Oceania Healthcare Limited ($OCA)

Thank you for standing by, and welcome to the Oceania Healthcare FY 2026 Full Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Suzanne Dvorak, Chief Executive Officer. Please go ahead.

Thank you very much. Good morning, everyone, and thank you for joining us today. For us, FY '26 was a year of focused delivery. We came into this financial year clear about what needed to be done, and we have made significant progress against these priorities. At the half year, we updated you on the work streams underway across the business, being sales performance, business excellence and capital management. Today, I'm pleased to report that this work has delivered a record result for Oceania. Against another year of subdued residential property conditions, we delivered an excellent sales result, materially improved care profitability, a significant reduction in net debt and lower gearing and an improvement in free cash flow from operations. We also made substantial progress in repositioning Oceania for the next phase of growth, establishing a platform to deliver stronger earnings growth and cash generation. I'm going to step through each of these areas before Kathryn takes you through the financial and operational detail, and then we'll close on our priorities for FY '27 and beyond. First, the headline financials for the year. We delivered a record underlying result for Oceania, reporting pro forma underlying EBITDA, up 20% to $97.7 million. This was underpinned by operational performance improvements and record sales volumes, up 16% to the highest level since FY '22. At the same time, free cash flow from operations improved significantly from an outflow of $41.7 million in FY '25 to an outflow of $15 million in FY '26, and we remain firmly focused on delivering free cash flow from operations in FY '27. Importantly, we also made substantial progress on capital management and resetting our financial capacity. Net debt reduced by more than $121 million to $506.7 million, supporting a reduction in gearing to 30.1%, which is now at the lower end of our target range. There is still more work to do, but our trajectory is positive. We are operating with greater discipline, sharper execution and a much clearer focus on cash generation and capital allocation. On dividends, the directors have resolved not to declare the final dividend. Generating positive free cash flow from operations and resuming dividend payments is a clear goal for FY '27. I'll now move to sales performance, one of the clearest signals of our improved performance this year. I'll start with our key development sites where we are seeing particularly strong momentum. At Franklin, Stage 1 opened in January with 31 villas and an amenity center. Franklin is our first green star community and the first in the industry. We opened with 48% of stock under contract, the strongest preopening position Oceania has achieved. Today, 80% of the villas are already sold or under application. This reflects disciplined sales execution and growing confidence that we are delivering the right products in the right locations. At Meadowbank, the final stage of the redevelopment added 40 dementia suites. The sales response has been encouraging with 65% of these now sold and occupied. At The Helier, independent living units are now 74% sold or under application. We are now only 1 sale away from full cash recovery of development expenditure. This is a significant milestone. These were the 3 sites where we needed to deliver. They are now all tracking against expectations and, in some instances, ahead of them. New sales tell the same story of momentum returning. We delivered a record 201 settlements this year against the subdued residential property market. Stronger care suite pricing and the return of villa sales through Franklin resulted in an average pricing improvement of 9%. Our development margin was 29.9%, and it's important to note that as we come to the end of our higher-margin Auckland apartment stock moving to villa and regional products, the margin reflects that shift in mix, not any weakening in the business. So let's look at how this has impacted our development stock on hand. The sell-down has released $115 million of net capital since March last year, taking unsold stock down from $342 million to $227 million. This is even after adding newly completed units at Franklin and Meadowbank. This capital has gone straight to reducing debt and strengthening the balance sheet. Of the stock that remains, the majority sits in Auckland. ILUs make up $157.5 million and care suites $69.3 million. Importantly, 54% of unsold care suites are already occupied by non-ORA residents under PAC or standard bed arrangements, contributing to operational earnings while sell-down continues. We believe an occupied care bed is a better outcome than an empty one. It supports earnings while we hold it, and it sells when the resident vacates. Reducing development stock further releases capital and keeps debt at the lower end of our range. This remains a primary focus through FY '27. Resales also remained strong during FY '26 with volumes increasing 20% year-on-year to more than 400 units. This growth was led by care suite resales. Our care suite model recycles capital materially faster than the independent living units. This improves cash conversion as our established villages with care reach their second and subsequent resales. Apartment turnover also increased as newer villages matured. This is a margin point worth explaining. The headline resale margin was 17.5%, reflecting a deliberate choice. We priced long-dated stock to accelerate its sell-through and released the capital tied up on our balance sheet. Margins are expected to normalize to historical trend line as our pricing strategy is moderated in FY '27. I'll now hand over to Kathryn, who will take you through the financial and operational performance for the year.

Thanks, Suzanne, and good morning, everyone. I'll start with care, then move through capital management and development. Care profitability was a standout contributor to our FY '26 earnings growth. Starting at the bottom right of this slide, we delivered a 40% increase in care EBITDA per bed to around $27,000, reflecting both stronger operating performance and the continued sell-down of higher-margin care suite inventory. Excluding capital gains and resale gains, EBITDA per bed increased 43% to approximately $14,800. The performance improvement to achieve this reflect stronger labor efficiency, tighter cost management, improved rostering and more disciplined operational execution. Moving to the graphic on the top right of the slide. Occupancy remains strong at 95.5% on a rolling 12-month basis. During the year, we divested 6 high-occupancy standard care bed sites while continuing to build our occupancy across newer care sites and premium offerings. We expect occupancy to further increase through FY '27 as recently completed developments mature and strategic initiatives focused on key sites. The care business is now firmly positioned for long-term earnings growth. This year marked the successful completion of our first transformation cycle, identifying opportunities, executing initiatives and embedding accountability across the organization. As promised at our Investor Day, that work has delivered $13.2 million of structural cost savings across corporate and operational areas. At the corporate office, we reduced annualized staff costs by approximately 20% while continuing to simplify processes and increase automation. Looking ahead, we will see further benefits in FY '27 with a total of $20.4 million of cost savings annualized into the year and a broader target of approximately $30 million in combined cost and cash improvements. This additional $10 million in cash savings will mostly be driven through tighter refurbishment and maintenance controls. These initiatives will also flow through to materially stronger cash performance. Operating free cash flow is a measure we introduced earlier this year to give a clearer visibility of the business' cash generation performance. The performance improved significantly with the outflow reducing 64% to $15 million from $42 million in FY '25. The improvement reflects stronger operating performance, tighter working capital management and improved resale cash flow timing. A key contributor was the reduction in buyback stock to approximately $38 million from around $52 million in FY '25. There is more to come, and the business remains highly focused on achieving free cash flow from operations in FY '27. Turning now to capital management. FY '26 included a targeted divestment program focused on improving portfolio quality, enhancing returns and recycling of capital. Over the year, we completed 7 divestments, generating approximately $51 million of proceeds. 6 were settled in March, effectively contributing a full year of earnings; a great result and ahead of our initial forecast of 4 sites for $40 million, which we signaled in November. The divestments released capital from lower-return assets, supported debt reduction and improved portfolio quality and operating leverage. We will continue to review the portfolio against the criteria in the slide, allocating capital to where it earns the best return, creating a more focused, scalable and higher-performing asset base. The benefit of that work shows up directly in the underlying earnings of the continuing business. An obvious question around the divestments is what impact they have had on our earnings. The bottom left table demonstrates this. And as you can see, stripping them out, the performance of the continuing business has materially improved, and more detailed reconciliation is also included in the appendices. On a normalized basis, adjusting for divested sites and the closure of the Wesley Institute, underlying EBITDA was $92.5 million, up from $74.8 million in the PCP. Underlying NPAT was $59.4 million, again up from $42.3 million in the PCP. The result, both pro forma and normalized earnings, reflect materially stronger care earnings, continued sell-down of stock and a lower corporate cost base. We have rightsized rosters, we have delivered procurement savings, and we have embedded ongoing cost discipline initiatives. Earnings quality continues to improve with a greater contribution from reoccurring care income and village cash flows. That stronger earnings base has translated into a materially stronger balance sheet. As Suzanne mentioned upfront, net debt reduced by more than $121 million while gearing improved to 30.1%, at the lower end of our target range. The reduction reflected proceeds from divestments and the development sell-down activity. We have total debt funding of $725 million with approximately $200 million of headroom. All key metrics sit comfortably within covenant bands. The maturity of this funding is on the top right of the slide: Our corporate bonds in beige and our bank facilities in blue. In line with good governance and capital management, we continue to ensure that our capital structure remains well diversified across bank facilities and retail bonds. To this end, the Board is currently considering potential options for refinance of the OCA010 bond, which matures in October 2027. The business is in a strong financial position with the flexibility and capacity to deliver future growth. Turning now to development. My current slide shows the capital recovery coming through as developments sell down. At the Helier, we are now 74% occupancy in our apartments. As Suzanne noted, the project will achieve full recovery of whole-of-site development expenditure on the sale of just one more apartment despite there being just over 20 remaining to sell in addition to the care suites. This is a significant milestone for the development. Franklin Stage 1 opened in January with strong early momentum in sales inquiry. Around $65 million has been invested to date, including the delivery of the lodge, its community amenity. Initial sales of $28 million from the sell-down of the first 25 villas are already contributing to a good capital recovery. The development of Stage 2 villas has commenced ahead of schedule, reflecting the confidence in the ongoing demand profile. Development activity continues to generate both earnings growth and capital recycling. Importantly, these outcomes reinforce our confidence in continuing to develop in a disciplined, modest and capital-efficient way. Turning to our near-term delivery pipeline. In FY '27, we expect to deliver 81 units across 3 sites in the second half: Franklin Stage 2, Bream Bay and the conversion program at Elmwood. Development has been sequenced to align with demand, optimize sell-down and keep debt and gearing within our target settings. Importantly, we expect full recovery of development costs from first sell-down sales. FY '28 follows a similar shape with the comparable number of units delivered on the same basis. The conversions at Elmwood are worth a particular mention. Villa and apartment conversions deliver attractive returns at lower capital intensity and with quicker cash recovery, which suits the current environment well. Over the medium term, we are progressing the design and consenting work needed to lift the build rate towards approximately 150 units per annum by FY '31. Growth there is commercially focused and increasingly self-funded through sell-down. Underpinning all of this is our land bank of over 1,200 units, and it's what gives the development program its long runway. We hold a substantial pipeline spread across a diversified mix of Auckland and regional locations with a balanced spread of villas, apartments and care that support both village earnings growth and reoccurring care revenue. The real strength of this pipeline is its flexibility at this stage, which means we can pace delivery to match market conditions, sell-down performance and capital availability. Taken together, that brings to a close the financial and operating picture for the year: A stronger earnings base, a more resilient balance sheet and a development that is increasingly self-funding. With that, I'll hand back to Suzanne to take you through the outlook and our strategic priorities.

Thanks, Kathryn. In closing, I'd like to briefly touch on where Oceania is now and where we are heading. This slide shows how deliberately the business has been reshaped. Today, Oceania is a smaller, stronger and more valuable business. We operate 30 sites with net tangible assets of $1.2 billion, more than double where they stood a decade ago or an 8% compound growth rate over the period. The change came from a deliberate long-term approach to capital allocation, divesting the sites that no longer fit, and reinvesting into integrated care and village communities. Our portfolio is now balanced, carries far less deferred maintenance and is built around cash generation rather than scale for its own sake. That repositioning matters most in a market like this one where conditions remain challenging. Many prospective residents are still finding it harder to sell their existing homes before moving to us. Encouragingly, underlying demand for what Oceania has to offer has still held up. Applications and the level of qualified inquiries are higher than they were this time last year. At the same time, we continue to monitor construction cost inflation closely, ensuring our development activity keeps delivering the returns we expect. The portfolio we have built smaller, better balanced, built around cash generation and with the development pipeline we can pace is exactly what positions Oceania to navigate these conditions. We are not waiting for the market to improve. We've built a business that performs while it is tough. And that is the backdrop for our priorities in the year ahead. This slide shows how deliberately the business has been reshaped. Today, Oceania is a smaller, stronger and more valuable business. And finally, our strategic priorities, and they are clear. In FY '27, the focus remains on cash. We will sell down unsold and bought-back stock. We will convert operational improvements into positive operating cash flow. And we will keep up the pace on rightsizing. Alongside that, we expect to complete 81 units across 3 development sites. Looking to FY '28, our objective is year-on-year growth in operating free cash flow. As that strengthens, we will look to resume dividends to 40% to 60% of operating free cash flow. We will also broaden customer choice through home-based care services and progress development carefully whilst keeping gearing within our target range. Over the longer term, the ambition is straightforward. We want to lead the sector in care quality and resident experience. We want to keep growing recurring operating cash flow, and we want to build our development capabilities steadily over this strategic period. Underpinning all of this is one principle: Directing capital to where it earns the best return, and reviewing the portfolio on that basis. So to close, FY '26 was a year of meaningful progress. We lifted sales to record levels; materially improved care profitability; significantly reduced debt; and substantially strengthened free cash flow, whilst continuing to sharpen capital allocation and improve the quality of the portfolio. There is still more to do, but the direction is clear. Oceania enters FY '27 with stronger momentum, a more resilient balance sheet and a clearer path to grow earnings and cash generation. I'd like to thank our shareholders, our residents and their families, our people across the business and the Board for their continued support. Thank you all for joining us today, and Kathryn and I will now be happy to take your questions.

[Operator Instructions] Your first question comes from Arie Dekker from Jarden.

First question, just with regards embedded value. I noticed -- well, I think I haven't missed it, but the CBRE embedded value slide isn't included, I think. And particularly with your repricing some of the stock to move older resales inventory, just wondered whether you can comment on what the CBRE embedded value of resale gains is at FY '26 or otherwise provide it later today?

Arie, it's Kathryn here. Yes, you're right. We haven't got that slide in, and we can provide you something in a one-on-one later today. And as far as the pricing of the stock, Suzanne mentioned about selling down the long dated. It was very targeted, specific and individual units at sites. So it wasn't a full-on across-the-portfolio approach. So you'll see from the other material that we've given, we have had an overall group uptick in sales prices. And then we can give you the specifics on the embedded value like today. But that -- you're correct. It's a slide we haven't included this year.

Okay. That will be useful. Just want to go through just status and thinking on some of the development, and you've given very clear guidance, not just for this year and next year as well. So just firstly, I guess, just prioritizing of Bream Bay Stage 2, just rationale there? And then just also a bit of an update on the timing for delivering villas on Gracelands. Is it envisaged that you'll start delivering Gracelands villas in '28?

Yes. Thanks, Arie. Yes. So Bream Bay and those of you who can picture the site, there's a little corner at the top of the original site that was built there where we purchased land a couple of years ago. So there were 2 lots we purchased. We really want to progress that, a, as demand for our existing villas, but, uh, it will complete off that site quite nicely. So we've prioritized that this year. We had an existing consent in there, and we have design ready, so we were ready to go on that when the market was there for us. Gracelands, you hit it on the head, and that's part of our '28 delivery. So we're going through the refinement of the design on that now, and you'll see us delivering a stage of villas in '28.

Yes. And then just on Elmwood apartments. I mean, I think there is some potential to do some more apartments there, not a particularly large block. Is that in your thinking at all for '28 or '29? Or are you, at this stage, not planning on progressing that at all?

So the focus for the coming years is the conversion. So I talked about villas and apartments there. The villas are the conversion of the cottages. If you've been to the site, you will have seen a few there. The apartments is actually a piece of the old care that used to be more serviced apartments care suites, and we're going to put those in apartment product. And there's absolutely demand for that area in South Auckland for apartments in time, and we do have consent, as you know, for a couple of hundred apartments on that site. Still something we're planning, but not something you'd see in '28.

Okay. So the apartments would be beyond '28. And I assume the same applies to Lady Allum and BayView. I guess it's possible that you might start development in '28, but the delivery wouldn't be until beyond '28?

Correct.

Cool. And then I guess just the other one I just wanted to touch on briefly to make sure I sort of understood it. So The Helier, you don't include expense interest in that recycling that you're about to achieve in terms of the full development cost. It's just the expensed interest -- capitalized interest, sorry. Is that correct?

No, it's all in. And so we've got the whole lot in there.

Okay. So it's capitalized and expensed interest within those development costs?

Yes. So it's a full-in cost, and it includes the capitalized wages as well.

Your next question comes from Bianca Murphy from UBS.

So firstly, just on your long-term build rate. So you got to a 150-unit exit build rate by FY '31. Should we think of that 150 as a steady-state level? Or as a base you would look to grow beyond over time?

Yes. So exit rate for us for '31, for steady state. At the moment, we've looked at it from a point of view that, that's a nice level where we've got, kind of, add in each time, but not getting out of control with debt. And it will really depend on what happens with the market when we get there, though, and things change. And obviously, if there's demand there, we'll build to it.

Okay. And then just following up on resale prices. So yes, you mentioned with the long-dated resale stock that was priced to sell. Could you talk about what your retail unit pricing was for the year on a like-for-like basis?

I'm not sure what you mean by a like-for-like basis, Bianca. So in the slide, we've got our pricing year-on-year is in there. I'm not sure what you're meaning by like-for-like. So that includes the -- that includes the stock that we have priced to sell from long dated. They're not excluded in those numbers.

Okay. No, sorry. Sorry, I mean, yes, sort of like-for-like units. Was there still positive unit price inflation year-on-year? Or was that negative because of those price to sell?

Yes, I understand your question now. Okay. Yes, absolutely. And overall portfolio was up on apartments year-on-year.

Okay. And could you talk a bit about incentives during the year?

From a resident incentive perspective, so we have the same tools on offer that we've been using since this time last year. So you will have seen some of our adverts and billboards for targeted at certain sites, and we are offering weekly fees and things like that. And really, our incentives are very tailored to the individual. So we don't have blanket across the site. We will look at specific rooms and see what we could do there. So it could be something as small as a move-in package through to a weekly fees free for a year. So we have been using those tools during this year. Our cost for incentives this year versus last year, it was about $2 million this year, about $1 million last year. It is something that now that we have the momentum going with our sales that we are looking to reduce during FY '27.

Okay. And then last question, just in terms of some of those one-offs in your free cash flow from operations for FY '26. Should we expect any further one-offs in FY '27, either positive or negative?

So in the one-offs that we've adjusted for -- and if I think about my slide, it's the left-hand side that gets us to the $15 million. No, we won't have any more of those. So the GST was a one-off treatment, as you know, in the first half, and that's nothing going forward. And with the restructure cost, they were specifically related to our support office, and that has been done and dusted now. And so you won't have those going forward. Transformation cost is something that I've called out on that slide as well. We will, as we continue with our cost savings and roster reviews at site, have more of those, and we will call them out and disclose them as they go. But the focus, Bianca, as you'll be aware, is 100% on achieving positive free cash flow.

Your next question comes from Nick Mar from Macquarie.

Obviously, Franklin seems to be going reasonably well at the starting point in the sort of [indiscernible] greenfield and the building [indiscernible] that way. When do you sort of get conviction that the sort of product is working enough that you look to buy land and actually grow a pipeline of greenfield sites?

So sorry, Nick, you are breaking up a little bit there. But if I heard your question right, you're saying Franklin is going really well, which is great. And when will we have enough confidence to go and buy more land. Is that what your question was?

Yes.

Yes. So I mean we're always looking for land and land always come in looking at us. And at Franklin, as you know, from the interim, we have an option over the joining land, and we are looking at what the timing that would be. As you would say, Franklin has gone really well. Our presales have been achieved. And so there is an opportunity for us to bring the official purchase of that one going forward. We are always looking at adjoining land to our existing sites as well. And yes, as you've said, if the right piece of land came around and we have confidence in our development capability and we have confidence in our sales capabilities, so provided the market was there for it, we would absolutely consider it.

That's good to know. And then just on the development pipeline in general, any sort of material changes since the last update? I can kind of see Bream Bay sort of Stage 2 is now just 23 villas, and previously, you had a whole bunch there. Is the rest of that site no longer, kind of, viable? Or is it just how you're looking at it from what you can actually do with the infrastructure near term?

Yes. So we do still own other piece of land kind of over the road from the 23 that we're doing. It's still part of what we're looking at. We're still planning what we do on that site. You're right about there's some infrastructure and consent plans that we need to consider up there, definitely still in the pipeline, just not here in the next couple of years.

Okay. Great. And then just, I guess, one slide that you didn't have in there was just around the sort of stock availability at balance date. I appreciate the, sort of, absolute stock levels in both new sales and resales has sort of come down. But anything that you can kind of call out there, which composition-wise was, I guess, an opportunity or a challenge within either of those stock bases?

Yes. So and that was a slide we put in last year, and I think it caused more confusion than it did answer things. So we did pull it out, but we can provide that detail to you and the other analysts later today if that's useful. And composition, I'd say we've obviously taken a big chunk of our new sales stock away. And there's less than 18 months' worth of new stock there until we start adding in the likes of Franklin and Bream Bay, which is why we're happy to build through the cycle and resales stock as well. We're pretty happy with the level we have there. We've been running down those reserves, so to speak. And for us, it's about making sure that we can recycle our resales and also making sure that we constantly add into that new sales pipeline through the developments that we do. But so nothing unusual in there, but we can talk you through the numbers later.

Your next question comes from Stephen Ridgewell from Craigs Investment Partners.

First of all, good to see the progress on cost out, sales and debt reduction and the improvement in cash flow from operations over the year. So well done for that progress. Just had a couple of questions. Just first of all, the unsold stock number that you've got, you just called out around about just under $40 million of the care suites and sold stock on the books. You've got unsold inventory, but actually it's sort of occupied by residents. And there's, no doubt, good economic reasons for that. Perhaps it's been a bit harder to sell and you've taken the PAC instead. It makes sense. But just interested in just how confident you are that those suites will eventually be sold on the next turn. And at what point would it be appropriate to perhaps take a write-down on those assets if they aren't actually sold ultimately as ORAs?

Thanks, Stephen. Sorry, Suzanne mentioned, it's actually in her section where we said we take the view that someone in a bed is better than having an empty bed while we're in the sell-down of these ramp-up of development sites, however you want to call them. Those beds, it's a mixture. So the one that's got the most momentum in somewhere like Elmwood. So if you think about, we do still have a bit of a hangover of the brownfield where we needed to demolish an old care site and then moved over to the new care site. So absolutely, we have confidence that we'll be able to sell them as we go. And the bulk of them are related to existing care residents who we've moved over. Having those people in there means that we can have operational efficiency from day 1, and we're not kind of inefficient with the layout of how we're selling. And so it's definitely had a positive from that respect. And yes. So I guess in answer to your question, we're very confident that we'll be able to sell them as care suites. We've had some good success stories in the regions with the likes of the BayView and Awatere where we've taken that approach, and we've also seen good first-sale development margins on them as a result because by the time those people do leave, you have a very vibrant community there and waitlist in some circumstances.

Yes, I understand, like, it makes sense if it's not selling ROA, but initially -- so no argument there. But equally, these units do cost, call it, $0.5 million plus to complete. And as we know, the EBITDA per bed won't be supporting that valuation. So I guess the question is, if you -- how long does it remain as a PAC bed before you actually have to take a write-down on those assets?

Yes. So we're not looking to write down those assets. And the sales of the units around them or the care suites, rather, around them supports their pricing. And in certain circumstances, we're actually -- we've got 0 vacancies at those sites and we have waitlists. So there's certainly no indicators that they would need to write down at this point. But it is something that, obviously, as we do our 6-month valuations, we monitor very closely.

Okay. And then just on CFTO. So again, good to see the improvement in that metric from what it was last year and the year before and moving in the right direction, particularly with the cost out. And you have been very clear on the cost out, but just interested if you could maybe talk to some of the drivers in what you're seeing year-to-date just that might move us into positive CFTO territory in '27 and particularly things like maybe what you're expecting around occupancy, resale volume growth and maybe some comments on the receivables collections? Obviously, good sales in the second half and still to collect that cash, but just maybe some comments on what you're expecting at this point in the year for CFTO and some of those drivers to support positive outcome this year?

Yes. Great. Thank you, Stephen. So you've heard both myself and Suzanne say a few times today. We're all laser-focused on returning to positive free cash in '27. The way in '26 we've approached is we're really focused on the cost base first and getting that momentum in sales, as you've said. Now they've helped from a reduction in debt perspective, and obviously, it's really helped from an EBITDA perspective, and it's really set us up for a future cash earnings on the reoccurring earnings. But what you've pointed out is correct is on a working cap side, there's still some work to do. So 2 of the things I called out that will help in the coming years, and then there won't be one-offs, they'll be going forward really around the capital expenditures. So if you think about maintenance CapEx and the refurbishment CapEx, that's something that we've had a real good close look at. And we've got savings coming in the next year, and that's where we have confidence behind the extra $10 million. On top of that, as you said, the order receivable has gone up. We've needed to -- and have some deferrals this year, and that's helped us get our sales in and it's locked in the cash for the future over the next 6 months. But as you say, it would have been nice to have that in this year. And so with that, I guess what I'd say is last time we spoke in November, we said that we really wanted to get that order receivable number down by $25 million. That's absolutely still our goal. That will be a one-off cash injection, and -- but still certainly something that will help our FY '27.

Right. And then just -- that's all clear. I mean, just in terms of the margin that we saw. So again, good sales. I think, maybe margins are a little bit softer than we were expecting and maybe from, as far as I could tell, consensus. But just on sort of the resale margins of roughly 3% year-over-year. Can you just talk a little bit to what you're seeing now in resale pricing? So there's been a bit of discounting through the year in some stock and maybe price increases elsewhere, but overall, the margins come down. Are we seeing sustainable resale pricing year-to-date? I mean are you expecting resale margin to come off this year? Or should we start to see that sort of stabilize, do you think, in terms of what you're seeing in the market? Obviously, it's more challenging conditions in the last couple of months. So that might make things a little bit difficult to hold margins. Just some comments there would be helpful.

Yes. So there's definitely been a little bit of a blip during the year that's gone over '26. And as we said, that was a targeted thing that we did. And it's really important to us that we reduce our debt and we clear that old stock. And so our resale margin did come down into around 17%. We expect it to moderate back up to the 20%. We've held it between 20%, 21%, 22% for the last couple of years, and we absolutely expect that will continue to be our run rate from a dollar margin perspective. And volumes, going forward, again, has really been a good news story for us, and we expect the volumes on the care resales to be going up next year as well.

Okay. And maybe one last one for me. Just apologies if you sort of already called this out, but just for the $30 million kind of cost-out target into '27. Are you able to give some indication where the lion's share of the incremental cost savings are going to come from year-over-year? Is there a tilt towards head office? Shall we expect some changes in the dev team there in the last year? Or is it more a village level that we'll be seeing those costs come down?

Yes. Thanks, Stephen. So the $30 million is inclusive of the $20 million that we've talked about. So $13 million of that $20 million we've received this year. So that's about all the numbers. And the bulk of that was support office savings plus some savings in our care predominantly. So you'll see that $20 million run rate, and you'll see that the whole way through because a lot of that only really we saw the impact of it in the second half. The remainder of the $10 million and some of it will be procurement and probably 20% care, 20% village, and then the rest of it will be more of your balance sheet items, which are very much around the village and around the maintenance and the refurb. Does that help?

Yes. That is helpful. That's all for me.

[Operator Instructions] Your next question comes from Will Twiss from Forsyth Barr.

Well done on a solid result. Obviously, great to see the EBITDA per bed jump to around 15,000 in FY '26. Can you just talk to your expectations for this number going into next year? You've obviously divested some pretty high occupancy sites. And then maybe just give us a steer of where you think this number could get to over the next couple of years. I think, if I recall correctly, you'd previously talked to getting that to around or above 25,000.

Great. Thanks, Will. And so we -- I don't know how many years ago we said this, but we always said we had an aspiration of that number, excluding capital gains, to be above 20,000. So it's absolutely where we're aiming for. So we want do 15,000 to turn into 20,000 in time. And I'd say with the divested sites, the number in the slide includes the divested sites because we obviously had a full year of earning for them. Some of those would have been at a lower return. Hence, they were on our list, and a lot of the beds were care suites. So taking those out would actually increase our average slightly as well going into the next year.

Okay. No, that's great. And then if we just look at the development pipeline for FY '27, it looks like it's quite back-ended. Kind of what are you expecting around new sales volumes for FY '27 given this dynamic and then also obviously starting the year with less new stock when you started the prior year?

Thanks, Will. So starting the year with less stock and correct, but we still have plenty to be able to achieve the same new sales volumes, if not better than we've had this year. I think the other thing I'd say is, as well, if you look at what we're bringing into the pipeline in '27, so Elmwood, Franklin, Bream Bay, we've kind of proved with our first stage of Franklin that we can achieve a high number of presales. And so we expect to do that on those as well. Again, another point for our new sales to improve on prior years. And resales have just been going from strength to strength, particularly with the care suite. So yes, without giving you guidance, I'd say, absolutely, we want it to be up.

Okay. Great. And then could you just give us an idea of where resales volumes were relative to unit turnover in FY '26? Were those 2 numbers quite close?

Sorry. Did you say volumes, resale volumes?

Yes. So resales volumes relative to unit turnover over the last year?

Well, I'd say it's slightly higher relative because, I guess, to the points that I've made earlier around we had some old stock which we bought back, which would have turned over in the prior year. So the actual resales during the year would be higher than the number of kind of departures that you've had.

Thank you. There are no further phone questions at this time. I'll now hand back to your speakers to address your webcast questions.

Yes. First question from online is, "Will Oceania consider a strategic review to close the NTA gap?"

So thank you. Sorry, I guess what that one is probably pointing at is whether we consider a share buyback. I know that's been a topic of conversation over the last couple of years. And I feel like I've spoken too much, so I'll let Suzanne answer this one.

Yes. Thank you. So we hear the question and we recognize the discount with accretion possible at the current share price. But right now, our priority is cash generation and the balance sheet discipline that we've spoken to. So we will continue to review, but no update at this stage.

The next question from online is, will tax efficiency be a consideration and whether an imputed dividend should be paid in the future?

Yes, that one, I'd probably have to defer to our tax experts. But absolutely, it's something that we look at when we do them. And for us, right now, the priority is very much around turning the dividends back on.

Final question from online is, "The property sector are seeing cost inflation and construction of 10% to 15%. How will you adapt to this to protect margins?"

So we only have at this stage, the Franklin Stage 2, which is currently under development, and we have already got a contingency in our cost to adapt to that degree of inflation. If it goes further than that, we will reconsider as we progress.

There are no more questions online.

Thank you. Do we have any other questions on the line, operator?

Thank you. There are no further phone questions at this time.

Thank you very much to everyone coming today.

Thank you.