Ryman Healthcare Limited (RH70.F) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Ryman Healthcare's 2025 Annual Shareholder Meeting. My name is Dean Hamilton and as Chair of the Board, it is my pleasure to welcome you all with you joining us here in person or online. Before we begin, a few practical matters, should the fire alarm sound at any point, please use your nearest fire exit. The meeting point is the grass area next to the building and please follow the instructions of the Piana staff at all times. Can I please ask that you all take a moment to ensure your cell phones are switched to silent mode. As a reminder, today's meeting is a hybrid meeting. For those online, if you have any issues, please refer to the virtual portal guide or phone the helpline on 080-0200-220. If you're online and have questions, you can send them through via the online portal by clicking the link shown here on the screen. I would encourage you to do so as early as possible as this will allow us to answer these questions at the appropriate time during the meeting. Voting on the resolutions today will be conducted by way of a poll. Both resolutions in today's meeting are ordinary resolutions, and to be passed, require approval of 50% of the votes cast on each resolution. For shareholders joining us in person today, you would have had validated or been given your shareholder voting card. If you are a shareholder and did not register on arrival and wish to vote, please make your way to the registration desk outside the room and our staff from MUFG corporate markets to assist you. Shareholders joining online will be able to cast a vote using the electronic voting card received when online registration is validated. To vote, you'll need to click on the get voting card button within the online platform meeting, which is also shown here on the screen. Voting will remain open until 5 minutes after the conclusion of the meeting. I declare that we have a quorum of shareholders and the meeting is now open. Today, I'll begin by providing an overview of the progress we are making and strengthening the foundations of Ryman which sets us up for improved performance over the coming years. I'll then hand over to our Chief Executive, Naomi James, who will walk you through the 2025 financial year and the plans we have for improving shareholder value. We will then address the resolutions of the meeting before we have time for questions and answers at the end. Following the conclusion of the meeting, we invite you to join the Ryman Board and the executive team for some light refreshments. Joining me today are my fellow Directors, Paula Jeffs, James Miller; Kate Munnings, David Pitman, Anthony Lees and Scott Pritchard. As part of our Board renewal, we were pleased to appoint Scott Pritchard as an Independent Director last November. Scott brings deep expertise in property development, corporate leadership, including his current role as Chief Executive Officer of Precinct Properties. Since joining the Board, Scott has played an active role in guiding our strategic initiatives and in particular, how we might go about development in the future. His extensive experience and insights have already added value. We also acknowledge recent Board transitions. As we discussed at last year's meeting, Claire Higgins stepped down from the Board on the 31st of December 2024. And and Anthony Lees advises us back in February of his intention to retire at the completion of today's meeting. Anthony joined the Ryman Board in 2018. Anthony has brought deep construction experience and an owner's mindset, and they have been a real value around the table. On behalf of the Board, I'd like to thank Claire and Anthony for their dedication and significant contribution to Ryman. Also joining me on stage is our CEO, Naomi James. Many of our executive team are also attending and sitting in the front row. I'd encourage you at the conclusion of the meeting to introduce yourself over refreshments. Representatives from a new auditor PwC and our share registrar, MUFG also join us today. Firstly, let me acknowledge and apologize on behalf of Ryman for the loss of value that shareholders have experienced over the last 4 years. As a result of a combination of internal and external factors, the fall in the share price has been substantial, down over 80% since the peak in 2021. This is totally unacceptable. Your Board are very focused on rebuilding this value, recognizing the need to build a more resilient, disciplined and commercial business, the Board is focused on resetting our foundations to materially improve our performance, but at the same time, ensuring we never lose sight of our core purpose that is providing exceptional care to our residents. I do believe we have taken decisive steps. This includes a comprehensive series of changes across governance, across management, remuneration, our financial reporting, the transparency of our financial accounts, our capital structure and our near-term priorities. I do believe we have turned the corner. Since June 2023, we've undertaken a significant board refresh with 5 new directors appointed, this has revitalized and added new skill sets to the Board. We will look to fill the vacancy created by the retirement of Anthony over the next 12 months, and then we will run with the smaller Board of 7 for the foreseeable future. I've been really pleased with how the new Board has linked in to and worked constructively to make what have been a number of hard decisions. All directors are now independent. As announced last year, the Board has been working to align executive remuneration with long-term value creation through a refreshed incentive scheme, which replaced the prior medium- and long-term schemes that were tied to growth in underlying profit, a problematic metric which we have moved away from. The new long-term scheme is now directly linked to total shareholder returns. In addition, we've introduced minimum shareholding requirements for both executives and directors to further align our interest with shareholders. In November last year, we welcomed Naomi James as our new CEO. Naomi brings extensive transtasman commercial experience, having held several senior leadership roles, including most recently as Chief Executive of NZX listed channel infrastructure. The Board was delighted to attract someone of Naomi's caliber to the business. The executive team has been reshaped and refocused reducing from 9 executives to 7 with clear accountability and functional responsibilities. I would also like to warmly welcome Matthew Prior as CFO from today. Matt brings extensive experience in consumer and patient-facing health care and has a proven track record of delivering for shareholders by driving operational excellence. I would like to take the opportunity to thank Rob Woodgate for his hard work and contribution to the first stage of our business transformation over the last 2 years. We have completed the extensive Board-led review of our financial reporting over 2 reporting periods. This has been a large exercise than initially expected. We have focused on removing directed judgments from asset valuations, taking a more conservative stance on revenue recognition and cost capitalization, removing internally-generated goodwill and writing down the carrying value of Ryman developed software. This has unfortunately led to a substantial reduction in shareholders' equity and NTA per share. The changes have been significant and in some cases, very complex. While it has been challenging to work through, and challenging for readers of the accounts given the scale of adjustments, we believe the improved transparency and greater comparability will put us in a much stronger position going forward. This review of our financial reporting is now complete. We are resetting our cost base. The company's overheads had grown significantly over recent years, which mean we became a high cost developer and a high-cost operator. Neither of these are sustainable in a competitive market. Naomi will speak more to the improvements we are ranking later on. In the past year, we've also taken decisive action to reset our balance sheet to strengthen our financial position, simplify our debt structure by removing the institutional term loan and ensure we have runway and control of our destiny to rebuild value. Our key milestone was our $1 billion equity raise earlier in the year. Thank you to those shareholders who supported us. This has significantly enhanced our financial flexibility by reducing our gearing ratio to 28% and delivering annualized interest savings of between $50 million to $55 million per annum. The capital raise also enabled us to secure an 18-month waiver of our interest covenant, providing us the time to continue our operational reset and the opportunity to renegotiate our funding structure this financial year from a much, much stronger position. As previously signaled, we remain committed to reviewing our capital management and dividend policies by the end of this financial year. In addition, we have advanced application for a foreign exempt listing on the ASX and expect to be listing -- to be live by the end of September. This will gradually expand our access to new investors which will be to the long-term benefit of all shareholders. You will see on this slide the substantial progress we have made in the last year in the scale of our investment. FY '25 was a record build year in Ryman's history with 950 retirement village units and aged care beds delivered across 9 villages. Including within this build was the opening of 4 main buildings shown here at Miriam Corbin at Keith Park, James Wattie and Victoria Burt Newton villages. These main building servers welcoming homes for our care and serviced apartment resins, while offering dining facilities, amenities and services enjoyed by all our village residents, and are an integral part of the communities at Ryman. The business has never delivered 4 main buildings in 1 year. These have been multiyear commitments that will take time to build occupancy as we fill the significant capacity of aged care beds and service departments for the first time. Our Hubert Opperman, Village and Mulgrave, Victoria also opened its first independent townhouses this year, bringing the total number of operating villages at Ryman to 49. 9 of these are in Victoria and 40 are here in New Zealand. I want to take the opportunity to thank our construction teams who have done a great job in challenging stop-start circumstances to get these buildings completed and to a very high standard. Post-balance date, we proudly opened the main building at our Kevin Hagman Village on the first of July, which is a significant milestone for this village, which opened independent residents in 2020. We now have around 200 residents to call this lobby village home and get to enjoy these fantastic amenities, which include a heated pool, spa, Tefe library, Jim, Bowling Green, Cinema and Beauty Salem that the Board had the pleasure of walking through on Monday. Earlier in July, we held our Village open days where we welcomed over 250 people through the doors at Kevin Hickman, and we're seeing strong inquiries on the back of this. Kevin Hickman is a truly stunning village and I would encourage anyone in Christchurch to visit, see it for yourself. It is certainly a special place for mom or dad. Please take a moment to enjoy the short video with a glimpse into village life at Kevin Hickman. [ Presentation ] I would also like to take the opportunity to acknowledge the passing sadly this year of one of our 2 co-founders, Kevin Hickman. Kevin, along with John Rider founded Ryman 40 years ago and pioneered integrated retirement living in aged care as we know today. It literally didn't exist before Kevin and John. Along with many others, I was fortunate to attend the service to Kevin at the Christchurch hall. It was humbling to hear of his contribution not only to this sector, but the athletics into other real passion horserace a great pioneer with an enormous legacy. Certainly, a life well lived. We remain committed to our sustainability journey and have made good progress in a number of areas over the past year. We've achieved a 41% reduction in our Scope 1 and 2 carbon emissions since our FY '21 baseline, which is a significant step towards our 2030 target. The Ryman Healthcare Solar and Northland is nearing completion and will soon be providing renewable energy to our villages through the innovative purchase agreement we've secured with Harbor infrastructure in Mercury. In Australia, we've secured a Green Power renewable energy agreement with Origin Energy. On the social front, we are proud to have published our first modern slavery statement and our first reconciliation action plan in Australia. We're also pleased to report that we have no gender pay gap cross all of our team members in both Australia and New Zealand. As we look to the future, we must not lose sight of our purpose, which is to provide freedom, connection and well-being for people as we grow older. Our residents are at the heart of everything we do, and we remain committed to our purpose-led model of care and delivering exceptional residential services. These are the same principles upon which the business was founded by Kevin and John 40 years ago. a milestone that we celebrated during the last financial year. That said, we recognize the need to deliver sustainable business performance and ensure that our business is fit for the next 40 years and delivering industry-leading retirement living in care for New Zealanders and Australians. We need to find the right balance between care and commerciality. Roman has undertaken a significant transformation over the past year. We've taken decisive action and laid the foundations for a stronger, more focused and more resilient business. To our shareholders, the share price performance over the last 4 years is clearly unacceptable. I thank you for your continued patience and support as we work towards rebuilding value. To our team members, thank you for another year of dedicating to delivering great care for our residents. With that, I'll now hand over to our Chief Executive, Naomi James.

Thank you, Dean, and thank you, to here for joining us today and to those who have joined us online. As Dean mentioned, I started in this role in November, and it is great to be with you today for my first Annual Shareholders Meeting. Since joining, I have met so many of our committed and caring staff, and it's this commitment and care that has seen Ryman once again this year selected by the public as New Zealand's most trusted brand in aged care and retirement villages. This marks the 11th time Ryman has received this industry award from Reader's Digest, which is real endorsement to the enduring commitment we have to residents, their families and the vibrant communities our teams help create across each of our villages. It's been a real privilege for me to have already visited more than half of our 49 villages and to meet many of our residents in New Zealand and Australia and hear it firsthand about their experiences. We know our residents are a key part of what makes each of our villages special and deeply value the contribution at our 15,000 residents make in our communities. We are proud to offer them a choice in retirement living and the peace of mind in knowing that they have access to industry-leading care as their needs change. Moving to our FY '25 results. As Dean noted earlier, we have now completed a comprehensive financial reporting review. This significant reset has led to changes to key accounting policies as well as improving transparency and comparability of Ryman's reporting. However, these changes have made this year's set of accounts, complex with a number of restatements, one-offs and noncash write-downs resulting in a reported net loss after tax of $436.8 million. In FY '25, we saw improvement in the financial performance of our villages and reductions in our non village costs. In FY '26, we expect to build on this momentum through incremental revenue growth across DMF and weekly fees, the ongoing impact of cost reductions already achieved and further savings driven by a sharper focus on procurement and operational efficiency. Looking at unit sales, Ryman achieved 1,523 sales of occupation rights in FY '25, broadly flat on the prior year. As outlined at the time of the equity raise, we saw a softer period for contracting in the second half of FY '25, which will result in a lower level of unit sales in FY '26. We have been working hard to rebuild contracting momentum, which I will talk to on the next slide. Reflecting our strong brand, occupancy remained above 90% in Ryman's mature villages across both aged care and retirement living. Lifting occupancy in our developing villages is a key focus area for the business as we look to sell down new stock and fill capacity in our recently opened care enters. Free cash flow of negative $94 million was in line with guidance provided at the equity raise. While still negative. This improved by almost $100 million year-on-year, and we are targeting further improvement in FY '26. We Sales contracts, which we also refer to as sales applications are a lead indicator in the business with settlements on average, lagging contracts by around 6 months. Since the equity raise, when we reported a soft period of contracting in the third quarter of FY contracting momentum has steadily improved with gross contracts in the first quarter of this year, now at 91% of the level seen in the last 2 comparative periods. This improvement reflects a sustained emphasis on sales effectiveness across a range of initiatives, including targeted promotions, and sales incentives, price optimization and continued investment in frontline sales team development. Importantly, we are rebuilding contracting momentum at a significantly higher level of deferred management fees or DMF, compared to the past with the average DMF on new resident contracts signed since October last year, almost 40% higher than in the past. As part of our efforts to provide more visibility to investors, we released our first quarterly update a few weeks ago, announcing 337 sales of occupation rights and over 96% occupancy in our mature aged care centers in the first quarter of FY '26. FY '26 sales are currently tracking towards the upper end of the previously guided range of $1,100 to $1,300. We still expect variability throughout the year, given the flow-through impacts of softer contracting in the second half of last year and mixed market conditions. Our operational reset is underpinned by 3 strategic priorities announced at the time of February's capital raise. The first strategic priority is to release cash from the business. which will allow us to reduce debt and create capacity for future growth. Our focus is on selling down over $700 million of new sales stock and paid out resale stock and portfolio optimization, where we will look to divest selected land bake sites, which are collectively valued at $370 million. Our second strategic priority is to make a significant and sustainable improvement in cash performance by $100 million to $150 million. This includes the lifting the operating performance of our billers and resetting our non-village overheads. Our third strategic priority is disciplined growth. driven by a clear plan for value-accretive portfolio expansion. Central to this is the portfolio and strategy review, we have commenced to identify the best opportunities to optimize and grow the Ryman business. I look forward to hearing more details with you on plans for the future later this financial year. We've made significant inroads on our strategic priorities here -- with this reset commencing well before I started as CEO. As I talked to earlier, the changes made to our unit pricing framework has driven a 40% higher average DMF on new contracts, and we continue to improve our effectiveness in selling the new offering. We've achieved annualized cost savings of $23 million and are targeting a doubling of this by the end of FY '26. And following our capital raise, we're achieving annualized interest savings of $50 million to $55 million. Commencement of new developments have been paused as we complete our in-flight projects, sell down existing stock and undertake our portfolio and strategy review, providing the time to lift the operating performance of our villages and get clarity on the best value accretive growth opportunities for the business. We will continue to update the market on our progress throughout the year ahead. As we review Ryman's plans for the future, we are very aware of the sector trends and how Ryman is uniquely positioned to benefit from these. As shown on this chart, the New Zealand government estimates that by 2032, there will be a shortage of over 10,000 aged care beds in New Zealand. As New Zealand's leading provider of retirement living and aged care and with a growing portfolio in Victoria, Ryman is well positioned for future growth in demand. as aging populations in both countries grow and the gap between aged care bed supply and demand widens, our model will become increasingly valuable to the residents we serve and to our shareholders. By pioneering the continuum of care model in New Zealand and bringing it to Australia, Ryman's portfolio offers more care capacity and capability than any of our retirement competitors. Ryman villages provide residents with the security of knowing they will be -- we looked after with access to the levels of care they might need as their needs change. I want to finish by highlighting the investment property position for Ryman as it stands today. FY '25 has been a year of significant reset and while there is still much to be done, I am confident that we start FY '26 with a strong platform to improve Proved shareholder value. We are a market leader in integrated retirement living and aged care. Our continuum of care model is unmatched in size and flexibility, and well positioned to capitalize on growing demand. We have a renewed performance focus with our revenue and cost reset well underway, and see significant opportunity to unlock further efficiencies and operating leverage. Our balance sheet has been reset following our equity raise providing financial stability that will continue to improve as our business improvements drive cash flow. It's important that we set the business up to be resilient through the cycle, and continue to have our shareholders' capital front of mind. Our portfolio and strategy Review provides the opportunity to unlock further value and ensure a disciplined approach to future growth. And lastly, we are attractively positioned to benefit from the recovery in the housing and economic cycle. We have already made significant progress on our plans and have a management team that is committed to delivering on the targets that we promised you at the time of the call raise. I want to thank you for your continued patience and support as we progress our business transformation. I look forward to updating you while our plans to further improve and grow our business and our dividend policy review later this financial year. I'll now pass back to the Chair for resolutions and general business.

Thanks, Naomi. Poor Naomi had a cough a couple of weeks ago, and it sounds like it's decided to come back at just the wrong time, but let me pick up. Before we get to general business and your opportunity to ask any questions, we will first move to the formal meeting resolutions, which were outlined in the Notice of Meeting. Each resolution set out in the notice of meeting is to be considered as an ordinary resolution, and as such, must be approved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. For those of you here today, you'll be voting using your voting card. Please mark your voting intention for each resolution and the voting cards will be collected at the conclusion of the meeting. If you require assistance with this, please see MUFG outside the room. Those of you voting online, you will now need to click Get Voting Card within the online meeting platform. Please mark your electronic voting card in the way you wish to vote by clicking for, against or abstain. Once you've made your selection, please click submit vote on the bottom of the card to lodge your vote. A quick reminder, voting will remain open until finances after the conclusion of the meeting. Results of the vote will be announced via the New Zealand Stock Exchange. The outcome of proxy votes received prior to the meeting will be displayed for your information after voting on all the resolutions. There will be an opportunity to ask questions on each matter being put to shareholders. For the sake of good order, shareholders questions raised should relate directly to the matter being considered. There will be time later to ask general questions. I will take questions from those present in the meeting before moving on to any questions from shareholders online. I ask that in interest of finish to all shareholders attending this meeting, anyone wishing to ask questions if you can be as concise as possible and considerate of other shareholders wishing to ask questions. Now turning to resolution 1, that the Board be authorized to fix the remuneration of PwC as auditor of Ryman Healthcare Limited for the ensuing year. The Board unanimously recommends that shareholders vote in favor of resolution 1. Are there any questions of the board concerning the resolution from shareholders in the room?

Yes, I've got a cold like you Naomi mine is probably worse. Just 1 question. David Kingston, Capital. One question. Clearly, the NTA has been falling precipitously in the last few years. It's currently sitting at $4.18, which when that was revealed, it disappointed the market. The market was expecting something a little bit higher than that. Just like to ask the auditor, please. if they could clarify to what extent have they reviewed the valuations of the villages, which are the critical determinant of the NTA of the company so that shareholders could have some comfort that there will be no further reduction in NTA per share and that they can have some comfort that, ultimately, there will be a rebound in shareholders' value to reflect the $4.18. Thank you.

Right. Thank you, David. Sim, if you could pick that up?

Yes. Thank you, Dave, for your question. I'll direct your attention to our audit opinion, that accompanies the financial statements. There's a key order matter around valuation of investment property and care homes. And I think that clearly a ticket relates the work that we've performed around the valuations.

As you'll be aware, David, the valuations performed both on the retirement village units and the care independently done on both sides of the Tasman. Those valuations are -- had sufficient inquiry from the Board. They present to all the Board. The auditor also has the ability and did inquire of the valuers in terms of their assumptions, and tested the reasonableness of those things. So I think there's been a comprehensive review both at the audit level and at the Board level of those valuations. Any other questions on the resolution at hand? Are there any online questions with regard to the auditor.

There are no questions online.

Thank you. Please mark your voting cards now. Moving on to the second resolution. Under Listing Rule 2.7.1. A director appointed by the Board must not hold office without reelection past the next Annual General Meeting following the director's appointment. Scott Pritchard was appointed as a Non-Executive Director by the Board with the effect from the November 1, 2024. So Scott accordingly retires and offers himself for reelection. Scott is considered by the Board to be independent. The Board unanimously recommends its shareholders vote in favor of resolution 2. I would now like to invite Scott to introduce himself and speak to you Regards his reelection.

Thanks, Dean, and morning, shareholders, and thank you for allowing me to say a few words. It's a great privilege to offer myself for reelection as an independent director of Ryman. I joined the Board in November last year, having observed the challenges that this company was facing, but realizing that this company as a truly iconic company that has led the retirement and age care sector in New Zealand over the last 40 years. as well as seeking your reelection today as independent director of Ryman. I'm also the Chief Executive Officer for Precinct Properties and have been for the past 15 years. I also serve on the Board of the Property Council of New Zealand. I chair the Auckland Council City Center Advisory Panel and a trustee for the Tanarolton Foundation. I've had around 25 years' experience in development in real estate markets and publicly listed companies. Over the past 10 years, I've led around $4 billion of development and my role as CEO for Precinct, and have delivered these projects successfully enter the benefit of investors. I plan to use my experience, both personal and professional to support Ryman, its Board of Directors and its management team, as it evolves its business operations and cement itself as New Zealand's leading retirement and aged care provider. Ryman Health care has and will continue to evolve its business model to generate and regenerate sustainable value while striving to exceed the expectations of a diverse stakeholder group, including you, our shareholders and owners of Ryman. I believe in this company, and I'm enthusiastic about Ryman's future. I believe my broad real estate experience and track record, along with my deep knowledge of New Zealand markets, and our company strategy and operations can contribute to Ryman's governance and success. As I said at the outset, it is a privilege to serve as a Director of Ryman. I acknowledge the responsibilities that come with this role. Thank you again for this opportunity and for putting your confidence in me.

Are there any questions for Scott or the Board considering this resolution from shareholders in the room? David?

Good to have you on board, Scott. Property development is a challenging area. It's one of the key reasons, in my view why Ryman has had a very disappointing few years. And I congratulate you chair on being honest enough to apologize. So well done. I think that's something that not many company Chairman are prepared to do, but shareholder value has suffered. But Scott, I believe that your contribution is crucial. In my view, the developments here in this company. It's exciting to do development. But at the end of the day, majority of developments, whether it's retirement villages or office blocks or whatever, majority tend to -- the CapEx blows out, the timeline blows out, and quite often, the ultimate return declines, for example, the high vacancy factor in the new villages. So in my view, focusing much, much more closely on whether property development is a good thing for this company is critical. At the moment the company has, I thought it was $390 million, ambityou said $370 million, but of that order of undeveloped sites, in my view, some of them should be sold quickly. I think the company with your assistance, Scott, should really look very, very, very closely at the IRR that is required to provide a proper return to shareholder on new development. And when you look at that IRR, I think you've also got to take into account various holding costs, the management time, which is extensive, and you've got to take into account the risk factor because I think it's fair to say that a lot of Ryman's new developments in recent years have not performed according to the original feasibilities, so look, I welcome you on board. Scott. I think your role is very important. I think the Board should focus incredibly closely on development. I would like to think that the Board would not look at new developments at all for a while. I think you've got to learn the right again to move into growth and redevelopment. I think you've got to stabilize first and foremost, recover from this very tough few years. I would also ask, Scott, what sort of IRR do you expect as a property expert on a new project, when you factor in everything, the management time, which is expensive, what sort of IRR do you expect, Scott, on your developments?

Thanks for your question, David. Look, it depends on the asset class, and that's the sort of short answer, and they vary. And so if you're looking at office right now, you might be looking at north of 12.5% IRR. If you're looking at student accommodation, you're 15% plus, if you're looking at residential and build to rent residential. It's often inside 12.5%. It can be as low as 11%. Each of those metrics depend on the cost of capital of the company, -- and so they can vary too. And so all of the comments that you've said today are all well considered. I hear you. There's a huge amount of consideration going on certainly, over the last 6 months in terms of how and what we develop in the future and when we develop. So I appreciate your feedback.

You've been on the Board for a little while, Scott. Have you had a chance to look at why a lot of the developments of Ryman have not delivered a proper -- and what are the lessons learned? Like there's no problem in things not working. We all have things that don't work. But smart -- people analyze why things don't work, learn lessons and make sure they don't repeat the same failure in the future. Appreciate your insights into what's going wrong on the developments.

Yes. I mean, look, it's probably not for me to reflect too much because I haven't been here for too long, but -- in terms of what you're looking for when you undertake a development, you're looking for demand, you're looking for highest and best use. You're looking for a set of specifications and a design that meets the needs of the end user and making sure that you're not spending too much money and overspecify volume developments or designing villages that are actually $2,000. And so those are all the things that we'll be looking at as we consider how we might allocate capital in the future into developments.

Thanks, David. Any questions online?

Two questions online. Scott Pritchard, the first is from Andrew MacKenzie. Are there likely to be any conflicts of interest with Precinct and Ryman possible outsourcing of its construction going forward.

No, I don't anticipate any conflicts of interest.

Maybe I'd just comment on that. We obviously run a strong conflicts of register as a Board. And to that extent, if there are any emerging conflicts those directors will be excluded from discussions and from voting.

Your next question is Scott Pritchard comes from Jochen. How does the experience you mentioned match the reality and your belief is truly reliable. .

I guess, in terms of my experience, it's been across development and office and industrial and residential hotel and retail. So this is a wide set of experience most recently in residential build-to-sell apartments. Of course, in villages, we're not looking to undertake necessarily a sales program in regards to kind of -- in the same way that we do for Precinct, for example. But all of the experiences I think, are particularly valid for Roman. The reality in the belief whether I'm reliable, that's going to be a question for you as shareholders in the future. I'm 6 months, and I'm incredibly excited about the opportunity that's in front of this organization. I acknowledge the challenges that it's had, but I'm encouraged about our future.

Thanks, Scott.

There are no further questions online.

I must say that I do not know anything about the subject you see. I was a basic maintenance engineer and I look at your very large blocks that are being built. And I wonder how on earth is Ryman going to maintain them bear in mind that after 25 years, you've got to really think about a major renovation of the building and after 50 issued demolished, would we not be better building small houses, which people could move into. And then after 50 years, sell them off to somebody else.

Thank you. I might pick that up. I think what I'll do is I'll deal with that later in general Q&A, you want to have to ask, I'll pick that up. But -- so thank you for that. But in terms of specifically on the resolution, are there any questions of regard, Scott? Okay. I now propose that Scott be reelected a Director of the company. Thank you. Please mark your voting cards now. I would now like to give shareholders the opportunity to ask questions, whether related to the presentations, the financial statements or the management of the company. We will do our best to answer these. Shareholders online can provide -- continue to provide questions through the portal, and we will also address questions from the room. When I call for questions, can shareholders present in the room who would like to ask a question, please make your way to the microphone stand in your closest aisle so that people in the room as well as online can clearly hear you. Please introduce yourself and identify yourself as a shareholder before asking your question. If you can't make it to a microphone no problem, please raise your hand and 1 will be brought to you. I will firstly respond to some questions that have been pre-submitted online in the last week and then take questions from those present in the room before moving on to questions from shareholders on line. The first question was submitted by Darren Ricard. His question is, is your new way of doing things starting to show results yet. As I said in my introductory speech, I do believe we are turning the corner. We've been driving a business improvement program over the last 12 months. And in Naomi also picked it up since she has joined and accelerated that. There is some way to go, no doubt. But I do believe our FY '25 results showed that we are turning the corner. We did reduce our cost base by some $23 million. And as we've said publicly, we're targeting doubling of that this financial year. On the revenue side, you saw more improvement in our bed revenue numbers, both in aged care and retirement. We've reset our deferred management fee on new resident contracts. As Naomi discussed, new contracts are up significantly old contracts . And will strengthen our balance sheet by raising $1 billion and reducing our gearing to 28%. So yes, I think we in, and we like to continue to show progress at the half year and the full year. The second question was provided by in -- what specific performance metrics are management being held accountable for this year to restore investor confidence and improve balance sheet health. As we disclosed in the annual report, Management have 2 sets of incentives. One is a short-term incentive, which we measure annually and one is a long-term center measured over 3 years. The financial targets in the first 12 months were as disclosed, which is an 80% weighting of the short-term incentive has financially driven. And they cover cash flow from existing operations, cash flow from development, operating cost reductions, sales and our oral payout balance, it's all very financially driven. So those are the key metrics that we've put there and the nonfinancial measures, which is 20% of their short-term incentive, they relate to safety to our resident Net Promoter Score and into a high-performance development culture, progress towards those. So those are the key measures that we have for our executives. And then in terms of the long-term incentives, that will be measured by total shareholder returns over the next 3 years. So a combination of short-term measures and a long-term measure, longer-term measure that is tied to total shareholder return. We have a question submitted by William Phillips and Leslie Phillips. Has any outside entity shown any interest in taking over this company. And when will shareholders see a return. On the first point, no, we haven't received any takeover proposals. When will shareholders see a return -- as I said in my speech and as Naomi reiterated, we are very focused on rebuilding value that shareholders have lost. These things take time. but we're confident that we have turned the corner and shareholders will begin to see some returns. Whilst there's a board, we keep an eye on the share price, very much focus is making sure we're doing the right things and rebuilding.value and that the shares will reflect that over time. Question from Jeffrey Hogan and Kathleen Hogan. When is the total Board going to resign. Thank you, Jeffrey, and Kathleen. The share market price is poor. You haven't paid out a dividend. It is time for a completely clean out is for poor performance. You can remuneration regardless. Look, that for your questions. The share price performance has been unacceptable, and I totally acknowledge that. And I do expect shareholders to be frustrated by the loss of value in their shareholdings. There has been substantial change. I joined the Board 2 years ago. with a clear mandate from shareholders to create change and to create improvement. There's been significant change in the Board since then, and you have 5 new directors on the board now, and we'll be replacing a new director in the following 12 months. The majority of that Board has been here for less than 2 years. So I think I would ask for support for this Board to demonstrate that we can rebuild value in the organization. The fifth question was provided by Karl Davies. The government is thankfully reviewing the 20-plus year old Retirement Villages Act. What is Ryman's position on the repayment of residents capital sum when they depart within a mandated time frame. What time frame would Ryman support? I'll hand over to Naomi for this one, please.

SP Thanks, Dean. We are supportive of the VA review that is underway and are monitoring that with interest. If you look at what has already occurred in Victoria, where we also operate they have recently introduced a 12-month mandatory obligation for payouts. And that seems to us to be a sense of approach. So we will continue to monitor the New Zealand process and make sure that our policy aligns with that. No Ryman resident has ever taken longer than the 12-month period to be repaid. So we are very committed to making sure we get the balance between the customer and the operator right in that policy.

Thanks, Naomi. In terms of the previous question here, thank you for that. and it was around maintenance and how do we manage our maintenance on such a large site and how do we think about maintenance over the life cycle of the building, good question. The Board and the manager are very conscious of the life cycle of a village. In fact, we spent a lot of time yesterday the baord members talking about the life cycle of our villages. In day-to-day, we have facilities managers on site, maintaining grounds, maintaining equipment and plant. When people vacate, we refurbish the individual units, as you can see in the accounts, we spend depending on the age of that unit, we average around $30,000 a refit, depending on its whether short or being long in terms of the person who was the resident there. And then we know we're going to be updating that facility in the 15- to 20-year period from the day it started. And then again, we have a reasonable period after that where it doesn't get updated other than the individual units and people vacate. We haven't got any villages that are 50 years old. Time will tell as to what we do with those. We actually redeveloped them on a stage process or whether there's a higher embedded use at that time. But at the moment, those points in time where we do reinvest, do -- we've got -- across our portfolio, those businesses do continue to create strong cash yields after that 15- to 20-year refresh. My Apologies, sorry? Yes, apologies I thought I had answered that. My comment was we don't have anything after over 50 years of age. And yes, and we'll assess that on a project-by-project basis, whether we refit that as what's happened in the area. We have 2 villages that are around 40. So in 10 years' time.

[indiscernible]

Yes. We do consider those villages. Well, every individual village will have a different answer to that. And to the extent we are going to do something to a village we need to obviously have that discussion with our residents first. But I don't believe there will be a 1 answer fits all for those things. There's been a variety of buildings built over time. Some with care, some with no car, some very small, some large. So I think the answer will be separate for each. But we are very aware of that, and we're thinking now about what will we do with those 2 that are 40 now. So in 10 years' time, will be 50. No, we think about that now. So let's come back into the room. This gentleman here.

Jim Barriere, hearing what you said about the large holding land for future development. If you have to quit some of that Len is the zoning that the land -- got only suitable for get care developments? Or can it be changed to residential housing developments or some of its owning? Or is it just tie that you have to sell another business in the same sort of business urine.

Yes. No, every site in the land bank, not have all got different stages of zoning. Some of those have been rezoned for aged care and retirement living, but nothing would stop a buyer if we did choose to sell one of those it's not suitable for us going forward to request a rezoning of those. So they're all different across all of the portfolio.

How do you see the value of that land, if you had to sell it with a different zone on it, perhaps just ordinary residential houses, to what the cost -- original cost price was and what's holding costs have been.

Do you see yourself getting out of it without losing your shirt or do you see yourself getting out of it? SP1 With a slight profit or -- you must do these valuations -- we have Well, we haven't done them. They've been independently valued willing buyer, willing seller. And so their view is what we could achieve if we chose to solve that in the market today.of $370 million, I think, across those sites.

[indiscernible]

You don't have the question I see the cost price and the holding price when you watch your left. Do you comment on top? Will you come in on in our balance sheet at the moment, they are valued independently at $370 million.

[indiscernible]

The gross price, what we paid for that $7 million, I don't know that original cost because Under the accounting rules, we're required to value those in Arne at the value as at today. That's our -- that's the requirement of the accounting rules. And so we get that independently valued. So what that would say if you chose to sell those 9 properties today?

[indiscernible]

Relative, the profit relative, sorry, could you just clarify just on the front of the profit relative to

You've got some holding costs or holding it all this time. You want to cash out of it. Usually, quite often land that's been zoned for this sort of activity, usually had to pay a premium to get it. you're going to get out of it, you're going to sell it to some we're going to -- you can put a road through, but how's side. What's the actual getting position? .

Yes. I don't know the cost position of those individual sites that have been bought over 7 or 8 years. So I can't answer that question of what the valuation is today relative to our cost. I don't know the answer to that. Well, ultimately, the question is what's the value today. What I bought my house for 7 years ago was kind of a relevant to what the market price is today. Yes, they'll leave against today's value is what they'll lend against it not cost. On hold they will lend against linked against value. but on a frontier. Yes. just need to sell Potentially, hopefully, at those values that the independent value has told us they are worth. That would be our expectation of what we would sell it for question is that the -- and apologies, I don't know the answer to that. Next question, please.

I do. My question is, I am bitterly disappointed that you did not acknowledge the tragic death and preventable death of Elizabeth Nickels, fully I'm aware that Health New Zealand had not -- had paid for that level of care. But the handling or mishandling in the newspaper was absolutely appalling. It was prevaricating of this casing, et cetera, et cetera. So why on earth when you want to step up and increase the share for the shareholders, why don't you offer tracking devices? You lost the woman in the North Island, that's newly come into the paper. And incidentally, my cat Simba, in 2005, you town the Hills above Westmarland, and he had a tracking device. you need to lead from the front ahead of other retirement for less and offer that, that they could have tracking devices.

Thank you. I might just hand over to Naomi.

To address that specific point. Thank you. And I think your point about just signaging that passing our deepest condolences go out to Elizabeth family. We've been in close contact and our team were incredibly saddened by that event. In terms of tracking devices, specifically, it is 1 of the things that's actively being discussed with Health because they set the pricing of aged care in New land, they effectively set the standard of care that we can provide. And we are very keen to make sure that as we see increasing incidences of dementia in the older community, which is occurring that we have the right tools and ways to care for people at different stages not just at the secure dementia care level, which is a different level. So the concerns you raised and point to raise, we have very mind it is an ongoing and active discussion, not just by Ryman, but by the whole sector about how we make sure we care for people experiencing debenture in the best way we can, recognizing people also want their freedom as well. So good point in terms of raising it. We need to keep looking at those opportunities. here. past year longer because she was incredibly stressed. -- she was out of her normal environment and you have a look at the statistics in the new. Thank you.

Next question, please.

Good morning. My name is Andrew Walton at and I'm quite a reasonably long-standing shareholder. And I would just like to say that I was quite saddened to learn over time about the self-inflicted problems that Ryman has been suffering from, let alone the external factors. I would like to thank the existing board and all the work that's been done with addressing all those problems and your candor with talking about them. Just on the capital management and debt levels, -- the number of shares in Ryman's just a bit over double now with the 2 capital raisings. And I would like the board to consider when looking at capital management to consider and I'm happy thought about things like another pandemic and suddenly your resales slowed down, and you were still buying out exiting people. To take that sort of thing into account when you talk about dividends because my personal view is I would like to see Ryman have a strong balance sheet. And if anything, stronger than you might sort of think is necessary from a conventional sort of point of view because if you are going to keep buying out exiting people, and not resell them, then obviously, your debt levels can blow out yet again. So personally, I would be happy for you to defer a dividend for longer to strengthen your balance sheet so that external factors to hurt the business for a year or 2, you don't have to suddenly have another dilutionary cash issue at a cheap price because the share price is fallen because of what's happened over a year or 2. I have 2 other questions. Should I carry on?

Should I just answer that, Andrew. I think those points are very valid. I think this Board will be conservative on those things. As we think about the capital that sits on side the business, got shareholders' capital. We've also got residents capital, some $5 billion of residents capital, and we've got bank capital. And the $5 billion we owe that back to a relatively vulnerable community that's an often large part of their life savings. So I think all of those things lead to a conservative desire around how we think about how much borrowings the business should have. So I think going forward, you'll see a more conservative capital structure than maybe you've seen in the past. So I can cure.

Thank you. Just another question. the Chief Executive talked about the demand for car beds growing, then a run on village, if someone needs to go into care, could they receive care in their apartment or whatever until there's a bed available in the actual care facility, i.e., if the care facilities are full up, what's going to happen to people who need here who are not -- who don't actually have a care bed yet?

Yes. No, good point. In terms of that, obviously, we're monitoring the health status of all residents at that time. So we're conscious inside a village if someone could be needing more care even if they're in an independent one now. So we think about that and where that transition in a managed way and people will be able to find a bid inside our village. If it's extremely urgent, something's happened have fallen. They're likely to require hospital care before they come back to us. So again, we'll have a window of opportunity to make sure that we might leave that bid available for that person when they come back because we're not running at 100% full on 96 is 98%. So I'm variably, we do have capacity available. So I'd be very conscious of providing a continuum of care, which is so important for Ryman for residents to be able to have that care. So I'm not aware of many circumstances, if any, where an independent resident has not been able to gain care inside our facilities.

Would you have a policy of actually not running at 100% with care beds, i.e. keeping some vacant beds available for unforeseen emergencies where resident suddenly does need care?

Naomi, it's quite an operational question. Why don't you jump on that?

And perhaps just to your point to highlight, this is the unique thing about the Ryman model. 30% of our capacity is care is residential care, 20% is service department and 50% is independent living. If you compare that to others in the market, they are typically 10% to 15% care and the remainder retirement living. It's a very big difference in terms of our model. That's why we communicate with such confidence the care offering being there when people need at the level they need it. How we operate today is that we will provide rest home and even in some cases, hospital-level care. -- both in the care center as well as in some of our villages and parts of our villages in service departments. We also provide an assisted living offering outside of residential aged care. And so there's a really full continuum as people need change, that the model always there to accommodate. And by being in the village, you are at the front of the queue and the staff are on site to support you with the care needs that you have. So we have real confidence in being able to provide that even with the demand that is coming.

Right because obviously, people who move into a village would be disrupted to put a mildly to be forced to actually move somewhere else totally if they have to need care suddenly total understanding and that does happen.

I think it is in very rare instances and normally for a short period of time, they might be offered a spot in another nearby village and two, we can secure at the right meg.That's what we've done in some of those cases where that's occurred.