Oceania Healthcare Limited (OCA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I am Elizabeth Coutts, the Chair of Oceania Healthcare, and thank you very much for joining us today for the Annual Meeting of Shareholders. Before we begin, a brief note on safety. We are not expecting any emergency today, but if the alarm sounds, please follow the directions of the Park Hyatt staff and lead by the nearest exit. You will find bathrooms outside and to the left down the corridor, and our staff can point you the way. Please also take a moment to ensure your mobile phone is on silent. Today's meeting is being held in person here at the Park Hyatt in Auckland and also online via Computershare's meeting platform. 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 open. To begin with, I would like to take this opportunity to introduce those people alongside me today. On my far right is Independent Director, Dame Kerry Prendergast. Dame Kerry is the Chair of the Clinical and Health and Safety Committee and a member of the Audit and Risk Committee. Next to Dame Kerry is Sarah Ottrey. Sarah is standing today for election as an Independent Director of Oceania Healthcare. Sarah is a member of the Clinical and Health and Safety Committee and the People and Culture Committee. And besides Sarah is Independent Director, Greg Tomlinson. Greg is Chair of the Development Committee. On my far left is Independent Director, Sally Evans. Sally is a member of the Clinical and Health and Safety Committee. Sally will be retiring as a Director of Oceania at the end of this meeting. I will acknowledge Sally's valuable contribution later in my speech. Next to Sally is Independent Director, Rob Hamilton. Rob is Chair of the People and Culture Committee and a member of the Audit and Risk Committee. And apology is Independent Director, Alan Isaac, Chair of the Audit and Risk Committee and a member of the People and Culture Committee. Also with us today is Suzanne Dvorak, our Chief Executive Officer. Joining Suzanne are members of our executive team here, we have Kathryn Waugh, our Chief Financial Officer; Sarah Miller, our Chief Legal, Corporate Services Officer and Company Secretary. Fiona Cameron, our Chief Sales and Marketing Officer; Gareth Wright, our General Manager of Property and Development; Michelle Baker, our Chief Customer and Services Officer; Shirley Ross, our Director of Clinical and Care Services and responsible for Health and Safety; Andrew Steele, our Chief Property Officer; and Hayden Brown, our General Manager of Strategy. We also welcome representatives from our legal advisers, Chapman Tripp; and our external auditors, Ernst & Young. When we come to the formal business, I will move each resolution. We will then open each item for discussion before putting it to a vote. In accordance with the NZX listing rules, voting today will be conducted by poll. For those of you attending the meeting virtually, I will shortly open voting for all resolutions to provide you enough time to vote. At that time, if you are eligible to vote at this meeting, the voting options will appear on your screen. To vote, simply click on the Vote icon and select your voting direction from the options shown on the screen. You can vote on all resolutions at once or one at a time. Your vote has been cast when the green tick appears. To change your vote, select change your vote. You can change your vote at any time until 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 advise before I move to close voting. For those attending in person, you should have received a voting paper on arrival. If you've not received one, please raise your hand now and a member of the Computershare team will assist you. Computershare will act as scrutineer for today's poll. The results of the votes will be released to the NZX and the ASX later today. There will be opportunities to ask questions throughout the meeting, and I will address them at the relevant point on the agenda. For those attending online, you can submit a question at any time by selecting the Q&A tab on your screen, typing your question into the box and press send. I encourage you to submit your questions as early as possible to help ensure they are addressed at the appropriate time. The Q&A tab remains open throughout the meeting. If you have any difficulty voting or asking questions, please use the Q&A tab to request help or refer to the virtual meeting guide and a member of the Computershare team will assist you. For those attending in person, if you wish to ask a question, please raise your hand, and we will bring you a microphone to you. When speaking, please clearly state your name and confirm whether you are a shareholder or you are a proxy holder and the name of the shareholder you represent. So the meeting runs in an orderly way, I will address questions at the relevant point in the agenda rather than as they arise, and I ask that questions are held until I invite them on each item. I also ask that in the interest of fairness to all shareholders attending this meeting, anyone wishing to speak should be as concise as possible and be considerate to other shareholders wishing to ask questions. For the sake of good order, shareholders should speak once on a matter being put and the questions raised should be -- should relate directly to the matter being considered. I may moderate or combine questions when we receive similar ones. If we were unable to respond to every question during the meeting due to time constraints, we will respond afterwards by e-mail. I would like to take this opportunity to remind everyone that as this meeting is being webcast, you will also be heard by an audience outside of this room. Are there any apologies that anyone would like to have recorded alongside Independent Director, Alan Isaac? It does not appear so. A number of shareholders have appointed proxies to cast their vote. Based on the first resolution, excluding shareholders who have abstained, 466 shareholders -- holding approximately 447.3 million shares are represented by valid proxies. This represents 61.77% of the shares on issue. I will advise on the number of proxies held by the Board and how they are intended to be voted after each resolution that will be put before the meeting today. The first item of business is to consider and receive the annual report and the audited financial statements for the year ended 31st of March 2026. We shall take the annual report as read. Before seeking your questions or comments on the annual report, I'll provide you with an update on the company's performance. This will be followed by an address from Suzanne Dvorak, our Chief Executive Officer. Before I turn to the year, I want to start with the people who make Oceania what it is. Every day, over 2,200 team members provide personal, high-quality care and services to more than 3,900 Oceania residents. It is demanding work. It takes real skill and dedication. And on behalf of the Board, I thank them for that. My thanks also to the families who place their trust in us, to our partners and to you, our shareholders, for your continued support. This year has been a year of disciplined progress and the transformation we set out to deliver is taking hold across the business. It starts with our residents and their families. Their experience is at the heart of everything we do, and we continue to invest in measuring and improving it. This year, 79.5% of our care residents maintained or improved their well-being. That result matters because behind the number are thousands of residents living more comfortable and connected lives. A clear and consistent read on how our residents are doing is the best early signal of a healthy business, and it keeps the whole organization focused on what matters most. None of this is possible without our people. In our most recent climate survey, 70% of our people told us they are engaged in their work, engaged and well supported teams deliver better care and listening to them and acting on what they tell us has become central to how we lead. Sustainability remains an important part of how we operate. While the mandatory climate reporting standards will no longer apply to Oceania when the revised legislation is passed, we have not stepped back. Our sustainability practices are now well embedded across the business and overseen by the full Board, and we remain committed to building and operating responsibly. Recently, Franklin Village became the first retirement village in New Zealand to achieve a 4-star Green Star Communities Rating, setting a new benchmark for the sector. We also met every environmental and social target in our sustainability-linked financing. For us, operating responsibly is simply part of running the business well. Over the past year, we have materially strengthened our financial position. We've reduced debt. Our gearing is at the lower end of our target range, and the executive team is fairly focused on generating free cash flow from operations. More recently, we successfully raised $125 million through the issue of a new corporate bond as part of reducing perceived financing risk and setting up our funding for the long term. The bond 6-year tenor better matches the long-dated nature of our assets and extends our debt maturities while continuing to ensure diversification of funding sources and strengthening our resilience through the cycle. That stronger footing is what allows us to operate profitably and grow with discipline. We are refining our development pipeline and the timing of each project working to a diversified and measured plan with an indicative build rate of approximately 150 units a year by FY '31. The timing and sequencing of these projects is not yet determined. They will be set as conditions and demand allow. The pipeline is also deliberately mixed, which lets us match what we build to conditions and demand. That flexibility is a strength, particularly in a market like this one. I want to turn now to how much this portfolio has changed since we listed in 2017 because the change runs far deeper in size. When we listed Oceania was a portfolio of 50 mostly older care-focused sites with total assets of $918 million. Today, we operate 30 mostly integrated communities and total assets have grown to $3.1 billion. The change in mix has been deliberate. At listing, nearly 3/4 of the portfolio was aged care and those villas and apartments and care suites under an Occupational Rights Agreement made up just 32% of it. Today, care and village living are close to evenly balanced with 80% of the portfolio under our Occupational Rights agreement. The result pioneering the care suite model, and we're weighting towards integrated care and village communities. To be clear, this rebalancing was not a retreat from care. Retirement living is exposed to house prices, care is exposed to government funding, balancing both at a portfolio level is what studies us through the cycle. Taking an early portfolio-wide view of where our capital worked hardest, we divested sites and focused on new development, building modern communities that now anchor the portfolio. So the portfolio today is younger and carries far less of the deferred maintenance that weighs on older operators. We've also renewed where and what we build, concentrating in the higher-value metropolitan markets where demand is strongest and positioning us to respond as those condition markets shift. That pipeline sits on land we already own and over time, has the potential to add around $1 billion to total assets once the pipeline is fully developed. None of this happened by chance. This is a substantial value created for you, the owners of the company, even if the share price has not yet to fully reflect it. While our share price has recovered somewhat over the past year, the Board shares your wish to see the market better recognize the value we have built in Oceania. With the current strategic period coming to an end, we refreshed our strategic plan last September through a comprehensive Board-led process that management is now delivering. Many of you will recognize this framework. We shared it at our Investor Day and have referred to it in our reporting since. This is what guides the business and our day-to-day decisions. The first phase is about strengthening our foundations. It is largely complete. We are now moving towards growth. What I want to focus on are the 3 things the plan are for. These are improving operating performance by undertaking a major cost reduction program, strengthening the balance sheet by reducing stock and divesting older sites that no longer meet our financial hurdles or fit our continuum of care strategy and ensuring growth initiatives are considered, disciplined and capital efficient. The Board has considered and continues to actively consider various strategic options with a view to maximizing shareholder value. These include sector consolidation opportunities, organic and inorganic growth, strategies, divestment of individual sites, capital structure and capital management options. One of those options is buying back our own shares. Shareholders are rightly asked about it, and I will address it directly when we come to Resolution 4. Over the past 2 years, we've sold 13 sites at around carrying value and used the proceeds to reduce debt. Central to that plan is our focus on positive cash flow from operations. Put simply, that is the cash the business generates from running homes, villages after the cost of operating and maintaining them and excludes development-related costs and profits as the clearest measure of whether the business is paying its own way. Rather than judging value add on development alone, we determined that our existing assets earn a strong and dependable return in their own right. That matters because of what it gives us, a strong balance sheet and positive free cash flow from operations are what create options for us. We can grow by developing the pipeline we already own. We can grow by acquisition where the right opportunity is priced well. Each of our options is tested against the capital we need to hold against the risks in front of us, including the change to residence repayment law, which Suzanne will describe shortly, which I will come back to at Resolution 4. We weigh these choices against market conditions, and your feedback, and we welcome your discussion on them today. Before I turn to risk, I want to say something about how we pay our executive team. A substantial part of effective pay is not guaranteed. It is at risk and is earned only against performance. The short-term component is tied directly to the things that build value for you, being underlying earnings, free cash flow from operations, resident and employee outcomes and delivering of the strategy. A free cash flow from operations must turn positive before dividends resume. The executive incentive is anchored to the very milestone you are waiting on. The long-term component is where the alignment is sharpest. Our executives are granted options with a fixed exercise price. If the share price does not exceed that price, they are worth nothing, and they cannot be exercised. These are not free shares. They are not share rights that convert one for one regardless what the share price does based solely on tenor. And when they do vest, executives receive only the difference between the exercise price and the share price at the time, not the full value of the share. So a large grant of options does not translate into the large issue of shares. The number is far smaller than the headline suggests. I would add this, very few incentives have actually vested for the current leadership team. The alignment we are describing is not theoretical. It is cost management, real money to date. And when shares are issued on exercise when it is appropriate to do so, we will endeavor to purchase equivalent number on market to offset dilution. In short, management is paid when the value of your shares grow and not before. Aligning incentives is one way the Board protects your investment guarding against what could go wrong is the other. And underpinning all of it is a gate. In any given year, no short-term incentive is paid at all at any level unless health and safety and care standards have been met. In a business caring for older New Zealanders that comes first ahead of any financial results. The Board keeps a close eye on risk and what remains a fast-changing environment. Over the past year, we've continued to strengthen how we identify and manage the risks that matter most for a business like ours. The safety and quality of our care, regulatory change, cybersecurity and the funding and delivery of care. As part of streamlining our committees, risk oversight now sits with our newly combined Audit and Risk Committee, which sharpens our focus and accountability. We are also renewing your Board through a deliberate and orderly succession, having assessed the mix of skills and experiences required. We welcome Sarah Ottrey, whose career has been built on marketing and customer-focused industries. As I said earlier, the experience of our residents and customers is the surest indicator of a healthy business, and Sarah brings the capability to help us better understand it and act on it. Together with the commercial and people expertise, Sarah strengthens your Board for the next phase of our growth. And today, we thank and farewell Sally Evans, who retires after 8 years as an Independent Director. Sally brought to Oceania more than 3 decades of experience in health, aged care and retirement. And from her very first day, she governed with the safety and well-being of our residents at the heart of everything, every decision. She chaired our People and Culture Committee and then our Sustainability Committee, where she led the oversight of implementing Oceania's first comprehensive sustainability strategy. She also served on our Clinical and Health and Safety Committee during her entire tenure. Throughout she's been a tireless and clear-eyed advocate for our residents. One small thing captures who Sally is. When she joined, she asked us one thing of us that we never call the places our residents live facilities because a facility is not a home. That insistence, that language matters, that the residents experience must always come first. It is a standard she held us to and one we will carry forward long after today. So on behalf of the whole Board, thank you, Sally, for your wisdom, your warmth, your unwavering commitment to the people we are here to serve. Thank you. Finally, the need for what we do has never been greater. You may have seen recent public discussion about reform of the retirement village sector, including how and when residents exit retirements are repaid. We welcome reform that gives residents greater certainty and improves the experience, and we are engaging constructively as it develops. Oceania already operates within the key parameters the government has proposed. We buy back villas, apartments and care suites within a 12-month period. We pay interest to residents from the 6-month mark, and we charge no fees and accrue no deferred management fee from the time of vacant possession. A resident leaving an Oceania Village is not waiting indefinitely on a market they cannot control. There is, however, a further proposal that would shorten that repayment window to 3 months. That is a different matter, and we are advocating alongside the Retirement Villages Association for the current settings to be maintained. We will return to what it means for your capital when we come to Resolution 4. Our concern with that is practical, and Suzanne will go through that in more detail shortly. What I would like to say is that we are engaging on it constructively alongside the Retirement Villages Association to land settings that generally workable and protect residents without unintended consequence for the people already living in our villages. Our interest, as it always has been, is in changes that are fair to residents and workable in practice. As New Zealand's population ages, Oceania's commitment to high-quality, personal centered care increasingly supported by new tools and technology is both our purpose and our opportunity. It is work that matters, and the Board remains confident in the direction we are taking. I'd now like to invite Suzanne to present her report.

Thank you, Liz, and good afternoon, everyone. Before I share an overview of our record financial results, I would like to recognize the teams who delivered our success. This is a demanding year, and our people rose to the challenge. The progress and achievements we are presenting today reflects their very hard work. We came into the financial year clear about what needed to be done. That work has now been delivered in a way we believe we can build and repeat. This result was no accident. Over the past 2 years, we have rebuilt this business deliberately site by site, department by department and across every cost and profit center. We have assessed every village and care center against consistent criteria with independent expert input, and that work has given us a clear and practical strategy and plan. We set out and published our strategy last September, and we have been delivering against that plan ever since. The financial results I would like to take you through today are the product of this strategic plan and of the people who executed it. This included our independent advisers, some of whom are with us here today. Against another year of subdued residential property conditions, Oceania produced a record result with pro forma underlying EBITDA up 20% to $97.7 million on sales volumes up 16% to 603 settlements. At the same time, we strengthened our balance sheet and improved cash generation. And I'd like to take you through what has driven that result. The clearest signal of our progress is sales, and this was a record year. New sales reached over 200 settlements, up 9% year-on-year, with average pricing also up 9% and a group development margin of 30%. Resales were strong, up 20% to more than 400 units, 60% of these were care suites. Our care residents stay with us for an average of 3 years, which means the deferred management fees and capital gains are realized sooner in care than they are in independent living. In the case of new sales, that sales performance is the key to recovery of our initial capital outlay. The sooner those first sales come through, the sooner we recover the capital we invested in building them. At Franklin, which is our first Green Star community, Stage 1 opened in January. As of the 30th of June, 84% of the 31 villas have already been sold or are under application. We have begun work on Stage 2, where there will be a further 28 units delivered by the end of the financial year. We have completed our master plan work at Meadowbank and delivered 40 new dementia suites as part of the Orakei building. As of the 30th of June, this stage is now 70% sold, under application or occupied. Franklin and Meadowbank were the sites we needed to deliver against and each is now tracking not only to plan, but ahead of it. Our sell-down of these sites and others, including The Helier released $115 million of capital over the year. Net of new deliveries, this reduced unsold stock from $342 million to $227 million. The proceeds of these sales went directly to reduce our debt. The further reduction of unsold stock will continue to be a focus throughout FY '27. We have addressed the fundamentals of our operating model. We have looked at our rosters, our occupancy, our procurement and our pricing. The result of this work is that we ended the financial year a much leaner and fitter business. We completed the first cycle of our transformation program and delivered over $13 million of structural cost savings, building to $20 million annualized in FY '27, and we have increased our FY '27 target to include cash savings to $30 million. These reductions came largely out of our Auckland head office and the regional infrastructure that previously supported our divested sites. Our profitability has also improved this year, and our care business has led the way. Earnings per bed rose 40% to $27,000, supported by occupancy and tighter cost management. After several challenging years, our care business is now well positioned for sustained earnings growth. Free cash flow from operations improved by 64% from a $42 million outflow in FY '25 to a $15 million outflow in FY '26. Converting that into positive free cash flow from operations in FY '27 is the goal that we are working towards. Importantly, the result of this transformation program is a materially stronger balance sheet. We have reduced net debt by more than $120 million to $507 million and gearing fell to 30%, the lower end of our target range with $200 million of headroom and every metric comfortably sitting inside of our covenants. I'm confident that this year's financial results are repeatable. The changes are all structural improvements and not just one-offs. Although part of this year's debt reduction did come from divestments, a larger part came from things that recur, such as disciplined sell-down, improved operating cash and lower capital spend. These savings are now embedded in the business. Setting the divested sites aside, the continuing business is materially stronger with both earnings and free cash flow from operations up on the prior year. Oceania is a business built to perform in all market cycles, not one waiting for the market to turn. Today, Oceania is a smaller but more resilient business. We have deliberately reshaped the portfolio around integrated care and village communities, prioritizing cash generation. The same is true of the organization behind it. We are a smaller team than we were a year ago, but a more capable one, and we have invested in leadership and systems to help us keep it that way. At each of our sites, we have streamlined our structure so that one manager now leads both the care center and the village. That gives residents and families a single point of contact as their needs change, and it gives our teams much clearer leadership. In parallel, we have restructured our leadership team around clearer portfolios, priorities and productivity. We launched a new set of values this year built from what our people told us matters. And these 4 values are: we are one team, we are committed to care. We're proud to deliver, and we are finding better ways. But values only mean something if you can see them in action. So we have also defined the behaviors behind each value, and they are already shaping how we work. All of these initiatives over the past 12 months built a stronger foundation and one we can improve upon and continue to grow over the next financial year. And we plan to do exactly that. Whilst we are maximizing our operational performance, development is how Oceania creates long-term value and our pipeline gives us that substance. In FY '27, we will deliver 81 units across 3 sites, comprising Bream Bay, Franklin Stage 2 and a number of villa conversions at Elmwood. Over the medium term, we are progressing the design and consenting work needed to lift that build rate towards approximately 150 units a year by FY '31. Behind our strategy sits a pipeline that is real lands that we already own, located at villages that we already operate. This is a low-risk growth supported by the demographics from our strategy work and in locations where we already have sites, communities and infrastructure in place. The pipeline is also deliberately mixed, which gives us optionality in how we build. Premium apartments at Lady Allum and The Helier, alongside the broad acre options at Franklin, Bream Bay and Gracelands let us pace delivery amid a wider range of customer demand. As Liz mentioned, this pipeline provides the opportunity to add approximately $1 billion to our total assets. We will not break ground on anything unless we are confident it will pay for itself and add premium earnings to our existing portfolio over time. This is growth, which will add earnings and growth that we can pace. As mentioned by Liz, there is currently a proposal to reduce the period in which we repay a resident's capital after they leave from 12 months to 3 months. Let me be clear about where we stand. We agree residents should have certainty regarding the return of their capital and our own practice already reflects this. Our concern with 3 months is about who ends up paying for it. Requiring repayment within 3 months would mean operators hold materially more capital against that obligation permanently. That capital has to be funded and in a village model, the cost of funding these buybacks does not fall to operators alone. It will fall to residents still living in the villages by way of fees and pricing uplifts. So the risk is that a change designed to help residents leaving a village is paid for by the residents who remain within it. If this becomes law, Oceania does have the balance sheet to meet this requirement. That brings me to the year ahead, and FY '27 is about continuing to improve our performance and to generate positive cash earnings. We will keep selling down our unsold stock. We will continue to convert our operational gains into positive operating cash flow. We will maintain our cost discipline, and we will deliver those 81 villas and apartments I mentioned earlier, each contributing to growth in free operating cash flow. Longer term, we want Oceania to continue to be known for the quality of its care and the experience of its residents and to keep converting that reputation into dependable cash flow as we grow. There is still more to do, but the direction is clear, and we carry real momentum into FY '27. So many thanks again to our people who care for our residents every day, our residents and their families for the trust they place in us, to the Board and to you, our shareholders, for your continued support. I'll now hand you back to Liz.

Thank you, Suzanne. Are there any questions arising from the annual report from my address or presentation from Suzanne? 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 a proxy holder and the name of the shareholder represented. Thank you.

I am a shareholder. You do well on most metrics, but your staff engagement is lower than the New Zealand standard. How are you plan to increase that? 3% against 70%.

We're actually just up against industry averages, which we're very happy about, but we do need to continue to increase that. And as I said, we have just -- we've relaunched our values, and we've also just relaunched behaviors that sit underneath that. And we think that key to great resident experience is keeping the same team with us for the whole way through, and we are committed to continuing to increase that engagement. And Andrew, who is here with us today will help us to continue to do that. We're actually just above industry average.

Are there any other questions from the floor?

Is it the right time to address the Chair of the Audit Committee on financials or...

Sorry.

Yes. Is this the right time to address the Chair of the Audit Committee on financials? Or should I do that later?

Sorry, if you just say your name and who you're representing. Thank you.

My name is Rob Smith. I'm a shareholder.

Thank you. You can submit your question now, please including the financial statement, Yes, please do.

So who's the audit?

Alan Isaac as the Audit Committee Chair, but we have both the auditors here today, and we also have Rob Hamilton here, who's a member of the Audit Committee -- Audit and Risk Committee.

So just on net tangible asset value. So obviously, the market disagrees with this value by a very large margin and has done for a very long time. As Benjamin Graham said, over the long term, the market is a weighing machine. So the auditors have signed off on the net tangible asset value. which is based to a large degree on a black box DCF, which we're not allowed to see. They also use incredibly high discount rates. And after 9 years, not much cash has shown up, especially not in the quantities predicted by these models. So which of these is correct? Are the auditors confident in the value they've signed off on? And if so, why?

So I just want to check with that question. Are you asking for the auditors are present here today? Are you wanting the auditors to make a statement? Or would you like Rob Hamilton to comment on that?

Well, the auditors have signed off on that net tangible asset value, which is what my question relates to. So perhaps the auditors can answer.

Brent Penrose is with us.

I'm very happy to answer that question.

Can someone bring a microphone, please? That's a good question.

Thank you for the question. So I'm Brent Penrose. I'm the audit partner from EY. There's a question we get every now and then, particularly when you have a listed share, which is below the NTA. We see them as 2 different measures. So from our perspective, as auditors, we need to comply with auditing standards and our role is to provide our opinion on the financial statements as a whole as prepared under the required accounting standards. The market capitalization is a measure at a point in time based on investors' view on control or absence of control, future prospects and other market dynamics. We do use the market capitalization, albeit it's not part of our overall audit responsibility when we look at the impairment or the valuation process. As you'd expect in an asset-intensive business like Oceania, our key audit matter is the valuation and the carrying value of the investment properties in the PPE. And so we interrogate the valuation, which is all of the valuations are externally valued by third-party valuer. We use our specialists. We interrogate the methodology, the DCF model that you referred to. And we look at the disclosures across all of the properties and property, plant and equipment. We then look at the market cap and that to see whether there are any indicators of impairment from that. It is certainly something that we consider, but it is not the overriding consideration. Unfortunately, this is not unique in the market at the moment. There are a number of not only retirement village entities, but other property holding entities, which market cap is lower than the NTA. And ultimately, we're required to provide our opinion on the financial statements as a whole. And as such, we've issued our unqualified opinion, but in the key audit matters is a description of the work that we do on the valuation of investment properties from PPE. Very long answer to your question, but I'll take that.

Thank you, Brent. Rob, would you like to add to that?

Thank you, Brent. Rob, would you like to add to that? Yes. Thanks, Brent, and agree entirely with what you said. I would say the NTA is assessed by an independent expert appointed by the Board. And that valuation is reviewed in detail by the Board, including meeting with the valuers each year and is also subject, as Brent has outlined, to quite a rigorous external audit review. I would say that the NTA per share and the share price don't measure the same thing. And I think it's quite important to acknowledge that. And that is a key reason why you see differences between NTA per share and share price over time. Two of the key differences are, firstly, the NTA as assessed by the independent expert does not take into account overhead costs. At the same time, it also does not take into account future growth prospects within the business. So when thinking about share price, we need to take both of those elements into account, and they are key drivers of our share price performance. Not surprisingly, as Suzanne and Liz have already outlined, they are also key elements of our strategy. And Suzanne has been through in detail the overhead cost savings that we have already put in place. And we also have, as Suzanne has also outlined, quite a robust and focused growth strategy going forward.

Thank you, Rob. Are there any other questions? Yes, microphone here. Thank you.

[indiscernible] Shareholder. My question is at the NZSA presentation, it was mentioned that the divestments were not sold to the highest bidder as the optics are questionable, can the thought process be explained?

Thank you for that question. Suzanne or Kathryn, would you like to answer that?

Thanks, Tommy. Thanks for the question. When we talked about the divestments, we said there are a number of factors that we take into account. We've obviously done 6 over the last financial year. Price is one of the things we consider, but also one of the really strong things that we consider is terms and conditions for our employees and terms and conditions for our residents and any other kind of liability implying things that the purchases may bring in. So we in all of these processes end up with a range of prices. we obviously aim to get the highest, but some of them -- and there'll be other hidden things in the contracts that may mean that we go through one that is slightly lower, but it is the one which is the most beneficial overall option for Oceania as a company.

Thank you, Kathryn. Are there any other questions?

I'm Rob Chamberlain, and I'm a shareholder. I'm just wanting to ask how you see the village OpEx expenses growing over the next few years. They've been growing quite rapidly, obviously, as you've been adding more villages, but now recognized and steady for a while, it was about -- the village was $44 million OpEx last year. How do you see that traveling with the costs that you're costing out of? And I'm going to ask the same question about the corporate expenses, which also grew quite rapidly and are at $32 million now. How do you see that traveling over the next couple of predictable years as you have throttled back your building?

That's a good question. Thank you. Suzanne, did you want to answer those? Or would you like Kathryn to?

I think Kathryn and I can probably do it together. So certainly, in terms of village costs, our intent is to continue to reduce them. We did have a 0 increase this year, and we are certainly hoping to keep it at that. It is difficult because we cannot pass on every inflationary cost to our residents. And so we need to work hard as to how we manage that. So yes, with increasing cost of living, there is increased costs, and we are -- I'll hand to Kathryn in a minute to talk to you about some of the things that we're doing with regards to that.

Thanks, Suzanne, and thanks, Rob. Yes, so what Suzanne said for Village, when we talked at the results time, we said there's a number of things that we're still working on. Procurement is a big one of them. And we -- this year had and saw impact coming through care more than we did Village. We'll start to see the impact of costs coming down in Village moving forward. And with corporate, what I would say is you're right on the number, of course. We obviously did a big restructuring in corporate office in the last 12 months. We reduced our headcount by 20%. We reduced our kind of professional services and overheads by that same amount as well. We are looking to reduce that further. What you will see though in the next 12 months is some investment. So we've got 3 systems in particular that we're investing in this year that will allow us to have long-term cost savings, but there is a cost that will come with them in the short term.

To get the mic so that the people on the webcast can hear.

Are you able to actually put a number on those 2 expenses over the next couple of years, plus or minus?

So in terms of our corporate office costs, we're not expecting that to increase at all over the next few years. The village costs, we still need to do work, as Kathryn said, with regards to procurement and other activities that we're not intending to increase our support office or central office costs.

Thank you for the question. Are there any other questions you have? Thank you. There are no questions online. So 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 vote 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, to cast your vote, please complete your voting paper by ticking for, 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 the 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 whole vote is automatically recorded. I will now hand over to Greg Thomson, who will take us through the next item of business.

Well, thank you, Liz. We now move to the next item of business, which relates to the reelection of a director. Under Rule 2.7.1 of the NZX listing rules, a director must not hold office without being reelected past the third annual meeting following that director's appointment or 3 years, whichever is longer. In this case, Elizabeth Coutts is offering herself for reelection as a Director of the company. The Board has determined that in its view, if reelected, Elizabeth Coutts will continue to be an Independent Director for the purpose of the NZX listing rules. Elizabeth Coutts stands for reelection with the unanimous support of the other directors of the company. The Board considers that her experience, objective oversight and deep understanding of the business significantly strengthened the government -- sorry, the governance of Oceania. I now invite Liz to speak in support of her reelection. Thank you.

Thank you, Greg. I am standing for reelection today, and I'd like to say briefly why I believe my continued service is in your best interest. My commitment to Oceania and to the people it serves remains as strong as ever, and there are 3 reasons in particular. My first reason is the orderly renewal of your Board. It is deliberate and skills led. Appointments and composition are guided by the skills matrix we use to govern this business and our reelection timing is staggered so that director rotation is spread evenly rather than clustered in any 1 year. Today, you are being asked to elect Sarah Ottrey, who brings the marketing and commercial capability to the Board has prioritized while we farewell Sally Evans after more than 8 years of outstanding service. This is succession working as it should, refreshing the Board while preserving the knowledge that has served the company well. My second reason is the transformation underway in our business. We are partway through a significant transformation of our operating model, our development pipeline and the way we deliver care. The early results are encouraging in the experience of our residents, the engagement of our people and a materially stronger balance sheet. But transformation of this kind is not a single event. It has delivered over several years, and it benefits from stability and a steady hand while the work is seen through. My third reason is the renewal of our management team. Over recent years, we have substantially renewed our executive leadership, including a new Chief Executive, Suzanne Dvorak, and changes across the senior team. That renewal is bidding in well and is precisely at such times that continuity at Board and Chair level is most valuable, providing the corporate memory, oversight and support that allow a new team to deliver. I would add one thing about my own commitment. I sit on each of the Board's 4 standing committees, Audit and Risk, People and culture, clinical, health, safety and development. I'm across every part of the governance of this company, and I intend to stay that way. For these reasons, I'm standing for reelection and provide continuity while the transformation seen through. Thank you very much for considering my reelection. I look forward to your support and ask for your vote.

I now move that Elizabeth Coutts, who retires by rotation and is eligible for reelection, be reelected as a director of the company. I'll put it to the floor if there's any questions. There's a hand here.

Sorry, Liz, rob Smith, again, shareholder. Did you mention your shareholding in Oceania as part of that address?

You didn't.

No, I did not, but I do hold -- my husband and I hold over 2 million shares.

Well, it's actually the most important part of the address would be your shareholding. It's actually the only thing that makes Liz an independent shareholder in the opinion of myself and Warren Buffett.

Thank you for that. And so I'm very passionate about this company, and I'm very keen on getting our share price up.

And the other side of that coin is those of you that don't have material shareholdings are not and cannot be independent.