased and decreased since then with the appointment and resignation of directors in accordance with NZX Listing Rule 2.11.3. It is proposed to increase the total pool of directors' fees by $133,500 to $896,000 per annum, being a 17.5% increase. The reasons for the increase are outlined in the notice of meeting and were also covered in my address earlier in the meeting. The directors recommend that shareholders vote to approve this resolution. Nonexecutive directors and the associated persons are prohibited from casting their own shareholding votes or discretionary proxy votes on this resolution, and any such votes will be disregarded by the company's auditors. I now move that the nonexecutive directors' fee pool be increased by $133,500 from $762,500 to $896,000 per annum with effect from 1st of April 2022 to be divided among the nonexecutive directors as they consider appropriate. Can I have a seconder, please?

[indiscernible]

Thank you, [ Graham ]. Is there any discussion? No there's nothing online. So -- yes.

Thank you, Liz. My name is Mike Dolden. I'm a shareholder, a member of the Institute of Directors. I've come up here from Christchurch to vote against this particular minute. However, since the presentation has been made, I've changed my mind. I think the Board and what we need on the Board was covered pretty thoroughly today, and I would just like to support the motion in every way.

Thank you, Mike. That's very much appreciated. And I certainly hope you do get the impression that we put a lot of thought, heart and soul into everything we do, the whole of the Board. So thank you for that.

I now put the motion and invite you to vote by marking resolution 3 on your voting card or selecting one of the options in the Vote icon. [Voting]

I advise that the Board is holding a total of 149,125,011 direct and discretionary proxies, which we've voted in favor of this resolution. Resolution 4. So we now move to the next resolution regarding the remuneration of the auditor. I now move that directors be authorized to fix the remuneration of PricewaterhouseCoopers as the auditor of the company for the ensuing year. Can I have a seconder, please?

[indiscernible]

Thank you, Bruce. Is there any discussion? I now put the motion and invite you to vote by marking resolution 4 on your voting card or selecting one of the options in the Vote icon. [Voting]

I advise that the Board is holding a total of 214,828,156 directed and discretionary proxies, which will be voted in favor of this resolution. Thank you all. This concludes the meeting's formal resolutions. I will shortly close the voting system. Please ensure that you cast your vote on all resolutions. I will now pause to allow time to finalize your votes. [Voting]

The results will be published to the market later today. Please put your completed voting papers in the ballot boxes as you leave the meeting, and please ensure your voting paper has been signed. So 2 things, make sure you put it in the box and make sure you sign it. Thank you. For those attending the meeting online, I now declare voting closed and move to general business. Can I ask, are there any items of general business that haven't previously been covered within the meeting that you as shareholders now wish to raise? And we do have a roving mic in the room. And please, if you've got a question, advise your name for Anna and whether you are a shareholder, or if a proxy holder, the name of the shareholder represented. Any questions? We can now consider the questions that have been submitted to the meeting online. Are there any questions that have been submitted online? Hadn't come up yet. No. Nothing's showing. Nothing line. Okay. Well, there's no questions online. But look, for any of you in the room, if you've got any -- if you don't want to ask questions in public, please come up to any of us execs if there's anything you'd like to have a chat about. So I really do appreciate your attendance today. I know it's not as straightforward to get out and about as it was a couple of years ago in 2019. We realized this is probably a pretty special year. So we really do appreciate your attendance. And afterwards, please join us for refreshments. So I now declare the meeting formally closed and invite those of you who are here in person to join the directors and management for afternoon tea. I would also, again, like to remind those of you who are here to please put your completed and signed voting papers in the ballot boxes as you make your way to afternoon tea. Thank you very much. Wonderful to see you all here this afternoon. Thank you.